Theories of Surplus Value, Part II, Chapter 12 - Part 9

The absolute rent equals the difference between the individual value and the individual price of production, i.e. between £120 and £110, whereas the differential value equals the difference between the individual value and the market value. So, if the individual value is lower than the market value, the particular capital will make a surplus profit, after the absolute rent is paid, and this will constitute a differential rent. However, if the individual value is greater than the market value, the individual capital would not even be able to pay all of the absolute rent, which is what gave rise to the negative differential rent seen in Table C.

Class	Capital £	Absolute Rent £	Number of tons	Market- Value per ton £	Individual Value per ton £	Total value £	Rent £	Differential Rent £
I	100	0.769	60.00	1.846	2.000	110.769	0.769	-9.231
II	100	10.000	65.00	1.846	1.846	120.000		0
III	100	10.000	75.00	1.846	2.600	138.462		+18.462
IV	100	10.000	92.50	1.846	3.000	170.769		+50.769
Total	400	30.769	292.50			540.000		69. 231

This is resolved in Marx's reformulated Table C. 

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

Suppose the individual value of a mine's output is £120, but its market value is £115, that would mean that its market value was still £5 above its price of production of £110. It would still be able to pay an absolute rent, but that rent would be £5 as opposed to the £10 required as absolute rent.

“If the market-value sank down to their cost-price, it would yield no rent for them at all. They could pay no rent, since rent is only the difference between value and cost-price, and for them, individually, this difference would have disappeared, because of the [fall in the] market-value. In this case, the difference between the market-value and their individual value is negative, that is, the market-value differs from their individual value by a negative amount. The difference between market-value and individual value in general I call differential value. Commodities belonging to the category described here have a minus sign in front of their differential value.” (p 268) 

The absolute rent always equals the excess of the commodity's value over the price of production, but the differential rent equals the excess of the market value over the individual value. By the same token, the total rent – absolute rent plus differential rent – is equal to the excess of the market value over the individual price of production. In other words, if the market value of the commodity is £120, but the price of production is £110, then an absolute rent of £10 arises. If for a particular capital its individual price of production is £105, it would pay a differential rent of £5. Its total rent would be £15 being the difference between the market value of £120, and its individual price of production of £105.

Marx makes clear that, in dealing with rent, here, he has only done so “as an illustration of my theory of value and cost-prices—since I do not intend to give a detailed exposition of rent till dealing with landed property ex professo”. (p 269) 

So, he has left out all complicating issues, such as location, the varying productivity of capital,the effect of different types of production and uses for the same land, for example, for building land and so on.

Back To Part 8

Forward To Part 10