Theories of Surplus Value, Part II, Chapter 8 - Part 37

[b) Rodbertus’s Second Thesis]

In Rodbertus' second thesis, he presents Ricardo's proposition that profit and rent are inversely related. In fact, this should be that because the surplus value, or profit is divided between rent and profit of enterprise, it is these latter two that are inversely related.

“Now the question is, what determines the apportionment between the two?” (p 75)

The revenue of the capitalist is equal to the surplus value obtained from their workers. Where this surplus value is greater than the average rate of profit on their capital, it represents surplus profit. Where the surplus profit is not distributed to other capitals by the process of competition, bringing about a general rate of profit, and prices of production, this surplus profit represents rent. Where this rent exists within raw products drawn from the land, the rent is appropriated by the landlord.

Marx then here deals with a situation, and an argument put forward by some advocates of the Temporal Single System Interpretation in relation to the use of historic prices, or current reproduction costs, as the basis for calculating the rate of profit. The argument put forward for using historic prices is a situation in which a severe crop failure results in the output of grain being less than the quantity of grain used as inputs (constant and variable capital).

So, if we have in use values:

c 500 + v 100 + s (300) = 300,

the consequence is a loss. It appears that instead of creating positive new value, labour here has created negative value. Of course, it is possible that labour can create negative value if it is destructive rather than productive, but the argument here is based on a fallacy. The fact here is that the labour did create positive new value. Let us say that the worker worked for a normal working day of 10 hours. It thereby created 10 hours of positive new value. The loss arises not because the labour created negative value, but because the new value that it created was less than the value of the labour-power that created it! And the reason that this was the case is precisely because the crop failure represents a dramatic fall in productivity, which causes a large rise in the value of the labour-power.

“It is quite true that when the value of the raw product rises [or falls], the rate of profit in those branches of industry which use raw material will rise or fall inversely to the value of the raw product. As I showed in a previous example, if the value of cotton doubles, then with a given wage and a given rate of surplus-value, the rate of profit will fall. The same applies however to agriculture. If the harvest is poor and production is to be continued on the same scale (we assume here that the commodities are sold at their value) then a greater part of the total product or of its value would have to be returned to the soil and after deducting wages, if these remain stationary, the farmer’s surplus-value would consist of a smaller quantity of product, hence also a smaller quantity of value would be available for sharing out between him and the landlord. Although the individual product would have a higher value than before, not only the amount of product, but also the remaining portion of value would be smaller.” (p 76) 

An extreme crop failure simply extends this principle so that instead of a “smaller surplus” it becomes a loss.

This is also the point that Marx makes in Capital III. The value of constant capital is revalued according to its current reproduction cost, in order to determine both the value it transfers to final output, and as the basis for calculating the rate of profit. This must be the case because, as Marx sets out there, and repeats here, for reproduction to take place the constant capital must be replaced on a like for like basis and that replacement takes place on the basis of current levels of productivity, not those that existed at some point in the past.

In Theories of Surplus Value, Chapter 20 Marx writes,

“How can a change in the value of constant capital retrospectively affect the surplus-value? For once surplus-value is assumed as given, the ratio of surplus to necessary labour is given, and therefore also the value of wages, i.e., their production cost. In these circumstances, no change in the value of constant capital can have any effect on the value of wages, any more than on the ratio of surplus labour to necessary labour, although it must always affect the rate of profit, the cost of production of the surplus-value for the capitalist, and in certain circumstances, namely, when the product enters into the consumption of the worker, it affects the quantity of use-values into which wages are resolved, although it does not affect the exchange-value of wages.” 

Marx goes on to show that if the value of cotton halves, this would mean that twice as much could be bought, and twice as much labour-power could be employed to process it. The rate of surplus value would not change but twice as much surplus value would be produced whilst the constant capital remained the same, so the rate of profit would double.

Conversely, 

“Suppose on the other hand that cotton doubles in value as a result of a bad harvest so that the same amount of cotton which formerly cost £100 now costs £200. In this case, the rate of profit will fall at all events, but in certain circumstances, the amount or absolute magnitude of profit may fall as well. If the capitalist employs the same number of workers, who do the same amount of work as they did before, under exactly the same conditions as before, the rate of profit will fall, although the ratio of surplus labour to necessary labour, and therefore the rate and the yield of surplus-value, will remain the same. The rate of profit falls because the production costs of surplus-value have risen, i.e., the capitalist has to spend £100 more on raw material in order to appropriate the same amount of other people’s labour-time as before.” (ibid)

Moreover, to the extent that the worker has to buy cotton goods as necessities, their higher cost raises the value of labour-power and reduces surplus value.

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