Saturday, 9 September 2017

Theories of Surplus Value, Part II, Chapter 8 - Part 12

[c) Private Ownership of the Land as a Necessary Condition for the Existence of Absolute Rent. Surplus-Value in Agriculture Resolves into Profit and Rent]

“It is quite simply the private ownership of land, mines, water, etc. by certain people, which enables them to snatch, intercept and seize the excess surplus-value over and above profit (average profit, the rate of profit determined by the general rate of profit) contained in the commodities of these particular spheres of production, these particular fields of capital investment, and so to prevent it from entering into the general process by which the general rate of profit is formed.” (p 37)

In order to understand this, its necessary to understand all of these different formulations of the rate of profit, referred to here by Marx, and which I have set out elsewhere. In summary: the annual rate of profit is the total surplus value, produced in the year, as a percentage of the capital advanced for one turnover period, or s x n/C, where s is the surplus value produced in one turnover period, n is the number of turnovers of the circulating capital, during the year, and C is the total fixed and circulating capital advanced for one turnover period.

If this is applied to the total social capital, so that differences of the rate of turnover, between capitals in different spheres, are subsumed under one single rate of turnover for the total social capital, this produces a general annual rate of profit.

Taking the general annual rate of profit, it gives an amount of average profit produced on the advanced capital. For example, if we have s x n/C = 60%, and the total advanced capital is £100 million, that gives £60 million of profit to be allocated. If the total capital turned over, i.e. the cost of production (wear and tear, materials, wages) is then £1 billion, the £60 million of allocated profit will represent a rate of profit, or profit margin, p/k, of 6%.

For each individual capital, whether its profit margin is higher or lower than this 6% figure, will depend upon whether its capital turns over at a faster or slower rate than the rate of turnover of the total social capital.

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