“The same domination of the regulating averages will be found here that Quetelet pointed out in the case of social phenomena.” (p 860)
Assuming an absence of any market frictions that prevent a free flow of capital and labour, so that these prices of production can be established, i.e. no monopoly prices, then rent resolves into differential rent, i.e. it arises due to surplus profits, where natural advantages enable specific capitals to enjoy prices of production below the market regulating price of production.
“Here, then, rent has its definite limit of value in the deviations of the individual rates of profit, which are caused by the regulation of prices of production by the general rate of profit. If landed property obstructs equalisation of the values of commodities into prices of production, and appropriates absolute rent, then the latter is limited by the excess of the value of the agricultural products over their price of production, i.e., by the excess of the surplus-value contained in them over the rate of profit assigned to the capitals by the general rate of profit. This difference, then, forms the limit of the rent, which, as before, is but a definite portion of the given surplus-value contained in the commodities.” (p 861)
Even where there are market frictions and monopoly prices, this does not remove the limit imposed on the mass and rate of profit arising from the value of commodities. It simply means that the surplus value due to some spheres is transferred to those spheres that enjoy these monopoly prices.
“A local disturbance in the distribution of the surplus-value among the various spheres of production would indirectly take place, but it would leave the limit of this surplus-value itself unaltered. Should the commodity having the monopoly price enter into the necessary consumption of the labourer, it would increase the wage and thereby reduce the surplus-value, assuming the labourer receives the value of his labour-power as before. It could depress wages below the value of labour-power, but only to the extent that the former exceed the limit of their physical minimum. In this case the monopoly price would be paid by a deduction from real wages (i.e.. the quantity of use-values received by the labourer for the same quantity of labour) and from the profit of the other capitalists. The limits within which the monopoly price would affect the normal regulation of the prices of commodities would be firmly fixed and accurately calculable.” (p 861)
In other words, as stated earlier, social reproduction requires that the physical mass of commodities consumed in current production as constant and variable capital be reproduced. The constraint on surplus value is then determined, not by the historic price of those commodities, but their value, i.e. their current reproduction cost, which determines what proportion of current production, of available social labour-time, must be devoted to this production, and what, therefore, is left over as a surplus product, available as surplus value to be divided as profit, interest and rent.
“Thus just as the division of the newly added value of commodities, and, in general, value resolvable into revenue, finds its given and regulating limits in the relation between necessary and surplus labour, wages and surplus-value, so does the division of surplus-value itself into profit and ground-rent find its limits in the laws regulating the equalisation of the rate of profit. As regards the division into interest and profit of enterprise, the average profit itself forms the limit for both taken together. It furnishes the given magnitude of value which they may split among themselves and which alone can be so divided. The specific ratio of this division is here fortuitous, i.e., it is determined exclusively by conditions of competition. whereas in other cases the balancing of supply and demand is equivalent to elimination of the deviations in market-prices from their regulating average prices, i.e., elimination of the influence of competition, it is here the only determinant.” (p 861-2)
The reason is that the limit of surplus value is set by the factors described above, i.e. ultimately by the value of commodities. But, the share of this surplus value going as interest or profit of enterprise, therefore, has to be resolved within the constraint of this limit, by a competition between the claims of two owners of the same factor of production – capital. The money-capital that the rentier loans to the productive capitalist is the same money-capital that the latter metamorphoses into productive capital. It is only this productive capital that produces the surplus value, and which must thereby be divided between these owners of the one and the same amount of capital value.
The competition revolves around the extent to which one is prepared to accept an amount of guaranteed interest in return for relieving themselves of the task of taking risk and having to undertake productive activity, whereas the other is prepared to take on risk and undertake productive activity in the hope of greater reward.
“But the fact that there is no definite, regular limit here for the division of the average profit does not remove its limit as part of the commodity-value; just as the fact that two partners in a certain business divide their profit unequally due to different external circumstances does not affect the limits of this profit in any way.” (p 862)
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