Excerpts from the Classics: Average Profit

November 9, 2002


Average Profit

“The profit occurring in accordance with this general rate of profit to any capital of a given magnitude, whatever its organic composition, is called the average profit.”

Marx, Capital, pub.1894, IP, Vol.3, p.158

Law of average profit.

“Under capitalist production the general law acts as the prevailing tendency only in a very complicated and approximate manner, as a never ascertainable average of ceaseless fluctuations.”

Marx, Capital, pub.1894, IP, Vol.3, p.161

Average rate of profit. “Here then we have a mathematically precise proof why capitalists form a veritable free mason society vis a-vis the whole working class, while there is little love between them in competition among themselves.”

Marx, Capital, pub.1894, IP, Vol.3, p.198

Circulation, Commercial & Loan Capital

“Just as the laborer’s unpaid labor directly increases surplus value for productive capital, so the unpaid labor of the commercial wage worker secures a share of this surplus value for merchant’s capital.”

Marx, Capital, pub.1894, IP, Vol.3, P.294

“Turn and twist as we may, the fact remains unaltered. If equivalents are exchanged, still no surplus-value. Circulation, or the exchange of commodities, begets no value..”

Marx, Capital, 1867, IP, Vol.1, p.163

“It is therefore impossible for capital to be produced by circulation, and it is equally impossible for it to originate apart from circulation. It must have its origin both in circulation and yet not in circulation.”

Marx, Capital, 1867, IP, Vol.1, p.165-66

Commercial or merchant capital

“functions only as an agent of productive capital.”

Marx, Capital, IP, Vol.3, p.327

[It] “creates neither value nor surplus-value but acts as middle man in their realization.”

Marx, Capital, pub.1894, IP, Vol.3, p.282

Loan capital as “interest-bearing capital is capital as property as distinct from capital as a function.”

Marx, Capital, pub.1894, IP, Vol.3, p.379

Crises, Economic Cycle

Contradiction between production and consumption is due “to the tremendous rate at which production is growing; to the tendency to unlimited expansion which competition gives it, while consumption (individual), if it grows at all, grows very slightly; the proletarian condition of the masses of the people makes a rapid growth of individual consumption impossible.”

Lenin, Reply to Mr.P. Nezhdanov, 1899, CW, Vol.4, p.161

“Underconsumption (to which crises are allegedly due) existed under the most diverse economic systems, whereas crises are the distinguishing feature of only one system – the capitalist system.”

Lenin, A Characterization of Economic Romanticism, Spring 1897, CW, Vol.2, p.167

“Even within ideally smooth and proportional reproduction and circulation of the whole social capital, a contradiction is inevitable between the growth of production and the restricted limits of consumption. In reality, besides this, the process of realization proceeds not with ideally smooth proportionality, but only amidst ‘difficulties’, ‘fluctuations’, ‘crises’, etc.”

Lenin, Once Again on the Question of the Theory of Realization, March 1899, CW, Vol.4, p.87

“The crises are always but momentary and forcible solutions of the existing contradictions, violent eruptions, which restore the disturbed equilibrium for a while.”

Marx, Capital, pub.1894, IP, Vol.3, p.249

“It is sheer tautology to say that crises are caused by the scarcity of effective consumption, or of effective consumers. The capitalist system does not know any other modes of consumption than effective ones, except that of such forma pauperis or of the swindler. That commodities are unsalable means only that no effective purchasers have been found for them, i.e., consumers (since commodities are bought in the final analysis for productive or individual consumption). But if one were to attempt to give this tautology the semblance of a profounder justification by saying that the working class receives too small a portion of its own product and the evil would be remedied as soon as it receives a larger share of it and its wages increase in consequence, one could only remark that crises are always prepared by precisely a period in which wages rise generally and the working class actually gets a larger share of that part of the annual product which is intended for consumption. From the point of view of these advocates of sound and ‘simple’ (!) common sense, such a period should rather remove the crisis. It appears, then, that capitalist production comprises conditions independent of good or bad will, conditions which permit the working class to enjoy that relative prosperity only momentarily, and at that always only as the harbinger of a coming crisis.”

Marx, Capital, pub.1893, IP, Vol.2, p.410

“The ultimate reason for all real crises always remains the poverty and restricted consumption of the masses as opposed to the drive of capitalist production to develop the productive forces as though only the absolute consuming power of society constituted their limit.”

Marx, Capital, pub.1894, IP, Vol.3, p.484

“There are not too many necessities of life produced, in proportion to the existing population. Quite the reverse. Too little is produced to decently and humanely satisfy the wants of the great mass. There are not too many means of production produced to employ the able-bodied portion of the population. Quite the reverse…

“On the other hand, too many means of labour and necessities of life are produced at times to permit of their serving as means for the exploitation of laborers at a certain rate of profit. Too many commodities are produced to permit of a realization and conversion into new capital of the value and surplus-value contained in them under the conditions of distribution and consumption peculiar to capitalist production, i.e., too many to permit of the consummation of this process without constantly recurring explosions. “Not too much wealth is produced. But at times too much wealth is produced in its capitalistic, self-contradictory forms.”

Marx, Capital, pub.1894, IP, Vol.3, p.257

“The conditions of direct exploitation, and those of realizing it, are not identical. They diverge not only in place and time, but also logically. The first are only limited by the productive power of society, the latter by the proportional relation of the various branches of production and the consumer power of society. But this last-named is not determined either by the absolute productive power, or by the absolute consumer power, but by the consumer power based on antagonistic conditions of distribution, which reduce the consumption of the bulk of society to a minimum varying within more or less narrow limits. It is furthermore restricted by the tendency to accumulate, the drive to expand capital and produce surplus value on an extended scale. This is a law for capitalist production, imposed by incessant revolutions in the methods of production themselves, by the depreciation of existing capital always bound up with them, by the general competitive struggle and the need to improve production and expand its scale merely as a means of self-preservation and under penalty of ruin.” Marx, Capital, pub.1894, IP, Vol.3, p.244

“It must never be forgotten that the production of this surplus value – and the reconversion of a portion of it into capital, or the accumulation, forms an integrate part of this production of surplus value – is the immediate purpose and compelling motive of capitalist production. It will never do, therefore, to represent capitalist production as something which it is not, namely as production whose immediate purpose is enjoyment or the manufacture of the means of enjoyment for the capitalist. This would be overlooking its specific character, which is revealed in all its inner essence.”

Marx, Capital, pub.1894, IP, Vol.3, p.243

Lenin, Imperialism – the Highest Stage of Capitalism, Jan-June 1916 (excerpts)

“Imperialism emerged as the development and direct continuation of the fundamental attributes of capitalism in general. But capitalism only became capitalist imperialism at a definite and very high stage of its development, when certain of its fundamental attributes began to be transformed into their opposites… Economically, the main thing in this process is the substitution of capitalist monopolies for capitalist free competition. Free competition is the fundamental attribute of capitalism, and of commodity production generally. Monopoly is exactly the opposite of free competition; but we have seen the latter being transformed into monopoly before our very eyes… At the same time, monopoly, which has grown out of free competition, does not abolish the latter, but exists over it and alongside of it, and thereby gives rise to a number of very acute, intense antagonisms, friction and conflicts. Monopoly is the transition from capitalism to a higher system.

“If it were necessary to give the briefest possible definition of imperialism we should have to say that imperialism is the monopoly stage of capitalism. Such a definition would include what is most important, for, on the one hand, finance capital is the bank capital of a few big monopolist banks, merged with the capital of the monopolist combines of manufacturers; and, on the other hand, the division of the world is the transition from a colonial policy which has extended without hindrance to territories unoccupied by any capitalist power, to a colonial policy of monopolistic possession of the territory of the world which has been completely divided up.

“But very brief definitions, although convenient, for they sum up the main points, are nevertheless inadequate, because very important features of the phenomenon that has to be defined have to be especially deduced. And so, without forgetting the conditional and relative value of all definitions, which can never include all the concatenations of a phenomenon in its complete development, we must give a definition of imperialism that will embrace the following five essential features:

“1) The concentration of production and capital developed to such a high stage that it created monopolies which play a decisive role in economic life. “2) The merging of bank capital with industrial capital, and the creation, on the basis of this ‘finance capital,’ of a ‘financial oligarchy.’ “3) The export of capital, which has become extremely important, as distinguished from the export of commodities. “4) The formation of international capitalist monopolies which share the world among themselves. “5) The territorial division of the whole world among the greatest capitalist powers is completed.

“Imperialism is capitalism in that stage of development in which the dominance of monopolies and finance capital has established itself; in which the export of capital has acquired pronounced importance; in which the division of the world among the international trusts has begun; in which the division of all territories of the globe among the great capitalist powers has been completed.

(p.88-89, LLL Ed) (p..265-67, CW)

“…the most deep-rooted economic foundation of imperialism is monopoly. This is capitalist monopoly, i.e., monopoly which has grown out of capitalism and exists in the general environment of capitalism, commodity production and competition, and remains in permanent and insoluble contradiction to this general environment. Nevertheless, like all monopoly, this capitalist monopoly inevitably gives rise to a tendency to stagnation and decay. As monopoly prices become fixed, even temporarily, so the stimulus to technical and, consequently, to all progress, disappears to a certain extent, and to that extent, also, the economic possibility arises of deliberately retarding technical progress.

(p.99 LLL Ed) (p.276 CW)

“Firstly, monopoly arose out of the concentration of production at a very advanced stage of development… “Secondly, monopolies have accelerated the capture of the most important sources of raw materials, especially for the coal and iron industries, which are the basic and most highly cartelized industries in capitalist society… “Thirdly, monopoly has sprung from the banks. The banks have developed from modest intermediary enterprises into the monopolists of finance capital…

“Fourthly, monopoly has grown out of colonial policy. To the numerous ‘old’ motives of colonial policy, finance capital has added the struggle for the sources of raw materials, for the export of capital, for ‘spheres of influence,’ i.e., for spheres for profitable deals, concessions, monopolist profits and so on; in fine, for economic territory in general…

“The extent to which monopolist capital has intensified all the contradictions of capitalism is generally known. It is sufficient to mention the high cost of living and the oppression of the cartels. This intensification of contradictions constitutes the most powerful driving force of the transitional period of history, which began from the time of the definite victory of world finance capital.

” Monopolies, oligarchy, the striving for domination instead of the striving for liberty, the exploitation of an increasing number of small or weak nations by an extremely small group of the richest or most powerful nations – all these have given birth to those distinctive characteristics of imperialism which compel us to define it as parasitic or decaying capitalism. More and more prominently there emerges, as one of the tendencies of imperialism, the creation of the ‘bondholding’ (rentier) state, the usurer state, in which the bourgeoisie lives on the proceeds of capital exports and by ‘clipping coupons.’ It would be a mistake to believe that this tendency to decay precludes the possibility of the rapid growth of capitalism. It does not. In the epoch of imperialism, certain branches of industry, certain strata of the bourgeoisie and certain countries betray, to a more or less degree, one or other of these tendencies. On the whole, capitalism is growing far more rapidly than before. But this growth is not only becoming more and more uneven in general; its unevenness also manifests itself, in particular, in the decay of the countries which are richest in capital (such as England).

(pp.123-125 LLL Ed)(p.298-300 CW)

“From all that has been said in this book on the economic nature of imperialism, it follow that we must define it as capitalism in transition, or, more precisely, as moribund capitalism.”

(p.126 LLL Ed) (p.302 CW)

Lenin, Imperialism – the Highest Stage of Capitalism, Jan-June 1916, LLL Ed, CW, Vol.22, p.185-304

“[state monopoly capitalism defined as] combining the colossal power of capitalism with the colossal power of the state into a single mechanism.”

Lenin, War & Revolution, lecture May 14, 1917, CW, Vol.24, p.403

“The concentration and internationalization of capital are making gigantic strides; monopoly capitalism is developing into state monopoly capitalism. In a number of countries regulation of production and distribution by society is being introduced by force of circumstances.”

Lenin, 7th All-Russian Conference of the RSDLP(B), 1917, CW, Vol.24, p.305

“State monopoly capitalism is a complete material preparation for socialism, the threshold of socialism, a rung on the ladder of history between which and the rung called socialism there are no intermediary rungs.”

Lenin, The Impending Catastrophe & How to Combat It, Sept. 10-14, 1917, CW, Vol.25, p.359

“Thus the speaker (Marx) was able to find a criteria for the solution of the problem which at first sight seemed to lead to the hopeless dilemma that brought Sismondi to a halt… both Free Trade and its restraint equally lead to the ruin of the workers. The criteria is the development of the productive forces…and established the fact that the productive forces of society develop thanks to the development of capitalism …It is in this sense alone, gentlemen, that I vote in favor of Free Trade.” Cites Marx, The Poverty of Philosophy.

Lenin, Notebooks on Imperialism, CW, Vol.39, p.263

“Although they (Narodniks) stress primarily and most emphatically that the problem of free trade and protection is a capitalist problem, one of bourgeois policy, the Russian Marxists must stand for free trade, since the reactionary character of protection, which retards the country’s economic development, and serves the interests not of the entire bourgeois class, but merely of a handful of all powerful magnates, is very strongly evident in Russia, and since free trade means accelerating the process that yields the means of deliverance from capitalism.”

Lenin, The Economic Content of Narodism, 1895, CW, Vol.1, p.436

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