When all existing spheres of production are undertaken on the basis of capitalism, this same law, set out by Marx as The Law of The Tendency For The Rate of Profit To Fall, as production in different spheres, occurs under conditions where the organic composition of capital is lower, or the rate of turnover is higher, means that capital is being continually reallocated, on this basis. But, as Marx says, this process is not to be understood as capital physically being reduced in one sphere, and moving to another higher profit sphere. The process involves capital accumulating more quickly in the higher profit spheres than in the lower profit spheres. Periodically, capital is actually withdrawn from low profit spheres, but this is not the fundamental way that the law operates, as opposed to differential rates of accumulation.
Ricardo only sets out a theory of Differential Rent, denying the possibility of Absolute Rent. But, Marx has demonstrated that, because the organic composition of capital in primary production is lower, on average, than in industry, the annual rate of profit in primary production is higher than than the average in industry. There will be a surplus profit overall, in primary production, compared to the general rate of profit, and it is this overall surplus profit, in primary production that is the basis for the Absolute Rent.
In industry, such surplus profits are competed away, unless monopolies or other frictions restricting the movement of capital prevent it, as described above, in line with The Law of The Tendency For The Rate of Profit To Fall, as the surplus profit encourages additional capital to move to those spheres. It results in a general rise in the average rate of profit, as the surplus profit from these high profit areas is shared out amongst the total social capital. But, in primary production, because of the existence of landed property, the landowners can demand that the surplus profit be paid to them as Absolute Rent, before they allow capital to be invested on their land.
“As a consequence of the transformation of rent into surplus profit, the direct influence of landed property on wages ceases, which, in other words, merely means that the landed proprietor ceases to be the direct appropriator of surplus labour, this role being now assumed by the capitalist. The relative size of the rent affects only the division of surplus-value between capitalist and proprietor, not the exaction of that surplus labour itself. This conclusion in fact emerges from Jones’s analysis, though it is not explicitly stated.” (p 402)
In other words, under feudal agriculture, the peasant producer produces to ensure their own reproduction, i.e. to produce their own “wages”/revenue/consumption. Above this subsistence level, the landlord extracts feudal rent, either in the form of Labour Rent, Rent in Kind, or Money Rent. It is the landlord, via this rent, who thereby limits the rise in the consumption/revenue of the peasant above this minimum. But, under capitalism, the wage worker must still obtain this minimum, equal to the value of their labour-power/wages, but it is the capitalist farmer who now pays those wages. The surplus labour provided by the worker now takes the immediate form of profit, not rent. Unless the capitalist farmer can make, at least, the average rate of profit they will not invest their capital, and employ labour. Only any excess profit, will they pay as rent to the landlord. That means that the exchange-value of these primary products must be high enough not only to ensure the capitalist obtains the average profit, but also that it produces a profit above this, which they pay as rent to the landlord.
It is then, now, profit, not rent, which determines the way surplus labour is pumped out of the producer, and rent is subordinated to it, because it is only payable when the average profit has been accounted for. This requires that it is capital that has become the dominant means of production, not land.
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