Sunday, 24 December 2017

Theories of Surplus Value, Part II, Chapter 11 - Part 1

[Chapter XI] Ricardo’s Theory of Rent.

[1. Historical Conditions for the Development of the Theory of Rent by Anderson and Ricardo]

Anderson had been concerned with agricultural prices throughout the 18th century, whereas Ricardo was only concerned with the period 1770-1815. It impacts the way both view things. In the first half of the 18th century, wheat prices were falling, and they were rising in the second half. That meant that Anderson did not see costs of production necessarily rising, as Ricardo did.

“Hence for Anderson, the law he discovered was in no way connected with a diminishing productivity of agriculture or a normal rise in the price of the product. For Ricardo however such a connection existed. Anderson believed that the abolition of the corn laws (at that time export premiums) caused the rise in prices during the second half of the eighteenth century. Ricardo knew that the introduction of corn laws (1815) was intended to prevent the fall in prices, and to a certain degree was bound to do so.” (p 236) 

Ricardo believed that, within any given territory, there would be diminishing returns, as continual increases in demand led to recourse to more inferior lands. Anderson, however, argued in favour of import duties, so as to provide some stability of prices so as to encourage capital investment. The consequence of such investment, he argued, would be not only to lift productivity overall, but to reduce the difference in fertility between the best and worst land.

“Consequently he [maintained] that this progressive development in itself—through the law of rent he discovered—would lead to increased productivity in agriculture and thereby to a fall in the average prices of agricultural produce.” (p 236-7) 

This was the opposite conclusion to that drawn by Malthus, who plagiarised Anderson's work. Both Anderson and Ricardo start from a position which would seem strange to people in continental Europe, Marx says.

“1. That there is no Landed property to shackle any desired investment of capital in land. 2. That expansion takes place from better land to worse (this process is absolute for Ricardo, provided one leaves out of account the interruptions caused by the response of science and industry; for Anderson the worse land is in turn transformed into better land and so it is relative). 3. That a sufficient amount of capital is always available for investment in agriculture.” (p 237) 

The supposition of no existing land ownership derives from the fact that capitalism in agriculture was well established, in England, and, wherever capital required land, for capitalist farming, it had simply ripped up existing feudal relations to meet its needs. That occurred with the clearing of estates, and the enclosure of land, for example. The supposition of the movement from better to worse land also stems from this longer history of capitalist farming. Within a relatively small territory, several centuries of capitalist farming had resulted in increasingly intensive production. For Ricardo, there is an absolute movement towards less fertile land, whereas for Anderson, the potential exists for continuing rises in productivity, and improvement of the worst soils, so that the movement is only relative. In other words, on the basis of continual development, even the worst soil may be more productive than was the best, in an earlier period.

But, there is another reason for this perspective. Agriculture arises around where people first settle. These first settlements only aim to meet the community's direct needs. There is no reason why the land first settled, therefore, is the most fertile. As communities expand, and technology improves, other areas of land may be cultivated that are more fertile. But, when capitalist agriculture commences, the imperative, from the beginning, is a production of commodities. So, when some capitalist countries, like Britain, develop colonies, those colonies develop production of specific agricultural commodities that can provide the largest profits. And, this is also why in some of these colonies, monocultures are created. As a result, such agriculture, in the colonies, seeks, from the the beginning, to locate the production of certain crops, in the most fertile soil, the development of large flocks of sheep, and herds of cattle, on the most effective grazing, and so on. Only as it needs to expand further, therefore, is it led to move on to less fertile land.

And, the supposition of a free flow of capital, to the most profitable spheres, was natural for Ricardo, living in a developed capitalist economy, compared to the situation in Germany, and other parts of Europe, where old feudal relations continued. Throughout these passages, Marx continually makes this contrast between the conditions of capitalist agriculture in England compared to the situation in Germany, and thereby contrasts the views of Ricardo, and the views of Rodbertus.

In England, there is no shortage of capital for investment in agriculture, although there were complaints of a lack of land. In fact, this shortage was pointed to by some writers, such as Wakefield and Chalmers, as a cause of the falling rate of profit. In Germany, farming was still largely undertaken by the landowner rather than capitalist farmers. These landowners had difficulty in borrowing money-capital. The criticism of Ricardo, by Rodbertus, and other European writers, therefore, merely reflected the lower level of development of production in Europe.

No comments: