Sunday, 31 December 2017

Theories of Surplus Value, Part II, Chapter 12 - Part 2

[2. Various Combinations of Differential and Absolute Rent. Tables A, B, C, D, E]

All cultivated land, mines, quarries etc. pay an absolute rent. The economic basis of this rent, the fund from which it is paid, is the difference between the price of production and the value of output. The value of output is taken as being greater than the price of production, because the composition of capital, in these spheres, is lower than the social average composition of capital. On top of this absolute rent, paid by all capital in these spheres, the capitals employed in the more fertile lands, mines etc. also pay a differential rent, the basis of which is the difference between the individual value of their production and the market value.

Marx sets out the following example. There are three mines. They each employ £100 of capital, and its has the same composition in each case. Mine I pays an absolute rent R; Mine II pays twice as much rent 2R; and Mine III 4R.

A new Mine IV is opened up that is more productive. By employing the £100 of capital employed in Mine I, instead on Mine IV, it becomes possible to not only replace all of Mine I's output, but also half of Mine II's output.

The amount of absolute rent paid by each mine is the same. So, when Mine I stops production, this has no effect on the absolute rent paid by Mines II-IV.

“The absolute rent, derived from IV, would, in amount and rate, be absolutely the same as that formerly derived from I; in fact the absolute rent, in amount and rate, would also before have been the same on I, II and III, always supposing that the same amount of capital was employed in those different classes. The value of the produce of IV would be exactly identical to that formerly employed on I, because it is the produce of a capital of the same magnitude and of a capital of the same organic composition. Hence the difference between [the] value [of the product] and its cost-price must be the same; hence [also] the rate of rent.” (p 254) 

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