The rete of profit has to be distinguished – as a separate analytical category – from the rate of surplus-value, and the various factors which influence that rate of profit identified. The tendency towards an equalization of the rate of profit between all capitals, independently of the amount of surplus-value produced by their ‘own’ variable capital, i.e. by the productive wage-labourers whom they productively employ, has to be discovered. And from these two conceptual innovations is deduced the centre-piece of the entire volume: the tendency of the average rate of profit to decline – in the absence of countervailing tendencies. Having deduced profit in general from surplus-value in general, Marx goes on to show how profit itself becomes divided into entrepreneurial profit (be it in industry, transport or trade) and interest, i.e. that part of surplus-value which accrues to capitalists who own-money capital and limit themselves to lending it to entrepreneurs. Finally, the total mass of surplus-value which is divided among all entrepreneurs and money-lenders is reduced by introducing the category of surplus profit (surplus-value which does not participate in the general movement of equalization of the rate of profit). The reasons why such surplus profit can arise are studied in detail for one special case, that of land rent. But Marx makes it clear, especially in Chapters 10 and 14, that land rent is only a special case of a more general phenomenon. Therefore, we are justified in saying that what Part Six of Volume 3 is really all about is the more general problem of monopoly giving rise to surplus profit. In his theory of surplus profit, Marx anticipates the whole contemporary theory of monopoly prices and profits, while being much clearer as to their origins than are most of the academic economists who, throughout the twentieth century, have been trying to elucidate the mysteries of monopoly.8

The fundamental logic of Marx’s Capital unfolds in all its majesty once we integrate the structure of Volume 3 into that of Volumes 1 and 2. The diagram on pages 14–15 gives a schematic representation of their overall contents and global cohesion.

THE EQUALIZATION OF THE RATE OF PROFIT

In Volume 1, Marx showed that surplus-value is only produced by living labour: from the capitalist’s point of view, by that fraction of capital which is spent on purchasing labour-power, and not by that spent on buying buildings, machinery, raw materials, energy, etc. For this reason, Marx called the former fraction of capital variable and the latter constant. It would at first seem to follow that the greater the proportion of capital which each industrial branch spends on wages, the higher its rate of profit (the relation between the surplus-value produced and the total amount of capital invested, or spent in annual production). However, such a situation would contradict the basic logic of the capitalist mode of production, which consists of expansion, growth, enlarged reproduction, through a substitution of living by dead labour: through an increase in the organic composition of capital, with a growing part of total capital expenditure occurring in the form of expenditure for equipment, raw material and energy, as against expenditure for wages. This basic logic results both from capitalist competition (the reduction of cost price being, at least in the long run, a function of more and more efficient machinery, i.e. of technical progress which is essentially labour-saving) and from the class struggle (since again, in the long run, the only way in which the growth of capital accumulation can prevent labour shortage and hence a constant increase in the level of real wages, which

would end by sharply reducing the rate of surplus-value, is by accumulating a larger and larger part of capital in the form of fixed constant capital – i.e. substituting machinery for living labour). Moreover, empirical evidence overwhelmingly confirms that branches of production which are more labour-intensive than others do not normally realize a higher rate of profit.

So the conclusion Marx draws is the following: in a fully developed and normally functioning capitalist mode of production, each industrial branch does not receive directly the surplus-value produced by the wage-labour it employs. It only receives a fraction of all surplus-value produced, proportional to the fraction it represents of all capital expended. Surplus-value in a given bourgeois society (country) as a whole is redistributed. This results in an average rate of profit more or less applicable to each branch of capital. Branches of production which have an organic composition of capital below the social average (i.e. which employ more labour, spend more variable capital, in relation to total capital spent) do not realize part of the surplus-value produced by ‘their’ wage-labourers. This part of surplus-value is transferred to those branches of industry where the organic composition of capital is above the social average (i.e. which spend a larger proportion of total capital on equipment and raw material, a smaller proportion on wages, than the social average). Only those branches of industry whose individual organic composition of capital is identical to the social average realize all the surplus-value produced by the wage-labour they employ, without transferring any portion of it to other branches or receiving any fraction of surplus-value produced in other branches. As a result, each capital receives a part of the total surplus-value produced by productive labour which is proportional to its own part in total social capital. This is the material basis of the common interest of all owners of capital in the exploitation of labour – which thereby takes the form of a collective class exploitation (competition between many capitals only deciding the way in which this total mass is redistributed between the capitalists).

This process of equalization of the rate of profit raises three series of problems. What is its relation to the labour theory of value in general? What are the concrete mechanisms which allow equalization of the rate of profit to occur in real life? What is the ‘technical’ solution to the problem of transformation of values into prices of production (capital outlays, i.e.