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• Preface By Frederick Engels
• Volume III. the Process of Capitalist Production As a Whole.
• Part I.: The Conversion of Surplus-value Into Profit and of the Rate of Surplus-value Into the Rate of Profit.
• Chapter I.: Cost Price and Profit.
• Chapter II.: The Rate of Profit.
• Chapter III.: The Relation of the Rate of Profit to the Rate of Surplus-value.
• Chapter IV.: The Effect of the Turn-over On the Rate of Profit.
• Chapter V.: Economies In the Employment of Constant Capital.
• I. General Economies.
• II. Economies In the Conditions of Labor At the Expense of the Laborers.
• III. Economies In the Generation of Power, Transmission of Power, and Buildings.
• IV. Utilisation of the Excrements of Production.
• V. Economies Due to Inventions.
• Chapter VI.: The Effect of Fluctuations In Price.
• I. Fluctuations In the Price of Raw Materials, and Their Direct Effects On the Rate of Profit.
• II. Appreciation, Depreciation, Release, and Tie-up of Capital.
• III. General Illustration. the Cotton Crisis of 1861-1865.
• Chapter VII.: Additional Remarks.
• Part II.: Conversion of Profit Into Average Profit.
• Chapter VIII.: Different Composition of Capitals In Different Lines of Production and Resulting Differences In the Rates of Profit.
• Chapter IX.: Formation of a General Rate of Profit (average Rate of Profit) and Transformation of the Values of Commodities Into Prices of Production
• Chapter X.: Compensation of the Average Rate of Profit By Competition. Market Prices and Market Values. Surplus-profit.
• Chapter XI.: Effects of General Fluctuations of Wages On Prices of Production.
• Chapter XII.: Some After Remarks.
• I. Causes Implying a Variation of the Price of Production.
• II. Price of Production of Commodities of Average Composition.
• III. Fluctuations For Which the Capitalist Makes Allowance.
• Part III.: The Law of the Falling Tendency of the Rate of Profit.
• Chapter XIII.: The Theory of the Law.
• Chapter XIV.: Counteracting Causes.
• I. Raising the Intensity of Exploitation.
• II. Depression of Wages Below Their Value.
• III. Cheapening of the Elements of Constant Capital.
• IV. Relative Overpopulation.
• V. Foreign Trade.
• VI. the Increase of Stock Capital.
• Chapter XV.: Unraveling the Internal Contradictions of the Law.
• I. General Remarks.
• II. Conflict Between the Expansion of Production and the Creation of Values.
• III. Surplus of Capital and Surplus of Population.
• IV. Supplementary Remarks.
• Part IV.: Transformation of Commodity-capital and Money-capital Into Commercial Capital and Financial Capital (merchant's Capital).
• Chapter XVI.: Commercial Capital.
• Chapter XVII.: Commercial Profit.
• Chapter XVIII.: The Turn-over of Merchant's Capital. the Prices.
• Chapter XIX.: Financial Capital.
• Chapter XX.: Historical Data Concerning Merchants' Capital.
• Part V.: Division of Profit Into Interest and Profits of Enterprise. the Interest-bearing Capital.
• Chapter XXI.: The Interest-bearing Capital.
• Chapter XXII.: Division of Profit. Rate of Interest. Natural Rate of Interest.
• Chapter XXIII.: Interest and Profit of Enterprise.
• Chapter XXIV.: Externalisation of the Relations of Capital In the Form of Interest-bearing Capital.
• Chapter XXV.: Credit and Fictitious Capital.
• Chapter XXVI.: Accumulation of Money-capital. Its Influence On the Rate of Interest.
• Chapter XXVII.: The Role of Credit In Capitalist Production.
• Chapter XXVIII.: The Medium of Circulation (currency) and Capital. Tooke's and Fullarton's Conception.
• I. Confounding the Definite Distinctions.
• II. Introducing the Question of the Quantity of Money Circulating Together In Both Functions.
• III. Introduction of the Question of the Relative Proportions of the Quantities of Currency Circulating In Both Functions and Thus In Both Spheres of the Process of Reproduction.
• Chapter XXIX.: The Composition of Banking Capital.
• Chapter XXX.: Money-capital and Actual Capital, I.
• Chapter XXXI.: Money-capital and Actual Capital. II. (continued.)
• 1. Conversion of Money Into Loan Capital.
• Conversion of Capital Or Revenue Into Money That Is Transformed Into Loan Capital.
• Chapter XXXII.: Money-capital and Actual Capital. III. (concluded.)
• Chapter XXXIII.: The Currency Under the Credit System.
• Chapter XXXIV.: The Currency Principle and the English Bank Laws of 1844.
• Chapter XXXV.: Precious Metals and Rates of Exchange.
• I. the Movements of the Gold Reserve.
• II. the Rate of Exchange.
• III. Rate of Exchange With Asia.
• IV. England's Balance of Trade.
• Chapter XXXVI.: Precapitalist Conditions.
• Interest In the Middle Ages.
• Part VI.: Transformation of Surplus Profit Into Ground-rent.
• Chapter XXXVII.: Preliminaries.
• Chapter XXXVIII.: Differential Rent. General Remarks.
• Chapter XXXIX.: The First Form of Differential Rent. ( Differential Rent I. )
• Chapter Xl.: the Second Form of Differential Rent. ( Differential Rent II. )
• Chapter Xli.: Differential Rent II.—FIRST Case: Constant Price of Production.
• Chapter Xlii.: Differential Rent II.—SECOND Case: Falling Price of Production.
• I. the Productivity of the Additional Investment of Capital Remains the Same.
• II. the Rate of Productivity of the Additional Capitals Decreases.
• III. the Rate of Productivity of the Additional Capitals Increases.
• Chapter Xliii.: Differential Rent No. II.—THIRD Case:  rising Price of Production.
• Chapter Xliv.: Differential Rent Even Upon the Worst Soil Under Cultivation.
• Chapter Xlv.: Absolute Ground-rent.
• Chapter Xlvi.: Building Lot Rent. Mining Rent. Price of Land.
• Chapter Xlvii.: Genesis of Capitalist Ground-rent.
• I. Introductory Remarks.
• II. Labor Rent.
• III. Rent In Kind.
• IV. Money Rent.
• V. Share Farming (metairie System) and Small Peasants' Property.
• Part VII.: The Revenues and Their Sources.
• Chapter Xlviii.: the Trinitarian Formula.
• Chapter Xlix.: a Contribution to the Analysis of the Process of Production.
• Chapter L.: the Semblance of Competition.
• Chapter Li.: Conditions of Distribution and Production.
• Chapter Lii.: the Classes.

V. Foreign Trade.

To the extent that foreign trade cheapens partly the elements of constant capital, partly the necessities of life for which the variable capital is exchanged, it tends to raise the rate of profit by raising the rate of surplus-value and lowering the value of the constant capital. It exerts itself generally in this direction by permitting an expansion of the scale of production. But by this means it hastens on one hand the process of accumulation, on the other the reduction of the variable as compared to the constant capital, and thus a fall in the rate of profit. In the same way the expansion of foreign trade, which is the basis of the capitalist mode of production in its stages of infancy, has become its own product in the further progress of capitalist development through its innate necessities, through its need of an ever expanding market. Here we see once more the dual nature of these effects. (Ricardo entirely overlooked this side of foreign trade.)

Another question, which by its special nature is really beyond the scope of our analysis, is the following: Is the average rate of profit raised by the higher rate of profit, which capital invested in foreign, and particularly in colonial trade, realises?

Capitals invested in foreign trade are in a position to yield a higher rate of profit, because, in the first place, they come in competition with commodities produced in other countries with lesser facilities of production, so that an advanced country is enabled to sell its goods above their value even when it sells them cheaper than the competing countries. To the extent that the labor of the advanced countries is here exploited as a labor of a higher specific weight, the rate of profit rises, because labor which has not been paid as being of a higher quality is sold as much. The same condition may obtain in the relations with a certain country, into which commodities are exported and from which commodities are imported. This country may offer more materialised labor in goods than it receives, and yet it may receive in return commodities cheaper than it could produce them. In the same way a manufacturer, who exploits a new invention before it has become general, undersells his competitors and yet sells his commodities above their individual values, that is to say, he exploits the specifically higher productive power of the labor employed by him as surplus-value. By this means he secures a surplus-profit. On the other hand, capitals invested in colonies, etc., may yield a higher rate of profit for the simple reason that the rate of profit is higher there on account of the backward development, and for the added reason, that slaves, coolies, etc., permit a better exploitation of labor. We see no reason, why these higher rates of profit realised by capitals invested in certain lines and sent home by them should not enter as elements into the average rate of profit and tend to keep it up to that extent.36 We see so much less reason for the contrary opinion, when it is assumed that such favored lines of investment are subject to the laws of free competition. What Ricardo has in mind as objections, is mainly this: With the higher prices realised in foreign trade, commodities are bought abroad and sent home. These commodities are sold on the home market, and this can constitute at best but a temporary advantage of the favored spheres of production over others. This aspect of the matter is changed, when we no longer look upon it from the point of view of money. The favored country recovers more labor in exchange for less labor, although this difference, this surplus, is pocketed by a certain class, as it is in any exchange between labor and capital. So far as the rate of profit is higher, because it is generally higher in the colonial country, it may go hand in hand with a low level of prices, if the natural conditions are favorable. It is true that a compensation takes place, but it is not a compensation on the old level, as Ricardo thinks.

However, this same foreign trade develops the capitalist mode of production in the home country. And this implies the relative decrease of the variable as compared to the constant capital, while it produces, on the other hand, an overproduction for the foreign market, so that it has once more the opposite effect in its further course.

And so we have seen in a general way, that the same causes, which produce a falling tendency in the rate of profit, also call forth counter-effects, which check and partly paralyse this fall. This law is not suspended, but its effect is weakened. Otherwise it would not be the fall of the average rate of profit, which would be unintelligible, but rather the relative slowness of this fall. The law therefore shows itself only as a tendency, whose effects become clearly marked only under certain conditions and in the course of long periods.

Before passing on to something new, we will, for the sake of preventing misunderstanding, repeat two statements, which we have substantiated at different times.

1) The same process, which brings about a cheapening of commodities in the course of development of the capitalist mode of production, also causes a change in the organic composition of the social capital invested in the production of commodities, and thereby lowers the rate of profit. We must be careful, then, not to confound the reduction in the relative cost of an individual commodity, including that portion of its cost which represents wear and tear of machinery, with the relative rise in the value of the constant as compared to the variable capital, although vice versa every reduction in the relative cost of the constant capital, whose material elements retain the same volume or increase in volume, tends to raise the rate of profit, in other words, tends to reduce the value of the constant capital to that extent as compared with the shrinking proportions of the employed variable capital.

2) The fact that the additional living labor contained in the individual commodities, which together make up the product of capital, stands in a decreasing proportion to the materials and instruments of labor consumed by them; the fact, that an ever decreasing quantity of additional living labor is materialised in them, because their production requires less labor to the extent that the productive power of society is developed,—this fact does not touch the proportion, according to which the living labor contained in the commodities is divided into paid and unpaid labor. On the other hand, although the total quantity of additional living labor contained in them decreases, the unpaid portion increases over the paid portion, either by an absolute, or by a proportional reduction of the paid portion; for the same mode of production, which reduces the total quantity of the additional living labor in the commodities, is accompanied by a rise of the absolute and relative surplus-value. The falling tendency of the rate of profit is accompanied by a rising tendency of the rate of surplus-value, that is, in the rate of exploitation. Nothing is more absurd, for this reason, than to explain a fall in the rate of profit by a rise in the rate of wages, although there may be exceptional cases where this may apply. Statistics do not become available for actual analyses of the rates of wages in different epochs and countries, until the conditions, which shape the rate of profit, are thoroughly understood. The rate of profit does not fall, because labor becomes less productive, but because it becomes more productive. Both phenomena, the rise in the rate of surplus-value and the fall in the rate of profit, are but specific forms through which the productivity of labor seeks a capitalistic expression,

[36.][36] Adam Smith was right in this respect, contrary to Ricardo, who said: "They contend the equality of profits will be brought about by the general rise of profits; and I am of opinion that the profits of the favoured trade will speedily submit to the general level. (Works, MacCulloch ed., p. 73.)