Theories of Surplus Value, Part II, Chapter 12 - Part 26

Table D

Class	C Capital £'s	T Output Tons	TV Total Value £'s	MV Market-Value £'s Per Ton	IV Individual Value £'s per Ton	DV Differential Value £'s per Ton	CP Cost-Price (price of production) £'s per ton	AR Absolute Rent £'s	DR Differential Rent £'s	AR in T Absolute Rent in Tons	DR in T Differential Rent in Tons	TR Total Rent £'s	TR in T Total Rent in Tons
I	100	60	110.000	1.833	2.000	- 0.166	1.833	0.	0	0	0	0	0.
II	100	65	119.166	1.833	1.846	- 0.012	1.692	9.166	0	5.000	0	9.166	5
III	100	75	137.500	1.833	1.600	0.219	1.466	10.000	17.500	5.454	9.545	27.500	15
IV	100	92.5	169.583	1.833	1.297	0.540	1.189	10.000	49.583	5.454	27.045	59.583	32.50
Total	400	292.5	536.250					29.166	67.083	15.909	36.590	96.250	52.50

In Table D, I pays no rent, because the market value of £1.833 per ton is equal to the individual price of production. In the equation AR = IV – CP = +y, IV = £2.00, CP = £1.833, resulting in AR = £0.166. Similarly, differential rent is DR = MV – IV = x. But, for I, the market value is equal to the price of production, so, MV = £1.833 and IV = £2.00, so, DR = -£0.166. The negative DR here cancels out the AR, so the TR is zero.

“The value of its product is £2; [it is] sold at £ 1 5/6, that means 1/12 below its value which is 8 1/3 per cent below its value. Category I cannot sell at a higher price, because the market is determined not by I but by IV, III, II in opposition to I. Category I can merely provide an additional supply at the price of £ 1 5/6.” (p 295) 

The fact that the market value is equal to I's price of production is a result of its relatively low level of productivity. Had I been slightly more productive, so that, for example, it produced 64 tons, rather than 60 tons, with £100 of capital, then its price of production would have been lower. The difference between MV and CP would then have been positive, resulting in absolute rent. To produce 60 tons would have required £93.75 of capital, resulting in an IV of £1.875, and CP of £1.719. The difference between MV and CP would then be £0.115 (rounded), giving a rent on the 60 tons of production of £6.875. That is, it would pay some, but not all, of the absolute rent.

A rise in the fertility of I, however, also means a relative fall in the fertility of II – IV.

“The fact that I bears no rent is therefore just as much due to the circumstance that it is not absolutely more fertile as to the fact that II, III, IV are not relatively less fertile.” (p 295) 

In the same way that a rise in the fertility of I would result in it paying some absolute rent, an absolute fall in the productivity of II – IV would have the same result. A higher market value would mean that the demand fell short of the 292.5 tons of supply, say amounting to only 280 tons.

“It can thus equally well be said that I yields no rent because of the absolute productivity of IV, for as long as II and III were the only competitors on the market, it yielded a rent and would continue to do so even despite the advent of IV, despite the additional supply—although it would be a lower rent—if for a capital outlay of £100 IV produced 80 tons instead of 92 1/2 tons.” (p 296) 

The other question that arises is what happens where either the organic composition in agriculture, or in industry, is different, in each of the situations described by Tables A – D.

The first question to ask, Marx says, is what is the rate of surplus value. If £100 of capital is laid out as variable capital, the value of output is greater where the rate of surplus value is 100% rather than 50%. In other words, the labour-power bought by this £100, produces £200 of new value, in the first case, and only £150, in the second case. But, this doesn't tell us what the total value of the product would be, because the second question is how much capital is laid out as constant capital, for its production. In other words, what is the organic composition of the capital?

That is significant, because, for any capital of a given size, with a given rate of surplus value, the amount of surplus value will be determined by the organic composition. If the composition is 80 c + 20 v, with a 50% rate of surplus value, the surplus value will be 10, and the value of the product is then £110. If its 40 c + 60 v, the surplus value is 30, and the value of the product is £130. A capital composed 60 c + 40 v produces 20 of surplus value, and its product is then £120.

The total profit is £60, and £300 was advanced to produce it, giving an average rate of profit of 20%. If each capital made this average rate, they would each sell their output for £120. Then the first would sell at £10 above the value of their product, the second at £10 below the value of their product, and the third at the same value of its product.

The price of £120 is the price of production, for the output of each capital, and would arise as a result of competition between the different capitals. Capital would leave the first sphere, reducing supply, and pushing the price of these commodities up from £110 to £120. The released capital would move to the second sphere, increasing supply of those commodities, and pushing their price down from £130 to £120.

“The values of the commodities, thus modified, are their cost-prices, which competition constantly sets as centres of gravitation for market-prices.” (p 297) 

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