Monday, 23 April 2018

Theories of Surplus Value, Part II, Chapter 15 - Part 26

Marx quotes the following statement by Ricardo to show that he does consider value and price of production to be the same thing. 

““Mr. Malthus appears to think that it is a part of my doctrine, that the cost and value of a thing should be the same;—it is, if he means by cost, ‘cost of production’ including profits” (l.c., p. 46, note).” (Note * p 393) 

Ricardo admits that, in practice, there may be no portion of land that pays no rent, but argues that some of the capital employed on the land pays no rent. The basis of this is that if a farmer rents an area of land from a landlord this may hide the fact that actually only three-quarters of the area produces a rent. So, although say 4 hectares are rented, at a rental of £75 per year, this hides the fact that the rent is £25 per hectare on 3 hectares, with the fourth being rent free. But, this does not help Ricardo's argument, Marx says. 

“The one fact is as irrelevant to the theory as the other. The real question is this: Do the products of these lands or of this capital regulate the market-value? Or must they not rather sell their products below their value, because their additional supply is only saleable at, not above, this market-value which is regulated without them.” (p 393) 

In other words, the market value is determined by production on other lands. All producers have to sell their output at this market value, which is below the individual value of the product of these lands that produce no rent. So, they must sell this output below its individual value. 

“So far as the portion of capital is concerned, the matter is simple, because for the farmer who invests an additional amount of capital landed property does not exist and as a capitalist he is only concerned with the cost-price; if he possesses the additional capital, it is more advantageous for him to invest it on his farm, even below the average profit, than to lend it out and to receive only interest and no profit. So far as the land is concerned, those portions of land which do not pay a rent form component parts of estates that pay rent and are not separable from the estates with which they are let; they cannot however be let in isolation from the rest to a capitalist farmer (but perhaps to a cottager or to a small capitalist).” (p 394) 

A farmer that is already renting out an area of land, is not confronting landed property, in relation to any additional capital they seek to invest, because their rent is already set for the duration of their lease. So, as Marx described earlier, in opposition to Ricardo, a farmer who seeks to invest an additional £1,000 of capital is led to do so, even if it produces a lower rate of profit than they currently enjoy, or below the average rate of profit. They do so because they cannot easily invest it in a separate farm, or other line of business, and even a lower rate of profit is likely to bring them a higher rate of return than were they to simply lend the capital as money-capital in return for interest. 

As set out earlier, some small pieces of land that cannot sustain rent can be let out to capitalist farmers as part of a larger area of land. The advantage to a landlord may not be only that it acts as an inducement to the farmer to take on the larger rented area, but the farmer may subsequently undertake improvements of that land, so that, in future, it sustains a rent. Some smallholders may be allowed to take on such areas rent free, or be given rent free periods, in return for undertaking such improvements of the land, so that it becomes cultivable, rent producing land in future. Some councils who rent out allotments do this. They will often make a charge for clearing a piece of land, before a new allotment holder takes it on, or they will give the allotment holder a year's free rent, if they undertake the initial clearance work. 

In addition to these options, a small peasant producer may sell their output at the market value, but below the individual value, whilst also paying a rent. The rent then eats into the profit, and often even into the wages of the producer. Small producers can continue on this basis, where they are also the landowner, particularly as they are reluctant to give up that ownership, and the independence that comes with it, in order to turn themselves into wage workers. As Marx pointed out, in relation to workers moving to the U.S., whenever they could, they proceeded in the opposite direction, saving their wages, so as to buy a piece of land and become a peasant producer. 

“The situation would be different in a country in which the composition of the agricultural capital was equal to the average composition of the non-agricultural capital, which presupposes a high level of development in agriculture or a low level of development in industry. In this case the value of the agricultural produce would be equal to its cost-price. Only differential rent could be paid then. The land which yields no differential rent but only an agricultural rent, could then pay no rent. For if the farmer sells the agricultural produce at its value, it only covers its cost-price. He therefore pays no rent. The landowner must then cultivate the land himself, or the so-called rent collected by him is a part of his tenant’s profit or even of his wages.” (p 394) 

Marx also refers to conditions where industry is at a low level of development, and consequently capitalist production in industry is poorly developed. In these cases, the categories of capitalist rent, of absolute and differential rent, do not exist, and other economic and social relations, for example of corvee, or share-cropping, and so on may exist. 

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