its initial variable capital advanced, i. e. 2000 units of variable capital advanced only fetch 1000 units of surplus capital, that is, surplus value. Hence why department 2 produces more value than department 1, since department 1 only produces 1000 units of surplus capital-value for each 2000 units of capital-value put to work, while department 2 produces 3000 units of surplus capital-value for each 1000 units of capitalvalue put to work. For Marx, this is attributed to the fact that each department utilizes at different ratios“ the sum of necessary labor and surplus labor, i. e. the sum period of time during which the worker respectively replaces the value of his labor-power [ i. e. necessary labor ] and [ in turn ] produces the surplus value [ i. e. surplus labor ]”[ 36 ]. The different ratios between necessary paid labor and surplus unpaid labor for department 1 and department 2, i. e., their different rates of surplus value, is the reason for their differing outputs of surplus value.
Likewise, the different ratios between department 1 and department 2, pertaining to paid and unpaid labor, i. e., necessary and surplus labor, results in different rates of profit between the two giant departments. According to Marx,“ profit, as we are originally faced with it, is … the same thing as surplus value, save in a mystified form … one that necessarily arises [ like surplus value ] from the capitalist mode of production”[ 37 ]. Profit is surplus value articulated in price. And as Marx states,
the value contained in a commodity is equal to the labor-time taken in making it, and this consists of both paid and unpaid labor … the capitalist’ s profit, therefore, comes from the fact that he has something to sell which he has not paid. The surplus-value or profit consists precisely in the excess of … value over the cost price.[ 38 ]
Specifically, the cost price is the initial constant capital and variable capital put forward by the capitalist to initiate commodity production. The surplus value, or profit, is the sum above the cost of production. The constant capital and variable capital put forward to initiate production, by the capitalist, always stands in a certain ratio to the profit sum, or surplus-value, above the initial cost of production, and this ratio is the rate of profit, it is surplus value divided by the sum of the constant and variable capital added together as one. To quote Marx,“ we … obtain the rate of profit [ as ]
S __ C + V which is distinct from the rate of surplus value S / V”[ 39 ].
The rate of surplus value is measured against the variable capital only, it is surplus value divided by the variable capital, while“ surplus value, as measured against the total capital, is known as the rate of profit. These are two different standards for measuring the same quantity, and as a result, are able to express the different relations in which the same quantity may stand. It is the transformation of surplus value into profit”[ 40 ].
Returning to the simple reproduction model above, and adding three columns for production-cost, i. e. C + V or constant capital plus variable capital, the rate of surplus value and the rate of profit, this gives us different results, depending on department 1 and department 2. The different costs of production, rates of surplus value and rates of profit, again are the result of the diverging organic compositions of capital between the two departments.
Constant + Variable + Surplus Value = Total Value | C + V | S / V | P = S / C + V | a) Department 1 | 4000 | 2000 | 1000 | 7000 | 6000 | 50 % | 16.666 % | b) Department 2 | 3000 | 1000 | 3000 | 7000 | 4000 | 300 % | 75 % | c) Total Price | 7000 | 3000 | 4000 | 14000 | N / A | N / A | N / A |