Monday, 20 June 2016

Capital III, Chapter 37 - Part 4

As with the constant capital used in factories, the constant capital used in agriculture may be either fixed or circulating. Circulating constant capital would be comprised of things such as seeds, or feed given to animals. But, the fixed capital itself may be either of a transitory or a permanent nature. Things such as drainage, farm building, machinery etc. are more permanent in nature, whereas things such as fertiliser are of a transitory nature.

Fertiliser is fixed capital, in the sense that say lubricating oil is in factory production. That is it is not circulating capital, because it is not all used up in the production process, in the way raw material is. A quantity of lubricating oil, used on a machine, will, like the machine, be used in the production of numerous commodities over several production processes. It will, therefore, only give up a portion of its value to those commodities, during each process. But, unlike the machine, the lubricating oil will itself have to be repeatedly replaced. In the same way, fertiliser binds with the soil, and becomes a part of it. It gives up only a portion of its value, but repeated quantities of fertiliser have to be added to the soil over time.

“Elsewhere I have called the capital thus applied to land la terre-capital. It belongs to the category of fixed capital. The interest on capital incorporated in the land and the improvements thus made in it as an instrument of production can constitute a part of the rent paid by the capitalist farmer to the landowner, but it does not constitute the actual ground-rent, which is paid for the use of the land as such — be it in a natural or cultivated state.” (p 619)

The elsewhere that Marx is referring to here is in “The Poverty of Philosophy”, (p 165) where he writes,

"The mere application of further outlays of capital to land already transformed into means of production increases land as capital without adding anything to land as matter, that is, to the extent of the land.... Land as capital is no more eternal than any other capital... Land as capital is fixed capital; but fixed capital gets used up just as much as circulating capital." (Note 28, p 619)

What Marx means here is that the ground-rent is paid for the use of the land, not the additional capital, such as farm buildings. However, as will be seen later, the landlord benefits from the capital invested by the capitalist farmer, in this fixed capital, because at the end of the tenancy agreement, all such improvements become the property of the landlord. The landlord then sets the new rent level in accordance with this new improved condition of the land. The tenant then pays a higher rent, even if this tenant is actually the same capitalist farmer who made these improvements!

But, economically, this “rent” conflates two different things, firstly, the rent on the land, and secondly the interest to be paid for the use of the capital now provided, i.e. farm buildings etc.

The transitory forms of fixed capital in fertiliser etc. are always advanced by the capitalist farmer. But, even these transitory forms of fixed capital, along with the cultivation itself of the land, can bring about a more permanent improvement in its condition, appropriated for free by the landowner. By contrast, the landowner protects themselves against any deterioration of the land, as a result of its use, by writing into the contract of tenure, that it must be handed back in as good a condition as it was originally let. This is true of landlords letting buildings on leasehold too.


levi9909 said...

I've just seen left links tweeting a link to here. Do you not have a twitter account? If you haven't I think you should. If you have, what is it?


Boffy said...

No I don't have enough time in the day to waste tweeting, and I don't think anyone has anything useful they can say in 140 characters!

levi9909 said...

You could simply have a profile with a shorter form of your profile here and tweet a link to your posts as they arise. You could even set up a bot to auto tweet every time you post. You'd get more readers for a small once off time investment.

To be fair I didn't find this thanks to left links tweets. I saw you commenting on Bob from Brockley's latest post and looked for you on twitter and found left links. But that's another thing, you could tweet links to your comments on other blogs.

Boffy said...

Yes, I did think about some such arrangement, and as I'm about to be writing another novel I have also been intending to set up a Facebook page. My son has offered to curate it for me, but he has been working 24/7 for the last few weeks too.

I mentioned your suggestion to him, and he thinks its a good idea. So, thanks for that, and when time permits, I will probably take it up.