Thursday, 15 February 2018

Theories of Surplus Value, Part II, Chapter 13 - Part 11

As Marx already pointed out, demand can rise without a rise in population, because, as corn prices fall, this can lead to movement along the demand curve, but it can also lead to substitution, i.e. consumers use the savings on their consumption of corn to buy other agricultural products. However, because the working population does grow each year, and because bread forms a large part of its diet (at least at the time Marx was writing) the increase in the demand for bread and corn rises by a larger proportion than the general rise in population, and expansion of capital. The consequence is then that additional less fertile land is brought into cultivation to meet this higher demand.

“It is thus not necessary to assume that the demand does not grow with the productivity of capital, and that consequently the rent falls. And the rent can rise, if the difference in the degree of fertility has been unevenly affected by the improvement.” (p 323)

Ricardo says, in relation to the second type of improvement,

““But there are improvements which may lower the relative value of produce without lowering the corn rent, though they will lower the money rent of land. Such improvements do not increase the productive powers of the land; but they enable us to obtain its produce with less labour. They are rather directed to the formation of the capital applied to the land, than to the cultivation of the land itself. Improvements in agricultural implements, such as the plough and the thrashing machine, economy in the use of horses employed in husbandry, and a better knowledge of the veterinary art, are of this nature. Less capital, which is the same thing as less labour, will be employed on the land; but to obtain the same produce, less land cannot be cultivated. Whether improvements of this kind, however, affect corn rent, must depend on the question, whether the difference between the produce obtained by the employment of different portions of capital be increased, stationary, or diminished” (l.c., p. 73).” (p 323-4)

Ricardo should also have applied this to his analysis of the natural fertility of the soil, Marx says. In other words, whether the transition from one type of soil to another results in the rent rising, falling or remaining the same also depends on whether the marginal productivity of capital is rising, falling or constant, as it is incrementally applied to these different soils.

Ricardo continues,

““If four portions of capital, 50, 60, 70, 80, be employed on the land, giving each the same results, and any improvement in the formation of such capital should enable me to withdraw 5 from each, so that they should be 45, 55, 65 and 75, no alteration would take place in the corn rent; but if the improvements were such as to enable me to make the whole saving on that portion of capital, which is least productively employed, corn rent would immediately fall, because the difference between the capital most productive, and the capital least productive, would be diminished; and it is this difference which constitutes rent” (l.c., pp. 73-74).” (p 324)

This is true for differential rent, which is the only kind of rent that exists for Ricardo.

“On the other hand, Ricardo does not touch upon the real question at all.” (p 324)

The real question, Marx says, is whether, as a result of the change in the value of the constant capital, a change in the organic composition of the agricultural capital occurs. If it does, then this will affect its relation to the organic composition of capital in industry, and it is this which is the economic basis for absolute rent.

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