Theories of Surplus Value, Part II, Chapter 9 - Part 7

[7. Hopkins’s Conjecture about the Difference Between Absolute Rent and Differential Rent; Explanation of Rent by the Private Ownership of Land]

Thomas Hopkins correctly grasps the difference between absolute and differential rent, Marx says.

““The principle of competition, which renders it impossible, that there should be two rates of profit in the same country […], does […] determine[…] their [..]relative rents…” but not the general average of rent (Thomas Hopkins, On Rent of Land, and Its Influence on Subsistence and Population…, London, 1828, p. 30.)” (p 136)

Hopkins also distinguishes between productive and unproductive, or what he calls primary and secondary labour, but his distinction is wrong. He argues that if all workers were employed as opera singers or diamond cutters, wealth would be quickly dissipated, because nothing of what they produced could become capital. Wages would then be low. If, on the other hand, all labourers were employed as “firemen, steelmakers, weavers, etc.” then this could be turned into a great deal of capital, and wages would be high. But, this argument is wrong for several reasons, as Marx sets out. It is really a repeat of the fallacies of the Physiocrats that was carried over by Adam Smith in his second definition of productive labour.

Firstly, it's not true to say that the output of the opera singer or diamond cutter cannot be converted into capital. The same applies to the labour of a prostitute, or an investment banker. As Marx puts it,

“Diamonds and song are both congealed labour and can—like all commodities—be converted into money and as money into capital.” (p 137)

As Marx established in Theories of Surplus Value, Part I, it is not the nature of the labour which determines whether it is productive or unproductive, but whether it produces surplus value. In other words, if an opera singer sings for 40 hours a week, and creates £100 of new value by their labour, which is appropriated by their employer, whilst the value of their labour power is only £50, which they are paid as wages by their employer, then they have created £50 of surplus value, which is appropriated by their employer, which can then be accumulated as capital. The theatre owner may use this £50 of surplus value, as accumulated capital to improve the theatre, or to employ additional performers, and thereby increase their profits further, or they may use the surplus value as capital in some other way, for example, establishing a new business in agriculture, shoemaking or weaving.

The other aspect in which Hopkins is wrong is that if we take the commodities he mentions none of these would necessarily imply an expansion of capital. For example, if more people are employed as shoemakers, more shoes are produced, but shoes do not form an element of productive capital, only of consumption. In order for more shoes to be made, more people need to be employed in agriculture to produce hides, so that additional tanners can produce more leather. More people would need to be employed in mining to produce more coal and iron ore, so that more iron and wood could be produced, to be used in foundries, to produce the lasts, hammers and so one that the additional shoemakers required.

“But in this transformation of money into capital we must distinguish two things. All commodities can be converted into money and as money into capital, because in the form of money their use-value and their particular natural form become extinct. They are materialised labour in that social form in which it is exchangeable for any real labour, therefore convertible into any form of real labour. On the other hand, whether the commodities which are the product of labour can as such become elements of productive capital once again, depends on whether the nature of their use-values permits them to re-enter the process of production—be it as objective conditions of labour (tools and material) or as subjective conditions (means of subsistence of the worker), (in other words [as] elements of constant or of variable capital).” (p 137)

The opera singer, prostitute or investment banker, in country A, may sell the product of their labour to consumers in country B for say £10,000. If to reproduce their labour power, they need to spend £8,000 buying food, shoes and clothes, they might buy these out of the £10,000 they have received. The ploughman, shoemakers and weavers in country A, thereby sell their output. Meanwhile, with the £2,000 of surplus value produced by the opera singers, prostitutes and investment bankers of country A, they buy ploughs, lasts, leather, yarn and looms, from country B, to be used by the ploughman, shoemakers, and weavers as additional capital. The point here is that it is not some specific type of labour that is productive or unproductive, but the fact of whether that labour creates a surplus value. In part, that question also depends upon whether the labour creates value, which depends on whether it is a use value, i.e., whether there is a demand for it. In turn, as Marx describes in Capital III and Theories of Surplus Value I, and returns to again later in this volume, and Part Three, that requires that all commodities are produced in appropriate proportions. If we took an economy where everyone was a ploughman, for example, it would produce little capital, because each producer would find it impossible to find a market for their output, and would similarly be unable to obtain the ploughs and other equipment required to undertake their work, or enhance their productivity.

Hopkins main point is that these unproductive workers are employed meeting the needs of the landed aristocracy.

““The cultivators” in Italy “generally paying from one-half to more than one-half of the produce as rent to the landlord, with moderate skill in agriculture, and a scanty supply of fixed capital. The greater part of the population is […] composed of secondary producers and proprietors, and generally the primary producers are a poor and degraded class” (l.c., pp. 101-102). (p 137)

But, then it is not the fact of work as being employed as opera singers, and so on, that is the cause of a reduction in capital accumulation, but the fact that the landlords appropriate a proportion of surplus value, in the form of rent, which they use as revenue rather than capital. If landlords did not appropriate rent, capitalists would have larger profits, which could be used for additional capital accumulation.

Hopkins also puts forward a fairly obvious point that Malthus overlooks, and which his latter day adherents miss, in advocating smaller populations, whether via birth control, or restrictions on immigration. Hopkins writes,

““The error of Mr. Malthus and his followers is to be found in the assumption, that a reduction of the labouring population would not be followed by a correspondent reduction of capital”(l.c., p. l18.) “…Mr. Malthus” forgets “that this demand [for labourers is] limited by the means of paying wages and” that “these means do not arise spontaneously, but are always previously created by labour” (l.c., p. 122). (p 138)

As Marx described, in Capital III, and referred to earlier, when the population rises, this creates an additional (at least potential) demand for commodities. It is only a potential demand, because it requires that these additional consumers, have money to turn their needs into monetary demand. But, generally, this is the case, for the reason that Marx describes. As a whole, the system produces surplus value, which is embodied within a surplus product. The surplus value exists as profit for the companies within the economy, and they can use the profits to expand their business by buying up the various commodities that comprise the surplus product. So, they employ the additional workers that are now available as a result of the increase in population. They pay these additional workers money wages out of the money profits, and those workers then buy some of those commodities, such as food, shelter, clothing and so on that make up the surplus product. The firms also buy machines and materials that also form part of the surplus product, and so the additional workers thereby have the means of production required to produce additional commodities. So, far from causing a pressure on existing resources, the increased population are the means by which additional production is undertaken, so that capital and social wealth expands. What is more, the labour employed produces a greater quantity of value than it consumes, so that surplus value expands, and this surplus value is also embodied within an additional surplus product, which makes further expansion possible. What is more, as Marx indicated earlier, as this expanded production, encouraged by this rise in population, occurs, it enjoys all the benefits of the economies of scale, and so on, so that not only does it result in lower commodity prices, which raises living standards, but it also facilitates a rise in profits, so as to make even greater expansion possible.

As Marx points out, Hopkins is wrong to think that a diminution of population would necessarily result in a shrinkage of capital, however, because a fall in population could be compensated by a rise in productivity, or, as I showed some time ago, a rise in the value of the product of labour, i.e. labour becoming more complex.

As Hopkins writes,

““It is somewhat extraordinary that [there is] a strong inclination […] to represent net wealth as beneficial to the labouring class, because it gives […] employment though it is evidently not on account of being net, that it has that power, but because it is wealth,—that which has been brought into existence by labour: while, at the time, an additional quantity of labour is represented as injurious to the labouring classes, though that labour produces three times as much as it consumes” (l.c., p. 120).” (p 138)

If productivity increased, as a result of using some new machines, it would be possible to increase output considerably. If the amount deducted for profit remains the same, the amount available to raise workers living standards could be considerable, Hopkins says.

“‘If by the use of superior machines, the whole primary produce could be raised from 200 to 250 or 300, while net wealth and profit took only 140, it is clear that there would remain as a fund for the wages of the primary producers 110 or 160 instead of 60” (l.c., p. 128).

“The condition of labourers is rendered bad either by crippling their productive power, or by taking from them what they have produced” (l.c., p. 129).” (p 138)

Malthus, and those today who oppose immigration, on the basis of a mistaken notion of a fixed amount of work and resources that can only be shared out amongst a larger number of people, act as apologists for the real cause of the problem, which is the fact that a large part of the surplus created by workers is appropriated by the exploiting classes – capitalists, landlords, the state – and used unproductively.

Hopkins also realises that the important thing here, in relation to rent, is that the landlords are able to appropriate it, because of the private ownership of the land.

““Rent, or a charge for use, arises naturally out of ownership, or the establishment of a right of property” (l.c., p. 13).

“Any thing may yield a rent if possessed of the following qualities:— First,—It must exist in a degree of scarcity. Secondly,—It must have the power to aid labour in the great work of production” (l.c., p. 14). Of course one must not take the case “…where land… [is] so plentiful, compared with the labour and stock to be employed upon it(abundance and scarcity of land are of course relative, and are related to the disposable quantity of labour and capital) ‘that no charge for rent could be made, because it was not scarce” (l.c., p. 21).” (p 138 – 9)

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