Theories of Surplus Value, Marx 1861-3

[CHAPTER VIII] Herr Rodbertus. New Theory of Rent.

(Digression)

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[1. Excess Surplus-Value in Agriculture. Agriculture Develops Slower Than Industry under Conditions of Capitalism]

||X-445| Herr Rodbertus. Dritter Brief an von Kirchmann von Rodbertus. Widerlegung der Ricardoschen Lehre von der Grundrente und Begründung einer neuen Rententheorie, Berlin, 1851.

The following remark has to be made beforehand: supposing the necessary wage is equal to 10 hours, then this is most easily explained in the following manner. If 10 hours’ labour (i.e., a sum of money equal to 10 hours) enabled the agricultural labourer, on an average, to purchase all the necessary means of subsistence, agricultural, industrial products, etc., then this is the average wage for unskilled labour. We are thus concerned here with the value of his daily product which must fall to his share. In the first place this value exists in the form of the commodity which he produces, i.e., [in] a certain quantity of this commodity, in exchange for which, after deducting what he himself consumes of the commodity (if he [does consume any of it]), he can procure for himself the necessary means of subsistence. Not only the use-value which he himself produces, but industry, agriculture, etc., thus come into the estimation of his necessary “income. But this is inherent in the concept of commodity. He produces a commodity, not merely a product. We need therefore waste no words about this.

Herr Rodbertus first investigates the situation in a country where there is no separation between land ownership and owner-ship of capital. And here he comes to the important conclusion that rent (by which he means the entire surplus-value) is simply equal to the unpaid labour or the quantity of products which it represents.

In the first instance it is noteworthy that Rodbertus only takes into account the growth of relative surplus-value, i.e., the growth of surplus-value in so far as it arises out of the growing productivity of labour and not the growth of surplus-value derived from the prolongation of the working-day itself. All absolute surplus-value is of course relative in one respect. Labour must be sufficiently productive for the worker not to require all his time to keep himself alive. But from this point the distinction comes into force. Incidentally, if originally labour is but little productive, the needs are also extremely simple (as with slaves) and the masters themselves do not live much better than the servants. The relative productivity of labour necessary before a profit-monger, a parasite, can come, into being is very small. If we find a high rate of profit though labour is as yet very unproductive, and machinery, division of labour etc., are not used, then this is the case only under the following circumstances; either as in India, partly because the requirements of the worker are extremely small and he is depressed even below his modest needs, but partly also because low productivity of labour is identical with a relatively small fixed capital in proportion to the share of capital which is spent on wages or, and this comes to the same thing, with a relatively high proportion of capital laid out in wages in relation to the total capital; or finally, because labour-time is excessively long, The latter is the case in countries (such as Austria etc.) where the capitalist mode of production is already in existence but which have to compete with far more developed countries. Wages can be low here partly because the requirements of the worker are less developed, partly because agricultural products are cheaper or—this amounts to the same thing as far as the capitalist is concerned—because they have less value in terms of money. Hence the quantity of the product of, say, 10 hours’ labour, which must go to the worker as necessary wages, is small. If, however, he works 17 hours instead of 12 then this can make up (for the low productivity of labour]. In any case because in a given country the value of labour is falling relatively to its productivity, it must not be imagined that wages in different countries are inversely proportional to the productivity of labour. In fact exactly the opposite is the case. The more productive one country is relative to another in the world market, the higher will be its wages as compared with the other. In England, not only nominal wages but [also] real wages are higher than on the continent. The worker eats more meat; he satisfies more needs. This, however, only applies to the industrial worker and not the agricultural labourer. But in proportion to the productivity of the English workers their wages are not higher (than the wages paid in other countries].

Quite apart from the variation in rent according to the fertility of the land, the very existence of rent—i.e., the modern form of landed property—is feasible because the average wage of the agricultural labourer is below that of the industrial worker. Since, to start with, by tradition (as the farmer turns capitalist before capitalists turn farmers) the capitalist passed on part of his gain to the landlord, he compensated himself by forcing wages down below their level. With the labourers’ desertion of the land, wages had to rise and they did rise. But hardly has this pressure become evident, when machinery etc. is introduced and the land once more boasts a (relative) surplus population. (Vide England.) Surplus-value can be increased, without the extension of labour-time or the development of the productive power of labour, by forcing wages below their traditional level. And indeed this is the case wherever agricultural production is carried on by capitalist methods. Where it cannot be achieved by means of machinery, it is done by turning the land over to sheep grazing. Here then we already have a potential basis of ||446| rent since, in fact, the agricultural labourer’s wage does not equal the average wage. This rent would be feasible quite independent of the price of the product, which is equal to its value.

Ricardo is also aware of the second type of rent increase, which arises from a greater product sold at the same price, but he does not take it into account, since he measures rent per quarter and not per acre. He would not say that rent has risen (and in this way rent can rise with falling prices) because 20 quarters [at] 2s, is more than 10 [quarters at] 2s, or 10 quarters [at] 3s.

Incidentally, however the phenomenon of rent may be explained, the significant difference between agriculture and industry remains, in that in the latter, excess surplus-value is created by cheaper production, in the former, by dearer production. If the average price of 1 lb. of yarn is 2s. and I can produce it for 1s. then, in order to gain an increased market for it, I will necessarily sell [it] for 1s. 6d. [or] at any rate below 2s. And what is more, this is absolutely necessary, for cheaper production presupposes production on a larger scale. So, compared with before, I am now glutting the market, I must sell more than before. Although 1 lb. of yarn costs only 1s. this is only the case if I now produce, say, 10,000 lbs. as against my previous 8,000 lbs. The low cost is only achieved because fixed capital is spread over 10,000 lbs. If I were to sell only 8,000 lbs., the depreciation of the machines alone would raise the price per lb. by one-fifth, i.e., 20 per cent. So I sell at below 2s. in order to be able to sell 10,000 lbs. In doing so, I am still making an excess profit of 6d., i.e., of 50 per cent on the value of my product which is 1s. and already includes the normal profit. In any case, I am hereby forcing down the market-price with the result that the consumer gets the product more cheaply. But in agriculture I sell at 2s. since, if I had sufficient fertile land, the less fertile would not be cultivated. If the area of fertile land were enlarged, or the fertility [of the] poorer soil so improved that I could satisfy demand, then this game would end, Not only does Ricardo not deny this, but he expressly calls attention to it.

Thus if we admit that the varying fertility of the land accounts not for rent itself, but only for the differences in rent, there remains the law that while in industry, on an average, excess profit arises from the lowering of the price of the product, in agriculture the relative size of rent is determined not only by the relative raising of the price (raising the price of the product of fertile land above its value) but by selling the cheaper product at he cost of the dearer. This is, however, as I have already demonstrated (Proudhon), merely the law of competition, which does not emanate from the “soil” but from “capitalist production” itself.

Furthermore, Ricardo would be right in another respect, except that, in the manner of the economists, he turns a historical phenomenon into an eternal law. This historical phenomenon is the relatively faster development of manufacture (in fact the truly bourgeois branch of industry) as against agriculture. The latter has become more productive but not in the same ratio as industry. Whereas in manufacture productivity has increased tenfold, in agriculture it has, perhaps, doubled. Agriculture has therefore become relatively less productive, although absolutely more productive. This only proves the very queer development of bourgeois production and its inherent contradictions. It does not, however, invalidate the proposition that agriculture becomes relatively less productive and hence, compared with the value of the industrial product, the value of the agricultural product rises and with it also rent. That in the course of development of capitalist production, agricultural labour has become relatively less productive than industrial labour only means that the productivity of agriculture has not developed with the same speed and to the same degree.

Suppose the relation of industry A to industry B is as 1:1. Originally agriculture [was] more productive because not only natural forces but also a machine created by nature play a part in agriculture; right from the start, the individual worker is working with a machine. Hence, in ancient times and in the Middle Ages agricultural products were relatively much cheaper than industrial products, which is obvious (see Wade) from the ratio of the two within the average wage.

At the same time let 1°: 1° indicate the fertility of the two [branches of production]. Now if industry A becomes 10°, [i.e.] its fertility increases tenfold while industry B merely increases threefold, becomes 3°, then whereas the industries were previously as 1:1 they are now as 10:3 or as 1 : ³/₁₀. The fertility of industry B has decreased relatively by ⁷/₁₀ although absolutely it has increased threefold. For the highest rent [it is] the same—relatively to industry—as if it had risen because the poorest land had become ⁷/₁₀ less fertile.

Now it does not by any means follow, as Ricardo supposes, that the rate of profit has fallen because wages have risen as a result of the relative increase in the price of agricultural products ||447|. For the average wage is not determined by the relative but by the absolute value of the products which enter into it. It does however follow that the rate of profit (really the rate of surplus-value) has not risen in the same ratio as the productive power of manufacturing industry, and this is due to agriculture (not the land) being relatively less productive. This is absolutely certain. The reduction in the necessary labour-time seems small compared with the progress in industry. This is evident from the fact that the agricultural products of countries like Russia etc. can beat those of England. The lower value of money in the wealthier countries (i.e., the low relative production costs of money in the wealthier countries) does not enter into it at all. For the question is, why it does not affect their industrial products in competition with poorer countries when it does affect their agricultural products. (Incidentally, this does not prove that poor countries produce more cheaply, that their agricultural labour is more productive. Even in the United States, the volume of corn at a given price has increased, as has recently been proved by statistical information, not however because the yield per acre has risen, but because more acres have come under cultivation. It cannot be said that the land is more productive where there is a great land mass and where large areas, superficially cultivated, yield a greater absolute product with the same amount of labour than much smaller areas in the more advanced country.)

The fact that less productive land is brought under cultivation does not necessarily prove that agriculture has become less productive. On the contrary, it may prove that it has become more productive; that the inferior land is being cultivated, not [only] because the price of the agricultural product has sufficiently risen to compensate for the capital investment, but also the converse, that the means of production have developed to such an extent that the unproductive land has become “productive” and capable of yielding not only the normal profit but also rent. Land which is fertile at a [given] stage of development of productive power may be unfertile for a lower developmental stage.

In agriculture, the extension of labour-time—i.e., the augmentation of absolute surplus-value—is only possible to a limited degree. One cannot work by gaslight on the land and so on. True, one can rise early in spring and summer. But this is offset by the shorter winter days when, in any case, only a relatively small amount of work can be accomplished. So in this respect absolute surplus-value is greater in industry so long as the normal working-day is not regulated by force of law. A second reason for a smaller amount of surplus-value being created in agriculture is the long period during which the product remains in the process of production without any labour being expended on it. With the exception of certain branches of agriculture such as stock-raising, sheep farming, etc., where the population is positively ousted from the land, the number of people employed relatively to the constant capital used, is still far greater—even in the most advanced large-scale agriculture—than in industry, or at least in the dominating branches of industry. Hence in this respect even if, for the above-mentioned reasons, the mass of surplus-value is relatively smaller than it [would be] with the employment of the same number of people in industry—this latter condition is partly offset again by the wage falling below its average level—the rate of profit can be greater than in industry, But if there are, in agriculture, any causes (we only indicate the above) which raise the rate of profit (not temporarily but on an average as compared with industry) then the mere existence of the landlord would cause this extra profit to consolidate itself and accrue to the landlord rather than enter into the formation of the general rate of profit.

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[2. The Relationship of the Rate of Profit to the Rate of Surplus-Value. The Value of Agricultural Raw Material as an Element of Constant Capital in Agriculture]

In general terms the question to be answered with regard to Rodbertus is as follows:

The general form of capital advanced is:

Constant capital	Variable capital
Machinery—Raw materials	Labour-power

In general the two elements of constant capital are the instruments of labour and the subject of labour. The latter is not necessarily a commodity, a product of labour. It may therefore not exist as an element of capital, although it is invariably an element in the labour-process. Soil is the husbandman’s raw material, the mine that of the miner, the water that of the fisherman and even the forest is that of the hunter. In the most complete form of capital, however, these three elements of the labour-process also exist as three elements of capital, i.e., they are all commodities, use-values which have an exchange-value and are products of labour. In this case all three elements enter into the process of creating value, although machinery [enters into it] not to the extent to which it enters into the labour-process but only in so far as it is consumed.

The following question now arises: Can the absence of one of these elements in a particular branch of industry enhance the rate of profit (not the rate of surplus-value) in that industry? In general terms, the formula itself provides the answer:

The rate of profit equals the ratio of surplus-value to the total capital advanced.

Throughout this investigation it is assumed that the rate of surplus-value, i.e., the division of the value of the product between the capitalist and the worker, remains constant.

||448| The rate of surplus-value is s/v; the rate of profit is s/c+v. Since s’, the rate of surplus-value, is given, v is given and s/v is assumed to be a constant value. Therefore the magnitude of s/c+v can only alter when c + v changes and since v is given, this can only increase or decrease because c decreases or increases.

And further, s/c+v will increase or decrease not in the ratio of c : v but according to c’s relation to the sum of c + v, If c equals nought, then s/c+v = s/v. The rate of profit [would] in this case equal the rate of surplus-value and this is its highest possible amount, since no sort of calculation can alter the magnitude of s and v. Suppose v = 100 and s = 50, then s/v = ⁵⁰/₁₀₀ = ¹/₂ = 50 per cent. If a constant capital of 100 were added, then the rate of profit [would be] ⁵⁰/₁₅₀+100 = ⁵⁰/₂₀₀ =¹/₄ = 25 per cent. The rate of profit would have decreased by half. If 150 c were added to 100 v then the rate of profit would be ⁵⁰/₁₀₀+150 = ⁵⁰/₂₅₀ = ¹/₅ = 20 per cent. In the first instance, total capital equals v, i.e., equals variable capital, hence the rate of profit equals the rate of surplus-value. In the second instance, total capital equals 2 × v, hence the rate of profit is only half the rate of surplus-value. In the third instance total capital is 2 ¹/₂ × 100, that is 2 ¹/₂ × v, that is ⁵/₂ × v; v is now only ²/₅ of total capital. Surplus-value equals half of v, i.e., half of 100, hence is only half of ²/₅ of total capital, or ²/₁₀ of total capital. ²⁵⁰/₁₀ = 25 and ²/₁₀ of 250 = 50. But ²/₁₀ = 20 per cent.

Hence to start with this much has been established. Provided v remains constant and s/v too, then it is of no consequence how c is composed. If c has a certain magnitude, say 100, then it makes no difference whether it consists of 50 units of raw material and 50 of machinery or 10 of raw material and 90 of machinery, or no raw material and 100 machinery or the other way about. For the rate of profit is determined by the relationship s/c+v; the relative value of the various production elements contained in c is of no consequence here. For instance, in the production of coal the raw materials (after deducting coal itself which is used as an auxiliary material) may be reckoned as nought and the entire constant capital can be assumed to consist of machinery (including buildings and tools). On the other hand, with a tailor, machinery can be considered as nought and here the whole of constant capital resolves into raw materials (particularly where tailors running a large business do not as yet use sewing-machines and, on the other hand, even save buildings, as sometimes occurs nowadays in London, by employing their workers as outworkers, This is a new phenomenon, where the second division of labour reappears in the form of the first).

If the colliery owner employs 1,000 units of machinery and 1,000 units of labour and the tailor 1,000 of raw materials and 1,000 of labour, then with an equal rate of surplus-value, the rate of profit in both instances is the same. If [we] assume that surplus-value is 20 per cent, then the rate of profit would in both cases be 10 per cent, namely: ²⁰⁰/₂₀₀₀ = ²/₂₀ = ¹/₁₀ = 10 per cent. Hence there are only two instances in which the ratio between the component parts of c, i.e., raw materials and machinery, can affect the rate of profit: 1. If a change in this ratio modifies the absolute magnitude of c. 2. If the ratio between the component parts of c modifies the size of v. This would imply organic changes in production itself and not merely the tautologous statement that if a particular part of c accounts for a smaller portion, then the other must make up a larger portion of the total amount.

In the real bill of an English farmer, wages amount to £ 1,690, manure to £ 686, seeds to £ 150, fodder for cows to £ 100. Thus “raw material” comes to £ 936, which is more than half the amount spent on wages. (See F. W. Newman, Lectures on Political Economy, London, 1851, p. 166.)

“In Flanders” (in the Belgian areas) “dung and hay are in these parts imported from Holland” (for flax-growing, etc. In turn they export flax, linseed, etc.).” The refuse of the towns has therefore become[a] a matter of trade, and is regularly sold at high prices to Belgium… At about twenty miles from Antwerp, up the Schelde, the reservoirs may be seen for the manure that is brought from Holland. The trade is managed by a company of capitalists and the[b] Dutch boats” etc. (Banfield).

And so even manure, plain muck, has become merchandise, not to speak of bone-meal, guano, pottash etc. That the elements of production are estimated in terms of money is not merely due to the formal change in production. New materials are introduced into the soil and its old ones are sold for reasons of production. This is not merely a formal difference between the capitalist and the previous mode of production. The seed trade has risen in importance to the extent to which the importance of seed rotation has become recognised. Hence it would be ridiculous to say that no “raw material”—i.e., raw material as a commodity— enters into agriculture whether it be reproduced by agriculture itself or bought as a commodity, acquired from outside. It would be equally absurd to say that the machine employed by the engineer ||449| who constructs machines does not figure as an element of value in his capital.

A German peasant who year after year produces his own elements of production, seeds, manure etc., and, with his family, consumes part of his crops needs to spend money (as far as production itself is concerned) only on the purchase of a few tools for cultivating the land, and on wages. Let us assume that the value of all his expenses is 100 [half of this having to be paid out in money]. He consumes half [of the product] in kind (production costs [are also included here]). The other half he sells and he receives, say, 100, His gross income is thus 100 and if he relates this to his capital of 50 then it amounts to 100 per cent [profit]. If one-third of the 50 is deducted for rent and one-third for taxes (33 ¹/₃ in all) then he retains 16 ²/₃, calculated on 50 this is 33 ¹/₃ per cent. But in fact he has only received 16 ²/₃ per cent [of the 100 he laid out originally]. The peasant has merely miscalculated and has cheated himself. The capitalist farmer does not make such errors.

Mathieu de Dombasle says in his Annales agricoles etc. 4 ième livraison, Paris 1828 that under the métairie contract (in [the province of] Berry, for example) :

“the landlord supplies the land, the buildings and usually all or part of the livestock and the tools required for cultivation; the tenant for his part supplies his labour and nothing, or almost nothing else. The products of the land are shared in equal parts” (l.c., p. 301). “The tenants are as a rule submerged in dire poverty” (l.c., p. 302). “If the metayer, having laid out 1,000 francs, increases his gross product by 1,500 francs” (i.e., a gross gain of 500 francs) “he must pass half of it on to the landowner, retaining merely 750 and so loses 250 francs of his expenses” (l.c., p. 304). “Under the previous system of cultivation the expenses or costs of production were almost exclusively drawn in kind, from the products themselves, for the consumption of the animals and of the cultivator of the land and his family; hardly any cash was paid out. Only these particular circumstances could give rise to the belief that landowner and tenant could divide amongst themselves the whole of the harvest which had not been consumed during production. But this process is only applicable to this type of agriculture, namely, low-level agriculture. But when it is desired to raise that level, it is realised that this is only possible by making certain advances which have to be deducted from the gross product in order to be able to utilise them again in the following year. Hence this kind of division of the gross product becomes an insurmountable obstacle to any sort of improvement” (l.c., p. 307).

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[3. Value and Average Price in Agriculture. Absolute Rent]

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[a) Equalisation of the Rate of Profit in Industry]

Herr Rodbertus seems to think that competition brings about a normal profit, or average profit or general rate of profit by reducing the commodities to their real value; i.e., that it regulates their price relationships in such a manner that the correlative quantities of labour-time contained in the various commodities are expressed in money or whatever else happens to be the measure of value. This is of course not brought about by the price of a commodity at any given moment being equal to its value nor does it have to be equal to its value. [According to Rodbertus, this is what happens:] For example the price of commodity A rises above its value and for a time remains, moreover, at this high level, or even continues to rise. The profit of [the capitalist who produces] A thus rises above the average profit in that he appropriates not only his own “unpaid” labour-time, but also a part of the unpaid labour-time which other capitalists have “produced”. This has to be compensated by a fall in profit in one or other sphere of production provided the price of the other commodities in terms of money remains constant. If the commodity is a means of subsistence generally consumed by the worker, then it will depress the rate of profit in all other branches; if it enters as a constituent part into the constant capital, then it will force down the rate of profit in all those spheres of production where it forms an element in constant capital.

Finally, the commodity may neither be an element in any constant capital, nor form a necessary item in the workers’ means of subsistence (for those commodities which the worker can choose to buy or abstain from buying, he consumes as a consumer in general and not as a worker) but it may be one of the consumer goods, an article for individual consumption in general. If, as such, it is consumed by the industrial capitalist himself, then the rise in its price in no way affects the amount of surplus-value or the rate of surplus-value. Now if the capitalist wanted to maintain his previous standard of consumption, then that part of profit (surplus-value) which he uses for individual consumption would rise in relation to that which he sinks into industrial reproduction. The latter would decrease. As a result of the price rise, or the rise in profit above its average rate, in A, the volume of profit in B, C, etc. would diminish within a certain space of time (which is also determined by reproduction). If article A was exclusively consumed by other than industrial capitalists, then they would consume more than before of commodity A as compared with commodities B, C, etc. The demand for commodities B, C, etc. would fall; their price would fall and, in this case, the price rise in A, or the rise in profit in A above the average rate, would have brought about a fall in the profit in B, C, etc. below the average rate by forcing down the money prices of B, C, etc. (in contrast to the previous instances where the money price of B, C, etc. ||450| remained constant). Capitals would migrate from B, C, etc., where the rate of profit has sunk below the [average] level, to A’s sphere of production. This would apply particularly to a portion of the new capital which is continually entering the market and which would naturally tend to penetrate into the more profitable sphere A. Consequently, after some time, the price of article A would fall below its value and would continue to do so for a longer or shorter period, until the reverse movement set in again. The opposite process would take place in the spheres B, C, etc., partly as a result of the reduced supplies of articles B, C, etc., because of the exodus of capital, i.e., because of the organic changes taking place in these spheres of production themselves, and partly as a result of the changes which have occurred in A and which in turn are affecting B, C, etc. in the opposite direction.

Incidentally, it may well be that in this process—assuming the value of money to be constant—the money prices of B, C, etc., never regain their original level, although they may rise above the value of commodities B, C, etc. and hence the rate of profit in B, C, etc. may also rise above the general rate of profit. Improvements, inventions, greater economy in the means of production, etc. are introduced not at times when prices rise above their average level, but when they fall below it, i.e., when profit falls below its normal rate. Hence during the period of failing prices of B, C, etc., their real value may fall, in other words the minimum labour-time required for the production of these commodities may decrease. In this case, the commodity can only regain its former money price if the rise in its price over its value equals the margin, i.e., the difference between the price which expresses its new value and the price which expressed its higher former value. Here the price of the commodity would have changed the value of the commodity by affecting supply, and the costs of production.

The result of the above-mentioned movement: If we take the average of the increases and decreases in the price of the commodity above or below its value, or the period of equalisation of rises and fails—periods which are constantly repeated—then the average price is equal to the value of the commodity. The average profit in a particular sphere is therefore also equal to the general rate of profit; for although, in this sphere, profit rose above or fell below its old rate with the rise or fall in prices—or with the increase or decrease in costs of production while the price remained constant—on an average, over the period, the commodity was sold at its value. Hence the profit yielded is equal to the general rate of profit. This is Adam Smith’s conception and, even more so, Ricardo’s, since the latter adheres more firmly to the real concept of value. Herr Rodbertus acquires it from them. And yet this conception is wrong.

What is the effect of the competition between capitals? The average price of the commodities during a period of equalisation is such that these prices yield the same profits to the producers of commodities in every sphere, for instance, 10 per cent. What else does this mean? That the price of each commodity stands at one-tenth above the price of the production costs, which the capitalist has incurred, i.e., the amount he has spent in order to produce the commodity. In general terms this just means that capitals of equal size yield equal profits, that the price of each commodity is one-tenth higher than the price of the capital advanced, consumed or represented in the commodity. It is however quite incorrect to say that capitals in the various spheres of production produce the same surplus-value in relation to their size, even if we assume that the absolute working-day is equally long in all spheres, i.e., if we assume a set rate of surplus-value. <We leave aside here the possibility of one capitalist enforcing longer working hours than another, and we assume a fixed absolute working-day for all spheres. The variation in absolute working-days is partly offset by the varying intensity of labour etc., and partly these differences only signify arbitrary excess profits, exceptional cases, etc.)

Bearing in mind the above assumption, the amount of surplus-value produced by capitals of equal size varies firstly according to the correlation of their organic components, i.e., of variable and constant capital; secondly according to their period of circulation in so far as this is determined by the ratio of fixed capital to circulating capital and also [by] the various periods of reproduction of the different sorts of fixed capital; thirdly according to the duration of the actual period of production as distinct from the duration of labour-time itself, which again may lead to substantial differences between the length of the production period and circulation period. (The first of these correlations, namely, that between constant and variable capital, can itself spring from a great divergency of causes; it may, for example, be purely formal so that the raw material worked up in one sphere is dearer than that worked up in another, or it may result from the varying productivity of labour, etc.)

Thus, if the commodities were sold at their values or if the average prices of the commodities were equal to their values, then the rate of profit in the various spheres would have to vary a great deal. In one case it would be 50, in others 40, 30, 20, 10, etc. Taking the total volume of commodities for a year in sphere A, for instance, their value would be equal to the capital advanced in them plus the unremunerated labour they contain. Ditto in spheres B and C. But since A, B and C contain different amounts of unpaid labour, for instance, A more than B and B more than C, the commodities A might perhaps yield 3 S (S = surplus-value) to their producers, B = 2 S and C = S. Since the rate of profit is determined by the ratio of surplus-value to capital advanced, and as on our assumption this is the same in A, B, C, etc., then ||451| if C is the capital advanced, the various rates of profit will be 3S/C, 2S/C, S/C. Competition of capitals can therefore only equalise the rates of profit, for instance in our example, by making the rates of profit, equal to 2S/C, 2S/C, 2SC, in the spheres A, B, C. A would sell his commodity at 1 S less and C at 1 S more than its value. The average price in sphere A would be below, and in sphere C would be above, the value of the commodities A and C.

As the example of B shows, it can in fact happen that the average price and the value of a commodity coincide. This occurs when the surplus-value created in sphere B itself equals the average profit; in other words, when the relationship of the various components of the capital in sphere B is the same as that which exists when the total sum of capitals, the capital of the capitalist class, is regarded as one magnitude on which the whole of surplus-value [is] calculated, irrespective of the sphere in which it has been created. In this aggregate capital the periods of turnover, etc. are equalised; one can, for instance, consider that the whole of this capital is turned over during one year. In that case every section of the aggregate capital would in accordance with its magnitude participate in the aggregate surplus-value and draw a corresponding part of it. And since every individual capital is to be regarded as shareholder in this aggregate capital, it would be correct to say first that its rate of profit is the same as that of all the others [because] capitals of the same size yield the same amount of profit; secondly, and this arises automatically from the first point, that the volume of profit depends on the size of the capital, on the number of shares the capitalist owns in that aggregate capital. Competition among capitals thus seeks to treat every capital as a share of the aggregate capital and correspondingly to regulate its participation in surplus-value and hence also in profit. Competition more or less succeeds in this by means of its equalisations (we shall not examine here the reason why it encounters particular obstacles in certain spheres). But in plain language this just means that the capitalists strive (and this striving is competition) to divide among themselves the quantity of unpaid labour—or the products of this quantity of labour—which they squeeze out of the working class, not according to the surplus-labour produced directly by a particular capital, but corresponding firstly to the relative portion of the aggregate capital which a particular capital represents and secondly according to the amount of surplus-labour produced by the aggregate capital. The capitalists, like hostile brothers, divide among themselves the loot of other people’s labour which they have appropriated so that on an average one receives the same amount of unpaid labour as another.

Competition achieves this equalisation by regulating average prices. These average prices themselves, however, are either above or below the value of the commodity so that no commodity yields a higher rate of profit than any other. It is therefore wrong to say that competition among capitals brings about a general rate of profit by equalising the prices of commodities to their values. On the contrary it does so by converting the values of the commodities into average prices, in which a part of surplus-value is transferred from one commodity to another, etc. The value of a commodity equals the quantity of paid and unpaid labour contained in it. The average price of a commodity equals the quantity of paid labour it contains (materialised or living) plus a average quota of unpaid labour. The latter does not depend on whether this amount was contained in the commodity itself or on whether more or less of it was embodied in the value of the commodity.

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[b) Formulation of the Problem of Rent]

It is possible—I leave this over for a later inquiry which does not belong to the subject-matter of this book—that certain spheres of production function under circumstances which work against a reduction in their values to average prices in the above sense, and do not permit competition to achieve this victory. If this were the case for instance with agricultural rent or rent from mines (there are rents which are altogether only explicable by monopoly conditions, for instance the water rent in Lombardy, and in parts of Asia, also house rent in so far as it represents rent from landed property) then it would follow that while the product of all industrial capitals is raised or lowered to the average price, the product of agriculture [would] equal its value, which would be above the average price. Might there be obstacles here, which cause more of the surplus-value created in this sphere of production to be appropriated as property of the sphere itself, than should be the case according to the laws of competition, more than it should receive according to the quota of capital invested in this branch of industry?

Supposing industrial capitals which are producing 10 or 20 or 30 per cent more surplus-value ||452| than industrial capitals of equal size in other spheres of production, not just temporarily, but because of the very nature of their spheres of production as opposed to others; supposing I say, they were able to hang on to this excess surplus-value in the face of competition and to prevent it from being included in the general accounts (distribution) which determine the general rate of profit, then, in this case, one could distinguish between two recipients in the spheres of production of these capitals, the one who would get the general rate of profit, and the other who would get the surplus exclusively inherent in this sphere. Every capitalist could pay, hand over, this excess to the privileged one, in order to invest his capital here, and he would retain for himself the general rate of profit, like every other capitalist, working under the same conditions. If this were the case in agriculture etc., then the splitting of surplus-value into profit and rent would by no means indicate that labour as such is actually more “productive” ([in the sense of production] of surplus-value) here than in manufacture. Hence [it would not be necessary] to ascribe any magic powers to the soil; this, moreover, is in any case absurd, since value equals labour, therefore surplus-value cannot possibly equal soil (although relative surplus-value may be due to the natural fertility of the soil, but under no circumstances could this result in a higher price for the products of the soil. Rather the opposite). Nor would it be necessary to have recourse to Ricardo’s theory, which is disagreeably linked with the Malthusian trash, has repulsive consequences and, though in theory it is not especially opposed to my views on relative surplus-value, it deprives them of much of their practical significance.

Ricardo’s point is this: Rent (for instance, in agriculture) can be nothing other than an excess above general profit where—as he presupposes—agriculture is run on capitalist lines, where [there] is [a] farmer. Whether that which the landlord receives is actually equal to this rent in the bourgeois-economic sense is quite irrelevant. It may be purely a deduction from wages (vide Ireland) or it may be partly derived from the reduction of the farmer’s profit below the average level of profits. Which of these possible factors happens to be operative is of no consequence whatsoever. Rent, in the bourgeois system, only exists as a special, characteristic form of surplus-value in so far as it is an excess over and above (general) profit.

But how is this possible? The commodity wheat, like every other commodity, is [according to Ricardo] sold at its value, i.e., it is exchanged for other commodities in relation to the labour-time embodied in it. (This is the first erroneous assumption which complicates the problem by posing it artificially. Only in exceptional circumstances are commodities exchanged at their value. Their average prices are determined in a different way. See above.> The farmer who grows wheat makes the same profit as all the other capitalists. This proves that, like all the others, he appropriates that portion of labour-time for which he has not paid his workers. Where, on top of this, does the rent come from? It must represent labour-time. Why should surplus-labour in agriculture resolve into profit and rent while in industry it is just profit? And, how is this possible at all, if the profit in agriculture equals the profit in every other sphere of production? <Ricardo’s faulty conception of profit and the way in which he confuses it with surplus-value have also a detrimental effect here. They make the whole thing more difficult for him.>

Ricardo solves this difficulty by assuming that in principle it is non-existent. <This indeed is in principle the only possibility of overcoming any difficulty. But there are two ways of doing this. Either one shows that the contradiction to the principle is an illusion which arises from the development of the thing itself, or one denies the existence of the difficulty at one point, as Ricardo does, and then takes this as a starting-point from which one can proceed to explain its existence at some other stage.>

He assumes a point at which the farmer’s capital, like everyone else’s, only yields profit. <This capital may be invested in a non-rent paying or individual farm, or in a non-rent paying part of the land of a farm. In fact it can be any capital which is employed in the cultivation of land that does not pay rent.> This, moreover, is the starting-point, and it can also be expressed as follows: Originally the farmer’s capital only pays profit, no rent <although this pseudo-historical form is of no consequence and in other “laws” is common to all bourgeois economists>. It is no different from any other industrial capital. Rent only enters into it because the demand for grain rises and now, in contrast to other branches of industry, it becomes necessary to resort to “less” fertile ground. The farmer (the supposed original farmer) suffers, like any other industrial capitalist, in so far as he has to pay his workers more because of the rise in [the price of] food. But he gains because of the rise in price of his commodity above its value, firstly, to the extent to which the value of other commodities which enter into his constant capital falls relatively to his commodity and so he buys them more cheaply, and secondly, in so far as he owns the surplus-value in the form of his dearer commodity. Thus this farmer’s profit rises above the average rate of profit, which has, however, fallen. Hence another capitalist moves onto the less fertile land, No. II which, with this lower rate of profit, can supply produce at the price of I or perhaps even a little more cheaply. Be that as it may, we now have, once more, ||453| the normal situation on II, that surplus-value merely resolves itself into profit. But we have explained the rent for I by the existence of a twofold price of production: the production price of II [which] is simultaneously the market price of I. A temporary surplus gain has been [achieved], just as with the factory-made commodity which is produced under more favourable conditions. The price of corn, which in addition to profit comprises rent, in fact consists only of materialised labour, and is equal to its value; it is however equal not to the value embodied in itself, but to the value of II. It is impossible to have two market prices [side by side] <While Ricardo introduces farmer No, II because of the fall in the rate of profit, Stirling introduces him because wages [have] fallen not risen following upon the price of corn. This fall in wages allows No. II to cultivate a piece [of land] No. II at the old rate of profit, although the soil is less fertile.> Once the existence of rent has been established in this way, the rest follows easily. The difference between rents according to varying fertility, etc., of course remains correct. This does not necessarily imply that less and less fertile land has to come under cultivation.

So here we have Ricardo’s theory. The higher price of corn, which yields an excess profit to I, does not yield even as much as the earlier rate of profit for II. It is thus clear that product II contains more value than product I, i.e., it is the product of more labour-time, it embodies a greater quantity of labour. Therefore more labour-time must be supplied to manufacture the same product—say, for instance, a quarter of wheat. And the rise in rent will be relative to this decreasing fertility of the land, or the growth in the quantity of labour which must be employed to produce, say, a quarter of wheat. Of course Ricardo would not talk of a rise in rent if there were just an increase in the number of quarters from which rent is paid, but only if the price of the individual quarter rose from say 30s. to 60s. True, he does sometimes forget that the absolute volume of rent can grow with a reduced rate of rent, just as the absolute amount of profit can increase with a decreasing rate of profit.

Others seek to by-pass this difficulty (Carey for instance) by directly denying its existence. Rent [they say] is only interest on the capital which, at an earlier stage, was incorporated in the land. Therefore, again only a form of profit. Here then the very existence of rent is denied and so indeed explained away.

Others, for instance Buchanan, regard it just as a consequence of monopoly. See also Hopkins. With them it is merely a surcharge above the value.

For Mr. Opdyke, a typical Yankee,* landed property or rent becomes “the legalised reflection of the capital”.[c]

With Ricardo the examination is rendered more difficult by the two false assumptions. <Ricardo it is true was not the inventor of the theory of rent. West and Malthus had put it into print before him. The source, however, is Anderson. But what distinguished Ricardo is the way in which he links rent with his theory of value (although West did not entirely miss the real interconnection either). As his later polemic about rent with Ricardo shows, Malthus himself did not understand the theory he had adopted from Anderson.> If we start from the correct principle that the value of commodities is determined by the labour-time necessary for their production (and that value in general is nothing other than materialised social labour-time) then it follows that the average price of commodities is determined by the labour-time required for their production. This conclusion would be the right one if it had been proved that average price equals value. But I show that just because the value of the commodity is determined by labour-time, the average price of the commodities (except in the unique case in which the so-called individual rate of profit in a particular sphere of production, i.e., the profit determined by the surplus-value yielded in this sphere of production itself, [is] equal to the average rate of profit on total capital) can never be equal to their value although this determination of the average price is only derived from the value which is based on labour-time.

In the first place, then, it follows that even commodities whose average price (if we disregard the value of constant capital) resolves only into wages and profit, in such a way that these stand at their normal rate, i.e., are average wages and average profit, can be sold above or below their own value, The fact that the commodity yields rent on top of profit ||454| does not prove that the commodity is sold above its intrinsic value, any more than the circumstance of the surplus-value of a commodity only expressing itself in the category of normal profit proves that the commodity is sold at its value. If a commodity can yield an average rate of profit or general rate of profit on capital which is below its own rate of profit determined by its real surplus-value, then it follows that if on top of this average rate of profit commodities in a particular sphere of production yield a second amount of surplus-value which carries a separate name, for instance, rent, then the sum of profit plus rent need not be higher than the surplus-value contained in the commodity. Since profit can be less than the intrinsic surplus-value of the commodity, or the quantity of unpaid labour it embodies, profit plus rent need not be larger than the intrinsic surplus-value of the commodity.

Why this occurs in a particular sphere of production as opposed to other spheres has of course still to be explained. But the problem has been simplified. This commodity (the commodity yielding rent] differs from the others in the following way: In a number of these other commodities average price is above their intrinsic value, but only in order to raise their rate of profit to the level of the general rate. In another section of these other commodities the average price stands at a level below their intrinsic value, but only to the extent required to reduce their rate of profit to concur with the general rate. Finally in a third section of these other commodities, average price equals their intrinsic value, but only because if sold at their intrinsic value they yield the general rate of profit. But the commodity which yields rent differs from all these three instances. Whatever the circumstances, it is sold at a price which will yield more than average profit—as determined by the general rate of profit on capital.

Now the question arises, which, or how many, of these three instances can occur. Supposing the whole of the surplus-value the commodity contains is realised in its price. In that case, it excludes the third instance, namely, those commodities whose entire surplus-value is realised in their average price, because they only yield ordinary profit. We may, therefore, dismiss this one. Similarly, on this presupposition, we can exclude the first instance, where the surplus-value realised in the price of the commodity is above its intrinsic surplus-value. For it is assumed, that “the surplus-value contained in it is realised” in its price. This instance is thus analogous with case 2 of those commodities whose intrinsic surplus-value is higher than the surplus-value realised in their average price. As with these commodities the profit represents a form of this surplus-value—in this case profit on the capital employed—which has been reduced to the level of the general rate of profit. The excess intrinsic surplus-value of the commodity over and above this profit is, however, in contrast to commodity 2, also realised in these exceptional commodities, but accrues not to the owner of the capital, but to the owner of the land, the natural agent, the mine, etc.

Or [what happens if we assume that] the price is forced up to such a degree that it carries more than the average rate of profit? This is, for instance, the case with actual monopoly prices. This assumption—applied to every sphere of production where capital and labour may be freely employed [and] whose production, so far as the volume of capital employed is concerned, is subject to the general laws—would not only be a petitio principii, but would directly contradict the foundations of [economic] science and of capitalist production—the former being merely the theoretical expression of the latter. For such an assumption presupposes the very phenomenon which is to be explained, namely, that in a particular sphere of production, the price of a commodity must carry more than the general rate of profit, more than the average rate of profit, and to this end must be sold above its value. It presupposes that agricultural products are excluded from the general laws of value of commodities and of capitalist production. It, moreover, presupposes this, because the peculiar presence of rent side by side with profit prima facie makes it appear so. Hence this is absurd.

So there is nothing left but to assume that special circumstances exist in this particular sphere of production, which influence the situation and cause the prices of the commodities to realise [the whole] of their intrinsic surplus-value, This in contrast to [case] 2 of the other commodities, where only as much of their intrinsic surplus-value is realised by their prices as is yielded by the general rate of profit, where their average prices fall so far below their surplus-value that they only yield the general rate of profit, or in other words their average profit is no greater than that in all other spheres of production of capital.

In this way the problem has already become much simpler. It is no longer a question of explaining how it comes about that the price of a commodity yields rent as well as profit, thus apparently evading the general law of value and by raising its price above its intrinsic surplus-value, carrying more than the general rate of profit for a given capital. The question is why, in the process of equalisation of commodities at average prices, this particular commodity does not have to pass on to other commodities so much of its intrinsic surplus-value that it only yields the average profit, but is able to realise a portion of its own surplus-value which forms an excess over and above average profit; so that it is possible for a farmer, who invests capital in this sphere of production, to sell the commodity at prices which yield him the ordinary profit and at the same time enable him to pay the excess in surplus-value realised over and above this profit to a third person, the landlord.

||455| Put in this way, the very formulation of the problem carries its own solution.

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[c) Private Ownership of the Land as a Necessary Condition for the Existence of Absolute Rent. Surplus-Value in Agriculture Resolves into Profit and Rent]

It is quite simply the private ownership of land, mines, water, etc. by certain people, which enables them to snatch, intercept and seize the excess surplus-value over and above profit (average profit, the rate of profit determined by the general rate of profit) contained in the commodities of these particular spheres of production, these particular fields of capital investment, and so to prevent it from entering into the general process by which the general rate of profit is formed. Moreover, some of this surplus-value is actually collected in every industrial enterprise, since rent for the land used (by factory buildings, workhouses etc.) figures in every instance, for even where the land is available free, no factories are built, except in the more or less populated areas with good means of communication.

Supposing the commodities produced by the poorest cultivated land belonged to category 3, i.e., those commodities whose average price equals their value, in other words, the whole of their inherent surplus-value is realised in their price because only thus do they yield the ordinary profit; in this case the land would pay no rent and land ownership would be purely nominal. If a payment were made for the use of the land, then it would only prove that small capitalists, as is partly the case in England (see Newman), are satisfied with making a profit below the average. The same applies whenever the rate of rent is higher than the difference between the inherent surplus-value of a commodity and the average profit. There is even land whose cultivation at most suffices to pay wages, for, although here the labourer works for himself the whole of his working-day, his labour-time is longer than the socially necessary labour-time. It is so unproductive—relative to the generally prevailing productivity in this branch of work—that, although the man works for himself for 12 hours, he hardly produces as much as a worker under more favourable conditions of production does in 8 hours. This is the same relationship as that of the hand-loom weaver who competes with the power-loom. Although the product of this hand-loom weaver was equal to 12 hours of labour, it was only equal to 8 or less hours of socially necessary labour and his product therefore only [had] the value of 8 necessary labour hours. If in such an instance the cottager pays a rent then this is purely a deduction from his necessary wage and does not represent surplus-value, let alone an excess over and above average profit.

Assume that in a country like the United States, the number of competing farmers is as yet so small and the appropriation of land so much just a matter of form that everyone has the opportunity to invest his capital in land and the cultivation of the soil, without the permission of hitherto-existing owner-cultivators or farmers. In these circumstances it is possible over a considerable period—with the exception of that landed property which by its very situation in populated areas carries a monopoly— that the surplus-value which the farmer produces on top of average profit is not realised in the price of his product, but that lie may have to share it with his brother capitalists in the same way as this is done with the surplus-value of all commodities which would give an excess profit, i.e., raise the rate of profit above the general rate, if their surplus-value were realised in their price. In this case the general rate of profit would rise, because wheat, etc., like other manufactured commodities, would be sold below its value. This selling below its value would not constitute an exception, but rather would prevent wheat from forming an exception to other commodities in the same category.

Secondly, assume that in a given country the land is all of a particular quality, so that if the whole of the surplus-value from the commodity were realised in its price, it would yield the usual profit on capital. In this case no rent would be paid. The absence of rent would in no way affect the general rate of profit, it would neither raise it nor lower it, just as it is not influenced by the fact that other non-agricultural products are to be found in this category. Since the commodities belong to this category just because their inherent surplus-value equals the average profit [they] cannot alter the level of this profit, on the contrary they conform with it and do not influence it at all, although it influences them.

Thirdly, assume that all the land consists of a particular type of soil, but this is so poor that the capital employed in it is so unproductive that its product belongs to that kind of commodity whose surplus-value [lies] below average profit. Since wages would rise everywhere as a result of the unproductiveness of agriculture, surplus-value could in this case of course only be higher where absolute labour-time can be prolonged, where the raw material, such as iron, etc., is not the product of agriculture or, further, where it [is] like cotton, silk etc., an imported article and a product of more fertile soil. In this case, the price of the [agricultural] commodity would include a surplus-value higher than that inherent in it, to enable it to yield the usual profit. The general rate of profit would consequently fall, despite the absence of rent.

Or assume in case 2, that the soil is very unproductive. Then surplus-value of this agricultural product, by its very equality with average profit would show that the latter is altogether low since in agriculture perhaps 11 of the 12 working hours are required to produce just the wages, and the surplus-value only equals 1 hour or less.

||456| These various examples illustrate the following:

In the first case, the absence or lack of rent is bound up with, or concurs with, an increased rate of profit—as compared with other countries where the phenomenon of rent has developed.

In the second case the lack or absence of rent does not affect the rate of profit at all.

In the third case, compared with other countries where rent exists, it is bound up with and indicative of a low, a relatively low, general rate of profit.

It follows from this that the development of a particular rent in itself has nothing to do with the productivity of agricultural labour, since the absence or lack of rent can be associated with a rising, falling or constant rate of profit.

The question here is not: Why is the excess surplus-value above average profit retained in agriculture etc.? On the contrary, we should rather ask: Why should the opposite take place here?

Surplus-value is nothing other than unpaid labour; the average or normal profit is nothing other than the quantity of unpaid labour which each capital of a given magnitude of value is supposed to realise. If we say that average profit is 10 per cent then this means nothing other than that a capital of 100 commands 10 units of unpaid labour; or 100 units of materialised labour command a tenth of their amount in unpaid labour. Thus excess of surplus-value over average profit implies that a commodity ( its price or that part of its price which consists of surplus-value) contains a quantity of unpaid labour [hich is] greater than the quantity of unpaid labour that forms average profit, which therefore in the average price of the commodities forms the excess of their price over the costs of their production. In each individual commodity the costs of production represent the capital advanced, and the excess over these production costs represents the unpaid labour which the advanced capital commands; hence the relationship of this excess in price over the costs of production shows the rate at which a given capital—employed in the production process of commodities—commands unpaid labour, irrespective of whether the unpaid labour contained in the commodity of the particular sphere of production is equal to this rate or not.

Now what forces the individual capitalist, for instance, to sell his commodity at an average price, which yields him only the average profit and makes him realise less unpaid labour than is in fact worked into his own commodity? This average price is thrust upon him; it is by no means the result of his own free will; he would prefer to sell the commodity above its value. It is forced upon him by the competition of other capitals. For every capital of the same size could also be rushed into A, the branch of production in which the relationship of unpaid labour to the invested capital, for instance, £100, is greater than in production spheres B, C, etc. whose products also satisfy a social need just as much as the commodities of production sphere A.

When there are spheres of production in which certain natural conditions of production, such as, for example, arable land, coal seams, iron mines, water falls, etc.—without which the production process cannot be carried out, without which commodities cannot be produced in this sphere—are in the hands of others than the proprietors or owners of the materialised labour, the capitalists, then this second type of proprietor of the conditions of production will say:

If I let you have this condition of production for your use, then you will make your average profit; you will appropriate the normal quantity of unpaid labour. But your production yields an excess of surplus-value, of unpaid labour, above the rate of profit. This excess you will not throw into the common account, as is usual with you capitalists, but I am going to appropriate it myself. It belongs to me. This transaction should suit you, because your capital yields you just the same in this sphere of production as in any other and besides, this is a very solid branch of production. Apart from the 10 per cent unpaid labour which constitutes the average profit, your capital will also provide a further 20 per cent of additional unpaid labour here. This you will pay over to me and in order to do so, you add 20 per cent unpaid labour to the price of the commodity, and this you simply do not account for with the other capitalists. Just as your ownership of one condition of production—capital, materialised labour—enables you to appropriate a certain quantity of unpaid labour from the workers, so my ownership of the other condition of production, the land, etc., enables me to intercept and divert away from you and the entire capitalist class, that part of unpaid labour which is excessive to your average profit. Your law will have it that under normal circumstances, capitals of equal size appropriate equal quantities of unpaid labour and you capitalists can force each other ||457| into this position by competition among yourselves. Well, I happen to be applying this law to you. You are not to appropriate any more of the unpaid labour of your workers than you could with the same capital in any other sphere of production. But the law has nothing to do with the excess of unpaid labour which you have “produced” over the normal quota. Who is going to prevent me from appropriating this “excess”? Why should I act according to your custom and throw it into the common pot of capital to be shared out among the capitalist class, so that everyone should draw out a part of it in accordance with his share in the aggregate capital? I am not a capitalist. The condition of production which I allow you to utilise is not materialised labour but a natural phenomenon. Can you manufacture land or water or mines or coal pits? Certainly not. The means of compulsion which can be applied to you in order to make you release again a part of the surplus-labour you have managed to get hold of does not exist for me. So out with it! The only thing your brother capitalists can do is to compete against you, not against me. If you pay me less excess profit than the difference between the surplus-time you have made and the quota of surplus-labour due to you according to the rule of capital, your brother capitalists will appear on the scene and by their competition will force you to pay me fairly the full amount I have the power to squeeze out of you.

The following problems should now be set forth: 1. The transition from feudal landownership to a different form, commercial land rent, regulated by capitalist production, or, on the other hand, the conversion of this feudal landed property into free peasant property. 2. How rent comes into existence in countries such as the United States, where originally land has not been appropriated and where, at any rate in a formal sense, the bourgeois mode of production prevails from the beginning. 3. The Asiatic forms of landownership still in existence. But all this does not belong here.

According to this theory then, the private ownership of objects of nature such as the land, water, mines etc., the ownership of these conditions of production, this essential ingredient of production emanating from nature, is not a source from which flows value, since value is only materialised labour. Neither is it the source from which excess surplus-value flows, i.e., an excess of unpaid labour over and above the unpaid labour contained in profit. This ownership is, however, a source of revenue. It is a claim, a means, which in the sphere of production that the property enters as a condition of production enables the owner to appropriate that part of the unpaid labour squeezed out by the capitalist which would otherwise be tossed into the general capital fund as excess over normal profit. This ownership is a means of obstructing the process which takes place in the rest of the capitalist spheres of production, and of holding on to the surplus-value created in this particular sphere, so that it is divided between the capitalist and the landowner in that sphere of production itself. In this way landed property, like capital, constitutes a claim to unpaid labour, gratis labour. And just as with capital, the worker’s materialised labour appears as a power over him, so with landed property, the circumstance which enables the landowners to take part of the unpaid labour away from the capitalists, makes landownership appear as a source of value.

This then explains the existence of modern ground-rent. With a given capital investment, the variation in the amount of rent is only to be explained by the varying fertility of the land. The variation in the amount of rent, given equal fertility, can only be case, rent rises because its rate increases in proportion to the explained by the varying amount of capital invested, In the first capital employed(also according to the area of the land). In the second case, it rise’s because with the same or even with a different rate (if the second dose of capital is not equally productive) the amount of rent increases.

For this theory it is immaterial whether the least fertile land yields a rent or not. Further, it is by no means necessary for the fertility of agriculture to decline, although the diversity in productivity, if not artificially overcome (which is possible), is much greater than in similar spheres of industrial production. When we speak of greater or lesser fertility, we are still concerned with the same product. The relationship of the various products, one to another, is another question.

Rent as calculated on the land itself is the rental, the amount of rent. It can rise without an increase in the rate of rent. If the value of money remains unchanged, then the relative value of agricultural product’s can rise, not because agriculture is becoming less productive, but because, although its productivity is rising, it is rising slower than in industry. On the other hand, a rise in the money price of agricultural products, while the value of money remains the same, is only possible if their value rises, i.e., if agriculture becomes less productive (provided it is not caused by temporary pressure of demand upon supply as with other commodities).

In the cotton industry, the price of the raw material fell continuously with the development of the industry itself; the same applies to iron, etc., coal, etc. The growth of rent here was possible, not because its rate rose, but only because more capital was employed.

Ricardo is of the following opinion: The powers of nature, such as air, light, electricity, steam, water are gratis; the land is not, because it is limited. So already for this reason alone, agriculture is less productive than other industries. If the land were just as common, unappropriated, available in any quantities, as the other element’s and powers of nature, then it would be much more productive.

||458| In the first place, if the land were so easily available, at everyone’s free disposal, then a principal element for the formation of capital would be missing. A most important condition of production and—apart from man himself and his labour—the only original condition of production could not be disposed of, could not be appropriated. It could not thus confront the worker as someone else’s property and make him into a wage-labourer. The productivity of labour in Ricardo’s sense, i.e., in the capitalist sense, the “producing” of someone else’s unpaid labour would thus become impossible. And this would put an end to capitalist production altogether.

So far as the powers of nature indicated by Ricardo are concerned, it is true that these are partly to be had for nothing and do not cost the capitalist anything. Coal costs him something, but steam costs him nothing so long as he gets water gratis. But now, for example, let us take steam. The properties of steam always exist. Its industrial usefulness is a new scientific discovery which the capitalist has appropriated. As a consequence of this scientific discovery, the productivity of labour and with it relative surplus-value rose. In other words, the quantity of unpaid labour which the capitalist appropriated from a day’s labour grew with the aid of steam. The difference between the productive power of steam and that of the soil is thus only that the one yields unpaid labour to the capitalist and the other to the landowner, who does not take it away from the worker, but from the capitalist. The capitalist is therefore so enthusiastic about this element “belonging to no one.

Only this much is correct: Assuming the capitalist mode of production, then the capitalist is not only a necessary functionary, but the dominating functionary in production. The landowner, on the other hand, is quite superfluous in this mode of production. Its only requirement is that land should not be common property, that it should confront the working class as a condition of production, not belonging to it, and the purpose is completely fulfilled if it becomes state-property, i.e., if the state draws the rent. The landowner, such an important functionary in production in the ancient world and in the Middle Ages, is a useless superfetation in the industrial world. The radical bourgeois (with an eye moreover to the suppression of all other taxes) therefore goes forward theoretically to a refutation of the private ownership of the land, which, in the form of state property, he would like to turn into the common property of the bourgeois class, of capital. But in practice he lacks the courage, since an attack on one form of property—a form of the private ownership of a condition of labour—might cast considerable doubts on the other form. Besides, the bourgeois has himself become an owner of land.

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[4. Rodbertus’s Thesis that in Agriculture Raw Materials Lack Value Is Fallacious]

Now to Herr Rodbertus.

According to Rodbertus, no raw material enters into agricultural calculations, because, so Rodbertus assures us, the German peasant does not reckon that seeds, feeding stuffs, etc. cost him anything. He does not count these as costs of production; in fact he miscalculates. In England, where the farmer has been doing his accounts correctly for more than 150 years, there should accordingly be no ground-rent. The conclusion therefore should not be the one drawn by Rodbertus, that the farmer pays a rent because his rate of profit is higher than in manufacture, but that he pays it because, as a result of a miscalculation, he is satisfied with a lower rate of profit. Dr. Quesnay, himself the son of a tenant farmer and closely acquainted with French farming, would not have received this idea kindly. [In his Tableau Economique], Quesnay includes the raw material which the tenant farmer needs, as one of the items in the annual outlay of 1,000 million, although the farmer reproduces it in kind.

Although hardly any fixed capital or machinery is to be found in one section of manufacture, in another section—the entire transport industry, the industry which produces change of location, [using] wagons, railways, ships, etc.—there is no raw material but only tools of production. Do such branches of industry yield a rent apart from profit? How does this branch of industry differ from, say, the mining industry? In both of them only machinery and auxiliary materials are used, such as coal for steamships and locomotives and mines, fodder for horses, etc. Why should the rate of profit be calculated differently in one sector than in the other? [Supposing] the advances to production which the peasant makes in kind are a fifth of the total capital he advances, to which we would then have to add four-fifths in advances for the purchase of machinery and labour-power, the total expenditure amounting to 150 quarters. If he then makes 10 per cent profit [this would be] equal to 15 quarters, i.e., the gross product would be 165 quarters. If he now deducted a fifth, equal to 30 quarters and calculated the 15 quarters only on 120, then he would have made a profit of 12 ¹/₂ per cent.

Alternatively, we could put it in this way: The value of his product, or his product, is equal to 165 quarters (£ 330). He reckons his advances to be 120 quarters (£ 240), 10 percent on this equals 12 quarters (£ 24). But his gross product amounts to 165 quarters; from which thus 132 quarters are to be deducted, which leaves 33 quarters. But from these, 30 quarters are deducted in kind. This leaves an extra profit of 3 quarters (£ 6). His total profit is 15 quarters (£ 30) instead of 12 quarters (£ 24). So he can pay a rent of 3 quarters or £ 6 and fancy that he has made a profit of 10 per cent like every other capitalist. But this 10 per cent exists only in his imagination. In fact, he has made advances of 150 quarters, not of 120 quarters and on these, 10 per cent amounts to 15 quarters or £ 30. In fact he received 3 quarters too few, i.e., a quarter of the 12 quarters which he actually received ||459| , or a fifth of the total profit which he should have received, because he did not consider a fifth of his advances to be advances. Therefore, as soon as he learnt to calculate according to capitalist methods, he would cease to pay rent, which would merely amount to the difference between his rate of profit and the normal rate of profit.

In other words, the product of unpaid labour embodied in the 165 quarters amounts to 15 quarters, which equals £ 30, representing 30 labour weeks. Now if these 30 labour weeks or 15 quarters or £ 30 were calculated on the total advances of 150 quarters, then they would only form 10 per cent; if they were calculated only on 120 quarters, then they would represent a higher percentage, because 10 per cent on 120 quarters would be 12 quarters and 15 quarters are not 10 per cent of 120 quarters but 12 ¹/₂ per cent. In other words: Since the peasant did not include some of his advances in the account as a capitalist would have done, he calculates the accumulated surplus-labour on too small a portion of his advances. Hence it represents a higher rate of profit than in other branches of industry and can therefore yield a rent which is based solely on a miscalculation. The game would be over if the peasant realised that it is by no means necessary first to convert his advances into real money, i.e., to sell them, in order to assess them in money, and hence to regard them as commodities.

Without this mathematical error (which may be committed by a large number of German peasants but never by a capitalist farmer) Rodbertus’s rent would be an impossibility. It only becomes possible where raw material enters into costs of production, but not where it does not. It only becomes feasible where the raw material enters [into production] without entering into the accounts, But it is not possible where it does not enter [into production], although Herr Rodbertus wants to derive his explanation of the existence of rent not from a miscalculation, but from the absence of a real item of expenditure.

Take the mining industry or the fisheries. Raw material does not figure in these, except as auxiliary material, which we can omit, since the use of machinery always implies (with very few exceptions) the consumption of auxiliary material, the food of the machine. Assuming that the general rate of profit is 10 per cent and £ 100 are laid out in machinery and wages; why should the profit on £ 100 amount to more than £ 10, because the £ 100 have not been expended on raw material, machinery and wages, but have been expended on raw material and wages only? If there is to be any sort of difference, this could only arise because in the various instances, the ratio of the values of constant capital and variable capital is in fact different. This varying ratio would result in varying surplus-value, even if the rate of surplus-value is taken to be constant. And if varying surplus-values are related to capitals of equal size, they must of course yield unequal profits. But on the other hand the general rate of profit means nothing other than the equalisation of these inequalities, abstraction from the organic components of capital and redistribution of surplus-value, so that capitals of equal size yield equal profits.

That the amount of surplus-value depends on the size of the capital employed does not hold good—according to the general laws of surplus-value—for capitals in different spheres of production, but for different capitals in the same sphere of production, in which it is assumed that the organic component parts of capital are in the same proportion. If one says for example: The volume of profit in spinning corresponds to the size of the capitals employed (which is also not quite correct, unless one adds that productivity is assumed to be constant), this in fact merely means that, given the rate of exploitation of the spinners, the total amount of exploitation depends on the number of exploited spinners. If, on the other hand, one says that the volume of profit in different branches of production corresponds to the size of the capitals employed, then this means that the rate of profit is the same for each capital of a given size, i.e., the volume of profit can only change with the size of this capital. In other words, the rate of profit is independent of the organic relationship of the components of a capital in a particular sphere of production; it is altogether independent of the amount of surplus-value which is realised in these particular spheres of production.

Mining production ought to be considered right from the start as belonging to industry and not to agriculture. Why? Because no product of the mine is used, in kind, as an element of production; no product of the mine enters in kind, straight from the mine, into the constant capital of the mining industry (the same applies to fishing and hunting, where the outlay consists to a still higher degree of the instruments of labour and wages or labour itself ||460|). In other words, because every production element in the mine—even if its raw material originates in the mine— not only alters its form, but becomes a commodity, i.e., it must be bought, before it can re-enter mining as an element of production. Coal forms the only exception to this, But it only appears as a means of production at a stage of development when the exploiter of the mine has graduated as a capitalist, who uses double entry book-keeping, in which he not only owes himself his advances, i.e., is a debtor against his own funds, but his own funds are debtors against themselves, Thus just here, where in fact no raw material figures in expenditure, capitalist accounting must prevail from the outset, making the illusion of the peasant impossible .

Now let us take manufacture itself, and in particular that section where all the elements of the labour-process are also elements in the process of the creation of value; i.e., where all the production elements enter into the production of the new commodity as items of expenditure, as use-values that have a value, as commodities. There is a considerable difference between the manufacturer who produces the first intermediate product and the second and all those that follow in the process towards the finished product. The raw material of the latter type of manufacturers enters the production process not only as a commodity, but is already a commodity of the second degree; it has already taken on a different form from the first commodity, which was a raw product in its natural form, it has already passed through a second phase of the production process. For example, the spinner: His raw material is cotton, a raw product which is already a commodity. The raw material of the weaver however is the yarn produced by the spinner; that of the printer or dyer is the woven fabric, the product of the weaver; and all these products, which reappear as raw materials in further phases of the process are at the same time commodities. |460||

||461| We seem to have returned here to the question with which we have already been concerned on two other occasions, once when discussing John Stuart Mill, and again during the general analysis of the relationship between constant capital and revenue. The continual recurrence of this question shows that there is still a hitch somewhere. Really this belongs into Chapter III on profit. But it fits in better here.

For example:

4,000 lbs. cotton equals £100;

4,000 lbs. yarn equals £200;

4,000 yards calico equals £400.

On the basis of this assumption, 1 lb. cotton = 6d., yarn = 1s., 1 yard [calico] = 2s.

Given a rate of profit of 10 per cent, then

A in £100, the outlay = £90 ¹⁰/₁₁ and the profit = £9 ¹/₁₁

B in £200, the outlay = £181 ⁹/₁₁ and the profit = £18 ²/₁₁

C in £400, the outlay = £363 ⁷/₁₁ and the profit = £36 ⁴/₁₁

A = cotton [the product of the] peasant (I); B = yarn [the product of the] spinner (II), C = woven fabric [the product of the] weaver (III).

Under this assumption it does not matter whether A’s £ 90 ¹⁰/₁₁ itself includes a profit or not. It will not do so if it constitutes self-replacing constant capital. It is equally irrelevant for B, whether the £ 100 [the value of product A] includes profit or not, and ditto with C in relation to B.

The relationship of C (the cotton-grower) or I, of S (spinner) or II and of W (weaver) or III is as follows:

I)	Outlay = £90¹⁰/₁₁	Profit =£ 9 ¹/₁₁	Total = £100
II)	Outlay = £100 (I) + £81⁹/₁₁	Profit = £18 ²/₁₁	Total = £200
III)	Outlay = £200 (II) + £163⁷/₁₁	Profit = £36 ⁴/₁₁	Total = £400

The grand total equals 700.

Profit equals £9 ¹/₁₁ + £18 ²/₁₁ + £36 ⁴/₁₁ [=£63⁷/₁₁]

Capital advanced in all three sections: £90 ¹⁰/₁₁ + £181 ⁹/₁₁ + £363 ⁷/₁₁ = £636 ⁴/₁₁

Excess of 700 over 636 ⁴/₁₁ = 63 ⁷/₁₁. But [the ratio of] 63 ⁷/₁₁ : 636 ⁴/₁₁ is as 10 : 100.

Continuing to analyse this rubbish, we obtain the following:

I)	Outlay = £90 ¹⁰/₁₁	Profit =£ 9 ¹/₁₁	Total = £100
II)	Outlay = £100 (I) + £81 ⁹/₁₁	Profit = 10+£8 ²/₁₁	Total = £200
III)	Outlay = £200 (II) + £163 ⁷/₁₁	Profit = 20+£16 ⁴/₁₁	Total = £400

I does not have to repay any profit, because it is assumed that his constant capital of £90¹⁰/₁₁ does not include any profit, but represents purely constant capital. The entire product of I figures as constant capital in II’s outlay. That part of constant capital which equals 100 yields a profit of £ 9 ¹/₁₁ to I. The entire product [of] II which amounts to 200, enters into III’s outlay, and thus yields a profit of £ 18 ²/₁₁. However, this does not in any way alter the fact that I’s profit is not one iota larger than II’s or III’s, because the capital which he has to replace is smaller to the same degree and the profit corresponds to the volume of the capital, irrespective of the composition of the capital.

Now let us assume that III produces everything himself. Then the position seems to change, because his outlay now appears as follows:

90 ¹⁰/₁₁ in the production of cotton; 181 ⁹/₁₁ in the production of yarn and 363 ⁷/₁₁ in the production of the woven fabric. He buys all three branches of production and must therefore continually employ a definite amount of constant capital in all three. If we now total this up we get: 90 ¹⁰/₁₁ + 181 ⁹/₁₁ + 363 ⁷/₁₁ = 636 ⁴/₁₁. 10 per cent of this is exactly 63 ⁷/₁₁, as above, only that one individual pockets the lot, whereas previously the 63 ⁷/₁₁ were shared among I, II and III.

||462| How did the wrong impression arise a little while ago?

But first, one other comment.

If from the 400, we deduct the profit of the weaver, which is included in it and which amounts to 36 ⁴/₁₁, then we are left with 400–36⁴/₁₁ = 363⁷/₁₁, his outlay. This outlay includes 200 paid out for yarn, Of these 200, 18 ²/₁₁ are the profit of the spinner. If we now deduct these 18 ²/₁₁ from the outlay of 363 ⁷/₁₁, we are left with 345 ⁵/₁₁. But the 200 which are returnable to the spinner, also contain 9 ¹/₁₁ profit for the cotton-grower. If we deduct these from the 345 ⁵/₁₁, we are left with 336 ⁴/₁₁. And if we deduct these 336 ⁴/₁₁ from the 400—the total value of the woven fabric—then it becomes evident that it contains a profit of 63 ⁷/₁₁.

But a profit of 63 ⁷/₁₁ on 336 ⁴/₁₁ is equal to 18 ³⁴/₃₇ per cent.

Previously we calculated these 63 ⁷/₁₁ on 636 ⁴/₁₁, and obtained a profit of 10 per cent. The excess of the total value of 700 over 636 ⁴/₁₁ was in fact 63 ⁷/₁₁.

According to the present calculation, therefore, 18 ³⁴/₃₇ per cent would be made on 100 of this same capital, whereas according to the previous calculation only 10 per cent.

How does this tally?

Supposing I, II and III are one and the same person, but that this individual does not employ three capitals simultaneously, one in cotton-growing, one in spinning and one in weaving. Rather, as soon as he ceases to grow cotton, he begins to spin it and as soon as he has spun, he finishes with this and begins to weave.

Then his accounting would look like this:

He invests £ 90 ¹⁰/₁₁ in cotton-growing. From this he obtains 4,000 lbs. of cotton, In order to spin these he needs to lay out a further £ 81 ⁹/₁₁ in machinery, auxiliary materials and wages. With this he makes the 4,000 lbs. of yarn. Finally he weaves these into 4,000 yards which involves him in a further outlay of £ 163 ⁷/₁₁. If he now adds up his expenditure, the capital which he has advanced amounts to £ 90 ¹⁰/₁₁ + £ 81 ⁹/₁₁ + £ 163 ⁷/₁₁, i.e., £ 336 ⁴/₁₁. 10 per cent on this would be 33 ⁷/₁₁, because 336 ⁴/₁₁ : 33 ⁷/₁₁ is as 100 : 10. But £ 336 ⁴/₁₁ + £ 33 ⁷/₁₁ = £ 370. He would thus sell the 4,000 yards at £ 370 instead of at £ 400, i.e., at £ 30 less, i.e., at a price which is 7 ¹/₂ per cent lower than before. If the value indeed were £ 400, he could thus sell at the usual profit of 10 per cent and in addition pay a rent of £ 30, because his rate of profit would not be 33 ⁷/₁₁ but 63 ⁷/₁₁ on his advances of 336 ⁴/₁₁, i.e., 18 ³⁴/₃₇ per cent, as we saw earlier on. And this in fact appears to be the manner in which Herr Rodbertus makes out his calculation of rent.

What does the fallacy consist of? First of all it is evident that if spinning and weaving are combined, they should [according to Rodbertus] yield a rent, just as if spinning is combined with cultivation or if agriculture is carried on independently.

Evidently two different problems are involved here.

Firstly we are calculating the £ 63 ⁷/₁₁ only on one capital of £ 336 ⁴/₁₁, whereas we should be calculating it on three capitals of a total value of £ 636 ⁴/₁₁.

Secondly in the last capital, that of III, we are reckoning his outlay to be £ 336 ⁴/₁₁, instead of £ 363 ⁷/₁₁.

Let us go into these points separately.

Firstly: If III, II and I are united in one person, and if he spins up the entire product of his cotton harvest, then he does not use any part of this harvest at all to replace his agricultural capital. He does not employ part of his capital in ||463| cotton-growing—in expenditure on cotton-growing, seeds, wages, machinery—and another part in spinning, but he first puts a part of his capital into cotton-growing, then this part plus a second into spinning, and then the whole of these two first parts, now existing in the form of yarn, plus a third part, into weaving. Now when the fabric of 4,000 yards has been woven, how is he to replace its elements? While he was weaving he wasn’t spinning, and he had no material from which to spin; while he was spinning he did not grow any cotton. Therefore his elements of production cannot be replaced. To help ourselves along, let us say: Well, the fellow sells the 4,000 yards and then “buys” yarn and the elements of cotton out of the £ 400. Where does this get us? To a position where we are in fact assuming that three capitals are simultaneously employed and engaged and laid out in production. But yarn cannot be bought unless it is available and in order to buy cotton it must be available as well. And so that they are available to replace the woven yarn and the spun cotton, simultaneously with the capital employed in weaving, capitals must be invested which are turned into cotton and yarn at the same time as the yarn is turned into woven fabric.

Thus, whether III combines all three branches of production or whether three producers share them, three capitals must be available simultaneously. If he wants to produce on the same scale, he cannot carry on spinning and cotton-growing with the same capital which he used for weaving. Every one of these capitals is engaged and their reciprocal replacement does not affect the problem under discussion. The replacement capitals are the constant capital which must be invested and operating in each of the three branches simultaneously. If the £ 400 contain a profit of £ 6 ³⁷/₁₁, then this is only because besides his own profit of £ 36 ⁴/₁₁, we allow III to gather in the profit which he has to pay to II and I and which, according to the assumption, is realised in his commodity. But the profit was not made on his £ 363 ⁷/₁₁. The peasant made it on his additional £ 90 ¹⁰/₁₁ and the spinner on his £ 181 ⁹/₁₁. When he pockets the whole amount himself, he likewise has not made it on the £ 363 ⁷/₁₁ that he invested in weaving, but on this capital and on his two other capitals invested in spinning and cotton-growing.

Secondly: If we reckon III’s outlay to be £ 336⁴/₁₁ instead of £363⁷/₁₁, then this arises from the following:

We take his outlay on cotton-growing to be only £ 90 ¹⁰/₁₁ instead of 100, But he needs the whole product and this equals £ 100 and not 90 ¹⁰/₁₁. It contains the profit of 9 ¹/₁₁. Or else he would be employing a capital of £ 90 ¹⁰/₁₁ which would bring him no profit. His cotton-growing would yield him no profit but would just replace his expenditure of £ 90 ¹⁰/₁₁. In the same way, spinning would not bring him any profit, but the whole of the product would only replace his outlay.

In this case, his expenditure would indeed be reduced to 90 ¹⁰/₁₁ + 81 ⁹/₁₁ + 163 ⁷/₁₁ = 336 ⁴/₁₁. This would be the capital he has advanced. 10 per cent on this would be £ 33 ⁷/₁₁. And the value of the product would be £ 370. The value would not be one farthing higher because, according to the supposition, portions I and II have not brought in any profit. Accordingly III would have done much better to leave I and II well alone and to keep to the old method of production. For instead of the £ 63 ⁷/₁₁ which were previously at the disposal of I, II and III, III now has only £ 33 ⁷/₁₁ for himself whereas previously, when his fellows were alongside of him, he had £ 36 ⁴/₁₁. He would indeed be a very bad hand at business. He would only have saved an outlay of £ 9 ¹/₁₁ in II because he had made no profit in I, and he would have saved an outlay of £ ¹⁸²/₁₁ in III, by not making a profit in II. The £90¹⁰/₁₁ in cotton-growing and the 81 ⁹/₁₁ + 90 ¹⁰/₁₁ in spinning would both have only replaced themselves. Only the third capital of 90 ¹⁰/₁₁ + 81 ⁹/₁₁ + 163 ⁷/₁₁ invested in weaving, would have yielded a profit of 10 per cent. This would mean that [£] 100 would yield 10 per cent profit in weaving, but not one farthing in spinning and cotton-growing. This would be very pleasant for III, so long as I and II are persons other than himself, but by no means so, if, in order to save these petty profits and pocket them himself, he has united these three branches of business in one and the same person, namely, his worthy self. The saving of advances for profit (or that component part of the ||464| constant capital of one capitalist which is profit for the others) arose therefore from the fact that [the products of] I and II contained no profits and that I and II performed no surplus-labour but regarded themselves merely as wage-labourers who only had to replace their costs of production, i.e., the outlay in constant capital and wages. Thus, in these circumstances—provided I and II were not prepared to work for III, since if they did, profit would go to his account—less labour would have been done in any case, and it would not matter to III whether the work for which he has to pay is only laid out in wages, or in wages and profit. This is all the same to him, in so far as he buys and pays for the product, the commodity.

Whether constant capital is wholly or partially replaced in kind, in other words, whether it is replaced by the producers of the commodity for which it serves as constant capital, is of no consequence. First of all, all constant capital must in the end be replaced in kind: machinery by machinery, raw material by raw material, auxiliary material by auxiliary material. In agriculture, constant capital may also enter as a commodity, i.e., be mediated directly by purchase and sale. In so far as organic substances enter into reproduction, the constant capital must of course be replaced by products of the same sphere of production. But it need not be replaced by the individual producers within this sphere of production. The more agriculture develops, the more all its elements enter into it as commodities, not just formally, but in actual fact. In other words, they come from outside, for instance, seeds, fertilisers, cattle, animal substances, etc., are the products of other producers. In industry, for example, the continual movement to and fro of iron into the machine shop and machines into the iron mines, is just as constant as is the movement of wheat from the granary to the land and from the land to the granary of the farmer. The products in agriculture are replaced directly. Iron cannot replace machines, But iron, to the value of the machine, replaces the machine for one [producer], and [the machine replaces] the iron for the other, in so far as the value of his machine is replaced by iron.

It is difficult to see what difference it is supposed to make to the rate of profit if the peasant, who lays out the £ 90 ¹⁰/₁₁ on a product of £ 100, were to compute that, for instance, he spends £ 20 on seeds etc., £ 20 on machinery etc., and £ 50 ¹⁰/₁₁ on wages. What he wants is a profit of 10 per cent on the total sum. The £ 20 of the product which he sets against seeds do not include any profit. Nevertheless, this is just as much £ 20 as the £ 20 in machinery, in which there may be a profit of 10 per cent, although this may be only formal. In actual fact the £ 20 in machinery, like the £ 20 in seeds, may not contain a single farthing of profit. This is the case if these £ 20 are merely a replacement for components of the machine builder’s constant capital, which he draws from agriculture, for instance.

Just as it would be wrong to say that all machinery goes into agriculture as its constant capital, so it is incorrect to say that all raw material goes into manufacture. A very large part of it remains fixed in agriculture and only represents a reproduction of constant capital. Another part of it goes directly into revenue in the form of food and some of it, like fruit, fish, cattle etc., does not undergo a “manufacturing process” at all. It would therefore be incorrect to burden industry with the entire bill for all the raw materials “manufactured” by agriculture. Of course in those branches of manufacture where the raw material features as an advance, alongside wages and machinery, the capital advanced must be greater than in those branches of agriculture which supply the raw material used. It could also be assumed that if these branches of manufacture had their own rate of profit (different from the general rate) it would be smaller here than in agriculture because less labour is employed. For, with a given rate of surplus-value, more constant capital and less variable capital necessarily bring in a lower rate of profit. This, however, applies equally to certain branches of manufacture as against others and to certain branches of agriculture (in the economic sense) as against others. It is in fact least likely to occur in agriculture proper, because, although it supplies raw material to industry, it differentiates between raw materials, machinery and wages in its own expenditure account, but industry by no means pays agriculture for the raw material, i.e., for that part of constant capital which it replaces from within itself and not by exchange with industrial products.

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[5. Wrong Assumptions in Rodbertus’s Theory of Rent]

||465| Now to a brief resumé of Herr Rodbertus.

First he describes the situation as he imagines it, where the owner of the land is at the same time the capitalist and slave-owner. Then there comes a separation. That part of the “product of labour” which has been taken from the workers—the “one natural rent”—is now split up into “rent of land and capital gain” ([Rodbertus, Sociale Briefe an von Kirchmann. Dritter Brief, Berlin, 1851,] pp. 81–82). (Mr. Hopkins—see notebook—explains this in even more simple and blunt terms.)

Then Herr Rodbertus divides the “raw product” and “manufactured product” (p.89) between the landowner and the capitalist—petitio principii. One capitalist produces raw products and the other manufactured products. The landowner produces nothing, neither is he the “owner of raw products”. That [i.e., that the landowner is the “owner of raw products”] is the conception of a German “landed proprietor” such as Herr Rodbertus is. In England, capitalist production began simultaneously in manufacture and in agriculture.

How a “rate of capital gain” (rate of profit) comes about, is explained by Herr Rodbertus purely from the fact that money now provides a “measure” of gain, making it possible to “express the relationship of gain to capital” (p. 94) and thus “supplying a standard gauge for the equalisation of capital gains” (p. 94). He has not even a remote idea that this uniformity of profit is in contradiction to the equality of rent and unpaid labour in each branch of production, and that therefore the values of commodities and the average prices must differ. This rate of profit also becomes the norm in agriculture because the “return on property cannot be calculated upon anything other than capital” (p. 95) and by far the “larger part of the national capital is employed” (p. 95) in manufacture. Not a word about the fact that with the advent of capitalist production, agriculture itself is revolutionised, not only in a formal sense but really, and the landowner is reduced to a mere receptacle, ceasing to fulfil any function in production. According to Rodbertus

“in manufacture, the value of the entire product of agriculture is included in the capital as raw material, whereas this cannot be the case in primary production” (p. 95).

The entire bit is incorrect.

Rodbertus now asks himself whether apart from the industrial profit, the profit on capital, there remains “a rent” for the raw product, and if so “for what reasons” (p. 96).

He even assumes

“that the raw product like the manufactured product exchanges according to its labour costs, that the value of the raw product is only equal to its labour cost” (p. 96).

True, as Rodbertus says, Ricardo also assumes this. But it is wrong, at least prima facie, since commodities do not exchange according to their values, but at average prices, which differ from their values, and this, moreover, is a consequence of the apparently contradictory law, the determination of the value of commodities by “labour-time”. If the raw product carried a rent apart from and distinct from average profit, this would only be possible if the raw product were not sold at the average price and why this happens would then have to be explained. But let us see how Rodbertus operates.

“I have assumed that the rent” (the surplus-value, the unpaid labour-time) “is distributed according to the v a l u e of the raw product and the manufactured product, and that this value is determined by labour costs” (labour-time) (pp. 96–97).

To begin with we must examine this first assumption. In fact this just means that the surplus-values contained in the commodities are in the same proportion as their values, or, in other words, the unpaid labour contained in the commodities is proportionate to the total quantities of labour they contain. If the quantity of labour contained in the commodities A and B is as 3 : 1, then the unpaid labour—or surplus-values—contained in them is as 3 : 1. Nothing could be further from the truth. Given the necessary labour-time, for instance 10 hours, one commodity may be the product of 30 workers while the other is the product of 10. If the 30 workers only work 12 hours, then the surplus-value created by them [amounts to] 60 hours, which is 5 days (5×12), and if the 10 [others] work 16 hours a day, then the surplus-value created by them is also 60 hours. According to this, the value of product A would be 30×12 = 120×3 = 360 [working hours] which is 30 working days <12 hours are 1 working day>. And the value of commodity B would be equal to 160 working hours which is 13 ¹/₃ working days. The values of commodities A and B [are as] 360 : 160, as 36 : 16, as 9 : 4, as 3 : 1 ¹/₃. The surplus-values contained in the commodities, however, are as 60 : 60 = 1 : 1. They are equal, although the values are as 3 : 1 ¹/₃.

||466| [Firstly] therefore, the surplus-values of the commodities are not proportionate to their values, if the absolute surplus-values, the extension of labour-time beyond the necessary labour, i.e., the rates of surplus-value, are different.

Secondly, assuming the rates of surplus-value to be the same, and leaving aside other factors connected with circulation and the reproductive process, then the surplus-values are not dependent on the relative quantities of labour contained in the two commodities, but on the proportion of the part of capital laid out in wages to the part which is laid out in constant capital, raw material and machinery. And this proportion can be entirely different with commodities of equal values, whether they be “agricultural products” or “products of manufacture”, which in any case has nothing to do with this business, at least not on the face of it.

Rodbertus’s first assumption, that, if the values of commodities are determined by labour-time, it follows that the quantities of unpaid labour contained in various commodities—or their surplus-values—are directly related to their values is therefore fundamentally wrong. It is therefore also incorrect to say that

“rent is distributed according to the value of the raw product and the manufactured product”, if “this value is determined by labour costs”(pp. 96–97).

“Of course it follows from this that the size of these portions of rent is not determined by the size of the capital on which the gain is calculated, but by the direct labour, whether it be agricultural or manufacturing + that amount of labour which must be added on account of the wear and tear of tools and machines” (p. 97).

Wrong again. The volume of surplus-value (and in this case surplus-value is the rent, since rent is here regarded as the general term, as opposed to profit and ground-rent) depends only on the immediate labour involved and not on the depreciation of fixed capital. Just as it does not depend on the value of the raw material or indeed on any part of the constant capital.

The wear and tear does, of course, determine the rate at which fixed capital must be reproduced. (At the same time, its production depends on the formation of new capital, on the accumulation of capital.) But the surplus-labour which is performed in the production of fixed capital does not affect the sphere of production into which this fixed capital enters as such, any more than does the surplus-labour which goes into the production of, say, the raw materials. It is rather equally valid for all of them, agriculture, production of machines and manufacture, that their surplus-value is determined only by the amount of labour employed, if the rate of surplus-value is given, and, by the rate of surplus-value, if the amount of labour employed is given. Herr Rodbertus seeks to “drag in” wear and tear in order to chuck out “raw materials”.

On the other hand, Herr Rodbertus maintains that the size of the rent can never he influenced by “that part of capital which consists of material value”, since “for instance, the labour cost of wool as a raw material cannot affect the labour cost of a particular product such as yarn or fabric” (p. 97).

The labour-time which is required for spinning and weaving is as much, or rather as little, dependent on the labour-time— i.e., the value—of the machine, as it is on the labour-time which the raw material costs. Both machine and raw material enter into the labour process; neither of them enters into the process of creating surplus-value.

“On the other hand, the value of the primary product, or the material value, does figure as capital outlay in the capital upon which the owner has to calculate his gain, the part of the rent falling on the manufactured product. But in agricultural capital this part of capital is missing. Agriculture does not require any material which is the product of a previous production, in fact it actually begins the production, and in agriculture, that part of the property which is analogous with material, would be the land itself, which is however assumed to be without cost” (pp. 97–98).

This is the conception of the German peasant. In agriculture (excluding mining, fishing, hunting but by no means stock-raising) seeds, feeding stuffs, cattle, mineral fertilisers etc. form the material for manufacturing and this material ||467| is the product of labour. This “outlay” grows proportionately to the development of industrialised agriculture. All production—once we are no longer dealing with mere taking and appropriating—is reproduction and hence requires “the product of a previous production as material”. Everything which is the result of production is at the same time a prerequisite of production. And the more large-scale agriculture develops the more it buys products of “a previous production” and sells its own. In agriculture these expenses feature as commodities in a formal sense—converted into commodities by being reckoned in money—as soon as the farmer becomes at all dependent on the sale of his product; as soon as the prices of various agricultural products (like hay for example) have established themselves, for division of the spheres of production takes place in agriculture as well. Queer things must be happening in the mind of a peasant if lie reckons the quarter of wheat which he sells as income, but does not reckon the quarter which he puts into the soil as expenditure. Incidentally, Herr Rodbertus ought to try somewhere to “begin the production”, for instance of flax or silk, without “products of a previous production”. This is absolute nonsense.

And therefore also the rest of Rodbertus’s conclusions:

“The two parts of capital that influence the size of the rent are thus common to agriculture and industry. The part of capital, however, that does not influence the size of the rent—but on which gain, i.e., the rent determined by those parts of capital, is also calculated—is to be found in industrial capital alone. According to the assumption, the value of the raw product like that of the manufactured product is dependent on labour cost and since rent accrues to the owners of the primary product and of the manufactured product proportionately to this value. Therefore the rent yielded in raw material production and industrial production is relative to the quantities of labour which the respective product has cost, but the capitals employed in agriculture and in industry, on which the rent is distributed as gain—namely in manufacture entirely, in agriculture according to the rate of gain prevailing in manufacture—are not in the same proportion as those quantities of labour and the rent determined by them. Although an equal amount of rent accrues to the primary product and to the industrial product, industrial capital is larger than agricultural capital by the entire value of the raw material it contains. Since the value of this raw material augments the industrial capital on which the available rent is calculated as gain, but not the gain itself, and thus simultaneously helps to lower the rate of capital gain, which also prevails in agriculture, there must necessarily be left over in agriculture a part of the rent accruing there which is not absorbed by the calculation of gain based on this rate of gain” (pp. 98–99).

First wrong proposition: If industrial products and agricultural products exchange according to their values (i.e., in relation to the labour-time required for their production), then they yield to their owners equal amounts of surplus-value or quantities of unpaid labour. Surplus-values are not proportional to values.

Second wrong proposition: Since Rodbertus presupposes a rate of profit (which he calls rate of capital gain) the supposition that commodities exchange in the proportion of t h e i r v a l u e s is incorrect. One proposition excludes the other. For a (general) rate of profit to exist, the values of the commodities must have been transformed into average prices or must be in the process of transformation. The particular rates of profit which are formed in every sphere of production on the basis of the ratio of surplus-value to capital advanced, are equalised in this general rate. Why then not in agriculture? That is the question. But Rodbertus does not even formulate this question correctly, because firstly he presupposes that there is a general rate of profit and secondly he assumes that the particular rates of profit (hence also their differences) are not equalised and thus that commodities exchange at their values.

Third wrong proposition: The value of the raw material does not enter into agriculture. Rather here, the advances of seeds etc. are component parts of constant capital and are calculated as such by the farmer. To the same degree that agriculture becomes a mere branch of industry—i.e., that capitalist production is established on the land— ||468| to the degree to which agriculture produces for the market, produces commodities, articles for sale and not for its own consumption—to the same degree it calculates its outlay and regards each item of expenditure as a commodity, whether it buys it from itself (i.e., from production) or from a third person. The elements of production naturally become commodities to the same extent as the products do, because, after all, these elements are those very same products. Since wheat, hay, cattle, seeds of all kinds etc. are thus sold as commodities—and, since this sale is the essential thing, not their use as a means of subsistence—they also enter into production as commodities and the farmer would have to be a real blockhead not to be able to use money as the unit of account. This is, however, only the formal aspect of the calculation. But simultaneously [the position] develops [in such a way] that the farmer buys his outlay, seeds, cattle, fertilisers, mineral substances etc. while he sells his receipts, so that for the individual farmer these advances are also advances in the formal sense in that they are bought commodities. (They have always been commodities for him, component parts of his capital. And when he has returned them, in kind, to production, he has regarded them as sold to himself in his capacity as producer.) Moreover, this takes place to the same extent as agriculture develops and the final product is produced increasingly by industrial methods and according to the capitalist mode of production.

It is therefore wrong to say that there is a part of capital which enters into industry but not into agriculture.

Suppose then, according to Rodbertus’s (false) proposition, that the “portions of rent” (i.e., shares of surplus-value) yielded by the agricultural product and the industrial product are given, and that they are proportionate to the values of the agricultural product and the industrial product. Supposing, in other words, industrial products and agricultural products of equal values yield equal surplus-values to their owners, i.e., contain equal quantities of unpaid labour, then no disparity arises owing to a part of capital entering into industry (for raw material) which does not enter into agriculture, so that, for instance, the same surplus-value would be calculated in industry on a capital augmented by this amount and hence result in a smaller rate of profit. For the same item of capital goes into agriculture. There only remains the question of whether it does so in the same proportion. But this brings us to mere quantitative differences whereas Herr Rodbertus wants a “qualitative” difference. These same quantitative differences occur between different industrial spheres of production. They compensate one another in the general rate of profit. Why not as between industry and agriculture (if there are such differences)? Since Herr Rodbertus allows agriculture to participate in the general rate of profit, why not in the process of its formation? But of course that would mean the end of his argument.

Fourth wrong proposition: It is wrong and arbitrary of Rodbertus to include wear and tear of machinery etc., that is an element of Constant capital, in variable capital, that is, in the part of capital which creates surplus-value and in particular determines the rate of surplus-value, and at the same time, not to include raw material. He makes this accounting error in order to arrive at the result he wanted from the outset.

Fifth wrong proposition: If Herr Rodbertus wants to differentiate between agriculture and industry, then that element of capital which consists of fixed capital such as machinery and tools belongs entirely to industry. This element of capital, in so far as it becomes part of any capital, can only enter into constant capital; and can never increase surplus-value by a single farthing.

On the other hand, as a product of industry, it is the result of a particular sphere of production. Its price, or the value which it forms within the whole of social capital, at the same time represents a certain quantity of surplus-value (just as is the case with raw material). Now it does enter into the agricultural product, but it stems from industry. If Herr Rodbertus reckons raw material to be an element of capital in industry which comes from outside, then he must charge machines, tools, vessels, buildings etc. as an element of capital in agriculture, which comes from outside. He [must] therefore say that industry comprises only wages and raw materials (because fixed capital, in so far as it is not raw materials, is a product of industry, its own product) whereas agriculture comprises only wages ||469| and machinery etc., i.e., fixed capital, because raw material, in so far as it is not embodied in tools etc., is the product of agriculture. It would then be necessary to examine how the absence of this “item” affects the account in industry.

Sixthly: It is quite true that mining, fishing, hunting, forestry (in so far as the trees have not been planted by man) etc., in short, the extractive industries—concerned with the extraction of raw material that is not reproduced in kind—use no raw materials, except auxiliary materials. This does not apply to agriculture.

But it is equally [true] that the same does hold good for a very large part of industry, namely the transport industry, in which outlay consists only of machinery, auxiliary materials and wages.

Finally, there are certainly other branches of industry, such as tailoring etc., which, relatively speaking, only absorb raw materials and wages, but no machinery, fixed capital etc.

In all these instances, the size of the profit, i.e., the ratio of surplus-value to capital advanced, would not depend on whether the advanced capital—after deduction of variable capital, or the part of capital spent on wages—consists of machinery or raw material or both, but it would depend on the magnitude of the capital advanced relative to the part of the capital spent on wages. Different rates of profit (apart from the modifications brought about by circulation) would thus exist in the different spheres of production, the result of their equalisation being the general rate of profit.

Rodbertus surmises that there is a difference between surplus-value and its special forms, in particular profit. But he misses the point because, right from the beginning, he is concerned with the explanation of a particular phenomenon (ground rent) and not [with] the establishment of a general law.

Reproduction occurs in all branches of production; but only in agriculture does this industrial reproduction coincide with natural reproduction. It does not do so in extractive industry. That is why, in the latter, the product does not in its natural form become an element in its own reproduction (except in the form of auxiliary material).

What distinguishes agriculture, stock-raising, etc. from other industries is, firstly, not the fact that a product becomes a means of production, since that happens to all industrial products which have not the definite form of individual means of subsistence. And even as such they become means of production of the producer who reproduces himself or maintains his labour-power by consuming them.

Secondly, the difference is not the fact that agricultural products enter into production as commodities, i.e., as component parts of capital; they go into production just as they come out of it. They emerge from it as commodities and they re-enter it as commodities. The commodity is both the prerequisite and the result of capitalist production.

Hence thirdly, there only [remains] the fact that they enter as their own means of production into the production process whose product they are. This is also the case with machinery. Machine builds machine. Coal helps to raise coal from the shaft. Coal transports coal etc. In agriculture this appears as a natural process, guided by man, although he also causes it to some extent. In the other industries it appears to be a direct effect of industry.

But Herr Rodbertus is on the wrong track altogether if he thinks that he must not allow agricultural products to enter into reproduction as “commodities” because of the peculiar way in which they enter it as “use-values” (technologically). He is evidently thinking of the time when agriculture was not as yet a trade, when only the excess of its production over what was consumed by the producer became a commodity and when even those products, in so far as they entered into production, were not regarded as commodities. This is a fundamental misunderstanding of the application of the capitalist mode of production to industry. For the capitalist mode of production, every product which has value—and is therefore in itself a commodity—also figures as a commodity in the accounts.

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[6. Rodbertus’s Lack of Understanding of the Relationship Between Average Price and Value in Industry and Agriculture. The Law of Average Prices]

Supposing, for example, that in the mining industry, the constant capital, which consists purely of machinery, amounts to £ 500 and that the capital laid out in wages also amounts to £ 500. Then, if the surplus-value is 40 per cent, i.e., £ 200, the profit [would be] 20 per cent. Thus:

constant capital	variable capital	surplus-value
Machinery
500	500	200

If the same variable capital were laid out in those branches of manufacture (or of agriculture) in which raw materials play a part, and furthermore, if the utilisation of this variable capital (i.e, the employment of this particular number of workers) required machinery etc., to the value of £ 500, then indeed a third element, the value of the raw materials, would have to be added, say again, £ 500. Hence in this case:

constant capital				variable capital	surplus-value
Machinery		Raw materials
500	+	500	= 1,000	500	200

The £ 200 would now have to be reckoned on £ 1,500 and would only be 13 ¹/₃ per cent. This example would still apply, if in the first case the transport industry had been quoted as an illustration. On the other hand, the rate of profit would remain the same in the second case if machinery cost 100 and raw materials 400.

||470| What, therefore, Herr Rodbertus imagines is that in industry 100 are laid out in machinery, 100 in wages and x in raw materials, whereas in agriculture 100 are laid out in wages and 100 in machinery. The scheme would be like this:

I. Agriculture
Constant capital	Variable capital	Surplus-value	Rate of profit
Machinery
100	100	50	⁵⁰/₂₀₀ = ¹/₄
II. Industry
Constant capital			Variable capital	Surplus-value	Rate of profit
Raw materials	Machinery
x	100	[=x+100]	100	50	⁵⁰/_{200 + x}

It must therefore be, at any rate, less than ¹/₄, Hence the rent in I.

Firstly then, this difference between agriculture and manufacture is imaginary, non-existent: it has no bearing on that form of rent which determines all others.

Secondly, Herr Rodbertus could find this difference between the rates of profit in any two individual branches of industry. The difference is dependent on the proportion of constant capital to variable capital and the proportion in turn may or may not be determined by the addition of raw materials. In those branches of industry which use raw materials as well as machinery, the value of the raw materials, i.e., the relative share which they form of the total capital, is of course very important, as I have shown earlier. This has nothing to do with ground-rent.

“Only when the value of the raw product falls below the cost of labour is it possible that in agriculture too the whole portion of rent accruing to the raw product is absorbed in the gain calculated on capital. For then this portion of rent may be so reduced that although agricultural capital does not comprise the value of raw material, the ratio between these two is similar to that existing between the portion of rent accruing to the manufactured product and the manufacturing capital, although the latter contains the value of material, Hence only in those circumstances is it possible that in agriculture too, no rent is left over besides capital gain, But in so far as, in practice, as a rule, conditions gravitate towards the law that value equals labour cast, so, as a rule, ground-rent is also present. The absence of rent and the existence of nothing but capital gain, is not the original state of’ affairs, as Ricardo maintains, but only an exception” (p. 100).

Thus, continuing with the above example; but taking raw materials as £ 100, to have something tangible, we get:

I. Agriculture
Constant capital		Variable capital	Surplus-value	Value	Price	Profit
	Machinery
	100	100	50	250	233 ¹/₃	[33¹/₃=] 16²/₃ per cent
II. Industry
Constant capital		Variable capital	Surplus-value	Value	Price	Profit
Raw materials	Machinery
100	100	100	50	350	350	50 = 16²/₃ per cent

Here the rate of profit in agriculture and industry would be the same, therefore nothing would be left over for rent, because the agricultural product is sold at £ 16 ²/₃ below its value. Even if the example were as correct as it is false for agriculture, then the circumstance that the value of the raw product falls “below the cost of labour” would in any case only correspond to the law of average prices. Rather it needs to be explained why “as an exception” this is to a certain extent not the case in agriculture and why here the total surplus-value (or at least to a larger extent than in the other branches of industry, a surplus above the average rate of profit) remains in the price of the product of this particular branch of production and does not participate in. the formation of the general rate of profit. It becomes evident here that Rodbertus does not understand what the (general) rate of profit and the average price are.

In order to make this law quite clear, and this is far more important than Rodbertus, we shall take five examples. We assume the rate of surplus-value to be the same throughout.

It is not at all necessary to compare commodities of equal value; they are to be compared only at their value. To simplify matters, the commodities compared here are taken as produced by capitals of equal size.

||471|

	Constant Capital		Variable Capital (wages)	Surplus-value	Rate of surplus-value	Profit	Rate of profit	Value of product
	Machinery	Raw materials
I	100	700	200	100	50 per cent	100	10 per cent	1,100
II	500	100	400	200	50 per cent	200	20 per cent	1,200
III	50	350	600	300	50 per cent	300	30 per cent	1,300
IV	700	none	300	150	50 per cent	150	15 per cent	1,150
V	none	500	500	250	50 per cent	250	25 per cent	1,250

We have here, in the categories I, II, III, IV and V (five different spheres of production), commodities whose respective values are £ 1,100, £ 1,200, £ 1,300, £ 1,150 and £ 1,250. These are the money prices at which these commodities would exchange if they were exchanged according to their values. In all of them the capital advanced is of the same size, namely £ 1,000. If these commodities were exchanged at their values, then the rate of profit in I would be only 10 per cent; in II, twice as great, 20 per cent; in III, 30 per cent; in IV, 15 per cent; in V, 25 per cent. If we add up these particular rates of profit they come to 10 per cent+20 per cent+30 per cent+15 per cent+25 per cent, which is 100 per cent.

If we consider the entire capital advanced in all five spheres of production, then one portion of this (I) yields 10 per cent, another (II) 20 per cent etc. The average yielded by the total capital equals the average yielded by the five portions, and this is:

^{100 (the total sum of the rates of profit)}/_{5
(the number of different rates of profit)}

i.e., 20 per cent.

In fact we find that the £ 5,000 capital advanced in the five spheres yield a profit of 100+200+300+150+250=1,000; 1,000 on 5,000 is ¹/₅ which is 20 per cent. Similarly: if we work out the value of the total product, it comes to £ 6,000 and the excess on the £ 5,000 capital advanced is £ 1,000, which is 20 per cent in relation to the capital advanced, that is ¹/₆ or 16 ²/₃ per cent of the total product. (This again is another calculation.) However, so that in fact each of the capitals advanced, i.e., I, II, III etc.—or what comes to the same thing, that capitals of equal size—should receive a part of the surplus-value yielded by the aggregate capital only in proportion to their magnitude, i.e., only in proportion to the share they represent in the aggregate capital advanced, each of them should get only 20 per cent profit and each must get this amount. ||472| But to make this possible, the products of the various spheres must in some cases be sold above their value and in other cases more or less below their value. In other words, the total surplus-value must be distributed among them not in the proportion in which it is made in the particular sphere of production, but in proportion to the magnitude of the capitals advanced. All must sell their product at £ 1,200, so that the excess of the value of the product over the capital advanced is ¹/₅ of the latter, i.e., 20 per cent.

According to this apportionment:

	Value of Product	Surplus-value	Average price	[Relation of average price to value]	Relation of profit to surplus-value in per cent	Calculated Profit
I	1,100	100	1,200	Excess of average price over value 100	Excess of profit over surplus-value 100 per cent	200
II	1,200	200	1,200	Value equal to price 0	0	200
III	1,300	300	1,200	Decrease in average price below value 100	Decrease in profit below surplus-value 33¹/₃ per cent	200
IV	1,150	150	1,200	Excess of price over value 50	Excess of profit over surplus-value 33¹/₃ per cent	200
V	1,250	250	1,200	Excess of value over price 50	Excess of surplus-value over profit 25 per cent. Decrease in profit below surplus-value 20 per cent	200

This shows that only in one instance (II) the average price equals the value of the commodity, because by coincidence, the surplus-value equals the normal average profit of 200. In all other instances a greater or a lesser amount of surplus-value is taken away from one [sphere] and given to another, etc.

What Herr Rodbertus had to explain was, why this [is] not the case in agriculture, hence [why] its commodities should be sold at their value and not their average price.

Competition brings about the equalisation of profits, i.e., the reduction of the values of the commodities to average prices. The individual capitalist, according to Mr. Malthus, expects an equal profit from every part of his capital—which, in other words, means only that he regards each part of his capital (apart from its organic function) as an independent source of profit, that is how it seems to him. Similarly, in relation to the class of capitalists, every capitalist regards his capital as a source of profit equal in volume to that which is being made by every other capital of equal size. This means that each capital in a particular sphere of production is only regarded as part of the aggregate capital which has been advanced to production as a whole and demands its share in the total surplus-value, in the total amount of unpaid labour or labour products—in proportion to its size, its stock—in accordance to the proportion of the aggregate capital it constitutes. This illusion confirms for the capitalist—to whom everything in competition appears in reverse—and not only for him, but for some of his most devoted pharisees and scribes, that capital is a source of income independent of labour, since in fact the profit on capital in each particular sphere of production is by no means solely determined by the quantity of unpaid labour which it itself “produces” and throws into the pot of aggregate profits, from which the individual capitalists draw their quota in proportion to their shares in the total capital.

Hence Rodbertus’s nonsense. Incidentally, in some branches of agriculture—such as stock-raising—the variable capital, i.e., that which is laid out in wages, is extraordinarily small compared with the constant part of capital.

“Rent, by its very nature, is always ground-rent” (p. 113).

Wrong. Rent is always paid to the landlord; that’s all. However, if, as so often occurs in practice, it is partially or wholly a deduction from normal profit or a deduction from normal wages (true surplus-value, i.e., profit plus rent, is never a deduction f r o m wages, but is that part of the product of the worker which remains after deduction of the wage from this product) then from an economic point of view, it is not rent of land. In practice this is proved as soon as ||473| competition restores the normal Wage and the normal profit.

Average prices, to which competition constantly tends to reduce the values of commodities, are thus achieved by constant additions to the value of the product of one sphere of production and deductions from the value of the product of another sphere—except in the case of II in the above table—in order to arrive at the general rate of profit. With the commodities of the particular sphere of production where the ratio of variable capital to the total sum of capital advanced (assuming the rate of surplus-labour to be given) corresponds to the average ratio of social capital—value equals average price; neither an addition to nor a deduction from value is therefore made. If, however, owing to special circumstances which we will not go into here, in certain spheres of production a deduction is not made from the value of the commodities (although it stands above the average price, not just temporarily but on an average) then this retention of the entire surplus-value in a particular sphere of production— although the value of the commodity is above the average price and therefore yields a rate of profit higher than the average—is to be regarded as a privilege of that sphere of production. What we are concerned with here and have to explain as a peculiar feature, as an exception, is not that the average price of commodities is reduced below their value—this [would be] a general phenomenon and a necessary prerequisite for equalisation—but why, in contrast to other commodities, certain commodities are sold at their value, above the average price.

The average price of a commodity equals its cost of production (the capital advanced in it, be it in wages, raw material, machinery or whatever else) plus average profit. Hence if, as in the above example, average profit is 20 per cent which is ¹/₅, then the average price of each commodity is C (the capital advance) +P/C (the average rate of profit). If C+P/C equals the value of this commodity, i.e., if S, the surplus-value created in this sphere of production, equals P, then the value of the commodity equals its average price. If C+P/C is smaller than the value of the commodity, i.e., if the surplus-value S, created in this sphere, is larger than P, then the value of the commodity is reduced to its average price and part of its surplus-value is added on to the value of other commodities. Finally, if C+P/C is greater than the value of the commodity, i.e., S is smaller than P, then the value of the commodity is raised to its average price and surplus-value created in other spheres of production is added to it.

Finally, should there be commodities which are sold at their value, although their value is greater than C+P/C, or whose value is at any rate not reduced to such an extent as to bring it down to the level of the normal average price C+P/C, then certain conditions must be operative, which put these commodities into an exceptional position. In this case the profit realised in these spheres of production stands above the general rate of profit. If the capitalist receives the general rate of profit here, the landlord can get the excess profit in the form of rent.

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[7. Rodbertus’s Erroneous Views Regarding the Factors Which Determine the Rate of Profit and the Rate of Rent]

What I call rate of profit and rate of interest or rate of rent, Rodbertus calls

“Level of Profit on Capital and Interest” (p. 113).

This level “depends on their ratio to capital… In all civilised nations a capital of 100 is taken as a unit, which provides the standard measurement for the level to be calculated. Thus, the larger the figure that expresses the relation between the gain or interest falling to the capital of 100, in other words, the ‘more per cent’ a capital yields, the higher are profit and interest” (pp. 113–14).

“The level of ground-rent and of rental follows from their proportion to a particular piece of land” (p. 114).

This is bad. The rate of rent is, in the first place, to be calculated on the capital, i.e., as the excess of the price of a commodity over its costs of production and over that part of the price which forms the profit. Because it helps him to understand certain phenomena Herr Rodbertus makes the caculation with an acre or a morgen, the apparent form of the thing, ||474| in which the intrinsic connection is lost. The rent yielded by an acre is the rental, the absolute amount of rent. It may rise if the rate of rent remains the same or is even lowered.

“The level of the value of land follows from the capitalisation of the rent of a particular piece of land, The greater the amount of capital derived from the capitalisation of the rent of a piece of land of a given area, the higher is the value of the land” (p. 114).

The word “level” is nonsense here. For to what does it express a relationship? That 10 per cent yields more than 20 is obvious; but the unit of measurement here is 100. Altogether the “level of the value of land” is the same general phrase as the high or low level of commodity prices in general.

Herr Rodbertus now wants to investigate:

“What then determines the level of capital profit and of ground-rent?” (p. 115)

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[a) Rodbertus’s First Thesis]

First of all he examines: What determines “the level of rent in general”, i.e., what regulates the rate of surplus-value?

“I) With a given value of a product, or a product of a given quantity of labour or, which again amounts to the same thing, with a given national product, the level of rent in general bears an inverse relationship to the level of wages and a direct relationship to the level of productivity of labour in general. The lower the wages, the higher the rent; the higher the productivity of labour in general, the lower the wages and the higher the rent” (pp. 115–16).

The “level” of rent—the rate of surplus-value—says Rodbertus, depends upon the “size of this portion left over for rent” (p. 117), i.e., after deducting wages from the total product, in which “that part of the value of the product which serves as replacement of capital…can be disregarded” (p. 117).

This is good (I mean that in this consideration of surplus-value the constant part of capital is “disregarded”).

The following is a somewhat peculiar notion:

“when wages fall, i.e., from now on form a smaller share of the total value of the product, the aggregate capital on which the other part of rent” <i.e., the industrial profit> “is to be calculated as profit, becomes smaller. Now it is, however, solely the ratio between the value that becomes capital profit or ground-rent, and the capital, or the land area on which it has to he calculated as such, which determines the level of profit and rent. Thus if wages allow a greater value to be left over for rent, a greater value is to be reckoned as profit and ground-rent, even with a diminished capital and the same area of land. The resulting ratio of both increases and, therefore, the two together, or rent in general, has risen… It is assumed that the value of the product remains the same… Because the wage, which the labour costs, diminishes, the labour, which the product costs, does not necessarily diminish” (pp. 117–18).

The last bit is good. But it is incorrect to say that when the variable capital that is laid out in wages decreases, the constant capital must diminish. In other words, it is not true that the rate of profit <the quite inappropriate reference to area of land etc. is omitted here) must rise because the rate of surplus-value rises. For instance, wages fall because labour becomes more productive and in all cases this expresses itself in more raw material being worked up by the same worker in the same period of time; this part of constant capital therefore grows, ditto machinery and its value. Hence the rate of profit can fall with the reduction in wages. The rate of profit is dependent on the amount of surplus-value, which is determined not only by the rate of surplus-value, but also (by] the number of workers employed.

Rodbertus correctly defines the necessary wage as equal to

“the amount of necessary subsistence, that is to a fairly stable definite quantity of material products for a particular country and a particular period” (p. 118).

||475| Herr Rodbertus then puts forward in a most intricately confused, complicated and clumsy fashion, the propositions set up by Ricardo on the inverse relationship of profit and wages and the determination of this relationship by the productivity of labour. The confusion arises partly because, instead of taking labour-time as his measure, he foolishly takes quantities of product and makes non-sensical differentiations between “level of the value of the product” and “magnitude of the value of the product”.

By “level of the value of the product” this stripling means nothing other than the relation of the product to the labour-time. If the same amount of labour-time yields many products then the value of the product, i.e., the value of separate portions of the product is low, if the reverse, then the reverse. If one working-day yielded 100 lbs. yarn and later 200 lbs. then in the second case the value of the yarn would be half what it was in the first. In the first case its value is ¹/₁₀₀ of a working-day; in the second, the value of the lb. of yarn is ¹/₂₀₀ of a working-day. Since the worker receives the same amount of product, whether its value be high or low, i.e., whether it contains more or less labour, wages and profit move inversely, and wages take more or less of the total product, according to the productivity of labour. He expresses this in the following intricate sentences:

“…if the wage, as necessary subsistence, is a definite quantity of material products, then, if the value of the product is high, the wage must have a high value, if it is low, it must constitute a low value and, since the value of the product available for distribution is assumed as constant, the wage will absorb a large part if the value of the product is high, a small part of it, if its value is low and finally, it will therefore leave either a large or a small share of the value of the product for rent. But if one accepts the rule that the value of the product equals the quantity of labour which it cost, then the level of the value of the product is again determined purely by the productivity of labour or the relationship between the amount of product and the quantity of labour which is used for its production…if the same quantity of labour brings forth more product, in other words, if productivity increases, then the same quantity of product contains less labour and conversely, if the same quantity of labour brings forth less product, in other words, if productivity decreases, then the same quantity of product contains more labour. But the quantity of labour determines the value of the product and the relative value of a particular quantity of product determines the level of the value of the product… Hence “the higher the productivity of labour in general, the higher” must “be rent in general” (pp. 119–20).

But this is only correct if the product, for whose production the worker is employed, belongs to that species which—according to tradition or necessity—figures in his consumption as a means of subsistence. If this is not the case, then the productivity of this labour has no effect on the relative height of wages and of profit, or on the amount of surplus-value in general. The same share in the value of the total product falls to the worker as wages, irrespective of the number of products or the quantity of the product in which this share is expressed. The division of the value of the product in this case is not altered by any change in the productivity of labour.

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[b) Rodbertus’s Second Thesis]

“II) If with a given value of the product, the level of rent in general is given, then the level of ground-rent and of capital profit, bear an inverse relationship to one another, and also to the productivity of extractive labour and manufacturing labour respectively. The higher or lower the rent, the lower or higher the capital profit and vice versa; the higher or lower the productivity of extractive labour or of manufacturing labour, the lower or higher the rent or capital profit, and alternately also the higher or lower is the capital profit or rent” (p. 116).

First ([in thesis] I) we had the Ricardian (law] that wages and profit are related inversely.

Now the second Ricardian [law]—differently evolved or, rather, “made involved”— that profit and rent have an inverse relation.

It is obvious, that when a given surplus-value is divided between capitalist and landowner, then the larger the share of one, the smaller will be that of the other and vice versa. But Herr Rodbertus adds something of his own which requires closer examination.

In the first place, Herr Rodbertus regards it as a new discovery that surplus-value in general (“the value of the product of labour which is in fact available for sharing out as rent”>, the entire surplus-value filched by the capitalist, “consists of the value of the raw product+the value of the manufactured product” (p. 120).

Herr Rodbertus first reiterates his “discovery” of the absence of “the value of the material” in ||476| agriculture. This time in the following flood of words:

“That portion of rent which accrues to the manufactured product and determines the rate of capital profit is reckoned as profit not only on the capital which is actually used for the production of this product but also on the whole of the raw product value which figures as value of the material in the capital fund of the manufacturer. On the other hand, as regards that portion of rent which accrues to the raw product and from which the profit on the capital used in raw material production is calculated according to the given rate of profit in manufacture” (yes! given rate of profit!) “leaving a remainder for ground-rent, such a material value is missing” (p. 121).

We repeat: quod non!

Assume that a ground-rent exists—which Herr Rodbertus has not proved and cannot prove by his method—that is to say, a certain portion of the surplus-value of the raw product falls to the landlord.

Further assume that: “the level of rent in general” (the rate of surplus-value) “in a particular value of the product is also given” (p. 121). This amounts to the following: For instance, in a commodity of £ 100, say half, £ 50, is unpaid labour; this then forms the fund from which all categories of surplus-value, rent, profit etc. are paid. Then it is quite evident that one shareholder in the £ 50 will draw the more, the less is drawn by the other and vice versa, or that profit and rent are inversely proportional. Now the question is, what determines the apportionment between the two?

In any case it remains true that the revenue of the manufacturer (be he agriculturist or industrialist) equals the surplus-value which he draws from the sale of his manufactured product (which he has pilfered from the workers in his sphere of production), and that rent of land (where it does not, as with the waterfall which is sold to the industrialist, stem directly from the manufactured product, which is also the case with rent for houses etc., since houses can hardly be termed raw product) only arises from the excess profit (that part of surplus-value which does not enter into the general rate of profit) which is contained in the raw products and which the farmer pays over to the landlord.

It is quite true that when the value of the raw product rises [or falls], the rate of profit in those branches of industry which use raw material will rise or fall inversely to the value of the raw product. As I showed in a previous example, if the value of cotton doubles, then with a given wage and a given rate of surplus-value, the rate of profit will fall. The same applies however to agriculture. If the harvest is poor and production is to be continued on the same scale (we assume here that the commodities are sold at their value) then a greater part of the total product or of its value would have to be returned to the soil and after deducting wages, if these remain stationary, the farmer’s surplus-value would consist of a smaller quantity of product, hence also a smaller quantity of value would be available for sharing out between him and the landlord. Although the individual product would have a higher value than before, not only the amount of product, but also the remaining portion of value would be smaller. It would be a different matter if, as a result of demand, the product rose above its value, and to such an extent that a smaller quantity of product had a higher price than a larger quantity of product did before. But this would be contrary to our stipulation that the products are sold at their value.

Let us assume the opposite. Supposing he cotton harvest is twice as rich and that that part of it which is returned direct to the soil, for instance as fertiliser and seed, costs less than before. In this case the portion of value which is left for the cotton-grower after deduction of wages is greater than before. The rate of profit would rise here just as in the cotton industry. True, in one yard of calico, the proportion of value formed by the raw product would now be smaller than before and [that] formed by the manufacturing process would be larger. Assume that calico costs 2s. a yard when the value of the cotton it contains is 1s. Now if cotton goes down from 1s. to 6d., (which, on the assumption that its value equals its price, is only possible because its cultivation has become more productive) then the value of a yard of calico is 18d. It has decreased by a quarter which is 25 per cent. But where the cotton-grower previously sold 100 lbs. at is., he is now supposed to sell 200 at 6d. Previously the value [was] 100s.; now too it is 100s. Although previously cotton formed a greater proportion of the value of the product—and the rate of surplus-value in cotton growing itself decreased simultaneously—the cotton-grower obtained only 50 yds. of calico for his 100s. cotton at 1s. per lb.; now that the lb. [is sold] at 6d., he receives 66 ²/₃ yds, for his 100s.

On the assumption that the commodities are sold at their value, it is wrong to say that the revenue of the producers who take part in the production of the product is necessarily dependent on the portion of value ||477| represented by their products in the total value of the product.

Let the value of the total product of all manufactured commodities, including machinery, be £ 300 in one branch, 900 in another and 1,800 in a third.

If it is true to say that the proportion in which the value of the whole product is divided between the value of the raw product and the value of the manufactured product determines the proportion in which the surplus-value—the rent, as Rodbertus says—is divided into profit and ground-rent, then this must also be true of different products in different spheres of production where raw material and manufactured products participate in varying proportions.

Suppose out of a value of £ 900, manufactured product accounts for £ 300 and raw material for £ 600, and that £ 1 equals 1 working-day. Furthermore, the rate of surplus-value is given as, say, 2 hours on 10, with a normal working-day of 12 hours, then the £ 300 [manufactured product] embodies 300 working-days, and the £ 600 [raw product] twice as much, i.e., 2×300. The amount of surplus-value in the one is 600 hours, in the other 1,200. This only means that, given the rate of surplus-value, its volume depends on the number of workers or the number of workers employed simultaneously. Furthermore, since it has been assumed (not proved) that of the surplus-value which enters into the value of the agricultural product a portion falls to the landlord as rent, it would follow that in fact the amount of ground-rent grows in the same proportion as the value of the agricultural product compared with the “manufactured product” .

In the above example the ratio of the agricultural product to the manufactured product is as 2:1, i.e., 600:300. Suppose [in another case] it is as 300:600. Since the rent depends on the surplus-value contained in the agricultural product, it is clear that if this [amounts to] 1,200 hours in the first case as against 600 in the second, and if the rent constitutes a certain part of this surplus-value, it must be greater in the first case than in the second. Or—the larger the portion of value which the agricultural product forms in the value of the total product, the larger will be its share in the surplus-value of the whole product, for every portion of the value of the product contains a certain portion of surplus-value and the larger the share in the surplus-value of the whole product which falls to the agricultural product, the larger will be the rent, since rent represents a definite proportion of the surplus-value of the agricultural product.

Let the rent be one-tenth of the agricultural surplus-value, then it is 120 [hours] if the value of the agricultural product is £ 600 out of the £ 900 and only 60 [hours] if it is £ 300. According to this, the volume of rent would in fact alter with the amount of the value of the agricultural product, hence also with the relative value of the agricultural product in relation to the manufactured product. But the “level” of the rent and of the profit— their rates—would have absolutely nothing to do with it whatsoever. In the first case the value of the product is £ 900 of which £ 300 is manufactured product and £ 600 agricultural product. Of this, 600 hours surplus-value accrue to the manufactured product and 1,200 to the agricultural product. Altogether 1,800 hours. Of these, 120 go to rent and 1,680 to profit. In the second case the value of the product is £ 900, of which £ 600 is manufactured product and £ 300 agricultural product. Thus 1,200 [hours] surplus-value for manufacture and 600 for agriculture. Altogether 1,800. Of this 60 go to rent and 1,200 to profit for manufacture and 540 for agriculture. Altogether 1,740. In the second case, the manufactured product is twice as great as the agricultural product (in terms of value). In the first case the position is reversed. In the second case the rent is 60, in the first it is 120. It has simply grown in the same proportion as the value of the agricultural product. As the volume of the latter increased so the volume of the rent increased. If we consider the total surplus-value, 1,800, then in the first case the rent is ¹/₁₅ and in the second it is ¹/₃₀.

If here with the increased portion of value that falls to agricultural product the volume of rent also rises and with this, its volume, increases its proportional share in the total surplus-value—i.e., the rate at which surplus-value accrues to rent also rises compared to that at which it accrues to profit—then this is only so, because Rodbertus assumes that rent participates in the surplus-value of the agricultural product in a d e f i n i t e p r o p o r t i o n. Indeed this must be so, if this fact is given or presupposed. But the fact itself by no means follows from the rubbish which Rodbertus pours forth about the “value of the material” and which I have already cited above at the beginning of page 476.

But the level of the rent does not rise in proportion to the [surplus-value in the] product in which it participates, because now, as before, this [proportion is] one-tenth; its volume grows because the product grows, and because it grows in volume, without a rise in its “level”, its “level” rises in comparison with the quantity of profit or the share of profit in the ||4781 value of the total product. Because it is presupposed that a greater part of the value of the total product yields rent, i.e., a greater part of surplus-value is turned into rent, that part of surplus-value which is converted into rent is of course greater. This has absolutely nothing to do with the “value of the material”, But that a

“greater rent” at the same time represents a “higher rent”, “because the area or number of acres on which it is calculated remains the same and hence a greater amount of value falls to the individual acre” (p. 122)

is ridiculous. It amounts to measuring the “level” of rent by a “standard of measurement” that obviates the difficulties of the problem itself.

Since we do not know as yet what rent is, had we put the above example differently and had left the same rate of profit for the agricultural product as for the manufactured product, only adding on one-tenth for rent, which is really necessary since the same rate of profit is assumed, then the whole business would look different and become clearer.

	Manufactured product	Agricultural product
I	£600 [7,200 hours]	£300 [3,600 hours]	1,200 [hours] surplus-value for manufacture, 600 for agriculture and 60 for rent. Altogether 1,860 [hours; of these] 1,800 for profit.
II	£300 [3,600 hours]	£600 [7,200 hours]	600 [hours] surplus-value for manufacture, 1,200 for agriculture and 120 for rent. Altogether 1,920 [hours; of these] 1,800 for profit.

In case II the rent is twice that in I because the agricultural product, the share of the value of the product on which it sponges, has grown in proportion to the industrial product. The volume of profit remains the same in both cases, i.e., 1,800. In the first case (the rent] is ¹/₃₁ of the total surplus-value, in the second case it is ¹/₁₆

If Rodbertus wants to charge the “value of the material” exclusively to industry, then above all, it should have been his duty to burden agriculture alone with that part of constant capital which consists of machinery, etc. This part of capital enters into agriculture as a product supplied to it by industry— as a “manufactured product”, which forms the means of production for the “raw product”.

Since we are dealing here with an account between two firms, so far as industry is concerned, that part of the value of the machinery which consists of “raw material” is already debited to it under the heading of “raw material” or “value of the material”. We cannot therefore book this twice over. The other portion of value of the machinery used in manufacture, consists of added “manufacturing labour” (past and present) and this resolves into wages and profit (paid and unpaid labour). That part of capital which has been advanced here (apart from that contained in the raw material of the machines) therefore consists only of wages. Hence it increases not only the amount of capital advanced, but also the profit, the volume of surplus-value to be calculated upon this capital.

(The error usually made in such calculations is that, for instance, the wear and tear of the machinery or of the tools used is embodied in the machine itself, in its value and although, in the last analysis, this wear and tear can be reduced to labour— either labour contained in the raw material or that which transformed the raw material into machine, etc.—this past labour never again enters into profit or wages, but only acts as a produced condition of production (in so far as the necessary labour-time for reproduction does not alter) which, whatever its use-value in the labour-process, only figures as value of constant capital, in the process of creating surplus-value. This is of great importance and has already been explained in the course of my examination of the exchange of constant capital and revenue. But apart from this, it needs to be further developed in the section on the accumulation of capital.)

So far as agriculture is concerned—that is, purely the production of raw products or so-called primary production—in balancing the accounts between the firms “primary production” and “manufacture” that part of the value of constant capital which represents machinery, tools, etc., can on no account be regarded in any other way than as an item which enters into agricultural capital without increasing its surplus-value. If, as a result of the employment of machinery etc., agricultural labour becomes more productive, the higher the price of this machinery etc., the smaller will be the increase in productivity. It is the use-value of the machinery and not its value which increases the productivity of agricultural labour or of any other sort of labour. Otherwise one might also say that the productivity of industrial labour is, in the first place, due to the presence of raw material and its properties. But again it is the use-value of the raw material, not its value, which constitutes a condition of production for industry. Its value, on the contrary, is a drawback. Thus what Herr Rodbertus says about the “value of the material” in respect to the industrial capital, is literally, ||479| mutatis mutandis valid for machinery etc.

“For instance the labour costs of a particular product, such as w h e a t or cotton, cannot be affected by the labour costs of t h e p l o u g h o r g i n a s m a c h i n e s” (or the labour costs of a drainage canal or stable buildings). “On the other hand, the value of the m a c h i n e or the m a c h i n e v a l u e does figure in the amount of capital on which the owner has to calculate his gain, the rent that falls to the r a w p r o d u c t.” (Cf. Rodbertus, p. 97.)

In other words: That portion of the value of wheat and cotton representing the value of the wear and tear of the plough or gin, is not the result of the work of ploughing or of separating the cotton fibre from its seed, but the result of the labour which manufactured the plough and the gin. This component part of value goes into the agricultural product without being produced in agriculture. It only passes through agriculture, which uses it merely to replace ploughs and gins by buying new ones from the maker of machines.

The machines, tools, buildings and other manufactured products required in agriculture consist of two component parts : 1. the raw materials of these manufactured products [2. the labour added to the raw materials.] Although these raw materials are the product of agriculture, they are a part of its product which never enters into wages or into profit. Even if there were no capitalist, the farmer still could not chalk up this part of his product as wages for himself. He would in fact have to hand it over gratis to the machine manufacturer so that the latter would make him a machine from it and besides he would have to pay for the labour which is added to this raw material (equal to wages plus profit). This happens in reality. The machine maker buys the raw material but in purchasing the machine, agricultural producer must buy back the raw material. It is just as if he had not sold it at all, but had lent it to the machine maker to give it the form of the machine. Thus that portion of the value of the machinery employed in agriculture which resolves into raw material, although it is the product of agricultural labour and forms part of its value, belongs to production and not to the producer, it therefore figures in his expenses, like seed. The other part, however, represents the manufacturing labour embodied in the machinery and is a “product of manufacture” which enters into agriculture as a means of production, just as raw material enters as a means of production into industry.

Thus, if it is true that the firm “primary production” supplies the firm “manufacturing industry” with the “value of the material” which enters as an item into the capital of the industrialist, then it is no less true that the firm “manufacturing industry” supplies the firm “primary production” with the value of the machinery which enters wholly (including that part which consists of raw material) into the farmer’s capital without this “component part of value” yielding him any surplus-value. This circumstance is a reason why the rate of profit appears to be smaller in “high agriculture”, as the English call it, than in primitive agriculture, although the rate of surplus-value is greater.

At the same time this supplies Herr Rodbertus with striking proof of how irrelevant it is to the nature of a capital advance, whether that portion of the product which is laid out in constant capital is replaced in kind and therefore only accounted for as a commodity—as money value—or whether it has really been alienated and has gone through the process of purchase and sale. Supposing the producer of raw materials handed over gratis to the machine builder the iron, copper, wood etc., embodied in his machine, so that the machine builder in selling him the machine would charge him for the added labour and the wear and tear of his own machine, then this machine would cost the agriculturist just as much as it costs him now and the same component part of value would figure as constant capital, as an advance, in his production. Just as it amounts to the same thing whether a farmer sells the whole of his harvest and buys seed from elsewhere with that portion of its value which rep-resents seed (raw material) perhaps to effect a desirable change in the type of seed and to prevent degeneration by inbreeding— or whether he deducts this component part of value directly from his product and returns it to the soil.

But in order to arrive at his results, Herr Rodbertus misinterprets that part of constant capital which consists of machinery.

A second aspect that has to be examined in connection with [case] II of Herr Rodbertus is this: He speaks of the manufactured and agricultural products which make up the revenue, which is something quite different from those manufactured and agricultural products which make up the total annual product. Now supposing it were correct to say of the latter that after deducting the whole of that part of the agricultural capital which consists of machinery etc. ||480| and that part of the agricultural product which is returned direct to agricultural production, the proportion in which the surplus-value is distributed between farmer and manufacturer—and therefore also the proportion in which the surplus-value accruing to the farmer is distributed between himself and the landlord—must be determined by the share of manufacture and of agriculture in the total value of the products; then it is still highly questionable whether this is correct if we are speaking of those products which form the common fund of revenue. Revenue (we exclude here that part which is reconverted into new capital) consists of products which go into individual consumption and the question is, how much do the capitalists, farmers and landlords draw out of this pot. Is this quota determined by the share of manufacture and raw production in the value of the product that constitutes revenue? Or by the quotas in which the value of the total revenue is divisible into agricultural labour and manufacturing labour?

The mass of products which make up revenue, as I have demonstrated earlier, does not contain any products that enter into production as instruments of labour (machinery), auxiliary material, semi-finished goods and the raw material of semi-finished goods, which form a part of the annual product of labour. Not only the constant capital of primary production is excluded but also the constant capital of the machine makers and the entire constant capital of the farmer and the capitalist which does not enter into the process of the creation of value though it enters into the labour-process. Furthermore, it excludes not only constant capital, but also the part of the unconsumable products that represents the revenue of their producers and enters into the capital of the producers of products consumable as revenue, for the replacement of their used up constant capital.

The mass of products on which the revenue is spent and which in fact represents that part of wealth which constitutes revenue, in terms of both use-value and exchange-value—this mass of products can, as I have demonstrated earlier, be regarded as consisting only of newly-added (during the year) labour. Hence it can be resolved only into revenue, i.e., wages and profit (which again splits up into profit, rent, taxes, etc.), since not a single particle of it contains any of the value of the raw material which goes into production or of the wear and tear of the machinery which goes into production, in a word, it contains none of the value of the means of production. Leaving aside the derivative forms of revenue because they merely show that the owner of the revenue relinquishes his proportional share of the said products to another, be it for services etc. or debt etc.—let us consider this revenue and assume that wages form a third of it, profit a third and rent a third and that the value of the product is £ 90. Then each will be able to draw the equivalent of £ 30 worth of products from the whole amount.

Since the amount of products which forms the revenue consists only of newly-added (i.e., added during the year) labour, it seems very simple that if the product contains two-thirds agricultural labour and one-third manufacturing labour, then manufacturers and agriculturists will share the value in this proportion. One-third of the value would fall to the manufacturers and two-thirds to the agriculturists and the proportional amount of the surplus-value realised in manufacture and agriculture (the same rate of surplus-value is assumed in both) would correspond to these shares of manufacture and agriculture in the value of the total product. But rent again [would] grow in proportion to the farmer’s volume of profit since it sits on it like a parasite. And yet this is wrong. Because a part of the value which consists of agricultural labour forms the revenue of the manufacturers of that fixed capital etc., which replaces the fixed capital worn out in agriculture. Thus the ratio between agricultural labour and manufacturing labour in the component parts of value of those products which constitute the revenue, in no way indicates the ratio in which the value of this mass of products or this mass of products itself is distributed between the manufacturers and the farmers, neither does it indicate the ratio in which manufacture and agriculture participate in total production.

Rodbertus goes on to say:

“But again it is only the productivity of labour in primary production or manufacture, which determines the relative level of the value of the primary product and manufactured product or their respective shares in the value of the total product. The value of the primary product will be the higher, the lower the productivity of labour in primary production and vice versa. In the same way, the value of the manufactured product will be the higher, the lower the productivity in manufacture and vice versa. Since a high value of the raw product effects a high ground-rent and low capital gain, and a high value of the manufactured product effects a high capital gain and low ground-rent, if the level of rent in general is given, the level of ground-rent and of capital gain must not only bear an inverse relationship to one another, but also to the productivity of their respective labour, that in primary production and that in manufacture” (p. 123).

If the productivity of two different spheres of production is to be compared, this can only be done relatively. In other words, one starts at any arbitrary point, for instance, when the values of hemp and linen, i.e., the correlative quantities of labour-time embodied in them, are as 1:3. If this ratio alters, then it is correct to say that the’ productivity of these different types of labour has altered. But it is wrong to say that because the labour-time required for the production of an ounce of gold ||481| equals three and that for a ton of iron also equals three, gold production is “less productive” than iron production.

The relative value of two commodities shows that the one costs more labour-time than the other; but one cannot say that because of this one branch is “more productive” than the other. This would only be correct if the labour-time were used for the production of the same use-values in both instances.

It would be entirely wrong to say that manufacture is three times as productive as agriculture if the value of the raw product is to that of the manufactured product as 3:1. Only if the ratio changes say to 4:1 or 3:2 or 2:1, i.e., when it rises or falls, could one say that the relative productivity in the two branches has altered.

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[c) Rodbertus’s Third Thesis]

III) “The level of capital gain is solely determined by the level of the value of the product in general and by the level of the value of the raw product and the manufactured product in particular; or by the productivity of labour in general and by the productivity of labour employed in the production of raw materials and of manufactured goods in particular. The level of ground-rent is, apart from this, also dependent on the magnitude of the value of the product or the quantity of labour, or productive power, which, with a given state of productivity, is used for production” (pp. 116–17).

In other words: The rate of profit depends solely on the rate of surplus-value and this is determined solely by the productivity of labour. On the other hand, given the productivity of labour, the rate of ground-rent also depends on the amount of labour (the number of workers) employed.

This assertion contains almost as many falsehoods as words. Firstly the rate of profit is by no means solely determined by the rate of surplus-value. But more about this shortly. First of all, it is wrong to say that the rate of surplus-value depends solely on the productivity of labour. Given the productivity of labour, the rate of surplus-value alters according to the length of the surplus labour-time. Hence the rate of surplus-value depends not only on the productivity of labour but also on the quantity of labour employed because the quantity of unpaid labour can grow (while productivity remains constant) without the quantity of paid labour, i.e., that part of capital laid out in wages, growing. Surplus-value—absolute or relative (and Rodbertus only knows the latter from Ricardo)—cannot exist unless labour is at least sufficiently productive to leave over some sur-plus labour-time apart from that required for the worker s own reproduction. But assuming this to be the case, with a given minimum productivity, then the rate of surplus-value alters according to the length of surplus labour-time.

Firstly, therefore, it is wrong to say that because the rate of surplus-value is solely determined by the productivity of the labour exploited by capital, the rate of profit or the “level of capital gain” is so determined. Secondly: The rate of surplus-value—which, if the productivity of labour is given, alters with the length of the working-day and, with a given normal working-day, alters with the productivity of labour—is assumed to be given. Surplus-value itself will then vary according to the number of workers from whose every working-day a certain quantity of surplus-value is extorted, or according to the volume of variable capital expended on wages. The rate of profit, on the other hand, depends on the ratio of this surplus-value [to] the variable capital plus the constant capital. If the rate of surplus-value is given, the amount of surplus-value does indeed depend on the amount of variable capital, but the level of profit, the rate of profit, depends on the ratio of this surplus-value to the total capital advanced. In this case the rate of profit will thus be determined by the price of the raw material (if such exists in this branch of industry) and the value of machinery of a particular efficiency.

Hence what Rodbertus says is fundamentally wrong:

“Thus, as the amount of capital gain increases consequent upon the increase in product value, so also in the same proportion increases the amount of capital value on which the gain has to be reckoned, and the hitherto existing ratio between gain and capital is not altered at all by this increase in capital gain” (p. 125).

This is only valid if it [signifies] the tautology that: given the rate of profit <very different from the rate of surplus-value and surplus-value itself.>, the amount of capital employed is immaterial, precisely because the rate of profit is assumed to be constant. But as a rule the rate of profit can increase although the productivity of labour remains constant, or it can fall even though the productivity of labour rises and rises moreover in every department.

And now again the silly remark <pp. 125–26> about ground-rent, the assertion that the mere increase of rent raises its rate, because in every country’ it is calculated on the basis of an “unalterable number of acres” (p. 126). If the volume of profit grows (given the rate of profit), then the amount of capital from which it is drawn, grows. On the other hand, if rent increases, then [according to Rodbertus] only one factor changes, namely rent itself, while its standard of measurement, “the number of acres”, remains unalterably fixed.

||482| “Hence rent can rise for a reason which enters into the economic development of society everywhere, namely the increase in labour used for production, in other words, the increasing population. This does not necessarily have to he followed by a rise in the raw product value since the drawing of rent from a greater quantity of primary product must already have this effect” (p. 127).

On p.128, Rodbertus makes the strange discovery that even if the value of the raw product fell below its normal level, causing rent to disappear completely, it would be impossible

“for capital gain ever to amount to 100 per cent” (i.e., if the commodity is sold at its value) “however high it may be, it must always amount to considerably less” (p. 128).

And why?

“Because it” (the capital gain) “is merely the result of the division of the value of the product. It must, accordingly, always he a fraction of this unit” (pp. 127–28).

This, Herr Rodbertus, depends entirely upon the nature of your calculation.

Let the constant capital advanced be 100, the wages advanced 50 and let the product of labour over and above this 50 be 150. We would then have the following calculation:

Constant capital	Variable capital	Surplus-value	value	cost of production	Profit	Per cent
100	50	150	300	150	150	100

The only requirement to produce this situation is that the worker should work for his master three quarters of his working-day, it is therefore assumed that one quarter of his labour-time suffices for his own reproduction. Of course, if Herr Rodbertus takes the total value of the product, which equals 300, and does not consider the excess it contains over the costs of production, but says that this product is to be divided between the capitalist and the worker, then in fact the capitalist’s portion can only amount to a part of this product, even if it came to ⁹⁹⁹/_1,000. But the calculation is incorrect, or at least useless in almost every respect. If a person lays out 150 and makes 300 he is not in the habit of saying that he has made a profit of 50 per cent on the basis of reckoning the 150 on 300 instead of 150.

Assume, in the above example, that the worker has worked 12 hours, 3 for himself and 9 for the capitalist. Now let him work 15 hours, i.e., 3 for himself and 12 for the capitalist. Then, according to the former production ratio, an outlay of 25 on constant capital would have to be added (less in fact, because the outlay on machinery would not grow to the same degree as the quantity of labour). Thus:

Constant capital	Variable capital	Surplus-value	value	cost of production	Profit	Per cent
125	50	200	375	175	200	114²/₇

Then Rodbertus comes up again with the growth of “rent to infinity”, firstly because he interprets its mere increase in volume as a rise, and therefore speaks of its rise when the same rate of rent is paid on a larger amount of product. Secondly because he calculates on “an acre” as his standard of measurement. Two things which have nothing in common.

***

The following points can be dealt with quite briefly, since they have nothing to do with my purpose.

The “value of land” is the “capitalised ground-rent”. Hence this, its expression in terms of money, depends on the level of the prevailing rate of interest. Capitalised at 4 per cent, it would have to be multiplied by 25 (since 4 per cent is ¹/₂₅ of 100); at 5 per cent by 20 (since 5 per cent is ¹/₂₀ of 100). This would amount to a difference in land value of 20 per cent (p. 131). Even with a fall in the value of money, ground-rent and hence the value of land would rise nominally, since—unlike the increase in interest or profit (expressed in money) —the monetary expression of capital does not rise evenly. The rent, however, which has risen in terms of money has to be related “to the unchanged number of acres of the piece of land” (p. 132).

Herr Rodbertus sums up his wisdom as applied to Europe in this way:

1. “…with the European nations, the productivity of labour in general—labour employed in primary production and manufacturing—has risen…as a result of which, the part of the national product used for wages has diminished, the part left over for rent has increased…so rent in general has risen” (pp. 138–39).

2. “…the increase in productivity is relatively greater in manufacture than in primary production … an equal value of national product will therefore at present yield a larger rent share to the raw product than to the manufactured product. Therefore notwithstanding the rise in rent in general, in fact only ground-rent has risen while capital gain has fallen” (p. 139).

Here Herr Rodbertus, just like Ricardo, explains the rise of rent and the fall of the rate of profit one by the other; the fall of one is equal to the rise of the other and the rise of the latter is explained by the relative unproductiveness ||483| of agriculture. Indeed, Ricardo says somewhere quite expressly that it is not a matter of absolute but of “relative” unproductiveness. But even if he had said the opposite, it would not comply with the principle he establishes since Anderson, the original author of the Ricardian concept, expressly declares that every piece of land is capable of absolute improvement.

If “surplus-value” (profit and rent) in general has risen then it is not merely possible that the rate of the total rent has fallen in proportion to constant capital, but it will have fallen because productivity has risen. Although the number of workers employed has grown, as has the rate at which they are exploited, the amount of capital expended on wages as a whole has fallen relatively, although it has risen absolutely; because the capital which as an advance—a product of the past—is set in motion by these workers and as a prerequisite of production forms an ever growing share of the total capital. Hence the rate of profit and rent taken together has fallen, although not only its volume (its absolute amount) has grown, but also the rate at which labour is being exploited has risen. This Herr Rodbertus cannot see, because for him constant capital is an invention of industry of which agriculture is ignorant.

But so far as the relative magnitude of profit and rent is concerned, it does not by any means follow that, because agriculture is relatively less productive than industry, the rate of profit has fallen absolutely. If, for instance, its relationship to rent was as 2:3 and is now as 1:3, then whereas previously it formed two-thirds of rent, it now forms only one-third, or previously [profit] formed two-fifths of the total surplus-value and now only a quarter, [or] previously ⁸/₂₀ and now only ⁵/₂₀; it would have fallen by ³/₂₀ or [by] 15 per cent.

Assume that the value of 1 lb. of cotton was 2s. It falls to 1s. 100 workers who previously span 100 lbs. in one day, now spin 300.

Previously, the outlay for 300 lbs. amounted to 600s.; now it is only 300s. Further, assume that in both cases machinery equals ¹/₁₀, or 60s. Finally, previously 300 lbs. cost 300s. as an outlay for 300 workers, now only l00s. for 100 [workers]. Since the productivity of the workers “has increased”, and we must suppose that they are paid here in their own product, assume that whereas previously the surplus-value was 20 per cent of wages, it is now 40.

Thus the cost of the 300 lbs. is:

in the first case:

Raw material 600, machinery 60, wages 300, surplus-value 60, altogether 1,020s.

in the second case:

Raw material 300, machinery 60, wages 100, surplus-value 40, altogether 500s.

In the first case: The costs of production 960, profit 60, rate of profit 6 ¹/₄ [per cent].

In the second case: [The costs of production] 460, profit 40, rate of profit 8 ¹⁶/₂₃ [per cent].

Suppose the rent is a third of 1 lb., then in the first case it equals 200s., i.e., £10; in the second it is 100s. or £5. The rent has fallen here because the raw product has become cheaper by 50 per cent. But the whole of the product has become cheaper by more than 50 per cent. The industrial labour added in I [is to the value of the raw material] as 300 : 600 = 6 : 10 = 1 : 1 ²/₃; in II, as 140 : 300 = 1 : 2 ¹/₇. Industrial labour has become relatively more productive than agricultural labour; yet in the first case the rate of profit is lower and the rent higher than in the second. In both cases rent amounts to one-third of raw materials.

Assume that the amount of raw materials in II doubles so that 600 lbs. are spun and the ratio would be:

II. 600 lbs. [cotton] = 600s. raw material, 120s. machinery, 200s. wages, 80s. surplus-value. Altogether 920s. production costs, 80s. profit, rate of profit 8 ¹⁶/₂₃ per cent.

The rate of profit [has] risen compared with I. Rent would be just the same as in I. The 600 lbs. would cost only 1,000, whereas before they cost 2,040.

||484| It does not by any means follow from the relative dearness of the agricultural product that it yields a [higher] rent. However, if one assumes—as Rodbertus can be said to assume, since his so-called proof is absurd—that rent clings as a percentage on to every particle of value of the agricultural product, then indeed it follows that rent rises with the increasing dearness of agricultural produce.

“…as a result of the increased population, the value of the total national product has also grown to an extraordinary extent … today, therefore, the nation draws more wages, more profit, more ground-rent … furthermore, this increased amount of ground-rent has raised it, whereas the increased amount of wages and profit could not have a similar effect” (p. 139).

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[8. The Kernel of Truth in the Law Distorted by Rodbertus]

Let us strip Herr Rodbertus of all nonsense (not to speak of such defective conceptions as I have detailed more fully above, for instance that the rate of surplus-value (“level of rent”) can only rise when labour becomes more productive, i.e., the overlooking of absolute surplus-value, etc.);

namely the absurd conception that the “value of the material” does not form part of the expenditure in (capitalist) agriculture in the strict sense.

The second piece of nonsense: that he does not regard the machinery etc., the second part of the constant capital of agriculture and manufacture, as a “component part of value”, which—just as the “value of the material”—does not arise from the labour of the sphere of production into which it enters as machinery, and upon which the profit made in each sphere of production is also calculated, even though the value of the machinery does not add a farthing to the profit, as little as the “value” of the material although both are means of production and as such enter into the labour process.

The third piece of nonsense: that he does not charge to agriculture the entire “value” of the “machinery” etc. which enters into it as an item of expenditure and that he does not regard that element of it which does not consist of raw material as a debit of agriculture to industry, which does not therefore belong to the expenditure of industry as a whole and in payment for which, a part of the raw material of agriculture must be supplied gratis to industry.

The fourth piece of nonsense : his belief that in addition to machinery and its auxiliary materials the “value of the material” enters into all branches of industry, whereas this is not the case in the entire transport industry any more than it is in the extractive industry.

The fifth piece of nonsense: that he does not see that although, besides variable capital, “raw material” does enter into many branches of manufacture (and this the more they supply finished produce for consumption) the other component part of constant capital disappears almost completely or is very small, incomparably smaller than in large-scale industry or agriculture.

The sixth piece of nonsense: that he confuses the average prices of commodities with their values.

Stripped of all this, which has allowed him to derive his explanation of rent from the farmer’s wrong calculation and his own wrong calculation, so that rent would have to disappear to the extent to which the farmer accurately calculates the outlay he makes, then only the following assertion remains as the real kernel:

When the raw products are sold at their values, their value stands above the average prices of the other commodities or above their own average price, this means their value is greater than the costs of production plus average profit, thus leaving an excess profit which constitutes rent. Furthermore, assuming the same rate of surplus-value, this means that the ratio of variable capital to constant capital is greater in primary production than it is, on an average, in those spheres of production which belong to industry (which does not prevent it from being higher in some branches of industry than it is in agriculture). Or, putting it into even more general terms: agriculture belongs to that class of industries, whose variable capital is greater proportionately to constant capital than in industry, on an average. Hence its surplus-value, calculated on its costs of production, must be higher than the average in the industrial spheres. Which means again, that its particular rate of profit stands above the average rate of profit or the general rate of profit. Which means again: when the rate of surplus-value is the same and the surplus-value itself is given, then the particular rate of profit in each sphere of production depends on the proportion of variable capital to constant capital in that particular sphere.

This would therefore only be an application of the law developed by me in a general form to a particular branch of industry.

||485| Consequently:

1. One has to prove that agriculture belongs to those particular spheres of production whose commodity values are above their average prices, whose profit, so long as they appropriate it themselves and do not hand it over for the equalisation of the general rate of profit, thus stands above the average profit, yielding them, therefore, in addition to this, an excess profit. This point 1 appears certain to apply to agriculture on an average, because manual labour is still relatively dominant in it and it is characteristic of the bourgeois mode of production to develop manufacture more rapidly than agriculture. This is, however, a historical difference which can disappear. At the same time this implies that, on the whole, the means of production supplied by industry to agriculture fall in value, while the raw material which agriculture supplies to industry generally rises in value, the constant capital in a large part of manufacture has consequently a proportionately greater value than that in agriculture. In the main, this will probably not apply to the extractive industry.

2. It is wrong to say, as Rodbertus does: If—according to the general law—the agricultural product is sold on an average at its value then it must yield an excess profit, alias rent; as though this selling of the commodity at its value, above its average price, were the general law of capitalist production. On the contrary, it must be shown why in primary production—by way of exception and in contrast to the class of industrial products whose value similarly stands a b o v e their average price—the values are not reduced to the average prices and therefore yield an excess profit, alias rent. This is to be explained simply by property in land. The equalisation takes place only between capitals, because only the action of capitals on one another has the force to assert the inherent laws of capital. In this respect, those who derive rent from monopoly are right. Just as it is the monopoly of capital alone that enables the capitalist to squeeze surplus-labour out of the worker, so the monopoly of land ownership enables the landed proprietor to squeeze that part of surplus-labour from the capitalist, which would form a constant excess profit. But those who derive rent from monopoly are mistaken when they imagine that monopoly enables the landed proprietor to force the price of the commodity above its value. On the contrary, it makes it possible to maintain the value of the commodity above its average price; to sell the commodity not above, but at its value.

Modified in this way, the proposition is correct. It explains the existence of rent, whereas Ricardo only explains the existence of differential rents and actually does not credit the ownership of land with any economic effect. Furthermore, it does away with the superstructure, which with Ricardo himself was anyhow only arbitrary and not necessary for his presentation, namely, that the agricultural industry becomes gradually less productive; it admits on the contrary that it becomes more productive. On the bourgeois basis however agriculture is relatively less productive, or slower to develop the productive power of labour, than industry, Ricardo is right when he derives his “excess surplus-value” not from greater productivity but from smaller productivity.

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[9. Differential Rent and Absolute Rent in Their Reciprocal Relationship. Rent as an Historical Category. Smith’s and Ricardo’s Method of Research]

So far as the difference in rents is concerned, provided equal capital is invested in land areas of equal size, it is due to the difference in natural fertility, in the first place, specifically with regard to those products which supply bread, the chief nutriment; provided the lad is of equal size and fertility, differences in rent arise from unequal capital investment. The first, natural, difference causes not only the difference in the size but also in the level or rate of rent, relatively to the capital which has been laid out. The second, industrial difference, only effects a greater rent in proportion to the volume of capital which has been laid out. Successive capital investments on the same land may also have different results. The existence of different excess profits or different rents on land of varying fertility does not distinguish agriculture from industry. What does distinguish it is that those excess profits in agriculture become permanent fixtures, because here they rest on a natural basis (which, it is true, can be to some extent levelled out). In industry, on the other hand—given the same average profit—these excess profits can only turn up fleetingly and they only appear because of a change-over to more productive machines and combinations of labour. In industry it is always the most recently added, most productive capital that yields an excess profit by reducing average prices. In agriculture excess profit may be the result, and very often must be the result, not of the absolute increase in fertility of the best fields, but the relative increase in their fertility, because less productive land is being cultivated. In industry the higher relative productiveness, the excess profit (which disappears), must always be due to the absolute increase in productiveness, or productivity, of the newly invested capital compared with the old. No capital can yield an excess profit in industry (we are not concerned here with a momentary rise in demand), because less productive capitals are newly entering into the branch of industry.

||486| It can, however, also happen in agriculture (and Ricardo admits this) that more fertile land—land which is either naturally more fertile or which becomes more fertile under newly developed advances in technique than the old land under the old [conditions]—comes into use at a later stage and even throws a part of the old land out of cultivation (as in the mining industry and with colonial products), or forces it to turn to another type of agriculture which supplies a different product.

The fact that the differences in rents (excess profits) become more or less fixed distinguishes agriculture from industry. But the fact that the market-price is determined by the average conditions of production, thus raising the price of the product which is below this average, above its price and even above its value, this fact by no means arises from the land, but from competition, from capitalist production. Hence this is not a law of nature, but a social law.

This theory neither demands the payment of rent for the worst land, nor the non-payment of rent. Similarly, it is possible that a lease rent is paid where no rent is yielded, where only the ordinary profit is made, or where not even this is made. Here the landowner draws a rent although economically none is available.

Rent (excess profit) is paid only for the better (more fertile) land. Here rent “as such” does not exist. In such cases excess profit—just as the excess profit in industry—rarely becomes fixed in the form of rent (as in the West of the United States of North America). |486||

||486| This is the case where, on the one hand, relatively great areas of disposable land have not become private property and, on the other, the natural fertility is so great that the values of the agricultural products are equal to (sometimes below) their average prices, despite the scant development of capitalist production and therefore the high proportion of variable capital to constant capital. If their values were higher, competition would reduce them to this level. It is however absurd to say, as for example Rodbertus does, that the state [appropriates the ground-rent because it] levies, for instance, a dollar or so per acre, a low, almost nominal price. One could just as well say that the state imposes a “trade tax” on the pursuit of every branch of industry. In this case Ricardo’s law exists. Rent exists only for relatively fertile land—although mostly not in a fixed but in a fluid state, like the excess profit in industry. The land that pays no rent does so, not because of its low fertility, but because of its high fertility. The better kinds of land pay rent, because they possess more than average fertility, as a result of their relatively higher fertility.

But in countries where landed property exists, the same situation, namely that the last cultivated land pays no rent, may also occur for the reverse reasons. Supposing, for instance, that the value of the grain crops was so low (and that its low value was in no way connected with the payment of rent), that owing to the relatively low fertility of the last cultivated land the value of its crop were only equal to the average price, this means that, if the same amount of labour were expended here as on the land which carried a rent, the number of quarters would be so small (on the capital laid out), that with the average value of bread products, only the average price of wheat would be obtained.

||487| Supposing for example, that the last land which carries rent (and the land which carries the smallest rent represents pure rent; the others already differential rent) produces [with] a capital investment of £100, [a product] equal to £120 or 360 quarters of wheat at £ ¹/₃. In this case 3 quarters equal £ 1. Let £ 1 equal one week’s labour. £ 100 are 100 weeks’ labour and £ 120 are 120 weeks’ labour. 1 quarter is ¹/₃ of a week which is 2 days and of these 2 days or 24 hours (if the normal working-day is 12 hours) ¹/₅, or 4 ⁴/₅ hours, are unpaid labour which is equal to the surplus-value embodied in the quarter. 1 quarter equals £ ¹/₃ which is 6 ²/₃s. or 6 ⁶/₉s.

If the quarter is sold at its value and the average profit is 10 per cent then the average price of the 360 quarters would be £110 and the average price per quarter 6 ¹/₉s. The value would be £10 above the average price. And since the average profit is 10 per cent the rent would be equal to half the surplus-value, i.e., £ 10 or ⁵/₉s. per quarter. Better types of land, which would yield more quarters for the same outlay of 120 labour weeks (of which, however, only 100 are paid labour, be it materialised or living), would, at the price of 6 ⁶/₉s. per quarter, yield a higher rent. But the worst cultivated land would yield a rent of £ 10 on a capital of £ 100 or of ⁵/₉s. per quarter of wheat.

Assume that a new piece of land is cultivated, which only yields 330 quarters with 120 labour weeks. If the value of 3 quarters is £ 1, then that of 330 quarters is £ 110. But 1 quarter would now be equal to 2 days and 2 ²/₁₁ hours, while before it was equal to only two days. Previously, 1 quarter was equal to 6 ⁶/₉s. or 1 quarter was equal to 6s. 8d.; now, since £ 1 equals 6 days, it is equal to 7s. 3d. 1 ¹/₁₁ farthing. To be sold at its value the quarter would now have to be sold at 7d. 1 ¹/₁₁ farthing more, at this price it would also yield the rent of ⁵/₉s. per quarter. The value of the wheat produced on the better land is here below the value of that produced on the worst land. If this worst land sells at the price per quarter of the next best or rent yielding land then it sells below its value but at its average price, i.e., the price at which it yields the normal profit of 10 per cent. It can therefore be cultivated and yield the normal average profit to the capitalist.

There are two situations in which the worst land would here yield a rent apart from profit.

Firstly if the value of the quarter of wheat were above 6 ⁶/₉s. (its price could be above 6 ⁶/₉s., i.e., above its value, as a result of demand; but this does not concern us here. The 6 ⁶/₉s., the price per quarter, which yielded a rent of £ 10 on the worst land cultivated previously, was equal to the value of the wheat grown on this land, which yields a non-differential rent), that is [if] the worst land previously cultivated and all others, while yielding the same rent, were proportionately less fertile, so that their value were higher above their average price and the average price of the other commodities. That the new worst land does not yield a rent is thus not due to its low fertility but to the relatively high fertility of the other land. As against the new type of land with the new capital investment, the worst, [previously] cultivated, rent-yielding lad represents rent in general, the non-differential rent. And that its rent is not higher is due to the [high] fertility of the rent-yielding land.

Assume that there are three other classes of land besides the last rent-yielding land. Class II (that above I, the last rent-yielding land) carries a rent of one-fifth more because this land is one-fifth more fertile than class I; class III again one-fifth more because it is one-fifth more fertile than class II, and the same again in class IV because it is a fifth more fertile than class III. Since the rent in class I equals £ 10, it is 10 + ¹/₅ = £ 12 in class II, 12 + ¹/₅ =£ 14 ²/₅ in class III and 14 ²/₅ + ¹/₅ = £17 ⁷/₂₅ in class IV.

If IV’s fertility were less, the rent of III-I inclusive ||488 | would be greater and that of IV also greater absolutely (but would the proportion be the same?). This can be taken in two ways. If I were more fertile then the rent of II, III, JV would be proportionately smaller. On the other hand, I is to II, II is to III and III is to IV as the newly added, non-rent-yielding type of land is to I. The new type of land does not carry a rent because the value of the wheat from I is not above the average price [of that] from the new land. It would be above it if I were less fertile. Then the new land would likewise yield a rent. But the same applies to I, If II were more fertile then I would yield no rent or a smaller rent. And it is the same with II and III and with III and IV, Finally we have the reverse: The absolute fertility of IV determines the rent of III. If IV were yet more fertile, III, II, I would yield a smaller rent or no rent at all. Thus the rent yielded by I, the undifferentiated rent, is determined by the fertility of IV, just as the circumstance that the new land yields no rent is determined by the fertility of I. Accordingly, Storch’s law is valid here, namely, that the rent of the most fertile land determines the rent of the last land to yield any rent at all, and therefore also the difference between the land which yields the undifferentiated rent and that which yields no rent at all.

Hence the phenomenon that here the fifth class, the newly cultivated land I’ (as opposed to I) yields no rent, is not to be ascribed to its own lack of fertility, but to its relative lack of fertility compared with I, therefore, to the relative fertility of I as compared with I’.

[Secondly ] The value [of the product] of the rent-yielding types of land I, II, III, IV, that is 6s. 8d. per quarter (to make it more realistic, one could say bushel instead of quarter), equals the average price of I’ and is below its own value. Now many intermediary stages are in fact possible. Supposing on a capital investment of £ 100, I’ yielded any quantity of quarters between its real return of 330 bushels and the return of I which is 360 bushels, say 333, 340, 350 up to 360—x bushels. Then the value of the quarter at 6s. 8d. would be above the average price of I’ (per bushel) and the last cultivated land would yield a rent. That it yields the average profit at all, it owes to the relatively low fertility of I, and therefore of I-IV. That it yields no rent, is due to the relatively high fertility of I and to its own relatively low fertility. The last cultivated land I’ could yield a rent if the value of the bushel were above 6s. 8d., that is, if I, II, III, IV were less fertile, for then the value of the wheat would be greater. It could however also yield a rent if the value were given at 6s. 8d., i.e., if the fertility of I, II, III and IV were the same. This would be the case if it were more fertile itself, yielded more than 330 bushels and if the value of 6s. 8d. per bushel were thus above its average price; in other words, its average price would then be below 6s. 8d., and therefore below the value of the wheat grown on I, II, III, IV. If the value is above the average price, then there is an excess profit above the average profit, hence the possibility of a rent.

This shows: When comparing different spheres of production—for instance industry and agriculture—the fact that value is above average price indicates lower productivity in the sphere of production that yields the excess profit, the excess of value over the average price. In the same sphere, on the other hand, [it indicates] greater productivity of one capital in comparison with other capitals in the same sphere of production. In the above example, I yields a rent, only because in agriculture the proportion of variable capital to constant capital is greater than in industry, i.e., more new labour has to be added to the materialised labour—and because of the existence of landed property this excess of value over average price is not levelled out by competition between capitals. But that I yields a rent at all is due to the fact that the value of 6s. 8d. per bushel is not below its average price, and that its fertility is not so low that its own value rises above 6s. 8d. per bushel. Its price moreover is not determined by its own value but by the value of the wheat grown on II, III, IV or, to be precise, by that grown on II. Whether the market-price is merely equal to its own average price or stands above it, and whether its value is above its average price, depends on its own productivity.

Hence Rodbertus’s view that in agriculture every capital which yields the average profit must yield rent is wrong. This false conclusion follows from his ||489| false basis. He reasons like this: The capital in agriculture, for instance, yields £ 10. But because, in contrast to industry, raw materials do not enter into it, the £ 10 are reckoned on a smaller sum. They represent therefore more than 10 per cent. But the point is this: It is not the absence of raw materials (on the contrary, they do enter into agriculture proper; it wouldn’t matter a straw if they didn’t enter into it, provided machinery etc. increased proportionally) which raises the value of the agricultural products above the average price (their own and that of other commodities). Rather is this due to the higher proportion of variable to constant capital compared with that existing, not in particular spheres of industrial production, but on an average in industry as a whole. The magnitude of this general difference determines the amount and the existence of rent on No. I, the absolute, non-differential rent and hence the smallest rent. The price of wheat from I’, the newly cultivated land which does not yield a rent, is, however, not determined by the value of its own product, but by the value of I, and consequently by the average market-price of the wheat supplied by I, II, III and IV.

The privilege of agriculture (resulting from landed property), that it sells its product not at the average price but at its value if this value is above the average price, is by no means valid for products grown on different types of land as against one another, for products of different values produced within the same sphere of production. As against industrial products, they can only claim to be sold at their value. As against the other products of the same sphere, they are determined by the market-price, and it depends on the fertility of I whether the value—which equals the average market-price here—is sufficiently high or low, i.e., whether the fertility of I is sufficiently high or low, for I’, if it is sold at this value, to participate little, much or not at all in the general difference between the value and the average price of wheat. But, since Herr Rodbertus makes no distinction at all between values and average prices, and since he considers it to be a general law for all commodities, and not a privilege of agricultural products, that they are sold at their values—he must of course believe that the product of the least fertile land has also to be sold at its individual value. But it loses this privilege in competition with products of the same type.

Now it is possible for the average price of I’ to be above 6s. 8d. per bushel, the value of I. It can be assumed (although this is not quite correct), that for land I’ to be cultivated at all, demand must increase. The price of wheat from I must therefore rise above its value, above 6s. 8d., and indeed persistently so. In this case land I’ will be cultivated, If it can make the average profit at 6s. 8d. although its value is above 6s. 8d. and if it can satisfy demand, then the price will be reduced to 6s. 8d., since demand now again corresponds to supply, and so I must sell at 6s. 8d. again, ditto II, III, IV; hence also I’. If, on the other hand, the average price in I’ amounted to 7s. 8d. so that it could make the usual profit at this price only (which would be far below its individual value) and if the demand could not be otherwise satisfied, then the value of the bushel would have to consolidate itself at 7s. 8d. and the demand price of I would rise above its value. That of II, III, IV, which is already above their individual value, would rise even higher. If, on the other hand, there were prospects of grain imports which would by no means permit of such a stabilisation, then I’ could nevertheless be cultivated if small farmers were prepared to be satisfied with less than the average profit. This is constantly happening in both agriculture and industry. Rent could be paid in this case just as when I’ yields the average profit, but it would merely be a deduction from the farmer’s profit. If this could not be done either, then the landlord could lease the land to cottagers whose main concern, like that of the hand-loom weaver, is to get their wages out of it and to pay the surplus, large or small, to the landlord in the form of rent. As in the case of the hand-loom weaver, this surplus could even be a mere deduction, not from the product of labour, but from the wages of labour. In all these instances rent could be paid. In one case it would be a deduction from the capitalist’s profit. In the other case, the landlord would appropriate the surplus-labour of the worker which would otherwise be appropriated by the capitalist. And in the final case he would live off the worker’s wage as the capitalists are also often wont to do. But large-scale capitalist production is only possible where the last cultivated land yields at least the average profit, that is where the value of I enables I, to realise at least the average price.

One can see how the differentiation between value and average price surprisingly solves the question and shows that Ricardo and his opponents are right.

||XI-490| If I, the land which yields absolute rent, were the only cultivated land, then it would sell the bushel of wheat at its value, at 6s. 8d. or 6 ⁶/₉s. and not reduce it to the average price of 6 ¹/₉s. or 6s. 1 ¹/₃d. If all land were of the same type and if the cultivated area increased tenfold, because demand grew, then since I yields a rent of £10 per £100, the rent would grow to £ 100, although only a single type of land existed. But its rate or level would not grow, neither compared with the capital advanced nor compared with the area of land cultivated. Ten times as many acres would be cultivated and ten times as much capital advanced. This would therefore merely be an augmentation of the rental, of the volume of rent, not of its level. The rate of profit would not fall; for the value and price of the agricultural products would remain the same. A capital which is ten times as large can naturally hand over a rent which is ten times larger than a capital which is one-tenth its size. On the other hand, if ten times as much capital were employed on the same area of land with the same result, then the rate of rent compared with the capital laid out would have remained the same; it would have risen in proportion to the area of land, but would not have altered the rate of profit in any way.

Now supposing the cultivation of I became more productive, not because the land had altered but because more constant capital and less variable capital is being laid out, that is more capital is being spent on machinery, horses, mineral fertilisers etc. and less on wages; then the value of wheat would approach its average price and the average price of the industrial products, because the excess in the ratio of variable to constant capital would have decreased. In this case rent would fall and the rate of profit would remain unaltered. If the mode of production changed in such a way that the ratio of variable to constant capital became the same as the average ratio in industry, then the excess of value over the average price of wheat would disappear and with it rent, excess profit. Category I would no longer pay a rent, and landed property would have become nominal (in so far as the altered mode of production is not in fact accompanied by additional capital being embodied in the land, so that, on the termination of the lease, the owner might draw interest on a capital which he himself had not advanced; this is indeed a principal means by which landowners enrich themselves, and the dispute about tenantry-right in Ireland revolves around this very point). Now if, besides I, there also existed II, III, IV, in all of which this mode of production were applied, then they would still yield rents because of their greater natural fertility and the rent would be in proportion to the degree of their fertility. Category I would in this case have ceased to yield a rent and the rents of II, III, IV would have fallen accordingly, because the general ratio of productivity in agriculture had become equal to that prevailing in industry. The rent of II, III, IV would correspond with the Ricardian law; it would merely be equivalent to, and would exist only as an excess profit of more fertile compared to less fertile land, like similar excess profits in industry, except in the latter they lack the natural basis for consolidation.

The Ricardian law would prevail just the same, even if landed property were non-existent. With the abolition of landed property and the retention of capitalist production, this excess profit arising from the difference in fertility would remain. If the state appropriated the land and capitalist production continued, then rent from II, III, IV would be paid to the state, but rent as such would remain. If landed property became people’s property then the whole basis of capitalist production would go, the foundation on which rests the confrontation of the worker by the conditions of labour as an independent force.

A question which is to be later examined in connection with rent: How is it possible for rent to rise in value and in amount, with more intensive cultivation, although the rate of rent falls in relation to the capital advanced? This is obviously only possible because the amount of capital advanced rises. If rent is ¹/₅ and it becomes ¹/₁₀, then 20 × ¹/₅ = 4 and 50 × ¹/₁₀ = 5. That’s all. But if conditions of production in intensive cultivation became the same as those prevailing on an average in industry, instead of only approximating to them, then rent for the least fertile land would disappear and for the most fertile it would be reduced merely to the difference in the land. Absolute rent would no longer exist.

Now let us assume that, following upon a rise in demand, new land, II, were cultivated in addition to I. Category I pays the absolute rent, II would pay a differential rent, but the price of wheat (value for I, excess value for II) remains the same. The rate of profit, too, [is supposed] not to be affected, And so on till we come to IV. Thus the level, the rate of rent is also rising if we take the total capital laid out in I, II, III, IV. But the average rate of profit from II, III, IV would remain the same as that from I, which equals that in industry, the general rate of profit. Thus if ||491| we go on to more fertile land, the amount and rate of rent can grow, although the rate of profit remains unchanged and the price of wheat constant. The rise in level and amount of rent would be due to the growing productivity of the capital in II, III, IV, not to the diminishing productivity in I. But the growing productivity would not cause a rise in profits and a fall both in the price of the commodity and in wages, as happens necessarily in industry.

Supposing, however, the reverse process took place: from IV to III, II, I, Then the price would rise to 6s. 8d. at which it would still yield a rent of £ 10 on £ 100 on I. For the rent of wheat on IV [amounts to] £ 17 ⁷/₂₅ on £ 100, of which, however, 7 ⁷/₂₅ are the excess of its price over the value of I. Category I gave 360 bushels at £ 100 (with a rent of £ 10 and the value of the bushel at 6s. 8d.) . II—432 bushels. III—518 ²/₅ bushels and IV—622 ²/₂₅ bushels. But the price per bushel of 6s. 8d yielded IV an excess rent of 7 ⁷/₂₅ per 100. IV sells 3 bushels for £ 1 or 622 ²/₂₅ bushels at £ 207 ⁹/₂₅. But its value is only £ 120, as in I; whatever is above this amount is excess of its price over its value. IV would sell the bushel at its value or rather, [he would sell it at its value] if he sold it, at 3s. 10 ⁸/₂₇d. and at this price he would have a rent of £ 10 on £ 100. The movement from IV to III, III to II and II to I, causes the price per bushel (and with it the rent) to rise until it eventually reaches 6s. 8d. with I, where this price now yields the same rent that it previously yielded with IV. The rate of profit would fall with the rise in price, partly owing to the rise in value of the means of subsistence and raw materials. The transition from IV to III could happen like this: Due to demand, the price of IV rises above its value, hence it yields not only rent but excess rent. Consequently III is cultivated which, with the normal average profit, is not supposed to yield a rent at this price, If the rate of profit has not fallen as a result of the rise in price of IV, but wages, have, then III will yield the average profit. But due to the [additional] supply from III, wages should rise to their normal level again; (then] the rate of profit in III falls etc.

Thus the rate of profit falls with this downward movement on the assumptions which we have made, namely, that III cannot yield a rent at the price of IV and that III can only be cultivated at the old rate of profit because wages have momentarily fallen below their [normal] level.

Under these conditions [it is again possible for] the Ricardian law [to apply]. But not necessarily, even according to his interpretation. It is merely possible in certain circumstances. In reality the movements are contradictory.

This has disposed of the essence of the theory of rent.

With Herr Rodbertus, rent arises from eternal nature, at least of capitalist production, because of his “value of the material”. In our view rent arises from an historical difference in the organic component parts of capital which may be partially ironed out and indeed disappear completely, with the development of agriculture. True, the difference in so far as it is merely due to variation in actual fertility of the land remains even if the absolute rent disappeared. But—quite apart from the possible ironing out of natural variations—differential rent is linked with the regulation of the market-price and therefore disappears along with the price and with capitalist production. There would remain only the fact that land of varying fertility is cultivated by social labour and, despite the difference in the amount of labour employed, labour can become more productive on all types of land. But the amount of labour used on the worse land would by no means result in more labour being paid for [the product] of the better land as now with the bourgeois. Rather would the labour saved on IV be used for the improvement of III and that saved from III for the improvement of II and finally that saved on II would be used to improve I. Thus the whole of the capital eaten up by the landowners would serve to equalise the labour used for the cultivation of the soil and to reduce the amount of labour in agriculture as a whole.

||492| {Adam Smith, as we saw above, first correctly interprets value and the relation existing between profit, wages, etc. as component parts of this value, and then he proceeds the other way round, regards the prices of wages, profit and rent as antecedent factors and seeks to determine them independently, in order then to compose the price of the commodity out of them. The meaning of this change of approach is that first he grasps the problem in its inner relationships, and then in the reverse form, as it appears in competition. These two concepts of his run counter to one another in his work, naively, without his being aware of the contradiction. Ricardo, on the other hand, consciously abstracts from the form of competition, from the appearance of competition, in order to comprehend the laws as such. On the one hand he must be reproached for not going far enough, for not carrying his abstraction to completion, for instance, when he analyses the value of the commodity, he at once allows himself to be influenced by consideration of all kinds of concrete conditions. On the other hand one must reproach him for regarding the phenomenal form as immediate and direct proof or exposition of the general laws, and for failing to interpret it. In regard to the first, his abstraction is too incomplete; in regard to the second, it is formal abstraction which in itself is wrong.}

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[10. Rate of Rent and Rate of Profit. Relation Between Productivity in Agriculture and in Industry in the Different Stages of Historical Development]

Now to return briefly to the remainder of Rodbertus.

“The increase in wages, capital gain and ground-rent respectively, which arises from the increase in the value of the national product can raise neither the wages nor the capital gain of the nation, since more wages are now distributed among more workers and a greater amount of capital gain accrues to capital increased in the same proportion; ground-rent, on the other hand, must rise since this always accrues to land whose area has remained the same. It is thus possible to explain satisfactorily the great rise in land value, which is nothing other than ground-rent capitalised at the normal rate of interest, without having to resort to a fall in productivity of agricultural labour, which is diametrically opposed to the idea of the perfectibility of human society and to all agricultural and statistical facts” (pp. 160–61).

First of all it should be noted that Ricardo [at whom this passage is aimed] nowhere seeks to explain the “great rise in land value”. This is no problem at all for him. He says further, and Ricardo even noted this explicitly (see later in connection with Ricardo), that—given the rate of rent—rent can increase with a constant value of corn or agricultural produce. This increase again presents no problem for him. The rise in the rental while the rate of rent remains the same, is no problem for him either. His problem lies in the rise in the rate of rent, i.e., rent in proportion to the agricultural capital advanced, and hence the rise in value not of the amount of agricultural produce, but the rise in the value, for example, of the quarter of wheat, i.e., of the same quantity of agricultural produce; in consequence of this the excess of its value over the average price increases and thereby also the excess of rent over the rate of profit. Herr Rodbertus here begs the Ricardian problem (to say nothing of his erroneous “value of the material”).

The rate of rent can indeed rise relatively to the capital advanced, in other words, the relative value of the agricultural product can rise in proportion to the industrial product, even though agriculture is constantly becoming more productive. And this can happen for two reasons.

Firstly take the above example, the transition from I to II, III, IV, i.e., to ever more fertile land (but where the additional supply is not so great as to throw I out of cultivation or to reduce the difference between value and average price to such an extent that IV, III, II pay relatively lower rents and I no rent at all). If I’s rent amounts to 10, II’s to 20, III’s to 30 and IV’s to 40 and if £ 100 are invested in all four types of land, then I’s rent would be ¹/₁₀ or 10 per cent on the capital advanced, II’s would be ²/₁₀ or 20 per cent, III’s would be ³/₁₀ or 30 per cent and IV’s rent would be ⁴/₁₀ or 40 per cent. Altogether £ 100 on 400 capital advanced, which gives an average rate of rent of ¹⁰⁰/₄=25 per cent. Taking the entire capital invested in agriculture, the rent amounts now to 25 per cent. Had only the cultivation of land I (the unfertile land) been extended, then the rent would be 40 on 400, 10 per cent just as before, and it would not have risen by 15 per cent. But in the first case (if 330 bushels resulted from an outlay of £ 100 on I) only 1,320 bushels would have been produced at the price of 6s. 8d. per bushel. In the second case [i.e., when all four classes of land are cultivated], 1,500 bushels have been produced at the same price. The same capital has been advanced in both cases.

But the rise in the level of the rent here is only apparent. For if we calculate the capital outlay in relation to the product, then 100 [would have been] needed in I to produce 330 and 400 to produce 1,320 bushels. But now only 100+90+80+70, i.e., £ 340 are needed to produce 1,320 bushels. £ 90 in II produce as much as 100 in I, 80 in III as much as 90 in II and 70 in IV as much as 80 in III. The rate of rent [has] risen in II, III, IV, compared with I.

If we take society as a whole, it means that a capital of 340 [was] employed to raise the same product, instead of a capital of 400, that is 85 per cent [of the previous] capital.

||493| The 1,320 bushels [would] only be distributed, in a different way from those in the first case. The farmer must hand over as much on 90 as previously on 100, as much on 80 as previously on 90 and as much on 70 as previously on 80. But the capital outlay of 90, 80, 70, gives him just the same amount of product as he previously obtained on 100. He hands over more, not because he must employ more capital in order to supply the same product, but because he employs less capital; not because his capital has become less productive, but because it has become more productive and he is still selling at the price of I, as though he still required the same capital as before in order to produce the same quantity of product.

[Secondly.] Apart from this rise in the rate of rent—which corresponds to the uneven rise in excess profit in individual branches of industry, though here it does not become fixed— there is only one other possibility of the rate of rent rising although the value of the product remains the same, that is, labour does not become less productive. It occurs either when productivity in agriculture remains the same as before but productivity in industry rises and this rise expresses itself in a fall in the rate of profit, in other words when the ratio of variable to constant capital diminishes. Or, alternatively, when productivity is rising in agriculture as well though not at the same rate as in industry but at a lower rate. If productivity in agriculture rises as 1:2 and in industry as 1:4, then it is relatively the same as if it had remained at one in agriculture and had doubled in industry, In this case the ratio of variable capital to constant capital would be decreasing in industry twice as fast as in agriculture.

In both cases the rate of profit in industry would fall, and because it fell the rate of rent would rise. In the other instances the rate of profit does not fall absolutely (rather it remains constant) but it falls relatively to rent. It does so not because it itself is decreasing but because rent, the rate of rent in relation to the capital advanced, is rising.

Ricardo does not differentiate between these cases. Except in these cases (that is where the rate of profit, although constant, falls relatively because of the differential rents of the capital employed on the more fertile types of land or where the general ratio of constant to variable capital alters as a result of the increased productivity of industry and hence increases the excess of value of agricultural products above their average price) the rate of rent can only rise if the rate of profit falls without industry becoming more productive. This is, however, only possible if wages rise or if raw material rises in value as a result of the lower productivity of agriculture. In this case both the fall in the rate of profit and the rise in the level of rent are brought about by the same cause—the decrease in the productivity of agriculture and of the capital employed in agriculture. This is how Ricardo sees it. With the value of money remaining the same, this must then show itself in a rise in the prices of the raw products. If, as above, the rise is relative, then no change in the price of money can raise the money prices of agricultural products absolutely as compared with industrial products. If money fell by 50 per cent then l quarter which was previously worth £ 3 would now be worth £ 6, but 1 lb. yarn which was previously worth 1s. would now be worth 2s. The absolute rise in the money prices of agricultural products compared with industrial products can therefore never be explained by changes in [the value of] money.

On the whole it can be assumed that under the cruder, pre-capitalist mode of production, agriculture is more productive than industry, because nature assists here as a machine and an organism, whereas in industry the powers of nature are still almost entirely replaced by human action (as in the craft type of industry etc.). In the period of the stormy growth of capitalist production, productivity in industry develops rapidly as compared with agriculture, although its development presupposes that a significant change as between constant and variable capital has already taken place in agriculture, that is, a large number of people have been driven off the land. Later, productivity advances in both, although at a uneven pace. But when industry reaches a certain level the disproportion must diminish, in other words, productivity in agriculture must increase relatively more rapidly than in industry. This requires: 1. The replacement of the easy-going farmer by the businessman, the fanning capitalist; transformation of the husbandman into a pure wage-labourer; large-scale agriculture, i.e., with concentrated capitals. 2. In particular however: Mechanics, the really scientific basis of large-scale industry, had reached a certain degree of perfection during the eighteenth century. The development of chemistry, geology and physiology, the sciences that directly form the specific basis of agriculture rather than of industry, ||494| does not take place till the nineteenth century and especially the later decades.

It is nonsense to talk of the greater or lesser productivity of two different branches of industry when merely comparing the values of their commodities. If, [in] 1800, the pound of cotton was 2s. and of yarn 4s., and if, in 1830, the value of cotton was 2s. or 18d. and that of yarn 3s. or 1s. 8d. then one might compare the proportion in which the productivity in both branches had grown—but only because the rate of 1800 is taken as the starting-point. On the other hand, because the pound of cotton is 2s, and that of yarn is 3, and hence the labour which produces the cotton is as great again as the [newly-added labour] of spinning, it would be absurd to say that the one is twice as productive as the other. Just as absurd as it would be to say that because canvas can be made more cheaply than the artist’s painting on the canvas, the labour of the latter is less productive than that of the former.

Only the following is correct, even if it comprises the capitalist meaning of productive—productive of surplus-value along with the relative amounts of the product:

If, on an average, according to the conditions of production, £ 500 is needed in the form of raw material and machinery etc.<at given values> in order to employ 100 workers [whose wages] amount to £ 100 in the cotton industry, and, on the other hand, £ 150 is needed for raw materials and machinery in order to employ 100 workers [whose wages] amount to £ 100, in the cultivation of wheat, then the variable capital in I would form ¹/₆ of the total capital of £ 600, and ¹/₅ of the constant capital; in II, the variable capital would constitute ²/₅ of the total capital of £ 250 and ²/₃ of constant capital. Thus every £ 100 which is laid out in I can only contain £ 16 ²/₃ variable capital and must contain £ 83 ¹/₃ constant capital; whereas in II it comprises £ 40 of variable capital and £ 60 of constant, In I, variable capital forms ¹/₆ or 16 ²/₃ per cent and in II, 40 per cent. Clearly the histories of prices are at present quite wretched. And they can be nothing but wretched until theory shows what needs to be examined. If the rate of surplus-value were given at, say, 20 per cent then the surplus-value in I would amount to £ 3 ¹/₃ (hence profit ³¹/₃ per cent). In II, however, £8 (hence profit 8 per cent). Labour in I would not be so productive as in II because it would be more productive (in other words, not so productive of surplus-value, because it is more productive of produce). Incidentally, it is cleary only possible to have a ratio of 1 :¹/₆, for example, in the cotton industry, if a constant capital (this depends on the machines etc.) amounting to say £ 10,000 has been laid out, hence wages amounting to 2,000, making a total capital of 12,000. If only 6,000 were laid out, of which wages would be 1,000, then the machinery would be less productive etc. At 100 it could not be done at all. On the other had it is possible that if £ 23,000 is laid out, the resulting increase in the efficiency of the machinery and other economies etc. are so great that the £ 19,166 ²/₃ is not entirely allocated to constant capital, but that more raw material and the same amount of labour require less machinery etc. ([in terms of] value) which is assumed to cost £ 1,000 less than before. Then the ratio of variable to constant capital grows again, but only because the absolute [amount of] capital has grown. This is a check against the fall in the rate of profit. Two capitals of 12,000 would produce the same quantity of commodities as the one of 23,000, but firstly the commodities would be dearer since they required an outlay of £ 1,000 more, and secondly the rate of profit would be smaller because within the capital of £ 23,000, the variable capital is more than ¹/₆ of the total capital, i.e., more than in the sum of the two capitals of £ 12,000. |494||

||494| (On the one hand, with the advance of industry, machinery becomes more effective and cheaper; hence, if only the same quantify of machinery were employed as in the past, this part of constant capital in agriculture would diminish; but the quantity of machinery grows faster than the reduction in its price, since this element is as yet little developed in agriculture. On the other hand, with the greater productivity of agriculture, the price of raw material—see cotton—falls, so that raw material does not increase as a component part of the process of creating value to the same degree as it increases as a component part of the labour-process.) |494||

* * *

||494| Already Petty tells us that the Landlord of his time feared improvements in agriculture because they would cause the price of agricultural products and (the level of) rent to fall; ditto the extension of the land and the cultivation of previously unused land which is equivalent to an extension of the land. (In Holland this extension of the land is to be understood in an even more direct way.) He says:

“…that the draining of Fens, improving of Forestsa, inclosing of Commons, Sowing of St. Foyne and Clovergrass, be grumbled against by Landlords, as the way to depress the Price of Victuals([William Petty], “Political Arithmetick” [in: Several Essays in Political Arithmetick,] London, 1699, p. 230.)

(“…the Rent of all England […] Wales, and the Low-Lands of Scotland, be about Nine Millions per Annum ) (Ibid., p. 231.)

Petty fights this view and D’Avenant goes ||495| even further and shows how the level of rent may decrease while the amount of rent or the rental increases, He says:

“Rents may fall in some Places, and Counties, and yet the Land of the Nation” (he means value of the land) “improve all the while: As for Example, when Parks are dispark’d, and Forests, and Commons are taken in, and enclos’d; when Fen-Lands are drein’d, and when many Parts” (of the country) “are meliorated by Industry, and manuring[e] it must certainly depretiate that Ground which has been Improv’d to the full before, or[f] c was capable of no farther Improvement […] the Rental[g] of private Men does thereby sink, yet the general Rental[h] of the Kingdom by such Improvements, at the same time rises.” (Charles D’Avenant, Discourses on the Publick Revenues, and on the Trade of England, Part II, London, 1698, pp. 26–27.)”… fall in private Rents from 1666 to 1688 […] but the Rise in the Kingdomes general Rental was greater in Proportion during that time, than in the preceeding Years, because the Improvements upon Land were greater and more universal, between those two Periods, than at any time before (l.c. p. 28).

It is also evident here, that the Englishman always regards the levef of rent as rent related to capital and never to the total land in the kingdom (or to the acre in general, like Herr Rodbertus).

[a] Instead of “of the towns has therefore become” in the manuscript: “In Dutch towns is”.—Ed.

[b] Instead of “and the” in the manuscript: “on”.—Ed

* ||486| <As Opdyke calls landed property “the legalised reflection of the capital”, so “capital is the legalised reflection of other people’s labour”.> |486||

[c] Instead of “reflection of the capital” in the manuscript: “reflection of the value of capital”.—Ed.

[d] In the manuscript: “woods”.—Ed.

[e] In the manuscript: “manufacturing” instead of “manuring”.—Ed.

[f] In the manuscript: “and” instead of “or”.—Ed.

[g] In the manuscript: “income from rent” instead of “Rental”.—Ed.

[h] In the manuscript: “rent” instead of “Rental”.—Ed.