Sismondi's second objection is that the value of the agricultural product has to be derived intrinsically rather than depending upon market fluctuations. This “intrinsic value” is comprised of the labour required for its production, and a “net product”, which is the product of nature, or the land. As Lenin says, this is loaded with all of the old Physiocratic errors that confuse value with use value, and surplus value with surplus product, but stripped of these Physiocratic fallacies, there is a core of truth in Sismondi's analysis. He is correct that agricultural/mineral prices are determined by values, i.e. they sell at their exchange value not their price of production. Industrial commodities, under capitalism, sell at prices of production, or more correctly, at market prices that gravitate towards the price of production, driven by movements in supply and demand. If we examine the value of agricultural products, it is determined, as with any other commodity, by the social labour-time required for its production. As with any other commodity, this social labour-time divides into necessary labour and surplus labour, v + s. because the organic composition of capital in agriculture is low, compared to industry, v + s is low in proportion to c, so that the rate of profit is higher than the average for industry. This is the basis of the Absolute Rent.
Sismondi, like the Physiocrats, confuses value with use value, and so also confuses the surplus value with the surplus product, i.e. the end product is greater than the use values consumed in its production, including the production of the labour-power used in production. But, as Marx sets out in Theories of Surplus Value, stripped of this confusion, the Physiocrats correctly located the source of surplus value in production, as against the Mercantilists who saw it arising in exchange. Adam Smith took over this insight of the Physiocrats and stripped it of this confusion to identify that value is labour, and surplus value is surplus labour, i.e. the labour undertaken over and above the necessary labour required to reproduce the labourer.
The confused concept that the land itself contributes value flows from the Physiocratic theory, because what it reflects is the fact that some land is more fertile than others, so that the product of a given amount of labour and capital on land A produces a greater output than the same labour and capital on land B. And, as Marx sets out in Capital III, and Theories of Surplus Value, in examining rent in terms of use value this is undoubtedly true. As Marx sets out in The Critique of the Gotha Programme, in terms of use value, which is the foundation of social wealth, it is not true to say that labour is the only source of value. Nature is also the source of use value.
“Labour is not the source of all wealth. Nature is just as much the source of use values (and it is surely of such that material wealth consists!) as labour, which itself is only the manifestation of a force of nature, human labour power.”
Nature assists labour in producing a greater quantity of use values, but this makes no difference to the amount of value produced. If ten hours of labour is expended, ten hours of new value is created; if 100 units are produced, each unit has a value of 0.10 hours. However, if Nature assists, and so 1000 units are produced, these 1,000 units still have a value of ten hours, but, now, each unit has a value of 0.01 hours. This is the basis of Differential Rent. If the market value of these products is determined by the first producer, then they will sell at 0.10 hours per unit – say £0.10 per unit. But, the producer assisted by Nature also sells their output at £0.10 per unit, even though the individual value of their output is only £0.01 per unit. They will make a surplus profit of £0.09 per unit on all of their 1000 units o output, and this surplus profit is the basis of the Differential Rent they pay on it. So, again, stripped of its Physiocratic errors, the core of Sismondi's analysis, here, is correct.
Lenin quotes Ricardo's comment in relation to the labour of Nature.
“Does nature do nothing for man in manufactures? Are the powers of wind and water, which move our machinery, and assist navigation, nothing? The pressure of the atmosphere and the elasticity of steam, which enable us to work the most stupendous engines—are they not the gifts of nature? To say nothing of the effects of the matter of heat in softening and melting metals, of the decomposition of the atmosphere in the process of dyeing and fermentation. There is not a manufacture which can be mentioned, in which nature does not give her assistance to man, and give it too, generously and gratuitously.”
(Note *, p 176)
And, in terms of value, this is absolutely correct, as Marx also demonstrates in using the same quote. But, this is not the point, when it come to the analysis of Differential Rent, which arises, precisely upon the additional use values that are produced on more fertile land, i.e. where Nature increases labour productivity. The whole basis of the theory of rent, as set out by Anderson, Ricardo and Marx is the function of marginal productivity of land, and in the case of Differential Rent II, of capital. Neither land nor capital produce value, but both contribute to the production of additional use values by raising the productivity of labour. Indeed, as Marx sets out at length, it is precisely this that is the basis of Differential Rent.
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