Published posthumously in 1894 by Friedrich Engels, Volume III of Capital marks a crucial evolution in Karl Marx’s critique of political economy. Whereas Volume I analyzed the production of surplus value and Volume II focused on the circulation of capital, Volume III turns its attention to the capitalist system as a totality, dealing with the distribution of surplus value among the various factions of the bourgeoisie—industrial capitalists, landlords, and financiers.
Major Ideas, Concepts
The Transformation of Surplus Value into Profit and the Rate of Profit
One of the central themes of Volume III is the transformation of surplus value into profit and how the rate of profit functions within capitalism. Marx introduces the concept of the general or average rate of profit, which emerges from the competitive interplay among capitals in different sectors.
In Volume I, surplus value (s) is generated by exploiting labor, but here in Volume III, that surplus is realized in the form of profit (p). This is crucial because it veils the actual source of surplus value.
“The profit of enterprise…is thus the same as surplus-value, only in a mystified form.” (Capital, Vol. III, Ch. 2)
Marx shows how competition among capitalists causes profit rates to level out across industries, even if they have different compositions of capital (i.e., different ratios of constant capital to variable capital). This leads to the concept of prices of production, which diverge from the actual values of commodities. Thus, commodities tend not to exchange at their values but at prices adjusted to yield average profits.
The Tendency of the Rate of Profit to Fall
Perhaps one of the most debated ideas in Volume III is Marx’s Law of the Tendency of the Rate of Profit to Fall (LTRPF). According to Marx, as capitalism develops, there’s an increasing investment in constant capital (machinery, technology) relative to variable capital (labor), which is the only source of surplus value. This dynamic leads to a decline in the rate of profit over time, despite technological advancements.
“The progressive tendency of the general rate of profit to fall is, therefore, just an expression peculiar to the capitalist mode of production of the progressive development of the social productivity of labor.” (Capital, Vol. III, Ch. 13)
However, Marx does not present this as a linear process. He discusses various counteracting tendencies, such as increasing exploitation of labor, cheapening of elements of constant capital, expansion of foreign trade, and others.
The Role of Commercial and Interest-Bearing Capital
Another theme of Volume III is the analysis of commercial capital and money-dealing (interest-bearing) capital. Here, Marx critiques how finance capital can obscure the origins of value and exploitation. In particular, he focuses on how interest-bearing capital appears to produce profit without labor—a view that, in Marx’s view, mystifies the nature of capital even further.
“In interest-bearing capital, this automatic fetish is elaborated in its pure state, the interest-form being the most external and the most fetish-like form of capital.” (Capital, Vol. III, Ch. 24)
He refers to this mystification as the “trinity formula”—the notion that land earns rent, capital earns interest, and labor earns wages, which hides the exploitative nature of capitalist relations and makes them seem natural and eternal.
Ground-Rent and the Role of Landed Property
Marx also devotes a significant section of Volume III to ground-rent and landed property, which he examines as a distinct form of appropriation of surplus value. He distinguishes between differential rent (based on the productivity of land) and absolute rent (based on monopoly over landownership), arguing that rent arises not because land has value but because the landowner can extract value due to control over a natural resource.
This section is vital because it shows that capitalism is not a single unified bloc but composed of different classes of appropriators—industrialists, landlords, and financiers—all drawing from the same surplus value created by labor.
Crisis Theory and Capitalist Instability
In the final parts of the book, Marx deals with the inherent contradictions and instabilities of capitalism, particularly the causes of economic crises. He argues that crises stem not from external shocks but from internal contradictions within the capitalist mode of production—particularly between the need to expand production and the limits of market consumption.
Marx explains that while overproduction is a recurrent feature of capitalism, it is not overproduction in general, but rather overproduction of capital in relation to profitable employment—leading to crises of realization and accumulation.
“The real barrier of capitalist production is capital itself.” (Capital, Vol. III, Ch. 15)
This idea forms the foundation of much later Marxist analysis of capitalism’s cyclical crises and remains highly relevant in interpretations of boom-and-bust patterns in modern economies.
Capital as Social Relation and Fetishism
A broader, philosophical thread running through Volume III is Marx’s continued focus on capital as a social relation, not a thing. This becomes especially evident in his analysis of financial capital and its illusion of self-expansion (M-M’, money making more money).
This deepens the concept of commodity fetishism, first explored in Volume I, now applied to the mystified forms of surplus value—profit, interest, and rent—which obscure the class relations behind them.
Final Thoughts
Capital, Volume III represents Marx’s effort to complete his critique of capitalist economy by showing not just how value is created, but how it is distributed and obscured. It’s in this volume that Marx most explicitly confronts the full ideological veil cast by capitalist society, making it his most complex and theoretically rich work.
While the text is dense and often fragmentary (owing partly to Engels’ editorial role), it remains foundational for understanding how Marx saw capitalism not just as a productive system, but as a contradictory totality, driven by profit but haunted by crisis.
