Sunday, 21 August 2016

Capital III, Chapter 45 - Part 6

The term rent here is used in the strict and specific economic sense that it is an independent component of the price of commodities, i.e. a separate fund into which the value of the commodity once realised, is paid. It is a deduction from surplus profit, rather than from the wages, or even the average profit. But, in practice, just as wages are reduced below the value of labour-power, at times, landlords may also make deductions, which eat into wages and the average profit of the farmer.

“In so far as the wages of the agricultural labourers in a given country are, in general, depressed below the normal average level of wages, so that a deduction from wages, a part of the wages, as a general rule enters into rent, this does not constitute an exceptional case for the farmer cultivating the worst soil. In the same price of production which makes cultivation of the worst soil possible these low wages already form a constituent element, and the sale of the product at the price of production does not therefore enable the farmer cultivating this soil to pay any rent.” (p 756)

Another form of this “lease-money”, as opposed to rent, is where a landlord leases land to a labourer who, after deducting their wages, hands over most of the rest of their production as rent.

“In all these cases, however, no real rent is paid in spite of the fact that lease money is paid. But wherever conditions correspond to those under the capitalist mode of production, rent and lease money must coincide. Yet it is precisely this normal condition which must be analysed here.” (p 756)

Marx compares the situation in the colonies, where this condition of landed property did not exist. Its not the vast expanse of fertile land that is the basis of the absence of rent.

“It is rather the circumstance that this land has not been appropriated, has not been subjected to private ownership. Herein lies the enormous difference, as regards the land, between old countries and colonies: the legal or actual non-existence of landed property, as Wakefield correctly remarks, and as Mirabeau père, the physiocrat, and other elder economists, had discovered long before him. It is quite immaterial here whether the colonists simply appropriate the land, or whether they actually pay to the state, in the form of a nominal land price, a fee for a valid legal title to the land. It is also immaterial that the colonists already settled there may be the legal owners of the land. In fact, landed property constitutes no limitation here to the investment of capital — and also of labour without capital; the appropriation of some of the land by the colonists already established there does not prevent the newcomers from employing their capital or their labour upon new land.” (p 756-7)

It made no sense then for Ricardo, in his chapter on ground rent, to refer to these colonies, because neither the form of agriculture was capitalist, nor the form of land ownership that corresponding to capitalist agriculture. It is only when land is bought and sold, as a commodity, that it can be analysed in capitalist terms, and its effect on rent and product prices determined.

“The mere legal ownership of land does not create any ground-rent for the owner. But it does, indeed, give him the power to withdraw his land from exploitation until economic conditions permit him to utilise it in such a manner as to yield him a surplus, be it used for actual agricultural or other production purposes, such as buildings, etc. He cannot increase or decrease the absolute magnitude of this sphere, but he can change the quantity of land placed on the market. Hence, as Fourier already observed, it is a characteristic fact that in all civilised countries a comparatively appreciable portion of land always remains uncultivated.” (p 757)

So, the landlord will not make available additional land for cultivation unless they can obtain a rent from it, and the ability to obtain this rent depends upon market prices being at a level that creates a surplus profit on this land.

“The investment of capital must yield him rent. He does not lease his land until he can be paid lease money for it. Therefore, the market-price must rise to a point above the price of production, i.e., to P + r, so that rent can be paid to the landlord. Since according to our assumption, landed property does not yield anything until it is leased, is economically valueless until then, a small rise in the market-price above the price of production suffices to bring the new land of poorest quality on the market.” (p 757)

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