Profit

Profit is an economic category that expresses the final financial results of economic activity in expanded reproduction.

Under capitalism, the category of profit is a converted form of surplus value, the embodiment of the unpaid labor of wage workers, which is appropriated without compensation by the capitalist. The profit is in a converted form because, in reality, surplus value is manifested as the amount by which the price exceeds the costs of production. As a product of variable capital alone, profit appears, superficially, to be an increase in all advanced capital, both constant and variable. Thus, profit conceals its true meaning as the product of capitalist exploitation, and, as Marx pointed out, “in its assumed capacity as the offspring of the aggregate advanced capital, surplus value takes the converted form of profit”. Marx strongly emphasized that under the conditions of capitalism, profit “is the same as surplus value, but it assumes a mystified form that is nonetheless a necessary outgrowth of the capitalist mode of production”. In a letter to Engels (Apr. 30, 1868), Marx wrote: “For us, profit is above all just another name or another category for surplus value. Given the form of wage payment today, all labor appears to be paid for, so it inevitably seems that the unpaid part of labor arises not from labor but from capital, and not from its variable part but from capital as a whole. As a result of this, surplus value assumes the form of profit, without a quantitative difference between the two. This is only an illusory form of the appearance of surplus value” .

The ratio of profit to all advanced capital is the rate of profit. The chief factors influencing the rate of profit are the rate of surplus value, the organic composition of capital, and the rate of capital turnover. The rate of profit is inversely proportional to the organic composition of capital and directly proportional to the rate of surplus value and the rate of capital turnover. The rate of profit also increases as a result of savings in constant capital, which are associated with intensified exploitation of the workers.