Theories of Surplus Value, Part II, Chapter 8 - Part 49

“But so far as the relative magnitude of profit and rent is concerned, it does not by any means follow that, because agriculture is relatively less productive than industry, the rate of profit has fallen absolutely. If, for instance, its relationship to rent was as 2:3 and is now as 1:3, then whereas previously it formed two-thirds of rent, it now forms only one-third, or previously [profit] formed two-fifths of the total surplus-value and now only a quarter, [or] previously 8/20 and now only 5/20; it would have fallen by 3/20 or [by] 15 per cent.” (p 90)

But, the mass of profit may still be greater. Suppose 1 kilo of cotton costs £2, and falls to £1. Previously, 100 workers spun 100 kilos of cotton, and now spin 300 kilos. So, productivity has risen faster in manufacturing than in agriculture. Previously, cotton amounted to £600 for 300 kilos, and now costs £300. The wages of workers (300) previously amounted to £300, but now wages of workers (100) amount to just £100. Marx assumes that in both cases, machinery equals £60.

Marx assumes that the workers are paid in their own product, so that the fall in its value reduces the value of labour-power, and raises the rate of surplus value. Where previously surplus value equalled 20% of wages, he assumes it now accounts for 40%.

Comparing the cost of 300 kilos, in the two cases, it is then:-

Case 1

Raw material 600, machinery 60, wages 300, surplus value 60 = £1,020

Case 2

Raw material 300, machinery 60, wages 100, surplus value 40 = £500

In Case 1, the cost of production is £960, and profit is £60, giving a rate of profit of 6.25%. In Case 2, the cost of production is £460, and profit is £40, giving a rate of profit of 8.70%.

If rent is 1/3 kilo, in the first case, it equals £200; in the second case it is £100. The rent has fallen because the raw product has fallen in value by 50%. But, the value of the total product has fallen by more than 50%.

The industrial labour has become relatively more productive, compared to the agricultural labour. In the first case, the industrial labour stood in relation to raw material as 360:600, or 6:10 = 1:1.66. In the second case, it has fallen to 140:300, or 1:2.143. But, the rate of profit has risen, and the rent has fallen.

If the amount of cotton spun doubles, in the second case, we would have:-

600 material, 120 machinery, 200 wages, 80 surplus value = £1,000. The cost of production is £920, and with £80 profit that gives a rate of profit still of 8.70%. But, that is a higher rate of profit than in Case 1, whilst the amount of rent would be the same as in Case 1.

“It does not by any means follow from the relative dearness of the agricultural product that it yields a [higher] rent. However, if one assumes—as Rodbertus can be said to assume, since his so-called proof is absurd—that rent clings as a percentage on to every particle of value of the agricultural product, then indeed it follows that rent rises with the increasing dearness of agricultural produce.” (p 91)

Back To Part 48

Forward To Part 50