Title page book Das Kapital volume 3

Das Kapital volume 3 ---- Don't start reading

Publication: Dietz Verlag (1975, Berlin)

First insertion on Heterodox Gazette Sam de Wolff: 19 february 2015

E.A. Bakkum is a blogger for the Sociaal Consultatiekantoor. He loves to reflect on the labour movement.

The third volume of Das Kapital has an even more strange history than the second volume. Friedrich Engels has published the volume posthumously, only in 1894 (nine years after the appearance of volume 2), and presents Karl Marx, who already died in 1883, as its author. The third volume is mainly important, because it has become the antithesis of the volume 1. Namely, in the third volume the labour theory of value, as developed by Marx, is actually abandoned. In the books of Marx himself the profit is completely determined by the exploitation of the factor labour. However, in the third volume of Das Kapital that idea is discarded. This is necessary because of the introduction of the profit rate, as a measure of the capital efficiency. The profit rate must be constant in the whole economy. This additional requirement has as its consequence, that the product price is no longer equal to the labour, that is spent on the product. So the products no longer exchange according to their labour value!

It is obviously strange, that the three volumes of Das Kapital contain two conflicting price theories for describing the reality, and it is not surprising that the political opponents made fun of this fact. And that situation became even more painful, when in 1907 a serious mistake was discovered in the manner, that the third volume uses to transform the labour values into prices1. It is wrong. The question arises who is responsible for this theoretical mess. Engels writes in his preface, that the design of Marx for the third volume is very incomplete. The contents is merely available as a raw sketch, and many subjects are merely mentioned, without a detailed elaboration. Engels complains about the poor quality of the arguments, which he attributes to the diseases of Marx. Therefore Engels, while completing the third volume, has the difficult task to turn all those text fragments into a coherent story.

With regard to the mentioned problem of the constant rate of profit, Engels had already in the preface of the second volume (1885) the singular idea to offer a kind of price to anybody who has a proposal for the transformation of the prices! Marx himself has never published about this theme, and, considering his public competition, apparently Engels also had doubts about adding the "antithesis" to the original theory of volume 1. Besides the public competition, the antithesis has been studied by the scientific staff of Engels2. Apparently in the end Engels has yet decided to include the antithesis in the third volume. This has undermined the original labour theory of value of Marx to such an extent, that you reviewer is inclined to record Engels (and his staff) as the sole author of volume 33.

Incidentally, the third volume is thicker than the volumes 1 and 2, and the text about the antithesis is merely a small part of the total contents. The remainder of volume 3 contains many facts about the economy in theory and practice, notably about the various components of the profit (entrepreneurial profit, interest of capital, rent). However, whereas Marx in the first volume succeeds in presenting a complete theory of exploitation (although speculative), Engels does not succeed in presenting a similar message in volume 3. One gets the impression, that Engels has publishes the volume purely because the social-democratic masses wanted more Marx. Engels throws the raw notes of Marx over the fence in the garden of the following generations, as it were, hoping that these can extract something useful from it. It may be clear, that science does not work like that4.

What can de reader find in the third volume? The book begins with the mentioned theory of the general average profit rate. Following this theory, it is explained that the entrepreneurs can save on their production costs. Next the law of the tendential fall of the profit rate is introduced. This law is just as curious as its name. It states, that the profit rate will fall, when the labour productivity does not grow proportionally with the expanding stock of the means of production. This is a meaningless statement, because nobody knows how the labour productivity will develop. Nonetheless, Engels builds his crisis theory on this law (which is not a law). As soon as the profit rate is too low, the capitalist system can no longer survive. And that is the start of the revolution of society into a socialist system. It may be clear, that this crisis theory is not very credible or convincing.

Next Engels explains the commercial (trade) capital. Trade follows production, because it must sell the total product to the consumers. From this Engels draws the strange conclusion, that the trade itself does not add value, but just skims the added value (surplus value) of the production. Incidentally, the capital interest must also be paid from the produced surplus value. The theme of the interest of capital covers no less than 250 pages. Here Engels describes the trade credit, which at the time mainly occurred by means of bills of exchange. The commercial banks unfold their activities in this system, because they guarantee and buy bills of exchange. Thus the banks determine the height of the interest rate. The bills of exchange are actually a form of money, which significantly simplifies the mutual circulation of payments in comparison with the traditional coins and bank-notes (liquidities).

Besides, a bank account can be opened, and payments can be made with cheques. The international trade mainly uses gold. The gold also serves as the guarantee for the value of government stocks. Apparently at the time the money system begins to mature. Moreover, the shareholder societies emerge. Value paper obtains its value by means of capitalization, and therefore is called fictitious capital by Engels. It is a source of speculation. Engels gives examples from practice, but this material from 1848, still collected by Marx, is then already obsolete. It describes the business cycles, especially in England. Thus the reader naturally gets some insights in the then financial system. Nonetheless, according to your reviewer it is all not very instructive. It looks chaotic. As far as theoretical conclusions are drawn, they are not useful for the average reader5.

Next Engels devotes almost 200 pages to the explanation of the rent, which must also be paid from the surplus value. The exploitation of labour is again discussed, but not so stirring as in the first volume. The land owner can demand a higher rent, according as the fertility of the plot is higher. Incidentally, the quality of the soil can be improved artificially, and the agriculture can be intensified. The text is fairly clear, but not very important. Besides, nowadays the rent has lost its importance in the economy. Thus Engels identifies three types of income: from labour, from capital, and from land. He calls this the trinitaristic form. At the end of volume 3 Engels uses approximately 50 pages for criticizing capitalism. At last.

Your reviewer began reading the third volume in 2007, and completed it only in 2010. It is a gigantic endeavour, which all in all hardly increases your knowledge. The volume just does not live up to its reputation. Moreover, it suffers from the endless repetitions, just like the volumes 1 and 2. Only the first 270 pages about the profit rate are somewhat interesting, mainly because this argument has such far-reaching consequences for the original labour theory of value of Marx. Your reviewer thanks Marx, that he has not published this enormous amount of chaotic information. This must also be the advice to all potential future readers: do not start reading, unless out of a purely historical curiosity. Those who, in spite of this warning, absolutely want to taste something of the atmosphere, will probably most enjoy the part about the profit rate.

  1. The fault in the price transformation has been repared only in the final quarter of the twentieth century. The repair is called the temporal single system interpretation (in short TSSI). Incidentally, then is must be accepted, that the labour value of a product changes continuously, due to the mutual redistribution of labour value between the economic branches. Unfortunately, thus the labour theory of value loses its simplicity, which before was the hallmark of the explanation of the prices and the exchange. The theory of the TSSI is explained in Reclaiming Marx's Capital (2007, Lexington Books) by Andrew Kliman. (back)
  2. Engels mentions in his preface notably the mathematician Samuel Moore. It is worth mentioning that after 1888 the leading social-democratic theoretician Eduard Bernstein also stays in London. He has been called the secretary of Engels, and will undoubtedly have contributed to the completion of the third volume. (back)
  3. It is unfitting to include theoretical arguments in a review. However, your reviewer makes an exception for the antithesis. In theory the profit rate must indeed be identical (constant) in all branches of the economy. For, differences in the profit rate imply a difference in capital efficiency. It is logical that all investors of capital will invest in the branches with the highest profit rate. This expands the branch, which is accompanied by more production, so that the product price must fall. This process always pushes the highest profit rate back to the average value of all branches. In a similar manner the lowest profit rates are pushed upwards to the average level. The original labour theory of value of Marx can not describe this process, and Marx was probably painfully aware of this. Besides, the theoretical flaw becomes worse, according as the enterprises accumulate more capital. It is understandable that Engels wants to repair this flaw. The main text in the review already concludes, that unfortunately the cure is worse than the flaw. In retrospect Engels should have omitted his antithesis. Incidentally, there is some justification for this, because the idea of free capital flows between the branches is a scientific abstraction, which is inaccurate. In reality, there do exist large differences between the profit rates of the various branches. And that increases the credibility of the abstraction of Marx in volume 1. An additional argument is, that according to the theory of Marx the capitalist economy is dynamical, and therefore permanently unstable. Therefore the capital flows do not get the time to balance the profit rate in the system as a whole.
    For completeness sake, it deserves mentioning, that in a sense Marx was too late. At the time (1894) all leading economists had already embraced the theory of the marginal utility. Then the labour theory of value, which had always been controversial, was generally considered to be outdated and obsolete.
    Marx and Engels were complements of each other, and apparently in 1894 the absence of Marx was a genuine loss. In volume 2 Nieuwe rivieren of the trilogy 1848 Theun de Vries presents their deliberations (p.15): Although it is of course true, that there are no Marxists among the left-wing leaders ... - Ha-ha! How do you call that? Why not Engelsian? - No; my name must not be used for such an affair. Marxist sounds excellent. Besides, you have written the Manifesto. And at the time converted me into the first Marxist. Marx protested, and at the same time was convulsed with laughter. - Idiot ... Spare me! Engels did not laugh. Marx became more serious. - No, my boy, you do yourself an injustice. This Manifesto could not have been written without you. And at the time you have learned me to begin with the fullness and the power of the living reality ... the most important, Friedrich! He gave Engels a friendly dig against his ribs. The blond young face of Engels did not change, but it coloured slightly.
  4. Herman Gorter clearly expresses on p.162 of the thick edition of Pan how at the time Marx was valued: And I continued through the dark city, / Heavy with shades. / And I sought for a Man, who controls the Universe. / The Society of Man as a God. / His name was Karl Marx. / And he said to me: "Just like the Universe / The Society moves due to its own forces. / It are the forces, the Forces of Production, / It is Labour, which moves the World / of Man, this dark World, / And it is Labour, which / Revolts this World and turns the Class of Slaves / Into the Controller of the Earth, the Universe". (back)
  5. The financial sector is a target for jokes. Rita Rudner illustrates this: They commonly have two cashiers in my bank, except when it is busy, because then there is just one. Or: a man enters his bank, and asks the cashier: "Can you check my balance?" And the cashier gave him a firm push. The trade in the stock exchange is even more funny. Thus some conclude, that the market for raisins dries out, the lamps exhibit a light recovery, the excavators hit rock-bottom, the elevators go up and down, the escalators fall, the trailers are trailing, the socks remain where they are for many days, and last but not least the bottom falls from the disposable napkins. (back)