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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. Introductory Remarks.

WE must be clear in our minds about the real difficulty in the analysis of ground-rent from the point of view of modern economics, to the extent that it is a theoretical expression of the capitalist mode of production. Even many of the more modern writers have not grasped this yet, as is shown by every renewed attempt to find a "new" explanation of ground-rent. The novelty consists almost always in a relapse into long outgrown conceptions. The difficulty is not to explain the surplus product and the surplus-value produced by agricultural capital. This question is solved by the general analysis of the surplus-value produced by all productive capital, no matter in what sphere it may be invested. The difficulty consists rather in demonstrating the source of the surplus over and above the general surplus-value paid by capital invested in the soil to the landlord in the form of rent after the general surplus-value has been distributed among the various capitals by means of the average profit, in other words, after the various capitals have shared in the total surplus-value produced by the social capital in all spheres of production in proportion to their relative size. Quite aside from the practical motives, which urged the modern economists as spokesmen of the industrial capitalists against the landlords to investigate this question, motives which we shall indicate more clearly in the chapter on the history of ground-rent, the question was of paramount interest for them as a theory. To admit that the rising of rent for capital invested in agriculture was due to some particular effect of the sphere of investment, to peculiar qualities of the land itself, was equivalent to giving up the conception of value as such, equivalent to abandoning all attempts at a scientific understanding of this field. Merely the simple observation that the rent is paid out of the price of the products of the soil, a thing which takes place even where rent is paid in kind, provided that the tenant is to get his price of production out of the land, showed the absurdity of the attempt to explain the excess of this price over the ordinary price of production, in other words, to explain the relative dearness of the products of agriculture out of the excess of the natural productivity of agricultural industry over the productivity of the other lines of industry. For the reverse is true. The more productive labor is, the cheaper is every aliquot part of its product, because the mass of use-values is so much greater, in which the same quantity of labor and with it the same value is incorporated.

The entire difficulty in the analysis of rent, therefore, consists in the explanation of the excess of agricultural profit over the average profit. It is not a question of surplus-value as such, but of the peculiar surplus of surplus-value found in this sphere of production, not a question of the "net product," but of the excess of this net product over the net product of the other lines of industry. The average profit itself is a product, formed under very definite historical conditions of production by the movement of the process of social life, a product which requires very far-reaching interrelations, as we have seen. In order that we may be able to speak at all of a surplus over the average profit, this average profit itself must already exist as a standard and as a regulator of production, such as it is under capitalist production. For this reason there can be no such thing as a rent in the modern sense, a rent consisting of a surplus over the average profit, over and above the proportional share of each individual capital in the total surplus-value produced by the entire social capital, so long as capital does not perform the function of enforcing all surplus-labor and appropriating at first hand all surplus-value, so long as capital has not yet brought under its control the social labor, or has done so only sporadically. It shows the naiveté of a man like Passy (see further along) that he speaks of a rent, a surplus over the profit, in primitive society, a surplus over and above a historically defined form of surplus-value, which, according to Passy, might almost exist without any society.

For the older economists, who make the first beginning in an analysis of the capitalist mode of production, which was still undeveloped in their day, the analysis of rent either offers no difficulty, or a difficulty of another sort. Petty, Cantillon, and in general the writers who are closer to feudal times, assume that ground-rent is the normal form of surplus-value, whereas profit to them is still vaguely combined with wages, or at best looks to them like a portion of surplus-value filched by the capitalist from the landlord. These writers take their departure from a condition, in which the agricultural population still constitutes the overwhelming majority of the nation, and in which the landlord still appears as the individual, who appropriates at first hand the surplus labor of the direct producers through his land monopoly, in which land therefore still appears as the chief requisite of production. These writers could not yet face the question, which, contrary to them, seeks to investigate from the point of view of capitalist production, how it happens that private ownership in land manages to wrest from capital a portion of the surplus-value produced by it at first hand (that is, filched by it from the direct producers) and first appropriated by it.

The physiocrats are troubled by a difficulty of another kind. Being in fact the first systematic spokesman of capital, they try to analyze the nature of surplus-value in general. This analysis coincides for them with the analysis of rent, the only form of surplus-value that exists for them. Therefore the rent-paying, or agricultural capital, is to them the only capital which produces any surplus-value, and the agricultural labor set in motion by it the only labor which makes for surplus-value, which quite correctly is considered the only productive labor from a capitalist point of view. They are right in considering the production of surplus-value as the essential thing. Aside from other merits set forth by us in the volume dealing with "Theories of Surplus-Value," they have the great merit of going back from the merchants' capital, which performs its functions wholly in the sphere of circulation, to the productive capital. In this they are opposed to the mercantile system, which, with its crude realism, constitutes the dominating vulgar economy of that time pushing the beginnings of scientific analysis by Petty and his successors into the background by means of its practical interests. By the way, in this critique of the mercantile system we aim only at its conceptions of capital and surplus-value. We have already indicated previously that the monetary system correctly proclaims production for the world market and the transformation of the product into commodities, and thus into money, as the prerequisite and condition of capitalist production. In the further development of this system into the mercantile system, it is no longer the transformation of the value of commodities into money, but the production of surplus-value, which decides the point, but merely from the meaningless point of view of the sphere of circulation and with the understanding that this surplus-value must present itself as surplus money in the surplus of the balance of trade. The characteristic mark of the interested merchants and manufacturers of that time, which is adequate to the period of capitalist development represented by them, is found in the fact that their principal aim in the transformation of the feudal and agricultural societies into industrial ones and in the corresponding industrial struggle of the nations upon the world market is a hastened development of capital, which is not supposed to take place in the so-called natural way, but by means of forced measures. It makes a tremendous difference, whether the national capital is gradually and slowly transformed into industrial capital, or whether the time of this development is hastened by means of a tax which they impose through protective duties mainly upon the real estate owners, the middle class and small farmers, and the handicraftsmen, by the accelerated expropriation of the independent direct producers, by a violently hastened accumulation and concentration of capitals, in short by a hastened introduction of the conditions of capitalist production. It makes at the same time an enormous difference in the capitalist and industrial exploitation of the natural powers of national production. Hence the national character of the mercantile system is not a mere phrase in the mouths of its spokesmen. Under the pretense of occupying themselves merely with the wealth of the nation and the resources of the state, they practically proclaim the interests of the capitalist class and the gathering of riches to be the ultimate end of the state, and so they proclaim bourgeois society against the old supernatural state. But at the same time they are conscious of the fact that the development of the interests of capital and of the capitalist class, of capitalist production, is the foundation of the national power and of the national preponderance in modern society.

The physiocrats are, furthermore, correct in stating that the production of surplus-value, and with it all development of capital, has for its natural basis the productivity of agricultural labor. If human beings are not capable of producing by one day's labor more means of subsistence, which signifies in its strictest sense more products of agriculture, than every laborer needs for his own reproduction, if the daily expenditure of his entire labor-power suffices only to produce the means of subsistence indispensable for his own individual needs, then there can be no mention of any surplus product nor of any surplus-value. A productivity of agricultural labor exceeding the individual requirements of the laborer is the basis of all societies, and is above all the basis of capitalist production, which separates a continually increasing portion of society from the production of the immediate requirements of life and transforms them into "free heads," as Steuart has it, making them available for exploitation in other spheres.

But what are we to say of more recent writers on economics, such as Daire, Passy, etc., who repeat the most primitive conceptions concerning the natural requirements of surplus labor and surplus-value in general, at a time when classic economy is in its declining years, or even on its deathbed, and who imagine that they are thus saying something new and convincing on ground-rent, after this ground-rent has long developed a peculiar form and has become a specific part of surplus-value?

It is precisely characteristic of vulgar economy that it repeats things which were new, original, deep and justified during a certain outgrown stage of development, at a time when they have become platitudinous, stale, false. In this way it confesses that it has not the slightest suspicion of the problems which used to occupy the attention of classic economy. It confounds them with questions that could be posed only on a low level in the development of bourgeois society. It is the same with its restless and self-complacent rumination of the physiocratic phrases concerning free trade. These phrases have long lost all theoretical interest, no matter how much they may engage the practical attention of this or that modern state.

In natural economy, properly so-called, when no part of the agricultural product, or but a very insignificant part of it, enters into the process of circulation, or even but a relatively small portion of that part of the product which represents the revenue of the landlord, as it did in many Roman latifundiæ, or upon the villae of Charlemagne, or more or less during the entire Middle Ages (see Vincard, Histoire du Travail), the product and the surplus product of the large estates consists by no means purely of the products of agricultural labor. Domestic handicrafts and manufacturing labor, as side issues to agriculture, which forms the basis, is the prerequisite of that mode of production upon which natural economy rests, in European antiquity and Middle Ages as well as in the Indian commune of the present day, in which the traditional organization has not yet been destroyed. The capitalist mode of production completely dissolves this connection. This process may be studied on a large scale during the last third of the 18th century, in England. Brains that had grown up in more or less semi-feudal societies, for instance Herrenschwand, still consider this separation of manufacture from agriculture as a foolhardy social adventure, as an unthinkably risky mode of existence, even as late as the close of the 18th century. And even in the agricultural societies of antiquity, which show the greatest analogy to capitalist agriculture, namely Carthage and Rome, the similiarity with plantation management is greater than with that form which really corresponds to the capitalist mode of exploitation.137

There existed at one time a formal analogy, which, however, appears as a deception in all essential points to a man familiar with the capitalist mode of production, and who does not, like Mr. Mommsen,138 discover a capitalist mode of production in every monetary economy. This formal analogy did not exist at all in continental Italy during antiquity, but at best only in Sicily, because this island served as an agricultural tributary for Rome, so that its agriculture was chiefly aimed at export. It was there that tenants of the modern kind existed.

An incorrect conception of the nature of rent is based upon the fact that rent in a natural form, either as tithes to the church, or as a curiosity perpetuated by old contracts, has dragged itself into modern times out of the natural economy of feudal days, quite contrary to the conditions of the capitalist mode of production. This creates the impression that rent does not arise from the price of the agricultural product, but from its mass, not from social conditions, but from the soil. We have shown previously that a surplus product, representing a mere increase in the mass of products, does not constitute any surplus-value, although surplus-value represents itself in a surplus product. A surplus product may represent a minus in value. Otherwise the cotton industry of 1860, compared to that of 1840, would represent an enormous surplus-value, whereas on the contrary the price of the yarn has fallen. The rent may increase enormously through a succession of crop failures, because the price of cereals rises, although this surplus-value is represented by an absolutely decreasing mass of dearer wheat. Vice versa, the rent may fall through a succession of fertile years, because the price falls, although the fallen rent is represented by a greater mass of cheaper wheat.

With regard to rent in kind it should be noted that it is a mere tradition dragged over from an outgrown mode of production and eking out an existence as a ruin. Its contradiction to the capitalist mode of production is shown by the fact that it disappeared from private contracts of its own accord, and that it was shaken off by force as an inconsistency in such instances as the church tithes in England, where legislation was able to step in. Furthermore, where rent in kind continued to exist on the basis of capitalist production, it was nothing else, and could be nothing else, but an expression of money rent in medieval garb. For instance, wheat is quoted at 40 shillings per quarter. One portion of this wheat has to reproduce the wages contained in it, and must be sold in order to be available for renewed expenditure. Another portion must be sold in order to pay its share of the taxes. Seeds and even a part of the manure enter as commodities into the process of reproduction, wherever the capitalist mode of production and division of labor are developed, and they must be bought for the purposes of reproduction. Therefore another portion of this quarter must be sold, in order to get money for these things. To the extent that they do not have to be bought as actual commodities, but are taken in their natural form out of the product, in order to enter once more as means of production into its reproduction—which is done, not only in agriculture, but in many other lines of production which create constant capital—they figure in the accounts as money of account and are thus deducted as component parts of the cost-price. The wear and tear of machinery, and of fixed capital in general, must be made good in money. And finally comes the profit, which is calculated on the basis of this sum of costs expressed either in real or in accounting money. This profit is represented by a definite portion of the gross product, which is determined by its price. The portion which then remains is the rent. If the rent in kind stipulated by contract is greater than this remainder determined by the price, then it is not a rent, but a deduction from the profit. On account of this possibility alone rent in kind is an old form, to the extent that it does not follow the price of the product, but may amount to more or less than the real rent, so that it may not only contain a deduction from the profit, but also from elements required for the reproduction of the capital. In fact, this rent in kind, so far as it is a rent, not merely in name but in essence, is exclusively determined by the excess of the price of the product over, its cost of production. Only it assumes this variable magnitude to be a constant one. But it is such a comforting reflection that the natural product should suffice, in the first place, to maintain the laborer, in the second place, to leave for the capitalist tenant more food than he needs, and finally, that the remainder should form a natural rent. The same fancy is indulged in when a manufacturer of cotton goods produces 200,000 yards of them. These yards are supposed to suffice for the purpose of clothing his laborers, his wife and all his offspring, together with himself abundantly, to leave over some cotton for sale, and besides to pay an enormous rent with cotton goods. The matter is so simple! Deduct the cost of production from 200,000 yards of cotton goods, and a surplus must remain for rent. But it is indeed a naïve conception, to deduct the cost of production of, say, 10,000 pounds sterling from 200,000 yards of cotton, without knowing the selling price, to deduct money from cotton goods, to deduct from a natural use-value an exchange-value, and thus to determine the surplus of yards of cotton goods over pounds of sterling. It is worse than the squaring of the circle, which is at least based upon the conception that there is a boundary at which straight lines and curves flow imperceptibly into each other. But such is the recipe of Mr. Passy. Deduct money from cotton goods, before the cotton goods have been converted into money, either in your head or in reality! What remains is the rent, which, however, is to be grasped tangibly (see for instance, Karl Arnd) and not by deviltries of sophistry. The entire restoration of rent in kind amounts really to this foolishness, to this deduction of the price of production from so and so many bushels of wheat, the subtraction of a sum of money from a cubic measure.

[137.][137] Adam Smith emphasizes the fact that at his time (and this applies also to the plantations in tropical and subtropical countries in our own time) rent and profit were not yet separated, for the landlord was at the same time a capitalist, just as Cato, for instance, was upon his estates. But this separation is precisely the premise of the capitalist mode of production. Moreover, the basis of slavery stands in contradiction with the nature of capitalist production.

[138.][138] Mr. Mommsen, in his Roman history, does not use the term capitalist in the sense in which modern economics and modern society does, but rather in the way peculiar to popular conception, such as still continues to vegetate, not in England or America, but upon the European continent, as an ancient tradition of past conditions.