Sunday, 25 February 2018

Theories of Surplus Value, Part II, Chapter 13 - Part 20

Once a farmer has signed a lease, say for 14 years, landed property effectively ceases to exist for him. His rent is set for the next 14 years, and is, thereby, unaffected by what happens to agricultural prices, or the farmer's profit, or the average rate of profit. The farmer, seeing agricultural prices rise, will make larger profits, surplus profits, which the landlord cannot appropriate in rent. In fact, as Marx describes in Capital I, this was one means by which primary capital accumulation proceeded. Rents were set in money, fixed over long lease periods, and when the Americas and other parts of the globe were opened up, by Europeans, gold and silver flooded back into European markets. This increased supply of precious metals resulted in a fall in its exchange-value, and as money-commodities, this meant an inflation of commodity prices. The farmers continued to pay the landlords the same nominal money rents, whilst the money prices of all the agricultural products they sold rose, bringing about a rise in profits made by capitalist farmers. Similarly, the landlords, dependent on these fixed nominal money rents, found themselves paying rapidly rising prices, not only for agricultural commodities, but also for industrial commodities, thereby placing them in a squeeze.

The landlords were led to borrow to sustain their lifestyles, and then to sell land to cover these debts. That meant that capitalist farmers were able to buy up the lands they farmed, whilst industrial capitalists from the towns and cities were able to buy up land, in order to obtain a revenue from rents, as an alternative to using their loanable money-capital for the purchase of bonds and other securities. But, as I've described elsewhere, and particularly in relation to the discussion on rent in Capital III, the idea that capital is only invested if it returns at least the average profit, and the requirement to produce the average rate of profit regulates the rental, does not conform to reality. Marx makes precisely these points in the following section.

“In practice matters do not always work out in the Ricardian manner. If the farmer possesses some spare capital or acquires some during the first years of a lease of 14 years, he does not demand the usual profit, unless he has borrowed additional capital. For what is he to do with the spare capital?” (p 335)

As I've pointed out, with any industry there are those capitals that operate at a lower level of efficiency, and obtain lower than average profits, just as the opposite is true. Over time, the less profitable capitals in the sphere go out of business or get swallowed up as part of the process of concentration and centralisation proceeds. But, that is a process not an event. At any one time, this process will not change the fact that some capitals, in each sphere, return lower than average profits. Moreover, there will always be some small capitals that may be large enough to provide employment for their owner, but which would not produce sufficient revenue for the owner if used as loanable money-capital, producing interest or dividends. Even where used to provide employment for the owner, for example, as a shopkeeper, back street mechanic etc., not only may the rate of profit on this capital fall below the average, it may even effectively become negative, thereby eating into the wages of the employed labour, resulting in the self-employed labour enduring longer hours, and worse conditions than wage labour employed by larger more efficient capitals.

Particularly with this capital used to self-employ labour, whether it is some kind of small-scale peasant production, in agriculture, or that of some kind of artisan, the employment is constrained by their concrete labour. A mechanic who has sufficient capital to keep them self employed in such work, cannot, for example, use that capital to set themselves up in employment as a carpenter, just because the rate of profit in that sphere is higher.

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