It has been shown that the value of commodities, or the price of production regulated by their total value, resolves into:

1. A value component that replaces constant capital, or represents labour already past, used up in the form of means of production while the commodity was being made — in a word, the value or price at which those means of production went into the commodity's production process.

Here we never speak of the single commodity, but of commodity capital: the form in which the product of capital presents itself over a definite stretch of time, a year, say. The single commodity is only one element of that product — and its value, too, divides analogously into the same components.

2. The value component of variable capital, which measures the worker's income and turns, for him, into wages — the wages, then, that the worker has reproduced in this variable component. In short: the value component in which the paid portion of the labour newly added to the first, constant part in the production of the commodity is represented.

3. Surplus-value: the value component of the commodity product in which unpaid labour, surplus labour, is represented. This last value component in turn takes independent forms that are at the same time forms of revenue: profit on capital — interest, on capital as such, and profit of enterprise, on capital as functioning capital — and ground-rent, which goes to the owner of the land that plays its part in the production process. Components 2 and 3 together are the value component that always takes the revenue forms of wages (and wages only ever after that component has first gone through the form of variable capital), profit and rent. What sets them apart from the constant component 1 is that the labour newly added to that constant part, the means of production, is objectified in a value, and the whole of that value resolves into components 2 and 3. If we now leave the constant value component aside, it is right to say this: the value of the commodity, so far as it represents newly added labour, constantly resolves into three parts that form the three forms of revenue — wages, profit and rent. How large each one is — the share of the total value each makes up — is settled by different laws of their own, worked out earlier. But it would be false to say it the other way round: that the value of wages, the rate of profit and the rate of rent are independent, constituent elements of value, and that the value of the commodity, apart from its constant component, arises from putting them together. In other words, it would be false to say that they are the components out of which commodity value, or the price of production, is composed.

The difference is plain at once.

Suppose a capital of 500 whose product-value is 400c + 100v + 150s = 650, and suppose the 150s is then split into 75 profit and 75 rent. To spare ourselves needless difficulties, let us further assume that this capital has an average composition, so that its price of production coincides with its value. That coincidence always occurs when the product of this single capital can be treated as the product of a piece of the total capital that matches it in size.

Here wages, measured by the variable capital, come to 20 per cent of the capital advanced; reckoned on the whole capital, the surplus-value comes to 30 per cent — 15 per cent profit and 15 per cent rent. The whole value component of the commodity in which the newly added labour is objectified is 100v + 150s = 250. Its size does not depend on how it is split into wages, profit and rent. From the ratio of these parts to one another we see that the labour-power paid for with 100 in money, say £100, delivered an amount of labour that is represented in a sum of money of £250. We see from this that the worker did one and a half times as much surplus labour as labour for himself. With a working day of 10 hours, he worked 4 hours for himself and 6 for the capitalist. The labour of the workers paid £100 is therefore expressed in a money value of £250. Beyond this value of 250 there is nothing to divide between worker and capitalist, or between capitalist and landowner. It is the total value newly added to the value of the means of production of 400. So the commodity value of 250 produced in this way, fixed by the quantity of labour objectified in it, is the limit on the dividends that worker, capitalist and landowner can draw from it in the form of revenue — as wages, profit and rent.

Now suppose that a capital of the same organic composition — the same ratio of living labour-power applied to the constant capital set in motion — is forced to pay £150 instead of £100 for the same labour-power that sets the constant capital of 400 in motion. And suppose further that profit and rent also divide the surplus-value in different proportions.

Since it is presupposed that the variable capital of £150 sets the same mass of labour in motion as the £100 did, the newly produced value would still be 250 and the value of the whole product would still be 650. But then we would have 400c + 150v + 100s, and this 100s would split, say, into 45 profit plus 55 rent. The proportion in which the newly produced total value divides into wages, profit and rent would be very different. So would the size of the total capital advanced, although it sets only the same total mass of labour in motion. Wages would come to 27 3/11 per cent, profit 8 2/11 per cent and rent 10 per cent of the capital advanced; the total surplus-value therefore a little over 18 per cent.

As a result of the rise in wages, the unpaid part of the total labour would have changed, and with it the surplus-value. On a ten-hour working day, the worker would have worked 6 hours for himself and only 4 for the capitalist. Profit and rent would stand in different proportions as well, the diminished surplus-value being divided in a changed proportion between capitalist and landowner. Finally, since the value of the constant capital stayed unchanged while the value of the variable capital advanced rose, the diminished surplus-value would show up as a still more diminished gross rate of profit — by which we mean here the ratio of the total surplus-value to the whole capital advanced.

Any change in the value of wages, in the rate of profit, in the rate of rent could move only inside the limits set by the newly created commodity value of 250 — whatever the effect of the laws that regulate the relation of these parts. There would be an exception only if the rent rested on a monopoly price. That would change nothing in the law; it would only make the treatment more complicated. For if in this case we look only at the product itself, then only the division of the surplus-value would differ. But if we look at its relative value against other commodities, the only difference to be found would be that a part of their surplus-value had been transferred from them to this particular commodity.

Let us recap:

First, the surplus-value falls by a third of what it was before, from 150 to 100. The rate of profit falls by a little more than a third, from 30 per cent to 18 per cent, because the reduced surplus-value now has to be reckoned on a larger total capital advanced. But its fall is by no means in the same proportion as that of the rate of surplus-value. The rate of surplus-value falls from 150/100 to 100/150, that is from 150 per cent to 66 2/3 per cent, while the rate of profit falls only from 150/500 to 100/550, that is from 30 per cent to 18 2/11 per cent. So the rate of profit falls proportionally more than the mass of surplus-value, but less than the rate of surplus-value. Further, the values and the masses of the products stay the same if the same mass of labour is applied as before, even though the capital advanced has grown as a result of the increase in its variable component. That growth of the capital advanced would, it is true, be very noticeable to a capitalist just starting a business. But taking reproduction as a whole, more variable capital means nothing more than this: a larger part of the value newly created by the newly added labour turns into wages, and so first of all into variable capital, instead of into surplus-value and surplus product. So the value of the product stays the same, because on one side it is limited by the constant capital value of 400 and on the other by the figure 250, in which the newly added labour is represented. Both have stayed unchanged. This product, so far as it itself went back into constant capital, would still represent the same mass of use-value in the same amount of value; that is, the same mass of elements of constant capital would keep the same value. Things would be different if wages rose — not because the worker received a larger part of his own labour, but because he received a larger part of his own labour for the reason that the productivity of labour had fallen. In that case the total value in which the same labour, paid plus unpaid, is represented would stay the same; but the mass of product in which that mass of labour is represented would have shrunk, so the price of each aliquot part of the product would rise, because each part would represent more labour. The higher wages of 150 would represent no more product than 100 did before; the reduced surplus-value of 100 would represent only two-thirds of the former product, 66 2/3 per cent of the mass of use-values that 100 previously represented. In that case the constant capital too would become dearer, so far as this product entered into it. But this would not be a consequence of the wage rise; rather, the wage rise would be a consequence of the commodity becoming dearer and of the diminished productivity of the same quantity of labour. Here the appearance arises as if the rise in wages had made the product dearer; but here the wage rise is not the cause, but the consequence of a change in the commodity's value brought about by the diminished productivity of labour.

Suppose, on the other hand, that everything else stays the same, so that the same amount of labour applied is still expressed in 250. Then if the value of the means of production that labour uses were to rise or fall, the value of the same mass of products would rise or fall by the same amount. 450c + 100v + 150s gives a product value of 700; 350c + 100v + 150s gives only 600 for the value of the same mass of products, against 650 before.

So when the capital advanced to set the same amount of labour in motion grows or shrinks, the product's value rises or falls — other things equal — provided the growth or shrinkage comes from a change in the value magnitude of the constant part. It stays unchanged, on the other hand, if the growth or shrinkage comes from a changed value magnitude of the variable part, with the productive power of labour unchanged.

With constant capital, a rise or fall in its value is compensated by no movement in the opposite direction. With variable capital, assuming the productivity of labour stays the same, a rise or fall in its value is compensated by the opposite movement on the side of surplus-value, so that the value of variable capital plus surplus-value — the value labour has newly added to the means of production and newly expressed in the product — stays unchanged.

If instead the rise or fall in the value of variable capital, or in wages, is the consequence of commodities becoming dearer or cheaper — that is, of a fall or rise in the productivity of the labour applied in this particular capital investment — then this does bear on the value of the product. But here the rise or fall of wages is not the cause; it is only the consequence.

Suppose instead, in the example above, with constant capital unchanged at 400c, that the change from 100v + 150s to 150v + 100s — the rise in variable capital — were the consequence of a fall in the productive power of labour not in this particular branch, cotton spinning, say, but in agriculture, for instance, which supplies the worker's food; the consequence, that is, of those foodstuffs becoming dearer. Then the value of the product would stay unchanged. The same mass of cotton yarn would still represent a value of 650.

One more thing follows from what has been set out. If the reduction in the outlay on constant capital through economy and the like occurs in branches of production whose products enter the workers' consumption, then this could bring about a fall in wages, just as a direct increase in the productivity of the labour applied itself could, because the worker's means of subsistence would become cheaper; and so it could bring about a growth in surplus-value too. The profit rate here would then grow for two reasons: on the one hand the value of constant capital declines, on the other surplus-value grows. In our examination of the transformation of surplus-value into profit, we assumed that wages do not fall but stay constant, because there we had to investigate the fluctuations of the profit rate independently of changes in the rate of surplus-value. Besides, the laws developed there are general, and they hold also for capital investments whose products do not enter the worker's consumption, where changes in the value of the product have no influence on wages.

Take the value that new labour adds each year to the means of production, that is to the constant capital component. It gets separated out and broken up into the different revenue forms — wages, profit and rent. That breaking-up, then, changes nothing about the limits of the value itself, nothing about the total value that gets divided among these categories. And a change in the proportions of the individual parts to one another can no more change their sum, this given amount of value. The given figure of 100 always stays the same, whether it splits into 50 + 50, or into 20 + 70 + 10, or into 40 + 30 + 30. The part of the product's value that falls apart into these revenues is fixed — exactly as the constant value component of the capital is — by the value of the commodities, that is, by the quantity of labour embodied in them at the time. So, first, what is given is the mass of value in the commodities that is divided into wages, profit and rent — the absolute limit of the sum of those value portions. Second, as far as the individual categories themselves go, their average and regulating limits are given too. Wages form the basis of this delimitation. On one side only are they regulated by a natural law: their minimum limit is the physical minimum of means of subsistence that the worker must get in order to keep and reproduce his labour-power — a definite quantity of commodities. The value of those commodities is fixed by the labour-time their reproduction needs; that is, by the share of the labour newly added to the means of production — or of the working day — that the worker needs in order to produce and reproduce an equivalent for the value of these necessary means of subsistence. If, in value, his average daily means of subsistence come to 6 hours of average labour, then he has to work on average 6 hours of his day for himself. The real value of his labour-power departs from this physical minimum. It differs with the climate and with the level of social development; it hangs not on physical needs alone but also on social needs that have developed in history and become second nature. But in each country, at a given period, this regulating average wage is a given quantity. The value of all the other revenues thus has a limit. It is always equal to the value in which the total working day is embodied — the total working day, which here coincides with the average working day, since it covers the whole mass of labour set in motion by the total social capital — minus the part of it that is embodied in wages. So its limit is given by the limit of the value in which unpaid labour is expressed, that is, by the quantity of this unpaid labour. If the part of the working day that the worker needs to reproduce the value of his wage has its last barrier in the physical minimum of that wage, then the other part of the working day, in which his surplus labour is expressed, and with it the value component that expresses surplus-value, has its barrier in the physical maximum of the working day — that is, in the total quantity of daily labour-time the worker can give at all while keeping and reproducing his labour-power. Since what is at issue here is the distribution of the value in which the total labour newly added each year is expressed, the working day can be treated here as a constant quantity, and is assumed to be one, however much or little it departs from its physical maximum. So the absolute limit of the value component that forms surplus-value, and that resolves into profit and ground-rent, is given; that value component is determined by the excess of the unpaid part of the working day over its paid part, that is, by the value component of the total product in which this surplus labour is realized. If we call this surplus-value — bounded as it is — profit, once it is calculated on the total capital advanced, as I have done, then this profit, considered in its absolute magnitude, is equal to the surplus-value, and so it is lawfully bounded in its limits exactly as the surplus-value is. But the height of the rate of profit is likewise a magnitude enclosed within certain limits set by the value of the commodities. It is the ratio of the total surplus-value to the total social capital advanced in production. If this capital is 500 (say millions) and the surplus-value is 100, then 20 per cent is the absolute limit of the rate of profit. The distribution of the social profit among the capitals invested in the different spheres of production, in proportion to this rate, produces prices of production that diverge from the values of commodities — and it is these that are really the regulating average market prices. This divergence, however, abolishes neither the determination of prices by values nor the law-governed limits of profit. Instead of the value of a commodity being the capital consumed in it plus the surplus-value contained in it, its price of production is now the capital k consumed in it plus the surplus-value that falls to it through the general rate of profit — say 20 per cent on the capital advanced for its production, whether consumed or merely applied. But this surcharge of 20 per cent is itself determined by the surplus-value the total social capital produces and its ratio to the value of that capital; and that is why it is 20 per cent and not 10 or 100. So the transformation of values into prices of production does not abolish the limits of profit; it only changes its distribution among the various particular capitals that make up the social capital, spreading it evenly over them in proportion as they form value components of that total capital. Market prices rise above and fall below these regulating prices of production, but these swings cancel each other out. If you look at price lists over a long period, and set aside the cases where the real value of the commodities changed through a change in the productive power of labour, and also the cases where natural or social disasters disturbed the production process, you will be surprised first at the relatively narrow limits of the divergences, and second at how regularly they are evened out. Here you find the same rule of regulating averages that Quételet demonstrated for social phenomena. If the equalization of commodity values into prices of production meets no obstacles, rent resolves into differential rent — that is, it is restricted to evening out the surplus profits that the regulating prices of production would give to one part of the capitalists, and which the landowner now appropriates. Here, then, rent has its definite value-limit in the divergences of the individual rates of profit that the regulation of production prices by the general rate of profit brings about. If landed property blocks this equalization of commodity values into prices of production and appropriates an absolute rent, then this rent is limited by the excess of the value of the soil's products over their price of production — that is, by the excess of the surplus-value contained in them over the rate of profit that the general rate of profit assigns to capitals. This difference then forms the limit of rent, which still forms only a definite part of the given surplus-value contained in the commodities.

Finally, suppose the equalization of surplus-value into average profit in the different spheres of production ran into an obstacle in artificial or natural monopolies — and especially in the monopoly of landed property — so that a monopoly price became possible, rising above both the price of production and the value of the commodities the monopoly works on. Even then the limits given by the value of commodities would not be abolished. A monopoly price for certain commodities would only transfer part of the profit of the other commodity producers onto the commodities carrying the monopoly price. There would indirectly be a local disturbance in the distribution of surplus-value among the different spheres of production — but it would leave the limit of that surplus-value itself unchanged.

If the commodity with the monopoly price entered into the worker's necessary consumption, it would raise wages and thereby reduce surplus-value — provided the worker still received the value of his labour-power. It could press wages below the value of labour-power, but only so far as those wages stood above the limit of their physical minimum. In that case the monopoly price would be paid by a deduction from real wages (that is, from the mass of use-values the worker would receive for the same mass of labour) and from the profit of the other capitalists. The limits within which the monopoly price would affect the normal regulation of commodity prices would be firmly fixed and exactly calculable.

So just as the division of the newly added value of commodities — value that can be resolved into revenue at all — finds its given and regulating limits in the relation between necessary labour and surplus labour, wages and surplus-value, so in turn the division of surplus-value itself into profit and ground-rent finds its limits in the laws that regulate the equalization of the rate of profit.

In the split into interest and profit of enterprise, the average profit itself is the limit for both together. It supplies the given amount of value they have to divide between them, and the only thing they can divide. The particular ratio of that division is accidental here: it is determined exclusively by relations of competition. Where otherwise the matching of demand and supply amounts to cancelling the divergence of market prices from their regulating average prices — that is, to cancelling the influence of competition — here it is the sole determinant. But why? Because one and the same factor of production, capital, has to divide the share of surplus-value falling to it between two owners of that same factor of production. But the fact that there is no definite, law-governed limit to the division of the average profit here does not abolish its limit as a part of commodity value — any more than two partners in a business, moved by various external circumstances, dividing the profit unequally would in any way affect the limits of that profit.

So when the part of commodity value that represents labour newly added to the value of the means of production does break down into different parts, and these take on shapes independent of one another in the form of revenues, that by no means makes wages, profit and ground-rent the constituent elements whose combination or sum would give the governing price of the commodities themselves — the 'natural price', the 'prix nécessaire', as the economists call it. For on that reading it would not be commodity value, once the constant value component is deducted, that was the original unity splitting into those three parts. It would be the other way round: each of the three parts would have its price fixed on its own, and only by adding these three independent magnitudes would the commodity's price come about. In reality commodity value is the presupposed magnitude, the whole of the total value of wages, profit and rent, no matter how those stand relative to one another. In that false conception, by contrast, wages, profit and rent figure as three independent magnitudes of value, whose total is what produces, bounds and determines the magnitude of commodity value.

First, this much is clear: if wages, profit and rent were what constituted the price of commodities, that would hold just as much for the constant part of commodity value as for the other part, the one in which variable capital and surplus-value are represented. So this constant part can be left entirely out of account here, since the value of the commodities it is made of would likewise resolve into the sum of the values of wages, profit and rent. And as already noted, this view does indeed deny that any such constant value component exists.

It is also clear that, on this view, every concept of value falls away. All that is left is the idea of price, in this sense: some quantity of money is paid to those who own labour-power, capital and land.

But what is money? Not a thing, but a definite form of value — so it takes value for granted once again. So let us say that a definite quantity of gold or silver is paid for those elements of production, or that in our minds they are put equal to such a quantity. But gold and silver are commodities like any others — a recognition the enlightened economist is proud of. So, on this reckoning, their price too is determined by wages, profit and rent.

That means wages, profit and rent cannot be determined by putting them equal to some quantity of gold and silver, for the value of that gold and silver, the equivalent they are to be measured in, is supposed to be determined by them in the first place — apart from gold and silver, that is, apart from the value of any commodity, that value being precisely the product of those three. To say that the value of wages, profit and rent lies in their being equal to so much gold and silver would therefore only be saying that they are equal to so much wages, profit and rent.

Take wages first. For even on this view, we have to start from labour. So how is the governing price of wages determined — the price around which its market prices move up and down?

Let us say: by the demand for and supply of labour-power. But which demand for labour-power? Capital's demand. So the demand for labour equals the supply of capital. And before we can talk of the supply of capital, we first have to know what capital is. What is capital made of? Take its simplest manifestation: money and commodities. But money is only a form of the commodity. So: of commodities. But the value of commodities is, on the presupposition, determined in the first instance by the price of the labour that produces them, by wages. Here the wage is presupposed and counted as a constituent element of the price of commodities.

This price is now supposed to be determined by the relation of the labour offered to capital. The price of capital itself is equal to the price of the commodities it consists of. The demand of capital for labour equals the supply of capital. And the supply of capital equals the supply of a sum of commodities of a given price; and this price is in the first instance regulated by the price of labour, while the price of labour is in turn equal to the part of commodity price that makes up the variable capital handed over to the worker in exchange for his labour. And the price of the commodities that make up this variable capital is itself in the first instance determined by the price of labour, since it is determined by the prices of wages, profit and rent.

So we cannot presuppose capital in order to determine wages, since the value of capital is itself co-determined by wages.

Bringing competition in does not help us either. Competition sends the market prices of labour up and down. But suppose the demand for and supply of labour match. What then determines wages? The conception's answer: by competition. But that is exactly what has been presupposed: that competition stops determining, that its effect cancels out in the equilibrium of its two opposing forces. For what we want to find is precisely the natural price of wages — the price of labour that competition does not regulate, but that, the other way round, regulates competition.

Nothing is left but to determine the necessary price of labour by the worker's necessary means of subsistence. But those means of subsistence are commodities, and they have a price. So what determines the price of labour is the price of the necessary means of subsistence — and what determines their price, as with every other commodity, is in the first place the price of labour. So the price of labour, determined by the price of the means of subsistence, is determined by the price of labour. The price of labour is determined by itself. In other words, we do not know what determines the price of labour. Labour has a price here at all only because it is treated as a commodity. So to speak of the price of labour, we must know what price is in general. But what price is in general, this path tells us still less.

Let us assume, though, that the necessary price of labour has been settled in this pleasant way. What about average profit, then — the profit every capital makes under normal conditions, the second element of a commodity's price? Average profit has to be fixed by an average rate of profit. And how is that fixed? By competition among the capitalists? But that competition already presupposes that profit exists. It presupposes different rates of profit, and so different profits, whether in the same branch of production or in different ones. Competition can act on the rate of profit only in so far as it acts on the prices of commodities. All it can bring about is that producers in the same sphere of production sell their commodities at the same price, and that producers in different spheres sell at prices that give them the same profit — the same proportional surcharge on the commodity's price, a price already partly fixed by wages. So the only thing competition can do to the rate of profit is even out its inequalities. But before unequal rates of profit can be evened out, profit must already be there as an element of the commodity's price. Competition does not create it. It pushes it higher or lower, but it does not create the level that comes about once the evening-out has taken place. And when we speak of a necessary rate of profit, what we want to know is the rate that is independent of competition's movements — the rate that for its part regulates competition. The average rate of profit comes about with the balance of the competing capitalists' forces against one another. Competition can produce that balance, but not the rate of profit that comes about at it. Once the balance is there, why is the general rate of profit 10 or 20 or 100 per cent? The conception's answer: on account of competition. But it is the other way round. Competition has removed the causes that produced deviations from the 10 or 20 or 100 per cent. It has brought about a commodity price at which every capital yields the same profit in proportion to its size. The size of that profit itself, though, is independent of competition. All it does is keep reducing every deviation back to that size. One man competes with the others, and competition forces him to sell his commodity at the same price as they do. But why is this price 10, or 20, or 100?

So on this route nothing is left but to declare the rate of profit, and therefore profit itself, a surcharge, determined in an incomprehensible way, on the commodity's price so far as wages had determined it. All that competition tells us is that this rate of profit has to be a given magnitude. But we knew that already, back when we spoke of the general rate of profit and of the "necessary price" of profit.

There is no need to thrash out this absurd process all over again for ground-rent. One can see anyway that, if it is carried through with any consistency at all, it makes profit and rent appear as nothing but surcharges, set by incomprehensible laws, on a commodity price that wages determine in the first place. In short, competition has to take on the job of explaining every one of the economists' irrationalities, whereas it is the economists who would have to explain competition.

If we now set aside here the fantasy that profit and rent are price components created by circulation — that is, arising out of sale (and circulation can never give what was not first put into it) — then the matter simply comes down to this:

Say the price of a commodity, as determined by wages, is 100, with the rate of profit at 10 per cent on wages and rent at 15 per cent on wages. On that supposition the price determined by the sum of wages, profit and rent comes to 125. That surcharge of 25 cannot come from the sale of the commodity. For all of them, selling to one another, each sell at 125 what cost 100 in wages — and that is exactly the same as if they all sold at 100. So the operation has to be considered apart from the circulation process.

If the three — worker, capitalist and ground-rentier — share the commodity itself, which now costs 125 — and it changes nothing if the capitalist first sells at 125 and then pays the worker 100, himself 10 and the ground-rentier 15 — then the worker receives 4/5 = 100 of the value and of the product. The capitalist receives 2/25 of the value and of the product, and the ground-rentier 3/25. By selling at 125 instead of 100, the capitalist gives the worker only 4/5 of the product in which his labour is represented. So it would be exactly the same if he had given the worker 80 and kept back 20, of which 8 would fall to him and 12 to the rentier. He would then have sold the commodity at its value, since in fact the price surcharges are increases independent of the commodity's value, which on this presupposition is determined by the value of wages.

By a detour it comes to this: in this conception the word 'wages', the 100, is equal to the value of the product — that is, to the sum of money in which this definite quantity of labour is represented — while this value is again different from the real wage, and so leaves a surplus. Here, though, this is brought out only by a nominal surcharge on the price. So were wages 110 rather than 100, profit would have to come to 11 and ground-rent to 16 1/2, putting the commodity's price at 137 1/2. This would leave the proportion quite unchanged. But since the division would always be obtained by a nominal surcharge of certain percentages on wages, the price would rise and fall with wages. Wages are here first set equal to the value of the commodity and then separated from it again. In fact, though, by an irrational detour, it comes back to this: the value of the commodity is determined by the quantity of labour contained in it, the value of wages by the price of the necessary means of subsistence, and the excess of value over wages forms profit and rent.

When the value of the means of production used up in producing commodities is deducted from their value, what remains is a given mass of value, fixed by the quantity of labour objectified in the commodity product. That mass breaks down into three parts, which as wages, profit and ground-rent take the shape of forms of revenue standing on their own, independent of one another. This decomposition presents itself inverted — on the surface of capitalist production that lies open to view, and so in the heads of the agents caught up in it.

Suppose the total value of some commodity is 300, and 200 of it is the value of the means of production used up in making it — the elements of constant capital. Then 100 is left as the new value added to the commodity in its production process, and this new value of 100 is all there is to share out among the three forms of revenue. Call wages x, profit y and ground-rent z: in our case x + y + z will always come to 100.

The industrialists, merchants and bankers see it quite differently, and so do the vulgar economists. In their minds, what is given is not the commodity's value, after the value of the means of production used up in it is taken off — a 100 that is then split into x, y and z. Instead, the price of the commodity is simply put together from wages, profit and rent, each a value magnitude settled apart from the commodity's value and apart from the other two: x, y and z are each given and fixed on their own, and only their sum — which may come to less than 100 or to more — yields the size of the commodity's value itself, as if it were the result of adding up these formers of its value. This quid pro quo is necessary:

First: the commodity's value components confront one another as independent revenues, and as such they are related to three quite different agents of production — labour, capital and the earth — so they seem to spring from these. Property in labour-power, in capital, in the earth is the cause that makes these different value components of commodities fall to their respective owners, and so turns them into revenues for them. But value does not spring from a conversion into revenue; it has to be there first, before it can be converted into revenue and take that shape. And the appearance of the reverse is bound to take all the firmer hold, because the relative sizes of the three parts are determined against one another by laws of different kinds, and nothing on the surface shows how those laws hang together with the value of the commodities themselves, or how that value limits them.

Second: we have seen that a general rise or fall in wages, other things being equal, sets the general rate of profit moving in the opposite direction, and so alters the prices of production of the various commodities, raising some and lowering others, depending on the average composition of capital in the sphere in question. So in some spheres of production at least, experience shows the average price of a commodity rising because wages have risen, and falling because they have fallen. What is not 'experienced' is the secret regulation of these changes by the value of commodities, which is independent of wages. If the wage rise is local instead — happening only in particular spheres of production, for particular reasons — then a corresponding nominal rise in the price of those commodities can occur. This rise in the relative value of one kind of commodity against the others, whose wages stayed unchanged, is then only a reaction against the local disturbance of the uniform distribution of surplus-value over the different spheres — a means of equalizing the particular rates of profit with the general one. The 'experience' made here is again the determination of price by wages. So what is experienced in both cases is that wages have determined commodity prices. What is not experienced is the hidden cause of this connection. Further: the average price of labour — the value of labour-power — is determined by the price of production of the necessary means of subsistence. If that rises or falls, so does the price of labour. What is experienced here again is that a connection exists between wages and the price of commodities; but the cause can present itself as the effect, and the effect as the cause — as also happens with the movement of market prices. There a rise of wages above their average corresponds to the rise of market prices above prices of production, the rise that goes with a period of prosperity, and the later fall of wages below their average corresponds to the fall of market prices below prices of production. Given that prices of production are bound by the values of commodities, and setting aside the oscillating movements of market prices, experience ought prima facie always to match this: when wages rise, the rate of profit falls, and vice versa. But we have seen that the rate of profit can be determined by movements in the value of constant capital, independently of movements of wages, so that wages and the rate of profit may move in the same direction instead of opposite ones — both rising or falling together. If the rate of surplus-value directly coincided with the rate of profit, this would not be possible. And even when wages rise because the means of subsistence have become dearer, the rate of profit can stay the same, or even rise, through greater intensity of labour or a longer working day. All these experiences confirm the appearance excited by the independent, inverted form of the value components — as if wages alone, or wages and profit together, determined the value of commodities. And once this seems so at all for wages — once the price of labour and the value created by labour seem to coincide — it goes without saying for profit and rent. Their prices — their expressions in money — must then be regulated independently of labour and of the value it creates.

Thirdly: assume that the values of commodities — or the prices of production that are only apparently independent of them — would directly and permanently coincide, in appearance, with the market prices of commodities, instead of only asserting themselves as the regulating average prices through the ongoing compensations of the constant fluctuations of market prices. Assume further that reproduction would always take place under the same unchanging conditions — that is, that the productivity of labour would stay constant in all elements of capital. Assume finally that the value component of the commodity product which is formed in each sphere of production by adding a new quantity of labour, hence a newly produced value, to the value of the means of production, would break down in always constant proportions into wages, profit and rent, so that the wages actually paid, the profit actually realized and the actual rent would always directly coincide with the value of labour-power, with the part of the total surplus-value that falls by virtue of the average rate of profit to each independently functioning part of the total capital, and with the limits within which ground-rent is normally confined on this basis. In a word, assume that the distribution of the social value product and the regulation of production prices take place on the capitalist basis, but with competition removed.

Under these assumptions, then — where the value of commodities would be and appear constant, where the value component of the commodity product that resolves into revenues would remain a constant magnitude and would always present itself as such, and where finally this given and constant value component would always break down in constant proportions into wages, profit and rent — even under these assumptions the real movement would necessarily appear in inverted shape: not as the decomposition of a value magnitude given in advance into three parts that assume mutually independent revenue forms, but conversely as the formation of this value magnitude from the sum of the independently and separately determined elements that compose it: wages, profit and ground-rent. This appearance would necessarily arise because in the real movement of individual capitals and their commodity products it is not the value of commodities that appears presupposed to its own decomposition, but conversely the components into which they decompose function as presupposed to the value of commodities. First, we have seen that the cost price of a commodity appears to every capitalist as a given magnitude and constantly presents itself as such in the actual price of production. But the cost price equals the value of the constant capital, the means of production advanced, plus the value of labour-power; this value, however, presents itself to the agent of production in the irrational form of the price of labour, so that wages appear at the same time as the worker's revenue. The average price of labour is a given magnitude, because the value of labour-power, as with any other commodity, is fixed by the labour-time its reproduction requires. But as for the value component of commodities that resolves into wages: it does not arise from its taking this form of wages — from the capitalist advancing the worker his share of his own product in the phenomenal form of wages — but from the worker producing an equivalent corresponding to his wages, that is, from one part of his daily or yearly labour producing the value contained in the price of his labour-power. But the wage is fixed by contract before the value equivalent that matches it has been produced. As a price element whose magnitude is given before the commodity and the commodity value are produced, as a component of the cost price, wages therefore appear not as a part that separates itself off from the total value of the commodity in independent form, but conversely as a given magnitude that predetermines this total value, that is, as a price- or value-former. Average profit plays a similar role in the production price of commodities to the role wages play in their cost price, for the production price equals the cost price plus the average profit on the capital advanced. This average profit enters practically, in the capitalist's own conception and calculation, as a regulating element — not only so far as it determines the transfer of capitals from one sphere of investment to another, but also for all sales and contracts that cover a reproduction process extending over longer epochs. But so far as it enters in this way, it is a presupposed magnitude, one that is in fact independent of the value and surplus-value produced in each particular sphere of production, and therefore even more independent of the value and surplus-value produced by each individual capital investment in each of these spheres. Instead of appearing as the result of a division of value, the appearance shows it rather as a magnitude independent of the value of the commodity product, given in advance in the production process of commodities and itself determining the average price of commodities, that is, as a value-former. And surplus-value, because its different parts fall apart into wholly independent forms, appears as presupposed to the formation of commodity value in an even more concrete form. One part of average profit, in the form of interest, confronts the functioning capitalist independently as an element presupposed to the production of commodities and their value. However much the magnitude of interest fluctuates, at every moment and for every capitalist it is a given magnitude, which enters for him, the individual capitalist, into the cost price of the commodities he produces. The same goes for ground-rent, in the form of the contractually fixed lease-money for the agricultural capitalist, and in the form of rent for business premises for other entrepreneurs. These parts into which surplus-value decomposes therefore appear — because as elements of the cost price they are given for the individual capitalist — conversely as formers of surplus-value; formers of one part of the commodity price, as wages form the other. The secret of why these products of the decomposition of commodity value constantly appear as the presuppositions of value formation itself is simply this: that the capitalist mode of production, like every other, constantly reproduces not only the material product but the social economic relations, the economic form-determinations of its formation. Its result therefore appears just as constantly as presupposed to it, as its presuppositions appear as its results. And it is this constant reproduction of the same relations that the individual capitalist anticipates as self-evident, as an undoubted fact. As long as capitalist production as such continues, one part of the newly added labour constantly resolves into wages, another into profit (interest and profit of enterprise) and the third into rent. In the contracts between the owners of the different agents of production this is presupposed, and this presupposition is correct, however much the relative proportions fluctuate in each individual case. The definite shape in which the value components face one another is presupposed because it is constantly reproduced, and it is constantly reproduced because it is constantly presupposed.

True, experience and appearance also show that market prices — and only through their influence does value determination in fact show itself to the capitalist — do not, in their size, depend in any way on these anticipations: they do not follow whether interest or rent was agreed high or low. But market prices are constant only in their changing, and their average over longer periods yields precisely the respective averages of wages, profit and rent as the constant magnitudes, and so as the ones that rule market prices in the last instance.

On the other hand, the reflection seems very simple: if wages, profit and rent are value-formers because they appear as presupposed to the production of value, and are presupposed for the individual capitalist in the cost price and the production price, then the constant capital part too — whose value enters the production of every commodity as given — is a value-former. But the constant capital part is nothing but a sum of commodities and therefore of commodity values. So it would come down to the absurd tautology that commodity value is the former and the cause of commodity value.

If the capitalist had any interest at all in reflecting on this — and his reflecting as a capitalist is determined exclusively by his interest and his interested motives — experience shows him that the product he himself produces enters other spheres of production as a constant capital part, and the products of these other spheres enter his product as constant capital parts. Since therefore for him, so far as his new production goes, the additional value is formed, to all appearance, by the magnitudes of wages, profit and rent, the same holds for the constant part that consists of other capitalists' products; and hence, in the last instance, the price of the constant capital part, and with it the total value of commodities, reduces — though in a way that cannot quite be got at — in the last instance to the sum of value that results from adding up independent value-formers regulated by different laws and formed from different sources: wages, profit and rent.

Fourth. Whether commodities are sold at their values or not — value determination itself — is a matter of complete indifference to the individual capitalist. From the outset it is something that goes on behind his back, through the power of relations independent of him, since it is not values but the prices of production that differ from them that form the regulating average prices in each sphere of production. Value determination as such interests and determines the individual capitalist, and capital in each particular sphere of production, only in so far as the smaller or larger quantity of labour needed to produce the commodities, as the productive power of labour rises or falls, in the one case lets him make an extra profit at the market prices already ruling, and in the other forces him to raise the price of the commodities, because a bit more wages, more constant capital, and so more interest too, fall on each part of the product, each single commodity. It interests him only in so far as it raises or lowers the production costs of the commodity for him, and so only in so far as it puts him in an exceptional position.

Wages, interest and rent, by contrast, appear to him as the limits that govern not only the price at which he can realize the share of profit that falls to him as a functioning capitalist, his profit of enterprise, but also the price at which he must be able to sell the commodity at all, if reproduction is to continue. Whether or not he realizes the value and surplus-value sitting in the commodity when he sells it is a matter of complete indifference to him, provided only that he gets out of the price the customary profit of enterprise, or a bigger one, over and above the cost price given for him individually by wages, interest and rent. Apart from the constant capital part, then, wages, interest and rent appear to him as the limiting and therefore creative, determining elements of commodity price. If he manages, say, to press wages below the value of labour-power, i.e. below their normal level, to get capital at a lower rate of interest, and to pay a lease-price below the normal level of rent, then it is completely indifferent to him whether he sells the product below its value, even below the general price of production — giving away for nothing a part of the surplus labour the commodity contains. This holds even for the constant capital part. If an industrialist can buy raw material below its price of production, that protects him from loss even when he resells it below the price of production in the finished commodity. His profit of enterprise can stay the same, or even grow, so long as the excess of the commodity price over its elements — the ones that have to be paid for, replaced by an equivalent — stays the same or grows. But besides the value of the means of production, which enter the production of his commodities as given price magnitudes, it is precisely wages, interest and rent that enter this production as limiting and regulating price magnitudes. They therefore appear to him as the elements that determine the price of commodities. From this standpoint profit of enterprise appears either as determined by the excess of market prices — which depend on accidental relations of competition — over the immanent value of commodities as determined by those price elements; or, so far as it itself steps into the market price as a determining factor, it appears in turn as dependent on competition among buyers and sellers.

In competition, both among individual capitalists and on the world market, it is the given and presupposed magnitudes of wages, interest and rent that enter the calculation as constant and regulating magnitudes: constant not in the sense that they never change, but in the sense that they are given in each single case and form the constant limit for market prices that are always fluctuating.

On the world market, for instance, the only question is whether, with the given wages, interest and rent, the commodity can be sold at or below the given general market prices with an advantage — that is, with the realization of a corresponding profit of enterprise. If wages and the price of land are low in one country while interest on capital is high, because the capitalist mode of production is not developed there at all, while in another country wages and the price of land are nominally high but interest on capital is low, then the capitalist in the one country puts more labour and land to work, and in the other relatively more capital. In working out how far competition between the two is possible, these factors enter as determining elements. So experience shows here theoretically, and the capitalist's interested calculation shows practically, that the prices of commodities are determined by wages, interest and rent, by the price of labour, of capital and of land, and that these price elements are in fact the regulating price-formers.

One element, of course, always remains that is not presupposed, but results from the market price of commodities: the excess over the cost price that is formed by adding up those elements — wages, interest and rent. This fourth element appears determined in each single case by competition, and in the average of cases by the average profit, which is in turn regulated by the same competition, only over longer periods.

Fifth. Where the capitalist mode of production is the basis, dividing the value in which newly added labour is represented into the revenue forms of wages, profit and ground-rent becomes so much a matter of course that the method is applied even where the conditions of existence of those revenue forms are lacking from the outset. (Not to speak of earlier historical periods — we gave examples of that in connection with ground-rent.) In other words, everything is subsumed under them by analogy.

Take a worker who is independent — a small peasant, say, since all three revenue forms can be applied to him. He works for himself and sells his own product. Then, first, he is regarded as his own employer (a capitalist) who employs himself as a worker, and as his own landowner who employs himself as his tenant. As his own wage-labourer he pays himself wages; as his own capitalist he claims profit; as his own landowner he pays himself rent. With the capitalist mode of production and the relations that go with it presupposed as the general basis of society, this subsumption is correct so far as he owes his ability to appropriate his own surplus labour not to his labour but to his possession of the means of production — which have here generally taken the form of capital. And further: so far as he produces his product as a commodity, and so depends on its price (and even if he does not, that price can be estimated), the mass of surplus labour he can valorize depends not on its own magnitude but on the general rate of profit. And any excess over the quota of surplus-value that the general rate of profit determines is again not determined by the quantity of labour he performs — he can appropriate it only because he is the owner of the land. Because a form of production that does not correspond to the capitalist mode can be subsumed under its revenue forms — and up to a certain degree this is not incorrect — the appearance is all the more firmly established that capitalist relations are the natural relations of every mode of production.

If, though, one reduces wages to their general basis — the part of the worker's own product of labour that goes into his individual consumption; if one frees that share from its capitalist limit and widens it to the scale of consumption that, on the one hand, the present productive power of society allows (that is, the social productive power of his own labour as genuinely social) and that, on the other, the full development of individuality requires; if one further reduces surplus labour and surplus product to the measure required under the given conditions of production in society — on the one hand for an insurance and reserve fund, on the other for the steady expansion of reproduction in the degree that social need determines; if one finally counts into (1) necessary labour and (2) surplus labour the amount of labour that those able to work must always perform for the members of society not yet able, or no longer able, to work — that is, if one strips the specifically capitalist character from wages and surplus-value alike, from necessary labour and surplus labour alike — then what remains is precisely not these forms, but only their foundations, which are common to all social modes of production.

This kind of subsumption, incidentally, belongs to earlier dominant modes of production too — the feudal one, for instance. Relations of production that did not correspond to it at all, that stood entirely outside it, were subsumed under feudal relations. In England, for example, the tenures in common socage (as opposed to tenures on knight's service) involved only money obligations and were feudal in name alone.