The article presents didactically as profit is obtained in capitalism

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THE TRUTH ABOUT PROFIT FORMATION IN CAPITALISM
Fernando Alcoforado *
From any given time throughout the history of mankind, humans began to exchange
goods (M). At this time there was still no money as a medium of exchange. He
practiced the barter, where goods were exchanged for merchandise (M = M). The
use of money as we know it today is the result of a long evolution. To present
advantages as the possibility of hoarding, divisibility, rarity, beauty and ease of
transport, the metal was chosen as the main standard of value. It was changed under
different forms. The principle, in its natural state, then in the form of bars and also in
the form of objects such as rings, bracelets etc. Arise, then, in the seventh century BC,
the first coins with the current characteristics: they are small pieces of metal weighing
and defined value and the print of the official stamp, which is the mark of who issued
them and ensures their value. The money appeared thus to facilitate the exchange of
goods.
(M D M)
Under capitalism, money is no longer a means of exchange between goods of equivalent
value, passing it being also the means to obtain more-money (D'). From an amount of
money (D) seeks to get more money (D').
D M (.........) M´ D´
In the first volume of O Capital (The Capital. São Paulo: Boitempo, 2013), Karl Marx
shows how the profit is realized. He explains that the capitalist finds in the market a
special commodity, which, unlike all other commodities, is the source of your profit.
Marx defined it as "the set of mental and physical capabilities existing in a human
being". The purchase and use of these "mental and physical capabilities" is the source of
the profits of the capitalists.
Although the employee has a contract to work for, say, eight hours a day, he would
cover the value of their salary in maybe four hours to meet your needs. This first period,
Marx describes it as necessary labor time. But once covered the value of his salary, he
did not stop working and continues to do so until the end of his eight-hour shift. It is this
extra period exceeding the required part, that the worker produces surplus value for the
capitalist, and is described by Marx as surplus labor time. This is unpaid labor and is
where the profits of the capitalist arise.
According to Marx, the capitalist profit results of Surplus Value (m). This comes from
the difference between the value of a good or service produced by a worker and the
salary paid to him. In other words, it is the working time that is not paid or paid by the
capitalist. Therefore, the profit comes directly from human labor, worker. Hence we can
calculate the rate of exploitation (m'), for example, if the value produced by a worker
for a year is R$ 72,000.00 and the salary paid is R$ 18,000.00 (v) the Surplus Value is
R$ 54,000.00 (m), then: m'= m / v = 54,000 / 18,000 = 3 (300%).
The value of raw materials and energy used in the production cannot constitute a source
of profit because it creates no new value, given that simply transfers their value to the
new product. This includes the use and wear of machines, which gradually transfer its
value only, which is known as depreciation. According to Karl Marx, the work

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(combined with nature) is the true source of all new value, including Surplus Value. All
value derived from previous work contained in the raw materials, etc., is transferred to
the new goods. To this Marx calls "dead labor", as opposed to new value added
resulting from human labor that Marx describes as "work live".
The driving force of capitalism is the production of Surplus Value. The capitalist is
determined to extract every last drop of profit from the unpaid labor of workers. It does
this through a combination of means: lengthening the working day, increasing the speed
of the machines, introducing sparing machines of work, through rationalization,
productivity agreements, new work shifts, time and motion studies, using new
technologies, etc. These methods have become familiar to workers.
The total capital invested by the capitalist was considered by Marx as follows. The
capital constituted of means of production, raw materials, energy, etc. is considered
constant capital (k), which simply transfers its value to the new goods. The value that
they transfer is fixed. However, the capital represented by labor (wages) is considered a
variable capital (v) as a source of all new value. Consequently, the total value of all
commodities is composed of k + v + m, where m is the Surplus Value. While the
Surplus Value is "trapped" within the commodity, the capitalist can only accomplish
this Surplus Value when the goods are sold in the market. Thus, the Surplus Value is
created only in production, and performed only in the exchange market.
It is worth noting that it is through the added value (m) that the capitalist pays his
capital invested, paid social and labor costs as well as fees and taxes to the government,
among other requirements. Ultimately, it is the worker who, in addition to ensuring the
production of the good or service, guarantees the gain of the capitalist and the payment
of the commitments assumed by this. If the journey of work is divided between
necessary labor and surplus labor, the rate of surplus value is the ratio of the two
portions of the journey of work. The higher the excess portion, the greater the rate of
surplus value. It is exactly the same ratio of surplus value and variable capital, ie (m /
v). In simple terms, the rate of surplus value is the rate of exploitation of labor by
capital, or workers by the capitalist. The capitalist class force the working class to do
more work than is required to cover their livelihoods, thus producing surplus value.
What matters to capitalist is the profit and the pursuit of higher profits. They need to
know if the value that legally does not pay its workers - the Surplus Value (m) - is
greater than the capital that invests in constant capital (k) and variable capital (v). Being
the constant capital machinery, raw materials, energy, etc. used in the production of
goods or services and capital variable buying labor to workers. Therefore,
mathematically the rate of profit is thus:
Whereas m'= m / v, we will have m = m'v. Replacing m by m'v in the formula that
calculates the rate of profit will have:
Dividing the numerator and denominator by v, we have the profit rate:

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l'= m'. 1 / (k / v + 1) = m'/ (k / v +1)
Whereas the organic composition of capital (coc) is the ratio of constant capital (k) and
variable capital (v):
We will have the rate of profit as shown below:
l´= m´/(coc + 1)
The analysis of this formula reveals that the rate of profit (l') is proportional to the rate
of exploitation (m') and inversely proportional to the organic composition of capital
(coc).
The incessant and passionate technical development, driven by competition between
capitalists forces them to invest in machinery (constant capital = k) that allows them to
produce the same with less time to "work live" (variable capital = v). Therefore, in their
search for reproduction capital, capitalists tend to invest more in constant capital (k) and
less in variable capital (v) tending to increase the organic composition of capital (coc)
causing the rate of profit has a tendency to decrease.
Unemployment resulting from this increased investment in constant capital (k) at the
expense of variable capital (v), thus making it also more difficult to capitalist obtain the
Surplus Value. Faced with the low rate of profit trend, the capitalists seek to increase
the rate of exploitation (m') to increase the numerator of the equation l'= m'/ (coc + 1).
At the same time, paradoxically, encourage consumption while the workers' purchasing
power tends to fall with rising unemployment. Thus, circulation D-M-D' decreases and
happen the system crises.
This pressure to enter machines allowing labor-saving driving, however, a relative
decrease of variable capital (workforce) compared to the constant capital (means of
production, raw material, etc.). Although there is a relative decrease in the workforce
for those who invested in constant capital, that fact, however, results in more investment
being made available to each worker employed. Through competition, the capitalist is
forced to invest to produce goods cheaper than its rivals.
The industries where labor productivity is below average are excluded from the business
for those that use the most current methods. Competition leads to the concentration and
centralization of capital. This process results in larger companies with the most modern
equipment and technology. This accumulation of capital is a fundamental feature of
capitalism. It´s the historic mission of capitalism to develop the productive forces. The
driving force of capitalist production is not the satisfaction of human needs, but the
production of surplus value at an ever increasing pace, much of which must be
accumulated and incorporated into new means of production.
* Fernando Alcoforado, member of the Bahia Academy of Education, engineer and doctor of Territorial
Planning and Regional Development from the University of Barcelona, a university professor and
consultant in strategic planning, business planning, regional planning and planning of energy systems, is
the author of Globalização (Editora Nobel, São Paulo, 1997), De Collor a FHC- O Brasil e a Nova
(Des)ordem Mundial (Editora Nobel, São Paulo, 1998), Um Projeto para o Brasil (Editora Nobel, São
Paulo, 2000), Os condicionantes do desenvolvimento do Estado da Bahia (Tese de doutorado.

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Universidade de Barcelona, http://www.tesisenred.net/handle/10803/1944, 2003), Globalização e
Desenvolvimento (Editora Nobel, São Paulo, 2006), Bahia- Desenvolvimento do Século XVI ao Século XX
e Objetivos Estratégicos na Era Contemporânea (EGBA, Salvador, 2008), The Necessary Conditions of
the Economic and Social Development-The Case of the State of Bahia (VDM Verlag Dr. Muller
Aktiengesellschaft & Co. KG, Saarbrücken, Germany, 2010), Aquecimento Global e Catástrofe
Planetária (P&A Gráfica e Editora, Salvador, 2010), Amazônia Sustentável- Para o progresso do Brasil e
combate ao aquecimento global (Viena- Editora e Gráfica, Santa Cruz do Rio Pardo, São Paulo, 2011),
Os Fatores Condicionantes do Desenvolvimento Econômico e Social (Editora CRV, Curitiba, 2012) and
Energia no Mundo e no Brasil- Energia e Mudança Climática Catastrófica no Século XXI (Editora CRV,
Curitiba, 2015).