Tuesday, 23 January 2018

Theories of Surplus Value, Part II, Chapter 12 - Part 25

“That I determines the market-value [is correct] only on the assumption that the additional supply from II etc. is only the additional supply which the market can absorb at the market-value of I. If it is greater, then I is quite passive and by the room it takes up, only compels II, III, IV to react until the price has contracted sufficiently for the market to be large enough for the whole product.” (p 293)

At this market value of £1.80 per ton, I pays no rent, but makes average profit; II pays no differential rent, and only pays £9.166 absolute rent, as opposed to the £10 full absolute rent; III pays £10 absolute rent and differential rent of £17.50; whilst IV pays £10 absolute rent and differential rent of £49.583.

II does not pay the full £10 of absolute rent, because although £1.80 per ton is more than its individual price of production, it is below its individual value.

“(The actual rent is equal to the difference between market-value and cost-price.)

The absolute rent is equal to the difference between individual value and cost-price.

The differential rent is equal to the difference between market-value and individual value.

The actual or total rent is equal to the absolute rent plus the differential rent, in other words, it is equal to the excess of the market-value over the individual value plus the excess of the individual value over the cost-price or [it is] equal to the difference between market-value and cost-price.” (p 293)

Marx sets out a series of equations that summarise the relations between the various elements:-

“1. AR=IV-GP=+y

2. DR=MV-IV=x

3. TR=AR+DR=MV-IV+IV-CP= y+x=MV-CP

If MV>IV then MV-IV=+x. Hence: DR positive and TR= y+x.

And MV-CP=y+x. Or MV-y-x=CP or MV=y+x+CP. If MV

And MV-CP=y-x. Or MV+x=IV. Or MV+x-y=CP. Or MV=y-x+CP.

If MV=IV, then DR=0, x=0, because MV-IV=0.

Hence TR=AR+DR=AR+0=MV-IV+IV-CP=0+IV-CP=IV-CP=MV-CP=+y.

If MV=CP [then] TR or MV-CP=0.” (p 294)

If the market value (MV) is equal to the individual value (IV), the differential rent (DR) is zero, and the total rent (TR) is equal to the difference between the individual value and the cost-price/price of production (CP). If the market value is greater than the individual value, the differential rent is equal to the excess of market value over individual value, but the total rent equals the differential rent plus the absolute rent. In other words, the difference between the market value and the individual price of production. If the market value is less than the individual value, but more than the price of production, the differential rent is a negative amount. In other words, not only is no differential rent paid, but not all of the absolute rent is paid. The total rent is then the absolute rent minus this negative amount of differential rent. In reality, no negative differential rent is paid – in other words, landlords do not pay farmers to cultivate such soils – its only that not all of the absolute rent is paid. Marx avoided the implications of this by introducing the concept of Differential Value (DV).

Monday, 22 January 2018

Theories of Surplus Value, Part II, Chapter 12 - Part 24

Marx now examines the situation where the additional supply results in a lower market price, which in turn causes an increase in demand. If the price drops to £1.846 per ton, demand rises to 292.5 tons, which means that all of the supply is absorbed.

Table C
Class
C
Capital £'s
T
Output
Tons
TV
Total Value
£'s
MV
Market-Value £'s
Per Ton
IV
Individual Value £'s per Ton
DV
Differential Value £'s per Ton
CP
Cost-Price (price of production)
£'s per ton
AR
Absolute Rent
£'s
DR
Differential Rent
£'s
AR in T
Absolute Rent in Tons
DR in T
Differential Rent in Tons
TR
Total Rent
£'s
TR in T
Total Rent in Tons
I
100
60
110.769
1.846
2.000
- 0.153
1.833
0.769
0
0.416
0
0.769
0.416
II
100
65
120.000
1.846
1.846
0
1.692
10
0
5.416
0
10
5.416
III
100
75
138.461
1.846
1.600
0.246
1.466
10
18.461
5.416
10
28.461
15.416
IV
100
92.5
170.769
1.846
1.297
0.548
1.189
10
50.769
5.416
27.50
60.769
32.916
Total
400
292.5
540.000




30.769
69.230
16.666
37.50
100
54.166
Table D
Class
C
Capital £'s
T
Output
Tons
TV
Total Value
£'s
MV
Market-Value £'s
Per Ton
IV
Individual Value £'s per Ton
DV
Differential Value £'s per Ton
CP
Cost-Price (price of production)
£'s per ton
AR
Absolute Rent
£'s
DR
Differential Rent
£'s
AR in T
Absolute Rent in Tons
DR in T
Differential Rent in Tons
TR
Total Rent
£'s
TR in T
Total Rent in Tons
I
100
60
110
1.833
2.000
- 0.166
1.833
0.
0
0
0
0
0.
II
100
65
119.166
1.833
1.846
- 0.012
1.692
9.166
0
5.000
0
9.166
5
III
100
75
137.500
1.833
1.600
0.219
1.466
10
17.500
5.454
9.545
27.500
15
IV
100
92.5
169.583
1.833
1.297
0.540
1.189
10
49.583
5.454
27.045
59.583
32.50
Total
400
292.5
536.250




29.166
67.083
15.909
36.590
96.25
52.50


Unlike Table C, Table D shows the situation where the 292.5 tons of supply is only fully absorbed if the market price falls to £1.80 per ton. In other words, in Tables C and D, Marx is examining the situation arising from different degrees of price elasticity of demand. The slope of the demand curve in D is different to that in C, illustrating a greater elasticity of demand in C to D.

At this price of £1.80 per ton, it equals the price of production for land type I. It can make the average profit of 10%, but pays no rent. Ricardo has this case as being normal, but, on the assumption that the progression has been from the most fertile to least fertile lands, as opposed to here, where land type IV came into production last.

Land I produces 60 tons. At £2 per ton, the demand is 200 tons. If II – IV only produced 140 tons, all of the 200 tons would be absorbed by the demand, and I would determine the market value. But, that is not the case, as II – IV's production leads to an oversupply of 92.5 tons. The oversupply then causes the market price to fall. It depends then on the price elasticity of demand how much the price needs to fall in order to raise demand from 200 tons to 292.5 tons. If demand is infinitely inelastic, it will not rise above 200 tons, no matter how much the price falls.

“If this were, in fact, surplus production, which exceeded the absolute requirements of the market, then I would be completely thrown out of the market and II would have to withdraw half its capital as in B II would then determine the market-value as in B.” (p 292)

At this point, the total supply would fall to 200 tons, but would still require the remaining output from II to achieve it, so II would then determine the market value. However, as Table D suggests, the consequence of the oversupply is that market prices fall, and demand rises in response to the lower market price. In this case, it rises to absorb the whole 292.5 tons, when the price falls to £1.80 per ton. Starting from the initial position where demand is 200 tons, and the supply 292.5 tons, II would try to hold on to its market share by selling at its individual value of £1.846. But, even at that price, supply would exceed demand. Producers on land type III and IV would try to hold on to their market share, by similarly selling at even lower prices.

However, when the market price has been driven down to £1.80 per ton, demand has risen to 192.5 tons, absorbing all the supply. So, all producers can dispose of their output, and at this price, land I would be selling below its individual value, but still at its individual price of production. It could pay no rent, but would still make the average profit of 10% on its capital. This situation is rather like what has been seen with oil production and prices in recent years. It illustrates Marx's examples whereby the progress is both from the most fertile to least fertile, and simultaneously from the least fertile to more fertile. In other words, a lot of oil production came from the very fertile oil fields of the Middle East. As demand exceeded supply, and global oil prices rose, new, less fertile fields were opened up, for example, in the North Sea, Alaska and Siberia etc. As demand rose further, new technologies, such as fracking, were developed, which meant that new oil production, in the US, could be opened up, which was less fertile than the Middle Eastern production, but more fertile than the North Sea production etc.

As a result of the increase in output, a condition of oversupply, similar to that set out by Marx here, in Table D, was created. The market prices fell, and caused a rise in demand. But, rather than the least fertile production dictating the market value, it becomes, under such conditions, the most fertile production that determines the market value.

“If this reduction in price is so great that the classes I, II etc. have to sell below their costs of production, they naturally have to withdraw [their capital from production]. If, however, the situation is such that the reduction does not have to be so great in order to bring the output into line with the state of the market, then the total capital can continue to work in this sphere of production at this new market-value. 

But it is further clear that in these circumstances it is not the worst land, I and II, but the best, III and IV, which determines the market-value, and so also the rent on the best sorts of land determines those on the worse, as Storch correctly grasped in relation to this case.” (p 292-3) 

If the price rose above £1.80 per ton, the market would contract, there would be oversupply, and the more efficient producers would reduce their selling price, to dispose of all their output. A similar thing occurs now with the oil market, except that the situation there is that if the price rises, its possible for shale oil producers to quickly restart rigs and increase output, so that supply rises, and market prices fall back. Its why I suggested, back in 2014, that, after a sharp drop in oil prices, caused by oversupply, the price would remain in a range between $40-70, during 2016, as this process of production being turned on and off, in response to price moves occurred. Only when either global oil demand rises sufficiently – shift in the demand curve – or when less productive oil production is taken out – North Sea etc. - are prices likely to escape that price range, and establish a new longer term equilibrium price around $70-80 a barrel. Given the rapid moves to replace petrol engined cars with electric powered cars, I now expect that we will never again see $100 a barrel oil, in constant money prices, and it may even be hard now for prices to even rise above $70 a barrel.

Sunday, 21 January 2018

The Law of The Tendency For The Rate of Profit To Fall Is Defunct - Part 5 of 5

Finally, as I have pointed out previously, when Marx talks about the Law of the Tendency for the Rate of Profit to Fall, he is talking about the rate of profit calculated on the basis of the laid-out capital, or in other words, the profit margin. As he says, in Theories of Surplus Value, Chapter 16,

"{Incidentally, when speaking of the law of the falling rate of profit in the course of the development of capitalist production, we mean by profit, the total sum of surplus-value which is seized in the first place by the industrial capitalist, [irrespective of] how he may have to share this later with the money-lending capitalist (in the form of interest) and the landlord (in the form of rent). Thus here the rate of profit is equal to surplus-value divided by the capital outlay." 

Indeed, its because of this that the increase in productivity, which results in a greater proportion of raw material in the value of the final product, plays such a significant role in causing this rate of profit/profit margin to fall. If, on the other hand, we examine the general annual rate of profit, the situation is different, because the average rate of profit, is based upon the annual rate of profit, and the annual rate of profit, is the total surplus value calculated as a proportion not of the laid-out capital, but of the advanced capital. The very fact, of a rise in social productivity, which is the basis of the Law of The Tendency for the Rate of Profit to Fall, is simultaneously, not only the basis of the countervailing forces to that law, but is also the basis of a rise in the rate of turnover of capital, which is the cause of a rise in the annual rate of profit, and so too of the average annual rate of profit.

In fact, in Capital III, Chapter 14, where Marx sets out a series of "countervailing forces" to his Law of The Tendency For The Rate of Profit To Fall, he does not mention, at all, the rise in the rate of turnover as such a countervailing force, which is yet another obvious indication, that his law is in relation to the rate of profit/profit margin p/k, and not the annual rate of profit, s x n/C.  Marx is clear that his law is based upon a rising proportion of material value in final output, but, as he sets out at length, in Capital II, the effect of rising productivity resulting from more, or more effective fixed capital, is to leave the amount of value advanced for materials the same or even lower.

For, example, suppose that a linen producer must produce 1,000 metres in a working period, before sending it to market.  If if takes 10 weeks, to produce this 1,000 metres, that determines the length of the turnover period, and if we ignore the circulation time, it means that in a 50 week year, the circulating capital turns over 5 times. If this producer introduces a second machine, or introduces a replacement machine that is twice as effective, the 1,000 metres is now produced in just 5 weeks, so that now the capital turns over 10 times during the year.  But, the amount of capital advanced for the yarn required to produce the 1,000 metres of linen remains the same, and will even be less if the rise in social productivity reduces the value of yarn along with other commodities.  So, again its clear that Marx's Law, based upon the rising proportion of material value, applies to the rate of profit/profit margin, p/k, and not to the annual rate of profit, s x n/C, because the effect of technological improvement, and a rising rate of turnover, is to cause this latter rate of profit to rise, not fall!

On the one hand, the rise in the importance of service industries acts to mitigate the rise in the rate of turnover, and so the rise in the average annual rate of profit. On the other it emphasises it. It mitigates it wherever, the rise in productivity in a service industry has no impact on raising the rate of turnover of the capital. If we take the example of the hotel, the fact that 200 rooms rather than 100 rooms are provided for, using the same amount of capital, does not raise the rate of turnover of that capital. In the case of a manufacturer, if productivity doubles, twice the quantity of materials are processed in a given amount of time. That is why the laid out capital rises. However, the same fact, means that the quantity of output required for any given working period, is now produced in half the time, so the working period halves, and consequently the rate of turnover of the capital increases. That reduces the amount of capital that is advanced, and so raises the annual rate of profit. But, that is not the case with the hotel, because the rise in productivity does not halve the time that the hotel guests stay before paying. The rise in productivity enables twice as many guests to stay during a given period of time, but the value of a room halves. The function of rising productivity here, would be that technological developments such as the Internet, and electronic payments, means that when the guests do pay, those payments are processed more quickly, than were they to pay by cash or cheques, which then had to be taken to the bank, processed, and so on.

But, the situation is different with other service industries. A manufactured product, can generally only be consumed by one person. A chocolate bar, for example, can only be eaten once. There are, of course, consumer durables. A car, can be used by one person, who then, after a number of years, sells it second-hand to someone else. But, here, the first owner consumes the use value of the car during the period they own it. All that occurs here is that they do not consume all of the use value of the car, and what they sell to the next owner is the residual use value. There are some commodities for which even this does not apply. These are what economists call public goods. They can be consumed simultaneously by a number of people. A bridge across a river, for example, can be used by thousands of motorists without any detriment to their usage, and without any additional cost.

The same is true of some services. If we take an example I have used several times before, a football team's performance does not diminish as a consequence of being viewed by 20,000 spectators rather than just 1. On the contrary, it is enhanced by the fact of a larger crowd, creating more atmosphere. Indeed, here, the value created by the labour of the players, itself becomes a function of the quantity of spectators watching the match simultaneously. The football club, if anything, will charge more for a ticket, if the team's matches are drawing large crowds. The labour is then complex labour, and the degree of its complexity, compared to simple labour is determined by the size of the average crowd, and price they are prepared to pay for a ticket.

Here, the role of technology becomes extremely significant. A rise in social productivity that reduces the cost of producing stadia, for example, can facilitate larger stadia that enables bigger crowds, which means that the value produced by the labour is increased. But, similarly, technology, by enabling the game to be filmed, and then shown on TV, and now to be streamed by satellite and Internet, across the globe, expands the number of consumers exponentially, without any additional labour being required. It is, in effect, a means of turning over the capital advanced for the production of the football ground, and of players wages, far more quickly.

A similar thing applies with other such service industries, that now constitute multi-billion pound markets. In the days of the Music Hall, a singer, dancer or comedian could only perform for a given number of people per night. Television, made that number limited only by the number of people with a TV, and now the Internet makes it more or less limitless. Yet, in neither case, does this reduce the value produced by the labour, because the product of this labour is not divisible. A teacher who stands in front of a class of students creates new value by their labour. They do so by creating a use value, education, but this use value, is in no way diminished by being consumed simultaneously by 20 students, as opposed to just 1. And, today, the Internet enables lectures by the world's top teachers and lecturers to be sold across the globe, along with university courses from some of the top universities. The fact, that some of these courses, and lectures might be sold at lower prices, is only an indication of applying a lower market price, in order to draw in a much larger number of consumers, not of any reduction in value as a result of selling the output on a larger scale.

In real terms, the cost of watching a film on Netflix today is much less than the cost of going to the cinema a couple of decades ago, or of hiring a DVD, or before that a video. But, the number of people who can now do so, via the Internet is much greater, so that the total amount of value obtained by the film company is much greater, and without all of the fixed capital required to build cinemas, produce DVD's or videos, or stores to sell and rent them. Once again, in essence, the film company is able to turnover the capital it advanced to produce the film, and pay the wages of the actors etc. in much less time, and this higher rate of turnover of its capital raises the annual rate of profit, which thereby also raises the average annual rate of profit of the economy.

There are some forms of service provision where that is not the case. A rise in productivity does not increase the number of clients a prostitute may have in a given period of time, for example. But, as in other areas of the economy, it does not prevent them undertaking other forms of sex work, which are opened up by these changes, for example in the production of Internet pornography and so on.  In fact, depending upon the service that any client might want, the Internet, and interactivity could be said to enable numerous clients to be serviced simultaneously. Similarly, the use of the Internet, means that doctors can see more patients using online video, which is opening up a whole new market via services such as Push Doctor, and Babylon. These developments do not replace existing labour with technology, but utilise technology to enable existing labour to provide services on a wider scale, and without any additional consumption of circulating constant capital, and so without any change in the organic composition of capital, or affect on the rate of profit.

And, as Marx sets out in Capital I, talking about the effect of machinery on raising the rate and mass of surplus value, and in reducing the value of the commodities that comprise the constant capital, and thereby facilitating more capital accumulation, although the amount of labour employed falls relative to output, it brings about an absolute increase in the amount of labour employed, and so an absolute increase in the amount of surplus value produced.  In a whole series of industries, the amount of labour actually employed is much less than would theoretically have been employed to produce the output on the basis of previous technology.  But, that theoretical reduction is irrelevant, because without the current technology those industries either would not exist, and so would not have employed any labour, or else they would only have been able to produce a much smaller quantity of output, with much higher unit values, for the commodities produced, which would only have been available as luxury consumption for the rich or affluent, and so would have employed only a fraction of the actual current numbers of workers involved in their production.

In all of these ways, the shift towards service industries, makes Marx's Law of the Tendency for the Rate of Profit to Fall, defunct, because it is a law based upon rising social productivity, which causes the proportion of materials in the value of final output to rise, and the processing of materials other than the use of auxiliary materials forms no part of these service industries. For remaining manufacturing industry, the Law may continue to operate, but given that a large part of the value of labour-power is now determined by the value of those services that workers consume, rather than by the actual consumption of commodities, the effect of the falling value of services on the value of labour-power, and consequent rise in the rate of surplus value, is likely to be more significant. But, even were the Law to continue to operate to a significant degree in relation to manufacturing, that would itself be largely irrelevant, because manufacturing only accounts for around 20% of total value and surplus value production in modern economies.

The determining factor is the rate of profit in service production, and because the rate of profit, and prices of production, in manufacturing, is itself a function of the annual average rate of profit, it is again that rate of profit in service production that is decisive.

Theories of Surplus Value, Part II, Chapter 12 - Part 23

Table A
Class
C
Capital £'s
T
Output
Tons
TV
Total Value
£'s
MV
Market-Value £'s
Per Ton
IV
Individual Value £'s per Ton
DV
Differential Value £'s per Ton
CP
Cost-Price (price of production)
£'s per ton
AR
Absolute Rent
£'s
DR
Differential Rent
£'s
AR in T
Absolute Rent in Tons
DR in T
Differential Rent in Tons
TR
Total Rent
£'s
TR in T
Total Rent in Tons
I
100
60
120
2.00
2.00
0
1.833
10
0
5
0
10
5
II
100
65
130
2.00
1.846
0.153
1.692
10
10
5
5
20
10
III
100
75
150
2.00
1.600
0.400
1.466
10
30
5
15
40
20
Total
300
200
400




30
40
15
20
70
35

As a result of the introduction of Land IV, the total 200 tons of supply can be produced with only £250 rather than £300 of capital. The total value of output has fallen from £400 to £369.231. Because land type I has gone out of production, type II now sets the market value, which falls from £2 per ton to £1.846 per ton. But, the total rent in Table B rises to £94.230, as against £70 in Table A.
Table B
Class
C
Capital £'s
T
Output
Tons
TV
Total Value
£'s
MV
Market-Value £'s
Per Ton
IV
Individual Value £'s per Ton
DV
Differential Value £'s per Ton
CP
Cost-Price (price of production)
£'s per ton
AR
Absolute Rent
£'s
DR
Differential Rent
£'s
AR in T
Absolute Rent in Tons
DR in T
Differential Rent in Tons
TR
Total Rent
£'s
TR in T
Total Rent in Tons
II
50
32.5
60
1.846
1.846
0
1.692
5
0
2.708
0
5.000
2.708
III
100
75
138.461
1.846
1.600
0.246
1.466
10
18.461
5.250
10
28.461
15.416
IV
100
92.5
170.769
1.846
1.297
0.548
1.189
10
50.769
5.416
27.50
60.769
32.916
Total
250
200
369.230




25
69.230
13.541
37.50
94.230
51.041


The reason can be broken down as follows. Firstly, in terms of absolute rent, the rate remains the same. Each pays at a rate of 10%. Land type I no longer pays rent, but its rent has been replaced by the absolute rent of Land IV. Land II pays £5 absolute rent, because it now only employs £50 of capital, rather than £100. In total, therefore, there is a reduction of £5 of absolute rent. This is what would be expected from the laws already outlined. The absolute rent is the result of the difference in productivity/organic composition of capital in agriculture/primary production compared to the rest of the economy. As a result of the more efficient land type IV that difference has been reduced.

The total rent rises, therefore, as a result of a rise in the amount of differential rent. Land I paid no differential rent, so none is lost from there as a result of its leaving production. Type II previously paid £10, but now pays none, because it determines the market value of output, and makes no surplus profit. Land type III paid £30, but its surplus profit has fallen with the fall in the market value. It now pays £18.462. The total fall in rent then is £15 in absolute rent (£10 I, plus £5 II), but land type IV pays £10 of absolute rent, leaving a net deficit of £5. The total fall in differential rent is £10 II, £11.538 III = £21.538, giving a total fall of £26.538.

The rise in total rent in Table B, compared to Table A, is £24.231. That means that a total of £26.538 + £24.231 = £50.769 must be accounted for, and that is exactly the differential rent paid by land type IV.

“The least fertile class has been removed entirely and yet the rental rises because, due to its relatively great fertility, the differential rent of IV alone is greater than the total differential rent of A had been previously. Differential rent does not depend on the absolute fertility of the classes that are cultivated for 1/2 II, III, IV [B are] more fertile than I, II, III [A], and yet the differential rent for 1/2 II, III, IV [B] is greater than it was for I, II, III [A] because the greatest portion of the product—92 1/2 tons—is supplied by a class whose differential value is greater than that occurring in I, II, III A.” (p 291)

The significance of the proportion of the total supply provided by the most fertile land can then be seen. On the one hand, the differential value of production on land IV depends on the difference between its individual price of production and the market value. But, the amount of surplus profit then depends upon the total output from that land type. In this case, the differential value was £0.548, whilst its output was 92.5 tons, giving a total of £50.69.

“When the differential value for a class is given, the absolute amount of its differential rent naturally depends on the amount of its product. But this amount itself is already taken into account in the calculation and formation of the differential value. Because with £100, IV produced 92 1/2 tons, no more and no less, its differential value in B where the market-value is £1 16 12/13s. per ton, amounts to 10 470/481s. per ton.” (p 291)

The rate of rent rises in Table B compared to A from £70 on £300 = 23.33%, to £94.231 on £250 = 37.69%.

Saturday, 20 January 2018

Theories of Surplus Value, Part II, Chapter 12 - Part 22

[d) Changes in the Total Rent, Dependent on Changes in the Market-Value]


Marx returns to his analysis of the Tables A & B presented earlier, and of the movements from more fertile to less fertile lands, and vice versa.

Table A
Class
C
Capital £'s
T
Output
Tons
TV
Total Value
£'s
MV
Market-Value £'s
Per Ton
IV
Individual Value £'s per Ton
DV
Differential Value £'s per Ton
CP
Cost-Price (price of production)
£'s per ton
AR
Absolute Rent
£'s
DR
Differential Rent
£'s
AR in T
Absolute Rent in Tons
DR in T
Differential Rent in Tons
TR
Total Rent
£'s
TR in T
Total Rent in Tons
I
100
60
120
2.00
2.00
0
1.833
10
0
5
0
10
5
II
100
65
130
2.00
1.846
0.153
1.692
10
10
5
5
20
10
III
100
75
150
2.00
1.600
0.400
1.466
10
30
5
15
40
20
Total
300
200
400




30
40
15
20
70
35

“Returning to Table A it thus follows, that the assumption, that the profit of 10 per cent has come about through a decrease (in that the rate of profit, starting from III was higher, in II it was lower than in III, but still higher than in I, where it was 10 per cent) may be correct, namely, if the development actually proceeded along the descending line; but this assumption by no means necessarily follows from the gradation of rents, the mere existence of differential rents; on the contrary with the ascending line, this [gradation of rents] presupposes that the rate of profit remains the same over a long period." 
Table B
Class
C
Capital £'s
T
Output
Tons
TV
Total Value
£'s
MV
Market-Value £'s
Per Ton
IV
Individual Value £'s per Ton
DV
Differential Value £'s per Ton
CP
Cost-Price (price of production)
£'s per ton
AR
Absolute Rent
£'s
DR
Differential Rent
£'s
AR in T
Absolute Rent in Tons
DR in T
Differential Rent in Tons
TR
Total Rent
£'s
TR in T
Total Rent in Tons
II
50
32.5
60
1.846
1.846
0
1.692
5
0
2.708
0
5
2.708
III
100
75
138.461
1.846
1.600
0.246
1.466
10
18.461
5.250
10
28.461
15.416
IV
100
92.5
170.769
1.846
1.297
0.548
1.189
10
50.769
5.416
27.50
60.769
32.916
Total
250
200
369.230




25
69.230
13.541
37.50
94.230
51.041


"Table B. As has already been explained above, in this example the competition from III and IV, forces [the cultivator of] II to withdraw half his capital. With a descending line, it would on the contrary appear that an additional supply of only 32 1/2 tons is required, hence only a capital of £50 has to be invested in II.” (p 289-90)