Introduction

In this chapter we rehearse the principle of profit-rate equalization as a tendency turning upon capitalists' responses to profit-rate differentials and responsible for an equilibrium price structure assuring prices of production deviating systematically from labor “values.” We raise the apparent property that in this context the relevant entity is surplus value net of rent and interest – these latter comprising contractual obligations on the part of employers – contrasting with the position in the analysis of the falling profit-rate. This contrast can better be appreciated after we have taken up the analysis of Absolute Rent, a major addition to the arsenal first introduced in correspondence with Engels in the early 1860s. Marx here sets aside the full Transformation, based on the assumption of profit-rate uniformity, by supposing capital immobility between industry and agriculture. The profoundly significant technical point emerges that in the presence of privately owned scarce land, the general profit rate is determined specifically in the industrial sector (including luxury goods industries) and it is this rate that “regulates” the return in agriculture – the precise reverse of the position often ascribed to the early Ricardo. And there is the problem of what definition of “profit” is intended – inclusive or exclusive of rent.

The rate of interest – its relationship to Surplus Value and to the profit rate – will preoccupy us.