SNNS 21

 

Incompetent, Lying, Reactionary and Deluded

Blue Labour's budget is just the latest manifestation of its reactionary, petty-bourgeois nationalist character, and the inevitable bureaucratic, lying and deluded politics that goes with it. But, the chaos and farce that surrounded the budget shows that they are, also, totally incompetent. At least Mussolini was reputed to have made the trains run on time. The tragedy is that its not just Blue Labour that displays this incompetence, or the totally deluded, petty-bourgeois nationalist ideology that has no grip on reality, or solutions to the problems of late, monopoly capitalism, and specifically those of British capitalism. The entire political elite is in a state of utter confusion and disarray. In previous decades, these are the conditions in which a mass, revolutionary workers' party, would be kicking down that rotten door, but, alas, no such party exists, today.

At the time of the last General Election, I pointed out, as did many others, that Blue Labour's agenda made no sense, and it was either delusional, or else, simply lying, in order to win the election. To win the election, Blue Labour believed that they had to distance themselves from Corbyn's mildly progressive, social-democratic agenda, presented in 2019. To do that, all of those popular policies that Starmer had committed to, in order to lie his way to the leadership, had to be quickly ditched. Any whiff that a Labour government might increase taxes, spending, or borrowing had to be crushed, as giving a hostage to fortune. Hence the amazingly inconsequential and uninspiring economic agenda they put forth. But, even that agenda was clearly impossible to fund, without significant tax rises or borrowing, given the state of the public finances, which everyone other than Rachel Reeves, apparently, was able to discern.

The existence of a £20 billion “black hole” in those finances was only news to Rachel Reeves, when they opened the books, so it was claimed, even though, numerous others had pointed it out months before the election! The economic analysis and programme of Rachel Reeves was never airtight, but as the months ticked by, even more holes were exposed. To fill all of Reeves' holes, it was obvious that either taxes would have to rise, borrowing increase, or both. But, Blue Labour had committed to doing neither, and had jammed itself into a tight spot of its own making. It had come up with the delusional alternative of growth, as the means of raising its revenues, and so shrinking the deficit. It was both delusional and lying, because growth requires changes in the economy itself, which often take years, if not decades to bring about. Blue Labour could offer no evidence that it could raise growth other than minor measures such as changes to planning regulations and so on.

There are two major causes of slowing growth in the UK economy. One is falling levels of productivity. It is not alone in that. Global productivity always falls at this stage of the long wave cycle. The peak of the last Innovation Cycle arose in 1985, as the microchip revolution swept the globe, replacing labour and, hugely depreciating the existing fixed capital stock, which brought about a huge rise in the global, annual rate of profit, which, in turn, also, led to falling interest rates and rising speculation on rapidly inflating asset prices. That rise in productivity, and profits continued for another 20 years, as a period of intensive capital accumulation shook out labour, and old technology, replacing it with the new technologies.

But, in fact, that rising productivity from the 1980's until the early 2000's, was actually one cause of slower global growth, as is always the case in such periods. As Marx describes, the rising productivity means that gross output rises more slowly than net output, the physical counterpart of the higher rate of surplus value and profit. In past long wave cycles, its when that period of rising productivity, and intensive accumulation, transitions into extensive accumulation, so that every increase in capital means a greater increase in employment, also, meaning a slowing in productivity growth.

What is different in this cycle, as I have set out before, is that the global ruling class, particularly in the developed western economies, has become addicted to rising asset prices, and any speeding up of growth, based on extensive accumulation, means rising wages, and rising interest rates, which, then, causes asset prices to fall, and, in conditions where those asset prices have been inflated to astronomical levels by repeated injections of liquidity, then, even the slightest rise in those rates means global financial crashes, like that of 2008. Only if capital could continue to accumulate on the basis of rising productivity could it have avoided that. But, the main way it achieved that, as the effects of the 1980's Innovation Cycle waned, was by removing global barriers to trade, and expanding the global division of labour/globalisation of production.

Brexit, and petit-bourgeois nationalism has cut the legs off that option, and even sent globalisation into reverse. For Britain, and its economy, highly dependent on trade and its trade with the EU, in particular, Brexit was just about the most stupid course of action it could take. Yet, the main parties have pursued it, as they have chased after the votes of that reactionary petty-bourgeoisie that has imposed its numbers electorally, as it expanded by round 50% in the period since the 1980's, itself a consequence of the process of technology replacing wage-labour, and sending former workers into the ranks of the impoverished and precarious petty-bourgeoisie, as a plethora of small traders/white van men.

Despite the fact that the electorate clearly recognised this reality, and now overwhelmingly support reversing Brexit, the main parties – Blue Labour, Tories and Reform – are paralysed, because none of them wants to be the first to break ranks, in fear of losing a large chunk of its perceived electoral coalition. But, that is a delusion too. The Conservative Party is dead, as its core petty-bourgeois base has already simply rebranded itself as Reform. Reform itself has reached the peak of its electoral support, based on that petty-bourgeoisie, and as is happening with Trump in the US, its inability to deal with the economic reality it faces, leads to it disillusioning even that base. Again, in previous times, it would be precisely those conditions that would enable the working-class, led by a mass communist party, to draw that petty-bourgeoisie behind it, not by appeasing it, or forming unprincipled popular fronts with it, but by marching out in front of it with a clear progressive alternative.

That petty-bourgeoisie is currently fragmenting, hence a section is being driven into the camp of the fascists, as seen with Musk and Yaxley-Lennon. Electorally, that split means those parties have peaked, but as Trotsky noted in relation to that phenomena in Germany, its consequence is that the actual fascists then seek to move increasingly from the ground of electoral politics to that of street fighting and paramilitary organisation. Any attempt to continue to appease that reactionary petty-bourgeoisie is, therefore, irrational. The Conservatives, now only face losing the rest of their electoral support based in the aspiring, professional middle-class, if they chase after Reform. They have already moved in droves to the Liberals.

But, Labour has seen the same thing. Now, it faces a similar collapse, as its core working-class vote flocks to the Greens, Liberals and others, hastened, increasingly, by the workings of the first past the post system. Its only rational choice is to cut loose from the reactionary, petty-bourgeois nationalist agenda it has pursued, since Starmer became Leader, backed by the shadowy forces of Blue Labour, and its ties to Trump, Zionism and other global reactionaries, and to embrace the EU. But, it will have to ditch Starmer and Blue Labour to do that. The current cakeist nonsense of a UK-EU Customs Union and so on, are just the latest variation of the delusion of a Labour Brexit. There is no chance of Britain creating a new Customs Union with the EU, and even if there were, it is meaningless, outside the context of being inside the Single Market. It is the single market that removes all of the frictions to trade, not the Customs Union. It is the former that is fundamental to raising productivity for Britain, as the basis of growth.

But, currently, it is only the Greens that are offering this alternative – if you ignore the Rejoin EU Party. Even the Liberals are too cautious to promote their long-standing support for the EU, and, instead give credence to the nonsense about closer ties to the EU, a new Customs Union and so on. So, Blue Labour's agenda is based on a delusion of the potential for economic growth, whilst refusing to commit to the one thing that could bring that growth to fruition. Hence, as the last GDP data show, the UK economy continues to not just stagnate, but even contract. It fell in September and October, and looks like being a negative final quarter of 2025.

The chaos and incompetence ahead of the budget, has continued after it. Reeves was accused of again misleading voters in relation to the health of the economy, in order to justify raising taxes. What that really amounted to was an attempt to press Blue Labour into further measures of austerity by cutting welfare. But, Reeves has been knee-capped by even the timid backbench MP's, who have to face the wrath of voters day after day in their seats. In fact, again, a similar thing has been seen in the US. Trump's support is cratering because, no matter how much he lies and lies again about how great the economy is, the reality is that US voters see growth slowing as a result of his tariffs, and they see their cost of living continuing to rise.

Starmer and Reeves have attempted the same deception in the UK, and all the same diversions over immigrants, but it is failing, and will continue to fail. In Reeves' budget, she talked about having increased NHS appointments, cut waiting lists and so on, as well as dealing with potholes in roads, but everyone can see that these claims have no real foundation. If some potholes have eventually been filled, they are dwarfed by the others that have appeared, but every motorist, and even more every cyclist, knows that even the claims about dealing with the existing potholes, are a lie. Anyone trying to get NHS appointments also knows that whatever figures the government claims are highly suspect, and open to manipulation and interpretation.

Waiting lists don't grow if you don't get put on to them. Back in 2003 when I was the Senior Vice-Chair of Staffordshire County Council's Health Scrutiny Committee, I got to attend meetings of the Board of the North Staffordshire Health Authority, and, at my first meeting, the question of waiting lists was addressed. At the time, I was actually on a waiting list to get an operation on a torn cruciate ligament. But, my experience gave me cause to question the data that was being provided, and I pointed out that I had been waiting for far longer than the claims being made suggested should have been the case. In a break, one of the officials spoke to me about it, and having checked the computer system, informed me that I seemed to have just disappeared off it! Precisely the point I had been making in the meeting. Government computer systems are notoriously unreliable, and workers under increasing pressure to meet targets, are also prone to massage the data, as was seen classically in the centralised planning systems of Eastern Europe under Stalinism.

The contradictions that petty-bourgeois nationalists are facing are, therefore, increasingly exploding, and no amount of lying and boosterism is going to fool voters who see the reality of decaying infrastructure, collapsing public services, due to lack of workers, and the workers there are being grossly underpaid, after 30 years of austerity, as well as seeing growth slowed by the implementation of Brexit, and it also resulting in higher prices, all the while, the liquidity pumped into the system has kept asset prices astronomically inflated, itself meaning that millions cannot afford a home to live in, or to put adequate amounts into a pension scheme to cover their future retirement. Now, we have these governments pumping out further ludicrous claims about a potential Russian invasion of Western Europe, requiring billions more to be poured down the drain to fund military spending. This is the same Russia that has been bogged down in a war against Ukraine for the last 4 years, and which, the same NATO countries have told us all along, Russia was losing, and whose economy was on its knees, as a result!

The best defence of Western Europe would be increased spending on its own infrastructure, and public services, raising the living standards of its people, as something the workers of Russia could aspire to, not reducing the living standards of workers in Europe further by draining resources into useless military spending and further belligerence, such as led to the Ukraine War, which can only be seen by the workers in Russia, as a further threat to them, and leading them to back the militarism of their own reactionary rulers. But, the governments in Europe will not do that, because they know that their own main enemy is not Putin, but their own workers. Thatcher said it openly in 1984, when she described the miners as “The Enemy Within”. All bourgeois politicians see the organised working-class in that way, and, they know that any period of sustained economic growth, means, now, a growth in the economic and social position of that working-class, much as happened in the 1950's, 60, and 70's, and that means a greater confidence, organisation and assertiveness of that class.

Anti-Duhring, Part II, Political Economy, X – From The Critical History - Part 1

As noted in the Introduction, this section was written by Marx. In the earlier editions, Engels had to severely cut it, but, as he explains in his Preface to this Edition, he was able to restore it to Marx's initial contribution. Although it was written by Marx, it appears in Engels' name. I will continue on that basis, as though the words are those of Engels.

“Finally, let us take a glance at the Critical History of Political Economy, at “that enterprise” of Herr Dühring's which, as he says, “is wholly without precedent”. Perhaps here at last we shall find the definitive and most rigorously scientific treatment which he has so often promised us.” (p 290)

One of the main discoveries in this sphere that Duhring proclaimed, was that “economic science”, is “an enormously modern phenomenon.” By “enormously modern phenomenon”, Duhring means starting only in the late 19th century. In fact, as Marx sets out, in Capital I, philosophers had tried to wrestle with the concept of value going back, at least, 2000 years. Both in Greece and in China, at around the same time, they had sought to reconcile the two aspects of value – use-value and exchange-value – represented by the commodity. But, these societies were still ones in which direct production predominated. The majority of production was of products to be directly consumed not exchanged as commodities.

As Marx explains in Capital I, a product has value, i.e. it is the product of labour, and labour is value, value is labour. This value is necessarily individual value, because each individual use-value is unique. It is not general, abstract labour that produces it, but some specific, concrete labour, and, even more than that. If labourer A produces a kilo of yarn, on a given day, it may take them 8 hours. The next day, they may take 8.5 hours, the day after only 7.5 hours. Each kilo they produce is not only unique, in its use-value, i.e. the quality of the yarn, but, also, in its individual value, the labour-time taken for its production.

For the product, consumed by the producer, in conditions of direct production, this does not matter. As Marx describes, in Capital and Theories of Surplus Value, in the product, use-value and value (the basis of exchange-value) are inextricably linked. The producer only produces products if they are use-values for them, and the value of these products, the labour-time, they require to produce them (individual value), is what it is. They only expend this labour-time if they conclude the use-value resulting from it is worthwhile. So, in societies where such direct production still predominated, it is clear why the distinction between the product, and the commodity is somewhat a mystery to be unravelled.

But, commodity production and exchange – mostly exchange between communities not individuals – has existed for at least 7,000 years, as Engels sets out in his Supplement to Capital III. That inextricable connection of use-value and value of the product – I want this use-value, and its worth the labour-time to produce it – now appears differently, in relation to the commodity. I do not, want this use-value, but I recognise that it has value, and this value can be realised in exchange for other use-values I do want. Its value, now, “appears on its face”, as Marx puts it, in Capital I, as its exchange value or price.

It is not surprising, therefore, that, even when we come to the period of Classical Political Economy, of Smith, Mill, Say and Ricardo, confusion still persists, in relation to the nature of the commodity, as against the product, and it is manifest in Mill's Law of Markets, popularised as Say's Law. It continued to see in generalised commodity production and exchange the conditions that existed under direct production, where only the surplus products was exchanged, or, later, where, under conditions of barter, commodities were deliberately produced to be exchanged for others for such consumption, i.e. C – C.

Back To IX - Natural Laws of Economics.  Ground-Rent

Anti-Duhring, Part II, Political Economy, IX Natural Laws of Economics. Ground-Rent - Part 8 of 8

The real relation is obscured for Duhring, because he limits his world view to what he saw in Prussia, where the landowners did engage in capitalist farming, and employed managers. But, even in Prussia, there were capitalist farmers who paid ground-rent. What Duhring can provide no objective, scientific explanation of, therefore, is what determines the amount of this ground-rent, in these cases. He can only see it in terms of the original relation, of the appropriation of the total surplus labour by the landlord. Instead of rent being a deduction from profit, equal to surplus profit, Duhring sees the profit being a deduction from the landlord's rent. But, he has no basis for determining what that deduction from rent should be.

“What does Herr Dühring do? He pretends that he does not have the slightest inkling of the division of the surplus-product of agriculture into farmer’s profit and ground-rent, and therefore of the whole theory of rent of classical political economy; that the question of what farmer’s profit really is has never yet been raised “with this precision”, in the whole of political economy and that he is dealing with an entirely unexplored subject about which there is no knowledge but only illusion and uncertainty.” (p 289)

Had Duhing had to apply his theory to England, it would have collapsed immediately, because, there, the landlords had long since ceased to have a social function in production and capitalist farming predominated. But, even in Prussia, his theory cannot explain the relations between rent and profit, when it comes to the capitalist farmers. Assume that, as he says, the full surplus takes the form of rent, and that the landlord, then, hands back (in reality reduces the rent by an amount) to the farmer, a portion of it for having applied their capital. In effect this reduces profit to nothing more than interest. It is as though the capitalist farmer lends capital to the landlord, and the landlord pays interest to the capitalist farmer. Except the capital is not loaned. The farmer owns the capital – though they may have, themselves, borrowed to acquire it, and pay interest to the lender – and expects to obtain the average rate of profit for employing it. So, if the amount the landowner “hands back” to the farmer is not equal to the average profit that could be obtained, there would be no basis for the farmer having advanced the capital in the first place!

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Anti-Duhring, Part II, Political Economy, IX Natural Laws of Economics. Ground-Rent - Part 7 of 8

To illustrate, Engels quotes Adam Smith from The Wealth of Nations.

“The revenue derived from labour is called wages. That derived from stock, by the person who manages or employs it, is called profit... The revenue which proceeds altogether from land, is called rent, and belongs to the landlord... When those three different sorts of revenue belong to different persons they are readily distinguished; but when they belong to the same they are sometimes confounded with one another, at least in common language. A gentleman who farms a part of his own estate, after paying the expense of cultivation, should gain both the rent of the landlord and the profit of the farmer. He is apt to denominate, however, his whole gain, profit, and thus confounds rent with profit, at least in common language.” (p 287)

For Duhring, the real relation is turned on its head, with rent representing the primary form of surplus-value, and a part of it being handed to capital as a secondary form. Duhring says,

“The farmer's earnings depend on the exploitation of the “rural labour-power” and are therefore obviously a “part of the rent” by which the “full rent”, which really should flow into the landowner’s pocket, “is reduced”.” (p 288)

On this basis, for Duhring, the only difference between ground-rent and profit is that the former is the form of the surplus in agriculture, and the latter in industry.

“It was inevitable that Herr Dühring should arrive at this uncritical and confused view. We saw that his starting-point was the “truly historical conception”, that domination over the land could be based only on domination over man. Therefore, as soon as land is cultivated by means of any form of subjugated labour, a surplus arises for the landlord, and it is precisely this surplus which is the rent, just as in industry the surplus of the labour product over and above the earnings of labour constitutes the earnings of capital.” (p 288-9)

Engels quotes Duhring to that effect.

“Thus it is clear that ground-rent exists on a considerable scale wherever and whenever agriculture is carried on by means of any form of subjugation of labour.” (p 289)

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Anti-Duhring, Part II, Political Economy, IX Natural Laws of Economics. Ground-Rent - Part 6 of 8

As Marx sets out in Theories of Surplus Value, Chapter 21, as industrial production increased in the towns and cities, as capital expanded, the lack of a similar capitalist development in agriculture meant that agricultural output lagged behind. Exceptions were in relation to sheep farming, which expanded on an extensive rather than intensive basis, and cattle breeding. The consequence was that as supply lagged demand, agricultural prices rose. Existing peasant producers sought to expand output by increasingly destroying the longer-term fertility of the land.

“It is in the nature of capitalist production that it develops industry more rapidly than agriculture. This is not due to the nature of the land, but to the fact that, in order to be exploited really in accordance with its nature, land requires different social relations. Capitalist production turns towards the land only after its influence has exhausted it and after it has devastated its natural qualities.”

The labour-intensive nature of agricultural production meant that it produced large amounts of surplus value, in relation to the capital advanced. It had a higher than average rate of profit, meaning it produced surplus profit/rent. It is only on that basis that capital begins to invade agricultural production, and to put it on a rational, scientific basis, which, also, begins to undo some of the damage done by the earlier over farming and destruction of the soil.

“Here, therefore, we have the three classes of bourgeois society and the form of income peculiar to each: the landlord, drawing ground-rent; the capitalist, drawing profit; and the labourer, drawing wages. It has never occurred to any English economist to regard the farmer’s earnings as a kind of wages, as seems to Herr Dühring to be the case; even less could it be hazardous for such an economist to assert that the farmer’s profit is what it indisputably, obviously and tangibly is, namely, profit on capital. It is perfectly ridiculous to say that the question of what the farmer’s earnings actually are has never been raised in this definite form. In England there has been no need so much as to raise this question; both question and answer have long been present in the facts themselves, and since Adam Smith there has never been any doubt about them.” (p 286-7)

In Germany, the landowners did, often, still cultivate their own lands, employing managers to undertake the work on their behalf. But, as Marx had already set out in Capital, this does not change the fundamental position, once capital has invaded this agricultural production. The fact that, once capitalist production in industry grew to a size that the individual capitalist could not carry out the role of functioning capitalist, and had to employ professional managers paid a wage, had not changed the basic social relation that capital employed wage-labour, and produced surplus value, which assumed the form of profit. Similarly, if a landowner, also, produces on a capitalist basis, employing wage-labour, which produces surplus-value/profit, this profit is a different revenue from rent or interest, whether the landowner recognises it as such or not.

It is only the surplus profit that forms rent, which is one reason that, where no such surplus profit exists, landlords were led to operate it themselves accepting only profit.

“If the landowner also provides the capital and has the farm run for his own account, he pockets the profit on capital in addition to the ground-rent, which is self-evident and cannot be otherwise with the existing mode of production. If Herr Dühring asserts that up to now no one has found it necessary to conceive the rent (he should say revenue) resulting from owner-cultivation as divided into parts, this is simply untrue, and at best only proves his own ignorance once again.” (p 287)

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Anti-Duhring, Part II, Political Economy, IX Natural Laws of Economics. Ground-Rent - Part 5 of 8

On this basis, capitalist production creates an average industrial rate of profit. It has no basis for expansion into agricultural production, at this point. Firstly, the peasants provide for themselves via their own direct production. Secondly, capitalist production requires large-scale production, which requires large markets to sell into. Whilst peasants provide for their own needs for food etc., no such large market for agricultural commodities exists. It is only when the growth of capitalist production, in the towns, expands faster, itself spurred by the opening up of global trade, in the 16th and 17th century, that its demand for raw materials, particularly wool, means that existing agricultural production is inadequate. The landlords begin to clear some of their lands, turning them over to sheep etc.

As Marx sets out in Capital III, as markets expanded, the landlords moved from payment of feudal rent as Labour Rent, or Rent in Kind (i.e. handing over agricultural commodities) to Money Rent. As he sets out, Money Rent represents the dissolution of feudal rent itself. The landlords sought money to buy the expanding range of commodities both those produced by urban capitalists and those brought in from abroad by the expanding commercial bourgeoisie. Money rents require the peasants to devote more of their time to the production of commodities for sale in the market, and less to the production of products for their own consumption.

Commodity production and exchange expand once more, as a consequence. But, the cottage industry of the peasants is increasingly undermined by the centralised, larger-scale and more efficient capitalist production in the towns. Increasing numbers of peasants are ruined and must become wage labourers. They must now buy as commodities the the agricultural products they previously produced for themselves. The market expands, and the basis for buying up their land, consolidating it into larger capitalist farms is, thereby, established.

Some of those industrial capitalists who had made their fortunes in the towns and cities, themselves, now, begin to invest capital in agriculture and primary production, as the potential for consolidating large capitalist farms opens up. The process of land enclosures, imposed by law, accelerates this process. But, as set out earlier, capital does not have to invest in agricultural production. It will do so only if it can make at least the average industrial rate of profit, after the payment of any rent.

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SNNS (20)

 

Anti-Duhring, Part II, Political Economy, IX Natural Laws of Economics. Ground-Rent - Part 4 of 8

Only when Duhring has to face the reality of the existence of very large capitalist farms is he forced to recognise the fallacy of that position. He goes on,

“Wherever we are dealing with fairly large farms it can easily be seen that it will not do to treat what are specifically the farmer’s earnings as wages. For these earnings are themselves based on the antithesis existing in relation to the rural labour-power, through whose exploitation that form of income is alone made possible. It is clearly a part of the rent which remains in the hands of the tenant and by which the full rent, which the owner managing himself would obtain, is reduced.” (p 286)

So, even here, whilst he recognises that describing the profit obtained as “wages” is untenable, he still views the relation as one in which the landlord appropriates the full rent (surplus value), as though they were themselves working the land and exploiting the labourers, but in which they must allow the capitalist to retain a portion of that rent. As seen before, he has simply changed the nomenclature, but kept the basic concepts the same. If the relation is one in which the rent is appropriated by the landlord, but who allows the capitalist farmer to retain a part of it, how is this different to simply calling what is, in reality, profit wages? Why does the landlord allow the capitalist farmer to retain this portion of rent, whether termed profit or wages?

Engels says,

“The theory of ground-rent is a part of political economy which is specifically English, and necessarily so, because it was only in England that there existed a mode of production under which rent had in fact been separated from profit and interest.” (p 286)

The historical outline is given by Marx in Capital and Theories of Surplus Value. In the 15th century, serfs released from the land moved to the towns, where they become small, independent commodity producers and traders. As Lenin, also, describes, in relation to Russia, following the 1861 Emancipation of the Serfs, this growth of commodity production and exchange, itself, expands the market.

The more producers specialise, and only produce one type of commodity to sell, the more, also, do they increase their own demand for all of those other products they previously produced themselves. All of these products they now buy as commodities, and others specialise in the production of these commodities. This specialisation and social division of labour is synonymous with the expansion of the market, and the realm of exchange-value. This urban industrial production, as a result of this specialisation, quickly begins to undermine the basis of rural domestic industry, and so of direct production, because the peasants always relied on their own domestic industry to supplement their agricultural production.

The competition between the urban commodity producers meant that the winners, the more efficient producers, expanded, which first assumes the form of greater affluence (quantitative change). They acquire better means of production and so on, and have larger families, providing more domestic labour, to produce on a larger scale. The losers are ruined. Their own means of production are bought up (centralised) by the winners. The losers are, then, employed by the winners, and only allowed to use their own, previous means of production, if they agree to provide an amount of free labour to their new employer. The winners, thereby, become capitalists, and the means of production become capital (qualitative change). The losers become proletarians, who only have their labour-power to sell as a commodity. They must, now, buy everything required for their own reproduction as commodities. The market expands again.

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Anti-Duhring, Part II, Political Economy, IX Natural Laws of Economics. Ground-Rent - Part 3 of 8

Here, Duhring fails to distinguish between the capitalist farmer and the peasant farmer. The peasant farmer must utilise the land for their own subsistence. They must pay whatever rent is required by the landlord to do so. However, even here, as Marx set out in Capital, this is not just an arbitrary amount. The origin of this rent arises as tribute, and its material basis is the surplus product/labour of the peasant. But, the position of the capitalist farmer is quite different. As with any capitalist, they do not have to apply their capital to the land. Incidentally, this is why capitalist production had to first arise in the towns rather than agriculture. It is the urban capitalist production which not only establishes an average industrial rate of profit, and so the basis of surplus profit/rent, but also means that capital does not have to be employed on the land if that average profit can't be made.

They could apply it to textile production, or any other sphere, where the highest rate of profit can be obtained. So, the capitalist farmer does not start from the position of having to pay a given amount of rent, and so taking what is left as their income. Rather, the position is reversed. Capital is only employed on the land if the rate of profit obtained is greater than the average industrial rate of profit. So, even if the farmer obtained the average rate of profit, but had to pay rent, they would end up with less than the average rate of profit. They would invest that capital elsewhere. It is only the profit of capital invested on the land that is greater than the average industrial rate of profit that can form rent.

So, Duhring is quite wrong in saying, in relation to capitalist production, as against feudal production, or the position of the peasant farmer, that “it is not customary to regard tenants' earnings as the main income and ground-rent as a balance.” For capitalist production, that is precisely what the relation is.

Duhring says,

“... in the theory of ground-rent the case in which the land is worked by the owner is not separately treated, and no special emphasis is laid on the difference between the amount of rent in the case of a lease and where the owner produces the rent himself. At any rate no one has found it necessary to conceive the rent resulting from owner-cultivated land as divided in such a way that one portion represents as it were the interest on the landed property and the other the surplus earnings of enterprise.” (p 286)

No one in Prussia maybe, but the distinction between these different revenues had been made in English Political Economy, at least from the time of Adam Smith. It forms the basis of Ricardo's theory of rent, and was even more explicitly set out by Marx.

Duhring, again basing himself on Prussian agriculture, as with Rodbertus, reduces the capitalist farmer to the position of being merely a professional manager employed by the landlord, and so reduces the profit to “a form of wages”. He says,

“Apart from the tenant’s own capital which he brings into the business, it would seem that his specific earnings are mostly regarded as a kind of wages. It is however hazardous to assert anything on this subject, as the question has never been raised with this precision.” (p 286)

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Anti-Duhring, Part II, Political Economy, IX Natural Laws of Economics. Ground-Rent - Part 2 of 8

Duhring's Law No. 2 reads,

“Division of Labour: “The separation of trades and the dissection of activities raises the productivity of labour”. (p 284)

Engels notes,

“In so far as this is true, it has likewise been a commonplace since Adam Smith. How far it is true will be shown in Part III.” (p 284)

Duhring's other fundamental laws of economics are:

“Law No. 3.“Distance and transport are the chief causes which hinder or facilitate the co-operation of the productive forces”.

Law No. 4. “The industrial state has an incomparably greater population capacity than the agricultural state”.

Law No. 5. “In the economy nothing takes place without a material interest”.” (p284)

Engels notes that, in terms of method, these economic laws remain true to Duhring's approach, set out earlier, in relation to Philosophy. In other words, a small number of axioms held to be universally and eternally true, as with formal logic or mathematics, but which, thereby, are equally banal, and lacking in content. They represent simply a superficial description, like a still photograph of the world, as perceived at a given time. And, as Engels describes, this world, perceived by Duhring, much as was the case with Rodbertus, analysed by Marx in Theories of Surplus Value, is, in fact, only the world of Prussia, a world that no longer existed, even in Prussia.

This becomes clear when Duhring discusses ground-rent.

“We shall not consider those points which Herr Dühring has merely copied from his predecessor Carey; we are not concerned with Carey, nor with defending Ricardo's views on ground-rent against Carey’s distortions and stupidities. We are only concerned with Herr Dühring, who defines ground-rent as “that income which the proprietor as such draws from the land”.” (p 285)

But, Duhring, like Rodbertus, describes a world in which the landlord still occupied a role in social production. In other words, a wold in which feudal production continues, and the landlord directly exploits the labour employed on the land, and appropriates the surplus product/value, thereby.

That world no longer existed. In Britain, it had disappeared long ago, as it was the capitalist farmer that took over the social function of the landlord in rural production. From that point, it is the capitalist farmer that directly exploits labour, and also, thereby, appropriates the surplus product/value.

Duhring says,

“if one wanted to press the analogy further, the earnings left to the tenant after payment of ground-rent must correspond to the balance of earnings of capital left with the entrepreneur who puts the capital to use after he has paid interest. But it is not customary to regard tenants' earnings as the main income and ground-rent as a balance.” (p 285-6)

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Anti-Duhring, Part II, Political Economy, IX Natural Laws of Economics. Ground-Rent - Part 1 of 8

Engels cites Duhring's “fundamental laws” of economics.

“Law No. 1. “The productivity of economic instruments, natural resources and human energy is increased by inventions and discoveries.”” (p 283)

Unlike Marx, who locates the role of productivity and technological innovation as stemming from an actual Natural Law – The Law of Value – Duhring's Law No.1 is banal. For Marx, The Law of Value acts as the motor of historical evolution, in the same way that The Law of Natural Selection is the motor of biological evolution. The Law of Value means that society must always seek to reduce unit values, in order to increase its production of use-values/real wealth. To do that, it must raise social productivity, a large part of which is technological innovation.

As Marx describes, for example, in The Poverty of Philosophy, it is this technological innovation which, then, results in the development of new productive relations, and these new productive relations create new forms of property, new social classes as the personification of this property, and so new social relations – a social revolution.

But, Duhring has no such material, historical basis for his law. He has no such means of setting out why societies seek to raise productivity at all. Why do they bother, rather than just continuing as they are? Moreover, as Engels notes, not all technological innovations do raise productivity. Engels points to the masses of paper in patent offices of things that were never taken up. Heath Robinson was renowned for his contraptions, none of which had practical application. Again, here, it is The Law of Value that is determinant, because it is only those innovations that actually do reduce unit values that pass the test of natural selection.

And, here, too, as Marx and Engels set out, in Capital III, it is the historically specific nature of capitalist production that determines the form in which that is manifest. Under capitalism, it is not enough simply that a new machine reduces the unit value of commodities, it must reduce those values – labour-time required for production- by such an amount that it is greater than the savings in wages that it brings about.

The importance of this can be seen from the previous discussion. In other words, the value of commodities (setting aside the constant capital) is not only equal to wages, but wages plus the surplus value. Again, here is the distinction between the social cost of production (value) of the commodities, as against the private cost of production (wages) to the capitalist. It is why, as Marx sets out in Capital and Connolly set out in relation to the cooperative at Ralahine, workers' cooperatives always have an incentive to be early adopters of such technologies, because, for the workers, the social cost of production is the same as their private cost of production, i.e. the labour they must expend.

For the individual capitalist firm, the only point of introducing a new machine is to reduce its individual costs of production, and so increase its profit. So, the machine must cost less than the wages saved. But, for the workers, the point of a new machine is only that it lightens the burden of their labour, enables them to produce more whilst working less.

“If “the triumph of the higher scientific method” in economics, as in philosophy, consists only in giving a high-sounding name to the first commonplace that comes to one’s mind, and trumpeting it forth as a natural law or even a fundamental law, then it becomes possible for anybody, even the editors of the Berlin Volkszeitung, to lay “deeper foundations” and to revolutionise science.” (p 283-4)

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Anti-Duhring, Part II, Political Economy, VIII – Capital and Surplus Value (Concluded) - Part 13 of 13

According to Duhring, who adopts from Adam Smith's cost of production theory of value, the value of commodities consists of two components, the costs of production, including wages, and the net product, which constitutes the master's income.

“And what is the “net product” constituting “the master's income” but the surplus of the product of labour over and above the wages, which, despite their quite superfluous disguise as a remuneration, must generally assure the worker's subsistence and possibility of propagation even with Herr Dühring? How can the “appropriation of the most important part of the product of labour-power” be carried out unless, as Marx shows, the capitalist extorts from the worker more labour than is necessary for the reproduction of the means of subsistence the latter consumes, that is, unless the capitalist makes the worker work a longer time than is necessary for the replacement of the value of the wages paid the labourer?” (p 280)

For Duhring, the determination of the value of the commodity becomes subjective and so arbitrary. It is the consequence of a cost of production theory of value in which the value/price of a commodity is derived simply as an exercise in the summation of these different factor costs.

“Thus the prolongation of the working-day beyond the time necessary for the reproduction of the labourer’s means of subsistence, Marx’s surplus-labour — this, and nothing but this, is concealed behind Herr Dühring's “utilisation of labour-power”; and his “net product” falling to the master — how can it manifest itself otherwise than in the Marxian surplus-product and surplus-value?” (p 280)

For Marx, there are objective, material constraints. The physical working-day is limited to 24 hours, but, itself, is reduced by the time required for the rest and recuperation required by the worker. The normal working day is limited by the fact that, beyond a certain degree of duration or intensity, the labour-power, itself, wears out more quickly, and so the value of labour-power/wages rises, reducing the amount of surplus value. So a limit on the amount of new value that can be produced, in a day, is set. At the same time, the value of labour-power is also objectively determined by the labour-time required to reproduce the labourer. Consequently, the difference between these two values – the new value created by labour and the value of labour-power – determines the amount of surplus-labour/value, which means it is no longer a subjective or arbitrary amount.

“And what, apart from its inexact formulation, is there to distinguish the Dühringian rent of possession from the Marxian surplus-value? For the rest, Herr Dühring has taken the name “rent of possession” (“Besitzrente“) from Rodbertus, who included both the ground-rent and the rent of capital, or earnings of capital, under the one term rent, so that Herr Dühring had only to add "possession" to it. So that no doubt may be left about his plagiarism, Herr Dühring sums up, in his own way, the laws of the changes of magnitude in the price of labour-power and in surplus-value which are developed by Marx in Chapter XV (Capital page 539, ff.), and does so in such a manner that what falls to the rent of possession must be lost to wages, and vice versa, he thus reduces the particular Marxian laws, which are so rich in content, to a tautology without content, for it is self-evident that one part of a given magnitude falling into two parts, cannot increase unless the other decreases.” (p 280-1)

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Anti-Duhring, Part II, Political Economy, VIII – Capital and Surplus Value (Concluded) - Part 12 of 13

Duhring's approach is entirely moralistic and subjective. He cannot explain where the surplus value/profit comes from, and no amount of force, on its own, can bring it into existence, as against its ability to appropriate it when it does exist. A modern day equivalent of this petty-bourgeois moralistic and subjective approach is seen in the arguments of the “anti-capitalists” and “anti-imperialists”. It basically explains the profits of the big, developed capitalist/imperialist economies on the basis of a mercantilist theory of unequal exchange and monopoly. Like Duhring, it fails to identify how these economies arrived at that superior position in the first place. In that respect, they not only go back to a time before Marx, but to before Adam Smith's “Wealth of Nations”.

“However we approach the Dühringian economics, we do not get one step further. For every obnoxious phenomenon—profit, ground-rent, starvation wages, the enslavement of the workers, it has only one word of explanation, force, and ever again force, and Herr Dühring's “mightier wrath” finally resolves itself into wrath against force.” (p 277)

As Engels already set out, it is economics which explains the material basis for the mobilisation of superior force, not vice versa. That applies equally in relation to the arguments of the “anti-capitalists” and “anti-imperialists”. The large companies can mobilise “force” against small capitals precisely because they have become large companies, and have economic power. They did not become large companies because they used force/market power.

“We have seen, first, that this appeal to force is a lame subterfuge, a relegation of the problem from the economic to the political sphere, which is unable to explain a single economic fact; and second, that it leaves unexplained the origin of force itself, and very prudently so, for otherwise it would have to come to the conclusion that all social power and all political force have their source in economic preconditions, in the mode of production and exchange historically given for each society.” (p 277)

Engels, then, turns to Duhring's treatment of wages and gives several of his quotes. But, in these quotes, Duhring, in his own style, simply repeats the historical analysis provided by Marx, in Capital, of the nature of surplus labour in different modes of production.

In the first of these quotes, cited by Engels, Duhring describes wages as “the remuneration for the subsistence of labour-power.” (p 278) He goes on to say,

“Whether it is a slave or a serf, or a wage-worker who has to be maintained, only gives rise to a difference in the mode of charging the costs of production. In every case the net product obtained by the utilisation of labour-power constitutes the master's income.” (p 278)

This net product, or master's income, he describes as a “rent of possession”, i.e. the feudal lord owns land, and obtains rent from the serfs allowed to live on it, just as the capitalist owns means of production, and, in return for allowing workers to use them, obtains profit. Engels notes,

“This net product has a very well-known physiognomy, which no tattooing or feat of whitewashing can conceal. “In order to become quite clear about the relationships obtaining in this field”, let the reader imagine the passages just cited from Herr Dühring printed opposite the passages previously cited from Marx on surplus-labour, surplus-product and surplus-value, and he will find that in his own style Herr Dühring is here directly copying from Capital.” (p 279)

So, Duhring, having railed against Marx, ends up plagiarising him. He accepts, in these statements, that, throughout history, the basis of exploitation, the source of revenue for all ruling classes, is the surplus labour of the labourer. But, what Duhring's version lacks is the historical specificity of Marx's analysis. As described earlier, the nature of this exploitation is different for slave societies, than for feudal societies, which, in turn, is different to capitalist society. The form of the revenues differs.

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Part II, Political Economy, VIII – Capital and Surplus Value (Concluded) - Part 11 of 13

Duhring writes,

“The domination of capital arose in close conjunction with the domination of land. Part of the agricultural serfs were transformed into craftsmen in the towns, and ultimately into factory material. After ground-rent, earnings of capital developed as a second form of rent of possession.” (p 276)

As Engels notes, as a historical description, this is perverse. Landed property came into existence long before industrial capital. What landed property extracted, as feudal rent, was not a proportion of surplus labour/value, but the whole amount. It is quite different to ground-rent/capitalist rent, which, itself, can only come into existence after the dominance of capitalist production and formation of an average industrial rate of profit. The fact that the former serfs and feudal retainers did move to the towns of the Middle Ages, and became the basis of the urban bourgeoisie, provides a further problem for Duhring's argument. They did not, thereby, become the ruling-class, or have the power of the state behind them, to extract this surcharge by force, as he claims. And yet they were able to sell their commodities at prices that realised the surplus value they contained.

“We can therefore come to no other conclusion than that Herr Dühring is incapable of answering his own question: how can the competing entrepreneurs constantly realize the product of labour above the natural costs of production? That is to say, he is incapable of explaining the genesis of profit. He can only bluntly decree: earnings of capital shall be the product of force — which, true enough, is wholly in accordance with Article Two of the Dühringian social constitution: force distributes. This is certainly expressed very nicely; but now “the question arises”, force distributes—what? Surely there must be something to distribute, or with the best will in the world even the most omnipotent force can distribute nothing.” (p 276-7)

Duhring has a purely subjectivist theory. At least Smith's theory recognised the existence of surplus value, as surplus labour, even if his failure to distinguish between labour-power and labour left him confused about the basis upon which it ends up in the hands of capital and labour. Even here, Smith is in advance of Duhring, because Smith posits the laws of supply and demand for capital and labour as resolving that question, whereas Duhring can only posit “force”.

Smith's solution, based on the operation of supply and demand, starts from the fact of the existence of a surplus value contained within the value of the commodity. Its weakness is that, like all explanations based on supply and demand, it fails to look behind that appearance to what determines the supply, and what determines the demand. It has the advantage over Duhring that it is both objective and scientific. It sets an objective determination of value, and of surplus-value, even if Smith did not properly draw it out. It is what lies behind the appearance of his supply and demand determination of the price of labour (wages) and capital (profit).

“The earnings pocketed by the competing entrepreneurs are something very tangible and solid. Force can take them, but cannot produce them. If Herr Dühring obstinately refuses to explain to us how force takes the earnings of entrepreneurs, he is as silent as the grave in answer to the question of where force takes them from. Where there is nothing, the king, like any other force, loses his rights. Out of nothing nothing comes, and certainly not profit.” (p 277)

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Anti-Duhring, Part II, Political Economy, VIII – Capital and Surplus Value (Concluded) - Part 10 of 13

The problem Duhring faced was, if no surplus labour is undertaken, no surplus value or surplus product created, how could it be extracted, however much force is mobilised? Even if Duhring argues that surplus labour is undertaken as a result of the coordinated use of force by the state/ruling-class, he is, then, forced to accept that the social cost of production, i.e. the total labour undertaken, is greater than simply the labour-time represented by wages. If workers are forced to work 10 million hours, whereas only 8 million are required to reproduce the labour-power of the workers/wages, then the total social cost of production is still 10 million hours/£100 million, and not 8 million hours/£80 million, and so he finds himself having to answer the question he posed to Marx of how the capitalists realise this value of £100 million.

As set out earlier, Marx's scientific resolution of this question also enabled him to explain the basis of the existence of an appropriation of the surplus product in previous modes of production, and, thereby, to establish a scientific theory of the evolution of class society. It is the potential for the labourer to perform surplus labour, i.e. to produce more in a day than is required to reproduce their own labour-power (to create more new value than the value of their labour-power) which enables a section of society to consume without producing. It is the amount of surplus production which determines how much can be extracted by an exploiting class, be they slave-owners, feudal lords, or capitalists.

The idea of Duhring's that the capitalists came together as some kind of cabal to determine what “certain measure of earnings of capital” are required can be found, today, in other forms. For example, Michael Roberts perennially predicts an imminent recession, on the basis that capitalists will reduce or refrain from capital accumulation, as a result of a falling rate of profit. But, why would that be the case, unless, as with Duhring, he believes that there is some given, unspoken, “measure of earnings of capital” that is required? Marx specifically rejected such a view. It is a completely different thing to say, as Marx did, that capital will tend o move in to spheres where the rate of profit is highest, and away from where it is lowest than to claim that it will, in total, sit on its hands!

As Engels puts it,

“Just as little can we be satisfied with the assurance that a certain measure of earnings of capital is a necessity in this kind of economy, once it is dominant; for the point to be proved is precisely why this is so.” (p 276)

Duhring utilises the argument put forward by Adam Smith, which led him to advance a cost of production theory of value as against his original labour theory of value. Smith set out the Labour Theory of Value, adopted by Ricardo, and developed by Marx, whereby the value of commodities is determined by the amount of labour-time required for their production. However, because Smith did not distinguish between labour and labour-power, he found himself in a dilemma in trying to explain why wages were not equal to the new value added by labour, and so how profit, rent and interest was possible, as component of the price of the commodity. He concluded that, when landed property and capital comes into existence, the Labour Theory of Value cases to operate as the basis of the price of commodities. In essence, he argues labour is plentiful and so its price falls below its value, whereas capital is scarce and so its price rises above its value. This was also the foundation of Smith's theory of a falling rate of profit. He believed that capital would accumulate and so its supply would rise, whereas labour supply would not increase in proportion. The price of capital (profit) would fall, and wages rise.

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Anti-Duhring, Part II, Political Economy, VIII – Capital and Surplus Value (Concluded) - Part 9 of 13

All consumers, as buyers of commodities, therefore, buy commodities at their value, in aggregate, i.e. at their social cost of production. The difference is that it is only capitalists who also sell those commodities at those values, but whose costs of production of them is less than that value.

“According to Herr Dühring, the natural outlays of production consist

“in the expenditure of labour or energy, and this in turn, in the last analysis, can be measured by the expenditure of food”

that is, in present-day society, these costs consist in the outlays actually expended on raw materials, instruments of labour, and wages, as distinguished from the “tax”, the profit, the surcharge levied sword in hand. Now everyone knows that in the society in which we live the competing entrepreneurs do not realise their commodities at the natural costs of production, but that they add on — and as a rule also receive — the so-called surcharge, the profit. The question which Herr Dühring thinks he has only to raise to blow down the whole Marxian structure — as Joshua blew down the walls of Jericho of yore — this same question also exists for Herr Dühring's economic theory.” (p 274-5)

In other words, Duhring's theory amounts to the same claim as that made by Proudhon that the value of commodities is determined by wages, the value of labour-power. Profit is, then, not an integral part of the value of commodities, but an arbitrary surcharge added to that value/price by the capitalist. That reduces it to being purely subjective and arbitrary, and so is not scientific. What determines that this surcharge is, say, 10% as opposed to 100% etc.? Moreover, if it is not an inherent component of the value of the commodity, why would not competition between capitalists reduce it to zero, as happens with surplus profits? That, of course, was, also, the conclusion that Walras and others were forced into, as the consequence of the neoclassical theory.

How does Duhring deal with this problem?

“Capital ownership,” he says, “has no practical meaning, and cannot be realized, unless indirect force against human material is simultaneously included in it. The product of this force is the earnings of capital, and the magnitude of the latter will therefore depend on the range and intensity of this exercise of domination ... Earnings of capital are a political and social institution which operates more powerfully than competition. In this connection the capitalists act as a social estate, and each one maintains his position. A certain measure of earnings of capital is a necessity in this kind of economy, once it is dominant” (p 275)

In other words, Duhring can only resolve his dilemma by claiming that the capitalists, as a class, come together in some kind of conspiratorial and coordinated manner, to agree amongst themselves what the level of this surcharge will be, and, thereby, utilise the force provided by the state to extract it. The fact that this fails the test of prima facie credibility is the least of its deficiencies. How, where, and when do the capitalists organise such meetings? Where is there evidence of such activity? Its true that, prior to the ascendancy of capitalist production, as Engels deribes in his Supplement To Capital III, the feudal guilds, and the merchants guilds did set agreed selling prices and profit margins, but capitalist production dismantled all of those monopolies. In fact, as Marx describes, so long as these antediluvian forms of capital – merchant capital and usurers capital – dominated, industrial capital could not become firmly established. They drained the surplus value produced both by the independent commodity producers and the small capitalist producers. In so doing, they thwarted capital accumulation, and threatened production itself.

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Anti-Duhring, Part II, Political Economy, VIII – Capital and Surplus Value (Concluded) - Part 8 of 13

The capitalist class do not sell commodities above their value, but at their value. In Capital II, Marx explains how the capitalist class sells all of these commodities at their value. The workers are paid the value of their labour-power, as wages. It is best seen by excluding the value of constant capital, which is merely preserved in current production. If the total new value of production is equal to 10 million hours of labour, wages are equal to 8 million hours, or 80% of total new value. Each commodity is sold to workers at its value, but, workers can only, thereby, buy 80% of what they produced. The other 20% is in the hands of capitalists.

If capitalists simply consumed the surplus product of their own production the question of realising its value would not even arise. But, of course, capitalist production does not work like that. Assume, however, then, for the sake of simplicity, there are just two commodities produced and sold, A and B. They each have a value equal to 1 million hours of labour. The capitalists who produce A require half for their own consumption, and seek to sell the other half to the capitalists who produce B. As Marx notes, the capitalists do not enter the market only with money to fund their purchases of elements of capital, but also, money to fund their own personal consumption.

Let us say that 1 hour of labour is equal £6. So, the capitalists producing A and B start off with £50 million each. Of this, they each advance £40 million in wages, but, each, then, has £10 million, which they throw into circulation simply to buy commodities for their own personal consumption. So, A capitalists throw £5 million into circulation to buy A commodities. What they spend as a consumer of A, therefore, comes back to them as a capitalist producer of A. They also throw into circulation £5 million to buy the B commodities they require for personal consumption, and that goes into the pocket of the capitalist producers of B.

But, the same applies to the capitalist producers of B. They simultaneously throw £5 million into circulation to buy their own B commodities, and another £5 million to buy A commodities. The first £5 million flows back into their own pocket, but the second £5 million flows into the pocket of A capitalists. At the end of this process of simple reproduction, all commodities have been sold at their value of £100 million. £80 million that had been paid as wages flows back to the capitalists, in payment for 80% of the total product in their hands. The capitalists, themselves, as consumers, rather than as producers, began with £20 million to fund their own consumption, and they throw this into circulation to fund that consumption of the remaining 20% of output. As capitalists, this £20 million flows back into their pockets too.

So, they have £80 million to fund wages in the following year, and they have £20 million in profits to fund their personal consumption in the next year.

“In Marx, the surplus-product as such has absolutely no cost of production; it is the part of the product which costs the capitalist nothing. If therefore the competing entrepreneurs desired to realise the surplus-product at its natural cost of production, they would have to give it away.” (p 274)

Which, as described earlier, is precisely what would happen in a society divided entirely into slaves and slave-owners. It is also what would be the case in a society where all production was undertaken entirely by machines, and so where no new value was produced. The point about commodity production and later capitalist production that distinguishes it from those conditions is the existence of free labour, and that the labourer, whether the independent commodity producer, or the wage-labourer, enters the market as both the seller and buyer of commodities.

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Anti-Duhring, Part II, Political Economy, VIII – Capital and Surplus Value (Concluded) - Part 7 of 13

Similarly, rent is equal to surplus profit, i.e. profit above the average industrial rate of profit. The simple movement of capital into these high profit spheres acts to compete away such surplus profits. However, that assumes that capital is free o enter such spheres, and, thereby, raise the level of supply. Where landed property already exists, that is not possible. The land owner says to the capitalist, who seeks to use their land, that they must pay them a rent, equal to this surplus profit. Competition to be able to produce those surplus profits, therefore, explains this movement of capital, but, also, explains the basis of the sub-form of surplus value as rent.

Finally, because all capital (not to be confused with the commodities that comprise capital, i.e. capital not as a thing but a social relation) has the potential to produce the average industrial rate of profit (the use-value of capital), it means that capital itself, then, becomes a commodity that can be bought and sold. A potential capitalist who does not own capital can buy it, i.e. borrow money-capital (or lease equipment, buildings etc.) so as to undertake production, and so obtain the average industrial rate of profit. Provided the price of that capital (i.e. rate of interest) is less than the average industrial rate of profit, they can engage in capitalist production. Similarly the owner of money-capital (lessor of premises, equipment etc.) will not lend it for nothing. So, as Marx sets out, in Capital III, the average industrial rate of profit sets an upper limit to the rate of interest, and zero a lower limit. The actual rate of interest then depends on the relation of demand for and supply of this money-capital, at the given time. Once again, therefore, it is this specific form of capitalist competition that provides the dynamic and explains the division of surplus-value into profit and interest.

“But competition is precisely the absolute obstacle to Herr Dühring's understanding of the process. He cannot comprehend how the competing entrepreneurs are able constantly to realise the full product of labour, including the surplus-product, at prices so far above the natural costs of production.” (p 274)

The solution has been set out earlier. The social cost of production is equal to the total social labour-time expended. That total social labour-time includes an amount of surplus labour, embodied in a social surplus product/value. The total product is in the hands of the capitalist class. It hands back, i.e. sells to the working-class, a part of that total product equal to the value of labour-power/wages. That leaves the surplus product in the hands of the capitalist class, just as, in previous modes of production, it remains in the hands of the slave-owners, or landlords.

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