Sunday, 4 November 2018

Theories of Surplus Value, Part II, Addenda


1. Early Formulation of the Thesis That the Supply of Agricultural Products Always Corresponds to Demand. Rodbertus and the Practicians among the Economists of the Eighteenth Century 

Earlier, Adam Smith's argument that the supply of agricultural products always creates its own demand was encountered. This was the basis upon which Smith argued that it was the use of this agricultural land that determines rent. The basis of the argument is succinctly put, in this quote, Marx says, from John Arbuthnot

““Corn […] is scarce or not scarce in proportion to the consumption of it. If there are more mouths, there will be more corn, because there will be more hands to till the earth; and if there is more corn, there will be more mouths, because plenty will bring people…“ ([John Arbuthnot], An Inquiry into the Connection Between the Present Price of Provisions, and the Size of Farms, etc. By a Farmer, London, 1773, p. 125). 


“the culture of the earth cannot be over-done” (l.c., p. 62).” (p 589) 

Previously, we also encountered Rodbertus' idea that rent arose because of surplus profit in agriculture, arising from the fact that farmers do not pay for their materials, such as seeds, etc. This idea, which reflects the fact that Rodbertus was writing from the standpoint of a German landowner, not a capitalist farmer, had been refuted by many writers, including capitalist farmers themselves. In contrast to Rodbertus, Marx says, it is more correct, in a context of capitalist farming, to consider rent itself a cost of production. 

“... it would be correct to say that rent is an item of expenditure for the farmer. He reckons rent among the costs of production (and it does belong to his costs of production). 

“If … the price of corn is nearly what it ought to be, which can only be determined by the proportion that the value of land bears to the value of money” (l.c., p. 132). 

As soon as capital takes possession of agriculture, the farming-capitalist himself regards rent only as a deduction from profit and the whole of surplus-value is for him essentially profit: 

“The old method of calculating the profits of the farmer [was] by the three rents” (the métayage system). “In the infancy of agriculture, it was a conscientious and equal partition of property; such as is now practised in the less enlightened parts of the world … the one finds land and capital, the other knowledge and labour: but on a well-cultivated and good soil, the rent is now the least object: it is the sum which a man can sink in stock, and in the annual expense of his labour, on which he is to reckon the interest of his money, or income” (l.c., p. 34). (p 589-90) 

As I have argued elsewhere, this is all the more the case where land itself becomes a commodity that is regularly bought and sold, in the same way that financial assets are bought and sold. If a capitalist farmer buys a piece of land, to farm, its price is the capitalised rent. But, the money-capital that is tied up in the land cannot be used for any other purpose. It is essentially the same as an industrial capitalist who uses their own money-capital to buy means of production and labour-power. This money-capital could otherwise have been used to buy a bond, or share, and thereby to obtain interest. They view the foregone interest on their money-capital as a cost of production. 

[2. Nathaniel Forster on the Hostility Between Landowners and Traders] 

““The landed and trading interests are eternally jarring, and jealous of each other’s advantages” ([Nathaniel Forster], An Enquiry into the Causes of the Present High Price of Provisions, London, 1767, p. 22, note).” (p 591) 

[3. Hopkins’s Views on the Relationship Between Rent and Profit] 

Thomas Hopkins' Economical Enquiries Relative to the Laws which Regulate Rent, Profit, etc. London, 1822 describes rent as the original form of surplus value and profit as derived from it. 

“He writes: 

“When the…producers were both agriculturists and manufacturers, the landowner received, as rent of land, a value of £10. Suppose this rent to have been paid one half in raw produce, and the other half in manufactures;— on the division of the producers into the two classes of agriculturists and manufacturers” this could be continued. “In practice, however, it would be found more convenient for the cultivators of the land, to pay the rent, and to charge it on their produce, when exchanging it against the produce of the labour of the manufacturers; so as to divide the payment into equitable proportions between the two classes, and to leave wages and profits equal in each department” (Thomas Hopkins, Economical Enquiries relative to the Laws which Regulate Rent, Profit, etc. London, 1822, p. 26).” (p 592) 

In Capital III, Marx sets out how, in pre-capitalist modes of production, surplus value is pumped from labour in a variety of forms, and it is the means by which this surplus labour/value is appropriated that determines the social relations between exploiters and exploited. In pre-capitalist agriculture, surplus value does take the form of rent, but it is not capitalist rent. It is rent based on the rank and status of the landed aristocracy and their right to extract tribute. It is then rent which sets the limit of any profit that the farmer can obtain, as a result of producing a surplus product. By contrast, under capitalist production, surplus value takes the form of profit, and it is profit that sets the limit for rent. Rent being restricted to only surplus profit, in excess of the average rate

[4. Carey, Malthus and James Deacon Hume on Improvements in Agriculture] 

““It will be observed that we consider the owner and farmer always as one and the same person… Such it is in the United States.” (H. C. Carey, The Past, the Present, and the Future, Philadelphia, 1848, p. 97, note).” (p 593) 

Increasingly, with industrial scale agriculture that becomes the case, with these large industrial agribusinesses themselves becoming joint stock companies. 

““Man […] is always going from a poor soil to better, and then returning on his footsteps to the original poor one, and turning up the marl or the lime; and so on, in continuous succession … and […] at each step in this course, he is making a better machine… (l.c., pp. 128-29).” (p 593) 

By better machine, here, Carey means that the land, as an instrument of production, is steadily improved. Marx also refers to this difference that the more a machine is worked the more it loses in wear and tear, but the more land is cultivated, the more its condition is improved, for example, the cultivation removes stones, and by continually turning the soil, returning manure and other nutrients, the more improved the soil becomes. 

““The gain from a steam-engine” (which transforms the wool into cloth, etc.) “is the wages of […] labour, minus the loss by deterioration of the machine. Labour applied to fashioning the earth produces wages, plus the gain by improvement of the machine” (l.c., p. 129).” (p 593) 

““The buyer of the other knows it will give him wages and interest, minus the diminution in its value by use […] The one buys a machine that improves by use. The other, one that deteriorates with use […] The one is a machine upon which new capital and labour may be expended with constantly increasing return; while upon the other no such expenditure can be made” (l.c., p. 131).” (p 593) 

The improvements in agriculture resulting from capital investment, which raise productivity and reduce prices, but which, prior to any fall in prices, cause profits to rise, nearly always cause rent to rise. 

““The increased capital, which is employed in consequence of the opportunity of making great temporary profits, can seldom or ever be entirely removed from the land, at the expiration of the current leases; and, on the renewal of these leases, the landlord feels the benefit of it in the increase of his rents” (Thomas Robert Malthus, An Inquiry into the Nature and Progress of Rent, London, 1815, p. 26).” (p 594) 

““If until the prevalence of the late high prices, arable land in general bore but little rent, chiefly by reason of the acknowledged necessity of frequent fallows; the rents must be again reduced, to admit of a return to the same system” (James Deacon Hume, Thoughts on the Corn-Laws, London, 1815, p. 72).” (p 594) 

[5. Hodgskin and Anderson on the Growth of Productivity in Agricultural Labour] 

Marx notes this comment from Thomas Hodgskin that confirms James Anderson's earlier argument, in contradiction of Malthus and Ricardo, that there is no limit to the potential rise in agricultural productivity. 

““A diminishing surface suffices to supply man with food as population multiplies” ([Thomas] Hodgskin (anonymously), The Natural and Artificial Right of Property Contrasted…, London, 1832, p. 69).” (p 595) 

[6. Decrease in the Rate of Profit] 

“Calculated on the total capital the [rate of] profit of the larger capital, which employs more constant capital (machinery, raw material) and relatively less living labour, will be lower than that of the smaller [amount of] profit yielded by the smaller capital employing more living labour in proportion to the total capital. The [relative] decrease in variable capital and the relative increase in constant capital, although both parts are growing, is only another expression for the increased productivity of labour.” (p 596)

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