Theories of Surplus Value, Part II, Chapter 12 - Part 6

Marx then presents tables A-E in a different format. In the process, he introduces a new term called “Differential Value”. Marx defines Differential Value later as being the difference between the market value and the individual value of a commodity. It is calculated per unit. So, for example, if the market value of coal in the examples is £2 per ton, and the individual values for each mine are £1, £1.20, £1.50, £200, £2.50, the differential values would be £1.00, £0.80, £0.50, £0, and - £0.50.

Table A

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	120	2.00	2.00	0	1.833	10	0	5	0	10	5
II	100	65	130	2.00	1.846	0.153	1.692	10	10	5	5	20	10
III	100	75	150	2.00	1.600	0.400	1.466	10	30	5	15	40	20
Total	300	200	400					30	40	15	20	70	35

Table B

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
II	50	32.5	60	1.846	1.846	0	1.692	5	0	2.708	0	5	2.708
III	100	75	138.461	1.846	1.600	0.246	1.466	10	18.461	5.250	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	250	200	369.230					25	69.230	13.541	37.50	94.230	51.041

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

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	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	17.500	5.454	9.545	27.500	15
IV	100	92.5	169.583	1.833	1.297	0.540	1.189	10	49.583	5.454	27.045	59.583	32.50
Total	400	292.5	536.250					29.166	67.083	15.909	36.590	96.25	52.50

Table E

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
II	100	65	113.750	1.750	1.846	- 0.096	1.692	3.750	0	2.142	0	3.75	2.142
III	100	75	131.250	1.750	1.600	0.150	1.466	10	11.250	5.714	6.428	21.250	12.142
IV	100	92.5	161.875	1.750	1.297	0.493	1.189	10	41.875	5.714	23.928	51.875	29.642
Total	300	232.5	406.875					23.750	53.125	30.357	30.357	76.875	43.928

By establishing the category of differential value, which can appear as a negative amount, Marx avoids the problem that arises from having to present a situation where the absolute rent falls below the normal level, as a negative differential rent, as was the case in Table C.

Marx restates some basic concepts and principles in explaining the basis of differential value. He begins by explaining the difference between individual value and individual price of production. If, in each mine, £100 of capital is employed, with the same organic composition of capital, say 80:20, then, with the same rate of surplus value, in each mine, say 100%, the individual value of output from each mine will be the same, that is £120, made up 80:20:20.

This caused some confusion for some economists, because it seemed perverse that the value of output from one mine, producing 60 tons of coal could be the same as the value of another mine producing 90 tons of coal. And, of course, in terms of the social value, or market value, of the output that is correct. But, in terms of the individual value it is not. This is a difference between an embodied labour theory of value, and a social theory of value.

Looking at a mine that produces 60 tons of coal, the value embodied in the coal is, here, £80, representing the dead labour, in the constant capital, and £40 of new value, created by the living labour, £20 of which reproduces the workers' wages, and £20 of which goes to surplus value. But, this is the value, irrespective of the quantity of coal produced. On this basis, each ton embodies 120/60 = £2 of value. If another mine produces 90 tons of coal, but similarly uses £80 of constant capital, and £20 of variable capital, with £20 of surplus value, the individual value of its output is also £120, but the value embodied in each ton is 120/90 = £1.33.

But, its obvious that Mine I does not sell its output at £2, whilst Mine II sells its output at £1.33. A commodity's value is not determined by its individual value, reflecting the embodied labour, but by its social value, a market value based upon the labour-time socially necessary for its production. In this case, we might say that the labour-time required is reflected in a value of £240 – the total value of output, which amounts to 240/150 = £1.60 per ton. On this basis, it can be seen that the individual value of Mine I's production is £0.40 per ton more than its social value, whereas Mine II's production has an individual value that is £0.66 per ton less than its social value. Put another way, the individual value of output of both mines is £120, but the market value of Mine I's output is £96, whereas the market value of Mine II's output is £144.

But, also, the individual value of output is not the same as the individual price of production. In each case, £100 of capital produces £120 of output value – individual value, i.e. 80 c + 20 v + 20 s. But, if the average rate of profit is 10%, then in each case, the individual price of production will be £110, i.e. £100 k + £10 p.

“If, therefore, the capital advanced equals £100, the value of the total product must be £120. Supposing furthermore that the average profit is 10 per cent, then £110 is the cost-price of total product, in the above example, of coal. With the given rate of surplus-value or surplus-labour, the £100 capital transforms itself into a value of £120, whether poor or rich mines are being exploited; in a word: The varying productivity of labour—whether this variation be due to varying natural conditions of labour or varying social conditions of labour or varying technological conditions—does not alter the fact that the value of the commodities equals the quantity of labour materialised in them.” (p 262)

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