Marx at his Study

Study Guide for
Karl Marx’s
Volume III

Commentaries: on Capital
Preparatory Reading:
Engels' 1894 Preface
Engels' Edition of the Third Volume of Capital and Marx's Original Manuscript, by Michael Heinrich


Part I: The Conversion of Surplus-Value into Profit and of
the Rate of Surplus-Value into the Rate of Profit

Chapters 1-3: - The Rate of Profit to the Rate of Surplus-Value

Terms: Commodity, Labour, Labour Power, Constant and Variable Capital, Surplus Value, Rate of Surplus Value, Price, Appearance, Essence, Capital, Profit, Proletariat, Rate of Profit, Means of Production.

Questions for discussion:
1. The very first paragraph on “Cost Price and Profit” explains that it is only in this third volume, published 11 years after Marx's death, that forms discussed in Capital will “approach step by step the form which they assume on the surface of society”. With reference to the concepts of value vs. price and surplus value vs. profit, can you explain concretely the relation between these concepts and the “form which they assume on the surface of society”?
2. Marx subdivides the value of any commodity, C, into c + v + s. Assuming that this subdivision reflected the average and therefore the subdivision of the total products in circulation, what could this tell us?
3. If the market has already set a price for a given commodity which a capitalist was considering producing, how would the capitalist determine what price to put on her product?
4. What basis does the capitalist have for believing that the increment in value added in production is derived from capital and not from labour?
5. How would you prove that this view is wrong and that the increment is brought about by labour, since all the components of the value of the product are paid for at their value?
6. How do capitalists calculate rate of profit and how does this differ from what Marx calls the “rate of profit”?
7. Is Marx's definition nevertheless a valid representation of the “point of view” of the capitalist?

Chapters 4-7: - Effects on the Rate of Profit

Terms: Organic Composition of Capital, Distribution and Exchange, Circuit of Capital, Cycle of Reproduction, Necessary and Surplus Labour Time, Absolute and Relative Surplus Value, The Working Day, Departments of Capital, Business Cycle.

Questions for discussion:
1. How does average turnover rate of capital convert the “rate of profit” into annual rate of profit?
2. What do you think about the turnover rate of capital in a modern economy today?
3. What effect does Marx suggest “industrial progress“ has on the organic composition of capital?
4. What is the effect on the rate of profit in an industry if the quantity of raw materials used and finished products made increases while everything else remains constant?
5. How is it that the capitalists manage to reap for themselves benefits derived from improvements in productivity in all other branches of industry.
6. At the close of the first section of Chapter V., Marx mentions three ways in which the workers are alienated from the labour process even where it absorbs their whole life. What were these three ways?
7. What significance do you see for today in Marx's comments about “early adopters” usually going bankrupt?
8. What were the Corn Laws about?
9. Marx says that the capitalist system works against rational agriculture. What was his argument and do you think it has been substantiated by subsequent history?
10. Marx has pointed out how the rate of surplus value is determined by the length of the working day and the necessary labour time, both characterising the economy as a whole. On the other hand, he has shown how a large number of factors, which may vary from industry to industry, may cause the rate of profit to vary. What do you see as being the effect of this variation in the rate of profit?

Part II: Conversion of Profit into Average Profit

Chapters 8-12: - The General Rate of Profit

Terms: Value, Political Economy, Economics, Wages, Market, Genetic Exposition, Abstract and Concrete, Class, Proletariat, Division of Labour, Theory of Marginal Utility.

Questions for discussion:
1. Marx claims to be investigating “the way in which a general rate of profit takes shape in any given country” What is the basis for such an investigation limited to “a given country” and to what extent if any is the approach invalidated by the world market in capital, commodities and labour which exists today?
2. Marx eliminates differing rates of exploitation as significant in this investigation of the differing rates of exploitation between industries, but pays special attention to rate of turnover of capital and the organic composition of capital. What is the basis for this distinction and what are the effects of the latter two variables?
3. What is the difference between the “technical composition” and the “organic composition” of capital?
4. Marx is showing how values are transformed into prices. How can this be explained?
5. “The exchange of commodities at their values, or approximately at their values, thus requires a much lower stage than their exchange at their prices of production, which requires a definite level of capitalist development”. Explain.
6. What is Marx's argument against supply and demand as the process determining prices in terms of it being a “tautology”? And can you see how the Marginal Theory of Value to some extent answers Marx's criticism, and how it doesn't?
7. “It is, therefore, a matter, at least as a minimum, of selling the commodities at prices which yield the average profit, i.e., at prices of production. In this form capital becomes conscious of itself as a social power in which every capitalist participates proportionally to his share in the total social capital.” Explain
8. “Now, if the commodities are sold at their values, then ... very different rates of profit arise in the various spheres of production, depending on the different organic composition of the masses of capital invested in them. But capital withdraws from a sphere with a low rate of profit and invades others, which yield a higher profit. Through this incessant outflow and influx ... it creates such a ratio of supply to demand that the average profit in the various spheres of production becomes the same, and values are, therefore, converted into prices of production.” Explain.
9. “The incessant equilibration of constant divergences is accomplished so much more quickly, 1) the more mobile the capital, i.e., the more easily it can be shifted from one sphere and from one place to another; 2) the more quickly labour-power can be transferred from one sphere to another and from one production locality to another. ”. Discuss this terms of the state of the world economy today.
10. What factors does Marx list in Chapter XII which may cause a change in the price of production, all of which are political-economic rather than technical or natural causes. Can you explain each of them?

Part III: The Law of the Tendency of the Rate of Profit to Fall

Chapters 13-15: - The Falling Rate of Profit

“If it is assumed that this gradual change in the composition of capital is not confined only to individual spheres of production, but that it occurs more or less in all, or at least in the key spheres of production, so that it involves changes in the average organic composition of the total capital of a certain society, then the gradual growth of constant capital in relation to variable capital must necessarily lead to a gradual fall of the general rate of profit, so long as the rate of surplus-value, or the intensity of exploitation of labour by capital, remain the same.”

Terms: Falling rate of Profit, Concentration of Capital, Private Property, Socialisation, Overproduction and Underconsumption, The Great Depression.

Questions for discussion:
1. What arguments does Marx bring forward to suggest a tendency for the organic composition of capital to rise?
2. The law as such is referred to the “rate of profit” as a proportion of the total social value in circulation. What is the significance of the law in these terms?
3. If the “rate of profit” is multiplied by the velocity of circulation of capital to give the annual rate of profit (which Marx considers later on), what would this signify?
4. Taking into account the formation of a general rate of profit, to what extent does the velocity of circulation of capital vary between constant and variable capital?
5. Why is the tendency of the rate of profit to fall a problem for capitalism, but not for other modes of production?
6. Why does the action of this law tend to drive up the rate of surplus value, i.e., to decrease the proportion of a workers' day worked on her own account and increase the number of unpaid hours of work performed for the capitalist?
7. Marx notes that “the same amount of value represents a greater mass of use-values and enjoyments.“ So, how does this process intersect with the struggle of workers for a better standard of living?
8. Why is “a mounting concentration of capitals ... therefore, one of the material requirements as well as one of its results” of capitalist production?
9. What countervailing tendencies does Marx list?
10. In examining these questions, do you see any advantage Marx has in approaching the problems in terms of labour time and the class struggle, rather than in terms of prices and supply vs. demand, in the manner of bourgeois economics? And any disadvantages?
11. “The capitalist process of production consists essentially of the production of surplus-value”. What does this mean?
12. What is the reason for the drive of capitalism to continuously extend the market?
13. What corresponds socially to an increasing mass of surplus value, a falling rate of profit and an increasing productivity of labour?
14. “The real barrier of capitalist production is capital itself. ... production is only production for capital and not vice versa.” Explain.
15. Some have argued that the increasing use of computers and software industries, and technologies which allow, for example, a very small group of people to produce CDs which were once a large-scale industrial process, and the rise of labour-intensive service industries, such as labour-hire or personal services, have reversed the process of the rising organic composition of capital. What do you think?

Part IV: Conversion of Commodity-Capital and Money-Capital into Commercial Capital and Money-Dealing Capital (Merchant's Capital)

Chapters 16-20: - Commercial and Merchants' Capital

Terms: Cycle of Reproduction, Productive and Unproductive Labour, Production and Consumption, Realisation, Mediation, Critique.

Questions for discussion:
1. What costs does Marx allocate to circulation, and what do you think about whether these costs can nowadays be seen as distinct from costs of production?
2. In particular, which of the following kinds of labour can be employed in the production of surplus value, and under what circumstances: transportation, software production, advertising, insurance broking.
3. What social function is performed by commercial capital? and how does it contribute to the social production and appropriation of surplus value
4. What significance would you see in the growing proportion of the total social capital of a country being commercial or commodity capital, and a smaller proportion being productive capital? What do you think is the case in your country in recent decades?
5. What would be the effects of a fall in profitability in the commercial sector?
6. What do you make of the paragraph, near the end of Chapter XVII, beginning: “The commercial worker produces no surplus-value directly”?
7. How does competition in the commercial sector function in the determination of the velocity of circulation of capital and in the formation of the general rate of profit?
8. Commercial capital and commercial activity grows up in the widening gap between production and consumption arising from the development of the social division of labour. Do you see any significance in this?
9. What conflicts of interest do you see between money-capital, commercial-capital and productive capital?
10. Commercial capital is historically older than productive capital, but yet it is seen that commercial capital is fundamentally derivative of productive capital. What do you make of this? And Marx mentions that the “Merchantile system” was historically the first theory of economics. Do you see any significance in this observation for this study group?
11. Near the close of Chapter XX, Marx refers to the “masters” of furniture makers in Tower Hamlets being in effect, not capitalist employers, but simply “middle-men”. Can you see any extension of this argument in relations between different classes in modern capitalist society?

Part V: Division of Profit into Interest and Profit of Enterprise.
Interest-Bearing Capital.

Chapters 21-24: - Interest and Profit

Terms: Credit, Monetarism, Money.

Questions for discussion:
1. What is the relation between the market rate of interest on capital and the general rate of profit, in the absence of any government or central bank intervention?
2. A productive capitalist figures the interest payments she makes on loans as part of the costs of production. How does Marx see this?
3. Marx refutes the assertion that profit from capital is the result of the labour of supervision. Does he nevertheless regard supervision as productive labour?
4. What is meant by “profit of enterprise”?
5. At the opening of Chapter XXIV, Marx says “The relations of capital assume their most externalised and most fetish-like form in interest-bearing capital”. Can you explain what he means?
6. The closing words of Chapter XXIV: “the reproduction of the value of products of past labour is only the result of their contact with living labour.” Why does Marx emphasise this point?

Chapters 25-28: - Credit and Fictitious Capital

Terms: Privatisation and Nationalisation, Business Cycle, Crisis of Capitalism, Inflation,

Questions for discussion:
1. What social functions does Marx see banks as performing?
2. “That anything can ultimately destroy its own cause is a logical absurdity only for the usurer enamoured of the high interest rate” &c. Can you generalise the point Marx is making here?
3. In the passages in Chapter XXVII., for instance, where Marx comments: “the stock company is a transition toward the conversion of all functions in the reproduction process which still remain linked with capitalist property, into mere functions of associated producers, into social functions.” — what do you make of these observations after the experience of the past century?
4. What are the various distinct kinds and functions of money identified by Marx?


Chapters 29-36: - Money Capital and Real Capital

Terms: Fictitious Capital, Wall Street Crash, Gold Standard, Bretton Woods, Centralisation and Decentralisation, Imperialism.

Questions for discussion:
1. What distinction would you make between credit and debt?
2. “The independent movement of the value of these titles of ownership, not only of government bonds but also of stocks, adds weight to the illusion that they constitute real capital alongside of the capital or claim to which they may have title. For they become commodities, whose price has its own characteristic movements and is established in its own way. Their market-value is determined differently from their nominal value, without any change in the value (even though the expansion may change) of the actual capital”. Discuss.
3. “With the development of interest-bearing capital and the credit system, all capital seems to double itself, and sometimes treble itself, by the various modes in which the same capital, or perhaps even the same claim on a debt, appears in different forms in different hands.” Discuss.
4. “To what extent does a scarcity of money, i.e., a shortage of loan capital, express a shortage of real capital (commodity-capital and productive capital)? To what extent does it coincide, on the other hand, with a shortage of money as such, a shortage of the medium of circulation?”
5. “The monetary system is essentially a Catholic institution. the credit system essentially Protestant. "The Scotch hate gold." In the form of paper the monetary existence of commodities is only a social one. It is Faith that brings salvation. Faith in money-value as the immanent spirit of commodities, faith in the mode of production and its predestined order, faith in the individual agents of production as mere personifications of self-expanding capital. But the credit system does not emancipate itself from the basis of the monetary system any more than Protestantism has emancipated itself from the foundations of Catholicism.” (End of Chapter XXXV) What do you make of this?
6. What distinction and connection does Marx make between usury and interest-bearing capital?

Part VI: Transformation of Surplus-Profit into Ground-Rent

Chapters 37-47: - Differential Rent

Terms: Rent, Goods and Services.

Questions for discussion:
1. “So far as we are concerned, the farmer produces wheat, etc., in much the same way as the manufacturer produces yarn or machines.” What does Marx specifically mean by this?
2. “One of the big contributions of Adam Smith was to have shown that ground-rent for capital invested in the production of such agricultural products ... is determined by the ground-rent obtained from capital invested in the production of the principal article of subsistence.” Discuss this is the modern context.
3. How does Marx describe the transformation of agriculture by capitalism?
4. How does it come about that the peasant (who unlike the proletarian, owns her own means of production) is exploited by capital?
5. If rent derives from the labour expended in improving ground, how is it possible that “All ground-rent is surplus-value, the product of surplus-labour.”?
6. “The waterfall, ... like any natural force, has no value because it does not represent any materialised labour” (Chapter XXXVIII) How does Marx describe the way natural forces come to be commodified and acquire value and price?
7. What is the distinction betwen Differential Rent I and Differential Rent II?
8. What does Marx mean by “the employment of constant capital is always cheaper than that of variable capital” (Chapter XLI)?
9. How does Marx describe the bankruptcy of European landlords brought about by trade with America and India (Chapter XLIII)?
10. “The mere legal ownership of land does not create any ground-rent for the owner. But ...”. Can you explain and complete what comes after the "but" (Chapter XLV)?
11. Describe how Chapter XLVII sketches how the historical development of capitalist production, and struggles between different sections of the capitalist class, are reflected in theoretical disputes among political economists, for example, Petty, the Physiocrats, and Adam Smith.
12. It has been suggested (see The Informatisation of Production) that capitalism has entered a new phase in recent decades, pushing manufacture into second place, just as manufacture had pushed agriculture into second place in the 19th century. Provisionally accepting this proposition for the moment, how would you apply to manufacture, the kind of observations made by Marx in this section in respect to agriculture?

Part VII: Revenues and their Sources

Chapters 48-52: - Distribution and Production

Terms: Distribution and Exchange.

Questions for discussion:
1. What is The Trinity Formula, and what criticism does Marx make of the formula?
2. What does Marx mean by “Capital is not a thing, but rather a definite social production relation”?
3. “Just as the savage must wrestle with Nature to satisfy his wants, to maintain and reproduce life, so must civilised man, ... With his development this realm of physical necessity expands as a result of his wants; but, at the same time, the forces of production which satisfy these wants also increase. Freedom in this field can only consist in socialised man, the associated producers, rationally regulating their interchange with Nature, bringing it under their common control, instead of being ruled by it as by the blind forces of Nature; and achieving this with the least expenditure of energy and under conditions most favourable to, and worthy of, their human nature. But it nonetheless still remains a realm of necessity. Beyond it begins that development of human energy which is an end in itself, the true realm of freedom, which, however, can blossom forth only with this realm of necessity as its basis. The shortening of the working-day is its basic prerequisite.” What do you make of this? And after all that, why add the bit about the length of the working day?
4. “However, the landlord plays a role in the capitalist process of production not merely through the pressure he exerts upon capital, nor merely because large landed property is a prerequisite and condition of capitalist production since it is a prerequisite and condition of the expropriation of the labourer from the means of production, but particularly because he appears as the personification of one of the most essential conditions of production.” Does this cause you to reflect on the position of the indigenous people in your country? What other issues arise?
5. “Surplus-value contained in the commodities seem not merely to be realised in the circulation, but actually to arise from it; an appearance which is especially reinforced by two circumstances: first, the profit made in selling depends on cheating, deceit, inside knowledge, skill and a thousand favourable market opportunities;” What does this mean in terms of social consciousness?
6. “The actual process of production, as a unity of the direct production process and the circulation process, gives rise to new formations, in which the vein of internal connections is increasingly lost, the production relations are rendered independent of one another, and the component values become ossified into forms independent of one another.” What does this mean in terms of social consciousness?
7. What does Marx mean by “our description of how production relations are converted into entities and rendered independent in relation to the agents of production” (Chapter XLVIII) and can you give examples of words that have recently entered the language to illustrate this?
8. “The authority assumed by the capitalist as the personification of capital in the direct process of production, the social function performed by him in his capacity as manager and ruler of production, is essentially different from the authority exercised on the basis of production by means of slaves, serfs, etc. ... not as political or theocratic rulers as under earlier modes of production ... themselves only as an overwhelming natural law in relation to individual free will.” (Chapter LI) Discuss.
9. At the very close of the manuscript, Marx is in the midst of explaining why the sources iof revenue do not constitute an adequate basis for the definition of classes. How would you continue the manuscript?


Engels: - Labour Theory of Value etc.

Terms: Labour Theory of Value, Theory of Marginal Utility, Productive Labour.

Questions for discussion:
1. What is “the Law of Value” and who first formulated it?
2. Under what conditions can “the Law of Value” operate as a law governing human affairs?
3. How do you understand the way Nike adds value to its products by getting sports stars to wear their logo?
4. The manufacturer “pumps” surplus value out of the workers, while the landlord using his land like a “magnet” to attract it, said Marx earlier. Can you use this kind of metaphor to explain how surplus value is distributed in today's economy with its huge finance, retail, advertising, etc., industries?
5. The Labour Theory of Value has not been supported by bourgeois economists since the 1860s, though it was conventional wisdom at least till the 1840s. What do you make of this?
6. How can we go about liberating humanity from the Law of Value and other such laws by means of which own activity confronts us as “blind necessity”? And once successful, what, if anything, would replace the Law of Value?

Andy Blunden, 2002