3. The fatal difficulty in which the Marxian theory of value culminated, due to the fact, as Marx described it, that the “organic composition of capital” is, for technical reasons, different in different industries, is the same as the difficulty of “fixed and circulating” capital, which occupied so large a share of Ricardo’s and McCulloch’s attention. The problem as discussed by Marx differs from Ricardo’s greatly in terminology, and considerably in certain other external features, but the identity of the two in essence can easily be shown. From his general law that the value of a commodity is governed by its labor cost,[85] Marx made a law of wages follow as a corollary, namely, that the value of labor, its exchange-value, or wages, is governed by its cost of production in labor. It is very hard to find a labor-cost of production of labor, so, by an act of logical legerdemain, this becomes the labor-cost of labor’s _subsistence_.[86] The value _produced by_ labor depends upon the duration of its exertion; but, says Marx, the _exchange value of_ labor is a different thing. If laborers commonly work ten hours a day for their employers, while six hours of labor will produce a day’s _subsistence_, the value produced by a day of labor is as ten, while the wages paid for it are—in virtue of the general law of value—as six. The difference between the value produced by labor and the value of labor—in this case (adopting the labor-cost unit of value) four hours of value—is the famous “_surplus-value_,” and the four hours a day is called the surplus labor time. We shall have to adopt a special and _purely temporary_ terminology to describe the complication in this theory about to be discovered.[87] By value we mean exchange-value, unless otherwise specified. The outlay of value made by an entrepreneur in labor, raw-material, machinery, _etc._, returns to him in the course of time a certain value of products, which is greater than the outlay required to produce them. The excess of this value over the outlay we shall call the “profit fund.” Now, according to Marx, _surplus-value is the sole source of this profit fund_. The reasoning to support this runs as follows: The entrepreneur’s investments in machinery and raw-material, says Marx, cannot contribute anything to this fund. For, according to the labor dialectic, all the value these goods can contribute to their products is derived from their own labor-costs, and the law of value forces the entrepreneur to pay this value for them in full. They can, therefore, afford him no surplus. But the _labor_ he buys is a different kind of thing. It, and it only, as just explained, gives more value to the product than he is forced by the law of value to pay for it.