Theories of Surplus Value, Part II, Chapter 10 - Part 2

This is no different to the situation in respect of all those other commodities whose exchange-value is above their price of production. The difference is that, in all those other spheres, capital is free to enter production in search of the higher profits. As a consequence, the increased supply of those commodities results in their market prices falling from their exchange-value down to their price of production. But, in agriculture, no such free movement of capital is possible. The landowner stands as gatekeeper over any influx of capital, and demands payment for the loan of the use value in its possession. Any new capital that seeks to enter agricultural production, in search of surplus profits, will then be prepared to pay rent up to the limit of that surplus profit. Competition between capitals, seeking to enter agricultural production, will then ensure that the landlord can extract a rent up to that limit.

“Hence this view assumes, like the monopoly theory, that property in land, as such, has something to do with rent; it assumes differential rent along with Ricardo, and finally it assumes that absolute rent by no means infringes the law of value.” (p 163)

[2. The Determination of Value by Labour-Time—the Basis of Ricardo’s Theory. Despite Certain Deficiencies the Ricardian Mode of Investigation Is a Necessary Stage in the Development of Political Economy]

“Ricardo starts out from the determination of the relative values (or exchangeable values) of commodities by “the quantity of labour”. (We can examine later the various senses in which Ricardo uses the term value. This is the basis of Bailey’s criticism and, at the same time, of Ricardo’s shortcomings.) The character of this “labour” is not further examined” (p 164)

Ricardo correctly establishes labour as the substance of value, and labour time as its measurement.

“But Ricardo does not examine the form—the peculiar characteristic of labour that creates exchange-value or manifests itself in exchange-values—the nature of this labour. Hence he does not grasp the connection of this labour with money or that it must assume the form of money.” (p 164)

In other words, in examining the difference between value and exchange value, Ricardo does not establish the concept of abstract labour as the substance of value, and he does not follow through the historical and logical process of the value-form analysis that Marx sets out in Capital I Chapter 3. Had Ricardo done that, he would have arrived at exchange value as the equivalent form of value, and its ultimate expression in money, as the universal equivalent form of value, whereby money itself becomes the expression of abstract labour, and measure of value.

“Hence his erroneous theory of money. Right from the start he is only concerned with the magnitude of value, i.e., the fact that the magnitudes of the values of the commodities are proportionate to the quantities of labour which are required for their production. Ricardo proceeds from here and he expressly names Adam Smith as his starting-point (Chapter I, Section I). (p 164)

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