Theories of Surplus Value, Part II, Chapter 8 - Part 39

We know from Marx's analysis that rent is surplus profit. But, let's assume that we do not know this yet, and see rent only as an addition, with the rate of profit for agricultural products and manufactured products being the same. Marx sets out the following table.

	Manufactured product	Agricultural product
I	£600 [7,200 hours]	£300 [3,600 hours]	1,200 [hours] surplus-value for manufacture, 600 for agriculture and 60 for rent.  Altogether 1,860 [hours; of these] 1,800 for profit.
II	£300 [3,600 hours]	£600 [7,200 hours]	600 [hours] surplus-value for manufacture, 1,200 for agriculture and 120 for rent.  Altogether 1,920 [hours; of these] 1,800 for profit.

The profit remains the same at 1800 hours, in both cases. The rent is double in the second case, for the simple reason that the size of the agricultural product is double. Rodbertus' explanation for rent is that agriculture does not have a cost of production of raw materials, which it replaces in kind, but that manufacture does have a cost of raw materials provided to it by agriculture. The larger the proportion of total production accounted for by agriculture, the larger the mass of rent, therefore.

But, as Marx pointed out earlier, on the basis of that argument, manufacture replaces in kind machines, which form a cost then only for agriculture. If we consider this as a relation between two firms, in the same way that Marx does in considering the relation between Department I and II, then for industry, the value of machines already includes the value of raw materials, which was used to produce those machines.

The other part of the cost of the machines, besides the raw material, is manufacturing labour. That includes that required to produce the machine, and that required to produce things such as steel, etc., used in its construction. This portion of value, therefore, resolves solely into wages and profit.

In terms of the capital advanced, then it consists of raw materials provided by agriculture, which are used either directly, or else go into other products, which are then used in further production, and wages. These wages are for the labour used in the machine production, or else in the production of those other elements used in the machine production.

The difference between the new value created by this manufacturing labour, and the capital advanced as wages to it, represents the manufacturing profit.

“The error usually made in such calculations is that, for instance, the wear and tear of the machinery or of the tools used is embodied in the machine itself, in its value and although, in the last analysis, this wear and tear can be reduced to labour— either labour contained in the raw material or that which transformed the raw material into machine, etc.—this past labour never again enters into profit or wages, but only acts as a produced condition of production (in so far as the necessary labour-time for reproduction does not alter) which, whatever its use-value in the labour-process, only figures as value of constant capital, in the process of creating surplus-value. This is of great importance and has already been explained in the course of my examination of the exchange of constant capital and revenue.” (p 80) 

This again highlights the error of the Temporal Single System Interpretation in using historic prices as the basis of calculation of the rate of profit. The point that Marx is making here is the same as that set out in Capital II, III, and in Theories of Surplus Value Part I, against Adam Smith. The value of output cannot be resolved just into factor incomes of wages, profit, interest and rent (v + s), or the new value created by labour, because it also includes the value of constant capital - “produced conditions of production”. In other words, the value of output is not just v + s. but c + v + s. Its true that c is itself the product of past labour, but this product cannot add to or subtract from the new value. It is constant capital.

But, the only way that can be true, that it can neither add to nor subtract from the new value created, that its value is constant, is if the value of this product is itself held constant. In order for reproduction to occur, the use values that comprise the constant capital must be reproduced on a like for like basis, but with changing levels of productivity, the value of that constant capital can only be held constant by revaluing the constant capital, consumed in production, according to its current reproduction cost, i.e. according to the social labour-time required to replace those use values on a like for like basis.

Marx's comment,

“... this past labour never again enters into profit or wages, but only acts as a produced condition of production (in so far as the necessary labour-time for reproduction does not alter) which, whatever its use-value in the labour-process, only figures as value of constant capital, in the process of creating surplus-value.”

only makes sense, on that basis, because, if productivity levels change so that the value of constant capital falls, and less social labour-time is required for its reproduction, on a like for like basis, this would create the appearance that the mass of surplus value produced had risen, whilst calculating the rate of profit on the basis of the higher historic prices would create the impression of a lower rate of profit than actually exists.

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