3 I8 KARL MARX: A BIOGRAPHYWhereas Volume One had dealt with production, Two and Three
investigated what happened outside the factory when the capitalist came
to sell his products for cash. In Volume Two Marx traced the circular
movement of sale, profit and the ploughing back of resources for the next
cycle of production and the complex factors underlying economic crises.
This volume is far less interesting, due to its technical, theoretical nature.
The first part of Volume Three appears to be in a more or less final
draft, but thereafter the book tails off without any final conclusion. It
begins with a discussion of the conversion of surplus value into profit and
thus the relationship between values and prices. Many people on reading
Volume One had asked how it came about that, if values were measured
by socially necessary labour, they should be so very different from market
prices. The only answer that Marx provided to this problem was to assert
that value was 'the centre of gravity around which prices fluctuate and
around which their rise and fall tends to an equilibrium'.^207 He continued:
'No matter what may be the way in which prices are regulated, the result
always is the following: the law of value dominates the movement of
prices, since a reduction or increase of the labour-time required for
production causes the prices of production to fall or to rise.'^208 Marx then
enunciated in more detail than in Volume One the falling tendency of
the rate of profit which forms the centrepiece of the third volume. This
law is expressed most succinctly by Marx as follows:
... it is the nature of the capitalist mode of production, and a logical
necessity of its development, to give expression to the average rate of
surplus-value by a felling rate of average profit. Since the mass of the
employed living labour is continually on the decline compared to
the mass of materialised labour incorporated in productively consumed
means of production, it follows that that portion of living labour, which
is unpaid and represents surplus-value, must also be continually on the
decrease compared to the volume and value of the invested total capital.
Seeing that the proportion of the mass of surplus-value to the value of
the invested total capital forms the rate of profit, this rate must fall
continuously.^209
Marx then went further into the nature of economic crises which he
traced to the basic contradiction between the necessity of a capitalist
economy to expand its production without taking into account the level
of consumption that alone could make it feasible:
The real barrier of capitalist production is capital itself. It is that capital
and its self-expansion appear as the starting and the closing point, the
motive and the purpose of production; that production is only pro-
duction for capital and not vice versa, the means of production are not
mere means for a constant expansion of the living process of the society