Capital, Volume III

Contents

1. Engels’s Preface (1894) 58 min 14

   Engels explains why the volume took nine years after Volume II: his failing eyesight, party work, and above all the state of the manuscript, a first draft of 1864–65 that broke off into notes and excerpts, worst of all in Part V on credit. He accounts for what he rewrote (the mathematics of chapter III, much of Part V, chapter IV) and what he left as Marx wrote it. He then reviews the answers to the puzzle he set in 1885, how an equal rate of profit can arise if value is created by labour alone: Lexis, Conrad Schmidt, Peter Fireman, Julius Wolf and Achille Loria. He rejects Schmidt’s solution while crediting him with finding the falling rate of profit independently, and credits Fireman with the key idea, left unworked. He ends with a polemic against Loria and Stiebeling.

2. I Cost Price and Profit 42 min 13

   From the capitalist’s point of view the value of a commodity splits into what it cost him, the cost-price (constant plus variable capital), and an excess over it. Because both parts of capital count alike in the cost-price, the difference between constant and variable capital, which is the source of surplus-value, disappears from view: surplus-value appears to arise from the whole capital advanced, and takes the form of profit. Commodities can be sold below their value and still yield a profit.

3. II The Rate of Profit 22 min 4

   The rate of profit is surplus-value measured against the total capital advanced (s/C), not against the variable capital alone as the rate of surplus-value is (s/v). The capitalist cares only about the first; the second is hidden by it. Profit thus appears as a creation of capital as a whole, a “mystified form” of surplus-value.

4. III The Relation of the Rate of Profit to the Rate of Surplus-Value 1 h 5 min 4

   A long mathematical chapter, largely Engels’s reworking of Marx’s calculations: how the rate of profit varies with the rate of surplus-value, the composition of capital (the ratio of constant to variable capital) and the value of capital. It works through the cases (surplus rate constant and composition varying, and so on) and concludes that the rate of profit can fall while the rate of surplus-value rises, and rise while it falls.

5. IV The Effect of the Turn-Over on the Rate of Profit 23 min 1

   Written by Engels from a title in Marx’s manuscript. The faster a capital turns over, the more surplus-value a given variable capital produces in a year, so the annual rate of profit rises with the turn-over. Shortening the time of production and of circulation (railways, steamships, the telegraph) raises the rate of profit.

6. V Economies in the Employment of Constant Capital 1 h 20 min 4

   Capitalists raise the rate of profit by economising on constant capital: concentrating workers in large factories, sharing buildings and power, using waste products, improving machinery. Marx sets the gains against their cost to workers, drawing on factory inspectors’ and medical reports: overcrowded, unventilated workshops, unguarded machinery, lung disease and accidents. Capitalism, he says, is thrifty with materials and wasteful of human life.

7. VI The Effect of Fluctuations in Price 1 h 38 min 10

   How changes in the price of raw materials affect the rate of profit, illustrated at length from the British cotton industry: the cotton famine during the American Civil War (1861–65), the scramble for substitutes, short time and unemployment in Lancashire. Marx argues that raw-material production, tied to natural and seasonal conditions, cannot keep pace with machine industry, so periods of over- and under-supply alternate.

8. VII Additional Remarks 10 min

   Short remarks. The capitalist sees profit as arising from his own activity and from the whole capital; even improvements in productivity appear to him as gifts of capital. Wages may fall below the value of labour-power without that being part of the general law.

9. VIII Different Composition of Capitals in Different Lines of Production and Resulting Differences in the Rates of Profit 36 min 5

   Capitals in different industries have different organic compositions (more or less machinery and materials per worker) and different turn-overs. If commodities sold at their values, equal capitals with the same rate of surplus-value would therefore earn very different rates of profit. Yet in reality rates of profit tend to equality. This is the problem the next chapters solve.

10. IX Formation of a General Rate of Profit (Average Rate of Profit) and Transformation of the Values of Commodities into Prices of Production 53 min 18

    Marx’s “transformation of values into prices of production”. Competition between capitals averages the different rates of profit into a general rate. Each commodity then sells not at its value but at its price of production: its cost-price plus the average profit on the capital used. Some commodities sell above value, others below, but total profit equals total surplus-value and total prices equal total values. Individual capitalists share in the social surplus-value in proportion to their capital. The chapter is the centre of the century-long “transformation problem” debate.

11. X Compensation of the Average Rate of Profit by Competition. Market Prices and Market Values. Surplus-Profit 1 h 13 min 15

    How competition brings about the equalisation: the movement of capital between industries, and within an industry the formation of a single market value out of the different individual values of producers working under different conditions. Supply and demand explain deviations of market prices from market values but not the level around which they fluctuate. Capitalists, competing with one another, form a “freemasonry” against the working class, since all share in the exploitation of all labour.

12. XI Effects of General Fluctuations of Wages on Prices of Production 15 min 3

    A general rise in wages does not raise prices in general, as political economy assumed. It lowers the average rate of profit; prices of production of commodities made with much constant capital fall, and those made with much variable capital rise.

13. XII Some After Remarks 17 min

    Supplementary remarks: causes of changes in prices of production, the price of production of commodities of average composition, and the capitalist’s motives for treating prices of production as the natural order of things.

14. XIII The Theory of the Law 1 h 3 min 7

    The law of the tendency of the rate of profit to fall. As accumulation proceeds, capital substitutes machinery and materials for living labour: the organic composition of capital rises. With the same rate of surplus-value, surplus-value then forms a smaller proportion of the total capital, so the average rate of profit falls, even while the mass of profit and of exploited labour grows. The falling rate is thus the expression, peculiar to capitalism, of rising productivity of labour.

15. XIV Counteracting Causes 25 min 11

    Counteracting causes explain why the fall is only a tendency: more intense exploitation of labour, wages pushed below the value of labour-power, cheapening of the elements of constant capital, relative overpopulation (cheap labour keeping backward industries alive), foreign trade, and the growth of share capital earning only interest.

16. XV Unraveling the Internal Contradictions of the Law 1 h 17 min 12

    The law’s contradictions unfold as crises. Production of surplus-value and its realisation in sales are separate; the drive to expand production clashes with the limited consuming power of a society of low-paid workers. A falling rate of profit spurs concentration and speculation; capital becomes superfluous alongside superfluous population. “The real barrier of capitalist production is capital itself.” Crises destroy capital and restore profitability temporarily, at ever greater scale.

17. XVI Commercial Capital 39 min 2

    Merchant’s capital (commercial capital) is the part of industrial capital that, in the form of commodity-capital, is turned over to a special class of capitalists who buy in order to sell. It produces no value or surplus-value, but by shortening the time of circulation it raises the industrial capitalist’s rate of profit.

18. XVII Commercial Profit 1 h 5 min 4

    Commercial capital nonetheless shares in the average rate of profit: the industrial capitalist sells to the merchant below the price of production, so that the merchant receives part of the surplus-value produced in industry. Commercial workers produce no surplus-value but, by unpaid labour, enable their employer to appropriate it; Marx and Engels note how their wages are falling with the spread of education and their numbers.

19. XVIII The Turn-Over of Merchant’s Capital. The Prices 37 min 2

    The turn-over of merchant’s capital differs from that of industrial capital; a faster turn-over lowers the commercial profit added to each commodity rather than raising the rate of profit. The appearance that prices are determined by the merchant’s mark-up is examined and rejected.

20. XIX Financial Capital 19 min 3

    Money-dealing capital: firms specialising in the technical operations of money (payments, safekeeping, exchange of currencies, bookkeeping). Like merchant’s capital it creates no value, and its profit is a deduction from surplus-value.

21. XX Historical Data Concerning Merchants’ Capital 37 min 13

    A historical sketch of merchant’s capital. Before capitalism it existed independently, as the carrier of trade between communities, and the richer the merchant class, the less developed production often was (Venice, Holland). Under capitalism it becomes subordinate to industrial capital. Marx distinguishes two transitions to capitalism: the producer becoming merchant and capitalist (“the really revolutionary way”) and the merchant taking control of production.

22. XXI The Interest-Bearing Capital 58 min 9

    Money lent as capital is itself a commodity of a special kind: its use-value is the power to produce average profit. Interest is the part of that profit the borrower pays the lender. Marx examines the form of the transaction (money given away and returned with an increment) and the confused ideas of Proudhon and others about it.

23. XXII Division of Profit. Rate of Interest. Natural Rate of Interest 30 min 12

    The rate of interest is determined by the supply of and demand for loan capital; there is no “natural” rate of interest as there is an average rate of profit. Its upper limit is the profit itself. Marx traces how the rate moves over the industrial cycle, low in prosperity, highest in crisis.

24. XXIII Interest and Profit of Enterprise 1 h 1 min 13

    Gross profit divides into interest and profit of enterprise, and the division hardens into a qualitative distinction: interest appears as the fruit of capital as property, profit of enterprise as the wages of superintendence of the active capitalist. Marx shows that the work of management is partly the coordination any large-scale labour needs and partly the supervision of exploitation; joint-stock companies and co-operative factories separate it from ownership and so show the capitalist superfluous.

25. XXIV Externalisation of the Relations of Capital in the Form of Interest-Bearing Capital 25 min 6

    In interest-bearing capital the relation of capital appears in its most fetishised form: money that breeds money, M–M′, value that expands itself, without any process of production in between. Marx mocks Richard Price’s calculations of compound interest that would pay off the national debt.

26. XXV Credit and Fictitious Capital 54 min 3

    The start of Marx’s analysis of credit, largely assembled by Engels from notes and quotations. Commercial credit (bills of exchange between producers and merchants) and bank credit. Banks act as middlemen in money capital, concentrating idle money and lending it. Extensive quotations from British parliamentary inquiries into the crisis of 1847.

27. XXVI Accumulation of Money-Capital. Its Influence on the Rate of Interest 1 h 7 min 3

    Accumulation of money-capital and its influence on the rate of interest, mostly a critique of Lord Overstone and the “currency school” from the evidence given to the 1857 committee on the Bank Acts: Overstone confuses money, capital and loan capital.

28. XXVII The Role of Credit in Capitalist Production 17 min 13

    The role of credit in capitalist production. Credit equalises the rate of profit, cuts circulation costs, and creates joint-stock companies, in which capital becomes social capital and the capitalist a mere manager of other people’s money: “the abolition of capital as private property within the boundaries of capitalist production itself.” Credit accelerates both the growth of productive forces and crises and swindling. Co-operative factories are “the first beginnings of the new” within the old form.

29. XXVIII The Medium of Circulation (Currency) and Capital. Tooke’s and Fullarton’s Conception 50 min 4

    A critique of Thomas Tooke and John Fullarton’s distinction between currency and capital. Marx argues that the difference between money as means of circulation of revenue and as means of circulation of capital is a distinction of function, which the banking school confused with a distinction between kinds of money.

30. XXIX The Composition of Banking Capital 32 min 7

    What bank capital consists of: cash, bills, securities, government bonds and shares. Much of it is fictitious capital, capitalised claims to future income whose price is set by the rate of interest, not by any real capital. Even the bank’s own capital is largely made up of the deposits of others.

31. XXX Money-Capital and Actual Capital, I 50 min 4

    The first of three chapters on how the accumulation of money-capital relates to the accumulation of real capital. Marx considers public debt and shares as fictitious capital and analyses the industrial cycle: in prosperity, credit expands; in crisis, the demand for means of payment turns into a demand for cash, and everything rushes from credit to money.

32. XXXI Money-Capital and Actual Capital. II. (Continued.) 31 min

    Continuation: how money becomes loan capital, and how the accumulation of loan capital can grow independently of real accumulation, through revenue being saved, the release of capital in crisis, and the growth of bank deposits.

33. XXXII Money-Capital and Actual Capital. III. (Concluded.) 43 min 2

    Conclusion of the three chapters. A plethora of money-capital may coincide with stagnation of real accumulation; the low rate of interest after a crisis reflects idle capital, not abundance of productive wealth.

34. XXXIII The Currency Under the Credit System 1 h 18 min 3

    The currency under the credit system, built from Marx’s comments on the evidence of bankers before parliamentary committees. The quantity of notes in circulation is determined by the needs of trade, not by the bank. The rate of interest, not the note issue, is the bank’s main instrument.

35. XXXIV The Currency Principle and the English Bank Laws of 1844 55 min 4

    A critique of the currency principle and Peel’s Bank Act of 1844, which tied the Bank of England’s note issue to its gold reserve. In the crises of 1847 and 1857 the Act had to be suspended: it made the panics worse by restricting credit precisely when it was most needed.

36. XXXV Precious Metals and Rates of Exchange 1 h 21 min 9

    Precious metals and rates of exchange: the movement of the bank’s gold reserve, the role of drains of gold to the east (India and China) and the rates of exchange as barometers of the international movement of money.

37. XXXVI Precapitalist Conditions 57 min 9

    Usurer’s capital as an older form of interest-bearing capital that preyed on small producers and spendthrift lords without changing the mode of production. Modern credit arose as a reaction against usury, subordinating interest to industrial capital. The banking system gives society “the form of universal bookkeeping and of a distribution of products on a social scale, but only the form.” Marx criticises the Saint-Simonian and Proudhonist hopes for socialism through credit.

38. XXXVII Preliminaries 1 h 9 min 12

    The start of Marx’s theory of ground-rent. He studies the capitalist form of landed property, in which an agricultural capitalist rents land from a landlord and employs wage labourers, and ground-rent is the part of surplus-value paid to the landlord for the use of land. He distinguishes rent from interest on capital sunk in the land and explains the price of land as capitalised rent.

39. XXXVIII Differential Rent. General Remarks 25 min 3

    Differential rent illustrated by a waterfall. A factory using a natural waterfall produces more cheaply than steam-powered ones; the surplus profit arises from a monopolisable natural condition and goes to the owner of the waterfall as rent. Rent does not cause the difference in productivity; it is the result of it.

40. XXXIX The First Form of Differential Rent. (Differential Rent I.) 1 h 5 min 5

    Differential rent I: rent arising from different fertility and location of soils of equal size with equal investments. With tables of four classes of soil, Marx shows that the worst land under cultivation regulates the price of production, and rent on better land is the difference. Against Ricardo, he shows that cultivation need not move from better to worse land; it can move the other way.

41. XL The Second Form of Differential Rent. (Differential Rent II.) 34 min

    Differential rent II: rent arising from successive investments of capital on the same land with differing productivity. It rests on differential rent I and becomes the more important form as agriculture becomes intensive.

42. XLI Differential Rent II.—First Case: Constant Price of Production 21 min 1

    Differential rent II when the price of production stays constant: the cases where additional investments are equally, less or more productive. Largely calculations.

43. XLII Differential Rent II.—Second Case: Falling Price of Production 39 min 2

    Differential rent II when the price of production falls: additional investments are more productive, and rents may rise even while prices fall. Tables revised by Engels.

44. XLIII Differential Rent No. II.—Third Case: Rising Price of Production 59 min 4

    Differential rent II when the price of production rises. Tables work through the variants. The conclusion: with capital invested more intensively, total rent can rise considerably, which is one reason landed property kept its economic power.

45. XLIV Differential Rent Even upon the Worst Soil Under Cultivation 27 min

    Even the worst soil under cultivation can yield a differential rent, when successive investments on it are of differing productivity and the price is regulated by the least productive investment.

46. XLV Absolute Ground-Rent 1 h 13 min 5

    Absolute ground-rent: even the worst land pays rent, because landed property is a monopoly barring capital from free access to the land. If agricultural capital has a lower organic composition than the social average, the value of agricultural products is above their price of production, and landed property captures part of the difference. Marx’s answer to Ricardo, who recognised only differential rent.

47. XLVI Building Lot Rent. Mining Rent. Price of Land 24 min 9

    Rent on building land and mines, where location and monopoly dominate and the landowner profits passively from social development: “poverty is for house rent a more lucrative source than the mines of Potosi ever were for Spain.” The price of land as capitalised rent, and how it rises with a falling rate of interest.

48. XLVII Genesis of Capitalist Ground-Rent 1 h 33 min 10

    The historical genesis of capitalist ground-rent from earlier forms: labour rent (corvée), rent in kind and money rent, then métayage and peasant proprietorship. Under labour rent surplus labour is visible; with money rent it becomes a purely monetary relation and prepares the capitalist tenant farmer. Small peasant property is a transitional form, doomed by its low productivity.

49. XLVIII The Trinitarian Formula 54 min 13

    The “trinity formula”: Capital–Interest, Land–Rent, Labour–Wages, in which vulgar economy presents each “factor of production” as the natural source of its own revenue. Marx shows how this hides the origin of all three revenues in the labour of the working class and turns social relations into properties of things. A famous passage on the “realm of necessity” and the “realm of freedom”, which begins with the shortening of the working day.

50. XLIX A Contribution to the Analysis of the Process of Production 54 min 6

    On the analysis of the process of production: how the total social product breaks down, not only into revenues (wages, profit, rent) but also into the replacement of constant capital. Against Adam Smith’s dogma that the price of every commodity resolves entirely into revenues.

51. L The Semblance of Competition 1 h 13 min 3

    The illusions created by competition: because wages, profit and rent appear as independent magnitudes that are added together to form prices, the capitalist and the economist see value as their sum rather than their source. Marx criticises the view that prices are composed of independently determined wages, profit and rent.

52. LI Conditions of Distribution and Production 20 min 3

    Relations of distribution are only the other side of relations of production, both historically specific. Capitalism is distinguished by the production of commodities as products of capital and by the production of surplus-value as its aim.

53. LII The Classes 3 min 6

    The unfinished last chapter. Marx names wage labourers, capitalists and landlords as the three great classes of modern society and asks what makes a class. He notes that the stratification is never pure, with intermediate layers everywhere, and that identity of revenue cannot be the criterion, since it would split society into endless groups. The manuscript breaks off.