Theories of Surplus Value, Part II, Chapter 8 - Part 31

[6. Rodbertus’s Lack of Understanding of the Relationship Between Average Price and Value in Industry and Agriculture. The Law of Average Prices]

If we take capital employed in mining, where there are no new materials used, we might have:

c 500 + v 500 + s 200. s' = 40%, r' = 20%.

The 500 c is just for machinery. 

In a business where, in addition, £500 of materials are used, we would have:

c 1000 (500 machines, 500 material) + v 500 + s 200. s' = 40%, r' = 13.33%.

The first case applies where the capital is employed in transport or some other industry, where material is not processed. In the second case, if the constant capital remained 500, but divided as 100 for machinery and 400 for materials, then it would still be:

c 500 + v 500 + s 200. s' = 40%, r' = 20%.

According to Rodbertus, it is only in industry that the cost of raw materials enters, as they are reproduced in kind in agriculture. So we might then have:

I. Agriculture
Constant capital	Variable capital	Surplus-value	Rate of profit
Machinery
100	100	50	50/200 = 1/4
II. Industry
Constant capital			Variable capital	Surplus-value	Rate of profit
Raw materials	Machinery
x	100	[=x+100]	100	50	50/200 + x

Whatever the value of x might be, it is then clear that the rate of profit in industry must be lower than in agriculture, and it is this difference that Rodbertus thinks is the basis of rent.

“Firstly then, this difference between agriculture and manufacture is imaginary, non-existent: it has no bearing on that form of rent which determines all others.” (p 65)

But, secondly, the difference is a consequence of different organic compositions of capital, and such differences exist between all industries, not just between agriculture and manufacturing. Such differences, therefore, have nothing to do with ground rent.

Only if the value of raw material used in manufacture fell below the cost of labour would the rate of profit in manufacture be similar to that in agriculture, so that there would be no room for rent, Rodbertus argues.

““But in so far as, in practice, as a rule, conditions gravitate towards the law that value equals labour cost, so, as a rule, ground-rent is also present. The absence of rent and the existence of nothing but capital gain, is not the original state of’ affairs, as Ricardo maintains, but only an exception” (p. 100).” (p 66)

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