VI

Karl Marx pronounces the doom of his own system in the following passage:—

A part from modifications introduced by the system of credit, by the chicaneries in which capitalists indulge with regard to one another, and by the advantages derived by them by the selection of the most favourable markets, while the degree in which labour is exploited by them may be the same, the rate of profit may be very different according as (a) their raw material is purchased more or less cheaply, or with more or less skill and judgment; (b) their plant is more or less productive, effective, and costly; (c) the general organisation of the various stages in the process of production is more or less complete; and (d) the waste of raw material is avoided; and (e) the management and superintendence are more or less simple and effective. In short, given the surplus-value for a particular amount of variable capital, it depends to a great extent upon the individual competence either of the capitalist himself or of his overseers and clerks, whether this surplus-value is to be expressed in a greater or a smaller rate of profit, and consequently whether his actual profit will be greater or less. The same surplus-value of £1,000, the produce of £1,000 spent in wages, may have required a constant capital of £9,000 in undertaking A and of £11,000 in undertaking B. In the case of A the profit is 1000\10000 10 per cent. In the case of B it is 1000\12000 8 1\3 per cent.

Such a difference in the representative value of the same quantity of surplus-value may be entirely due to differences in the capacity of those who direct the two undertakings.

Engels qualifies the illustration in which the rate of profit is given as 1,307 9-13 per cent. with the observation that this rate of profit is abnormal and is only to be explained by a temporal and exceptional combination of circumstances (exceptionally low prices of raw and exceptionally high prices of manufactured cotton) which undoubtedly cannot have obtained throughout a whole year. A few lines lower down, he confuses the expressions “profit” and “surplus-value,” and remarks that such a rate of profit is not uncommon in periods of great prosperity, such as have not, however, been experienced for a considerable time.

These two qualifications, it would seem, upset the whole calculation. If the prices of raw cotton as a raw material, and of manufactured cotton as a product play a part in the increase or decrease of profits, it follows that profit is not simply the product of surplus-labour, and the rate of 1,307 per cent. disappears with the appearance of elements in the value of the product other than the element of surplus-labour.

Marx recognises over and over again that the difference in the profits of various industries depend upon the rapidity with which the capital employed in them is turned over. Accordingly the profit of an undertaking does not depend exclusively upon unpaid labour. It is, therefore, not enough for a capitalist to bring a large number of workmen together, to pay them small wages, and to impose severe and protracted labour upon them in order to obtain surplus-value in proportion to the number employed at a minimum rate of wages and a maximum of industry and duration of labour. Marx himself recognises this by saying that a difference in the same quantity of surplus-value may be entirely due to differences in the capacity of those who direct different undertakings.

Hence follows the involuntary conclusion to his theory to which he is forced and which he admits in his own words: “The profits of an undertaking are independent of the quantity of capital employed in it and are not in proportion to the quantity of unpaid labour.”

Profit is derived from the management of the undertaking.