Thursday, 28 December 2017

Theories of Surplus Value, Part II, Chapter 11 - Part 5

Under capitalism, some things that do not have value do become sold as commodities. Capital has no value, but is sold as a commodity, whose price is interest; land has no value, but is sold as a commodity, whose price is the capitalised rent.

“Then we would have to say: Rent is the price paid to the owner of natural forces or mere products of nature for the right of using those forces or appropriating (by labour) those products. This is in fact the form in which all rent appears originally. But then the question remains to be solved, how things which have no value can have a price and how this is compatible with the general theory of value.” (p 247)

But, the real question to be asked, Marx says, is from what fund is this compensation paid?

“Well, says Ricardo, “by the sale of the timber”. That is, out of the price of the timber. And furthermore, this price was such that, as Ricardo says, the man “actually repaid himself with a profit”.” (p 247)

But, then it becomes apparent why this is not possible within the context of Ricardo's theory of value. Ricardo argues that prices of production and exchange-value are the same, so we can ignore the issue of the price of production here, and focus on the value. What is the value of the timber? We can ignore any constant capital. The value of the timber, the price it obtains by sale, is then equal to the labour required to fell it, process it, and transport it to market. On the assumption that this is a capitalist operation, part of this labour will be paid labour, covering the wages of the forestry workers, and the other part will be unpaid labour, constituting the profit of the timber capitalist. But, in that case, had this capitalist been involved in cotton spinning and employed the same quantity of labour, that labour would have produced the same quantity of new value and surplus value. In that case, it's clear that the capitalist could not finance the purchase of the timber, coal, or stone – or use the land from which they came – out of the value/price of the commodities. 

The only other option would be that the commodities sold at a price above that value, but that would destroy Ricardo's labour theory of value, because it would mean that the value of these commodities was greater than the labour required for their production.

The reason that Ricardo falls into this error is that he proceeds on the basis of how things appear to stand from the perspective of the capitalist. First of all, the timber capitalist, for instance, pays the landowner for the timber taken from the land. As virgin timber, it has no value. In fact, Marx says, while it exists simply as trees it doesn't even have use value as timber.

Ricardo never investigates surplus value, but simply assumes the existence of an average rate of profit, which each capitalist expects to obtain on their capital, within the price of the commodities they sell. So, if the capitalist pays £5 per ton for timber, to the landowner, Ricardo sees this as being like the advance of capital by any other capitalist. If the capitalist had no other costs, he might then sell the timber for £6 per ton, obtaining the average rate of profit of 20% on his capital. By the same token, had the landowner only charged him £2 per ton, he could have sold it for £2.40 per ton, and still made 20% profit. In this case, the price of timber would be wholly dependent on the amount of compensation the landowner demanded.

“Whether the “rent”—compensation—is paid to the owner of the land for the use of the “power” of the land or for the “use” of the “natural products” of the land, in no way alters the economic relations, in no way alters the fact that money is paid for “a natural thing” (power or produce of the earth) upon which no previous human labour has been spent. And thus on the second page of his chapter “On Rent” Ricardo would have overthrown his whole theory in order to avoid a difficulty. It would appear that Adam Smith was a great deal more far-sighted here.” (p 248-9)

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