Saturday, 21 April 2018

Theories of Surplus Value, Part II, Chapter 15 - Part 24

Ricardo says, 

““I hope I have made it sufficiently clear, that until a country is cultivated in every part, and up to the highest degree, there is always a portion of capital employed on the land which yields no rent, and” (!) “that it is this portion of capital, the result of which, as in manufactures, is divided between profits and wages that regulates the price of corn. The price of corn, then, which does not afford a rent, being influenced by the expenses of its production, those expenses cannot be paid out of rent. The consequence therefore of those expenses increasing, is a higher price, and not a lower rent” (l.c., p. 293).” (p 392) 

But, Marx points out that absolute rent is equal to the excess of the exchange-value of the agricultural product over its price of production. So, whatever reduces the total quantity of labour (dead labour and living labour) required for corn production, reduces the rent, because it reduces the value. The price of production consists of the cost of production, k, (c + v) plus average profit. Marx comments, 

“In so far as the price of production consists of expenses, its fall is identical and goes hand in hand with the fall in value.” (p 392) 

This is only where less labour is required. If v falls because wages fall that is not the case. If the value of c falls, then the value of c + v falls, and consequently c + v + p falls. However, if the value of the variable capital falls, because the value of labour-power (wages) falls, (c +v), k, + p, i.e. the price of production falls, but c + v + s, the value, does not, because s rises by the same amount as the fall in v. 

“But in so far as the price of production (or the expenses) is equal to the capital advanced plus the average profit, the very reverse is the case. The market-value of the product falls, but that part of it, which is equal to the price of production, rises, if the general rate of profit rises as a result of the fall in the market-value of corn. The rent, therefore, falls, because the expenses in this sense rise—and this is how Ricardo takes expenses elsewhere, when he speaks of cost of production.” (p 392) 

However, as shown earlier, this is only the case if the rise in p is greater than the fall in k. 

“Improvements in agriculture, which bring about an increase in constant capital as compared with variable, would reduce rent considerably, even if the total quantity of labour employed fell only slightly, or so slightly that it did not influence wages (surplus-value, directly) at all.” (p 392) 

But, given that agriculture and mineral extraction forms a significant element in the input costs of wage goods, it's hard to see how an improvement in efficiency in the production does not reduce the value of wage goods, and thereby in the value of labour-power, thereby, so raising the rate of surplus value. Moreover, in both agriculture and mineral extraction, a large part of the organic composition is determined by the introduction of fixed capital, as neither involve the processing of raw material, in the way that occurs in manufacturing. In mineral extraction, as Marx already pointed out, there is only a minimal amount of circulating constant capital, in the form of auxiliary materials. The organic composition is affected by the introduction of machines to replace labour, but, as described in Capital III, new machines are only introduced where their value, i.e. the labour they represent, is less than the paid labour they replace. In the case of agriculture that also applies, but in addition a large element of the circulating constant capital in corn production is seeds. But, if a rise in efficiency reduces the value of corn, it thereby also reduces the value of the seeds, which are themselves replaced in kind from the production. 

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