Proudhon believed that technological improvements, in industry, which, then, enabled more efficient use of the land, acted to increase rent, but the opposite is true. The basis of absolute rent is the lower, average organic composition of capital in primary production. But, as technology is applied to primary production, this difference between primary production and other industrial production is narrowed. Consequently, the rate of profit in primary production falls, relative to that of industrial production, so that surplus profits are reduced.
“Wherein consists, in general, any improvement, whether in agriculture or in manufacture? In producing more with the same labour; in producing as much, or even more, with less labour. Thanks to these improvements, the farmer is spared from using a greater amount of labour for a relatively smaller product. He has no need, therefore, to resort to inferior soils, and instalments of capital applied successively to the same soil remain equally productive.
Thus, these improvements, far from continually raising rent as M. Proudhon says, become on the contrary so many temporary obstacles preventing its rise.” (p 153)
Indeed, this process, described by Marx, in Value, Price and Profit, is a perfect example of the operation of the long wave cycle; the relative shortage of labour, at points within it, causing wages to rise, and profits to be squeezed (overproduction of capital), which, in turn, leads to a technological response, by capital. In the long wave uptrend, running from 1843-1865, workers left rural areas for industrial employment, work on the railways, and so on, leading to a shortage of agricultural labour. It was particularly marked between 1849-1859.
As Marx notes, competition prevented farmers from raising prices to meet the higher wage costs, so that profits were squeezed. They responded by introducing new, labour-saving machines, which raised productivity, and created a new, relative surplus population, enabling wages to be reduced and profits to be raised. Such is the cycle of events in every long wave, with the crisis of overproduction of capital, shortage of labour, provoking a technological revolution that raises productivity and the rate of surplus value, and mass of profit.
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