Friday, 2 September 2016

Capital III, Chapter 47 - Part 1

Genesis of Capitalist Ground-Rent

I Introductory Remarks

The problem for bourgeois economists in explaining capitalist ground rent is to explain how this rent can be paid after the rate of profit for all capital has been equalised. How is it then possible to pay this rent, which must mean that capitals paying rent thereby obtain a less than average rate of profit. For Classical Economy, the problem could not be resolved by claiming that this rent was an equivalent for the value contributed by the land, because land is not produced by labour, and so has no value.

“To admit that the appearance of rent for capital invested in agriculture is due to some particular effect produced by the sphere of investment itself, due to singular qualities of the earth’s crust itself, is tantamount to giving up the conception of value as such, thus tantamount to abandoning all attempts at a scientific understanding of this field.” (p 782-3)

That is not a problem for neoclassical economics, precisely because it does abandon the concept of value, in favour of an analysis of market prices; it abandons a scientific understanding in favour of a description of the mechanism. Rent is then simply another market price, just like the market price of the other factor inputs – capital, labour, and entrepreneurship.

But, neoclassical economics here also has a problem, because if the payment of rent is simply the market determined price for the marginal product of land, its necessary to show that this land acts to raise productivity. Yet, as Marx points out, agricultural capital, agricultural production is marked by its lower level of productivity, compared to industrial production.

“... in other words, to explain the relative dearness of agricultural products on the basis of the excess of natural productivity of agricultural production over the productivity of other lines of production. For the reverse is true: the more productive labour is, the cheaper is every aliquot part of its product, because so much greater is the mass of use-values incorporating the same quantity of labour, i.e., the same value.” (p 783)

The problem then is to explain not the surplus value, but why, in agriculture, there is a surplus profit over and above the average profit, a surplus which is appropriated as rent.

“The average profit itself is a product formed under very definite historical production relations by the movement of social processes, a product which, as we have seen, requires very complex adjustment.” (p 783)

As described in Chapter 9, the process of creating an average, general rate of profit proceeds over centuries, from the start of capitalist production in the 15th century. It requires that this capitalist production spread from one industry to another, thereby ending the determination of market prices by exchange value, and over time, ensuring their determination by prices of production. Only when capitalist production dominates can such a general rate of profit be considered to exist.

“For this reason there can be no talk of rent in the modern sense, a rent consisting of a surplus over the average profit, i.e., over and above the proportional share of each individual capital in the surplus-value produced by the total social capital, in social formations where it is not capital which performs the function of enforcing all surplus-labour and appropriating directly all surplus-value. And where therefore capital has not yet completely, or only sporadically, brought social labour under its control.” (p 783)

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