result? His variable capital amounting to one thousand dollars, John Brown now employs one hundred men. The value of the weekly product of each man is forty dollars, and the value of the aggregate weekly product, four thousand dollars. Out of this, one thousand dollars represents the necessary value and three thousand is surplus value. His profits have increased enormously, but yet not in proportion to his capital. That is to say, while the gross amount of his profits is enormous, the rate of his profits, the percentage return of each dollar of capital, is considerably smaller. A profit of three thousand dollars on a capital of twenty thousand makes only fifteen per cent., a decrease of five per cent. as compared with the older days.
The different ways in which the business of the older and the younger John Brown is organized, and the results flowing from the different organizations of the business, are typical of the development of capitalistic production in general, and correctly exemplify it. It shows the fact of the falling rate of profit, and also gives the explanation therefor. The development of capitalist production consisting in the increased productivity of labor, by reason of which the composition of capital becomes higher, this development must necessarily tend to lower the rate of interest or profit; for the profit is obtained only from the variable part of capital, which is constantly being diminished as compared with the constant part, whereas it is figured on the whole capital.
Our example, does not, however, show the full effect of the change of the composition of capital on the profit rate. When left to itself, the change in the composition of capital has a tendency to lower the rate of profit much more than appears from our example. The reason for it is, that in our example we did not present the workings of this law in its purity, by changing the conditions of the problem. In the first instance we represented the workingmen as receiving one-half of the value they produced, whereas in the second we assumed that they received only one-quarter.
