Monday, 5 September 2016

Capital III, Chapter 47 - Part 4

Another remnant of the past, the payment of tithes to the Church, usually paid in kind, as well as some payment of rent in kind, are based on the actual mass of the agricultural product, rather than its price. A tithe is a tenth of the physical product. This creates the false idea that rent is a function of the earth, rather than of social conditions.

“We have previously shown that although surplus-value is manifested in a surplus-product the converse does not hold that a surplus-product, representing a mere increase in the mass of product, constitutes surplus-value. It may represent a minus quantity in value. Otherwise the cotton industry of 1860, compared with that of 1840, would show an enormous surplus-value, whereas on the contrary the price of the yarn has fallen. Rent may increase enormously as a result of a succession of crop failures, because the price of grain rises, although this surplus-value appears as an absolutely decreasing mass of dearer wheat. Conversely, the rent may fall in consequence of a succession of bountiful years, because the price falls, although the reduced rent appears as a greater mass of cheaper wheat.” (p 787)

The wrong impression should not be given here, however, that the crop failure, and subsequent rise in prices, must necessarily result in a rise in profits. For example, Marx, in the analysis of rent demonstrates that such a rise in the price of wheat would raise the value of labour-power. This has the consequence of reducing not raising the amount of surplus value.

Moreover, if the quantity of wheat produced falls, the amount of seed produced also falls. That means the seed required to reproduce that used in production rises as a proportion of total output. In addition, if the price of wheat rises, the price of seed required as constant capital also rises. If the crop failure is big enough, the quantity of wheat that must be set aside to cover the replacement of the seed used as constant capital, and to reproduce the labour-power used in its production, may even be greater than the quantity of output itself! Or to put it another way, rather than a physical surplus being produced, their would be a contraction, but in value terms, this could also mean that the value of the constant capital and labour-power that must be reproduced to continue producing on the same scale, rises beyond the value of the output itself. In that case, instead of the capital producing surplus value, it produces a loss, and the capital itself contracts, able to set to work less constant capital, and so less labour-power, and consequently producing less surplus value.

The consequence is that the rise in the price of wheat raises the value of labour-power, reducing the mass and rate of surplus value, and by raising the value of both the constant capital, and the variable capital, it acts to reduce the rate of profit. The actual effect will depend on the extent to which wheat forms an important element of the value of labour-power, and of constant capital.

The payment of rent in kind is, however, an anachronism, inconsistent with capitalist production. In respect of church tithes they were abolished by legislation.

Even where rent in kind persists, it is really money rent. The physical quantity of products is simply adjusted, according to their value, to coincide with the money-rent due. Similarly, where a farmer saved seed, to use as constant capital, it appears in his books at its current reproduction cost, which is no different than had he had to buy that seed from a seed merchant at current market prices.  This fact, was completely misunderstood by Rodbertus, in his theory of rent, as Marx sets out in Theories of Surplus Value, Part 2.

“Wheat, for instance, is quoted at 40 shillings per quarter. One portion of this wheat must replace the wages contained therein, and must be sold to become available for renewed expenditure. Another portion must be sold to pay its proportionate share of taxes. Seed and even a portion of fertiliser enter as commodities into the process of reproduction, wherever the capitalist mode of production and with it division of social labour are developed, i.e., they must be purchased for replacement purposes; and therefore another portion of this quarter must be sold to obtain money for this. In so far as they need not be bought as actual commodities, but are taken out of the product itself in kind, in order to enter into its reproduction anew as conditions of production — as occurs not only in agriculture, but in many other lines of production producing constant capital — they figure in the books as money of account and are deducted as elements of the cost-price.” (p 788)

In addition, the wear and tear of fixed capital must be paid for, in money, and the profit of the capitalist is also realised as money, all requiring the wheat to be sold. The profit in money forms a proportion of the total price of the commodity – here £2 or forty shillings. This proportion can also be represented as a quantity of the physical product.

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