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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.

I. The Productivity of the Additional Investment of Capital Remains the Same.

In this case the assumption is that the product increases in the same proportion as the capital invested in the various soils and in accordance with their respective qualities. This implies, always assuming the differences of the various soil to remain unaltered, that the surplus-product increases in proportion to the increased investment of capital. This case, then, excludes any additional investment of capital upon soil A which might affect the differential rent. Upon this soil the rate of surplus-profit is 0; it remains 0, since we have assumed that the productive power of the additional capital and therefore the rate of surplus-profit remain the same.

But under these conditions the regulating price of production can fall only, because instead of the price of production of A that of the next best soil B, or of any better soil than A, becomes the regulator; so that the capital is withdrawn from A, or perhaps from B and A, in case the price of production of C should become the regulating one and all inferior soil should be eliminated from the competition of the wheat raising soils. The prerequisite for this would be, under the assumed conditions, that the additional product of the additional investments of capital should satisfy the demand, so that the product of the inferior soils A, etc., would become superfluous for the formation of a full supply.

Take, for instance, Table II, but in such a way that 18 quarters instead of 20 will satisfy the demand. Soil A would drop out; D and its price of production of 30 shillings would become regulating. In that case the differential rent would assume the following form:

In other words, compared to Table II the ground-rent would have fallen in money from 36 pounds sterling to 9 pounds sterling and in grain from 12 quarters to 6 quarters, whereas the total output would have fallen only by 2, from 20 to 18. The rate of surplus-profit, calculated on the capital, would have fallen by one-half, from 180% to 90%. The fall of the price of production in this case is accompanied by a decrease of the rent in grain and money.

Compared to Table I there is merely a decrease in the money rent; the rent in grain in both cases is 6 quarters. But in the one case these bring 18 pounds sterling, in the other only 9 pounds sterling. So far as the soils C and D are concerned, the rent in grain compared to Table I remains the same. In face, owing to the additional production put forth by the uniformly working additional capital, the product of A has been pushed out of the market, the soil A has been eliminated from the competition of the producing agents, and a new differential rent No. 1 has thus been formed, in which the better soil B plays the same role as formerly the inferior soil A. Consequently the rest of B disappears on the one side; on the other side nothing has been altered in the differences of B, C and D by the investment of additional capital, according to our assumption. For this reason that part of the product, which is converted into rent, is reduced.

If the above result, the satisfaction of the demand with A left out, should have been accomplished by the investment of more than double the capital upon C or D, or upon both, then the matter would assume a different aspect. Let us suppose, that a third investment of capital is made upon C.

In this case, compared to Table IV, the product of C has risen from 6 quarters to 9, the surplus product from 2 quarters to 3, the money rent from 3 pounds sterling to 4½ pounds sterling. Compared to Table II, in which the money rent was 12 pounds sterling, and Table I, in which it was 6 pounds sterling, it has fallen off. The total rental in grain is 7 quarters. It has fallen compared to Table II, in which it was 12 quarters, but has risen compared to Table I, in which it was 6 quarters. In money the rest is 10½ pounds sterling and has fallen compared to both of the other Tables, in which it was 18 and 36 pounds sterling respectively.

If the third investment of capital, amounting to 2½ pounds sterling, had been applied to soil B, it would indeed have altered the quantity of production, but would not have touched the rent, since the successive investments, according to our assumption, do not produce any differences upon the same soil, and soil B does not produce any rent.

Again, if we assume that the third investment of capital takes place upon D instead of C, we get

Here the total product is 22 quarters, more than double that of Table I, although the invested capital is only 17½ pounds sterling as against 10 pounds sterling, in other words, not twice the size. The total product is also larger by 2 quarters than that of Table II, although the capital in it is larger, namely 20 pounds sterling.

Compared to Table I, the rent in grain upon soil D has increased from 2 quarters to 6, whereas the money rent has remained the same, 9 pounds sterling. Compared to Table II the grain rent of D is the same, namely 6 quarters, but the money rent has fallen from 18 pounds sterling to 9 pounds sterling.

Comparing the total rents, the grain rent of IV b is 8 quarters, larger than that of I which is 6 and than that of IV a which is 7 quarters; but it is smaller than that of II which is 12 quarters. The money rent of IV b, 12 pounds sterling, is larger than that of IV a, which is 10½ pounds sterling, and smaller than that of Table I, which is 18 pounds sterling and that of Table II, which is 36 pounds sterling.

In order that the total rental under the conditions of Table IV b, after the elimination of the rent upon B, may be equal to that of Table I, we need 6 pounds sterling of surplus product more, that is, 4 quarters at 1½ pounds sterling, which is the new price of production. Then we shall have once more a total rental of 18 pounds sterling, the same as in Table I. The magnitude of the required additional capital will differ, according to whether we invest it upon C or D, or distribute it between these two.

In the case of C 5 pounds sterling of capital result in a surplus product of 2 pounds sterling, consequently 10 pounds sterling of additional capital will result in 4 quarters of additional surplus product. In the case of D 5 pounds sterling of additional capital would suffice for the purpose of producing 4 quarters of additional grain rent, under the conditions assumed here, namely that the productivity of the additional investments of capital will remain the same. We should then get the following Tables:

The total money rental would be exactly one-half of what it was in Table II, where the additional capitals were invested under conditions, in which the prices of production remained the same.

The most important thing is to compare the above Tables with Table I.

We find that the total money rental has remained the same, namely 18 pounds sterling, while the price of production has fallen by one-half, from 60 shillings to 30 shillings per quarter, and that the grain rent has been correspondingly duplicated, from 6 quarters to 12. The rent upon B has disappeared; the money rent has risen by one-half in IV c, but fallen by one-half in IV d; upon D the money rent has remained the same, 9 pounds sterling, in IV c, and has risen from 9 pounds sterling to 15 pounds sterling in IV d. The production has risen from 10 quarters to 34 in IV c, and to 30 quarters in IV d; the profit from 2 pounds sterling to 5½ pounds sterling in IV c and to 4½ pounds sterling in IV d. The total investment of capital has risen in one case from 10 pounds sterling to 27½ pounds sterling, and in the other from 10 pounds sterling to 22½ pounds sterling, in either case by more than one-half. The rate of rent, that is, the rent calculated on the invested capital, is everywhere the same in all the Tables from IV to IV d for the respective kinds of soils, for this was implied by the assumption that every kind of soil should retain the same rate of productivity with the two successive investments of capital. But compared to Table I, this rate has fallen, both for the average of all kinds of soil and for each one of them individually. In Table I it was 180% on an average, whereas in IV c it is (18 ÷ 27½) × 100 = 65 5/11% and in IV d it is (18 ÷ 22½) × 100 = 80%. The average money rent per acre has risen. Formerly, in Table I, its average was 4½ pounds sterling per acre upon all four acres, whereas now, in IV c and IV d, it is 6 pounds sterling per acre upon the three acres. Its average upon the rent paying soil was formerly 6 pounds sterling, whereas now it is 9 pounds sterling per acre. Hence the money value of the rent per acre has risen, and represents now double the grain product that it did formerly; but the 12 quarters of grain rent are now less than one-half of the total product of 33 and 27 quarters respectively, whereas in Table I the 6 quarters represent 3/5ths of the total product of 10 quarters. Consequently, although the rent as an aliquot part of the total product has fallen, and has also fallen when calculated on the invested capital yet its money-value, calculated per acre, has risen and still more its value as a product. If we take soil D in Table IV d, we find that the cost of production expended in it amounts to 15 pounds sterling, of which 12½ pounds sterling are invested capital. The money rent is 15 pounds sterling. In Table I, for the same soil D, the cost of production was 3 pounds sterling, the invested capital 2½ pounds sterling the money rent 9 pounds sterling, that is, the money rent amounted to three times the cost of production and almost four times the capital. In Table IV d, the money rent for D, 15 pounds sterling, is exactly equal to the cost of production and only by 1/5th larger than the capital. Nevertheless the money rent per acre is two-thirds larger, namely 15 pounds sterling instead of 9 pounds sterling. In Table I the grain rent of 3 quarters constitutes three quarters of the total product of 4 quarters; in Table IV d it is 10 quarters, or one-half of the total product of 20 quarters of one acre of D. This shows that the money value and grain value of the rent per acre may rise, although it forms a smaller aliquot part of the total yield and has fallen in proportion to the invested capital.

The value of the total product in Table I is 30 pounds sterling. The rent is 18 pounds sterling, more than one-half of it. The value of the total product of IV d is 45 pounds sterling, the rent is 18 pounds sterling, or less than one-half of it.

The reason, why in spite of the fall of the price by 1½ pounds sterling per quarter, a fall of 50%, and in spite of the reduction of the competing soil from 4 acres to 3, the total rent remains the same and the grain rent is doubled, while on a calculation per acre both the grain rent and money rent rise, is that more surplus product is created. The price of grain falls by 50%, the surplus product increases by 100%. But in order to accomplish this result, the total production under the conditions assumed by us must be trebled, and the investment of capital upon the superior soils must be more than doubled. In what proportion this last factor must increase, depends in the first place upon the distribution of the additional investments of capital among the superior and best kinds of soil, always assuming that the productivity of the capital upon every kind of soil increases proportionately to its size.

If the fall of the price of production were smaller, less additional capital would be required for the production of the same money rent. If the supply required for the purpose of throwing soil A out of cultivation—and this depends not merely upon the product per acre of A, but also upon the proportional share taken by A in the entire cultivated area—were larger, and with it also the amount of additional capital required upon better soils they A, then, other circumstances remaining the same, the money rent and the grain rent would have increased still more, although both of them would disappear upon the soil B.

If the eliminated capital of A had been 5 pounds sterling, we should have to compare Tables II and IV d: The total product would have increased from 20 quarters to 30. The money rent would be only half as large, that is, 18 pounds sterling instead of 36 pounds sterling; the grain rent would be the same, namely 12 quarters.

If a total product of 44 quarters, valued at 66 pounds sterling, could be produced upon D with a capital of 27½ pounds sterling—corresponding to the old rate of D, 4 quarters per 2½ pounds sterling of capital—then the total rental would once more reach the level of Table II, and we should get the following diagram:

The total production would be 54 quarters as against 20 quarters in Table II, and the money rent would be the same, 36 pounds sterling. But the total capital would be 37½ pounds sterling, whereas it was 20 in Table II. The invested total capital would almost be doubled, while production would be nearly trebled; the grain rent would have been doubled, the money rent would have remained the same. Hence, if the price falls as a result of the investment of additional money-capital, while productivity remains the same, upon the better soils which pay rent, that is, all soils above A, then the total capital has a tendency not to increase in the same proportion as the production and the grain rent; so that the increase of the grain rent may offer a compensation for the loss in money rent due to the falling price. The same law also manifests itself through the fact that the invested capital must be larger in proportion as it is more largely invested upon C than D, upon the soils paying a smaller rent rather than upon the soils paying a larger rent. The point is simply this: In order that the money rent may remain the same or rise, a certain additional quantity of surplus product must be created, and this requires less capital in proportion as the productivity of the soils yielding a surplus product is greater. If the difference between B and C, C and D were still greater, still less additional capital would be required. The proportion is determined 1) by the proportion in which the price falls, in other words, by the difference between soil B, which is not paying any rent now, and soil A, which formerly was the soil that did not pay any rent; 2) by the proportion between the differences of the better soils from B upward; 3) by the amount of newly invested additional capital, and 4) by its distribution among the different qualities of soil.

In fact, we see that this law expresses merely the same thing which we ascertained already in the case of the first illustration: When the price of production in given, no matter what may be its figure, the rent may increase in consequence of additional investments of capital. For owing to the elimination of A, we have now a new differential rent No. I with B as the worst soil and 1½ pounds sterling per quarter as the new price of production? This applies to Tables IV as well as to Table II. It is the same law, only that we have as a basis soil B instead of A, and a price of production of 1½ pounds sterling instead of 3 pounds sterling.

The important thing here is this: To the extent that so and so much additional capital was necessary for the purpose of withdrawing the capital from soil A and satisfying the supply without it, we find that this may be accompanied by an unaltered, a rising, or a falling rent per acre, if not upon all soils, then at least upon some and so far as the average of the cultivated lands is concerned. We have seen that the grain rent and the money rent do not maintain a uniform ratio to one another. However, it is merely due to tradition that grain rent is still playing any role at all in political economy. One might demonstrate equally well that a manufacturer can buy much more of his own yarn with his profit of 5 pounds sterling than he could formerly with a profit of 10 pounds sterling. It shows at any rate, that the landlords, when they are at the same time owners or partners of manufacturing establishments, sugar factories, distilleries, etc., may still make a considerable profit even when the money rent is falling, in their capacity as producers of their own raw materials.128

[128.][128] The above Tables IV a to IV d had to the figured over on account of an error of calculation which ran though all of them. While this did not affect the theoretical conclusions drawn from these Tables, it carried monstrous figures concerning the production per acre into them. Even these would not be objectionable on principle. In all maps showing geographical conditions in relief or giving a view of altitudes in profile it is customary to choose a much larger scale for the vertical then for the horizontal lines. Nevertheless, should any one feel that his agrarian heart is injured thereby, he is at liberty to multiply the number of acres with any figure that will satisfy him. One might also choose 10, 12, 14, 16 bushels (8 bushels = 1 quarter) per acre instead of 1, 2, 3, 4 quarters in Table I, and in that case the figures of the other Tables which are developed out of them would remain within the limits of probability; it will be found that the result, the proportion of increase in the rent compared to the increase in capital, comes to the same thing. This has been done in the following Tables, which were added by the editor.—F. E.