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CHAPTER XII.: SOME AFTER REMARKS. - Karl Marx, Capital: A Critique of Political Economy. Volume III: The Process of Capitalist Production as a Whole 
Capital: A Critique of Political Economy. Volume III: The Process of Capitalist Production as a Whole, by Karl Marx. Ed. Federick Engels. Trans. from the 1st German edition by Ernest Untermann (Chicago: Charles H. Kerr and Co. Cooperative, 1909).
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SOME AFTER REMARKS.
I. Causes Implying a Variation of the Price of Production.
THE price of production of a commodity can vary only from two causes:
1) The average rate of profit varies. This can be due only to a change in the average rate of surplus-value, or, if the average rate of surplus-value remains the same, by a change in the proportion of the sum of the appropriated surplus-values to the sum of the advanced total capital of society.
Unless a variation of the rate of surplus-value is due to a depression of wages below normal, or their rise above normal,—and such movements must be considered as mere oscillations—it can take place only for two reasons: Either the value of labor-power may have risen or fallen. The one eventuality is as impossible as the other without a change in the productivity of that labor which produces means of subsistence, in other words, without a change in the value of the commodities which are consumed by the laborer. Or, the proportion of the sum of appropriated surplus-values to the advanced total capital of society varies. Since the variation in this case is not due to the rate of surplus-value, it must be due to the total capital, or rather to its constant part. The mass of this part, technically speaking, increases or decreases in proportion to the quantity of labor-power bought by the variable capital, and the mass of its value increases or decreases with the increase or decrease of its own mass. Its mass of value, then, increases or decreases likewise in proportion to the mass of the value of the variable capital. If the same labor sets more constant capital in motion, labor has become more productive. If less, less productive. There has then been a change in the productivity of labor, and a change must have taken place in the value of certain commodities.
The following rule, then, applies to both cases: If the price of production of a certain commodity changes in consequence of a change in the average rate of profit, its own value may have remained unchanged, but a change must have taken place in the value of other commodities.
2) The average rate of profit remains unchanged. In that case the price of production of a commodity cannot change, unless its own value has changed. This may be due to the fact that more or less labor is required to produce this commodity, either because the productivity of that labor varies, which produces this commodity in its final form, or of that labor which produces the commodities consumed in its production. Cotton yarn may vary in its price of production, either because cotton is produced at a lower figure, or because the labor of spinning has become more productive in consequence of improved machinery.
As we have seen before, the price of production is equal to k + p, equal to cost-price plus profit. This implies k + kp', and k, cost-price, stands here for a variable magnitude, which changes according to different spheres of production, but is everywhere equal to the value of the constant and variable capital consumed in the production of commodities, while p' stands for the percentage of the average rate of profit. If k = 200, and p' = 20%, the price of production k + kp' is equal to 200 + 200 20/100 = 200 + 40 = 240. It is evident that this price of production may remain the same, although the value of the commodities may change.
All changes in the price of production of commodities reduce themselves in the last analysis to changes in value. But not every change in the value of commodities needs to find expression in a change of the price of production. For this price is not determined merely by the value of any particular commodity, but by the aggregate value of all commodities. A change in commodity A may eventually be balanced by an opposite change of commodity B, so that the general proportion remains the same.
II. Price of Production of Commodities of Average Composition.
We have seen that a deviation of the prices of production from the values may be brought about by the following means:
1) By adding to the cost-price of a commodity, not the surplus-value contained in it, but the average profit.
It is therefore possible that the cost-price may differ from the sum of the values of those elements which make up this portion of the price of production, even in the case of commodities produced by capitals of average composition. Take it that the average composition is 80 c + 20 v. Now it is possible that in the actual capitals of this composition 80 c may be greater or smaller than the value of c, the constant capital, because this c may be made up of commodities whose price of production differs from their value. In the same way 20 v might differ from its value, if the laborer consumes commodities whose price of production differs from their value, in which case the laborer would work a longer or shorter time for their reproduction, and would thus perform more or less necessary labor, then would be required, if the price of production of the necessities of life coincided with their value.
However, this possibility does not alter the correctness of the rules laid down for commodities of average composition. The quantity of profit falling to the share of these commodities is equal to the quantity of surplus-value contained in them. For instance, the most important point in a capital of the above composition, 80 c + 20 v, so far as the determination of surplus-value is concerned, is not whether these figures are expressions of actual values, but whether this represents their actual proportion to one another, in other words, whether v is one-fifth, and c four-fifths, of the total capital, Whenever this is actually the case, as was assumed above, then the surplus-value produced by v is equal to the average profit. On the other hand, seeing that this surplus-value is equal to average profit, the price of production, or cost-price plus profit, k +p, is equal to k + s, that is, practically equal to the value of these commodities. This implies that a rise or a fall in wages would not change the price of production, k + p, any more than it would change the value of these commodities. It would merely effect a corresponding opposite movement on the side of profit, a fall or a rise. For if a rise or a fall of wages were to bring about a change in the price of commodities of average composition, then the rate of profit in these spheres of average composition would rise above, or fall below, the level it holds in other spheres. The sphere of average composition maintains the same level of profit as the other spheres only so long as the price remains unchanged. The practical result in the case of this sphere of average composition is the same as though its products were sold at their value. For if commodities are sold at their actual values, it is evident that, other circumstances remaining equal, a rise or a fall in wages will cause a corresponding fall or rise in profits, but no change in the value of commodities, and that under all circumstances a rise or a fall in wages can never affect the value of commodities, but only the magnitude of the surplus-value.
III. Fluctuations for which the Capitalist makes Allowance.
It has been said that competition levels the rates of profit of the different spheres of production into an average rate of profit and thereby transforms the values of the products of these different spheres into prices of production. This is accomplished by continually transferring capital from one sphere to another, in which the profit happens to stand above the average for the moment. The fluctuations of profit due to the cycle of fat and lean years, following each other in any given line of industry during given periods, must be taken into consideration, of course. These incessant emigrations and immigrations of capital, which take place between the different spheres of production, create rising and falling movements of the rate of profit. These movements balance one another more or less and thereby create a tendency to reduce the rate of profit everywhere to the same common and universal level.
This movement of capitals is caused primarily by the stand of the market-prices, which lift profits above the level of the universal average in one place and depress them below it in another. We leave out of consideration, for the present, merchant's capital. We know from the sudden paroxysms of speculation in certain favorite articles that this merchants' capital can draw masses of capital from a certain line of business with extraordinary rapidity and throw them with equal rapidity into another. But we have nothing to do with merchants' capital at this place. So far as the sphere of actual production is concerned, that is, industries, agriculture, mining, etc., the transfer of capital from one sphere to another offers considerable difficulty, particularly on account of the existing fixed capital. Moreover, experience demonstrates that, if a certain line of industry, for instance the cotton industry, yields extraordinary profits at one period, it suffers losses, or makes very little profit, at some other period, so that the average profit within a certain cycle of years is pretty much the same as in other lines. And capital soon learns to take this experience into account.
What competition does not show is the way in which value is determined and the movement of production dominated by this determination. It does not show the values that stand behind the prices of production and determine them in the last instance. Competition does show, on the other hand, the following things: 1) The average profits independent of the organic composition of capital in the different spheres of production, and therefore also independent of the mass of living labor appropriated by any given capital in any particular sphere of exploitation. 2) A rise and fall of prices of production as a result of changes in the level of wages, a phenomenon which flatly contradicts at first sight the law of value of commodities. 3) The fluctuations of market-prices, which reduce the average market-price of commodities in a given period of time, not to the market-value, but to a market-price of production differing considerably from this market-value. All these phenomena seem to contradict the determination of value by labor-time as much as the fact that surplus-value consists of unpaid surplus-labor. Everything appears upside down in competition. The existing conformation of economic conditions, as seen in reality on the surface of things, and consequently in the conceptions which the leading human agents of these conditions form in trying to understand them, are not only different from the internal and disguised essence of these conditions, and from the conceptions corresponding to this essence, but actually opposed to them, or their reverse.
Furthermore, as soon as capitalist production has reached a certain degree of development, the reduction of the different rates of profit of the individual spheres to the level of the average rate of profit no longer proceeds solely by virtue of the play of attraction and repulsion, by which the market prices attract or repel capital. After the average prices, and the market-prices corresponding to them, have become stable for a time, the capitalists become conscious of the fact that this leveling process balances definite differences. And then they allow for these differences in their mutual calculations. The differences exist in the consciousness of the capitalists and are taken into consideration as fluctuations for which allowance must be made.
At the bottom of all conceptions lies that of the average profit, to-wit, that capitals of the same magnitude must yield the same profits in the same time. This, again, is based on the assumption that the capital of each sphere of production shares in the total profit squeezed out of the laborers by the total social capital in proportion to its magnitude; or, that every individual capital should be regarded merely as a part of the total social capital, and every capitalist as a shareholder in the total social enterprise, each sharing in the total profit in proportion to the magnitude of his share of capital.
These conceptions serve as a basis for the calculations of the capitalist, for instance the assumption that a capital which is turned over more slowly than another, because its commodities require a longer time for their production, or because they must be sold in more remote markets, should nevertheless charge the profit it loses in this way and reimburse itself by putting up the price. Another idea is that capitals invested in lines which are exposed to considerable danger, for instance in shipping, should be compensated by a raise in prices. As soon as capitalist production, and the insurance business, are developed, the danger is equalised for all spheres of production (see Corbett); but the capitals invested in more than ordinarily dangerous enterprises have to pay higher insurance rates and recover them in the prices of their commodities. All this amounts in practice to saying that every circumstance (and all of them are considered equally necessary within certain limits), which renders one line of production profitable, and another less, are calculated as legitimate grounds for compensation, without requiring the ever renewed action of competition to demonstrate the justification of such claims. The capitalist simply forgets, or rather he does not see, because competition does not show it to him, that all these claims for compensation mutually advanced by the capitalists in the calculation of the prices of commodities of different lines of production repeat in another way the idea that all capitalists are entitled, in proportion to the magnitude of their respective capitals, to equal shares of the common loot, the total surplus-value. They are rather under the impression, seeing that the profit pocketed by them differs from the surplus-value appropriated by them, that those grounds for compensation do not equalise their participation in the total surplus-value, but that they rather create the profit itself, which is supposed to originate in an addition to the price of their commodities, for which they advance different excuses.
In other respects the statements made in chapter VII concerning the assumptions of the capitalists as to the source of surplus-value apply also in this instance. The present case differs a little from those in chapter VII, but only to the extent that a saving in cost-price depends on individual ability, attention to business, etc., assuming the market-price of commodities and the degree of exploitation of labor to be given.
THE LAW OF THE FALLING TENDENCY OF THE RATE OF PROFIT.