Theories of Surplus Value, Part II, Chapter 12 - Part 30

Marx describes this situation by examining the scenarios set out in Table C. If the starting position is that of IV, then III-I cannot compete with it, if the market value is £1.846. If only 92.5 tons are required, IV can supply all of these on its own. IV invests £100 of capital to produce these 92.5 tons. The value of these 92.5 is then £120, or £1.297 per ton.

Table C

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	110.769	1.846	2.000	- 0.153	1.833	0.769	0	0.416	0	0.769	0.416
II	100	65	120.000	1.846	1.846	0	1.692	10	0	5.416	0	10	5.416
III	100	75	138.461	1.846	1.600	0.246	1.466	10	18.461	5.416	10	28.461	15.416
IV	100	92.5	170.769	1.846	1.297	0.548	1.189	10	50.769	5.416	27.50	60.769	32.916
Total	400	292.5	540.000					30.769	69.230	16.666	37.50	100	54.166

That value is below the price of production for III – I. So, IV can sell all of its output at its value, and it will thereby produce a surplus profit of £10, which constitutes the absolute rent. That situation would change if demand rose above 92.5 tons, at a price of £1.297 per ton. In that case, IV could not satisfy all of the demand, which would mean that III could enter production. Similarly, assuming demand remains constant, if III attempted to enter production, their additional supply would represent overproduction, and the market price would fall, possibly wiping out any profit for III altogether.

Suppose there is just one class of land, Marx says. In that case, there is no differential rent. If there is unlimited land, relative to the capital and labour that seeks to use it, and if there is no landed property, then there is also no absolute rent. If the value of agricultural output is 60 c + 40 v + 20 s = £120, whilst the average rate of profit is 10%, so that the price of production is £110, capital will migrate to agricultural production in search of this higher rate of profit. The supply of agricultural commodities would then rise, and the market price of those commodities would fall as supply then exceeded demand. Capital would continue to to migrate into agriculture, so long as the surplus profits existed. Supply would continue to rise, and market prices fall until they reached the price of production of £110, at which point only average profits are made. In that case, there would be no rent at all.

“This is a tautology. For the existence of absolute rent not only presupposes landed property, but it is the posited landed property, i.e., landed property contingent on and modified by the action of capitalist production. This tautology in no way helps to settle the question, since we explain that absolute rent is formed as the result of the resistance offered by landed property in agriculture to the capitalist levelling out of the values of commodities to average prices. If we remove this action on the part of landed property—this resistance, the specific resistance which the competition between capitals comes up against in this field of action—we naturally abolish the precondition on which the existence of rent is based.” (p 301) 

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