The Driver of Accumulation
In that case the question of the natural rate of interest is irrelevant. Whether any such rate exists or not, the point is that the actual market rate of interest plays a role in determining the profit of enterprise, and so investment decisions. But, what is that role? In Theories of Surplus Value, Chapter 13, Marx again takes up the essentially Ricardian idea put forward by Roberts. I have referred, in previous posts, to Marx's rejection of that Ricardian position as set out in Capital III. Ricardo argued, like Roberts, that what drives capital accumulation is higher profits. By contrast, in Capital III, Marx says that capital accumulates on the basis of an anticipation of a continual increase in the size of the market. Each capital is driven, by competition, to do so, or else risk losing market share, and, thereby, also profits. Having accumulated additional capital, this then provides the basis for the anticipated increase in the size of the market. Driven by competition, capitalists must take the market value of their output as given, and whatever then results from the resolution of the revenues into profit.
Ricardo, also like Roberts, argues that if by accumulating additional capital, the rate of profit falls, or is expected to fall, capital will not invest, or will invest in some other venture, or by using the available money-capital to loan at interest. But, Marx shows why this is also wrong. As Marx says, he could use an additional £1,000 to lease additional land, but capitalist agriculture favours more intensive rather than extensive production.
“Moreover, if no land could be leased in the immediate vicinity of the old land, two farms would split up the farmer’s work of super-intending them to a much greater extent, than six factories would split up the work of one capitalist in manufacture.” (p 335)
Instead, the farmer could put the £1,000 on deposit in the bank, or use it to buy bonds or shares, so as to obtain interest on it.
“Then, from the outset, he forgoes at least a half or a third of the usual profit. Hence, if he can invest it as additional capital on the old farm, even below the average rate of profit, say at 10 per cent, if his profit was 12, then, he will still be gaining 100 per cent if the rate of interest is 5 per cent. To invest the additional £1,000 in the old farm is, therefore, still a profitable speculation for him.” (p 335)
So, Marx says, its quite wrong for Ricardo (and hence Roberts) to assume that the investment of this additional £1,000 of capital on the farmer's existing land is determined by the same considerations that determine the investment of capital on new land. The same might be said about incremental accumulations of circulating capital, and, in some conditions, fixed capital, for an industrial firm.
A manufacturer, faced with advancing a large amount of capital to establish a new factory, and all the attendant equipment etc., may only be prepared to do so if they have the prospect of obtaining, at least, the average rate of profit. If not, they might decide to use that capital to advance in some other line of production, where the average profit is obtainable. But, the same manufacturer may be prepared to advance a smaller amount of capital to make modifications to their existing factory, to obtain more space, to employ additional machines, or to invest in newer, more effective machines to replace existing equipment, even if this does not offer the average rate of profit. Similarly, they may be prepared, where possible, to use existing fixed capital more effectively, where it is underutilised, or where new working methods might be introduced, so as to accumulate additional circulating capital, again even though this additional capital does not produce the average profit.
“In the first case, the product does not have to yield the usual profit, even in capitalist production. It must only yield as much above the usual rate of interest as will make worth while the trouble and risk of the farmer to prefer the industrial employment of his spare capital to its employment as money capital. ” (p 335)
No comments:
Post a Comment