Sunday, 23 October 2016

Profit, Rent, Interest and Asset Prices - Part 9 of 19

In the value-form, value is always expressed as a quantity of some other use value (relative form), or conversely a quantity of some use value is expressed as a value (equivalent form), or in the form of the universal equivalent form of value, money, as a price. So, for example, a metre of linen, a use value, may be expressed as £1, a quantity of value. In fact, what is being expressed is the value represented by a metre of linen, the labour-time required for its production, in its equivalent form as a certain sum of money. But, capital is not a thing, and reflecting its nature as self-expanding value, it is itself expressed as an amount of value, in its universal equivalent form, a sum of money, whether this capital-value is itself actually a sum of money-capital, or as above a machine or some other commodity.

And that is one reason that expressing the price of money is itself irrational. The price of £1 can be nothing other than £1, because price is only value expressed in money. The rate of interest then cannot possibly be a price of money. The rate of interest is not a price of money, but a price of the use value of money-capital, or of the money equivalent of some other form of capital. Unlike say yarn, or linen whose use value is expressed in terms of some physical quantity, the use value of capital can only be expressed as some sum of value, because the use value of capital is its ability to self-expand, to change from one sum of value to some greater sum of value, i.e. its ability to earn the average rate of profit. What is being bought is the ability for such self-expansion.

“What the buyer of an ordinary commodity buys is its use-value; what he pays for is its value. What the borrower of money buys is likewise its use-value as capital; but what does he pay for? Surely not its price, or value, as in the case of ordinary commodities. No change of form occurs in the value passing between borrower and lender, as occurs between buyer and seller when it exists in one instance in the form of money, and in another in the form of a commodity... But this is only possible as long as the money acts as capital and is therefore advanced. The borrower borrows money as capital, as a value producing more value. But at the moment when it is advanced it is still only potential capital, like any other capital at its starting-point, the moment it is advanced. It is only through its employment that it expands its value and realises itself as capital. However, it has to be returned by the borrower as realised capital, hence as value plus surplus-value (interest). And the latter can only be a portion of the realised profit. Only a portion, not all of it. For the use-value of the loaned capital to the borrower consists in producing profit for him. Otherwise there would not have been any alienation of use-value on the lender's part. On the other hand, not all the profit can fall to the borrower's share. Otherwise he would pay nothing for the alienated use-value, and would return the advanced money to the lender as ordinary money, not as capital, as realised capital, for it is realised capital only as M + ΔM.”

(Capital III, Chapter 21) 

So, Marx has established the basis upon which the value of commodities can be objectively determined in terms of the labour-time currently required for their reproduction. On this basis, he is also able to determine the value of the commodities, which comprise capital, i.e. the value of the constant capital, and the variable-capital. On that basis the cost of production is objectively determinable. Moreover, because the value of labour-power is inextricably tied to the normal working-day, which is thereby also objectively determinable, the amount of new value created by labour, during that working-day, is also objectively determinable. As the surplus value, is the difference between this new value created, and the value of labour-power, the mass of surplus value is also thereby objectively determinable.

Now, on the basis of all these objectively determinable quantities, it is also possible to then objectively determine the relations between them to arrive at a rate of surplus value, and a rate of profit. As outlined above, although it is not possible to determine, in the same way, the rate of interest, the determinants of that rate of interest, the demand for and supply of money-capital, are objectively determinable, and the bounds within which that rate of interest can extend are thereby set.

Having established all of these objective bases upon which these values and proportions are established, its clear then why Marx also wants to determine rent in similar objective terms.

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