Tuesday, 2 August 2016

Capital III, Chapter 42 - Part 6

If the difference between the rentless land B, and land type C, and between C and D were greater, then less additional capital is required, because additional investment in these lands, increases output and surplus profit by a proportionally greater amount.

“The specific proportion is determined by 1) the ratio of fall in price, in other words, by the difference between soil B, which does not yield rent now, and soil A, which formerly was the soil not yielding rent; 2) the ratio of the differences between the soils better than B upwards; 3) the amount of newly invested additional capital, and 4) its distribution among the soils of varying quality.” (p 700)

What this demonstrates is that for any given price of production, the rent increases as a result of additional investment. The additional output pushes out land type A so that land type B, or better, sets the new price of production. But, what applied previously to the price of production, determined by A, now applies equally when the price of production is determined by B. Any additional investment will cause rent to rise, and that will continue to be the case until the output of B is pushed out, and a new price of production is determined by C etc.

“The important thing here is this: To the extent that so much and so much additional capital was necessary in order to withdraw the capital from soil A and create the supply without it, we find that this may be accompanied by an unaltered, rising, or falling rent per acre, if not from all plots of land then at least from some, and so far as the average of the cultivated plots is concerned.” (p 701)

As a result of changes in productivity, and prices, rent, measured in grain and money, do not move uniformly. A fall in prices means that any given rent, measured in grain will fall as a money-rent.

The measurement of rent in grain is an anachronism, but as Marx points out,

“One might demonstrate equally well that, e.g., a manufacturer can buy much more of his yarn with his profit of £5 than he could formerly with a profit of £10. It shows at any rate, that messieurs landlords, when they are simultaneously owners or shareholders in manufacturing establishments, sugar-refineries, distilleries, etc., may in their capacity as producers of their own raw materials still make a considerable profit when the money-rent is falling.” (p 701)

Engels notes, at this point, that all of the tables IV(a) to IV(d) – Tables 4 to 7 in Parts 2 and 3 - had been recalculated because the original calculations used by Marx contained an error that ran through all of them, and which also produced “monstrous numerical values”. As Engels points out, none of this changed the theoretical conclusions obtained, and anyone who objects to the actual numerical values used can simply multiply those numbers by whatever they like to obtain more realistic values. It does not change the results. To that effect, Engels says he has used that approach in relation to the examples he has provided in the next chapter.

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