from wage-labor, and that this is accomplished either by way of brotherly arrangement or through competition. As to the special surplus-value for which the rival capitalists fight so mercilessly, why that is lost sight of and plays no part either in the income of the individual capitalist, or in the establishment of the rate of profits or in the formation of prices.
"After Marx has led us in the course of two volumes through an elaborate analysis by which he sought to prove that surplus-value is produced by hired human labor-power, he turns a somersault and admits that all his laws and formulas are in direct conflict with reality, and cannot be brought into harmony. That surplus-value in the form of profits is yielded by every productive capital as such in equal amount, even though it be used in such a manner that no wage-laborers are employed thereby. Instead, therefore, of surplus-value, which we put to the credit of unpaid labor appropriated by the capitalists, we are confronted with the average rate of profits, which is conditioned neither upon the number of workmen nor upon the degree of their exploitation, nor is it influenced by either."
And Masaryk declares: "De facto we have in the third volume the ordinary theory of cost of production, and the law of supply and demand plays the decisive part."
"Bernstein"—says he—"admits the breach between the third and first volumes. Marx has certainly modified his theory. The theory of value of the first volume is incomplete, and therefore vulnerable, without the elaborations of the third volume. Bernstein admits that the first volume offers for the real economic relations a 'sea of generalities without any shore,' and that the determination of value by the quantity of labor is inadequate; a more specific measure is necessary. Commodities are exchanged not at their value but at their cost of production, the exchange-value of goods is directly determined by competition of capital, and only indirectly by the law of value. I believe that Bernstein correctly judges the Marxian teaching. The
