Tuesday, 26 December 2017

Theories of Surplus Value, Part II, Chapter 11 - Part 3

[3. The Inadequacy of the Ricardian Definition of Rent]

Adam Smith, as was seen, began with a labour theory of value, but ended up falling back from it into a cost of production theory, whereby the value of commodities was a composite of wages, profits and rent. Ricardo rejected this view and insists on a labour theory of value. He says,

““Adam Smith… cannot be correct in supposing that the original rule which regulated the exchangeable value of commodities, namely, the comparative quantity of labour by which they were produced, can be at all altered by the appropriation of land and the payment of rent” (l.c., p. 67).” (p 245) 

The conscious connection that Ricardo makes here between his theory of rent and the determination of value is its theoretical merit, Marx says. But, apart from that, Marx continues, Ricardo's Chapter II, “On Rent”, is inferior to the exposition provided by West.

Marx makes a distinction between three things for which rent of land is paid. Firstly, there is the agricultural rent proper. As Ricardo says, it is paid for the permission to invest capital in the land, and thereby to produce capitalistically. Marx distinguishes between this condition, where the land is the element within which production takes place, and two other conditions. The second is where a rent is paid for some particular natural feature which facilitates production, and acts as a condition for it. For example, a miller might use the natural motive power that a waterfall provides, to drive a water-wheel. But, the miller's production does not take place in the waterfall, as a farmer's production does take place in the land.

The third situation is with mines or quarries. Here again the land is not the element where production takes place. Rather, the land is a reservoir containing various minerals, and once they have been extracted, the production ceases.

“In this case payment is made for the land, not because it is the element in which production is to take place, as in agriculture, not because it enters into production as one of the conditions of production, as in the case of the waterfall or the building site, but because it is a reservoir containing the use-values, which are to be got hold of through industry.” (p 245)

Marx quotes Ricardo,

““Rent is that portion of the produce of the earth, which is paid to the landlord for the use of the original and indestructible powers of the soil” (l.c., p. 53)” (p 245) 

This explanation is poor, Marx says, for several reasons. Firstly, the soil has no “indestructible powers”. It can be over-cultivated, and worn out. But, similarly, it has no original powers either. All land is the result of a long historical process. Some of that process is natural. For example, in some areas, centuries of natural composting has taken place, as leaves have fallen, plants have decayed and been incorporated into the soil; in other areas, centuries of wild animal herds have manured the land; over millennia, the action of water, wind and heat have shaped the land and its composition. But, also from the time that Man began settled agriculture, cultivation has transformed the soil, and land conditions.

“By “original” powers of the land we understand here those, which it possesses independently of the action of human industry, although, on the other hand, the powers given to it by human industry, become just as much its original powers as those given to it by the process of nature. Apart from this, it is correct to say that rent is a payment for the “use” of natural things, irrespective of whether it is for the use of the “original powers” of the soil or of the power of the waterfall or of land for building or of the treasures to be found in the water or in the bowels of the earth.” (p 245-6)

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