“If it were not for this interest, the farmer—the chief agent in agriculture—would not advance the capital for investment in it. Already from this standpoint, the appropriation by the farmer of that portion of the agricultural surplus proceeds which represents interest is, according to the Physiocrats, as necessary a condition of reproduction as the farmer class itself; and hence this element cannot be put in the category of the national “net product” or “net income”; for the latter is characterised precisely by the fact that it is consumable without any regard to the immediate needs of national reproduction.” (p 321)
In other words, to use Marx's formulation, gross output is equal to c + v + s. C, the consumed constant capital (raw and auxiliary materials, and wear and tear of fixed capital) plus the variable-capital (the physical wage goods), must all be reproduced on a “like for like basis”, so that reproduction can occur. Only what is left over after that represents the net or surplus product. Of course, in class societies, the exploiting classes do not see things that way. They, after all, must consume to live, and they justify their consumption on the basis of their functional role in society. Landlords provide land, without which production could not take place; capitalists provide capital, without which production could not occur; money-capitalists provide money, without which some industrial capitalists could not accumulate capital.
The Physiocrats represented the ideas of the rising French bourgeoisie, and, in particular, the capitalist farmers. Like the rising productive-capitalists everywhere, they recognised that the old, aristocratic, landlord class no longer had any functional role. They played no part in agricultural production, as that function was now undertaken by the capitalist farmer. If the landlords didn't exist, then, what the Physiocrats saw as the mystical power of the land to create a surplus product (output greater than inputs) would still exist. If the farmers did not have to hand over that rent to landlords to consume unproductively, production not only would still take place on the same scale, but those rents could be used productively, to cultivate additional land.
In Britain, this same perception led the bourgeoisie's ideologists to argue for land nationalisation. If land was nationalised, they argued, rents paid to the aristocracy would instead go to the capitalist state, so that it would not need to levy as much in tax, which is a deduction from profit. That would leave more profit, and so a greater potential for capital accumulation and economic growth. This is the opposite to the Keynesian argument set out earlier, which argues that increased taxes by the state used, for example, in arms spending can act to increase capital accumulation, employment and growth. Keynes' argument was just a 20th century version of the argument put forward by Malthus as paid apologist of the landed aristocracy. Malthus plagiarised Sismondi's arguments in relation to the inevitability of an overproduction of commodities, and put forward as the solution, increases in the revenues of the landlords, clergy and state, so that the capitalists had less to use to increase production, and all of these other parasitic and unproductive classes had more to spend to increase demand.
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