Spring 1999

Capital, Volume 3, Part 1

Epistemological Standpoints


The primary point in this part involves the difference between surplus value and profit.  Up until this point Marx has emphasized that the production of surplus value is the object of capitalism and the goal that drives the process.  In one respect profit is the same thing as and indistinguishable from surplus value, but in another respect profit determines a very different perspective than that of surplus value and this perspective substantially mystifies the process.

In other words, considered only in terms of its quantity in one cycle of production, surplus value and profit are identical:

Take C -> c + v (+ s)   or  C -> k (+ s)  and say  100 -> 80 + 20 + 20, then both surplus value and profit are 20.  (k is cost price)

Now, the sum is identical.  The difference comes when we consider the perspective from which that sum is regarded, or really what that sum is viewed in relation to.  Surplus value is recognized from the perspective of labor and thus the excess sum 20 is seen with respect to variable capital, which is in this case also 20.  This leads us directly to the definition of the rate of surplus value s'=s/v, in this case 20/20=100%.

Profit, on the other hand, is recognized from the point of view of capital or really the point of view of the capitalist.  Here the excess sum 20 is seen with respect to the entire total of capital advanced in the production process.  Marx explains this beginning with a quote from Malthus: "'The capitalist ... expects an equal profit upon all the parts of the capital which he advances.'"  And Marx goes on to explain, "As this supposed derivative of the total capital advanced, the surplus-value takes on the transformed form of profit.  A sum of value is therefore capital if it is invested in order to produced a profit, or alternatively profit arises because a sum of value is employed as capital" (126-27).  From the capitalist's point of view what matters is the excess sum with respect to the total quantity of money that had to be advanced.  In this regard the capitalist recognized no distinction between constant and variable capital and thus the location of the production of the surplus sum (what it is seen with respect to) "is shifted from the variable capital to the capital as a whole" (127).  This, then, leads us directly to the definition of the rate of profit p'=p/k, or rather p'=s/c+v, in this case 20/80+20=20%.

Now, before going on I want to consider parenthetically another difficulty with the capitalist point of view on profit.  As I just said Marx claims that the capitalist point of view cannot distinguish between variable and constant capital in the production of profit, but I would say that the capitalist is equally blind here to the distinction between fixed and circulating capital.  (I don't think Marx is really going into this here.)  In other words, when we say that the capitalist views profit with respect to the total capital advanced, that includes all of the constant capital not only that portion that is devalued during that cycle of production.  In other words, in the example I just gave the constant capital 80 might be composed of 60 of circulating capital (raw materials and so forth) and 20 of fixed capital devalued in that cycle (wear and tear on the machines, building, etc).  The total value of the fixed capital, though, might be something like 1,000.  The total capital advanced from the capitalist point of view is therefore really (1,000+60)c+20v.  This is what the capitalist sees profit with respect to because this is how much the capitalist had to advance in order to make that profit, that is the capitalist's real point of reference.  But clearly this notion of the total capital advanced does not account for cycles of production in time, so Marx quickly transforms this total capital advanced to the portion of the capital advanced that is used up in each productive cycle.  That is what Marx poses as the effective the point of reference for the rate of profit, p'=s/c+v.  (Even though it is already a modification the diverts from the capitalist point of view.)  Also, very much in line with this Engels explains that whereas rate of s-v is calculated for each productive cycle, rate of profit is calculated per year and thus includes already the turnover rate (Chapter 4, see p. 165).


·What might be interesting about all this?  The establishment of two separate epistemologies.  Profit and s-v are two different standpoints that view the production of excess value differently; they are really two different frameworks of knowledge.  This is I think precisely what Lukács means by epistemological standpoint.  I’m thinking here of Lukács book, History and Class Consciousness, and in particular the chapter titled “Reification and the Consciousness of the Proletariat,” or really the third part of that chapter, “The Standpoint of the Proletariat.”  In that section Lukács writes, “Thus bourgeois thought remains fixated on these forms (e.g., interest, profit) which it believes to be immediate and original and from there it attempts to seek an understanding of economics, blithely unaware that the only phenomenon that has been formulated is its own inability to comprehend its own social foundations.  Whereas for the proletariat the way is opened to a complete penetration of the forms of reification.  It achieves this by starting with what is dialectically the clearest form (the immediate relation of capital and labor).  It then relates this to those forms that are more remote from the production process and so includes and comprehends them, too, in a dialectical totality” (185).


Three things have to be established for this theory.

1) That there are two separate epistemologies, or rather two different sciences that view the world differently: a science of capital and a proletarian science.  Here profit and s-v are symptoms of or stand in for these two separate sciences.

2) That the proletarian science is better than the science of capital.  In this case, s-v locates the real production of the excess value and profit mystifies it in various ways.

3) That the proletarian standpoint is not the spontaneous perspective of the workers, but an achieved (and in this sense, scientific) position.  It might be more accurate to say that s-v marks the standpoint of labor rather than the standpoint of the proletariat in order to indicate how it is a conceptual and achieved position.


OK, let's go back to Marx's line of reasoning and see how he elaborates profit and s-v as two separate perspectives or standpoints.  One thing Marx has established is the quantitative difference between the rate of s-v and the rate of profit, but what really interests me is the difference between s-v and profit.  "Thus even if the rate of profit is numerically different from the rate of surplus-value, while surplus- value and profit are in fact the same and even numerically identical, profit is still for all that a transformed form of surplus-value, a form in which its origin and the secret of its existence are veiled and obliterated.  In point of fact, profit is the form of appearance of surplus-value, and the latter can be sifted out from the former only by analysis" (139).  And Marx continues, "profit and surplus-value ... are treated as numerically identical magnitudes, different only in form" (139).  Now, I think that the numerical or quantitative difference between rate of profit and rate of s-v is quite clear (in our example s' is 100% and p' is 20%), but what is not so clear is the purely formal or qualitative difference between profit and s-v.

I would say that Marx is calling a formal difference refers really to the source implied by profit and s-v.  S-v points toward the real source of the excess value (which is unpaid labor, valorization, exploitation -- however you want to call it), whereas profit mystifies that source.  In a way, to understand this perhaps we should start with the rates and then look back from them at profit and s-v.  The denominator of the two rates tell us what is the implied source of that excess value, in one case labor-power (v) and in the other the total capital advanced (k).  The formal difference is the difference between these two sources implied in the concepts of s-v and profit.

There are three levels on which this mystification appear.

·In the first place, as I said before, the perspective of profit can make no distinction between constant and variable capital, so that it has to view capitalist expects "equal profit on all parts of the capital advanced."  This first mystification is within the labor process between living labor (the real source of the surplus) and dead labor.

·The second level of the mystification moves outside of the production process because in effect the perspective of profit cannot distinguish between production and circulation.  This is the focus of the example Marx gives from the economist Torrens.  Profit in Torrens's view is "the excess of the sale price over the excess of the cost price" (129).  In this way Torrens views the process only from a very external point of view and thus cannot distinguish between production or circulation.  Or really, he cannot recognize the real nature of production and flattens it onto a kind of particularly impoverished exchange.  "Profit cannot derive from production, says Torrens, for if it did it would already be included in the costs of production and would not be an excess over and above these costs" (129).  (Obviously, what Torrens does not recognize is the productivity of living labor and the cost of labor (the wage) and the value produced by labor.)  In any case, this second level of the mystification confused production and circulation.

·The third level is in a way a combination of the two in that here the perspective of profit views the source of the surplus not as labor but as capital itself.  This, I think, is the ultimate mystification involved in the perspective of profit.  Capital appears as independent of labor for two reasons.

- First due to the second mystification, by which profit appears to arise equally from the production and circulation processes.  Read 135 bot: "The immediate process of production ... relation to labor."  Or consider also this passage, p. 235: "In the process of circulation, he [the bourgeois] forgets the production process.  The realization of commodity value -- including the realization of surplus-value -- he takes as the making of this surplus-value" (235).

-         Second due to the first mystification: since profit is seen to arise equally from all parts of the capital advanced it must not be generated by labor (since it is not specific to the variable portion of the total capital) but by capital itself.  These two together create the real mystification of the capital relation from the perspective of profit. 


I have two descriptions of this mystification, one in class terms and one in conceptual terms. 

-         First, personal, class formulation: "And this circumstance misleads the capitalist by convincing him that his profit is due not to the exploitation of labour, but at least in part also to other circumstances independent of this, and in particular his own individual action" (236). 

-         Second, read p. 136 mid: "the way that surplus-value ... productive forces of capital."  This might be a good way to revisit the question of fetishism and reification, as the inversion of subject and object.

Also, this passage is close to some of the formations to the Appendix of Vol. 1 about the real subsumption, the tendency for capital itself to appear as the real source of production.  This is a theme Marx pursues throughout Part 1.  Marx embarks on dealing with a series of areas to explore how changes effect the rate of profit.  Economy in the use of constant capital is one way of raising the rate of profit, and in this case it clearly appears as if the action of the capitalist is what creates profit.


Two points that look back to Vol. 1.

Excursus #1: Do we now have a better way of explaining the relationship between the labor theory of value and the theory of supply and demand than we had at the beginning of Volume 1?  Would it be accurate to say that the labor theory of value reveals surplus value, whereas the notion of value being determined by supply and demand, like profit, depends on a confusion between production and circulation -- that it seems to locate the creation of value in circulation rather than production?

Excursus #2: Can we see better now why it is so important for Marx that value is created only by labor?  The claim really is that only surplus value is created by labor; constant capital merely transfers its value to the product.  If we were to say that constant and variable capital both were to produce surplus value and ultimately profit, then it would appear that capital itself produces profit – the same illusion that Marx claims here the capitalist perspective suffers from.


This theoretical argument about s-v and profit, about the two perspectives is entirely explained in the first two chapters of Part 1.  The rest of Part 1 is concerned with the capitalist strategies to increase profit.  Marx first establishes that although s-v and profit are identical, the rate of s-v and the rate of profit are relatively independent.  This is because the two rates are calculated over different time periods and because the rates are considered with respect to different quantities.

a)      increase turnover rate (Engels): s’ is calculated per turnover and p’ is calculated per year.

b)      Economy in the use of constant capital.  Read p. 173: “If surplus-value is a given factor, the profit rate can be increased only by reducing the value of the constant capital required for the production of the commodities in question.”  (Remember the rate of s-v does not regard constant capital, but rate of profit does.)

-         lengthen working day

-         cooperation

-         increase productivity


Again two perspectives.

Read p. 178 top: “this economy in the use of means of production . . . capitalist mode of production.”

Read p. 178 bottom: “the relative cheapness . . . bit and bridle.”