第5章

Theorganiccompositionofcapitaldependsatanygiventimeontwocircumstances:first，onthetechnicalrelationoflabourpoweremployedtothemassofthemeansofproductionemployed；secondly，onthepriceofthesemeansofproduction。Thiscomposition，aswehaveseen，mustbeexaminedonthebasisofpercentageratios。Weexpresstheorganiccompositionofacertaincapitalconsisting4/5ofconstantand1/5ofvariablecapital，bytheformula80c+20v。Itisfurthermoreassumedinthiscomparisonthattherateofsurplus-valueisunchangeable。Letitbeanyratepickedatrandom；say，100%。Thecapitalof80c+20vthenproducesasurplus-valueof20s，andthisyieldsarateofprofitof20%onthetotalcapital。Themagnitudeoftheactualvalueofitsproductdependsonthemagnitudeofthefixedpartoftheconstantcapital，andontheportionwhichpassesfromitthroughwearandtearintotheproduct。Butsincethiscircumstancehasabsolutelynobearingontherateofprofit，andhence，inthepresentanalysis，weshallassume，forthesakeofsimplicity，thattheconstantcapitaliseverywhereuniformlyandentirelytransferredtotheannualproductofthecapitals。Itisfurtherassumedthatthecapitalsinthedifferentspheresofproductionannuallyrealisethesamequantitiesofsurplus-valueproportionatetothemagnitudeoftheirvariableparts。Forthepresent，therefore，wedisregardthedifferencewhichmaybeproducedinthisrespectbyvariationsinthedurationofturnovers。Thispointwillbediscussedlater。

Letustakefivedifferentspheresofproduction，andletthecapitalineachhaveadifferentorganiccompositionasfollows:

CapitalsRateofSurplus-ValueSurplus-

ValueValueofProductRateofProfitI。80c+20v100%2012020%

II。70c+30v100%3013030%

III。60c+40v100%4014040%

IV。85c+15v100%1511515%

V。95c+5v100%51055%Here，indifferentspheresofproductionwiththesamedegreeofexploitation，wefindconsiderablydifferentratesofprofitcorrespondingtothedifferentorganiccompositionofthesecapitals。

Thesumtotalofthecapitalsinvestedinthesefivespheresofproduction=500；

thesumtotalofthesurplus-valueproducedbythem=110；theaggregatevalueofthecommoditiesproducedbythem=610。Ifweconsiderthe500asasinglecapital，andcapitalsItoVmerelyasitscomponentparts(as，say，differentdepartmentsofacottonmill，whichhasdifferentratiosofconstanttovariablecapitalinitscarding，preparatoryspinning，spinning，andweavingshops，andinwhichtheaverageratioforthefactoryasawholehasstilltobecalculated)，themeancompositionofthiscapitalof500would=390c+110v，or，inpercent，=78c+22v。Shouldeachofthecapitalsof100beregardedasone-fifthofthetotalcapital，itscompositionwouldequalthisaverageof78c+22v；forevery100therewouldbeanaveragesurplus-valueof22；thus，theaveragerateofprofitwould=22%，and，finally，thepriceofeveryfifthofthetotalproductproducedbythe500would=122。

Theproductofeachfifthoftheadvancedtotalcapitalwouldthenhavetobesoldat122。

Buttoavoidentirelyerroneousconclusionsitmustnotbeassumedthatallcost-prices=100。

With80c+20vandarateofsurplus-value=100%，thetotalvalueofcommoditiesproducedbycapitalI=100wouldbe80c+20v+20s=120，providedtheentireconstantcapitalwentintotheannualproduct。Now，thismayundercertaincircumstancesbethecaseinsomespheresofproduction。Buthardlyincaseswheretheproportionofc:v=4:1。Wemust，therefore，rememberincomparingthevaluesproducedbyeach100ofthedifferentcapitals，thattheywilldifferinaccordancewiththedifferentcompositionofcastoitsfixedandcirculatingparts，andthat，inturn，thefixedportionsofeachofthedifferentcapitalsdepreciateslowlyorrapidlyasthecasemaybe，thustransferringunequalquantitiesoftheirvaluetotheproductinequalperiodsoftime。Butthisisimmaterialtotherateofprofit。

Nomatterwhetherthe80cgiveupavalueof80，or50，or5，totheannualproduct，andtheannualproductconsequently=80c+20v+20s=120，or50c+20v+20s=90，or5v+20v+20s=45；inallthesecasestheredundanceof-theproduct’svalueoveritscost-price=20，andincalculatingtherateofprofitthese20arerelatedtothecapitalof100inallofthem。TherateofprofitofcapitalI，therefore，is20%ineverycase。Tomakethisstillplainer，weletdifferentportionsofconstantcapitalgointothevalueoftheproductofthesamefivecapitalsinthefollowingtable:

CapitalsRateofSurplus-ValueSurplus-

ValueRateofProfitUsedupcValueofcommoditiesCost-

PriceI。80c+20v100%2020%509070

II。70c+30v100%3030%5111181

III。60c+40v100%4040%5113191

IV。85c+15v100%1515%407055

V。95c+5v100%55%102015

390c+110v——110110%——Total78c+22v——2222%——AverageIfwenowagainconsidercapitalsItoVasasingletotalcapital，weshallseethat，inthiscaseaswell，thecompositionofthesumsofthesefivecapitals=500=390c+110v，sothatwegetthesameaveragecomposition=78c+22v，and，similarly，theaveragesurplus-valueremains22。Ifwedividethissurplus-valueuniformlyamongcapitalsItoV，wegetthefollowingcommodity-prices:

CapitalsSurplus-

ValueValueofCommoditiesCost-PriceofCommoditiesPriceofCommoditiesRateofProfitDeviationofPricefromValueI。80c+20v2090709222%+2

II。70c+30v301118110322%-8

III。60c+40v401319111322%-18

IV。85c+15v1570557722%+7

V。95c+5v520153722%+17Takentogether，thecommoditiesaresoldat2+7+17=26above，and8+18=26

belowtheirvalue，sothatthedeviationsofpricefromvaluebalanceoutoneanotherthroughtheuniformdistributionofsurplus-value，orthroughadditionoftheaverageprofitof22per100unitsofadvancedcapitaltotherespectivecost-pricesofthecommoditiesItoV。Oneportionofthecommoditiesissoldaboveitsvalueinthesameproportioninwhichtheotherissoldbelowit。AnditisonlythesaleofthecommoditiesatsuchpricesthatenablestherateofprofitforcapitalsItoVtobeuniformly22%，regardlessoftheirdifferentorganiccomposition。Thepriceswhichobtainastheaverageofthevariousratesofprofitinthedifferentspheresofproductionaddedtithecost-pricesofthedifferentspheresofproduction，constitutethepricesofproduction。Theyhaveastheirprerequisitetheexistenceofageneralrateofprofit，andthis，again，presupposesthattheratesofprofitineveryindividualsphereofproductiontakenbyitselfhavepreviouslybeenreducedtojustasmanyaveragerates。

Theseparticularratesofprofit=s/cineverysphereofproduction，andmust，asoccursinPartIofthisbook，bededucedoutofthevaluesofthecommodities。Withoutsuchdeductionthegeneralrateofprofit(andconsequentlythepriceofproductionofcommodities)remainsavagueandsenselessconception。Hence，thepriceofproductionofacommodityisequaltoitscost-priceplustheprofit，allottedtoitinpercent，inaccordancewiththegeneralrateofprofit，or，inotherwords，toitscost-priceplustheaverageprofit。

Owingtothedifferentorganiccompositionsofcapitalsinvestedindifferentlinesofproduction，and，hence，owingtothecircumstancethat——dependingonthedifferentpercentagewhichthevariablepartmakesupinatotalcapitalofagivenmagnitude——capitalsofequalmagnitudeputintomotionverydifferentquantitiesoflabour，theyalsoappropriateverydifferentquantitiesofsurplus-labourorproduceverydifferentquantitiesofsurplus-value。Accordingly，theratesofprofitprevailinginthevariousbranchesofproductionareoriginallyverydifferent。Thesedifferentratesofprofitareequalizedbycompetitiontoasinglegeneralrateofprofit，whichistheaverageofallthesedifferentratesofprofit。Theprofitaccruinginaccordancewiththisgeneralrateofprofittoanycapitalofagivenmagnitude，whateveritsorganiccomposition，iscalledtheaverageprofit。Thepriceofacommodity，whichisequaltoitscost-priceplustheshareoftheannualaverageprofitonthetotalcapitalinvested(notmerelyconsumed)initsproductionthatfallstoitinaccordancewiththeconditionsofturnover，iscalleditspriceofproduction。Take，forexample，acapitalof500，ofwhich100isfixedcapital，andlet10%ofthiswearoutduringoneturnoverofthecirculatingcapitalof400。Lettheaverageprofitfortheperiodofturnoverbe10%。Inthatcasethecost-priceoftheproductcreatedduringthisturnoverwillbe10cforwearplus400(c+v)circulatingcapital=410，anditspriceofproductionwillbe410cost-priceplus(10%profiton500)50=460。

Thus，althoughinsellingtheircommoditiesthecapitalistsofthevariousspheresofproductionrecoverthevalueofthecapitalconsumedintheirproduction，theydonotsecurethesurplus-value，andconsequentlytheprofit，createdintheirownspherebytheproductionofthesecommodities。

Whattheysecureisonlyasmuchsurplus-value，andhenceprofit，asfalls，whenuniformlydistributed，totheshareofeveryaliquotpartofthetotalsocialcapitalfromthetotalsocialsurplus-value，orprofit，producedinagiventimebythesocialcapitalinallspheresofproduction。Every100ofaninvestedcapital，whateveritscomposition，drawsasmuchprofitinayear，oranyotherperiodoftime，asfallstotheshareofevery100，theNthpartofthetotalcapital，duringthesameperiod。Sofarasprofitsareconcerned，thevariouscapitalistsarejustsomanystockholdersinastockcompanyinwhichthesharesofprofitareuniformlydividedper100，sothatprofitsdifferinthecaseoftheindividualcapitalistsonlyinaccordancewiththeamountofcapitalinvestedbyeachintheaggregateenterprise，i。e。，accordingtohisinvestmentinsocialproductionasawhole，accordingtothenumberofhisshares。Therefore，theportionofthepriceofcommoditieswhichreplacestheelementsofcapitalconsumedintheproductionofthesecommodities，theportion，therefore，whichwillhavetobeusedtobuybacktheseconsumedcapital-values，i。e。，theircost-price，dependsentirelyontheoutlayofcapitalwithintherespectivespheresofproduction。Buttheotherelementofthepriceofcommodities，theprofitaddedtothiscost-price，doesnotdependontheamountofprofitproducedinagivensphereofproductionbyagivencapitalinagivenperiodoftime。Itdependsonthemassofprofitwhichfallsasanaverageforanygivenperiodtoeachindividualcapitalasanaliquotpartofthetotalsocialcapitalinvestedinsocialproduction。

Whenacapitalistsellshiscommoditiesattheirpriceofproduction，therefore，herecoversmoneyinproportiontothevalueofthecapitalconsumedintheirproductionandsecuresprofitinproportiontothisadvancedcapitalasthealiquotpartinthetotalsocialcapital。Hiscost-pricesarespecific。Buttheprofitaddedtothemisindependentofhisparticularsphereofproduction，beingasimpleaverageper100unitsofinvestedcapital。

LetusassumethatthefivedifferentinvestmentsItoVoftheforegoingillustrationbelongtooneman。Thequantityofvariableandconstantcapitalconsumedper100oftheinvestedcapitalineachofthedepartmentsItoVintheproductionofcommoditiesItoVwould，needlesstosay，makeupapartoftheirprice，sinceatleastthispriceisrequiredtorecovertheadvancedandconsumedportionsofthecapital。Thesecost-priceswouldthereforebedifferentforeachclassofthecommoditiesItoV，andwouldassuchbesetdifferentlybytheowner。Butasregardsthedifferentquantitiesofsurplus-value，orprofit，producedbyItoV，theymighteasilyberegardedbythecapitalistasprofitonhisadvancedaggregatecapital，sothateach100unitswouldgettheirdefinitealiquotpart。Hence，thecost-pricesofthecommoditiesproducedinthevariousdepartmentsItoVwouldbedifferent；butthatportionoftheirsellingpricederivedfromtheprofitaddedper100capitalwouldbethesameforallthesecommodities。TheaggregatepriceofthecommoditiesItoVwouldthereforeequaltheiraggregatevalue，i。e。，thesumofthecost-pricesItoVplusthesumofthesurplus-values，orprofits，producedinItoV。Itwouldhenceactuallybethemoney-expressionofthetotalquantityofpastandnewlyappliedlabourincorporatedincommoditiesItoV。Andinthesamewaythesumofthepricesofproductionofallcommoditiesproducedinsociety——thetotalityofallbranchesofproduction——isequaltothesumoftheirvalues。

Thisstatementseemstoconflictwiththefactthatundercapitalistproductiontheelementsofproductivecapitalare，asarule，boughtonthemarket，andthatforthisreasontheirpricesincludeprofitwhichhasalreadybeenrealised，hence，includethepriceofproductionoftherespectivebranchofindustrytogetherwiththeprofitcontainedinit，sothattheprofitofonebranchofindustrygoesintothecost-priceofanother。Butifweplacethesumofthecost-pricesofthecommoditiesofanentirecountryononeside，andthesumofitssurplus-values，orprofits，ontheother，thecalculationmustevidentlyberight。Forinstance，takeacertaincommodityA……Itscost-pricemaycontaintheprofitsofB，C，D，etc。，justasthecost-pricesofB，C，D，etc。，maycontaintheprofitsofA。Now，aswemakeourcalculationtheprofitofAwillnotbeincludedinitscost-price，norwilltheprofitsofB，C，D，etc。，beincludedintheirs。Nobodyeverincludeshisownprofitinhiscost-price。

Ifthereare，therefore，nspheresofproduction，andifeachmakesaprofitamountingtop，thentheiraggregatecost-price=k-np。Consideringthecalculationasawholeweseethatsincetheprofitsofonesphereofproductionpassintothecost-priceofanother，theyarethereforeincludedinthecalculationasconstituentsofthetotalpriceoftheend-product，andsocannotappearasecondtimeontheprofitside。Ifanydoappearonthisside，however，thenonlybecausethecommodityinquestionisitselfanultimateproduct，whosepriceofproductiondoesnotpassintothecost-priceofsomeothercommodity。

Ifthecost-priceofacommodityincludesasum=p，whichstandsfortheprofitsoftheproducersofthemeansofproduction，andifaprofit=p1

isaddedtothiscost-price，theaggregateprofitP=P+P1。Theaggregatecost-priceofthecommodity，consideredwithouttheprofitportions，isthenitsowncost-priceminusP。Letthiscost-pricebek。Then，obviously，k+p=k+p+p1。Indealingwithsurplus-values，wehaveseeninBookIthattheproductofeverycapitalmaybesotreated，asthoughapartofitreplacesonlycapital，whiletheotherpartrepresentsonlysurplus-value。

Inapplyingthisapproachtotheaggregateproductofsociety，wemustmakesomerectifications。Lookinguponsocietyasawhole，theprofitcontainedin，say，thepriceofflaxcannotappeartwice——notbothasaportionofthelinenpriceandastheprofitoftheflax。

Thereisnodifferencebetweensurplus-valueandprofit，aslongas，e。g。，A’ssurplus-valuepassesintoB’sconstantcapital。Itis，afterall，quiteimmaterialtothevalueofthecommodities，whetherthelabourcontainedinthemispaidorunpaid。ThismerelyshowsthatBpaysforA’s’ssurplus-value。A’ssurplus-valuecannotbeenteredtwiceinthetotalcalculation。

Butthedifferenceisthis:Asidefromthefactthatthepriceofaparticularproduct，letussaythatofcapitalB，differsfromitsvaluebecausethesurplus-valuerealisedinBmaybegreaterorsmallerthantheprofitaddedtothepriceoftheproductsofB，thesamecircumstanceappliesalsotothosecommoditieswhichformtheconstantpartofcapitalB，andindirectlyalsoitsvariablepart，asthelabourers’necessitiesoflife。Sofarastheconstantportionisconcerned，itisitselfequaltothecost-priceplusthesurplus-value，herethereforeequaltocost-priceplusprofit，andthisprofitmayagainbegreaterorsmallerthanthesurplus-valueforwhichitstands。Asforthevariablecapital，theaveragedailywageisindeedalwaysequaltothevalueproducedinthenumberofhoursthelabourermustworktoproducethenecessitiesoflife。Butthisnumberofhoursisinitsturnobscuredbythedeviationofthepricesofproductionofthenecessitiesoflifefromtheirvalues。However，thisalwaysresolvesitselftoonecommodityreceivingtoolittleofthesurplus-valuewhileanotherreceivestoomuch，sothatthedeviationsfromthevaluewhichareembodiedinthepricesofproductioncompensateoneanother。Undercapitalistproduction，thegenerallawactsastheprevailingtendencyonlyinaverycomplicatedandapproximatemanner，asaneverascertainableaverageofceaselessfluctuations。

Sincethegeneralrateofprofitisformedbytakingtheaverageofthevariousratesofprofitforeach100ofcapitalinvestedinadefiniteperiod，e。g。，ayear，itfollowsthatinitthedifferencebroughtaboutbydifferentperiodsofturnoverofdifferentcapitalsisalsoeffaced。

Butthesedifferenceshaveadecisivebearingonthedifferentratesofprofitinthevariousspheresofproductionwhoseaverageformsthegeneralrateofprofit。

Intheprecedingillustrationconcerningtheformationoftheaveragerateofprofitweassumedeachcapitalineachsphereofproduction=100，andwedidsotoshowthedifferenceintheratesofprofitinpercent，andthusalsothedifferenceinthevaluesofcommoditiesproducedbyequalamountsofcapital。Butitgoeswithoutsayingthattheactualamountsofsurplus-valueproducedineachsphereofproductiondependonthemagnitudeoftheinvestedcapitals，sincethecompositionofcapitalisgivenineachsphereofproduction。Yettheactualrateofprofitinanyparticularsphereofproductionisnotaffectedbythefactthatthecapitalinvestedis100，ormtimes100，orxmtimes100。Therateofprofitremains10%，whetherthetotalprofitis10:100，or1，000:10，000。

However，sincetheratesofprofitdifferinthevariousspheresofproduction，withverymuchdifferentquantitiesofsurplus-value，orprofit，beingproducedinthem，dependingontheproportionofthevariabletothetotalcapital，itisevidentthattheaverageprofitper100ofthesocialcapital，andhencetheaverage，orgeneral，rateofprofit，willdifferconsiderablyinaccordancewiththerespectivemagnitudesofthecapitalsinvestedinthevariousspheres。LetustakefourcapitalsA，B，C，D。Lettherateofsurplus-valueforall=100%。Letthevariablecapitalforeach100ofthetotalbe25inA，40inB，15inC，and10inD。Theneach100ofthetotalcapitalwouldyieldasurplus-value，orprofit，of25inA，40inB，15inC，and10inD。Thiswouldtotal90，andifthesefourcapitalsareofthesamemagnitude，theaveragerateofprofitwouldthenbe90/4or221/2%。

Suppose，however，thetotalcapitalsareasfollows:A=200，B=300，C=1，000，D=4，000。Theprofitsproducedwouldthenrespectively=50，120，150，and400。Thismakesaprofitof720，andanaveragerateofprofitof131/11%

for5，500，thesumofthefourcapitals。

ThemassesofthetotalvalueproduceddifferinaccordancewiththemagnitudesofthetotalcapitalsinvestedinA，B，C，D，respectively。

Theformationoftheaveragerateofprofitis，therefore，notmerelyamatterofobtainingthesimpleaverageofthedifferentratesofprofitinthevariousspheresofproduction，butratheroneoftherelativeweightwhichthesedifferentratesofprofithaveinformingthisaverage。This，however，dependsontherelativemagnitudeofthecapitalinvestedineachparticularsphere，oronthealiquotpartwhichthecapitalinvestedineachparticularsphereformsintheaggregatesocialcapital。Therewillnaturallybeaverygreatdifference，dependingonwhetheragreaterorsmallerpartofthetotalcapitalproducesahigherorlowerrateofprofit。

Andthis，again，dependsonhowmuchcapitalisinvestedinspheres，inwhichthevariablecapitalisrelativelysmallorlargecomparedtothetotalcapital。Itisjustliketheaverageinterestobtainedbyausurerwholendsvariousquantitiesofcapitalatdifferentinterestrates；forinstance，at4，5，6，7%，etc。Theaverageratewilldependentirelyonhowmuchofhiscapitalhehasloanedoutateachofthedifferentratesofinterest。

Thegeneralrateofprofitis，therefore，determinedbytwofactors:

1)Theorganiccompositionofthecapitalsinthedifferentspheresofproduction，andthus，thedifferentratesofprofitintheindividualspheres。

2)Thedistributionofthetotalsocialcapitalinthesedifferentspheres，andthus，therelativemagnitudeofthecapitalinvestedineachparticularsphereatthespecificrateofprofitprevailinginit；i。e。，therelativeshareofthetotalsocialcapitalabsorbedbyeachindividualsphereofproduction。

InBooksIandIIwedealtonlywiththevalueofcommodities。

Ontheonehand，thecost-pricehasnowbeensingledoutasapartofthisvalue，and，ontheother，thepriceofproductionofcommoditieshasbeendevelopedasitsconvertedform。

Supposethecompositionoftheaveragesocialcapitalis80c+20vandtheannualrateofsurplus-value，s’，is100%。Inthatcasetheaverageannualprofitforacapitalof100=20，andthegeneralannualrateofprofit=20%。

Whateverthecost-price，k，ofthecommoditiesannuallyproducedbyacapitalof100，theirpriceofproductionwouldthenbek+20。Inthosespheresofproductioninwhichthecompositionofcapitalwould=(80-x)c+(20+x)v，theactuallyproducedsurplus-value，ortheannualprofitproducedinthatparticularsphere，wouldbe20+x，thatis，greaterthan20，andthevalueoftheproducedcommodities=k+20+x，thatis，greaterthank+20，orgreaterthantheirpriceofproduction。Inthosespheres，inwhichthecompositionofthecapital=(80+x)c+(20-x)v，theannuallyproducedsurplus-value，orprofit，would=20-x，orlessthan20，andconsequentlythevalueofthecommoditiesk+20-xlessthanthepriceofproduction，which=k+20。Asidefrompossibledifferencesintheperiodsofturnover，thepriceofproductionofthecommoditieswouldthenequaltheirvalueonlyinspheres，inwhichthecompositionwouldhappentobe80c+20v。

Thespecificdevelopmentofthesocialproductivityoflabourineachparticularsphereofproductionvariesindegree，higherorlower，dependingonhowlargeaquantityofmeansofproductionaresetinmotionbyadefinitequantityoflabour，henceinagivenworking-daybyadefinitenumberoflabourers，and，consequently，onhowsmallaquantityoflabourisrequiredforagivenquantityofmeansofproduction。Suchcapitalsascontainalargerpercentageofconstantandasmallerpercentageofvariablecapitalthantheaveragesocialcapitalare，therefore，calledcapitalsofhighercomposition，and，conversely，thosecapitalsinwhichtheconstantisrelativelysmaller，andthevariablerelativelygreaterthanintheaveragesocialcapital，arecalledcapitalsoflowercomposition。Finally，wecallthosecapitalswhosecompositioncoincideswiththeaverage，capitalsofaveragecomposition。Shouldtheaveragesocialcapitalbecomposedinpercentof80c+20v，thenacapitalof90c+1Ovishigher，andacapitalof70c++30vlowerthanthesocialaverage。Generallyspeaking，ifthecompositionoftheaveragesocialcapital=mc+nv，inwhichmandnareconstantmagnitudesandm+n=100，theformula(m+x)c+(n-x)vrepresentsthehighercomposition，and(m-x)c++(n+x)vthelowercompositionofanindividualcapitalorgroupofcapitals。Thewayinwhichthesecapitalsperformtheirfunctionsafterestablishmentofanaveragerateofprofitandassumingoneturnoverperyear，isshowninthefollowingtabulation，inwhichIrepresentstheaveragecompositionwithanaveragerateofprofitof20%。

I)80v+20v+20s。Rateofprofit=20%。

Priceofproduct=120。Value=120。

II)90c+10v+10s。Rateofprofit=20%。

Priceofproduct=120。Value=110。

III)70c+30v+30s。Rateofprofit=20%。

Priceofproduct=120。Value=130。ThevalueofthecommoditiesproducedbycapitalIIwould，therefore，besmallerthantheirpriceofproduction，thepriceofproductionofthecommoditiesofIIIsmallerthantheirvalue，andonlyinthecaseofcapitalIinbranchesofproductioninwhichthecompositionhappenstocoincidewiththesocialaverage，wouldvalueandpriceofproductionbeequal。

Inapplyingthesetermstoanyparticularcasesnotemust，however，betakenwhetheradeviationoftheratiobetweencandvissimplyduetoachangeinthevalueoftheelementsofconstantcapital，ratherthantoadifferenceinthetechnicalcomposition。

Theforegoingstatementshaveatanyratemodifiedtheoriginalassumptionconcerningthedeterminationofthecost-priceofcommodities。Wehadoriginallyassumedthatthecost-priceofacommodityequalledthevalueofthecommoditiesconsumedinitsproduction。Butforthebuyerthepriceofproductionofaspecificcommodityisitscost-price，andmaythuspassascost-priceintothepricesofothercommodities。Sincethepriceofproductionmaydifferfromthevalueofacommodity，itfollowsthatthecost-priceofacommoditycontainingthispriceofproductionofanothercommoditymayalsostandaboveorbelowthatportionofitstotalvaluederivedfromthevalueofthemeansofproductionconsumedbyit。Itisnecessarytorememberthismodifiedsignificanceofthecost-price，andtobearinmindthatthereisalwaysthepossibilityofanerrorifthecost-priceofacommodityinanyparticularsphereisidentifiedwiththevalueofthemeansofproductionconsumedbyit。Ourpresentanalysisdoesnotnecessitateacloserexaminationofthispoint。Itremainstrue，nevertheless，thatthecost-priceofacommodityisalwayssmallerthanitsvalue。Fornomatterhowmuchthecost-priceofacommoditymaydifferfromthevalueofthemeansofproductionconsumedbyit，thispastmistakeisimmaterialtothecapitalist。Thecost-priceofaparticularcommodityisadefiniteconditionwhichisgiven，andindependentoftheproductionofourcapitalist，whiletheresultofhisproductionisacommoditycontainingsurplus-value，thereforeanexcessofvalueoverandaboveitscost-price。Forallotherpurposes，thestatementthatthecost-priceissmallerthanthevalueofacommodityhasnowchangedpracticallyintothestatementthatthecost-priceissmallerthanthepriceofproduction。Asconcernsthetotalsocialcapital，inwhichthepriceofproductionisequaltothevalue，thisstatementisidenticalwiththeformer，namelythatthecost-priceissmallerthanthevalue。Andwhileitismodifiedintheindividualspheresofproduction，thefundamentalfactalwaysremainsthatinthecaseofthetotalsocialcapitalthecost-priceofthecommoditiesproducedbyitissmallerthantheirvalue，or，inthecaseofthetotalmassofsocialcommodities，smallerthantheirpriceofproduction，whichisidenticalwiththeirvalue。Thecost-priceofacommodityrefersonlytothequantityofpaidlabourcontainedinit，whileitsvaluereferstoallthepaidandunpaidlabourcontainedinit。Thepriceofproductionreferstothesumofthepaidlabourplusacertainquantityofunpaidlabourdeterminedforanyparticularsphereofproductionbyconditionsoverwhichithasnocontrol。

Theformulathatthepriceofproductionofacommodity=k+p，i。e。，equalsitscost-priceplusprofit，isnowmorepreciselydefinedwithp=kp’(p’

beingthegeneralrateofprofit)。Hencethepriceofproduction=k+kp’。

Ifk=300andp’=15%，thenthepriceofproductionisk+kp’=300+300x15/100，or345。

Thepriceofproductionofthecommoditiesinanyparticularspheremaychangeinmagnitude:

1)Ifthegeneralrateofprofitchangesindependentlyofthisparticularsphere，whilethevalueofthecommoditiesremainsthesame(thesamequantitiesofcongealedandlivinglabourbeingconsumedintheirproductionasbefore)。

2)Ifthereisachangeofvalue，eitherinthisparticularsphereinconsequenceoftechnicalchanges，orinconsequenceofachangeinthevalueofthosecommoditieswhichformtheelementsofitsconstantcapital，whilethegeneralrateofprofitremainsunchanged。

3)Finally，ifacombinationofthetwoaforementionedcircumstancestakesplace。

Inspiteofthegreatchangesoccurringcontinually，asweshallsee，intheactualratesofprofitwithintheindividualspheresofproduction，anyrealchangeinthegeneralrateofprofit，unlessbroughtaboutbywayofanexceptionbyextraordinaryeconomicevents，isthebelatedeffectofaseriesoffluctuationsextendingoververylongperiods，fluctuationswhichrequiremuchtimebeforeconsolidatingandequalisingoneanothertobringaboutachangeinthegeneralrateofprofit。Inallshorterperiods(quiteasidefromfluctuationsofmarket-prices)，achangeinthepricesofproductionis，therefore，alwaystraceableprimafacietoactualchangesinthevalueofcommodities，i。e。，tochangesinthetotalamountoflabour-timerequiredfortheirproduction。Merechangesinthemoney-expressionofthesamevaluesare，naturally，notatallconsideredhere。

Ontheotherhand，itisevidentthatfromthepointofviewofthetotalsocialcapitalthevalueofthecommoditiesproducedbyit(or，expressedinmoney，theirprice)=valueofconstantcapital+valueofvariablecapital+surplus-value。

Assumingthedegreeoflabourexploitationtobeconstant，therateofprofitcannotchangesolongasthemassofsurplus-valueremainsthesame，unlessthereisachangeineitherthevalueoftheconstantcapitaLthevalueofthevariablecapital，orthevalueofboth，sothatCchanges，andtherebys/C，whichrepresentsthegeneralrateofprofitIneachcase，therefore，achangeinthegeneralrateofprofitimpliesachangeinthevalueofcommoditieswhichformtheelementsoftheconstantorvariablecapital，orofboth。

Or，thegeneralrateofprofitmaychange，whilethevalueofthecommoditiesremainsthesame，whenthedegreeoflabourexploitationchanges。

Or，ifthedegreeoflabourexploitationremainsthesame，thegeneralrateofprofitmaychangethroughachangeintheamountoflabouremployedrelativetotheconstantcapitalasaresultoftechnicalchangesinthelabour-process。Butsuchtechnicalchangesmustalwaysshowthemselvesin，andbeattendedby，achangeinthevalueofthecommodities，whoseproductionwouldthenrequiremoreorlesslabourthanbefore。

WesawinPartIthatsurplus-valueandprofitareidenticalfromthestandpointoftheirmass。Buttherateofprofitisfromtheveryoutsetdistinctfromtherateofsurplus-value，whichappearsatfirstsightasmerelyadifferentformofcalculating。Butatthesametimethisserves，alsofromtheoutset，toobscureandmystifytheactualoriginofsurplus-value，sincetherateofprofitcanriseorfallwhiletherateofsurplus-valueremainsthesame，andviceversa，andsincethecapitalistisinpracticesolelyinterestedintherateofprofit。Yettherewasdifferenceofmagnitudeonlybetweentherateofsurplus-valueandtherateofprofitandnotbetweenthesurplus-valueitselfandprofit。Sinceintherateofprofitthesurplus-valueiscalculatedinrelationtothetotalcapitalandthelatteristakenasitsstandardofmeasurement，thesurplus-valueitselfappearstooriginatefromthetotalcapital，uniformlyderivedfromallitsparts，sothattheorganicdifferencebetweenconstantandvariablecapitalisobliteratedintheconceptionofprofit。Disguisedasprofit，surplus-valueactuallydeniesitsorigin，losesitscharacter，andbecomesunrecognisable。However，hithertothedistinctionbetweenprofitandsurplus-valueappliedsolelytoaqualitativechange，orchangeofform，whiletherewasnorealdifferenceofmagnitudeinthisfirststageofthechangebetweensurplus-valueandprofit，butonlybetweentherateofprofitandtherateofsurplus-value。

Butitisdifferent，assoonasageneralrateofprofit，andtherebyanaverageprofitcorrespondingtothemagnitudeofinvestedcapitalgiveninthevariousspheresofproduction，havebeenestablished。

Itisthenonlyanaccidentifthesurplus-value，andthustheprofit，actuallyproducedinanyparticularsphereofproduction，coincideswiththeprofitcontainedinthesellingpriceofacommodity。Asarule，surplus-valueandprofitandnottheirratesalone，arethendifferentmagnitudes。Atagivendegreeofexploitation，themassofsurplus-valueproducedinaparticularsphereofproductionisthenmoreimportantfortheaggregateaverageprofitofsocialcapital，andthusforthecapitalistclassingeneral，thanfortheindividualcapitalistinanyspecificbranchofproduction。

Itisofimportancetothelatteronlyinsofarasthequantityofsurplus-valueproducedinhisbranchhelpstoregulatetheaverageprofit。Butthisisaprocesswhichoccursbehindhisback，onehedoesnotsee，norunderstand，andwhichindeeddoesnotinteresthim。Theactualdifferenceofmagnitudebetweenprofitandsurplus-value——notmerelybetweentherateofprofitandtherateofsurplus-value——inthevariousspheresofproductionnowcompletelyconcealsthetruenatureandoriginofprofitnotonlyfromthecapitalist，whohasaspecialinterestindeceivinghimselfonthisscore，butalsofromthelabourer。Thetransformationofvaluesintopricesofproductionservestoobscurethebasisfordeterminingvalueitself。

Finally，sincethemeretransformationofsurplus-valueintoprofitdistinguishestheportionofthevalueofacommodityformingtheprofitfromtheportionformingitscost-price，itisnaturalthattheconceptionofvalueshouldeludethecapitalistatthisjuncture，forhedoesnotseethetotallabourputintothecommodity，butonlythatportionofthetotallabourforwhichhehaspaidintheshapeofmeansofproduction，betheylivingornot，sothathisprofitappearstohimassomethingoutsidetheimmanentvalueofthecommodity。Nowthisideaisfullyconfirmed，fortified，andossifiedinthat，fromthestandpointofhisparticularsphereofproduction，theprofitaddedtothecost-priceisnotactuallydeterminedbythelimitsoftheformationofvaluewithinhisownsphere，butthroughcompletelyoutsideinfluences。

Thefactthatthisintrinsicconnectionishererevealedforthefirsttime；thatuptothepresenttimepoliticaleconomy，asweshallseeinthefollowingandinBookIV，eitherforciblyabstracteditselffromthedistinctionsbetweensurplus-valueandprofit，andtheirrates，soitcouldretainvaluedeterminationasabasis，orelseabandonedthisvaluedeterminationandwithitallvestigesofascientificapproach，inordertoclingtothedifferencesthatstriketheeyeinthisphenomenon——thisconfusionofthetheoristsbestillustratestheutterincapacityofthepracticalcapitalist，blindedbycompetitionasheis，andincapableofpenetratingitsphenomena，torecognisetheinneressenceandinnerstructureofthisprocessbehinditsouterappearance。

Infact，allthelawsevolvedinPartIconcerningtheriseandfalloftherateofprofithavethefollowingtwo-foldmeaning:

1)Ontheonehand，theyarethelawsofthegeneralrateofprofit。

Inviewofthemanydifferentcauseswhichmaketherateofprofitriseorfallonewouldthink，aftereverythingthathasbeensaidanddone，thatthegeneralrateofprofitmustchangeeveryday。Butatrendinonesphereofproductioncompensatesforthatinanother，theireffectscrossandparalyseoneanother。Weshalllaterexaminetowhichsidethesefluctuationsultimatelygravitate。Buttheyareslow。Thesuddenness，multiplicity，anddifferentdurationofthefluctuationsintheindividualspheresofproductionmakethemcompensateforoneanotherintheorderoftheirsuccessionintime，afallinpricesfollowingarise，andviceversa，sothattheyremainlimitedtolocal，i。e。，individual，spheres。Finally，thevariouslocalfluctuationsneutraliseoneanother。Withineachindividualsphereofproduction，theretakeplacechanges，i。e。，deviationsfromthegeneralrateofprofit，whichcounterbalanceoneanotherinadefinitetimeontheonehand，andthushavenoinfluenceuponthegeneralrateofprofit，andwhich，ontheother，donotreactuponit，becausetheyarebalancedbyothersimultaneouslocalfluctuations。Sincethegeneralrateofprofitisnotonlydeterminedbytheaveragerateofprofitineachsphere，butalsobythedistributionofthetotalsocialcapitalamongthedifferentindividualspheres，andsincethisdistributioniscontinuallychanging，itbecomesanotherconstantcauseofchangeinthegeneralrateofprofit。

Butitisacauseofchangewhichmostlyparalysesitself，owingtotheuninterruptedandmany-sidednatureofthismovement。

2)Withineachsphere，thereissomeroomforplayforalongerorshorterspaceoftime，inwhichtherateofprofitofthisspheremayfluctuate，beforethisfluctuationconsolidatessufficientlyafterrisingorfallingtogaintimeforinfluencingthegeneralrateofprofitandthereforeassumingmorethanlocalimportance。Thelawsoftherateofprofit，asdevelopedinPartIofthisbook，likewiseremainapplicablewithintheselimitsofspaceandtime。

Thetheoreticalconceptionconcerningthefirsttransformationofsurplus-valueintoprofit，thateverypartofacapitalyieldsauniformprofit，expressesapracticalfact。Whateverthecompositionofanindustrialcapital，whetheritsetsinmotiononequarterofcongealedlabourandthree-quartersoflivinglabour，orthree-quartersofcongealedlabourandone-quarteroflivinglabour，whetherinonecaseitabsorbsthreetimesasmuchsurplus-labour，orproducesthreetimesasmuchsurplus-valuethaninanother——ineithercaseityieldsthesameprofit，giventhesamedegreeoflabourexploitationandleavingasideindividualdifferences，which，incidentally，disappearbecausewearedealinginbothcaseswiththeaveragecompositionoftheentiresphereofproduction。Theindividualcapitalist(orallthecapitalistsineachindividualsphereofproduction)，whoseoutlookislimited，rightlybelievesthathisprofitisnotderivedsolelyfromthelabouremployedbyhim，orinhislineofproduction。Thisisquitetrue，asfarashisaverageprofitisconcerned。Towhatextentthisprofitisduetotheaggregateexploitationoflabouronthepartofthetotalsocialcapital，i。e。，byallhiscapitalistcolleagues——thisinterrelationisacompletemysterytotheindividualcapitalist；allthemoreso，sincenobourgeoistheorists，thepoliticaleconomists，havesofarrevealedit。Asavingoflabour——

notonlylabournecessarytoproduceacertainproduct，butalsothenumberofemployedlabourers——andtheemploymentofmorecongealedlabour(constantcapital)，appeartobeverysoundoperationsfromtheeconomicstandpointanddonotseemtoexerttheleastinfluenceonthegeneralrateofprofitandtheaverageprofit。Howcouldlivinglabourbethesolesourceofprofit，inviewofthefactthatareductioninthequantityoflabourrequiredforproductionappearsnottoexertanyinfluenceonprofit？Moreover，itevenseemsincertaincircumstancestobethenearestsourceofanincreaseofprofits，atleastfortheindividualcapitalist。

Ifinanyparticularsphereofproductionthereisariseorfalloftheportionofthecost-pricewhichrepresentsthevalueofconstantcapital，thisportioncomesfromthecirculationand，eitherenlargedorreduced，passesfromtheveryoutsetintotheprocessofproductionofthecommodity。

If，ontheotherhand，thesamenumberoflabourersproducesmoreorlessinthesametime，sothatthequantityoflabourrequiredfortheproductionofadefinitequantityofcommoditiesvarieswhilethenumberoflabourersremainsthesame，thatportionofthecost-pricewhichrepresentsthevalueofthevariablecapitalmayremainthesame，i。e。，contributethesameamounttothecost-priceofthototalproduct。Buteveryoneoftheindividualcommoditieswhosesummakesupthetotalproduct，sharesinmoreorlesslabour(paidandthereforealsounpaid)，andsharesconsequentlyinthegreaterorsmalleroutlayforthislabour，i。e。，a1argerorsmallerportionofthewage。Thetotalwagespaidbythecapitalistremainthesame，butwagesdifferifcalculatedperpieceofthecommodityThus，thereisachangeinthisportionofthecost-priceofthecommodity。Butnomatterwhetherthecost-priceoftheindividualcommodity(or，perhaps，thecost-priceofthesumofcommoditiesproducedbyacapitalofagivenmagnitude)risesorfalls，beitduetosuchchangesinitsownvalue，orinthatofitselements，theaverageprofitof，e。g。，10%remains10%。Still，10%ofanindividualcommoditymayrepresentverydifferentamounts，dependingonthechangeofmagnitudecausedinthecost-priceoftheindividualcommoditybysuchchangesofvalueaswehaveassumed。

Sofarasthevariablecapitalisconcerned——andthisismostimportant，becauseitisthesourceofsurplus-value，andbecauseanythingwhichconcealsitsrelationtotheaccumulationofwealthbythecapitalistservestomystifytheentiresystem——mattersgetcruderorappeartothecapitalistinthefollowinglight:Avariablecapitalof£；100representstheweeklywageof，say，100labourers。Ifthese100labourersweeklyproduce200piecesofacommodity=200C，inagivenworking-time，then1C——abstractedfromthatportionofitscost-pricewhichisaddedbytheconstantcapital，costs£；100/200=10shillings，since£；100=200C。Nowsupposethatachangeoccursintheproductivenessoflabour。Supposeitdoubles，sothatthesamenumberoflabourersnowproducestwice200Cinthetimewhichitpreviouslytooktoproduce200C。Inthatcase(consideringonlythatpartofthecost-pricewhichconsistsofwages)1C=£；100/400=5shillings，sincenow£；100=400C。Shouldtheproductivenessdecreaseone-half，thesamelabourwouldproduceonly200C/2andsince£；100=200C/2，1C=£；200/2=£；1。Thechangesinthelabour-timerequiredfortheproductionofthecommodities，andhencethechangesintheirvalue，thusappearinregardtothecost-price，andhencetothepriceofproduction，asadifferentdistributionofthesamewageformoreorfewercommodities，dependingonthegreaterorsmallerquantityofcommoditiesproducedinthesameworking-timeforthesamewage。Whatthecapitalist，andconsequentlyalsothepoliticaleconomist，seeisthatthepartofthepaidlabourperpieceofcommoditychangeswiththeproductivityoflabour，andthatthevalueofeachpiecealsochangesaccordingly。Whattheydonotseeisthatthesameappliestounpaidlabourcontainedinverypieceofthecommodity，andthisisperceivedsomuchlesssincetheaverageprofitactuallyisonlyaccidentallydeterminedbytheunpaidlabourabsorbedinthesphereoftheindividualcapitalist。Itisonlyinsuchcrudeandmeaninglessformthatwecanglimpsethatthevalueofcommoditiesisdeterminedbythelabourcontainedinthem。

Capital，Vol。3，Chapter10KarlMarxCAPITALVol。III

THEPROCESSOF

CAPITALISTPRODUCTIONASAWHOLEPartII

CONVERSIONOFPROFITINTOAVERAGEPROFITChapterX

EQUALISATIONOFTHEGENERALRATEOFPROFIT

THROUGHCOMPETITION。

MARKET-PRICESANDMARKET-VALUES。

SURPLUS-PROFIT

Thecapitalinvestedinsomespheresofproductionhasamean，oraverage，composition，thatis，ithasthesame，oralmostthesamecompositionastheaveragesocialcapital。

Inthesespheresthepriceofproductionisexactlyoralmostthesameasthevalueoftheproducedcommodityexpressedinmoney。Iftherewerenootherwayofreachingamathematicallimit，thiswouldbetheone。Competitionsodistributesthesocialcapitalamongthevariousspheresofproductionthatthepricesofproductionineachspheretakeshapeaccordingtothemodelofthepricesofproductioninthesespheresofaveragecomposition，i。e。，they=k+kp’(cost-priceplustheaveragerateofprofitmultipliedbythecostprice)。Thisaveragerateofprofit，however，isthepercentageofprofitinthatsphereofaveragecompositioninwhichprofit，therefore，coincideswithsurplus-value。Hence，therateofprofitisthesameinallspheresofproduction，foritisequalizedonthebasisofthoseaveragespheresofproductionwhichhastheaveragecompositionofcapital。Consequently，thesumoftheprofitsinallspheresofproductionmustequalthesumofthesurplus-values，andthesumofthepricesofproductionofthetotalsocialproductequalthesumofitsvalue。Butitisevidentthatthebalanceamongspheresofproductionofdifferentcompositionmusttendtoequalizethemwiththespheresofaveragecomposition，beitexactlyoronlyapproximatelythesameasthesocialaverage。Betweenthespheresmoreorlessapproximatingtheaveragethereisagainatendencytowardequalization，seekingtheidealaverage，i。e。，anaveragethatdoesnotreallyexist，i。e。，atendencytotakethisidealasastandard。Inthiswaythetendencynecessarilyprevailstomakethepricesofproductionmerelyconvertedformsofvalue，ortoturnprofitsintomereportionsofsurplus-value。However，thesearenotdistributedinproportiontothesurplus-valueproducedineachspecialsphereofproduction，butratherinproportiontothemassofcapitalemployedineachsphere，sothatequalmassesofcapital，whatevertheircomposition，receiveequalaliquotsharesofthetotalsurplus-valueproducedbythetotalsocialcapital。

Inthecaseofcapitalsofaverage，orapproximatelyaverage，composition，thepriceofproductionisthusthesameoralmostthesameasthevalue，andtheprofitthesameasthesurplus-valueproducedbythem。Allothercapitals，ofwhatevercomposition，tendtowardthisaverageunderpressureofcompetition。Butsincethecapitalsofaveragecompositionareofthesame，orapproximatelythesame，structureastheaveragesocialcapital，allcapitalshavethetendency，regardlessofthesurplus-valueproducedbythem，torealizetheaverageprofit，ratherthantheirownsurplus-valueinthepriceoftheircommodity，i。e。，torealizethepricesofproduction。

Ontheotherhand，itmaybesaidthatwhereveranaverageprofit，andthereforeageneralrateofprofit，areproduced——nomatterbywhatmeans——suchanaverageprofitcannotbeanythingbuttheprofitontheaveragesocialcapital，whosesumisequaltothesumofsurplus-value。Moreover，thepricesobtainedbyaddingthisaverageprofittothecost-pricescannotbeanythingbutthevaluestransmutedintopricesofproduction。Nothingwouldbealteredifcapitalsincertainspheresofproductionwouldnot，forsomereason，besubjecttotheprocessofequalization。Theaverageprofitwouldthenbecomputedonthatportionofthesocialcapitalwhichenterstheequalizationprocess。itisevidentthattheaverageprofitcanbenothingbutthetotalmassofsurplus-valuesallottedtothevariousquantitiesofcapitalproportionallytotheirmagnitudesintheirdifferentspheresofproduction。Itisthetotalrealizedunpaidlabour，andthistotalmass，likethepaid，congealedorliving，labour，obtainsinthetotalmassofcommoditiesandmoneythatfallstothecapitalists。

Thereallydifficultquestionisthis:howisthisequalizationofprofitsintoageneralrateofprofitbroughtabout，sinceitisobviouslyaresultratherthanapointofdeparture？

Tobeginwith，anestimateofthevaluesofcommodities，forinstanceintermsofmoney，canobviouslyonlybetheresultoftheirexchange。

If，therefore，weassumesuchanestimate，wemustregarditastheoutcomeofanactualexchangeofcommodity-valueforcommodity-value。Buthowdoesthisexchangeofcommoditiesattheirrealvaluecomeabout？

Letusfirstassumethatallcommoditiesinthedifferentbranchesofproductionaresoldattheirrealvalues。Whatwouldthenbetheoutcome？

Accordingtotheforegoing，verydifferentratesofprofitwouldthenreigninthevariousspheresofproduction。Itisprimafacietwoentirelydifferentmatterswhethercommoditiesaresoldattheirvalues(i。e。，exchangedinproportiontothevaluecontainedinthematpricescorrespondingtotheirvalue)，orwhethertheyaresoldatsuchpricesthattheirsaleyieldsequalprofitsforequalmassesofthecapitaladvancedfortheirrespectiveproduction。

Thefactthatcapitalsemployingunequalamountsoflivinglabourproduceunequalamountsofsurplus-value，presupposesatleasttoacertainextentthatthedegreeofexploitationortherateofsurplus-valuearethesame，orthatanyexistingdifferencesinthemareequalizedbyrealorimaginary(conventional)groundsofcompensation。Thiswouldassumecompetitionamonglabourersandequalizationthroughtheircontinualmigrationfromonesphereofproductiontoanother。Suchageneralrateofsurplus-value——viewedasatendency，likeallothereconomiclaws——hasbeenassumedbyusforthesakeoftheoreticalsimplification。Butinrealityitisanactualpremiseofthecapitalistmodeofproduction，althoughitismoreorlessobstructedbypracticalfrictionscausingmoreorlessconsiderablelocaldifferences，suchasthesettlementlawsforfarm-labourersinBritain。

Butintheoryitisassumedthatthelawsofcapitalistproductionoperateintheirpureform。Inrealitythereexistsonlyapproximation；but，thisapproximationisthegreater，themoredevelopedthecapitalistmodeofproductionandthelessitisadulteratedandamalgamatedwithsurvivalsofformereconomicconditions。

Thewholedifficultyarisesfromthefactthatcommoditiesarenotexchangedsimplyascommodities，butasproductsofcapitals，whichclaimparticipationinthetotalamountofsurplus-value，proportionaltotheirmagnitude，orequaliftheyareofequalmagnitude。Andthisclaimistobesatisfiedbythetotalpriceforcommoditiesproducedbyagivencapitalinacertainspaceoftime。Thistotalpriceis，however，onlythesumofthepricesoftheindividualcommoditiesproducedbythiscapital。

Thepunctumsalienswillbebetbroughtifweapproachthematterasfollows:suppose，thelabourersthemselvesareinpossessionoftheirrespectivemeansofproductionandexchangetheircommoditieswithoneanother。Inthatcasethesecommoditieswouldnotbeproductsofcapital。

Thevalueofthevariousmeansoflabourandrawmaterialswoulddifferinaccordancewiththetechnicalnatureofthelaboursperformedinthedifferentbranchesofproduction。Furthermore，asidefromtheunequalvalueofthemeansofproductionemployedbythem，theywouldrequiredifferentquantitiesofmeansofproductionforgivenquantitiesoflabour，dependingonwhetheracertaincommoditycanbefinishedinonehour，anotherinoneday，andsoforth。Alsosupposethelabourersworkanequalaveragelengthoftime，allowingforcompensationsthatarisefromthedifferentlabourintensities，etc。Insuchacase，twolabourerswould，first，bothhavereplacedtheiroutlays，thecost-pricesoftheconsumedmeansofproduction，inthecommoditieswhichmakeuptheproductoftheirday’swork。Theseoutlayswoulddiffer，dependingonthetechnicalnatureoftheirlabour。

Secondly，bothofthemwouldhavecreatedequalamountsofnewvalue，namelytheworking-dayaddedbythemtothemeansofproduction。Thiswouldcomprisetheirwagesplusthesurplus-value，thelatterrepresentingsurplus-labouroverandabovetheirnecessarywants，theproductofwhichwouldhoweverbelongtothem。Toputitthecapitalistway，bothofthemreceivethesamewagesplusthesameprofit，orthesamevalue，expressed，say，bytheproductofaten-hourworking-day。Butinthefirstplace，thevaluesoftheircommoditieswouldhavetodiffer。IncommodityI，forinstance，theportionofvaluecorrespondingtotheconsumedmeansofproductionmightbehigherthanincommodityII。And，tointroduceallpossibledifferences，wemightassumerightnowthatcommodityIabsorbsmorelivinglabour，andconsequentlyrequiresmorelabour-timetobeproduced，thancommodityII。ThevaluesofcommoditiesIandIIare，therefore，verydifferent。

Soarethesumsofthevaluesofthecommodities，whichrepresenttheproductofthelabourperformedbylabourersIandIIinagiventime。TheratesofprofitwouldalsodifferconsiderablyforIandIIifwetaketherateofprofittobetheproportionofthesurplus-valuetothetotalvalueoftheinvestedmeansofproduction。ThemeansofsubsistencedailyconsumedbyIandIIduringproduction，whichtaketheplaceofwages，hereformthepartoftheinvestedmeansofproductionordinarilycalledvariablecapital。ButforequalworkingperiodsthesurplusvalueswouldbethesameforIandII，or，moreprecisely，sinceIandIIeachreceivethevalueoftheproductofaday’swork，bothofthemreceiveequalvaluesafterthevalueoftheinvested”constant”elementshasbeendeducted，andoneportionofthoseequalvaluesmayberegardedasasubstituteforthemeansofsubsistenceconsumedinproduction，andtheotherassurplus-valueinexcessofit。IflabourerIhasgreaterexpenses，theyaremadegoodbyagreaterportionofthevalueofhiscommodity，whichreplacesthis”constant”part，andhethereforehastoreconvertalargerportionofthetotalvalueofhisproductintothematerialelementsofthisconstantpart，whilelabourerII，thoughreceivinglessforthis，hassomuchlesstoreconvert。Inthesecircumstances，adifferenceintheratesofprofitwouldthereforebeimmaterial，justasitisimmaterialtothewage-labourertodaywhatrateofprofitmayexpresstheamountofsurplus-valuefilchedfromhim，andjustasininternationalcommercethedifferenceinthevariousnationalratesofprofitisimmaterialtocommodityexchange。

Theexchangeofcommoditiesattheirvalues，orapproximatelyattheirvalues，thusrequiresamuchlowerstagethantheirexchangeattheirpricesofproduction，whichrequiresadefinitelevelofcapitalistdevelopment。

Whateverthemannerinwhichthepricesofvariouscommoditiesarefirstmutuallyfixedorregulated，theirmovementsarealwaysgovernedbythelawofvalue。Ifthelabour-timerequiredfortheirproductionhappenstoshrink，pricesfall；ifitincreases，pricesrise，providedotherconditionsremainthesame。

Apartfromthedominationofpricesandpricemovementbythelawofvalue，itisquiteappropriatetoregardthevaluesofcommoditiesasnotonlytheoreticallybutalsohistoricallypriustothepricesofproduction。Thisappliestoconditionsinwhichthelabourerownshismeansofproduction，andthisistheconditionoftheland-owningfarmerlivingoffhisownlabourandthecraftsman，intheancientaswellasinthemodernworld。Thisagreesalsowiththeviewweexpressedpreviouslythattheevolutionofproductsintocommoditiesarisesthroughexchangebetweendifferentcommunities，notbetweenthemembersofthesamecommunity。Itholdsnotonlyforthisprimitivecondition，butalsoforsubsequentconditions，basedonslaveryandserfdom，andfortheguildorganisationofhandicrafts，solongasthemeansofproductioninvolvedineachbranchofproductioncanbetransferredfromonespheretoanotheronlywithdifficultyandthereforethevariousspheresofproductionarerelatedtooneanother，withincertainlimits，asforeigncountriesorcommunistcommunities。

Forpricesatwhichcommoditiesareexchangedtoapproximatelycorrespondtotheirvalues，nothingmoreisnecessarythan1)fortheexchangeofthevariouscommoditiestoceasebeingpurelyaccidentaloronlyoccasional；

2)sofarasdirectexchangeofcommoditiesisconcerned，forthesecommoditiestobeproducedonbothsidesinapproximatelysufficientquantitiestomeetmutualrequirements，somethinglearnedfrommutualexperienceintradingandthereforeanaturaloutgrowthofcontinuedtrading；and3)sofarassellingisconcerned，fornonaturalorartificialmonopolytoenableeitherofthecontractingsidestosellcommoditiesabovetheirvalueortocompelthemtoundersell。Byaccidentalmonopolywemeanamonopolywhichabuyerorselleracquiresthroughanaccidentalstateofsupplyanddemand。

Theassumptionthatthecommoditiesofthevariousspheresofproductionaresoldattheirvaluemerelyimplies，ofcourse，thattheirvalueisthecentreofgravityaroundwhichtheirpricesfluctuate，andtheircontinualrisesanddropstendtoequalise。Thereisalsothemarket-value——ofwhichlater——tobedistinguishedfromtheindividualvalueofparticularcommoditiesproducedbydifferentproducers。Theindividualvalueofsomeofthesecommoditieswillbebelowtheirmarket-value(thatis，lesslabourtimeisrequiredfortheirproductionthanexpressedisthemarketvalue)

whilethatofotherswillexceedthemarket-value。Ontheonehand，market-valueistobeviewedastheaveragevalueofcommoditiesproducedinasinglesphere，and，ontheother，astheindividualvalueofthecommoditiesproducedunderaverageconditionsoftheirrespectivesphereandformingthebulkoftheproductsofthatsphere。Itisonlyinextraordinarycombinationsthatcommoditiesproducedundertheworst，orthemostfavourable，conditionsregulatethemarket-value，which，inturn，formsthecentreoffluctuationformarket-prices。Thelatter，however，arethesameforcommoditiesofthesamekind。Iftheordinarydemandissatisfiedbythesupplyofcommoditiesofaveragevalue，henceofavaluemidwaybetweenthetwoextremes，thenthecommoditieswhoseindividualvalueisbelowthemarket-valuerealiseanextrasurplus-value，orsurplus-profit，whilethose，whoseindividualvalueexceedsthemarket-value，areunabletorealiseaportionofthesurplus-valuecontainedinthem。

Itdoesnogoodtosaythatthesaleofcommoditiesproducedundertheleastfavourableconditionsprovesthattheyarerequiredtosatisfythedemand。Ifintheassumedcasethepricewerehigherthantheaveragemarket-value，thedemandwouldbesmaller。Atacertainprice，acommodityoccupiesjustsomuchplaceonthemarket。Thisplaceremainsthesameincaseofapricechangeonlyifthehigherpriceisaccompaniedbyadropinthesupplyofthecommodity，andalowerpricebyanincreaseofsupply。Andifthedemandissogreatthatitdoesnotcontractwhenthepriceisregulatedbythevalueofcommoditiesproducedundertheleastfavourableconditions，thenthesedeterminethemarket-value。Thisisnotpossibleunlessdemandisgreaterthanusual，orifsupplydropsbelowtheusuallevel。Finally，ifthemassoftheproducedcommoditiesexceedsthequantitydisposedofataveragemarket-values，thecommoditiesproducedunderthemostfavourableconditionsregulatethemarket-value。Theymay，forexample，besoldexactlyorapproximatelyattheirindividualvalue，inwhichcasethecommoditiesproducedundertheleastfavourableconditionsmaynotevenrealisetheircost-price，whilethoseproducedunderaverageconditionsrealiseonlyaportionofthesurplus-valuecontainedinthem。Whathasbeensaidhereofmarket-valueappliestothepriceofproductionassoonasittakestheplaceofmarket-value。Thepriceofproductionisregulatedineachsphere，andlikewiseregulatedbyspecialcircumstances。Andthispriceofproductionis，initsturn，thecentrearoundwhichthedailymarket-pricesfluctuateandtendtoequaliseoneanotherwithindefiniteperiods。(SeeRicardoondeterminingthepriceofproductionthroughthoseworkingundertheleastfavourableconditions。)

Nomatterhowthepricesareregulated，wearriveatthefollowing:

1)Thelawofvaluedominatespricemovementswithreductionsorincreasesinrequiredlabour-timemakingpricesofproductionfallorrise。ItisinthissensethatRicardo(whodoubtlesslyrealisedthathispricesofproductiondeviatedfromthevalueofcommodities)saysthat”theinquirytowhichIwishtodrawthereader’sattentionrelatestotheeffectofthevariationsintherelativevalueofcommodities，andnotintheirabsolutevalue”。

2)Theaverageprofitdeterminingthepricesofproductionmustalwaysbeapproximatelyequaltothatquantityofsurplus-valuewhichfallstotheshareofindividualcapitalinitscapacityofanaliquotpartofthetotalsocialcapital。Supposethatthegeneralrateofprofit，andthereforetheaverageprofit，areexpressedbymoney-valuegreaterthanthemoney-valueoftheactualaveragesurplus-value。Sofarasthecapitalistsareconcerned，itisthenimmaterialwhethertheyreciprocallycharge10or15%profit。

Neitherofthesepercentagescoversmoreactualcommodity-valuethantheother，sincetheoverchargeinmoneyismutual。Asforthelabourer(theassumptionbeingthathereceiveshisnormalwageandtheriseintheaverageprofitdoesnotthereforeimplyanactualdeductionfromhiswage，i。e。，itexpressessomethingentirelydifferentfromthenormalsurplus-valueofthecapitalist)，theriseincommodity-pricescausedbyanincreaseoftheaverageprofitmustcorrespondtotheriseofthemoney-expressionofthevariablecapital。Suchageneralnominalincreaseintherateofprofitandtheaverageprofitabovethelimitprovidedbytheratiooftheactualsurplus-valuetothetotalinvestedcapitalisnot，ineffect，possiblewithoutcausinganincreaseinwages，andalsoanincreaseinthepricesofcommoditiesformingtheconstantcapital。Thereverseistrueincaseofareduction。Sincethetotalvalueofthecommoditiesregulatesthetotalsurplus-value，andthisinturnregulatesthelevelofaverageprofitandtherebythegeneralrateofprofit——asagenerallaworalawgoverningfluctuations——itfollowsthelawofvalueregulatesthepricesofproduction。

Whatcompetition，firstinasinglesphere，achievesisasinglemarket-valueandmarket-pricederivedfromthevariousindividualvaluesofcommodities。

Anditiscompetitionofcapitalsindifferentspheres，whichfirstbringsoutthepriceofproductionequalizingtheratesofprofitinthedifferentspheres。Thelatterprocessrequiresahigherdevelopmentofcapitalistproductionthatthepreviousone。

Forcommoditiesofthesamesphereofproduction，thesamekind，andapproximatelythesamequality，tobesoldattheirvalues，thefollowingtworequirementsarenecessary:

First，thedifferentindividualvaluesmustbeequalizedatonesocialvalue，theabove-namedmarketvalue，andthisimpliescompetitionamongproducersofthesamekindofcommoditiesand，likewise，theexistenceofacommonmarketinwhichtheyoffertheirarticlesforsale。Forthemarket-priceofidenticalcommodities，each，however，producedunderdifferentindividualcircumstances，tocorrespondtothemarket-valueandnottodeviatefromiteitherbyrisingaboveorfallingbelowit，itisnecessarythatthepressureexertedbydifferentsellersupononeanotherbesufficienttobringenoughcommoditiestomarkettofillthesocialrequirements，i。e。，aquantityforwhichsocietyiscapableofpayingthemarket-value。

Shouldthemassofproductsexceedthisdemand，thecommoditieswouldhavetobesoldbelowtheirmarket-value；andconversely，abovetheirmarket-valueifthemassofproductswerenotlargeenoughtomeetthedemand，or，whatamountstothesame，ifthepressureofcompetitionamongsellerswerenotstrongenoughtobringthismassofproductstomarket。Shouldthemarket-valuechange，thiswouldalsoentailachangeintheconditionsonwhichthetotalmassofcommoditiescouldbesold。Shouldthemarket-valuefall，thiswouldentailariseintheaveragesocialdemand(thisalwaystakentomeantheeffectivedemand)，whichcould，withincertainlimits，absorblargermassesofcommodities。Shouldthemarket-valuerise，thiswouldentailadropinthesocialdemand，andasmallermassofcommoditieswouldbeabsorbed。Hence，ifsupplyanddemandregulatethemarket-price，orratherthedeviationsofthemarket-pricefromthemarket-value，then，inturn，themarket-valueregulatestheratioofsupplytodemand，orthecentreroundwhichfluctuationsofsupplyanddemandcausemarket-pricestooscillate。

Lookingcloser，wefindthattheconditionsapplicabletothevalueofanindividualcommodityareherereproducedasconditionsgoverningthevalueoftheaggregateofacertainkindofcommodity。Capitalistproductionismassproductionfromtheveryoutset。Buteveninother，lessdeveloped，modesofproductionthatwhichisproducedinrelativelysmallquantitiesasacommonproductbysmall-scale，evenifnumerous，producers，isconcentratedinlargequantities——atleastinthecaseofthevitalcommodities——

inthehandsofrelativelyfewmerchants。Thelatteraccumulatethemandsellthemasthecommonproductofanentirebranchofproduction，orofamoreorlessconsiderablecontingentofit。

Itshouldbeherenotedinpassingthatthe”socialdemand”，i。e。，thefactorwhichregulatestheprincipleofdemand，isessentiallysubjecttothemutualrelationshipofthedifferentclassesandtheirrespectiveeconomicposition，notablythereforeto，firstly，theratiooftotalsurplus-valuetowages，and，secondly，totherelationofthevariouspartsintowhichsurplus-valueissplitup(profit，interest，ground-rent，taxes，etc。)。

Andthisthusagainshowshowabsolutelynothingcanbeexplainedbytherelationofsupply。todemandbeforeascertainingthebasisonwhichthisrelationrests。

Althoughbothcommodityandmoneyrepresentaunityofexchange-valueanduse-value，wehavealreadyseenthatinbuyingandsellingbothofthesefunctionsarepolarisedatthetwoextremes，thecommodity(seller)

representingtheuse-value，andthemoney(buyer)representingtheexchange-value。

Oneofthefirstpremisesofsellingwasthatacommodityshouldhaveuse-valueandshouldthereforesatisfyasocialneed。Theotherpremisewasthatthequantityoflabourcontainedinthecommodityshouldrepresentsociallynecessarylabour，i。e。，itsindividualvalue(and，whatamountstothesameunderthepresentassumption，itssellingprice)shouldcoincidewithitssocialvalue。

Letusapplythistothemassofcommoditiesavailableinthemarket，whichrepresentstheproductofawholesphere。

Thematterwillbemostreadilypicturedbyregardingthiswholemassofcommodities，producedbyonebranchofindustry，asonecommodity，andthesumofthepricesofthemanyidenticalcommoditiesasoneprice。

Then，whateverhasbeensaidofasinglecommodityappliesliterallytothemassofcommoditiesofaentirebranchofproductionavailableinthemarket。Therequirementthattheindividualvalueofacommodityshouldcorrespondtoitssocialvalueisnowrealised，orfurtherdetermined，inthatthemasscontainssociallabournecessaryforitsproduction，andthatthevalueofthismassisequaltoitsmarket-value。

Nowsupposethatthebulkofthesecommoditiesisproducedunderapproximatelysimilarnormalsocialconditions，sothatthisvalueisatthesametimetheindividualvalueoftheindividualcommoditieswhichmakeupthismass。

Ifarelativelysmallportionofthesecommoditiesmaynowhavebeenproducedbelow，andanotherabove，theseconditions，sothattheindividualvalueofoneportionisgreater，andthatoftheothersmaller，thantheaveragevalueofthebulkofthecommodities，butinsuchproportionsthattheseextremesbalanceoneanother，sothattheaveragevalueofthecommoditiesattheseextremesisequaltothevalueofcommoditiesinthecentre，thenthemarket-valueisdeterminedbythevalueofthecommoditiesproducedunderaverageconditions。Thevalueoftheentiremassofcommoditiesisequaltotheactualsumofthevaluesofallindividualcommoditiestakentogether，whetherproducedunderaverageconditions，orunderconditionsaboveorbelowtheaverage。Inthatcase，themarket-value，orsocialvalue，ofthemassofcommodities——thenecessarylabour-timecontainedinthem——isdeterminedbythevalueofthepreponderantmeanmass。

Suppose，onthecontrary，thatthetotalmassofthecommoditiesinquestionbroughttomarketremainsthesame，whilethevalueofthecommoditiesproducedunderlessfavourableconditionsfailstobalanceoutthevalueofcommoditiesproducedundermorefavourableconditions，sothatthepartofthemassproducedunderlessfavourableconditionsformsarelativelyweightyquantityascomparedwiththeaveragemassandwiththeotherextreme。

Inthatcase，themassproducedunderlessfavourableconditionsregulatesthemarket，orsocial，value。

Suppose，finally，thatthemassofcommoditiesproducedunderbetterthanaverageconditionsconsiderablyexceedsthatproducedunderworseconditions，andislargeevencomparedwiththatproducedunderaverageconditions。Inthatcase，thepartproducedunderthemostfavourableconditionsdeterminesthemarket-value。Weignoreheretheoverstockedmarket，inwhichthepartproducedundermostfavourableconditionsalwaysregulatesthemarket-price。Wearenotdealingherewiththemarket-price，insofarasitdiffersfromthemarket-value，butwiththevariousdeterminationsofthemarket-valueitself。[1]

Infact，strictlyspeaking(which，ofcourse，occursinrealityonlyinapproximationandwithathousandmodifications)themarket-valueoftheentiremass，regulatedasitisbytheaveragevalues，isincaseI

equaltothesumoftheirindividualvalues；althoughinthecaseofthecommoditiesproducedattheextremes，thisvalueisrepresentedasanaveragevaluewhichisforceduponthem。Thosewhoproduceattheworstextrememustthenselltheircommoditiesbelowtheindividualvalue；thoseproducingatthebestextremesellthemaboveit。

IncaseIItheindividuallotsofcommodity-valuesproducedatthetwoextremesdonotbalanceoneanother。Rather，thelotproducedundertheworseconditionsdecidestheissue。Strictlyspeaking，theaverageprice，orthemarket-value，ofeachindividualcommodity，oreachaliquotpartofthetotalmass，wouldnowbedeterminedbythetotalvalueofthemassasobtainedbyaddingupthevaluesofthecommoditiesproducedunderdifferentconditions，andinaccordancewiththealiquotpartofthistotalvaluefallingtotheshareofeachindividualcommodity。Themarket-valuethusobtainedwouldexceedtheindividualvaluenotonlyofthecommoditiesbelongingtothefavourableextreme，butalsoofthosebelongingtotheaveragelot。Yetitwouldstillbebelowtheindividualvalueofthosecommoditiesproducedattheunfavourableextreme。Howclosethemarket-valueapproaches，orfinallycoincideswith，thelatterwoulddependentirelyonthevolumeoccupiedbycommoditiesproducedattheunfavourableextremeofthecommoditysphereinquestion。Ifdemandisonlyslightlygreaterthansupply，theindividualvalueoftheunfavourablyproducedcommoditiesregulatesthemarket-price。

Finally，ifthelotofcommoditiesproducedatthefavourableextremeoccupiesgreaterplacethantheotherextreme，andalsothantheaveragelot，asitdoesincaseIII，thenthemarket-valuefallsbelowtheaveragevalue。Theaveragevalue，computedbyaddingthesumsofvaluesatthetwoextremesandatthemiddle，standsherebelowthevalueofthemiddle，whichitapproaches，orviceversa，dependingontherelativeplaceoccupiedbythefavourableextreme。Shoulddemandbeweakerthansupply，thefavourablysituatedpart，whateveritssize，makesroomforitselfforciblybyparingitspricedowntoitsindividualvalue。Themarket-valuecannotevercoincidewiththisindividualvalueofthecommoditiesproducedunderthemostfavourableconditions，exceptwhensupplyfarexceedsdemand。

Thismodeofdeterminingmarket-values，whichwehavehereoutlinedabstractly，ispromotedintherealmarketbycompetitionamongthebuyers，providedthedemandislargeenoughtoabsorbthemassofcommoditiesatvaluessofixed。Andthisbringsustotheotherpoint。

Second，tosaythatacommodityhasause-valueismerelytosaythatitsatisfiessomesocialwant。Solongaswedealtwithindividualcommoditiesonly，wecouldassumethattherewasaneedforaparticularcommodity——itsquantityalreadyimpliedbyitspricewithoutinquiringfurtherintothequantityrequiredtosatisfythiswant。Thisquantityis，however，ofessentialimportance，assoonastheproductofanentirebranchofproductionisplacedononeside，andthesocialneedforitontheother。Itthenbecomesnecessarytoconsidertheextent，i。e。，theamountofthissocialwant。

Intheforegoingdeterminationsofmarket-valueitwasassumedthatthemassoftheproducedcommoditiesisgiven，i。e。，remainsthesame，andthatthereisachangeonlyintheproportionsofitsconstituentelements，whichareproducedunderdifferentconditions，andthat，hence，themarket-valueofthesamemassofcommoditiesisdifferentlyregulated。Suppose，thismasscorrespondsinsizetotheusualsupply，leavingasidethepossibilitythataportionoftheproducedcommoditiesmaybetemporarilywithdrawnfromthemarket。Shoulddemandforthismassnowalsoremainthesame，thiscommoditywillbesoldatitsmarket-value，nomatterwhichofthethreeaforementionedcasesregulatesthismarket-value。Thismassofcommoditiesdoesnotmerelysatisfyaneed，butsatisfiesittoitsfullsocialextent。

Shouldtheirquantitybesmallerorgreater，however，thanthedemandforthem，therewillbedeviationsofthemarket-pricefromthemarket-value。

Andthefirstdeviationisthatifthesupplyistoosmall，themarket-valueisalwaysregulatedbythecommoditiesproducedundertheleastfavourablecircumstancesand，ifthesupplyistoolarge，alwaysbythecommoditiesproducedunderthemostfavourableconditions；thatthereforeitisoneoftheextremeswhichdeterminesthemarket-value，inspiteofthefactthatinaccordancewiththemereproportionofthecommoditymassesproducedunderdifferentconditions，adifferentresultshouldobtain。Ifthedifferencebetweendemandandtheavailablequantityoftheproductismoreconsiderable，themarket-pricewilllikewisebeconsiderablyaboveorbelowthemarket-value。

Now，thedifferencebetweenthequantityoftheproducedcommoditiesandthatquantityofthematwhichtheyaresoldatmarket-valuemaybeduetotworeasons。Eitherthequantityitselfchanges，becomingtoosmallortoolarge，sothatreproductionwouldhavetakenplaceonadifferentscalethanthatwhichregulatedthegivenmarket-value。Inthatcase，thesupplychanged，althoughdemandremainedthesame，andtherewas，therefore，relativeover-productionorunder-production。Orelsereproduction，andthussupply，remainedthesame，whiledemandshrankorincreased，whichmaybeduetoseveralreasons。Althoughtheabsolutemagnitudeofthesupplywasthesame，itsrelativemagnitude，itsmagnituderelativeto，ormeasuredby，thedemand，hadchanged。Theeffectisthesameasinthefirstcase，butinthereversedirection。finally，ifchangestakeplaceonbothsides，buteitherinreversedirections，or，ifinthesamedirection，thennottothesameextent，ifthereforetherearechangesonbothsides，butthesealtertheformerproportionbetweenthetwosides，thenthefinalresultmustalwaysleadtooneofthetwoabove-mentionedcases。