Ricardo argued that as the price of food rose, money wages would rise, which squeezes money profits. This is the case even though Ricardo argues real wages may fall, because money wages do not rise as much as food prices. Prévost seeks, on this basis, to show that a continual fall in profits is not inevitable. His argument is essentially that the accumulation of capital itself is an indication of the potential for a growing mass of profit. He says,
““To begin with, the state of prosperity increases profits”” (p 106)
He means, here, specifically agricultural profits, because, as the population grows, the demand for food rises, more land is cultivated, more capital is invested in agriculture, and, as food prices rise, agricultural profits rise.
“... “and this happens long before new land is taken into cultivation. The increased area under cultivation does indeed affect rent and decreases profits. But although profit is thus directly decreased, it still remains as high as before the advance… Why is the cultivation of land of inferior quality undertaken at certain times? It is undertaken in the expectation of a profit which is at least equal to the customary profit. And what circumstance can lead to the realisation of such a profit on this kind of land? Increase of population. It presses on … the existing means of subsistence, thereby raising the prices of food (especially of corn) so that agricultural capitals obtain high profits. The other capitals pour into agriculture, but since the soil is limited in area, this competition has its limits and the point is reached when even higher profits can be made than in trade or manufacture through the cultivation of inferior soils. If there is a sufficient area of inferior land available, then agricultural profit must be adjusted to the last capitals applied to the land. If one proceeds from the rate of profit prevailing at the beginning of the increasing prosperity” (division of profit into profit and rent), “then it will be found that profit has no tendency to decline. It rises with the increase in the population until agricultural profit rises to such a degree that it can suffer a considerable reduction as a result of the cultivation [of new land] without ever sinking below its original rate, or, to be more precise, below the average rate determined by various circumstances” (op. cit., pp. 190-92).” (p 107)
Marx notes that “Prévost obviously misunderstands the Ricardian view” (p 107)
If the population rises, causing the demand for food to rise, then food prices rise, and agricultural capitals make bigger profits. Its true that on existing farms, where rents have already been set, this does not result in higher rents, and the higher profits go into the farmer's pocket. But, if additional capital is invested, in the cultivation of new land, even of the same quality, this additional demand for land will allow landlords to charge higher rents on this land. Moreover, as existing leases run out, landlords will inevitably set higher rents on that land, reflecting the higher agricultural profits. The higher food prices cause wages to rise, and those higher wages cause profits in industry to fall. That means that even the lower profits on less fertile land may surpass industrial profits, which creates an incentive for capital to move from industry to agriculture. A demand for these less fertile lands is then created, which enables landlords to charge a rent. Only when these new lands begin to supply products to the market, so that the demand is satisfied, and agricultural prices fall, does it become not possible to levy a rent on the least fertile land.
“The additional amount yielded by the product of the better [soils] is converted into rent. This is the Ricardian conception, whose basic premises are accepted by Prévost and from which he reasons. Corn is now dearer than it was before the rise in agricultural profit. But the additional profit which it brought the farmer is transformed into rent. In this way, therefore, profit also declines on the better land to the lower rate of industrial profit brought about by the rise in the price of agricultural produce. There is no reason for assuming that as a consequence profits do not have to fall below their “original rate” if no other modifying circumstances intervene. Other circumstances may, of course, intervene.” (p 107-8)
Other circumstances may intervene. If productivity rises, the prices of manufactured wage goods may fall to such an extent that money wages may not rise, so that money profits in industry are not squeezed. Or, as was the case, in the 20th century, when central banks acted to control the note issue, to prevent deflation of the general price level, money wages may rise, but not by as much as total money prices. In this way, the rise in productivity results in a rise in the real wage (living standards), but by a smaller amount than the rise in the nominal money wage, and of total output. The consequence is a rise in the surplus product and surplus value.
A similar rise in productivity may reduce the value of manufactured constant capital, and of non-food agricultural products, as well as mineral. This does not increase the mass of profit, but, by reducing the value of constant capital, it does lead to a release of capital, and rise in the rate of profit. The rate of profit in agriculture is higher than in industry, because of the lower organic composition of capital. The rise in demand for agricultural products causes prices, and agricultural profits to rise. When capital migrates from industry to agriculture, in response, this only has the effect of reducing the agricultural profits to their previous level, prior to the increase in demand.
No comments:
Post a Comment