Wednesday, 27 December 2017

Theories of Surplus Value, Part II, Chapter 11 - Part 4

Marx then examines what he says is a very strange logic applied by Ricardo. Ricardo notes that Adam Smith talks about rent being paid for wood from virgin forests, and coal from mines, stone from quarries etc. In other words, the point being made is that there is some natural resource, which has no value, i.e. it has not been produced by labour – virgin timber as opposed to cultivated timber. The importance of the distinction being obvious that these use values have no value, and yet the owner of them will insist on a price for their use.

Ricardo says,

““Is it not, however, evident, that the person who paid what he” (Adam Smith) “calls rent, paid it in consideration of the valuable commodity which was then standing on the land, and that he actually repaid himself with a profit, by the sale of the timber?” (l.c., p. 54).” (p 246) 


““… the compensation[…] for the mine or quarry, is paid for the value of the coal or stone which can be removed from them, and has no connection with the original and indestructible powers of the land. This is a distinction of great importance, in an enquiry concerning rent and profits; for it is found, that the laws which regulate the progress of rent, are widely different from those which regulate the progress of profits, and seldom operate in the same direction” (l.c., pp. 54-55).” (p 246) 

This is very strange logic, says Marx. Ricardo wants to argue that what is paid for the virgin timber, or minerals, is not rent, because it is not payment for the “use of original and indestructible powers of the soil.” Instead, he argues as though it is the same as the profit that a capitalist obtains from advancing capital to the land, for example, to farm it, or the interest that may be obtained from having invested in fixed capital on the land, which is then loaned to a farmer. For example, a landowner may erect barns, which they loan out to the farmer. What the farmer pays for the use of the barn is not rent, but interest on the fixed capital value they have use of, as part of their production. But, this is clearly not the case with the owner of virgin forests, mines, etc.

“Has the owner of a “virgin forest” invested “capital” in it so that it may bear “wood” or has the owner of stone-quarries and coal-mines invested “capital” in these, so that they may contain “stones” and “coal”? Whence, therefore, his “compensation”? It is by no means—as Ricardo tries to make out—profit or interest of capital. Therefore it is “rent” and nothing else, even if it is not rent as defined by Ricardo. But this only shows that his definition of rent excludes those forms of it where the “compensation” is paid for mere natural things, in which no human labour is embodied, and where it is paid to the owner of these natural things only because he is the “owner”, the owner of land, whether this consists of soil, forest, fish pond, waterfall, building land or anything else.” (p 246-7)

Ricardo ends up in confusion here, because he argues that what is paid for is a valuable commodity – virgin timber, coal, minerals etc. But, he began himself by distinguishing his position from Smith by insisting that value is determined by labour. As far as the virgin timber, coal and mineral are concerned they have no value, because, in their original state, no labour has been expended on them. They are very great use-values, but that does not make them products, possessing value, let alone commodities possessing exchange-value.

All of them only obtain value when they are the subject of labour. The trees must be felled and processed; the coal must be mined and the minerals quarried and processed. They must then be sent to market. Only then do they become commodities possessing exchange-value.  In the case of virgin timber, there may be a further complication, which does not apply to say minerals.  Minerals in the ground, cannot be produced by labour, however, timber can be produced as a result of forestry, in the same way that other agricultural crops are produced.  Virgin timber, as Marx says has no individual value, because it is not the product of labour.  But, as Marx points out the value of timber as a commodity is not determined by the actual labour embodied in it (here none), but by the socially necessary labour required for its reproduction.  In terms of the social value of virgin timber, therefore, it is indistinguishable from the social value of cultivated timber.  The virgin timber when cut down, must be reproduced by forestry, and so its social value is determined by the labour required for its reproduction.

This does not change the basis of Marx's argument in relation to Ricardo.  It means that the virgin timber has no individual value, but its social value is determined as with cultivated timber.  It is the fact that there is this difference between the individual value of the virgin timber, and its market value, that provides a basis for differential rent for the land on which it resides.

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