The revenues received by the owners of the different factors of production appear as merely the fruits of the factors of production themselves. Insofar as these different factors of production compete for a larger share of the total available revenue, this appears only as a distributional struggle, confined within the constraints of supply and demand for each factor in the market. All sense that the real basis of these revenues and their distribution is based in production, and founded on the non-ownership of capital by labour is lost.
“We have seen how Adam Smith first reduces value to wages, profit (interest) and rent, and then, conversely, presents these as independent constituent elements of commodity prices. He expresses the secret connection in the first version and the outward appearance in the second.” (p 515)
The first represents Smith's scientific approach, and is what he has to return to when it comes to specific analysis, whilst the second represents the vulgar aspect of his theory, which is seized upon by his critics, and by later vulgar economy.
“Rent—as the price of land—may not determine the price of the product directly, but it determines the method of production, whether a large amount of capital is concentrated on a small area of land, or a small amount of capital is spread over a large area of land, and whether this or that type of product is produced—e.g., cattle or corn—the market price of which covers the rent most effectively, for the rent must be paid before the term stipulated by contract expires.” (p 515)
Where interest appears as a cost of production, in the form of the cost of capital, however the capital is used, rent is surplus profit, and, thereby, determined by the use of land in different applications. In other words, surplus profit appears as absolute rent in primary production, because the organic composition of capital in primary production is lower, on average, than in industry. Consequently, the annual rate of profit in primary production is higher than in industry, and landlords appropriate this surplus profit as a result. Landlords will then set rents according to the surplus profit that would be obtained from the use of the land in the highest profit production. That is why Adam Smith argued that it is grain production that determine rents.
Arable production is most labour intensive, and, thereby, produces the highest annual rate of profit, highest surplus profit, and so rent. But, not all agricultural production has a low organic composition. Marx points to cattle rearing as having a high organic composition. Consequently, cattle production would have a lower than average rate of profit, that produces no surplus profit or rent. However, landlords will not just rent land to cattle breeders at low or zero rents, when they could rent that land to grain producers at a higher rent. So, they can only rent land that landlords cannot use for other purposes, or else meat prices must rise high enough, above their value, that they can pay the market rent.
In other words, supply of cattle/meat must fall sufficiently that the price of meat rises above its exchange-value. Marx notes,
“Even though rent does not directly determine the market price of corn, for example, it determines directly the market price of cattle, etc., in short, of commodities produced in the spheres where rent is not regulated by the market prices of their products but where the market prices of products are regulated by the amount of rent borne by the grain-producing land. The price of meat, for example, is always too high in industrially developed countries, that is, it is not only far above its production price, but above its value.” (p 515-6)
No comments:
Post a Comment