## Wednesday, 11 October 2017

### Theories of Surplus Value, Part II, Chapter 8 - Part 45

Rodbertus uses a similar logic in relation to rent, arguing that a rise in the rate of rent (by which he again means rental) results from a rise in rent, because the number of hectares remains constant. But, of course, although the amount of land may or may not remain constant (land is reclaimed or disappears into the sea) the amount of land under cultivation constantly changes, and the cultivated land that produces rent also constantly changes.

Rodbertus also makes the odd claim that the rate of profit can never reach 100%. But, whether it is a measurement of the rate of surplus value, or an actual measurement of the rate of profit, it is obvious that it can not only reach, but exceed 100%. If necessary labour is 4 hours per day, and the normal working-day is 10 hours, then surplus value is 6 hours, or 150%. If we take a capital, which employs £100 of constant capital, and £200 of variable capital, then, on this basis, it would produce £300 of surplus value, so that its rate of profit would be 100%.

If we assume that the working-day is 12 hours, then surplus labour is 8 hours, and the rate of surplus value is 200%. In that case we might have a capital such as:

c £100 + v £200 + s £400.

In that case, the rate of profit is 133%.

Rodbertus can only arrive at his conclusion by calculating the profit as a percentage of the value of the product rather than as a percentage of the cost of production. For example, above, the value of the product is 100 + 200 + 400 = £900. The profit is £400, which is approximately 45% of £900.

Marx briefly explains the basis of the price of land as capitalised rent. If the amount of rent per hectare remains constant, the price of a hectare moves in inverse relation to the rate of interest. If the rate of interest is 5%, and the rent is £1,000 p.a., the price of the land is 1000 x 100/5 = £20,000. If the rate of interest falls to 4%, the price of the land rises to 1000 x 100/4 = £25,000.

Rodbertus sets out the same explanation of the tendency for the rate of profit to fall as Ricardo and Malthus, in relation to European economies. On the one hand, he says, productivity has risen, and this causes the share of the total product going to wages to fall, and the portion going to rent/surplus value to rise. On the other hand, productivity rises faster in manufacturing than agriculture, and because of his proposition that surplus value is allocated proportionally to the share of raw product or manufactured product, in total product value, he concludes that, although surplus value rises in total, it is only ground-rent that rises, whilst the rate of profit falls.

This was typical of the kinds of erroneous theories of the tendency for the rate of profit to fall, put forward prior to Marx explaining the real basis. They all explain it on the same basis of some kind of absolute fall in profits brought about by a rise in the share of the total product going to other revenues.

For Rodbertus here, it is an increase in ground-rent, at the expense of profit. For Ricardo, it is rising food prices that cause wages and rents to rise, which reduces profits. For others it is a rise in interest that reduces profit.

It was for this reason, and so as to show that all these theories were wrong, that Marx, in Capital III, sets out the basis of The Law of The Tendency For The Rate of Profit To Fall, before he discusses the division of that profit into rent, interest and profit of enterprise. It is also why he clearly sets out that the law is based not on a fall in the mass of profit, but necessarily a rise in the mass of profit.