Saturday, 3 March 2018

Theories of Surplus Value, Part II, Chapter 13 - Part 26

Ricardo criticises Smith's argument that a switch to cheaper staple foodstuffs, e.g. potatoes, in place of bread, would result in a greater mass of rent, and share of output going to the landlord. But, Ricardo's argument is also wrong. He writes,

““No part of that additional proportion would go to rent, but the whole invariably to profits … while lands of the same quality were cultivated, and there was no alteration in their relative fertility or advantages, rent would always bear the some proportion to the gross produce” (l.c., p. 396).” (p 340) 

The cheaper foodstuff reduces the value of labour-power. That causes the rate of surplus value to rise. Assuming no change in the value of constant capital, the reduced value of variable capital brings about an increase in the value composition of capital, whilst the technical composition of capital remains the same. In other words, although the value of variable capital advanced declines, the physical quantity of labour-power employed remains the same. The amount of new value produced by labour, therefore, remains the same, whilst a smaller portion of this new value is required to reproduce the consumed labour-power. The mass of surplus value, thereby rises. The value of c remains constant, whilst the value of v falls, so c + v falls, whilst s rises, bringing about a rise in the rate of profit.

The rate of profit would therefore rise. In this case [there would be] a fall in absolute rent and proportionately in differential rent. This factor would affect equally agricultural and non-agricultural capital. The general rate of profit would rise and the rent would consequently fall.” (p 341) 

In concluding the chapter, Marx cites without comment Chapter XXVIII and Chapter XXXI of Ricardo's “Principles”.

Marx cites Ricardo's criticism of Smith's view concerning the constant value of corn. (Chapter XXVIII),

“Corn, according to him, is always of the same value because it will always feed the same number of people. In the same manner, it might be said, that cloth is always of the same value, because it will always make the same number of coats. What can value have to do with the power of feeding and clothing?” (l.c., pp. 449-50.)” (p 341) 

Ricardo's comments here demonstrate the difference between and confusion of value with exchange value.

““Estimated in corn, gold may be of very different value in two countries. I have endeavoured to show that it will be low in rich countries, and high in poor countries; Adam Smith is of a different opinion: he thinks that the value of gold, estimated in corn, is highest in rich countries” (l.c., p. 454).” (p 341)

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