In areas such as the United States, where vast areas of land existed, which had not become private property, workers who had emigrated to the continent were able to acquire land, and turn themselves back into peasant producers. Their production was usually inefficient, despite the fertility of the land, because they lacked capital. The organic composition of capital was low, depending on large amounts of manual labour, relative to constant capital. So, the value of production was high. But, surplus profits did not exist for the same reason as in other industries. That is additional capital, in the shape of more workers, was constantly able to acquire land, and increase the supply of agricultural products. So, the market price of agricultural products was forced down, no surplus profit existed, and so no basis for rent to be formed existed.
“But in countries where landed property exists, the same situation, namely that the last cultivated land pays no rent, may also occur for the reverse reasons.” (p 97)
It requires that the fertility of the last cultivated land is so low that the output only generates enough return, at the market price of grain, so as to only produce the average profit.
Suppose £1,000 is invested and produces an output of 3600 kilos with an exchange-value of £1200. The price per kilo is £0.33. There is a 6 day week, and 12 hour working day. A week's labour equals £10. One day's labour is then equal to £1.67. £1,000 then equals 100 weeks labour, and £1200, 120 week's labour.
Ten kilos of grain has a value of £3.33, which is equal to 2 day's labour. Of the 2 day's labour, 20% is unpaid labour, or £0.67.
If average profit is 10%, then on the £1,000 of capital advanced, the price of production for the 3600 kilos is £1,100, which is £0.31 per kilo.
The value of the output is then £100 above the price of production, which is then surplus profit,, appropriated as rent. Rent then constitutes half the surplus value on this production. More fertile lands would produce greater output for the same £1,000 of capital, and would thereby produce more rent.
Now, if another piece of land is cultivated, which only produces 3500 kilos of grain with the same expenditure of 120 weeks of labour, at £3.333 pre kilo, it will only return £1100.But, 10 kilos is now equal to 2.18 days of labour, whereas previously it was only equal to 2 days labour.
The price of production for the 3300 kilos is £1 per kilo. The price of production for the output is £1100, but the value of output is £1200. If it sells its output at £0.333, it will sell it below its value, but at its price of production. So, there would be no surplus profit, or basis for rent.
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