us see how the development of capitalistic production affects the two parts of capital, and what bearing this has on the rate of profit.
John Brown, Sr., went into the business of manufacturing shoes in the year of Our Lord, 1850. He started out with a capital of, let us say, $500.00, four hundred of which he spent in fixing up his plant and buying a stock of raw material necessary in the business, and the remaining one hundred he used in paying his labor. We will assume, for the sake of simplicity, that he employed ten men, paying each ten dollars per week, and that the "turn-over" in his business was such that he cashed in every week the proceeds of his manufactured product, so that he did not need to invest for labor any more than one week's wages. Let us further assume that the state of the productivity of labor was such that the labor of one of our manufacturer's men during one week created a product of the value of twenty dollars. (In addition, of course, to the value of the raw materials, etc., consumed in its production.) Under these conditions the value of the product manufactured by John Brown, weekly, will be two hundred dollars, one hundred of which will be "necessary" value (the amount paid in wages), and one hundred, "surplus" value. This will be his profit. (In order to simplify matters, we assume that he deals with his consumers direct, thus cutting out the middlemen's share of the profit.) The ratio of the "necessary" to the "surplus" value, which we will call the rate of surplus value or the rate of the exploitation of labor, is that of 1 to 1 or 100 per cent. John Brown does not figure that way, however. While he is interested in paying his men as little as possible and make them produce as much as possible, whether by foul means or fair, he is not at all interested to know what proportion the surplus-value they create bears to their wages. Good business man that he is, he wants to know what return the capital invested by him in the enterprise has brought him. He finds that his investment of five hundred dollars has netted
