[OPE-L:4327] RE: profit and Volume 3

Michael_A._Lebowit (mlebowit@sfu.ca)
Sun, 9 Mar 1997 17:21:10 -0800 (PST)

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In message Fri, 7 Mar 1997 22:16:11 -0800 (PST),
Fred Moseley <fmoseley@laneta.apc.org> writes:

> However, Mike still argues that this does not necessarily imply that
> Volume 3 must BEGIN with cost price; i.e. cost price could still precede
> price of production, etc. and yet Volume 3 could begin with some other
> concept (i.e. some other concept predede that of cost price). This is of
> course a logical possibility. Let us examine this more closely.
> On further reflection, it seems to me that, in a sense, the actual
> starting point of Volume 3 is the concept of PROFIT, rather than the
> concept of cost price. In the earlier drafts of Volume 3 (in the
> Grundrisse and the 1861-63 manuscript), Marx began directly with profit
> (more on this below). However, while working on the 1861-63 manuscript,
> Marx realized that he needed the concept of cost price in order to
> develop the concept of profit (MECW, vol. 33, pp. 78-84 and 91-103).
> Profit is the excess of the price of commodities over their cost price.
> Therefore, in Marx's 1864-65 manuscript of Volume 3, Marx began with cost
> price and then followed with profit. But the real starting point is
> profit, as in the earlier drafts.

I want to thank Fred very much for his response. Until now, I was not
clear on how consistent Marx was on the point that once capital has been
established as this unity of production and circulation, it is appropriate
to proceed to capital as profit (capital as "fructiferous", capital as
measured by itself). Ie., what he is up to at the beginning of vol. 3 has
been signalled, as Fred notes, in the Grundrisse (Vintage, 745-6) and in the
1861-63 Mss.
This point, however, raises further questions for clarification. What
exactly is "profit" as Marx means it at this point? Remember, in both the
Grundrisse and Vol. II, Marx has just gone through a lengthy discussion of
time of production, time of circulation, turnover, annual surplus value,
etc. He has demonstrated the way in which the necessity that capital proceed
through the sphere of circulation has generated new determinations and
definitions--- in place of the surplus value produced in one circuit of
capital (the Vol I concept), we now have the annual surplus value; in place
of capital's advances in the sphere of production in one circuit (the Vol I
concept), we now have capital's total annual advances (both for production
and circulation). It is clear that this discussion in Vol. II has moved us
away from the abstract discussion in Vol I (which reveals so clearly that
capital is the result of the exploitation of workers) to concepts of surplus
value and costs which correspond to the way things appear to capitalists.
Marx is very clear in the opening of the Grundrisse section which begins
the discussion of profit that he means the surplus value in a given time
period (and he repeats the equation expressed in time of production and
time of circulation from the earlier discussion). He makes the same point at
the outset of the 1861-63 discussion. If this is the level of abstraction
at which the discussion is proceeding, then two things seem to follow:

1. We are talking about the surplus value *realised* in the given time
period. To determine the annual surplus value, we need the time of
circulation, and the time of circulation includes within it the time for the
realisation of value/surplus value. Ie., the concept of the annual surplus
value implies realisation. (Note that in Vol. II, Marx indicates that the
surplus value realised is determined by the capitalists' own expenditures.)
The alternative--- annual surplus value produced (but not realised) is
relevant neither to the consciousness of capitalists nor to the rate of

2. In terms of costs, we are talking not only about those incurred in
production but also those which accompany the necessary circulation process.
Ie., the capitalist annually advances a certain quantity of capital--- a
portion for production and a portion for circulation (the relative
quantities determined by the time of production and time of circulation); in
short, "cost-price" is not limited to c+v in the sphere of production
(except in the limiting case of time of circulation = 0). Again, it is these
total expenses which are relevant to the capitalist when it comes to profit
and the rate of profit. Marx says nothing about this in the Grundrisse
(where he proceeded to work out the falling rate of profit argument). In the
1861-63 discussion, there is one passage which could be read this way (MECW,
Vol. 33, 81):

"Profit therefore = the excess of value of the product or rather the
amount of money realised in circulation for the product (hence in the
capitalist process, this excess during a particular turnover time) *above*
the value of the capital which entered the formation of the product. The
whole of the capital accordingly appears as *means of production* for this
profit, and since these means of production are values which are here given
over in part to the industrial process of production, in part to
circulation, in order to create this excess of value or profit, the whole
amount of the capital advanced appears as *costs of production of the
commodity*, in fact costs of production of the gain or profit which is made
by means of the commodity."

Aside from the above, I don't see anything suggesting #2. However,
logically, it seems that cost-price should include the costs of circulation.
Once we accept #1 (indeed, once we move to annual S), then it seems #2
should follow.

> With what other concept should one start an analysis of the distribution
> of surplus-value, besides the total amount of surplus-value produced in a
> given period of time? I guess it is time for Mike to tell us what is his
> preferred starting point for Volume 3. I would especially like to know
> how this alternative starting point is a better starting point for an
> analysis of the distribution of surplus-value.

Actually, Fred has convinced me that Marx always intended to begin with
profit and that he needs cost-price for that. I don't know whether I quite
have a preferred starting point as opposed to questions, and at this point
my question becomes--- what is the point when we leave capital as a whole
and function at the level of many capitals? Is realised value for individual
capitals (ie, price) the premise for this discussion of profit? OK, I
confess, I've wondered whether "price" isn't the logical starting point for

> Mike and I also have a disagreement about whether the total amount of
> surplus-value, taken as given in Volume 3, is determined solely in Volume
> 1 or also depends on the Volume 2 analysis. I will leave that question
> for a later discussion in order to focus first on this question of the
> starting point of Volume 3.

As noted above, these are entirely separate questions--- Vol. I deals with
surplus-value in single circuits of capital (actually, not even that--- just
in the sphere of production portion) and thus is at a different level of
abstraction to (annual) profit.

in solidarity,
Michael A. Lebowitz
Economics Department, Simon Fraser University
Burnaby, B.C. Canada V5A 1S6
Office (604) 291-4669; Office fax: (604) 291-5944
Home: (604) 872-0494; Home fax (with warning): (604) 872-0485
Lasqueti Island (250) 333-8810