## Friday, 16 February 2018

### Theories of Surplus Value, Part II, Chapter 13 - Part 12

Marx refers back to the examples previously given in Chapter 12

The organic composition of capital in industry is taken as 80 c + 20 v, and in agriculture as 60 c + 40 v. In both, the rate of surplus value is 50%. The rate of profit in industry is then 10%, and this determines the general rate of profit. As the rate of profit in agriculture would be 20%, with the value of agricultural output being 120, that means that there is surplus profit of 10, giving rise to a rent of that amount.

 Class Capital £'s Kilos of corn Total value £'s Market-value per Kilo. £'s Individual value per Kilo. £'s I 100.00 65 120.00 2.00 2.00 II 100.00 65 130.00 2.00 1.846 III 100.00 75 150.00 2.00 1.600 Total 300.00 200 400.00
 Differential value per Kilo. £'s Price of production per Kilo £'s Absolute rent £'s Differential rent £'s I 0 1.833 10.00 5.00 II 0.154 1.462 10.00 10.00 III 0.400 1.133 10.00 20.00 30.00 35.00
 Absolute Rent in Kilos. Differential rent in Kilos Rental £'s Rental in Kilos I 5 0 10.00 5 II 5 5 20.00 10 III 5 15 40.00 20 15 20 70.00 35

Marx assumes that the effect of a fall in the value of constant capital is the same for whatever type of soil is considered. He assumes a 10% reduction in the value of constant capital from £100 to £90.

There are basically three scenarios that might exist. Firstly, the fall in the value of constant capital might result in an equal fall in the value of variable-capital, or the fall in the value of the variable capital might be proportionately greater or smaller, or finally, the value of variable capital may remain constant, but a fall in the value of constant capital releases capital so that more of both are employed.

If the organic composition of capital of 60:40 remains constant, then on a capital of £90 this would equate to £54 c + £36 v. The value of the land type I output (60 kilos) would then be £54 c + £36 v + £18 s = £108. For this to be the case, the same rise in social productivity that reduced the value of constant capital by 10%, would have to reduce the value of wage goods by 10%, leading to a 10% fall in wages. But, if wages fell by more than 10%, so that v falls not to £36, but to £32.40, the laid out capital falls to £86.40. The value of the 60 kilos is then £54 c + £32.40 v + £16.20 s = £102.60. The organic composition of capital here then would be 62.75:37.5.

Finally, the amount laid out for wages could remain the same so that it rises relative to the constant capital, leading to a lower organic composition. If £90 is laid out and £40 is laid out as variable capital, that leaves £50 to be laid out as constant capital. For that to be the case, there also has to be a change in the technical composition of capital, reflecting a fall in agricultural productivity. The original composition would then be 50:40, and the value of output would be £50 c + £40 v + £20 s = £110.

The consequence of this can be seen in the following table.

 Capital Absolute Rent % Absolute rent £'s Differential rent £'s Absolute rent Kilos Differential rent Kilos Rental £'s Rental Kilos A) 60 c+40 v 10.00 30.00 40.00 15.00 20.00 70.00 35.00 B) 54 c+36 v (60 c+40 v) 10.00 27.00 36.00 15.00 20.00 63.00 35.00 C) 54 c + 32.40 v (62.50 c+37.50 v) 8.75 22.03 34.20 13.26 20.00 56.88 33.26 D) 50c+40v(55.56 c+44.44 v) 12.22 33.00 36.66 18.00 20.00 69.66 38.00