[3. Roscher’s Falsification of the History of Views on Ground-Rent. Examples of Ricardo’s Scientific Impartiality. Rent from Capital Investment in Land and Rent from the Exploitation of Other Elements of Nature. The Twofold Influence of Competition]
Marx turns to Willhelm Roscher's views on rent.
““Remarkable, how a doctrine which in 1777 remained almost unnoticed, was immediately defended and attacked with the greatest interest in 1815 and the following years because it touched upon the contradiction between monied and landed interest which had meanwhile so sharply developed.” (Die Grundlagen der Nationalökonomie, 3rd edition, 1858, pp. 207-98.)” (p 122)
Roscher's comments here contain as many falsehoods as words, Marx says. Anderson had not put forward his ideas on rent as a doctrine, but appeared only as part of a polemic in relation to the Corn Laws to be introduced in Scotland in 1777. Those laws were intended to encourage the import of corn, and so reduce food prices in contrast to the Corn Laws of 1815, which sought to restrict grain imports to keep prices high. Anderson made clear his opposition to the laws proposed in 1777, and his support for the laws of 1815, because he saw it in stark terms of a conflict of interest between landlords and farmers on the one hand, and capitalists and industrial workers on the other. Contrary to the assertion by Roscher, the theory was used both by Anderson in 1777, and by Malthus in 1815, in support of landed property. Similarly, it was used by Ricardo to oppose landed property. It is not a case, as Roscher asserts, of the same theory being used to support one position in 1777, and the opposite position in 1815, but the same theory being used to arrive at opposing conclusions, by the advocates of two opposing class interests.
Roscher also confuses "monied interest" with the industrial bourgeoisie, and thereby presents a conflict between this "monied interest", and the "landed interest".
“As Wilhelm Thukydides could have gathered from John Stuart Mill (Essays on Some Unsettled Questions of Political Economy, London, 1844, pp. 109-10), by 'monied class' the Englishman understands l. the money-lenders; and 2. these money-lenders are people who either live altogether on interest or are money-lenders by profession, such as bankers, bill-brokers etc. Mill also observes that all these people who form the 'monied class' are opposed to, or at any rate are distinct from, the “producing class” (by which Mill understands 'industrial capitalists' besides the working men). Hence Wilhelm Thukydides should see that the interests of the 'producing class', including the manufacturers, the industrial capitalists, and the interests of the monied class are two very different matters and that these classes are different classes.” (p 123).
Had Roscher actually studied the struggles over the Corn Laws, he would have seen that it was by no means a struggle between the “monied interests”, and the “landed interest”, but that these two classes were united in opposition to the industrial bourgeoisie and proletariat.
“If Wilhelm Thukydides knew the history of the corn laws of 1815 and the struggle over these, then he would already have known from Cobbett that the borough-mongers (landed interest) and the loan-mongers (monied interest) combined against the industrial interest. But Cobbett is “crude”. Furthermore, Wilhelm Thukydides should know from the history of 1815 to 1847 that in the battle over the corn laws, the majority of the monied interest and some even of the commercial interest (Liverpool for instance) were to be found amongst the allies of the landed interest against the manufacturing interest.” (p 123).
Marx has little more time for Roscher than for Malthus, and accuses him of similar falsifications.
“Furthermore, Wilhelm Thukydides is by no means “honest” in his research and cataloguing. Anyone who is not “respectable” does not exist for him historically either. For instance, Rodbertus does not exist for him as a theoretician of rent because he is a ‘communist”. (p 124).
In fact, Rodbertus was not a communist but a landowner and representative of Prussian state socialism, of the type promoted by Lasalle, and opposed by Marx. Nevertheless, despite his opposition to Rodbertus and all state socialism, Marx writes,
“If the science of political economy is to he furthered and popularised in Germany, people like Rodbertus should found a journal which would be open to all scholars (not pedants, prigs and vulgarisers) and whose main purpose it would be to demonstrate the ignorance of the specialists in the science itself as well as in its history.” (p 124)
Anderson could not have placed his theory of rent in the context of the system of political economy, as Roscher contends, because that system had only been put forward the previous year in The Wealth of Nations. Anderson was looking more specifically at agriculture, and undertakes detailed analysis of the subject on that basis. Ricardo is able to base himself on that work and the theory developed out of it, but he is also able to relate it more specifically to the period of rising corn prices between 1800 and 1815. Similarly, Ricardo was able to base himself on David Hume's theory of money and interest, whilst focusing on its application to the events between 1797 and 1809.
Marx then gives a number of quotes from Ricardo, which, he says, illustrate his character. They demonstrate the points made earlier about Ricardo's scientific approach, and his focus, on that basis, on only what acts to promote the greatest development of the productive forces. Of course, in doing so, he can only frame his concept of the development of the productive forces within the existing bourgeois system. So, Ricardo speaks about the development of "our" capital, by which, as Marx points out, he means neither his own capital nor "our" capital, but “social wealth, which is an end as such, irrespective of who are the participants in this wealth! (p 125). This is also an indication, as Marx has described, of the extent to which the revolutionary class – which the bourgeoisie was at that time – sees its own interests, and of the conditions of its liberation, as identical to those of society as a whole.
Marx quotes Ricardo,
““I shall […] greatly regret that considerations for any particular class, are allowed to check the progress of the wealth and population of the country.” (David Ricardo, An Essay on the Influence of a Low Price of Corn on the Profits of Stock, second edition, London, 1815, p. 49.)” (p 125)
So, with a free import of corn this leads to land being abandoned that cannot produce it at a competitive price, and so some land and capital is sacrificed, but this sacrifice, Ricardo argues is justified by the greater good of promoting an accumulation of social wealth in general.
““That some capital would be lost cannot be disputed, but is the possession or preservation of capital the end, or the means? The means, undoubtedly. What we want is an abundance of commodities” (wealth in general) “and if it could he proved that by the sacrifice of a part of our capital we should augment the annual produce of those objects which contribute to our enjoyment and happiness we ought not […] to repine at the loss of a part of our capital,” David Ricardo, On Protection to Agriculture, 4th ed., London, 1822, p. 60.)” (p 125)
But, it's not just land and capital that Ricardo is prepared to sacrifice,
““To an individual with a capital of £20,000, whose profits were £2,000 per annum, it would be a matter quite indifferent whether his capital would employ a hundred or a thousand men, whether the commodity produced, sold for £l0,000, or for £20,000, provided, in all cases, his profits were not diminished below £2,000. Is not the real interest of the nation similar? Provided its net real income, its rent and profits be the same, it is of no importance whether the nation consists of ten or of twelve millions of inhabitants.” (David Ricardo, On the Principles of Political Economy, and Taxation, third edition, London, 1821, p. 416.)
Here the “proletariat” is sacrificed to wealth. In so far as it is irrelevant to the existence of wealth, its existence is a matter of indifference to wealth. Here mass—mass of human beings— is worth nothing. These three instances exemplify Ricardo’s scientific impartiality. (p 126)
As Marx described earlier, the basis of rent is surplus profit. Such surplus profits exist in all spheres of production, because of the existence of different organic compositions of capital. However, because capital moves into those spheres that enjoy higher rates of profit – have lower organic compositions of capital – this acts to reduce market prices in those spheres, as the supply of those commodities increases, to below their exchange value, or until they reach the price of production – cost price plus average profit. The opposite happens in those spheres where the rate of profit is below the average – organic composition higher than average. Consequently, the surplus profits in one industrial sphere are dissipated by competition. That doesn't happen in agriculture, because the land is owned by landowners, who demand a rent for its use, which means that capital cannot freely enter this sphere of these surplus profits. But, the same applies to any sphere where this free flow of capital, in search of surplus profits, is prevented. Whatever is the basis of such surplus profits then provides the owner of that resource with the bases of demanding a rent. The greater the surplus profit such a resource creates, the greater the differential rent its owner can demand.
“For instance, a waterfall may replace the steam-engine for a manufacturer and save him consumption of coal. While in possession of this waterfall, he would, for instance, constantly be selling yarn above its average price and making an excess profit. If the waterfall belongs to a landowner, this excess profit accrues to him as rent. In his book on rent, Mr. Hopkins observes that in Lancashire the waterfalls not only yield rent but, according to the degree of the natural motive power, they yield differential rent. Here rent is purely the excess of the average market-price of the product over its individual average price.}” (p 126)
Another more modern application of this concept can be drawn from football. The value produced by the labour of footballers is complex labour. That is, the value produced by one hour of such labour is greater than one hour of simple labour. Marx demonstrated, in Capital I, that exactly what the value produced by such complex labour is, how much of a multiple of simple labour it represents, can only be determined post facto, in the market, by how much consumers are prepared to pay for that product. As with any other labour, the value it produces has nothing to do with the value of the specific labour power itself. It is the difference between the two, the value of the product of the labour, and the value of the labour power itself, which is the basis of surplus value.
If we take a successful football team that has several top class players, the team has a great deal of demand for its specific product. Consumers are prepared to pay a lot of money to consume the product, as compared to that of other teams, or alternative uses for their money. In other words, the labour of the footballers represents very complex labour. The value of the product of one hour of that labour is the equivalent of thousands of hours of simple labour, and the multiple is greater for the labour of the players in the top teams, compared to the labour of players in the lower divisions. That means that surplus profits can be made in this sphere, compared to other industrial spheres, and within this sphere, the most successful clubs can make greater surplus profits than the least successful clubs – some of whom may not make any surplus profits at all. The basis of the surplus profit is the particular resource represented by the labour of the players. On the one hand, the value of the labour power of the players might be seen as very high, because it cannot easily be reproduced, because of its specific skill that relies on natural ability. On the other hand, in previous decades, players with similar skill obtained much lower wages. In terms of the reproduction of the player, that is little different to any other worker. If we relate this to the example Marx gives in Capital I, then we might have a situation where such a player produces £20,000 of value by an hour of their labour, whereas a worker whose labour is simple produces only £20 of value in an hour.
The value of the labour power of the former, might be £10,000, because it is not easily reproduced, due to the requirement of natural ability. By contrast, the value of the labour power of the other worker is only £10. The rate of surplus value is 100 per cent in both cases, but the footballer produces £10,000 of surplus value in the hour, whereas the other worker produces only £10.00. In terms of the rate of profit, the football club would have a very low organic composition of capital. Very little constant capital would be required, in the form of fixed capital, tied up in the stadium, compared with the large amount of variable capital tied up in players' salaries. As a specific sphere, therefore, it would be expected to make surplus profits, and thereby attract capital, which would then dissipate them. But, in fact, it cannot because the supplier of the resource, which is the basis of the surplus profits, the labour of the top players, is limited in supply. The owners of that resource are thereby able to extract a rent on the basis of the surplus profits that the top teams are able to obtain from it. The future incomes of such players should, therefore, be viewed as a combination of being both wages and rent. On the one hand, the high wages represent a high value of labour power that is not easily reproduced. On the other, the rent arises from the surplus profit, which their labour produced due to its highly complex nature, and which they are able to extract, because of the limited supply of that labour.
“In competition there are two distinct movements towards equalisation. Capitals within the same sphere of production equalise the prices of the commodities produced within this sphere to the same market-price, irrespective of the relationship of the value of these commodities to this price. The average market-price should equal the value of the commodity, [were] it not for the equalisation between different spheres of production. As between these different spheres, competition equalises the values to the average prices, in so far as the reciprocal interaction of the capitals is not hampered, disrupted by a third element—landownership, etc.” (p 126 – 7)
In other words, within any particular sphere, there can only be one market price, even though there are a multiplicity of individual values/prices of production, because each firm produces at a different level of efficiency. Competition demands a single market price, because consumers will shun the more expensive suppliers, and flock to the cheapest suppliers of a commodity. But, this single, uniform, market price necessitates different rates of profit within that sphere, because each firm within that sphere will make more or less profit depending upon whether it is more or less efficient than the average firm within the sphere. But, whereas a single market price necessitates different rates of profit, within the sphere, the same competition necessitates a single rate of profit – or a constant movement towards it – between spheres. That is because capital will constantly shun those spheres that produced the lowest rate of profit, and flock towards those that produce the highest. Surplus profits and rents can only persist where competition is not enabled to produce such flows of capital.
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