 In the first volume of Capital, Marx presents a series of formulas representing a tight relationship between labor, exploitation, and capitalist profit. According to Marx, the value of a commodity is a function of three factors: constant capital (\(C\)), i.e., the labor value of nonlabor means of production such as machines, buildings, and raw materials; variable capital (\(V\)), i.e., the labor value of the labor power of workers involved in production), and surplus value (\(S\)). Since surplus value comes from the exploitation of labor (rather than machines or land), Marx defined the rate of exploitation as the ratio of surplus value over variable capital \((S/V)\). Of course, different industries will employ different mixes of labor and other factors of production—of variable and constant capital. Marx referred to this mixture as the organic composition of capital, and defined it as \(C/V\). But since capitalist profit is generated by the exploitation of labor, it seems to follow that industries that employ a greater proportion of labor (of variable over constant capital) should therefore earn a higher rate of profit. Thus, Marx defined the rate of profit as \((S/(C+V))\), which is equivalent to the rate of exploitation divided by the organic composition of \(\textrm{capital} + 1\). This last proposition has been referred to by Jon Elster as the “fundamental equation of Marxian economics” (Elster 1986a: 67).