3. Factors which determine the rate of profit.

The rate of profit, depends on two main factors — the rate of surplus-value and the value-composition of capital. The effects of these two factors may be briefly summed up as follows, by giving the composition in per cent, for it is immaterial which of the two portions of the capital causes the variation:

The rates of profit of two different capitals, or of one and the same capital in two successive different conditions, are equal

1) if the per cent composition of the capitals is the same and their rates of surplus-value are equal;

2) if their per cent composition is not the same, and the rates of surplus-value are unequal, provided the products of the rates of surplus-value by the percentages of the variable portions of capitals (s' by v) are the same, i.e., if the masses of surplus-value (s = s'v) calculated in per cent of the total capital are equal; in other words, if the factors s' and v are inversely proportional to one another in both cases.

They are unequal

1) if the per cent composition is equal and the rates of surplus-value are unequal, in which case they are related as the rates of surplus-value;

2) if the rates of surplus-value are the same and the per cent composition is unequal, in which case they are related as the variable portions of the capitals;

3) if the rates of surplus-value are unequal and the per cent composition not the same, in which case they are related as the products s'v, i.e., as the quantities of surplus-value calculated in per cent of the total capital.

A rise in the rate of profit is always due to a relative or absolute increase of the surplus-value in relation to its cost of production, i. e., to the advanced total capital, or to a decrease in the difference between the rate of profit and the rate of surplus-value.

Fluctuations in the rate of profit may occur irrespective of changes in the organic components of the capital, or of the absolute magnitude of the capital, through a rise or fall in the value of the fixed or circulating advanced capital caused by an increase or a reduction of the working-time required for its reproduction, this increase or reduction taking place independently of the already existing capital. The value of every commodity – thus also of the commodities making up the capital – is determined not by the necessary labour-time contained in it, but by the social labour-time required for its reproduction. This reproduction may take place under unfavorable or under propitious circumstances, distinct from the conditions of original production. If, under altered conditions, it takes double or, conversely, half the time, to reproduce the same material capital, and if the value of money remains unchanged, a capital formerly worth £100 would be worth £200, or £50 respectively. Should this appreciation or depreciation affect all parts of capital uniformly, then the profit would also be accordingly expressed in double, or half, the amount of money. But if it involves a change in the organic composition of the capital, if the ratio of the variable to the constant portion of capital rises or falls, then, other circumstances remaining the same, the rate of profit will rise with a relatively rising variable capital and fall with a relatively falling one. If only the money-value of the advanced capital rises or falls (in consequence of a change in the value of money), then the money-expression of the surplus-value rises, or falls, in the same proportion. The rate of profit remains unchanged.