Theories of Surplus Value, Part II, Chapter 9, Part 8

Hopkins sets out the different degrees of fertility of land in different parts of Europe, the consequence of which is that, in some regions, the requirements of producers are easily met, leaving the large surpluses to be extracted by landowners. He also points to the large amount of common land still in existence in Britain, but notes that its fertility is similar to that of land prior to it being regularly cultivated. The consequence was that, in order to bring it up to the level of fertility of existing farmland, it would require considerable investment, so that it would produce no or little rent. This was not because this common land was naturally less fertile than the existing farmland. The difference was that centuries of cultivation of the existing farmland, the application during that time of manure, of regular hoeing and ploughing, removal of stones, weeds and so on, had raised the natural fertility of the soil, and these improvements had become embodied within the soil itself, during this period. Even given the fact of improved techniques, and lower costs of capital, in the 19th century, compared to previous centuries, it was clearly not possible to quickly, easily, or cheaply replicate the improvement of the soil that had been effected over several centuries of cultivation.

“This is a very important circumstance in relation to rent, especially when the population suddenly grows significantly, as it did from 1780 to 1815, consequent upon the advance in industry, and hence a large portion of hitherto uncultivated land is suddenly brought into cultivation. The newly cultivated land may be as fertile as or even more fertile than old land was, before centuries of cultivation had accumulated in it. But what is demanded of the new land—if [this product] is not to be sold at a dearer price—is that its fertility must be equal firstly to the natural fertility of the cultivated land and secondly to the artificial fertility which has been engendered by cultivation, but which has now become its natural fertility. The newly cultivated land would thus have to be much more fertile than the old had been before its cultivation. (p 139)

And this is part of the answer to Ricardo's question posed earlier. The reason that prices for agricultural products rose was not that the additional land brought into cultivation was less fertile than existing land, but that even if it was as fertile or even more fertile, it still required a significant investment of initial capital, capital which had been established on existing farm land over centuries, and incorporated into the land. This, indeed, was a difference with industry. In industry, new capital investment replaces the existing fixed capital, and depreciates the existing fixed capital stock, but in agriculture the additional fixed capital built on the fixed capital that already existed. Instead of depreciating it, it added to it. Nor is it simply a question of the investment in the land itself, but also of the general infrastructure. So, Hopkins writes,

“... with all the advantages of an immediate application of labour, aided by stock skilfully applied, and furnished with manufactures cheaply produced; added to the very important circumstance, of good roads being already formed in the neighbourhood … the present land proprietors may be considered the owners of all the accumulated labour which has for ages been expending, in bringing the country to its present productive state” (l.c., p. 35).” (p 139)

There is an equivalent in industry that Marx refers to, however, back in Capital I, which is the limitations on investment imposed by the technical composition of capital. One of the examples Marx gave was of a glass factory, where the kiln has six openings, and so requires not only the capital to install the kiln, but also to employ six teams of workers. Generally, as Marx says, firms would wait until they had the required capital, generated from profits, or else could justify borrowing money capital to finance the investment, before they engaged in the expansion. However, the firm may introduce such a kiln, and run it with say only one or two teams, if they believe that demand for glass might expand rapidly, and would then justify the investment. The unit cost of production might then rise, and the firm would have to absorb it until such time as production rose to full capacity, and unit costs then fell below the original level. Orthodox economics also recognizes such conditions, whereby the marginal cost curve does not comply with the simple shape of a parabola, with initially falling and then rising marginal costs, but instead consists of a series of peaks and troughs, as investment occurs in lumps, rather than marginal increments.

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