The Forum: The rate of surplus-value

[To the editor.]
Watford.
Sir,—Seeing that a definite statement is made (Young’s article’ “Economics in Brief,” 1.4.13)
that constant capital creates no value, and that two illustrations are given wherein a surplus of
33 per cent. of the total outlay is mentioned, in the other a surplus of 66 per cent. of the total
outlay. If constant capital creates no value does it not follow that the worker has been exploited
to the extent of 100 per cent, in each case ? .,
Yours, etc., F. G. PARLBY.

It is quite true that on our assumption the workers have been exploited to the extent of 100 per cent. in each case. The rate of exploitation is the proportion of the surplus-value created by the workers to the amount they receive in wages. For example : If a value of 100 is created by the workers and they receive but 50 there remains a surplus of 50, and the rate of surplus-value or exploitation is 100 per cent.

In the particular portion of the article you refer to I was dealing with the rate of profit. But I was careful not to use the term profit, for this would not have been strictly correct. The term surplus on the outlay was preferred, for, as was stated in an earlier part of the article, the industrial capitalist cannot retain the whole of the surplus-value for himself, but has to pay over certain portions to the financial capitalist in the form of interest, and to the ground landlord in the form of rent, etc.

Profit, therefore, is that portion of the surplus-value that remains after all expenses have been considered, and the rate of profit is the proportion of this to the total capital which is invested.

The fact that other expenses may be incurred does not in the least affect our illustration if we assume that they are the same in each case.

H. A. Y.