Theories of Surplus Value, Part II, Chapter 12 - Part 37

Where the absolute rent for any particular class of land cannot be fully met, because the market value falls below the individual price of production for that class of land, a portion of the capital employed on that land must be withdrawn. The same is true if a new type of land, like IV, is introduced, which is more productive, and so makes some of the output from the less productive land redundant.

Where rent is completely absent, it implies that landed property does not act as an impediment to the investment of capital. That means that either the landowner and the capitalist are the same person, which in developed capitalist production, Marx says, would be the exception, or else it is a situation such as in the colonies, where landed property had not been established. It might also arise, Marx says, where there is overproduction, which forces prices down.

“This however is the very case which Ricardo does not foresee because he always argues on the assumption that the supply is only sufficient to satisfy the additional demand;” (p 306)

It may be the case, as in Table B,C and D that land II and I pay no absolute rent, or not the full amount, because competition from III and IV reduces the market value, causing I and II to sell below the individual value of their production.

“Ricardo on the other hand presupposes that they sell their product at its value and that the worst land always determines the market-value, whereas in case I D, which he regards as the normal case, just the opposite takes place. Furthermore his argument is always based on the assumption of a descending line of production.” (p 306) 

The absolute rent depends on the difference between the organic composition of capital in industry, compared to agriculture.

“If the average composition of the non-agricultural capital is £80 c+£20 v, and the rate of surplus-value is 50 per cent, and if the composition of the agricultural capital is £90 c + £l0 v, i.e., higher than that of industrial capital—which is historically incorrect for capitalist production— [then there is] no absolute rent; if it is £80 c + £20 v, which has not so far been the case, [there is] no absolute rent; if it is lower, for instance £60 c + £40 v, [there is an] absolute rent.” (p 307) 

Again, as earlier, Marx does not answer the question here of why landowners would rent land for free, i.e. no absolute rent, on any land, in conditions where the organic composition of capital was higher in agriculture than industry. All that can be said under such circumstances is that no rent is possible in the “economic sense”. In other words, the rent, as with ability of other monopolies to charge higher prices, and thereby to appropriate additional surplus value, represents an appropriation of profit, and or wages, rather than just surplus profit.

There are a number of scenarios dependent upon which class of land dominates the market. If the least productive land pays absolute rent, this means that all output is required to satisfy demand. In that case, the least productive land determines the market value. That is shown in Table A.

Table A.

Class	Capital £	Absolute Rent £	Number of Tons	Market-Value per ton £	Individual Value per ton £	Total value £	Differential Rent £
I	100	10	60	2.000	2.000	120	0
II	100	10	65	2.000	1.846	130	10
III	100	10	75	2.000	1.600	150	30
Total	300	30	200			400	40

In Table B, the least productive land again determines the market value, and it pays absolute rent at the full rate. But, the amount of rent it pays is less than before, because it employs less capital. Competition from III and IV means that demand is satisfied without the need for all of its output. 

Table B

Class	Capital £	Absolute Rent £	Number of tons	Market- Value per ton £	Individual Value per ton £	Total value £	Differential Rent £
I	50	5	32.50	1.846	1.846	60.000	0
II	100	10	75.00	1.846	1.600	138.462	18.462
III	100	10	92.50	1.846	1.297	170.769	50.769
Total	250	25	200.00			369.231	69.231

In B, the market value does not fall, but in C, the production from all of the land leads to an oversupply. The market value falls, because, in a condition of oversupply, the more productive lands dominate the market. However, as a result of the lower market value, demand rises (movement along the demand curve), so that all of the supply is absorbed. But, at this lower market value, I can pay only part of the absolute rent, whilst II can pay only the absolute rent, and no differential rent.

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

In Table D, the condition of oversupply, or the ability of the more productive land to dominate the market value, by the size of their production, lowers the market value to a point whereby I can pay no absolute rent, and II can pay only a partial absolute rent.

Table D

Class	Capital £	Absolute Rent £	Market- Value per ton £	Cost-price (Price of Production) £	Number of tons	Total Value £	Differential Rent £
I	100	0	1.833	1.833	60.00	110.000	0(-)
II	100	9.167	1.833	[1.692]	65.00	119.167	-(latent)
III	100	10.000	1.833	[1.467]	75.00	137.500	+17.500
IV	100	10.000	1.833	[1.189]	92.50	169.500	+49.583
Total	400	29.167			292.50	536.250	67.083

Finally, Table E sees land I forced out of production altogether. The output from the other land types is able to meet demand without I's output. The market value, based on the production of these other lands, is below the price of production for I.

Table E

Class	Capital £	Absolute Rent £	Market-Value per ton £	Cost-price (Price of Production) £	Number of tons	Total Value £	Differential Rent £
II	100	3.750	1.750	1.692	65.00	113.750	-(none)
III	100	10.000	1.750	[1.467]	75.00	131.250	+11.250
IV	100	10.000	1.750	[1.189]	92.50	161.875	+41.875
Total	300	23.750			232.50	406.875	53.125

Marx adds a short note, at the end of the chapter to point out that the price of the land, the capitalised rent, does not constitute an element of advanced capital for the purpose of determining the organic composition of capital in agriculture.

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