8) Capitalist Rent and Capitalist Overpopulation
Lenin sets out Sismondi's objections to Ricardo's theory of rent. Its not clear whether Lenin accepts these objections or not, but he describes his arguments as “feeble”.
The first objection is that the general level of profit is never established, and there is no free movement of capital in agriculture. Now, if Lenin disagrees with this objection it would be odd. Marx himself notes that the general rate of profit is never actually established. It is an abstraction, and because of continually changing levels of productivity, and movement of capital, a perpetually moving target. Nevertheless, this abstraction is no barrier to industrial capital always seeking to move from spheres where the annual rate of profit is low to those where it is high, or as Marx points out, the accumulation of capital more rapidly in the latter, and more slowly in the former. This movement is the fundamental basis of the concept of an average annual rate of profit, because, as Marx describes, in analysing the formation of prices of production, it is the more rapid accumulation of capital in spheres with a high rate of profit (and so greater increase in supply of those commodities) that drives the market price of them down below their exchange-value, until they reach a point where only the average annual rate of profit is made. The opposite occurs in those spheres where the annual rate of profit is low, and so capital accumulates more slowly or even contracts.
But, as Marx points out, capital cannot move freely into agriculture, as it does in industry, and this is why agriculture does not participate in the formation of an average annual rate of profit. In industry, capital moves freely to high profit areas, supply rises, market prices fall, competing away surplus profits. In agriculture, this cannot happen, and so surplus profit is not competed away.
Marx points out that Ricardo did not accept the possibility of Absolute Rent, but it is precisely this fact that the organic composition of capital in agriculture is lower than in industry that means that the annual rate of profit in agriculture is higher than in industry, which is the basis of that Absolute Rent. It is these overall surplus profits in agriculture that is the basis of Absolute Rent. What leads to this Absolute rent ending up in the pocket of the landlord is the monopoly ownership of land. The landlord says to the capitalist farmer, if you employ your capital on my land, you will make surplus profits compared to in industry, and so the price for using my land is that surplus profit, which you will pay me as Absolute Rent. Differential Rent arises because some land is more fertile than others, closer to markets than others, so that capital employed on it produces an even greater surplus profit. This greater amount is then handed over to the landlord as a Differential Rent.
So, its hard to see why Lenin would disagree with this objection of Sismondi, because the same objection to Ricardo is made by Marx. Instead of capital moving freely into agriculture/mineral extraction, in search of surplus profits and so increasing supply, reducing market prices to price of production, thereby establishing the average annual rate of profit, it is stopped by the monopoly ownership of land, which draws off the surplus profits itself as rent, and so also prevents the fall of market prices in that sector.
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