Wednesday, 20 June 2018

Theories of Surplus Value, Part II, Chapter 16 - Part 27

[d) Historical Illustration of the Rise in the Rate of Profit with a Simultaneous Rise in the Prices of Agricultural Products. The Possibility of an Increasing Productivity of Labour in Agriculture]

Marx begins this section by making the point he set out in Capital III, that, in reality, it is not a matter of land cultivation proceeding from the most fertile to the least fertile, or vice versa, but that both of these exist together, and are intertwined. 

“But it cannot by any means be said that if for individual short periods (such as 1797–1813) the descending line clearly predominates, that because of this, the rate of profit must fall (in so far, that is, as the latter is determined by the rate of surplus-value). Rather I believe that during that period, the rate of profit in England rose by way of exception, despite the greatly increased prices of wheat and agricultural produce generally. I do not know of any English statistician who does not share this view on the rise in the rate of profit during that period. Individual economists, such as Chalmers, Blake, etc. have advanced special theories based on this fact. Moreover I must add that it is foolish to attempt to explain the rise in the price of wheat during that period by the depreciation of money. No one who has studied the history of the prices of commodities during that period, can agree with this. Besides, the rise in prices begins much earlier and reaches a high level before any kind of depreciation of money occurs. As soon as it appears it must simply be allowed for.” (p 460) 

The explanation of the rising rate of profit, during this time, Marx says, is due to a number of factors. Firstly, this is a period when machinery starts to be introduced on a large scale, and along with the machinery came a prolongation of the working-day, which brought about a rise in absolute surplus value. Secondly, although agricultural prices were rising sharply, the very advance of machine industry reduced the price of the manufactured goods that workers had to buy, and imported commodities, from the colonies, also reduced the value of wage goods, and so labour-power, increasing relative surplus value. But, also, in addition to the fall in the value of labour-power, although nominal wages rose, real wages were pushed below the traditional value of labour-power. 

“... this fact is acknowledged for that period; J. P. Stirling in The Philosophy of Trade etc., Edinburgh, 1846, who, on the whole, accepts Ricardo’s theory of rent, seeks, however, to prove that the immediate consequence of a permanent (that is, not accidental, dependent on the seasons) rise in the price of corn, is always reduction in the average wage”. (p 460) 

Another factor, Marx says, is the effect of the rise in nominal prices, in other words, inflation. The process that Marx describes here is that the expansion of bank credit, and of government expenditure, increased the demand for money-capital faster than the increase in supply. That causes market rates of interest to rise. However, all of those landlords who have rented land to farmers, are stuck with a fixed level of rent, until the end of the period of the lease. Similarly, those rentiers who have bought longer term bonds, are stuck with a fixed amount of coupon. In effect, what capital pays back to these landlords and other rentiers, from profits, falls in real terms, as inflation rises, leaving a larger proportion of nominal profits after the payment of rent and interest, i.e. profit of enterprise

Marx concludes this section with a quote from an unknown source, which demonstrated the way agricultural productivity could be raised by crop selection. It concerned an exhibitor at the Great Exhibition, in 1862, called Mr. Hallett. He showed how by breeding the best ears of wheat from his crop, over several years, he had been able to lengthen the ears, on each stalk, and to increase the number of grains produced by each ear. 

“He asserts that the corn produce of England may be doubled by adopting ‘pedigree wheat’ and the ‘natural system’ of cultivation. He states that from single grains, planted at the proper time, one only on each square foot of ground, he obtained plants consisting of 23 ears on the average, with about 36 grains in each ear. The produce of an acre at this rate was, accurately counted, 1,001,880 ears of wheat; while, when sown in the ordinary fashion, with an expenditure of more than 20 times the amount of seed, the crop amounted to only 934,120 ears of corn, or 67,760 ears less…” (p 461) 

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