Friday, 17 June 2016

Capital III, Chapter 37 - Part 1

Transformation of Surplus-Profit into Ground-Rent - Introduction

The basis of rent is the existence of landed property. As with other phenomenon, the real content of landed property is historically specific. That is landed property is not the same in ancient Rome as it is under feudalism, which is not the same as under capitalism. Yet, also, the existence of landed property, under capitalism, cannot be separated from the fact, at least in Europe, that it already existed under feudalism, and was inherited from it. Marx begins by saying, therefore, that the analysis of landed property in these various historical forms is beyond the scope of his work, but any analysis of rent must necessarily touch on its development and the nature of landed property, as it has been inherited from these previous forms.

As with the other aspects of capitalism he has analysed, he makes a number of simplifying assumptions, so as to get to the nub of what is being studied. For example, he assumes that agriculture is capitalist agriculture, where food is produced as a commodity, on exactly the same basis that linen is produced, as a commodity, in a factory. He also assumes that this capitalist production has reached the level of maturity where all of the other simplifying assumptions, about free competition, the development of a general rate of profit etc. also apply.

Another assumption in analysing agriculture is that it focusses on the main crop – here wheat. This assumption flows from Adam Smith's analysis, which showed that ground-rent, for all other agricultural land, was determined by the main commodity. But, the laws for ground-rent apply equally for the use of land for mining etc. Included in landed property here then also is included ownership of what is beneath the ground, as well as ownership of water.

“Landed property is based on the monopoly by certain persons over definite portions of the globe, as exclusive spheres of their private will to the exclusion of all others. With this in mind, the problem is to ascertain the economic value, that is, the realisation of this monopoly on the basis of capitalist production.” (p 615-6)

The term monopoly here does not preclude the possibility that the ownership of a piece of land cannot fall into the ownership of someone else, nor mean that all land is owned by one person, family, company etc. It means that, unlike any other commodity, including loanable money-capital, land is fixed in supply. An increased demand for land cannot result in an increased supply of identical land, in the same way that an increased demand for linen can result in its increased production and supply.

Consequently, if any particular piece of land is owned by one person or group of people, they can only do so at the expense of the exclusion of everyone else, being able to own that land. This is the basis of ground-rent, and based on it, the price of land. Land is not a product of labour, and, therefore, like every other use value, that is not the product of labour, it has no value. The concept of a price of land is, therefore, itself irrational, because price is merely the money form of value.

Yet, land does have a price. As seen previously, the concept of interest, on loanable money-capital – which also has no value, because it is not the product of labour – led to the idea that all such revenues could be capitalised. So, if the average rate of interest is 5%, and wages are £10,000 per year, this could give a value of the “human capital” that provides this labour, of £200,000.

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