第7章

Thedifferencebetweenthetwonationalratesofprofitmightdisappear，orevenbereversed，iflabourwerelessproductiveinthelessdevelopedcountry，sothatalargerquantityoflabourweretoberepresentedinasmallerquantityofthesamecommodities，andalargerexchange-valuewererepresentedinlessuse-value。Thelabourerwouldthenspendmoreofhistimeinreproducinghisownmeansofsubsistence，ortheirvalue，andlesstimeinproducingsurplus-value；consequently，hewouldperformlesssurplus-labour，withtheresultthattherateofsurplus-valuewouldbelower。Suppose，thelabourerofthelessdevelopedcountryweretowork2/3oftheworking-dayforhimselfand1/3forthecapitalist；inaccordancewiththeaboveillustration，thesamelabour-powerwouldthenbepaidwith1331/3andwouldfurnishasurplusofonly602/3。Aconstantcapitalof50wouldcorrespondtoavariablecapitalof4331/3。Therateofsurplus-valuewouldamountto662/3:1331/3=50%，andtherateofprofitto662/3:1331/3，orapproximately36%。

Sincewehavenotsofaranalysedthedifferentcomponentpartsofprofit，i。e。，theydonotforthepresentexistforus，wemakethefollowingremarksbeforehandmerelytoavoidmisunderstanding:Incomparingcountriesindifferentstagesofdevelopmentitwouldbeabigmistaketomeasurethelevelofthenationalrateofprofitby，say，thelevelofthenationalrateofinterest，namelywhencomparingcountrieswithadevelopedcapitalistproductionwithcountriesinwhichlabourhasnotyetbeenformallysubjectedtocapital，althoughinrealitythelabourerisexploitedbythecapitalist(as，forinstance，inIndia，wheretheryotmanageshisfarmasanindependentproducerwhoseproductionassuchisnot，therefore，asyetsubordinatedtocapital，althoughtheusurermaynotonlyrobhimofhisentiresurplus-labourbymeansofinterest，butmayalso，touseacapitalistterm，hackoffapartofhiswage)。Thisinterestcomprisesalltheprofit，andmorethantheprofit，insteadofmerelyexpressinganaliquotpartoftheproducedsurplus-value，orprofit，asitdoesincountrieswithadevelopedcapitalistproduction。Ontheotherhand，therateofinterestis，inthiscase，mostlydeterminedbyrelations(loansgrantedbyusurerstoownersoflargerestateswhodrawground-rent)whichhavenothingtodowithprofit，andratherindicatetowhatextentusuryappropriatesground-rent。

Asregardscountriespossessingdifferentstagesofdevelopmentofcapitalistproduction，andconsequentlycapitalsofdifferentorganiccomposition，acountrywherethenormalworking-dayisshorterthananother’smayhaveahigherrateofsurplus-value(oneofthefactorswhichdeterminestherateofprofit)。First，iftheEnglishten-hourworking-dayis，onaccountofitshigherintensity，equaltoanAustrianworking-dayof14hours，then，dividingtheworking-dayequallyinbothinstances，5hoursofEnglishsurplus-labourmayrepresentagreatervalueontheworld-marketthan7hoursofAustriansurplus-labour。Second，alargerportionoftheEnglishworking-daythanoftheAustrianmayrepresentsurplus-labour。

Thelawofthefallingrateofprofit，whichexpressesthesame，orevenahigher，rateofsurplus-value，states，inotherwords，thatanyquantityoftheaveragesocialcapital，say，acapitalof100，comprisesaneverlargerportionormeansoflabour，andaneversmallerportionoflivinglabour。Therefore，sincetheaggregatemassoflivinglabouroperatingthemeansofproductiondecreasesinrelationtothevalueofthesemeansofproduction，itfollowsthattheunpaidlabourandtheportionofvalueinwhichitisexpressedmustdeclineascomparedtothevalueoftheadvancedtotalcapital。Or:Aneversmalleraliquotpartofinvestedtotalcapitalisconvertedintolivinglabour，andthistotalcapital，therefore，absorbsinproportiontoitsmagnitudelessandlesssurplus-labour，althoughtheunpaidpartofthelabourappliedmayatthesametimegrowinrelationtothepaidpart。Therelativedecreaseofthevariableandincreaseoftheconstantcapital，howevermuchbothpartsmaygrowinabsolutemagnitude，is，aswehavesaid，butanotherexpressionforgreaterproductivityoflabour。

Letacapitalof100consistof80c+20v，andthelatter=20labourers。

Lettherateofsurplus-valuebe100%，i。e。，thelabourersworkhalfthedayforthemselvesandtheotherhalfforthecapitalist。Nowletthecapitalof100inalessdevelopedcountry=20c+80v，andletthelatter=80labourers。Buttheselabourersrequire213ofthedayforthemselves，andworkonlyforthecapitalist。Everythingelsebeingequal，thelabourersinthefirstcaseproduceavalueof40，andinthesecondof120。Thefirstcapitalproduces80c+20v+20s=120；rateofprofit=20%。

Thesecondcapital，20c+80v+40s=140；rateofprofit40%。Inthesecondcasetherateofprofitis，therefore，doublethefirst，althoughtherateofsurplus-valueinthefirst=100%，whichisdoublethatofthesecond，whereitisonly50%。Butthen，acapitalofthesamemagnitudeappropriatesthesurplus-labourofonly20labourersinthefirstcase，andof80labourersinthesecondcase。

Thelawoftheprogressivefallingoftherateofprofit，ortherelativedeclineofappropriatedsurplus-labourcomparedtothemassofmaterialisedlaboursetinmotionbylivinglabour，doesnotruleoutinanywaythattheabsolutemassofexploitedlaboursetinmotionbythesocialcapital，andconsequentlytheabsolutemassofthesurplus-labouritappropriates，maygrow；nor，thatthecapitalscontrolledbyindividualcapitalistsmaydisposeofagrowingmassoflabourand，hence，ofsurplus-labour，thelattereventhoughthenumberoflabourerstheyemploydoesnotincrease。

Takeacertainworkingpopulationof，say，twomillion。Assume，furthermore，thatthelengthandintensityoftheaverageworking-day，andthelevelofwages，andtherebytheproportionbetweennecessaryandsurplus-labour，aregiven。Inthatcasetheaggregatelabourofthesetwomillion，andtheirsurplus-labourexpressedinsurplus-value，alwaysproducesthesamemagnitudeofvalue。Butwiththegrowthofthemassoftheconstant(fixedandcirculating)capitalsetinmotionbythislabour，thisproducedquantityofvaluedeclinesinrelationtothevalueofthiscapital，whichvaluegrowswithitsmass，evenifnotinquitethesameproportion。Thisratio，andconsequentlytherateofprofit，shrinksinspiteofthefactthatthemassofcommandedlivinglabouristhesameasbefore，andthesameamountofsurplus-labourissuckedoutofitbythecapital。Itchangesbecausethemassofmaterialisedlaboursetinmotionbylivinglabourincreases，andnotbecausethemassoflivinglabourhasshrunk。Itisarelativedecrease，notanabsoluteone，andhas，infact，nothingtodowiththeabsolutemagnitudeofthelabourandsurplus-laboursetinmotion。Thedropintherateofprofitisnotduetoanabsolute，butonlytoarelativedecreaseofthevariablepartofthetotalcapital，i。e。，toitsdecreaseinrelationtotheconstantpart。

Whatappliestoanygivenmassoflabourandsurplus-labour，alsoappliestoagrowingnumberoflabourers，and，thus，undertheaboveassumption，toanygrowingmassofcommandedlabouringeneral，andtoitsunpaidpart，thesurplus-labour，inparticular。Iftheworkingpopulationincreasesfromtwomilliontothree，andifthevariablecapitalinvestedinwagesalsorisestothreemillionfromitsformertwomillion，whiletheconstantcapitalrisesfromfourmilliontofifteenmillion，then，undertheaboveassumptionofaconstantworking-dayandaconstantrateofsurplus-value，themassofsurplus-labour，andofsurplus-value，risesbyone-half，i。e。，50%，fromtwomilliontothree。Nevertheless，inspiteofthisgrowthoftheabsolutemassofsurplus-labour，andhenceofsurplus-value，by50%，theratioofvariabletoconstantcapitalwouldfallfrom2:4to3:15，andtheratioofsurplus-valuetototalcapitalwouldbe(inmillions)

I。4c+2v+2s；C=6，p’=331/3%。

II。15c+3v+3s；C=18，p’=162/3%。

Whilethemassofsurplus-valuehasincreasedbyone-half，therateofprofithasfallenbyone-half。However，theprofitisonlythesurplus-valuecalculatedinrelationtothetotalsocialcapital，andthemassofprofit，itsabsolutemagnitude，issociallyequaltotheabsolutemagnitudeofthesurplus-value。Theabsolutemagnitudeoftheprofit，itstotalamount，would，therefore，havegrownby50%，inspiteofitsenormousrelativedecreasecomparedtotheadvancedtotalcapital，orinspiteoftheenormousdecreaseinthegeneralrateofprofit。Thenumberoflabourersemployedbycapital，hencetheabsolutemassofthelaboursetinmotionbyit，andthereforetheabsolutemassofsurplus-labourabsorbedbyit，themassofthesurplus-valueproducedbyit，andthereforetheabsolutemassoftheprofitproducedbyit，can，consequently，increase，andincreaseprogressively，inspiteoftheprogressivedropintherateofprofit。

Andthisnotonlycanbeso。Asidefromtemporaryfluctuationsitmustbeso，onthebasisofcapitalistproduction。

Essentially，thecapitalistprocessofproductionissimultaneouslyaprocessofaccumulation。Wehaveshownthatwiththedevelopmentofcapitalistproductionthemassofvaluestobesimplyreproduced，ormaintained，increasesastheproductivityoflabourgrows，evenifthelabour-poweremployedshouldremainconstant。Butwiththedevelopmentofsocialproductivityoflabourthemassofproduceduse-values，ofwhichthemeansofproductionformapart，growsstillmore。Andtheadditionallabour，throughwhoseappropriationthisadditionalwealthcanbereconvertedintocapital，doesnotdependonthevalue，butonthemassofthesemeansofproduction(includingmeansofsubsistence)，becauseintheproductionprocessthelabourershavenothingtodowiththevalue，butwiththeuse-value，ofthemeansofproduction。Accumulationitself，however，andtheconcentrationofcapitalthatgoeswithit，isamaterialmeansofincreasingproductiveness。Now，thisgrowthofthemeansofproductionincludesthegrowthoftheworkingpopulation，thecreationofaworkingpopulation，whichcorrespondstothesurplus-capital，orevenexceedsitsgeneralrequirements，thusleadingtoanover-populationofworkers。Amomentaryexcessofsurplus-capitalovertheworkingpopulationithascommandeered，wouldhaveatwo-foldeffect。Itcould，ontheonehand，byraisingwages，mitigatetheadverseconditionswhichdecimatetheoffspringofthelabourersandwouldmakemarriageseasieramongthem，soasgraduallytoincreasethepopulation。

Ontheotherhand，byapplyingmethodswhichyieldrelativesurplus-value(introductionandimprovementofmachinery)itwouldproduceafarmorerapid，artificial，relativeover-population，whichinitsturn，wouldbeabreeding-groundforareallyswiftpropagationofthepopulation，sinceundercapitalistproductionmiseryproducespopulation。Itthereforefollowsofitselffromthenatureofthecapitalistprocessofaccumulation，whichisbutonefacetofthecapitalistproductionprocess，thattheincreasedmassofmeansofproductionthatistobeconvertedintocapitalalwaysfindsacorrespondinglyincreased，evenexcessive，exploitableworkerpopulation。

Astheprocessofproductionandaccumulationadvancestherefore，themassofavailableandappropriatedsurplus-labour，andhencetheabsolutemassofprofitappropriatedbythesocialcapital，mustgrow。Alongwiththevolume，however，thesamelawsofproductionandaccumulationincreasealsothevalueoftheconstantcapitalinamountingprogressionmorerapidlythanthatofthevariablepartofcapital，investedasitisinlivinglabour。Hence，thesamelawsproduceforthesocialcapitalagrowingabsolutemassofprofit，andafallingrateofprofit。

Weshallentirelyignoreherethatwiththeadvanceofcapitalistproductionandtheattendantdevelopmentoftheproductivenessofsociallabourandmultiplicationofproductionbranches，henceproducts，thesameamountofvaluerepresentsaprogressivelyincreasingmassofuse-valuesandenjoyments。

Thedevelopmentofcapitalistproductionandaccumulationliftslabour-processestoanincreasinglyenlargedscaleandthusimpartstothemevergreaterdimensions，andinvolvesaccordinglylargerinvestmentsofcapitalforeachindividualestablishment。Amountingconcentrationofcapitals(accompanied，thoughonasmallerscale，byanincreaseinthenumberofcapitalists)

is，therefore，oneofitsmaterialrequirementsaswellasoneofitsresults。

Handinhandwithit，mutuallyinteracting，thereoccursaprogressiveexpropriationofthemoreorlessdirectproducers。Itis，then，naturalfortheindividualcapitaliststocommandincreasinglylargearmiesoflabourers(nomatter。howmuchthevariablecapitalmaydecreaseinrelationtotheconstant)，andnatural，too，thatthemassofsurplus-value，andhenceprofit，appropriatedbythem，shouldgrowsimultaneouslywith，andinspiteof，thefallintherateofprofit。Thecauseswhichconcentratemassesoflabourersunderthecommandofindividualcapitalists，aretheverysamethatswellthemassoftheinvestedfixedcapital，andauxiliaryandrawmaterials，inmountingproportionascomparedtothemassofemployedlivinglabour。

Itrequiresnomorethanapassingremarkatthispointtoindicatethat，givenacertainlabouringpopulation，themassofsurplus-value，hencetheabsolutemassofprofit，mustgrowiftherateofsurplus-valueincreases，beitthroughalengtheningorintensificationoftheworking-day，orthroughadropinthevalueofwagesduetoanincreaseintheproductivenessoflabour，andthatitmustdosoinspiteoftherelativedecreaseofvariablecapitalinrespecttoconstant。

Thesamedevelopmentoftheproductivenessofsociallabour，thesamelawswhichexpressthemselvesinarelativedecreaseofvariableascomparedtototalcapital，andinthetherebyfacilitatedaccumulation，whilethisaccumulationinitsturnbecomesastarting-pointforthefurtherdevelopmentoftheproductivenessandforafurtherrelativedecreaseofvariablecapital——thissamedevelopmentmanifestsitself，asidefromtemporaryfluctuations，inaprogressiveincreaseofthetotalemployedlabour-powerandaprogressiveincreaseoftheabsolutemassofsurplus-value，andhenceofprofit。

Now，whatmustbetheformofthisdouble-edgedlawofadecreaseintherateofprofitandasimultaneousincreaseintheabsolutemassofprofitarisingfromthesamecauses？Asalawbasedonthefactthatundergivenconditionstheappropriatedmassofsurplus-labour，henceofsurplus-value，increases，andthat，sofarasthetotalcapitalisconcerned，ortheindividualcapitalasanaliquotpartofthetotalcapital，profitandsurplus-valueareidenticalmagnitudes？

Letustakeanaliquotpartofcapitaluponwhichwecalculatetherateofprofit，e。g。，100。These100representtheaveragecompositionofthetotalcapital，say，80c+20v。Wehaveseeninthesecondpartofthisbookthattheaveragerateofprofitinthevariousbranchesofproductionisdeterminednotbytheparticularcompositionofeachindividualcapital，butbytheaveragesocialcomposition。Asthevariablecapitaldecreasesrelativetotheconstant，hencethetotalcapitalof100，therateofprofit，ortherelativemagnitudeofsurplus-value，i。e。，itsratiototheadvancedtotalcapitalof100，fallseventhoughtheintensityofexploitationweretoremainthesame，oreventoincrease。Butitisnotthisrelativemagnitudealonewhichfalls。Themagnitudeofthesurplus-valueorprofitabsorbedbythetotalcapitalof100alsofallsabsolutely。Atarateofsurplus-valueof100%，acapitalof60c+40vproducesamassofsurplus-value，andhenceofprofit，amountingto40；acapitalof80c+20vamassofprofitof30；andforacapitalof80c+20vtheprofitfallsto20。Thisfallingappliestothemassofsurplus-value，andhenceofprofit，andisduetothefactthatthetotalcapitalof100employslesslivinglabour，and，theintensityoflabourexploitationremainingthesame，setsinmotionlesssurplus-labour，andthereforeproduceslesssurplus-value。Takinganyaliquotpartofthesocialcapital，i。e。，acapitalofaveragecomposition，asastandardbywhichtomeasuresurplus-value——andthisisdoneinallprofitcalculations——arelativefallofsurplus-valueisgenerallyidenticalwithitsabsolutefall。Inthecasesgivenabove，therateofprofitsinksfrom40%to30%andto20%，because，infact，themassofsurplus-value，andhenceofprofit，producedbythesamecapitalfallsabsolutelyfrom40to30andto20。Sincethemagnitudeofthevalueofthecapital，bywhichthesurplus-valueismeasured，isgivenas100，afallintheproportionofsurplus-valuetothisgivenmagnitudecanbeonlyanotherexpressionforthedecreaseoftheabsolutemagnitudeofsurplus-valueandprofit。Thisis，indeed，atautology。But，asshown，thefactthatthisdecreaseoccursatall，arisesfromthenatureofthedevelopmentofthecapitalistprocessofproduction。

Ontheotherhand，however，thesamecauseswhichbringaboutanabsolutedecreaseofsurplus-value，andhenceprofit，onagivencapital，andconsequentlyoftherateofprofitcalculatedinpercent，produceanincreaseintheabsolutemassofsurplus-value，andhenceofprofit，appropriatedbythesocialcapital(i。e。，byallcapitaliststakenasawhole)。Howdoesthisoccur，whatistheonlywayinwhichthiscanoccur，orwhataretheconditionsobtaininginthisseemingcontradiction？

Ifanyaliquotpart=100ofthesocialcapital，andhenceany100ofaveragesocialcomposition，isagivenmagnitude，forwhichthereforeafallintherateofprofitcoincideswithafallintheabsolutemagnitudeoftheprofitbecausethecapitalwhichhereservesasastandardofmeasurementisaconstantmagnitude，thenthemagnitudeofthesocialcapitallikethatofthecapitalinthehandsofindividualcapitalists，isvariable，andinkeepingwithourassumptionsitmustvaryinverselywiththedecreaseofitsvariableportion。

Inourformerillustration，whenthepercentageofcompositionwas60c+40v，thecorrespondingsurplus-value，orprofit，was40，andhencetherateofprofit40%。Suppose，thetotalcapitalinthisstageofcompositionwasonemillion。Thenthetotalsurplus-value，andhencethetotalprofit，amountedto400，000。Now，ifthecompositionlater=80c+20v，whilethedegreeoflabourexploitationremainedthesame，thenthesurplus-valueorprofitforeach100=20。Butsincetheabsolutemassofsurplus-valueorprofitincreases，asdemonstrated，inspiteofthedecreasingrateofprofitorthedecreasingproductionofsurplus-valuebyevery100ofcapital——increases，say，from400，000to440，000，thenthisoccurssolelybecausethetotalcapitalwhichformedatthetimeofthisnewcompositionhasrisento2，200，000。Themassofthetotalcapitalsetinmotionhasrisento220%，whiletherateofprofithasfallenby50%。Hadthetotalcapitalnomorethandoubled，itwouldhavetoproduceasmuchsurplus-valueandprofittoobtainarateofprofitof20%astheoldcapitalof1，000，000

producedat40%。Haditgrowntolessthandouble，itwouldhaveproducedlesssurplus-value，orprofit，thantheoldcapitalof1，000，000，which，initsformercomposition，wouldhavehadtogrowfrom1，000，000tonomorethan1，100，000toraiseitssurplus-valuefrom400，000to440，000。

Weagainmeetherethepreviouslydefinedlawthattherelativedecreaseofthevariablecapital，hencethedevelopmentofthesocialproductivenessoflabour，involvesanincreasinglylargemassoftotalcapitaltosetinmotionthesamequantityoflabour-powerandsqueezeoutthesamequantityofsurplus-labour。Consequently，thepossibilityofarelativesurplusoflabouringpeopledevelopsproportionatelytotheadvancesmadebycapitalistproductionnotbecausetheproductivenessofsociallabourdecreases，butbecauseitincreases。Itdoesnotthereforeariseoutofanabsolutedisproportionbetweenlabourandthemeansofsubsistence，orthemeansfortheproductionofthesemeansofsubsistence，butoutofadisproportionoccasionedbycapitalistexploitationoflabour，adisproportionbetweentheprogressivegrowthofcapitalanditsrelativelyshrinkingneedforanincreasingpopulation。

Shouldtherateofprofitfallby50%，itwouldshrinkone-half。Ifthemassofprofitistoremainthesame，thecapitalmustbedoubled。

Forthemassofprofitmadeatadecliningrateofprofittoremainthesame，themultiplierindicatingthegrowthofthetotalcapitalmustbeequaltothedivisorindicatingthefalloftherateofprofit。Iftherateofprofitfallsfrom40to20，thetotalcapitalmustriseinverselyattherateof20:40toobtainthesameresult。Iftherateofprofitfallsfrom40to8，thecapitalwouldhavetoincreaseattherateof8:40，orfive-fold。Acapitalof1，000，000at40%produces400，000，andacapitalof5，000，000at8%likewiseproduces400，000。Thisappliesifwewanttheresulttoremainthesame。Butiftheresultistobehigher，thenthecapitalmustgrowatagreaterratethantherateofprofitfalls。Inotherwords，forthevariableportionofthetotalcapitalnottoremainthesameinabsoluteterms，buttoincreaseabsolutelyinspiteofitsfallinginpercentageofthetotalcapital，thetotalcapitalmustgrowatafasterratethanthepercentageofthevariablecapitalfalls。Itmustgrowsoconsiderablythatinitsnewcompositionitshouldrequiremorethantheoldportionofvariablecapitaltopurchaselabour-power。Ifthevariableportionofacapital=100shouldfallfrom40to20，thetotalcapitalmustrisehigherthan200tobeabletoemployalargervariablecapitalthan40。

Eveniftheexploitedmassoftheworkingpopulationweretoremainconstant，andonlythelengthandintensityoftheworking-dayweretoincrease，themassoftheinvestedcapitalwouldhavetoincrease，sinceitwouldhavetobegreaterinordertoemploythesamemassoflabourundertheoldconditionsofexploitationafterthecompositionofcapitalchanges。

Thus，thesamedevelopmentofthesocialproductivenessoflabourexpressesitselfwiththeprogressofcapitalistproductionontheonehandinatendencyoftherateofprofittofallprogressivelyand，ontheother，inaprogressivegrowthoftheabsolutemassoftheappropriatedsurplus-value，orprofit；sothatonthewholearelativedecreaseofvariablecapitalandprofitisaccompaniedbyanabsoluteincreaseofboth。Thistwo-foldeffect，aswehaveseen，canexpressitselfonlyinagrowthofthetotalcapitalatapacemorerapidthanthatatwhichtherateofprofitfalls。

Foranabsolutelyincreasedvariablecapitaltobeemployedinacapitalofhighercomposition，oroneinwhichtheconstantcapitalhasincreasedrelativelymore，thetotalcapitalmustnotonlygrowproportionatelytoitshighercomposition，butstillmorerapidly。Itfollows，then，thatasthecapitalistmodeofproductiondevelops，aneverlargerquantityofcapitalisrequiredtoemploythesame，letaloneanincreased，amountoflabour-power。Thus，onacapitalistfoundation，theincreasingproductivenessoflabournecessarilyandpermanentlycreatesaseemingover-populationoflabouringpeople。Ifthevariablecapitalformsjust1/6ofthetotalcapitalinsteadoftheformer，thetotalcapitalmustbetrebledtoemploythesameamountoflabour-power。Andiftwiceasmuchlabour-poweristobeemployed，thetotalcapitalmustincreasesix-fold。

Politicaleconomy，whichhasuntilnowbeenunabletoexplainthelawofthetendencyoftherateofprofittofall，pointedself-consolinglytotheincreasingmassofprofit，i。e。，tothegrowthoftheabsolutemagnitudeofprofit，beitfortheindividualcapitalistorforthesocialcapital，butthiswasalsobasedonmereplatitudeandspeculation。

Tosaythatthemassofprofitisdeterminedbytwofactors——first，therateofprofit，and，secondly，themassofcapitalinvestedatthisrate，ismeretautology。Itisthereforebutacorollaryofthistautologytosaythatthereisapossibilityforthemassofprofittogroweventhoughtherateofprofitmayfallatthesametime。Itdoesnothelpusonestepfarther，sinceitisjustaspossibleforthecapitaltoincreasewithoutthemassofprofitgrowing，andforittoincreaseevenwhilethemassofprofitfalls。For100at25%yields25，and400at5%yieldsonly20。[1]Butifthesamecauseswhichmaketherateofprofitfall，entailtheaccumulation，i。e。，theformation，ofadditionalcapital，andifeachadditionalcapitalemploysadditionallabourandproducesadditionalsurplus-value；

if，ontheotherhand，themerefallintherateofprofitimpliesthattheconstantcapital，andwithitthetotaloldcapital，haveincreased，thenthisprocessceasestobemysterious。Weshallseelater[K。Marx，TheorienberdenMehrwert。K。Marx/F。Engels，Werk，，Band26，Teil2，。S。435-66，541-43——Ed]towhatdeliberatefalsificationssomepeopleresortintheircalculationstospiritawaythepossibilityofanincreaseinthemassofprofitsimultaneouswithadecreaseintherateofprofit。

Wehaveshownhowthesamecausesthatbringaboutatendencyforthegeneralrateofprofittofallnecessitateanacceleratedaccumulationofcapitaland，consequently，anincreaseintheabsolutemagnitude，ortotalmass，ofthesurplus-labour(surplus-value，profit)appropriatedbyit。Justaseverythingappearsreversedincompetition，andthusintheconsciousnessoftheagentsofcompetition，soalsothislaw，thisinnerandnecessaryconnectionbetweentwoseemingcontradictions。Itisevidentthatwithintheproportionsindicatedaboveacapitalistdisposingofalargecapitalwillreceivealargermassofprofitthanasmallcapitalistmakingseeminglyhighprofits。Evenacursoryexaminationofcompetitionshows，furthermore，thatundercertaincircumstances，whenthegreatercapitalistwishestomakeroomforhimselfonthemarket，andtocrowdoutthesmallerones，ashappensintimesofcrises，hemakespracticaluseofthis，i。e。，hedeliberatelylowershisrateofprofitinordertodrivethesmalleronestothewall。Merchantscapital，whichweshalldescribeindetaillater，alsonotablyexhibitsphenomenawhichappeartoattributeafallinprofittoanexpansionofbusiness，andthusofcapital。Thescientificexpressionforthisfalseconceptionwillbegivenlater。Similarsuperficialobservationsresultfromacomparisonofratesofprofitinindividuallinesofbusiness，distinguishedeitherassubjecttofreecompetition，ortomonopoly。TheutterlyshallowconceptionexistinginthemindsoftheagentsofcompetitionisfoundinRoscher，namely，thatareductionintherateofprofitis”moreprudentandhumane”。[Roscher，DieGrundlagederNationalkonomie，3Auflage，1858，108，S。192——

Ed。]Thefallintherateofprofitappearsinthiscaseasaneffectofanincreaseincapitalandoftheconcomitantcalculationofthecapitalistthatthemassofprofitspocketedbyhimwillbegreateratasmallerrateofprofit。Thisentireconception(withtheexceptionofAdamSmiths，whichweshallmentionlater)[K。Marx，TheorienberdenMehrwert。K。Marx/F。Engels，Werke，Band26，Teil2，S。214-28——

Ed。]restsonanuttermisapprehensionofwhatthegeneralrateofprofitis，andonthecrudenotionthatpricesareactuallydeterminedbyaddingamoreorlessarbitraryquotaofprofittothetruevalueofcommodities。Crudeastheseideasare，theyarisenecessarilyoutoftheinvertedaspectwhichtheimmanentlawsofcapitalistproductionrepresentincompetition。

Thelawthatafallintherateofprofitduetothedevelopmentofproductivenessisaccompaniedbyanincreaseinthemassofprofit，alsoexpressesitselfinthefactthatafallinthepriceofcommoditiesproducedbyacapitalisaccompaniedbyarelativeincreaseofthemassesofprofitcontainedinthemandrealisedbytheirsale。

Sincethedevelopmentoftheproductivenessandthecorrespondinglyhighercompositionofcapitalsetsinmotionanever-increasingquantityofmeansofproductionthroughaconstantlydecreasingquantityoflabour，everyaliquotpartofthetotalproduct，i。e。，everysinglecommodity，oreachparticularlotofcommoditiesinthetotalmassofproducts，absorbslesslivinglabour，andalsocontainslessmaterialisedlabour，bothinthedepreciationofthefixedcapitalappliedandintherawandauxiliarymaterialsconsumed。Henceeverysinglecommoditycontainsasmallersumoflabourmaterialisedinmeansofproductionandoflabournewlyaddedduringproduction。Thiscausesthepriceoftheindividualcommoditytofall。Butthemassofprofitscontainedintheindividualcommoditiesmayneverthelessincreaseiftherateoftheabsoluteorrelativesurplus-valuegrows。Thecommoditycontainslessnewlyaddedlabour，butitsunpaidportiongrowsinrelationtoitspaidportion。However，thisisthecaseonlywithincertainlimits。Withtheabsoluteamountoflivinglabournewlyincorporatedinindividualcommoditiesdecreasingenormouslyasproductiondevelops，theabsolutemassofunpaidlabourcontainedinthemwilllikewisedecrease，howevermuchitmayhavegrownascomparedtothepaidportion。Themassofprofitoneachindividualcommoditywillshrinkconsiderablywiththedevelopmentoftheproductivenessoflabour，inspiteofagrowthintherateofsurplus-value。Andthisreduction，justasthefallintherateofprofit，isonlydelayedbythecheapeningoftheelementsofconstantcapitalandbytheothercircumstancessetforthinthefirstpartofthisbook，whichincreasetherateofprofitatagiven，orevenfalling，rateofsurplus-value。

Thatthepriceofindividualcommoditieswhosesummakesupthetotalproductofcapitalfalls，meanssimplythatacertainquantityoflabourisrealisedinalargerquantityofcommodities，sothateachindividualcommoditycontainslesslabourthanbefore。Thisisthecaseevenifthepriceofonepartofconstantcapital，suchasrawmaterial，etc。，shouldrise。Outsideofafewcases(forinstance，iftheproductivenessoflabouruniformlycheapensallelementsoftheconstant，andthevariable，capital)，therateofprofitwillfall，inspiteofthehigherrateofsurplus-value，1)becauseevenalargerunpaidportionofthesmallertotalamountofnewlyaddedlabourissmallerthanasmalleraliquotunpaidportionoftheformerlargeramountand2)becausethehighercompositionofcapitalisexpressedintheindividualcommoditybythefactthattheportionofitsvalueinwhichnewlyaddedlabourismaterialiseddecreasesinrelationtotheportionofitsvaluewhichrepresentsrawandauxiliarymaterial，andthewearandtearoffixedcapital。Thischangeintheproportionofthevariouscomponentpartsinthepriceofindividualcommodities，i。e。，thedecreaseofthatportionofthepriceinwhichnewlyaddedlivinglabourismaterialised，andtheincreaseofthatportionofitinwhichformerlymaterialisedlabourisrepresented，istheformwhichexpressesthedecreaseofthevariableinrelationtotheconstantcapitalthroughthepriceoftheindividualcommodities。Justasthisdecreaseisabsoluteforacertainamountofcapital，sayof100，itisalsoabsoluteforeveryindividualcommodityasanaliquotpartofthereproducedcapital。However，therateofprofit，ifcalculatedmerelyontheelementsofthepriceofanindividualcommodity，wouldbedifferentfromwhatitactuallyis。Andforthefollowingreason:

[Therateofprofitiscalculatedonthetotalcapitalinvested，butforadefinitetime，actuallyayear。Therateofprofitistheratioofthesurplus-value，orprofit，producedandrealisedinayear，tothetotalcapitalcalculatedinpercent。Itis，therefore，notnecessarilyequaltoarateofprofitcalculatedfortheperiodofturnoveroftheinvestedcapitalratherthanforayear。Itisonlyifthecapitalisturnedoverexactlyinoneyearthatthetwocoincide。

Ontheotherhand，theprofitmadeinthecourseofayearismerelythesumofprofitsoncommoditiesproducedandsoldduringthatsameyear。

Now，ifwecalculatetheprofitonthecost-priceofcommodities，weobtainarateofprofit=p/kinwhichpstandsfortheprofitrealisedduringoneyear，andkforthesumofthecost-pricesofcommoditiesproducedandsoldwithinthesameperiod。Itisevidentthatthisrateofprofitp/kwillnotcoincidewiththeactualrateofprofitp/C，massofprofitdividedbytotalcapital，unlessk=C，thatis，unlessthecapitalisturnedoverinexactlyoneyear。

Letustakethreedifferentconditionsofanindustrialcapital。

I。Acapitalof£；8，000producesandsellsannually5，000piecesofacommodityat30s。perpiece，thusmakinganannualturnoverof£；7，500。

Itmakesaprofitof10s。oneachpiece，or£；2，500peryear。Everypiece，then，contains20s。advancedcapitaland10s。profit，sothattherateofprofitperpieceis10/20=50%。Theturned-oversumof£；7，500

contains£；5，000advancedcapitaland£；2，500profit。Rateofprofitperturnover，p/k，likewise50%。Butcalculatedonthetotalcapitaltherateofprofitp/C=2，500/8，000=31%

II。Thecapitalrisesto£；10，000。Owingtoincreasedproductivityoflabouritisabletoproduceannually10，000piecesofthecommodityatacost-priceof20s。perpiece。Supposethecommodityissoldataprofitof4s。，henceat24s。perpiece。Inthatcasethepriceoftheannualproduct=£；12，000，ofwhich£；10，000isadvancedcapitaland£；2，000

isprofit。Therateofprofitp/k=4/20perpiece，and2，000/10，000fortheannualturnover，orinbothcases=20%。Andsincethetotalcapitalisequaltothesumofthecost-prices，namely£；10，000，itfollowsthatp/C，theactualrateofprofit，isinthiscasealso20%。

III。Letthecapitalriseto£；15，000owingtoaconstantgrowthoftheproductivenessoflabour，andletitannuallyproduce30，000piecesofthecommodityatacost-priceof13s。perpiece，eachpiecebeingsoldataprofitof2s。，orat15s。Theannualturnovertherefore=30，000x15s。

=£；22，500，ofwhich£；19，500isadvancedcapitaland£；3，000

profit。Therateofprofitp/kthen=2/13=3，000/15，000=20%。

Wesee，therefore，thatonlyincaseII，wheretheturned-overcapital-valueisequaltothetotalcapital，therateofprofitperpiece，orpertotalamountofturnover，isthesameastherateofprofitcalculatedonthetotalcapital。IncaseI，inwhichtheamountoftheturnoverissmallerthanthetotalcapital，therateofprofitcalculatedonthecost-priceofthecommodityishigher；andincaseIII，inwhichthetotalcapitalissmallerthantheamountoftheturnover，itislowerthantheactualratecalculatedonthetotalcapital。Thisisageneralrule。

Incommercialpractice，theturnoverisgenerallycalculatedinaccurately。

Itisassumedthatthecapitalhasbeenturnedoveronceassoonasthesumoftherealisedcommodity-pricesequalsthesumoftheinvestedtotalcapital。Butthecapitalcancompleteonewholeturnoveronlywhenthesumofthecost-pricesoftherealisedcommoditiesequalsthesumofthetotalcapital——F。E。]

Thisagainshowshowimportantitisincapitalistproductiontoregardindividualcommodities，orthecommodity-productofacertainperiod，asproductsofadvancedcapitalandinrelationtothetotalcapitalwhichproducesthem，ratherthaninisolation，bythemselves，asmerecommodities。

Therateofprofitmustbecalculatedbymeasuringthemassofproducedandrealisedsurplus-valuenotonlyinrelationtotheconsumedportionofcapitalreappearinginthecommodities，butalsotothispartplusthatportionofunconsumedbutappliedcapitalwhichcontinuestooperateinproduction。However，themassofprofitcannotheequaltoanythingbutthemassofprofitorsurplus-value，containedinthecommoditiesthemselves，andtoherealisedbytheirsale。

Iftheproductivityofindustryincreases，thepriceofindividualcommoditiesfalls。Thereislesslabourinthem，lesspaidandunpaidlabour。Suppose，thesamelabourproduces，say，tripleitsformerproduct。Then2/3lesslabouryieldsindividualproduct。Andsinceprofitcanmakeupbutaportionoftheamountoflabourcontainedinanindividualcommodity，themassofprofitintheindividualcommoditymustdecrease，andthistakesplacewithincertainlimits，eveniftherateofsurplus-valueshouldrise。Inanycase，themassofprofitonthetotalproductdoesnotfallbelowtheoriginalmassofprofitsolongasthecapitalemploysthesamenumberoflabourersatthesamedegreeofexploitation。(Thismayalsooccuriffewerlabourersareemployedatahigherrateofexploitation。)Forthemassofprofitontheindividualproductdecreasesproportionatelytotheincreaseinthenumberofproducts。Themassofprofitremainsthesame，butitisdistributeddifferentlyoverthetotalamountofcommodities。

Nordoesthisalterthedistributionbetweenthelabourersandcapitalistsoftheamountofvaluecreatedbynewlyaddedlabour。Themassofprofitcannotincreasesolongasthesameamountoflabourisemployed，unlesstheunpaidsurplus-labourincreases，or，shouldintensityofexploitationremainthesame，unlessthenumberoflabourersgrows。Or，boththesecausesmaycombinetoproducethisresult。Inallthesecases-which，however，inaccordancewithourassumption，presupposeanincreaseofconstantcapitalascomparedtovariable，andanincreaseinthemagnitudeoftotalcapital——theindividualcommoditycontainsasmallermassofprofitandtherateofprofitfallsevenifcalculatedontheindividualcommodity。Agivenquantityofnewlyaddedlabourmaterialisesinalargerquantityofcommodities。

Thepriceoftheindividualcommodityfalls。Consideredabstractlytherateofprofitmayremainthesame，eventhoughthepriceoftheindividualcommoditymayfallasaresultofgreaterproductivenessoflabourandasimultaneousincreaseinthenumberofthischeapercommodityif，forinstance，theincreaseinproductivenessoflabouractsuniformlyandsimultaneouslyonalltheelementsofthecommodity，sothatitstotalpricefallsinthesameproportioninwhichtheproductivityoflabourincreases，while，ontheotherhand，themutualrelationofthedifferentelementsofthepriceofthecommodityremainsthesame。Therateofprofitcouldevenriseifariseintherateofsurplus-valuewereaccompaniedbyasubstantialreductioninthevalueoftheelementsofconstant，andparticularlyoffixed，capital。Butinreality，aswehaveseen，therateofprofitwillfallinthelongrun。Innocasedoesafallinthepriceofanyindividualcommoditybyitselfgiveacluetotherateofprofit。Everythingdependsonthemagnitudeofthetotalcapitalinvestedinitsproduction。Forinstance，ifthepriceofoneyardoffabricfallsfrom3s。to12/3s。，ifweknowthatbeforethispricereductionitcontained12/3s。constantcapital，yarn，etc。，2/3s。wages，and2/3s。profit，whileafterthereductionitcontains1s。constantcapital，1/3s。wages，and1/3s。profit，wecannottelliftherateofprofithasremainedthesameornot。Thisdependsonwhether，andbyhowmuch，theadvancedtotalcapitalhasincreased，andhowmanyyardsmoreitproducesinagiventime。

Thephenomenon，springingfromthenatureofthecapitalistmodeofproduction，thatincreasingproductivityoflabourimpliesadropinthepriceoftheindividualcommodity，orofacertainmassofcommodities，anincreaseinthenumberofcommodities，areductioninthemassofprofitontheindividualcommodityandintherateofprofitontheaggregateofcommodities，andanincreaseinthemassofprofitonthetotalquantityofcommodities——thisphenomenonappearsonthesurfaceonlyinareductionofthemassofprofitontheindividualcommodity，afallinitsprice，anincreaseinthemassofprofitontheaugmentedtotalnumberofcommoditiesproducedbythetotalsocialcapitaloranindividualcapitalist。Itthenappearsasifthecapitalistaddslessprofittothepriceoftheindividualcommodityofhisownfreewill，andmakesupforitthroughthegreaternumberofcommoditiesheproduces。Thisconceptionrestsuponthenotionofprofituponalienation，which，initsturn，isdeducedfromtheconceptionofmerchantcapital。

WehavepreviouslyseeninBookI(4and7Abschnitt)[Englishedition:

PartsIVandVII——Ed。]thatthemassofcommoditiesgrowingalongwiththeproductivityoflabourandthecheapeningoftheindividualcommodityassuch(aslongasthesecommoditiesdonotenterthepriceoflabour-powerasdeterminants)——thatthisdoesnotaffecttheproportionbetweenpaidandunpaidlabourintheindividualcommodity。inspiteofthefallingprice。

Sinceallthingsappeardistorted，namely，reversedincompetition，theindividualcapitalistmayimagine:1)thatheisreducinghisprofitontheindividualcommoditybycuttingitsprice，butstillmakingagreaterprofitbysellingalargerquantityofcommodities；2)thathefixesthepriceoftheindividualcommoditiesandthathedeterminesthepriceofthetotalproductbymultiplication，whiletheoriginalprocessisreallyoneofdivision(seeBookI，Kap。X，S。281[Englishedition:Ch。XII——

Ed])，andmultiplicationisonlycorrectsecondarily，sinceitisbasedonthatdivision。Thevulgareconomistdoespracticallynomorethantranslatethesingularconceptsofthecapitalists，whoareinthethrallofcompetition，intoaseeminglymoretheoreticalandgeneralisedlanguage，andattempttosubstantiatethejusticeofthoseconceptions。

Thefallincommodity-pricesandtheriseinthemassofprofitontheaugmentedmassofthesecheapenedcommoditiesis，infact，butanotherexpressionforthelawofthefallingrateofprofitattendedbyasimultaneouslyincreasingmassofprofit。

TheanalysisofhowfarafallingrateofprofitmaycoincidewithrisingpricesnomorebelongsherethanthatofthepointpreviouslydiscussedinBookI(S。280-81[Englishedition:Ch。XII——Ed。])，concerningrelativesurplus-value。Acapitalistworkingwithimprovedbutnotasyetgenerallyadoptedmethodsofproductionsellsbelowthemarket-price，butabovehisindividualpriceofproduction；。hisrateofprofitrisesuntilcompetitionlevelsitout。Duringthisequalisationperiodthesecondrequisite，expansionoftheinvestedcapital，makesitsappearance。Accordingtothedegreeofthisexpansionthecapitalistwillbeabletoemployapartofhisformerlabourers，actuallyperhapsallofthem，orevenmore，underthenewconditions，andhencetoproducethesame，oragreater，massofprofit。

FOOTNOTES[1]”Weshouldalsoexpectthat，howevertherateoftheprofitsofstockmightdiminishinconsequenceoftheaccumulationofcapitalonthelandandtheriseofwages，yettheaggregateamountofprofitswouldincrease。

Thus，supposingthat，withrepeatedaccumulationsof£；100，000，therateofprofitshouldfallfrom20to19，to48，to17%，aconstantlydiminishingrate，weshouldexpectthatthewholeamountofprofitsreceivedbythosesuccessiveownersofcapitalwouldhealwaysprogressive；thatitwouldbegreaterwhenthecapitalwas£；200，000，thanwhen£；100，000；

stillgreaterwhen£；300，000；andsoon，increasing，thoughatadiminishingrate，witheveryincreaseofcapital。Thisprogression，however，isonlytrueforacertaintime；thus19%on£；200，000ismorethan20%on£；100，000；again18%on£；300，000ismorethan19%on£；200，000；

butaftercapitalhasaccumulatedtoalargeamount，andprofitshavefallen，thefurtheraccumulationdiminishestheaggregateofprofits。Thus，supposetheaccumulationshouldbe£；1，000，000，andtheprofits7%，thewholeamountofprofitswillbe£；70，000；nowifanadditionof£；100，000

capitalbemadetothemillion，andprofitsshouldfallto6%，£；66，000

oradiminutionof£；4，000willbereceivedbytheownersofthestock，althoughthewholeamountofstockwillbeincreasedfrom£；1，000，000

to£；1，100，000。”——Ricardo，PoliticalEconomy，Chap。VI(Works，ed。byMacCulloch，1852，pp。68-69)——Thefactis，thattheassumptionhasherebeenmadethatthecapitalincreasesfrom1，000，000to1，100，000，thatis，by10%，whiletherateofprofitfallsfrom7to6，henceby142/7%。Hincillaelacrimae！[Publius，Terence，Andria，ActI，Scene1——Ed。]

Capital，Vol。3，Chapter14Capital，Vol。3，Chapter15Capital，Vol。3，Chapter16KarlMarxCAPITALVol。III

THEPROCESSOF

CAPITALISTPRODUCTIONASAWHOLEPartIV

CONVERSIONOFCOMMODITY-CAPITALANDMONEY-CAPITAL

INTOCOMMERCIALCAPITALANDMONEY-DEALINGCAPITAL

(MERCHANT’SCAPITAL)CHAPTER16

CommercialCapitalMerchant’s，ortrading，capitalbreaksupintotwoformsorsub-divisions，namely，commercialcapitalandmoney-dealingcapital，whichweshallnowdefinemoreclosely，insofarasthisisnecessaryforouranalysisofcapitalinitsbasicstructure。Thisisallthemorenecessary，becausemodernpoliticaleconomy，eveninthepersonsofitsbestexponents，throwstradingcapitalandindustrialcapitalindiscriminatelytogetherand，ineffect，whollyoverlooksthecharacteristicpeculiaritiesoftheformer。

Themovementsofcommodity-capitalhavebeenanalysedinBookII。Totakethetotalcapitalofsociety，onepartofit——alwaysmadeupofdifferentelementsandevenchanginginmagnitude——alwaysexistsintheformofcommoditiesonthemarket，tobeconvertedintomoney。Anotherpartexistsonthemarketintheformofmoney，tobeconvertedintocommodities。

Itisalwaysintheprocessofthistransition，ofthisformalmetamorphosis。

Inasmuchasthisfunctionofcapitalintheprocessofcirculationisatallsetapartasaspecialfunctionofaspecialcapital，asafunctionestablishedbyvirtueofthedivisionoflabourtoaspecialgroupofcapitalists，commodity-capitalbecomescommercialcapital。

Wehaveexplained(BookII，ChapterVI，”TheCostsofCirculation，”)

towhatextentthetransportindustry，storageanddistributionofcommoditiesinadistributableform，mayberegardedasproductionprocessescontinuingwithintheprocessofcirculation。Theseepisodesincidentaltothecirculationofcommodity-capitalaresometimesconfusedwiththedistinctfunctionsofmerchant’sorcommercialcapital。Sometimestheyare，indeed，practicallyboundupwiththesedistinct，specificfunctions，althoughwiththedevelopmentofthesocialdivisionoflabourthefunctionofmerchant’scapitalevolvesinapureform，i。e。，divorcedfromthoserealfunctions，andindependentofthem。Thosefunctionsarethereforeirrelevanttoourpurpose，whichistodefinethespecificdifferenceofthisspecialformofcapital。Insofarascapitalsolelyemployedinthecirculationprocess，specialcommercialcapital，partlycombinesthosefunctionswithitsspecificones，itdoesnotappearinitspureform。Weobtainitspureformafterstrippingitofalltheseincidentalfunctions。

Wehaveseenthattheexistenceofcapitalascommodity-capitalandthemetamorphosisitundergoeswithinthesphereofcirculationinthemarketascommodity-capital——ametamorphosiswhichresolvesitselfintobuyingandselling，convertingcommodity-capitalintomoney-capitalandmoney-capitalintocommodity-capital——thatthisformsaphaseinthereproductionprocessofindustrialcapital，henceinitsprocessofproductionasawhole。Wehavealsoseen，however，thatitisdistinguishedinitsfunctionasacapitalofcirculationfromitsfunctionasproductivecapital。

Thesearetwodifferentandseparateformsofexistenceofthesamecapital。

Oneportionofthetotalsocialcapitaliscontinuallyonthemarketintheformofcapitalofcirculation，passingthroughthisprocessoftransmutation，althoughforeachindividualcapitalitsexistenceascommodity-capital，anditsmetamorphosisassuch，merelyrepresentever-vanishingandeverrenewednodalpoints——i。e。，stagesoftransitioninthecontinuityofitsproductionprocess，andalthoughtheelementsofcommodity-capitalinthemarketvarycontinuouslyforthisreason，beingconstantlywithdrawnfromthecommodity-marketandequallyperiodicallyreturnedtoitasnewproductsoftheprocessofproduction。

Commercialcapitalisnothingbutatransmutedformofapartofthiscapitalofcirculationconstantlytobefoundinthemarket，everintheprocessofitsmetamorphosis，andalwaysencompassedbythesphereofcirculation。

Wesayapart，becauseapartofthesellingandbuyingofcommoditiesalwaystakesplacedirectlybetweenindustrialcapitalists。Weleavethispartentirelyoutofconsiderationinthisanalysis，becauseitcontributesnothingtodefiningtheconception，ortounderstandingthespecificnatureofmerchant’scapital，andbecauseithasfurthermorebeenexhaustivelytreatedforourpurposeinBookII。

Thedealerincommodities，asacapitalistgenerally，appearsonthemarketprimarilyastherepresentativeofacertainsumofmoney，whichbeadvancesasacapitalist，i。e。，whichhewantstoturnfromx(itsoriginalvalue)intox+Dx(theoriginalsumplusprofit)。Butitisevidenttohim——notbeingjustacapitalistingeneral，butratheraspecialdealerincommodities——thathiscapitalmustfirstenterthemarketintheformofmoney-capital，forhedoesnotproducecommodities。Hemerelytradesinthem，expeditestheirmovement，andtooperatewiththemhemustfirstbuythem，and，therefore，mustbeinpossessionofmoney-capital。

Supposethatadealerincommoditiesowns£；3，000whichheinvestsasatradingcapital。Withthese£；3，000hebuys，say，30，000yardsoflinenfromsomelinenmanufacturerat2s。peryard。Hethensellsthe30，000yards。Iftheannualaveragerateofprofitof10%andhemakesanannualprofitof10%afterdeductingallincidentalexpenses，thenbytheendoftheyearhehasconvertedhis£；3，000into£；3，300。

Howhemakesthisprofitisaquestionwhichweshalldiscusslater。Atpresent，weintendtoconsidersolelytheformofthemovementsofhiscapital。Withhis£；3，000hekeepsbuyinglinenandsellingit；heconstantlyrepeatsthisoperationofbuyinginordertosell，M——C——

M’，thesimpleformofcapitalasitobtainsentirelyintheprocessofcirculation，uninterruptedbytheproductionprocess，whichliesoutsideitsownmovementandfunction。

Whatisnowtherelationofthiscommercialcapitaltocommodity-capitalasamereformofexistenceofindustrialcapital？Sofarasthelinenmanufacturerisconcerned，hehasrealisedthevalueofhislinenwiththemerchant’smoneyandtherebycompletedthefirstphaseinthemetamorphosisofhiscommodity-capital——itsconversionintomoney。Otherconditionsbeingequal，hecannowproceedtoreconvertthismoneyintoyarn，coal，wages，etc。，andintomeansofexistence，etc。，fortheconsumptionofhisrevenue。Hence，leavingasidetherevenueexpenditure，hecangoonwithhisprocessofreproduction。

Butwhilethesaleofthelinen，itsmetamorphosisintomoney，hastakenplaceforhim，asproducer，ithasnotyettakenplaceforthelinenitself。

Itisstillonthemarketascommodity-capitalawaitingtoundergoitsfirstmetamorphosis——tobesold。Nothinghashappenedtothislinenbesidesachangeinthepersonofitsowner。Asconcernsitspurpose，asconcernsitsplaceintheprocess，itisstillcommodity-capital，asaleablecommodity，withtheonlydifferencethatitisnowinthemerchant’shandsinsteadofthemanufacturer’s。Thefunctionofsellingit，ofeffectingthefirstphaseofitsmetamorphosis，haspassedfromthemanufacturertothemerchant，hasbecomethespecialbusinessofthemerchant，whereaspreviouslyitwasafunctionwhichtheproducerhadtoperformhimselfafterhavingcompletedthefunctionofitsproduction。

Letusassumethatthemerchantfailstosellthe30，000yardsoflinenduringtheintervalrequiredbythelinenmanufacturertobringanother30，000yardstomarketatavalueof£；3，000。Themerchantcannotbuythemagain，becausehestillhasinstocktheunsold30，000yardswhichhavenotasyetbeenreconvertedintomoney-capital。Astoppageensues，i。e。，aninterruptionofreproduction。Thelinenproducermight，ofcourse，haveadditionalmoney-capitalathisdisposal，whichhecouldconvertintoproductivecapital，regardlessofthesaleofthe30，000yards，inordertocontinuetheproductionprocess。Butthiswouldnotalterthesituation。Sofarasthecapitaltiedupinthe30，000yardsoflinenisconcerned，itsprocessofreproductionis，andremains，interrupted。Itis，indeed，easilyseenherethatthemerchant’soperationsarereallynothingbutoperationsthatmustbeper-formedatalleventstoconverttheproducer’scommodity-capitalintomoney。Theyareoperationswhicheffectthefunctionsofcommodity-capitalinthecirculationandreproductionprocesses。Ifitdevolvedupontheproducer’sclerktoattendexclusivelytothesale，andalsothepurchase，insteadofanindependentmerchant，thisconnectionwouldnotbeobscuredforasinglemoment。

Commercialcapitalis，therefore，nothingbuttheproducer’scommodity——capitalwhichhastoundergotheprocessofconversionintomoney——

toperformitsfunctionofcommodity-capitalonthemarket-theonlydifferencebeingthatinsteadofrepresentinganincidentalfunctionoftheproducer，itisnowtheexclusiveoperationofaspecialkindofcapitalist，themerchant，andissetapartasthebusinessofaspecialinvestmentofcapital。

Thisbecomesevident，furthermore，inthespecificformofcirculationofcommercialcapitalThemerchantbuysacommodityandthensellsit:

M——C——M’。Inthesimplecirculationofcommodities，oreveninthecirculationofcommoditiesasitappearsinthecirculationprocessofindustrialcapital，C’——M——C，circulationiseffectedbyeachpieceofmoneychanginghandstwice。Thelinenmanufacturersellshiscommodity-linen，convertingitintomoney；thebuyer’smoneypassesintohishands。Withthissamemoneyhebuysyarn，coal，labour，etc。expendsthemoneyforreconvertingthevalueoflinenintothecommoditieswhichmakeupitsproductionelements。Thecommodityhebuysisnotthesamecommodity，notthesamekindofcommoditywhichhesells。Hehassoldproductsandboughtmeansofproduction。Butitisdifferentwithrespecttothemovementsofmerchant’scapital。Withhis£；3，000thelinenmerchantbuys30，000

yardsoflinen；hesellsthesame30，000yardsoflineninordertoretrievehismoney-capital(£；3，000andtheprofit)fromcirculation。Itisnotthesamepiecesofmoney，butratherthesamecommoditywhichherechangesplacestwice；thecommoditypassesfromthesellerintothehandsofthebuyer，andfromthehandsofthebuyer，whonowbecomesseller，intothoseofanotherbuyer。Itissoldtwice，andmaybesoldrepeatedlythroughthemediumofaseriesofmerchants。Anditispreciselythroughthisrepeatedsale，throughthistwo-foldchangeofplaceofthesamecommodity，thatthemoneyadvancedforitspurchasebythefirstbuyerisretrieved，itsrefluxtohimeffected。Inonecase，C’——M——Ceffectsthetwo-foldchangeofplaceofthesamemoney，thesaleofacommodityinoneformandthepurchaseofacommodityinanother。Intheothercase，M——C——

M’effectsthetwo-foldchangeofplaceofthesamecommodity，thewithdrawalofadvancedmoneyfromcirculation。Itisevidentthatthecommodityhasnotbeenfinallysoldwhenitpassesfromtheproducerintothehandsofthemerchant，inthatthelattermerelycarriesontheoperationofselling-oreffectsthefunctionofcommodity-capital。ButatthesametimeitisevidentthatwhatisC——M，amerefunctionofhiscapitalinitstransientformofcommodity-capitalfortheproductivecapitalist，isM——C——M’，aspecificincreaseinthevalueofhisadvancedmoney-capital，forthemerchant。

OnephaseofthemetamorphosisofcommoditiesappearshereinrespecttothemerchantintheformofM——C——M’，henceasevolutionofadistinctkindofcapital。

Themerchantfinallysellshiscommodity，thatis，thelinen，totheconsumer，beitaproductiveconsumer(forinstance，ableacher)，oranindividualwhoacquiresthelinenforhisprivateuse。Themerchanttherebyrecovershisadvancedcapital(withaprofit)，andcanrepeathisoperationanew。Hadthemoneyservedmerelyasameansofpaymentinpurchasingthelinen，sothatthemerchantwouldhavehadtopayonlyaftersixweeks，andhadhesucceededinsellingbeforethistermwasout，hecouldhavepaidthelinenmanufacturerwithoutadvancinganymoney-capitalofhisown。Hadhenotsoldit，hewouldhavehadtoadvancehis£；3，000

onthedateofexpiration，insteadofondeliveryofthelinen。Andifadropinthemarket-priceshadcompelledhimtosellbelowthepurchaseprice，hewouldhavehadtomakegoodtheshortageoutofhisowncapital。

Whatisit，then，thatlendstocommercialcapitalthecharacterofanindependentlyoperatingcapital，whereasinthehandsoftheproducerwhodoeshisownsellingitisobviouslymerelyaspecialformofhiscapitalinaspecificphaseofthereproductionprocessduringitssojourninthesphereofcirculation？

First:Thefactthatcommodity-capitalisfinallyconvertedintomoney，thatitperformsitsinitialmetamorphosis，i。e。，itsappropriatefunctiononthemarketquacommodity-capitalwhileinthehandsofanagentotherthantheproducer，andthatthisfunctionofcommodity-capitaliseffectedbythemerchantinhisoperations，hisbuyingandselling，sothattheseoperationsassumetheappearanceofaseparateundertakingdistinctfromtheotherfunctionsofindustrialcapital——andhenceofanindependentundertaking。Itisadistinctformofthesocialdivisionoflabour，sothatpartofthefunctionordinarilyperformedasaspecialphaseofthereproductionprocessofcapital，inthiscase——circulation，appearsastheexclusivefunctionofspecificcirculationagentdistinctfromtheproducer。Butthisalonewouldbynomeansgivethisparticularbusinesstheaspectofafunctionofaspecificcapitaldistinctfrom，andindependentof，industrialcapitalengagedintheprocessofreproduction；indeed，itdoesnotsoappearincaseswheretradeiscarriedonbytravellingsalesmenorotherdirectagentsoftheindustrialcapitalist。Therefore，theremustbeasecondelementinvolved。

Second:Thisarisesfromthefactthatinhiscapacityasanindependentcirculationagent，themerchantadvancesmoney-capital(hisownorborrowed)。ThetransactionwhichforindustrialcapitalinthereproductionprocessamountsmerelytoC——M，i。e。，convertingcommodity-capitalintomoney-capital，ormeresale，assumesforthemerchanttheformofM——C——M’，orpurchaseandsaleofthesamecommodity，andthusof&；

refluxofmoney-capitalwhichleaveshiminthepurchase，andreturnstohiminthesale。

ItisalwaysC——M，theconversionofcommodity-capitalintomoney-capital，whichforthemerchantassumestheformofM——C——M，inasmuchasheadvancescapitaltopurchasecommoditiesfromtheirproducers；itisalwaysthefirstmetamorphosisofcommodity-capital，althoughforaproducer，orforindustrialcapitalinprocessofreproduction，thesametransactionmayamounttoM——C，toareconversionofmoneyintocommodities(meansofproduction)，tothesecondphaseofthemetamorphosis。Forthelinenproducer，thefirstmetamorphosiswasC——M，theconversionofhiscommodity-capitalintomoney-capital。ForthemerchantthesameactappearsasM——C，asaconversionofhismoney-capitalintocommodity-capital。Now，ifhesellsthislinentoableacher，itwillmeanM——C，i。e。，theconversionofmoney；capitalintoproductivecapital，thisbeingthesecondmetamorphosisofhiscommodity-capitalforthebleacher，whileforthemerchantitmeansC——M，thesaleofthelinenhehadbought。Butinfactitisonlyatthispointthatthecommodity-capitalproducedbythelinenmanufacturerhasbeenfinallysold。Inotherwords，thisM——C——Mofthemerchantrepresentsnomorethanamiddleman’sfunctionforC——Mbetweentwomanufacturers。

Orletusassumethatthelinenmanufacturerbuysyarnfromayarndealerwithaportionofthevalueofthesoldlinen。ThisisM——Cforhim。

ButforthemerchantsellingtheyarnitisC——M，theresaleoftheyarn。

Asconcerningtheyarninitscapacityofcommodity-capital，itisnomorethanitsfinalsale，wherebyitpassesfromthesphereofcirculationintothatofconsumption；itisC——M，theconsummationofitsfirstmetamorphosis。

Whetherthemerchantbuys，orsellstotheindustrialcapitalist，hisM——

C——M，thecircuitofmerchant’scapital，alwaysexpresseswhatisjustC——M，orsimplythecompletionofitsfirstmetamorphosis，withregardtothecommodity-capital，atransientformofindustrialcapitalinprocessofreproduction。TheM——Cofmerchant’scapitalisC——M

onlyfortheindustrialcapitalist，notforthecommodity-capitalproducedbyhim。Itisbutthetransferofcommodity-capitalfromtheindustrialcapitalisttothecirculationagent。Itisnotuntilthemerchant’scapitalclosesC——Mthatfunctioningcommodity-capitalperformsitsfinalC——

M。M——C——MamountssolelytotwoC——M’softhesamecommodity-capital，twosuccessivesalesofit，whichmerelyeffectitslastandfinalsale。

Thus，commodity-capitalassumesincommercialcapitaltheformofanindependenttypeofcapitalbecausethemerchantadvancesmoney-capital，whichisrealisedandfunctionsascapitalonlybyservingexclusivelytomediatethemetamorphosisofcommodity-capital，itsfunctionascommodity-capital，i。e。，itsconversionintomoney，anditaccomplishesthisbythecontinualpurchaseandsaleofcommodities。Thisisitsexclusiveoperation。

Thisactivityofeffectingthecirculationprocessofindustrialcapitalistheexclusivefunctionofthemoney-capitalwithwhichthemerchantoperates。Bymeansofthisfunctionheconvertshismoneyintomoney-capital，mouldshisMintoM——C——M，andbythesameprocessconvertscommodity-capitalintocommercialcapital。

Solongandsofarascommercialcapitalexistsintheformofcommodity-capital，itisobviouslynothingelse——fromthestandpointofthereproductionprocessofthetotalsocialcapital——butaportionofindustrialcapitalinthemarketinprocessofmetamorphosis，whichexistsandfunctionsascommodity-capital。Itisthereforeonlythemoney-capitaladvancedbythemerchantwhichisexclusivelydestinedforpurchaseandsaleandforthisreasonneverassumesanyotherformbutthatofcommodity-capitalandmoney-capital，neverthatofproductivecapital，andisalwaysconfinedtothesphereofcirculationofcapital——itisonlythismoney-capitalwhichisnowtoberegardedwithreferencetotheentirereproductionprocessofcapital。

Assoonastheproducer，thelinenmanufacturer，hassoldhis30，000

yardstothemerchantfor£；3，000，heusesthemoneysoobtainedtobuythenecessarymeansofproduction，sothathiscapitalreturnstotheproductionprocess。Hisprocessofproductioncontinueswithoutinterruption。

Sofarasheisconcerned，theconversionofhiscommodityintomoneyisaccomplished。Butforthelinenitself，aswehaveseen，itsmetamorphosishasnotyettakenplace。Ithasnotyetbeenfinallyreconvertedintomoney，hasnotyetpassedasause-valueintoeitherproductiveorindividualconsumption。Itisnowthelinenmerchantwhorepresentsonthemarketthesamecommodity-capitaloriginallyrepresentedbythelinenmanufacturer。

Forthelattertheprocessoftransformationhasbeencurtailed，onlytobecontinuedinthemerchant’shands。

Hadthelinenproducerbeenobligedtowaituntilhislinenhadreallyceasedbeingacommodity，untilithaspassedintothehandsofitsultimatebuyer，itsproductiveorindividualconsumer，hisprocessofreproductionwouldhavebeeninterrupted。Or，toavoidinterruptingit，hewouldhavehadtocurtailhisoperations，toconvertasmallerportionofhislinenintoyarn，coal，labour，etc。，inshort，intotheelementsofproductivecapital，andtoretainalargerportionofitasamoneyreserve，sothatwithoneportionofhiscapitalonthemarketintheshapeofcommodities，anotherwouldcontinuetheprocessofproduction；oneportionwouldbeonthemarketintheformofcommodities，whiletheotherreturnedintheformofmoney。Thisdivisionofhiscapitalisnotabolishedbythemerchant’sintervention。Butwithoutittheportionofmoneyreserveinthecapitalofcirculationwouldalwayshavetobegreaterinrelationtothepartemployedintheformofproductivecapital，andthescaleofreproductionwouldhavetoberestrictedaccordingly。Instead，however，themanufacturerisenabledtoconstantlyemployalargerportionofhiscapitalintheactualprocessofproduction，andasmallerportionasmoneyreserve。

Ontheotherhand，however，anotherportionofthesocialcapital，intheformofmerchant’scapital，iskeptcontinuallywithinthesphereofcirculation。Itisemployedallthetimeforthesolepurposeofbuyingandselling。Hencethereseemstohavebeennomorethanareplacementofpersonsholdingthiscapitalintheirhands。

If，insteadofbuying£；3，000worthoflinenwiththepurposeofsellingitagain，themerchanthadappliedthese£；3，000productively，theproductivecapitalofsocietywouldhaveincreased。True，thelinenmanufacturerwouldthenhavebeenobligedtoholdbackalargerportionofhiscapitalasmoneyreserve，andlikewisethemerchant，nowtransformedintoanindustrialcapitalist。Ontheotherhand，ifthemerchantremainsmerchant，themanufacturersavestimeinselling，whichhecandevotetosupervisingtheproductionprocess，whilethemerchantmustapplyallhistimetoselling。

Ifmerchant’scapitaldoesnotoverstepitsnecessaryproportions，itistobeinferred，1)thatasaresultofthedivisionoflabourthecapitaldevotedexclusivelytobuyingandselling(andthisincludesnotonlythemoneyrequiredtobuycommodities，butalsothemoneywhichmustbeinvestedinlabourtomaintainthemerchant’sestablishment，andinhisconstantcapital-thestorehouses，transport，etc。)issmallerthanitwouldbeiftheindustrialcapitalistwereconstrainedtocarryontheentirecommercialpartofhisbusinessonhisown；

2)thatbecausethemerchantdevotesallhistimeexclusivelytothisbusiness，theproducerisabletoconverthiscommoditiesmorerapidlyintomoney，and，moreover，thecommodity-capitalitselfpassesmorerapidlythroughitsmetamorphosisthanitwouldinthehandsoftheproducer；

3)thatinviewingtheaggregatemerchant’scapitalinitsrelationtoindustrialcapital，oneturnoverofmerchant’scapitalmayrepresentnotonlytheturnoversofmanycapitalsinonesphereofproduction，buttheturnoversofanumberofcapitalsindifferentspheresofproduction。

Theformeristhecasewhen，forinstance，thelinenmerchant，afterbuyingtheproductofsomelinenmanufacturerwithhis£；3，000，sellsitbeforethesamemanufacturerbringsanotherlotofthesamequantitytomarket，andbuys，andagainsells，theproductofanother，orseveralother，linenmanufacturers，thuseffectingtheturnoversofdifferentcapitalsinthesamesphereofproduction。Thelatteristhecaseif，forexample，themerchantaftersellinghislinenbuyssilk，thuseffectingtheturnoverofacapitalinadifferentsphereofproduction。

Ingeneral，itmaybenotedthattheturnoverofindustrialcapitalislimitednotbythetimeofcirculationalone，butalsobythetimeofproduction。Theturnoverofmerchant’scapitaldealinginonekindofcommodityisnotmerelylimitedbytheturnoverofasingleindustrialcapital，butbythatofallindustrialcapitalsinthesamebranchofproduction。Afterthemerchanthasboughtandsoldthelinenofoneproducerhecanbuyandsellthatofanother，beforethefirstbringsanotherlottothemarket。

Thesamemerchant’scapitalmay，therefore，successivelypromotethedifferentturnoversofcapitalsinvestedinacertainbranchofproduction，withtheeffectthatitsturnoverisnotidenticalwiththeturnoversofasoleindustrialcapital，anddoesnotthereforereplacejustthesinglemoneyreservewhichthatoneindustrialcapitalistwouldhavehadtoholdinpetto。Theturnoverofmerchant’scapitalinonesphereofproductionisnaturallyrestrictedbythetotalproductionofthatsphere。Butitisnotrestrictedbythescaleofproduction，ortheperiodofturnover，ofanyonecapitalofthesamesphere，sofarasitsperiodofturnoverisqualifiedbyitstimeofproduction。Suppose，Asuppliesacommodityrequiringthreemonthsforitsproduction。Afterthemerchanthasboughtandsoldit，say，inonemonth，hecanbuyandsellthesameproductofsomeothermanufacturer。Orafterhehassold，say，thecornofonefarmer，hecanbuyandsellthatofanotherwiththesamemoney，etc。Theturnoverofhiscapitalisrestrictedbythemassofcornheisabletobuyandsellsuccessivelywithinacertainperiod，forinstance，inoneyear，whiletheturnoverofthefarmer’scapitalis，regardlessofthetimeofturnover，restrictedbythetimeofproduction，whichlastsoneyear。

However，theturnoverofthesamemerchant’scapitalmayequallywelleffecttheturnoversofcapitalsindifferentbranchesofproduction。

Insofarasthesamemerchant’scapitalservesindifferentturnoverstotransformdifferentcommodity-capitalssuccessivelyintomoney，buyingandsellingthemoneafteranother，itperformsthesamefunctioninitscapacityofmoney-capitalwithregardtocommodity-capital，whichmoneyingeneralperformsbymeansofthenumberofitsturnoversinagivenperiodwithregard10commodities。

Theturnoverofmerchant’scapitalisnotidenticalwiththeturnover，orasinglereproduction，ofanindustrialcapitalofequalsize；itisratherequaltothesumoftheturnoversofanumberofsuchcapitals，whetherinthesameorindifferentspheresofproduction。Themorequicklymerchant’scapitalisturnedover，thesmallertheportionoftotalmoney-capitalservingasmerchant’scapital；andconversely，themoreslowlyitisturnedover，thelargerthisportion。Thelessdevelopedproduction，thelargerthesumofmerchant’scapitalinitsrelationtothesumofthecommoditiesthrownintocirculation；butthesmallerinabsoluteterms，orincomparisonwithmoredevelopedconditions，andviceversa。Insuchundevelopedconditions，therefore，thegreaterpartoftheactualmoney-capitalisinthehandsofmerchants，whosefortuneconstitutesmoneywealthvis-à；-vistheothers。

Thevelocityofcirculationofthemoney-capitaladvancedbythemerchantdepends1)onthespeedwithwhichtheprocessofproductionisrenewedandthedifferentprocessesofproductionarelinkedtogether；and2)onthevelocityofconsumption。

Toaccomplishtheturnoverwehaveexaminedabove，merchant’scapitaldoesnotfirsthavetobuycommoditiesforitsfullamountofvalue，andthentosellthem。Instead，themerchantperformsbothmovementssimultaneously。

Hiscapitalthenbreaksupintotwoparts。Oneofthemconsistsofcommodity-capital，andtheotherofmoney-capital。Hebuysandconvertshismoneyintocommoditiesatoneplace。Elsewhere，hesellsandconvertsanotherpartofhiscommodity-capitalintomoney。Ononeside，hiscapitalreturnstohimintheformofmoney-capital，whileontheotherhegetscommodity-capital。Thelargertheportioninoneform，thesmallertheportionintheother。Thisalternatesandbalancesitself。Iftheuseofmoneyasamediumofcirculationcombineswithitsuseasameansofpaymentandtheattendantdevelopmentofthecreditsystem，thenthemoney-capitalpartofmerchant’scapitalisreducedstillmoreinrelationtothevolumeofthetransactionsthismerchant’scapitaleffects。

IfIbuy£；3，000worthofwineonthreemonths’creditandsellallthewineforcashbeforethis。termexpires，IdonotneedtoadvanceasinglepennyforthesetransactionsInthiscaseitisalsoquiteobviousthatthemoney-capital，whichhereactsasmerchant’scapital，isnothingmorethanindustrialcapitalinitsmoney-capitalform，initsprocessofrefluxintheformofmoney。(Thefactthatthemanufacturerwhosold£；3，000worthofwineonthreemonths’creditmaydiscounthispromissorynoteatthebanker’sdoesnotalterthematteratallandhasnothingtodowiththemerchant’scapital。)Ifmarket-pricesshouldfallinthemeantimeby，say，themerchant，farfrommakingaprofit，wouldrecoveronly£；2，700

insteadof£；3，000。Hewouldhavetoputup£；300outofhisownpocket。These£；300wouldservemerelyasareservetobalancethedifferenceinprice。Butthesameappliestothemanufacturer。Ifhehimselfhadsoldatfallingprices，hewouldlikewisehavelost£；300，andwouldnotbeabletoresumeproductiononthesamescalewithoutreservecapital。