Sunday, 17 July 2016

Capital III, Chapter 39 - Part 16

In certain parts of the world, where land has been previously uncultivated, it may seem to be particularly fertile because over thousands of years, it has absorbed organic matter. In the US, the plains had the advantage of already being naturally cleared, so there was no need to clear forested areas, before cultivation could occur. But, this initial fertility may only last several years, before these nutrients are used from the soil. Large fertile areas can rapidly become barren, as happened with the Dust Bowl in the US in the 1930's.

Where the size of the cultivated land acts to overcome the lack of fertility, this may result in the creation of very large, highly capitalised industrial farming, but it may also result in the opposite – share cropping. That was true in the US. In Russia too, 80% of the population, at the end of the 19th century, still worked on the land. Farming was extensive, but very inefficient and unproductive. But, also although farming was extensive rather than intensive, it was not extensive enough, given the huge tracts of land available, to make Russia into the kind of food producer it could have been, and that was down to the structure of its farming.

“Property relations in countries with maturer civilisations, with their determination of the price of uncultivated soil by that of the cultivated, etc., make such an extensive economy impossible.” (p 672)

In other words, the price of the uncultivated land is determined by the high rents on the cultivated land. Rather than pay high prices or rents for additional land, therefore, farmers are led to use their existing land more efficiently, and therefore, more intensively.  The same applies today with high property prices pushing up the price of undeveloped building land, which pushes up the cost of building new properties, which creates a vicious circle.  It means builders and landowners hold on to land in the expectation of capital gains from further rising prices of land, whilst builders seek to squeeze as many properties on to a given piece of land as possible, creating all of the health and social problems that goes with it. 

Where prices are rising, this can be a reason for less fertile soil to be brought into cultivation. But, more land can be brought into cultivation, even if prices are not rising.

Capitalist producers of linen do not expand their production of linen only when the price of linen is rising, and when therefore, the rate of profit from linen production is rising. They produce more linen because they believe that the demand for linen next year will be greater than it is this year, and so even if linen prices are constant or even falling, on this greater supply of linen, their mass of profit will be larger. Moreover, they believe that by producing on this larger scale, the cost of production of the linen will be lower, so creating the potential for the rate of profit to be higher.

“... the extension of cultivation to larger areas — aside from the case just mentioned, in which recourse must be had to soil inferior than that cultivated hitherto — to the various kinds of soil from A to D, thus, for instance, the cultivation of larger tracts of B and C does not by any means presuppose a previous rise in grain prices any more than the preceding annual expansion of cotton spinning, for instance, requires a constant rise in yarn prices. Although considerable rise or fall in market-prices affects the volume of production, regardless of it there is in agriculture (just as in all other capitalistically operated lines of production) nevertheless a continuous relative over-production, in itself identical with accumulation, even at those average prices whose level has neither a retarding nor exceptionally stimulating effect on production.” (p 672)

In previous modes of production, the increase in production went along with the increase in population. Under feudalism, for example, when the population of the peasant village commune expanded beyond a certain level, a portion of the common land was brought into the commune's domain, so that it could be divided. In the colonies, additional portions of land are brought into cultivation and add to production by the constant immigration of new colonists.

“The demand increases constantly, and, in anticipation of this new capital is continually invested in new land, although this varies with the circumstances for different agricultural products. It is the formation of new capitals which in itself brings this about. But so far as the individual capitalist is concerned, he measures the volume of his production by that of his available capital, to the extent that he can still control it himself. His aim is to capture as big a portion as possible of the market. Should there be any over-production, he will not take the blame upon himself, but places it upon his competitors. The individual capitalist may expand his production by appropriating a larger aliquot share of the existing market or by expanding the market itself.” (p 672-3)

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