Thursday, 3 August 2017

Theories of Surplus Value, Part I, Addenda - Part 3

Petty was writing at a time when agriculture dominated, and when rent appeared as the form of surplus value, as also viewed by the Physiocrats. For the latter, the profit of the industrial capitalist was effectively a wage, and a deduction from the surplus value of the landlord. For, Petty, there are only two forms of surplus value, rent and interest, with the latter being derived from the former.

“In developing his ideas he presents rent (the surplus-value) not only as the excess drawn by the employer beyond the necessary time of labour, but also as the excess of surplus-labour of the producer himself over his wages and the replacement of his own capital.” (p 356)

In this way, Petty actually arrives at the concept of surplus labour and surplus product being the basis of surplus value, although he considers this surplus value only as rent. He sets this out by describing a situation whereby a certain amount of labour-time is expended to produce a given quantity of corn (which as Marx says, he makes clear is really to stand for all the labourer's subsistence needs). Out of this quantity of corn, a given amount must be set aside to replace, in kind, the seed. As Marx puts it,

“... that is, in the first place deducted from the product an amount equivalent to the constant capital.” (p 357)

A further quantity must be set aside to replace, in kind, the wages or subsistence needs of the labourer. What is left represents the surplus product and surplus value.

“... that the Remainder of Corn, is the natural and true Rent of the Land for that year;” (p 357)

Having derived the basis of the rent of land, Petty also then derives a basis for determining the price of land, which is similar to the idea of capitalisation. He takes the average of a grandfather, father, and son, to arrive at a figure of 21 years, and equates the price of land as being this many years rent. Marx goes on to explain the price of land as capitalised rent, on the same basis as described in Capital III, that is based on the average rate of interest.

“But as Petty starts from the rent of land as the general form of surplus-value, which includes profit, he cannot take the rate of interest on capital as something given; on the contrary, he has to deduce it from rent as a special form (as Turgot also does-quite consistently from his own standpoint). In what way then is he to determine the number of years—the number of years’ rent —which forms the value of land? A man is only interested in buying as many yearly rentals as the years during which he has “to take care” of himself and his immediate posterity; that is, as long as an average man, grandfather, father and child, lives, and on the “English” reckoning this is twenty-one years. Therefore what lies beyond the twenty-one years “usus fructus” has no value for him. Consequently he pays for the usus fructus for twenty-one years, and this constitutes the value of the land.” (p 358)

However, as Marx points out, where Petty is in advance of the Physiocrats here is that the surplus product, and so surplus value arises not from the land but from the labourer, “... the surplus of labour in excess of what is necessary for the subsistence of the labourer;” (p 359)

Moreover, because the value of the land is nothing more than capitalised rent, and rent is only surplus labour, this overcomes the problem of how to value land, by the labour-time required for its production. What is more significant is that this view of rent, and the price of land takes on additional significance when, under capitalism, the land itself becomes bought and sold as a commodity.

For the buyer of land, what they are buying is the rent of that land. That is true whether they are to use the land themselves or lease it to someone else. For a capitalist buyer of this land, they exchange their loanable money-capital for it, and so the rent appears as nothing more than the interest on this money-capital. It is only that Petty has the relation the wrong way round. For him the rate of interest is determined by the rent on the land, whereas in reality it is the rate of interest which determines the price of land, by determining the capitalisation of the rent.

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