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Theories of Surplus Value, Marx 1861-3
[Chapter XII] Tables of Differential Rent and Comment
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[1. Changes in the Amount and Rate of Rent]
A further comment on the above: Supposing more productive or better situated coal-mines and stone-quarries were discovered, so that, with the same quantity of labour, they yield-ed a larger product than the older ones, and indeed so large a product that it covered the entire demand. Then the value and therefore the price of coal, stones, timber, would fall and as a result the old coal-mines and stone-quarries would have to be closed. They would yield neither profit, nor wages, nor rent. Nevertheless, the new ones would yield rent just as the old ones did previously although less (at a lower rate). For every increase in the productivity of labour reduces the amount of capital laid out [in] wages, in proportion to the constant capital which is in this case laid out in tools. Is this correct? Does this also apply here, where the change in the productivity of labour does not arise from a change in the method of production itself, but from the natural fertility of the coal-mine or the stone-quarry, or from their situations? One can only say here that in this case the same quantity of capital yields more tons of coal or stone and that therefore each individual ton contains less labour; the total tonnage, however, contains as much as, or even more [labour], if the new mines or quarries satisfy not only the old demand which was previously supplied by the old mines and quarries, but also an additional demand, and, moreover, an additional demand which is greater than the difference between the productivity of the old and that of the new mines and quarries. But this would not alter the organic composition of the capital employed. It would be true to say that the price of a ton, an individual ton, contained less rent, but only because altogether it contained less labour, hence also less wages and less profit. The proportion of the rate of rent to profit would, however, not be affected by this. Hence we can ||567| only say the following:
If demand remains the same, if, therefore, the same quantity of coal and stone is to be produced as before, then less capital is employed now in the new richer mines and quarries than before, in the old ones, in order to produce the same mass of commodities. The total value of the latter thus falls, hence also the total amount of rent, profit, wages and constant capital employed. But the proportions of rent and profit change no more than those of profit and wages or of profit and the capital laid out, because there has been no organic change in the capital employed. Only the size and not the composition of the capital employed has changed, hence neither has the method of production.
If there is an additional demand to be satisfied, an additional demand moreover that equals the difference in fertility between the new and the old mines and quarries, then the same amount of capital will be used now as previously. The value of the individual ton falls. But the total tonnage has the same value as before. As regards the individual ton, the size of the portions of value which resolve into profit and rent decreased together with the value it contained. But since the amount of capital has remained the same and with it the total value of its product and no organic change has taken place in its composition, the absolute amount of rent and profit has remained the same.
If the additional demand is so great that with the same capital investment it is not covered by the difference in fertility between the new and the old mines and quarries, then additional capital will have to be employed in the new mines. In this case—provided the growth of the total capital invested is not accompanied by a change in the distribution of labour, the application of machinery, in other words provided there is no change in the organic composition of the capital—the amount of rent and profit grows because the value of the total product grows, the value of the total tonnage, although the value of each individual ton falls and therefore also that part of its value which resolves into rent and profit.
In all these instances, there is no change in the rate of rent, because there is no change in the organic composition of the capital employed (however much its magnitude may alter). If, on the other hand, the change arose out of such a change—i.e., from a decrease in the amount of capital laid out in wages as compared with that laid out in machinery, etc., so that the method of production itself is altered—then the rate of rent would fall, because the difference between the value of the commodity and the cost-price would have decreased. In the three cases considered above, this does not decrease. For though the value falls, the cost-price of the individual commodity falls likewise, in that less labour is expended upon it, less paid and unpaid labour.
Accordingly, therefore, when the greater productivity of labour, or the lower value of a certain measure of commodities produced, arises only from a change in the productivity of the natural elements, from the difference between the natural degree of fertility of soils; mines, quarries etc., then the amount of rent may fall because, under the altered conditions, a lesser quantity of capital is employed; it may remain constant if there is an additional demand; it may grow, if the additional demand is greater than the difference in productivity between the previously employed and the newly employed natural agencies. The rate of rent, however, could only grow with a change in the organic composition of the capital employed.
Thus the amount of rent does not necessarily fall if the worse soil, quarry, coal-mine etc. is abandoned. The rate of rent, moreover, can never fall if this abandoning is purely the result of lesser natural fertility.
Ricardo distorts the correct idea, that in this case, depending on the state of demand, the amount of rent may fall, in other words depending upon whether the amount of capital employed decreases, remains the same or grows; he confuses it with the fundamentally wrong idea, that the rate of rent must fall, which is an impossibility on the assumption made, since it has been assumed that no change in the organic composition of capital has taken place, therefore no change affecting the relationship between value and cost-price, the only relationship that determines the rate of rent.
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[2. Various Combinations of Differential and Absolute Rent. Tables A, B, C, D, E]
But what happens to differential rents in this case?
Supposing that three groups of coal-mines were being worked: I, II and III. Of these, I bore the absolute rent, II a rent which was twice that of I, and III a rent which was twice that of II or four times that of I. In this example, I bears the absolute rent R, II 2R and III 4R. Now if No. IV is opened up, and if this is more productive than I, II and III, and if it is so extensive that the capital invested in it can be as great as that in I, [then] in this case—the former state of demand remaining constant—the same amount of capital as was previously invested in I would now be invested in IV. I would thereupon be closed and a part of the capital invested in II would have to be withdrawn. IV would suffice to replace I and a part of II, but III and IV would not suffice to supply the whole demand, without part of II continuing to be worked. Let us assume, for the sake of the illustration, that IV—using the same amount of capital as was previously invested in I—is capable of providing the whole of the supply from I and half the supply from II. If, therefore, half the previous capital were invested in II, the old capital in III and the new in IV, then the whole market would be supplied.
||568| What changes had taken place, or how would the changes accomplished affect the general rental, the rents of I, II, III and IV?
The[a] absolute rent, derived from IV, would, in amount and rate, be absolutely the same as that formerly derived from I; in fact the absolute rent, in amount and rate, would also before have been the same on I, II and III, always supposing that the same amount of capital was employed in those different classes. The value of the produce of IV would be exactly identical to that formerly employed on I, because it is the produce of a capital of the same magnitude and of a capital of the same organic composition. Hence the difference between [the] value [of the product] and its cost-price must be the same; hence [also] the rate of rent. Besides, the amount [of rent] must be the same, because—at a given rate of rent—capitals of the same magnitude would have been employed. But, since the [market] -value of the coal is not determined by the [individual] value of the coal derived from IV, it would bear an excess rent, or an overplus over its absolute rent; a rent derived, not from any difference between value and cost-price, but from the difference between the market-value and the individual value of the produce No. IV.
When we say that the absolute rent or the difference between value and cost-price on I, II, III, IV, is the same, provided the magnitude of the capital invested in them, and therefore the amount of rent with a given rate of rent is the same, then this is to be understood in the following way: The (individual) value of the coal from I is higher than that from II and that from II is higher than that from III, because one ton from I contains more labour than one ton from II and one ton from II more than one ton from III. But since the organic composition of the capital is in all three cases the same, this difference does not affect the individual absolute rent yielded by I, II, III, For if the value of a ton from I is greater, so is its cost-price; it is only greater in the proportion that more capital of the same organic composition is employed for the production of one ton in I than in II and of one ton in II than in III. This difference in their va1ues is, therefore, exactly equal to the difference in their cost-prices, in other words to [the difference in] the relative amount of capital expended to produce one ton of coal in I, II and III. The variation in the magnitudes of value in the three groups does not, therefore, affect the difference between value and cost-price in the various classes. If the value is greater, then the cost-price is greater in the same proportion, for the value is only greater in proportion as more capital or labour is expended; hence the relation between value and cost-price remains the same, and hence absolute rent is the same.
But now let us go on to see what is the situation regarding differential rent.
Firstly, less capital is now being employed in the entire production of coal in II, III and IV. For the capital in IV is as great as the capital in I had been. Furthermore, half the capital employed in II is now withdrawn. The amount of rent on II therefore will at all events drop by a half. Only one change has taken place in capital investment, namely in II, because in IV the same amount of capital is invested as was previously invested in I. We have, moreover, assumed that capitals of the same size were invested in I, II and III, for example £ 100 in each, altogether £ 300; now therefore only £ 250 are invested in II, III and IV, or one-sixth of the capital has been withdrawn from the production of coal.
Moreover, the market-value of coal has fallen. We saw that I yielded R, II 2R and III 4R. Let us assume that the product of £ 100 on I was £ 120, of which R equalled £10 and £10 equalled the profit, then the market-value of II was £ 130 (£ 10 profit and £ 20 rent), and of III £ 150 (£ 10 profit and £ 40 rent). If the product of I was 60 tons (£ 2 per ton), then that of II was 65 tons and that of III was 75 tons and the total production was 60+65+75 tons=200 tons. Now 100 will produce as much in IV as the total product of I and half the product of II, namely, 60+32 1/2 tons=92 1/2 tons, which, according to the old market-value, would have cost £ 185 and since the profit was 10 would thus have yielded a rent of £ 75, amounting to 7 1/2 R, for the absolute rent equalled £ 10.
II, III and IV continue to yield the same number of tons, 200, since 32 1/2+75+92 1/2=200 tons.
But what is the position now, with regard to market-value and differential rents?
In order to answer this we must see what is the amount of the absolute individual rent of II, We assume that the absolute difference between value and cost-price in this sphere of production equals £ 10, i.e. equals the rent yielded by the worst mine, although this is not necessary unless the market-value was absolutely determined by the value of I. ||569| If this was, indeed, the case, then the rent on I (if the coal from I were sold at its value) in fact represented the excess of value over its own cost-price and the general cost-price of commodities in this sphere of production. II would therefore be selling its products at their value, if it sold its tonnage (the 65 tons) at £ 120, i.e., the individual ton at £ 1 11/13. That instead it sold them at £ 2 was only due to the excess of the market-value, as determined by I, over its individual value; it was due to the excess, not of its value, but of its market-value over its cost-price.
Moreover, on the assumption made, II now sells instead of 65, only 32 1/2 tons, because a capital of only £ 50 instead of a capital of £ 100, is now invested in the mine.
II therefore now sells 32 1/2 tons at £ 60. £ 10 on £ 50 [the capital advanced] is 20 per cent. Of the £ 60, 5 are profit and 5 rent.
Thus we have for II: Value of the product, £ 1 11/13 per ton; number of tons is 32 1/2; total value of the product is £ 60; rent is £ 5. The rent has fallen from £ 20 to £ 5. If the same amount of capital were still employed, then it would only have fallen to £ 10. The rate has therefore only fallen by half. That is, it has fallen by the total difference that existed between the market-value as determined by I and its own value, the difference therefore that existed over and above the difference between its own value and cost-price. Its differential rent was £ 10; its rent is now £ 10, equal to its absolute rent. In II, therefore, with the reduction of the market-value to the value (of coal from II) differential rent has disappeared and consequently also the increased rate of rent which was doubled by this differential rent. Thus it has been reduced from £ 20 to £ 10; with this given rate of rent, however, the rent has been further reduced from £ 10 to £ 5, because the capital invested in II has fallen by half.
Since the market-value is now determined by the value of II, i.e., by £ 1 11/13 per ton, the market-value of the 75 tons produced by III is now £ 138 6/13, of which £ 28 6/13 are rent. Previously the rent was £ 40. It has, therefore, fallen by £ 11 7/13. The difference between this rent and the absolute rent used to be [£] 30; now it only amounts to [£] 18 6/13 (for 18 6/13+10=28 6/13), Previously it was 4R, now it is only 2R+£ 8 6/13. As the amount of capital invested in III has remained the same, this fall is entirely due to the fall in the rate of differential rent, i.e., the fall in the excess of the market-value of III over its individual value. Previously, the whole amount of the rent in III was equal to the excess of the higher market-value over the price of production, now it is only equal to the excess of the lower market-value over the cost-price; the difference is thus coming closer to the absolute rent of III. With a capital of £ 100. III produces 75 tons, whose [individual] value is £ 120; one ton is therefore equal to £ 1 3/5. But III sold the ton at £ 2, the previous market-price, therefore, at £ 2/5 more [than its individual value]. On 75 tons, this amounted to [£] 2/5×75=£ 30, and this was in fact the differential rent of rent III, for the rent was [£] 40 ([£] 10 absolute and [£] 30 differential rent). Now, according to the new market-value, the ton is sold at only £ 1 11/13. How much above its [individual] value is this? [£] 1 3/5 =£ 1 39/65 and [£] 1 11/13=1 55/65 [1 55/65-1 39/65=16/65]. Thus the price at which the ton is sold is [£] 16/65 above its [individual] value. On 75 tons this amounts to [£] 18 6/13, and this is exactly the differential rent, which is thus always equal to the number of tons multiplied by the excess of the market-value of the ton over the [individual] value of the ton. It now remains to work out the fall in rent by £ 11 7/13. The excess of the market-value over the value of III has fallen from 2/5 of a £ per ton (when it was sold at £ 2) to 16/65 per ton (at £ 1 11/13), i.e., from 2/5=26/65 to 16/65, [which is by] 10/65. On 75 tons this amounts to 750/65= =150/13=11 7/13, and this is exactly the amount by which the rent in III has fallen.
||570| The 92 1/2 tons from IV, at £ 1 11/13 [per ton], cost £ 170 10/13. The rent here is £ 60 10/13 and the differential rent is £ 50 10/13.
If the 92 1/2 tons were sold at their value (£ 120), then 1 ton would cost £ 1 11/37, Instead it is being sold at £ 1 11/13. But £ 1 11/13=£ 1 407/481 and £ 1 11/37=£ 1 143/481. This makes the excess of the market-value of IV over its value equal to 264/481. On 92 1/2 tons this amounts to exactly £ 50 10/13, which is the differential rent of IV.
Now let us put these two cases together, under A and B.
A
Class Capital Absolute rent Number of tons Market-value per ton Individual value per ton Total value Differential rent £ £ £ £ £ £ I 100 10 60 2 2 120 0 II 100 10 65 2 111/13 130 13 III 100 10 70 2 13/5 150 30 Total 300 30 200 400 40 The total number of tons = 200. Total absolute rent = £30.
Total differential rent = £40. Total rent = £70.B
Class capital Absolute rent Number of tons Market- value per ton Individual value per ton Total value Differential rent £ £ £ £ £ £ I 50 5 32 1/2 1 11/13 1 11/13 60 0 II 100 10 75 111/13 13/5 138 6/13 18 6/13 III 100 10 921/2 111/13 111/37 17010/13 5010/13 Total 250 25 200 369 3/13 69 3/13 Total capital = £250. Absolute rent = £25. Differential rent = £69 3/13. Total rent = £94 3/13. The total value of the 200 tons has fallen from £400 to £369 3/13.
These two tables give rise to some very important considerations.
First of all we see that the amount of absolute rent rises or falls proportionately to the capital invested in agriculture, that is, to the total amount of capital invested in I, II, III. The rate of this absolute rent is quite independent of the size of the capitals invested for it does not depend on the difference in the various types of land but is derived from the difference between value and cost-price; this latter difference however is itself determined by the organic composition of the agricultural capital, by the method of production and not by the land. In II B, the amount of the absolute rent falls from £ 10 to £ 5, because the capital has fallen from £ 100 to £ 50; half ||571| the capital has been withdrawn [from the land].
Before making any further observations on the two tables, let us construct some other tables. We saw that in B the market-value fell to £ 1 11/13 per ton. But [let us assume that] at this value, there is no necessity either for I A to disappear completely from the market, or for II B to employ only half the previous capital. Since in I, the rent is £ 10 out of the total value of the commodity of £ 120, or 1/12 of the total value, [this applies] equally to the value of the individual ton which is worth £ 2. £2/12, however, is £1/6 or 3 1/3s. (3 1/3s.X60=£10). The cost-price of a ton from I is thus [£ 2-3 1/3s.=] £ 1 16 2/3s. The [new] market-value is £ 1 11/13, or £ 1 16 12/13s. £ 1 16 2/3s., however, is £ 1 16s. 8d. or £ 1 1626/39s. Against this, £ 1 1612/13s. are £1 16 36/39s. or 10/39s. more. This would be the rent per ton, at the new market-value and would amount to a total rent of 15 5/13s. for 60 tons. Therefore I put less than 1 per cent rent on the capital of £ 100. For I A to yield no rent at all, the market-value would have to fall to its cost-price, namely, to £ 1 162/3s, or to £ 1 5/6 (or to £ 110/12). In this case the rent on I A would have disappeared. It could, however, continue to be exploited with a profit of 10 per cent. This would only cease if the market-value were to fall further, below [the cost-price of] £ 1 5/6.
So far as II B is concerned, it has been assumed in Table B that half of the capital is withdrawn. But since the market-value of £ 111/13 still yields a rent of 10 per cent, it will do so just as well on £ 100 as on £ 50. If, therefore, it is assumed that half the capital has been withdrawn, then only because under these circumstances, II B still yields an absolute rent of 10 per cent. For if II B had continued to produce 65 tons instead of 32 1/2, then the market would be over-supplied and the market-value of IV, which dominates the market, would fall to such an extent, that the capital investment in II B would have to be reduced in order to yield the absolute rent. It is however clear that, if the whole capital [of] £ 100 yields rent at 9 per cent, the sum total is greater than that yielded by [a capital of] £ 50 at 10 per cent. Thus if, according to the state of the market, a capital of only £50 were required in II to satisfy the demand, the rent would have to be forced down to £ 5. It would, in fact, fall even lower, if it is assumed that the 321/2 tons cannot always be disposed of, i.e., if they were thrown out of the market. The market-value would fall so low, that not only the rent on II B would disappear, but the profit would also be affected. Then capital would be withdrawn in order to diminish supply, until the correct point of £ 50 had been reached and then the market-value would have been re-established at £ 1 11/13, at which II B would again yield the absolute rent, but only on half the capital previously invested in it. In this instance too, the whole process would emanate from IV and III, who dominate the market.
But it does not by any means follow that if the market only absorbs 200 tons at £ 1 11/13 per ton, it will not absorb an additional 32 1/2 tons if the market-value falls, i.e., if the market-value of 232 1/2 tons is forced down through the pressure of 32 1/2 surplus tons on the market. The cost-price in II B is £ 1 9/13 or £ 1 13 11/13s. But the market-value is £ 1 11/13 or £ 1 16 12/13s. If the market-value fell to such an extent that I A no longer yielded a rent, i.e., [if the market-value fell] to the cost-price of I A, to £ 1 16 2/3s. or £ 1 5/6 or £ 1 10/12, then for II B to use his whole capital, demand would have to grow considerably; since I A could continue to be exploited, as it yields the normal profit. The market would have to absorb not 32 1/2 but 92 1/2 additional tons, 292 1/2 tons instead of 200, i.e. [almost] half as much again. This is a very significant increase. If a moderate increase is to take place, the market-value would have to fall to such an extent that I A is driven out of the market. That is, the market-price would have to fall below the cost-price of I A, i.e., below £ 1 10/12, say, to £ 1 9/12 or £ 1 15s. It would then still be well above the cost-price of II B.
We shall therefore add a further three tables to the tables A and B, namely, C and D and E. And we shall assume in C that the demand grows, that all classes of A and B can continue to produce, but at the market-value of B, at which I A still yields a rent. In D we assume that [the demand] is sufficient for I A to continue to yield the normal profit but no longer a rent. And we shall assume in E that the price falls sufficiently to eliminate I A from the market ||572| but that the fall of the price simultaneously leads to the absorption of the 32 1/2 surplus tons from II B.
The case assumed in A and B is possible. It is possible that if the rent is reduced from £ 10 to barely 16s., I A would withdraw his land from this particular form of exploitation and let it out to another sphere of exploitation, in which it can yield a higher rent. But in this case, II B would be forced through the process described above, to withdraw half his capital, if the market did not expand upon the appearance of the new market-value.
C
Class capital Absolute rent Number of tons Market- value per ton Individual value per ton Total value Rent Differential rent £ £ £ £ £ £ £ I 100 10/13 60 1 11/13 2 110 10/13 10/13 -93/13 II 100 10 65 111/13 111/13 120 0 III 100 10 75 111/13 13/5 1386/13 +186/13 IV 100 10 921/2 111/13 111/37 17010/13 +5010/13 Total 400 30 10/13 292 1/2 540 69 3/13 D
Class capital Absolute rent Market- value per ton Cost-price Number of tons Total value Differential rent £ £ £ £ £ £ I 100 0 15/6 1 5/6 60 110 0(-) II 100 91/6 15/6 [19/13] 65 119 1/6 -(latent) III 100 10 15/6 [17/15] 75 1371/2 +171/2 IV 100 10 15/6 [17/37] 921/2 1691/2 +497/12 Total 400 29 1/6 292 1/2 536 1/4 67 1/12 E
Class Capital Absolute rent Market-value per ton Cost-price Number of tons Total value Differential rent £ £ £ £ £ £ II 100 3 3/4 1 3/4 1 9/13 65 113 3/4 -(none) III 100 10 13/4 [17/15] 75 1311/4 +11 1/4 IV 100 10 13/4 [17/37] 92 1/2 1617/8 +417/8 Total 300 23 3/4 232 1/2 406 7/8 53 1/8 ||573| Now let us compile the tables A, B, C, D and E, but in the manner which should have been adopted from the outset. Capital, Total value, Total product, Market-value per ton, Individual value [per ton], Differential Value [per ton], Cost-Price [per ton], Absolute rent, Absolute rent in tons, Differential rent, Differential rent in tons, Total rent, And then the totals of all classes in each table.
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||575| Comment on the Table (p. 574)
It is assumed that a capital of 100 (constant and variable capital) is laid out and that the labour it employs provides surplus-labour (unpaid labour) amounting to one-fifth of the capital advanced, or a surplus-value of 100/5. If, therefore, the capital advanced equals £ 100, the value of the total product must be £ 120. Supposing furthermore that the average profit is 10 per cent, then £ 110 is the cost-price of total product, in the above example, of coal. With the given rate of surplus-value or surplus-labour, the £ 100 capital transforms itself into a value of £ 120, whether poor or rich mines are being exploited; in a word: The varying productivity of labour—whether this variation be due to varying natural conditions of labour or varying social conditions of labour or varying technological conditions—does not alter the fact that the value of the commodities equals the quantity of labour materialised in them.
Thus to say the value of the product created by the capital of £ 100 equals £ 120, simply means that the product contains the labour-time materialised in the £ 100 capital, plus one-sixth of labour-time which is unpaid but appropriated by the capitalist. The total value of the product equals £ 120, whether the capital of £ 100 produces 60 tons in one class of mines or 65, 75 or 92 1/2 in another. But clearly, the value of the individual part, be it measured by the quarter or yard etc., varies greatly according to the productivity. But to stick to our table (the same applies to every other mass of commodities brought about by capitalist production) the value of l ton equals £ 2, if the total product of the capital is 60 tons, i.e., 60 tons are worth £ 120 or represent labour-time equal to that which is materialised in £ 120. If the total product amounts to 65 tons, then the value of the individual ton is £ 11 1/13 or £ 1 16 12/13s., if it amounts to 75 tons, then the value of the individual ton is £ l 9/15 or £ 1 12s.; finally, if it comes to 92 1/2 tons, then the value per ton is £ 1 11/37 or £ 1 5 35/37s. Because the total mass of commodities or tons produced by the capital of £ 100 always has the same value, equal to £ 120, since it always represents the same total quantity of labour contained in £ 120, the value of the individual ton varies, according to whether the same value is represented in 60, 65, 75 or 92 1/2 tons, in other words, it varies with the different productivity of labour. It is this difference in the productivity of labour which causes the same quantity of labour to be represented sometimes in a smaller and sometimes in a larger total quantity of commodities, so that the individual part of this total contains now more, now less, of the absolute amount of labour expended, and, therefore, accordingly has sometimes a larger and sometimes a smaller value. This value of the individual ton, which varies according to whether the capital of £ 100 is invested in more fertile or less fertile mines, and therefore according to the different productivity of labour, figures in the table as the individual value of the individual ton.
Hence nothing could be further from the truth than the notion that when the value of the individual commodity falls with the rising productivity of labour, the total value of a product produced by a particular capital—for instance, £ 100— rises because of the increased mass of commodities in which it is [now] represented. For the value of the individual commodity only falls because the total value—the total quantity of labour expended—is represented by a larger quantity of use-values, of products. Hence a relatively smaller part of the total value or of the labour expended falls to the individual product and this only to the extent to which a smaller quantity of labour is absorbed in it or a smaller amount of the total value falls to its share.
Originally, we regarded the individual commodity as the result and direct product of a particular quantity of labour.
Now, that the commodity appears as the product of capitalist production, there is a formal change in this respect: The mass of use-values which has been produced represents a quantity of labour-time, which is equal to the quantity of labour-time contained in the capital (constant and variable) consumed in its production, plus the unpaid labour-time appropriated by the capitalist. If the labour-time contained in the capital, as expressed in terms of money, amounts to £ 100 and this capital of £ 100 comprises £40 laid out in wages, and if the surplus labour-time amounts to 50 per cent on the variable capital, in other words, the rate of surplus-value is 50 per cent, then the value of the total mass of commodities produced by the capital of £ 100 equals £ 120. As we have seen in the first part of this work, if the commodities are to circulate, their exchange-value must first be converted into a price, i.e., expressed in terms of money. Thus ||576| before the capitalist throws the commodities on to the market, he must first work out the price of the individual commodity, unless the total product is a single indivisible object, such as, for example, a house, in which the total capital is represented, a single commodity, whose price according to the assumption would then be £ 120, equal to the total value as expressed in terms of money. Price here equals monetary expression of value.
According to the varying productivity of labour the total value of £ 120 will be distributed over more or fewer products. Thus the value of the individual product will, accordingly, be proportionally equal to a larger or a smaller part of £ 120. The whole operation is quite simple. For example, if the total product equals 60 tons of coal, 60 tons are equal to £ 120 and 1 ton equals £ 120/60, i.e., £2; if the product is 65 tons, the value of the individual ton equals £ 120/65, i.e., £ 1 11/13 or £ 1 16 12/13s. (£ 1 16s. 1 11/13d). If the product equals 75 tons, the value of the individual ton is 120/75, i.e., £ 1 12 s.; if it equals 92 1/2 tons, then it is £1 11/37, which is £ 1 5 35/37s. The value (price) of the individual commodity is thus equal to the total value of the product divided by the total number of products, which are measured according to the standard of measurement—such as tons, quarters, yards etc. appropriate to them as use-values.
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C T TV MV IV DV CP AR DR AR in T DR in T TR TR in T [Class] Capital Number of tons Total value Market value per ton Individual-value per ton Differential value per ton Cost-price per ton Absolute rent Differential rent Absolute value in tons Differential rent in tons Rental Rental in tons £ £ £ £ £ A I 100 60 120 £2[=40s.] $2[=40s.] 0 £1 5/6 = £1 162/3s. 10 0 5 0 10 5 II 100 65 130 £2[=40s.] £1 11/13= £1 1612/13s. £ 2/13 = 31/13s. £19/13 = 1 1311/13s. 10 10 5 5 20 10 III 100 75 150 £2[=40s.] £1 3/5 = £ 1 12s. £2/5=8s. £17/15 = 91/3s. 10 30 5 15 40 20 Total 300 200 400 30 40 15 20 70 35 B II 500 32 1/2 60 £1 11/13=£1 16 12/13s. £1 11/13 = £1 16 12/13s. 0 £1 9/13 = £1 13 11/13s. 5 0 2 17/24 0 5 2 17/24 III 100 75 138 6/13 £111/13=£1 16 12/13s. £1 3/5 = £ 1 12s. £ 16/15 = 4 12/13s. £1 7/15 = £1 9 1/3s. 10 18 6/13 5 5/12 10 28 6/13 15 5/12 IV 100 92 1/2 170 10/13 £1 11/13=£1 1612/13s. £ 111/37 = £ 1 5 35/37s. £264/481 = 10 470/481s. £1 7/37 = £1 3 29/37s. 10 50 10/13 5 5/12 27 1/2 60 10/13 32 11/12 Total 250 200 369 3/13 25 69 3/13 13 13/24 37 1/2 94 3/13 51 1/24 C I 100 60 110 10/13 £1 11/13=£1 16 12/13s. £2 = 40s. -£2/13 = -3 1/13s. £1 5/6 = £1 16 2/3s. £10/15 = 15 5/13s. 0 5/12 0 £10/13 = 15 5/13s. 5/12 II 100 65 120 £1 11/13=£1 16 12/13s. £1 11/13 = £1 16 12/13s 0 £1 9/3 = £1 13 11/13s. 10 0 5 5/12 0 10 5 5/12 III 100 75 138 6/13 £1 11/13=£1 16 12/13s. £1 3/5 = £1 12s. +£16/65 = +4 12/13s. £1 7/15 = £1 9 1/3s. 10 18 6/13 5 5/12 10 28 6/13 15 5/12 IV 100 92 1/2 170 10/13 £1 11/13=£1 16 12/13s. £1 11/37= £1 5 35/37s. +£ 264/481= +10 470/481s. £1 7/15 = £1 3 29/37s. 10 50 10/13 5 5/12 27 1/2 60 10/13 32 11/12 Total 400 292 1/2 540 30 10/13 69 3/13 16 2/3 37 1/2 100 54 1/6 D I 100 60 110 £1 5/6 = £1 16 2/3s. £2 = 40s. -£1/6 = -3 1/3s. £1 5/6 = £1 16 2/3s. 0 0 0 0 0 0 II 100 65 119 1/6 £1 5/6 = £1 16 2/3s. £1 11/13=£1 16 12/13s -£ 1/78 = -10/39s. £1 9/3 = £1 13 11/13s. 9 1/6 0 5 0 9 1/6 5 III 100 75 137 1/2 £1 5/6 = £1 16 2/3s. £1 3/5 = £1 12s. +£7/32 = +4 2/3s. £1 7/15 = £1 9 1/3s. 10 17 1/2 5 5/11 9 6/11 27 1/2 15 IV 100 92 1/2 169 7/12 £1 5/6 = £1 16 2/3s. £1 11/37 = £1 5 35/37s. +£ 119/220= +10 80/111s. £1 7/37 = £1 3 29/37s. 10 49 7/12 5 5/11 27 1/22 59 7/12 32 1/2 Total 400 292 1/2 536 1/4 29 1/6 67 1/12 15 10/11 36 13/22 96 1/4 52 1/2
E II 100 65 113 3/4 £1 3/4 = £1 15s. £ 1 11/13 = £1 16 12/13s. [-£5/52] = -1 1213s. £1 9/3 = £1 13 11/13s. 3 3/4 0 2 1/7 0 3 3/4 2 1/7 III 100 75 131 1/4 £1 3/4 = £1 15s. £1 3/5= £1 12s. [+£ 3/20]= +3s. £1 7/15 = £1 9 1/3s. 10 11 1/4 5 5/7 6 3/7 21 1/4 12 1/7 IV 100 92 1/2 161 7/8 £1 3/4 = £1 15s. £1 11/37 = £1 5 35/37s. [+£73/138] = +9 2/37s. £1 7/37 = £1 3 29/37s. 10 41 7/8 5 5/7 23 13/14 51 7/8 29 9/14 Total 300 232 1/2 406 7/8 23 3/4 53 1/8 15 10/11 30 5/14 76 7/8 43 13/14 If, therefore, the price of the individual commodity equals the total value of the mass of commodities produced by a capital of £100, divided by the total number of commodities, then the total value equals the price of the individual commodity multiplied by the total number of individual commodities or it equals the price of a definite quantity of individual commodities multiplied by the total amount of commodities, measured by this standard of measurement. Furthermore: The total value consists of the value of the capital advanced to production plus the surplus-value; that is of the labour-time contained in the capital advanced plus the surplus labour-time or unpaid labour-time appropriated by the capital. Thus the surplus-value contained in each individual part of the commodity is proportional to its value. In the same way as the £ 120 is distributed among 60, 65, 75 or 92 1/2 tons, so the £ 20 surplus-value is distributed among them. When the number of tons is 60, and therefore the value of the individual ton equals 120/60, which is £ 2 or 40s., then one-sixth of this 40s. or £ 2, that is, 6 2/3s., is the share of the surplus-value which falls to the individual ton; the proportion of surplus-value in the ton which costs £ 2 is the same as in the 60 which cost £ 120. The [ratio of] surplus-value to value remains the same in the price of the individual commodity as in the total value of the mass of commodities. In the above example, the total surplus-value in each individual ton is 20/60=2/6=1/3 of [20], which is equal to 1/6 of 40 as above. Hence the surplus-value of the single ton multiplied by 60 is equal to the total surplus-value which the capital has produced. If the portion of value which falls to the individual product—the corresponding part of the total value—is smaller because of the larger number of products, i.e., because of the greater productivity of labour, then the portion of surplus-value which falls to it, the corresponding part of the total surplus-value which adheres to it, is also smaller. But this does not affect the ratio of the surplus-value, of the newly-created value, to the value advanced and merely reproduced. Although, as we have seen, the productivity of labour does not affect the total value of the product, it may however increase the surplus-value, if the product enters into the consumption of the worker; then the falling price of the individual commodities or, which is the same, of a given quantity of commodities, may reduce the normal wage or, amounts to the same, the value of the labour-power. In so far as the greater productivity of labour creates relative surplus-value, it increases not the total value of the product, but that part of this total value which represents surplus-value, i.e., unpaid labour. Although, therefore, with greater productivity of labour, a smaller portion of value falls to the individual product—because the total mass of commodities which represents this value has grown—and thus the price of the individual product falls, that part of this price which represents surplus-value, nevertheless, rises under the above-mentioned circumstances, and, therefore, the proportion of surplus-value to reproduced value grows (actually here one should still refer to variable capital, for profit has not yet been mentioned). But this is only the case because, as a result of the increased productivity of labour, the surplus-value has grown within the total value. The same factor—the increased productivity of labour—which enables a larger mass of products to contain the same quantity of labour thus lowering the value of a given part of this mass or the price of the individual commodity, reduces the value of the labour-power, therefore increases the surplus or unpaid labour contained in the value of the total product and hence in the price of the individual commodity. Although thus the price of the individual commodity falls, although the total quantity of labour contained in it, and therefore its value, falls, the proportion of surplus-value, which is a component part of this value, increases. In other words, the smaller total quantity ||577| of labour contained in the individual commodity comprises a greater quantity of unpaid labour than previously, when labour was less productive, when the price of the individual commodity was therefore higher, and the total quantity of labour contained in the individual commodity greater. Although in the present case one ton contains less labour and is therefore cheaper, it contains more surplus-labour and therefore yields more surplus-value.
Since in competition everything appears in a false form, upside down, the individual capitalist imagines 1. that he [has] reduced his profit on the individual commodity by reducing its price, but that he makes a greater profit because of the increased mass [of commodities] (here a further confusion is caused by the greater amount of profit which is derived from the increase in capital employed, even with a lower rate of profit); 2. that he fixes the price of the individual commodity and by multiplication determines the total value of the product whereas the original procedure is division and multiplication is only correct as a derivative method based on that division. The vulgar economist in fact does nothing but translate the queer notions of the capitalists who are caught up in competition into seemingly more theoretical language and seeks to build up a justification of these notions.
Now to return to our table.
The total value of the product or of the quantity of commodities created by a capital of £100, equals £ 120, however great or small—according to the varying degree of the productivity of labour—the quantity of commodities may be. The cost-price of this total product, whatever its size, equals £ 110 if, as has been assumed, the average profit is 10 per cent. The excess in value of the total product, whatever its size, equals £ 10, which is one-twelfth of the total value or one-tenth of the capital advanced. This £ 10, the excess of value over the cost-price of the total product, constitutes the rent. It is evidently quite independent of the varying productivity of labour resulting from the different degrees of natural fertility of the mines, types of soil, in short, of the natural element in which the capital of £ 100 has been employed, for those different degrees in the productivity of the labour employed, arising from the different degrees of fertility of the natural agent, do not prevent the total product from having a value of £ 120, a cost-price of £ 110, and therefore an excess of value over cost-price of £ 10. All that the competition between capitals can bring about, is that the cost-price of the commodities which a capitalist can produce with £ 100 in coal-mining, this particular sphere of production, is equal to £ 110. But competition cannot compel the capitalist to sell the product at £ 110 which is worth £ 120—although such compulsion exists in other industries. Because the landlord steps in and lays his hands on the £ 10. Hence I call this rent the absolute rent. Accordingly it always remains the same in the table, however the fertility of the coal-mines and hence the productivity of labour may change. But, because of the different degrees of fertility of the mines and thus of the productivity of labour, it is not always expressed in the same number of tons. For, according to the varying productivity of labour, the quantity of labour contained in £ 10 represents more or less use-values, more or less tons. Whether with the variation in degrees of fertility, this absolute rent is always paid in full or only in part, will be seen in the further analysis of the table.
There is furthermore on the market coal produced in mines of different productivity. Starting with the lowest degree of productivity, I have called these, I, II, III, IV. Thus, for instance, the first class produces 60 tons with a capital of £ 100, the second class produces 65 tons etc. Capital of the same size— £ 100, of the same organic composition, within the same sphere of production—does not have the same productivity here, because the degree of productivity of labour varies according to the degree of productivity of the mine, type of soil, in short of the natural agent. But competition establishes one market-value for these products, which have varying individual values. This market-value itself can never be greater than the individual value of the product of the least fertile class. If it were higher, then this would only show that the market-price stood above the market-value. But the market-value must represent real value. As regards products of separate classes, it is quite possible, that their [individual] value is above or below the market-value. If it is above the market-value, the difference between the market-value and their cost-price is smaller than the difference between their individual value and their cost-price. But as the absolute rent equals the difference between their individual ||578| value and their cost-price, the market-value cannot, in this case, yield the entire absolute rent for these products. If the market-value sank down to their cost-price, it would yield no rent for them at all. They could pay no rent, since rent is only the difference between value and cost-price, and for them, individually, this difference would have disappeared, because of the [fall in the] market-value. In this case, the difference between the market-value and their individual value is negative, that is, the market-value differs from their individual value by a negative amount. The difference between market-value and individual value in general I call differential value. Commodities belonging to the category described here have a minus sign in front of their differential value.
If, on the other hand, the individual value of the products of a class of mines (class of land) is below the market-value, then the market-value is a b o v e their individual value. The value or market-value prevailing in their sphere of production thus yields an excess above their individual value. If, for example, the market-value of a ton is £ 2, and the individual value of a ton is £ 1 12s., then its differential value is 8s. And since in the class in which the individual value of a ton is £ 1 12s. the capital of £ 100 produces 75 tons, the total differential value of these 75 tons is 8 s.´75=£ 30. This excess of the market-value for the total product of this class over the individual value of its product, which is due to the relatively greater fertility of the soil or the mine, forms the differential rent, since the cost-price for the capital remains the same as before. This differential rent is greater or smaller, according to the greater or smaller excess of the market-value over the individual value. This excess in turn is greater or smaller, according to the relatively greater or smaller fertility of the class of mine or land to which this product belongs, compared with the less fertile class whose product determines the market-value.
Finally, the individual cost-price of the products is different in the different classes. For instance, for the class in which a capital of £ 100 yields 75 tons the cost-price of the individual commodity would be £ 1 9 1/3 s., since the total value is £ 120 and the cost-price £ 110, and if the market-value were equal to the individual value in this class, i.e., £ 1 12 s., then the 75 tons sold at £ 120 would yield a rent of £ 10, while £ 110 would represent their cost-price.
But of course, the individual cost-price of a single ton varies according to the number of tons in which the capital of £ 100 is represented, or according to the individual value of the individual products of the various classes. If, for example, the capital of £ 100 produces 60 tons, then the value per ton is £ 2 and its cost-price £ 1 16 2/3 s.; 55 tons would be equal to £ 110 or to the cost-price of the total product. If, however, the £ 100 capital produces 75 tons, then the value per ton is £ 1 12s., its cost-price £ 1 9 1/3s., and 68 3/4 tons of the total product would cost £ 110 or would replace the cost-price. The individual cost-price, i.e., the cost-price of the individual ton, varies in the different classes in the same proportion as the individual value.
It now becomes evident from all the five tables, that absolute rent always equals the excess of the value of the commodity over its own cost-price. The differential rent, on the other hand, is equal to the excess of the market-value over its individual value. The total rent, if there is a differential rent (apart from the absolute rent), is equal to the excess of the market-value over the individual value plus the excess of the individual value over the cost-price, or the excess of the market-value over the individual cost-price.
Because here the purpose is only to set forth the general law of rent as an illustration of my theory of value and cost-prices—since I do not intend to give a detailed exposition of rent ||579| till dealing with landed property ex professo—I have removed all those factors which complicate the matter: namely the influence of the location of the mines or types of land; different degree of productivity of different amounts of capital applied to the same mine or the same type of land; the interrelationship of rents yielded by different lines of production within the same sphere of production, for example, by different branches of agriculture; the interrelationship of rents yielded by different branches of production which are, however, interchangeable, such as, for instance, when land is withdrawn from agriculture in order to be used for building houses, etc. All this does not belong here.
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[3. Analysis of the Tables]
Now for a consideration of the tables. They show how the general law explains a great multiplicity of combinations, while Ricardo, because he had a false conception of the general law of rent, perceived only one side of differential rent and therefore wanted to reduce the great multiplicity of phenomena to one single case by means of forcible abstraction. The tables are not intended to show all the combinations but only those which are most important, particularly for our specific purpose.
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[a)] Table A [The Relation Between Market-Value and Individual Value in the Various Classes]
In Table A, the market-value of a ton of coal is determined by the individual value of a ton in class I, where the mine is least fertile, hence the productivity of labour is the lowest, hence the mass of products yielded by the capital investment of £ 100 is the smallest and, therefore, the price of the individual product (the price as determined by its value) is the highest.
It is assumed that the market absorbs 200 tons, neither more nor less.
The market-value cannot be above the [individual] value of a ton in I, i.e., of that commodity which is produced under the 1east favourable conditions of production, II and III sell the ton above its individual value because their conditions of production are more favourable than those of other commodities produced within the same sphere, this does not, therefore, offend against the law of value. On the other hand, the market-value could only be above the value of a ton in I, if the product of I were sold above its value, quite regardless of market-value. A difference between market-value and [individual] value arises in general not because products are sold absolutely above their value, but only because the value of the individual product may be different from the value of the product of a whole sphere; in other words because the labour-time necessary to supply the total product—in this case 200 tons—may differ from the labour-time which produces some of the tons—in this case those from II and III—in short, because the total product supplied has been produced by labour of varying degrees of productivity. The difference between the market-value and the individual value of a product can therefore only be due to the fact that the definite quantities of labour with which different parts of the total product are manufactured have different degrees of productivity. It can never be due to the value being determined irrespective of the quantity of labour altogether employed in this sphere. The market-value could be above £ 2 per ton, only if I, on the whole, quite apart from its relation to II and III, were to sell its product above its value. In this case the market-price would be above the market-value because of the state of the market, because of demand and supply. But the market-value which concerns us here—and which here is assumed to be equal to the market-price—cannot rise above itself.
The market-value here equals the value of I, which, more-over, supplies three-tenths of the entire product on the market. since II and III only supply sufficient amounts to meet the total demand, i.e., to satisfy the additional demand over and above that which is supplied by I, II and III have no cause, therefore, to sell below £ 2 since the entire product can be sold at £2. They cannot ||580| sell above £ 2 because I sells at £ 2 per ton. This law, that the market-value cannot be above the individual value of that product which is produced under the worst conditions of production but provides a part of the necessary supply, Ricardo distorts into the assertion that the market-value cannot fall below the value of that product and must therefore always be determined by it. We shall see later how wrong this is.
Because the market-value of a ton coincides with the individual value of a ton in I, the rent it yields represents the absolute excess of the value over its cost-price, the absolute rent, which is £ 10. II yields a differential rent of £ 10 and III of £ 30, because the market-value, which is determined by I, yields an excess of £ 10 for II and of £ 30 for III, over their individual value and therefore over the absolute rent of £ 10, which represents the excess of the individual value over the cost-price. Hence II yields a total rent of £ 20 and III of £ 40, because the market-value yields an excess over their cost-price of £ 20 and £40 respectively.
We shall assume that the transition is from I, the least fertile mine, to the more fertile II, and from this to the yet more fertile mine III, It is true that II and III are more fertile than I, but they satisfy only seven-tenths of the total demand and, as we have just explained, can therefore sell their product at £ 2, although its value is only £ 1 16 12/13s. and £ 1 12s. respectively. It is clear that when the particular quantity required to satisfy demand is supplied, and gradation takes place in the productivity of labour which satisfies the various portions of this demand, whether the transition is in one direction or the other, in both cases the market-value of the more fertile classes will rise above their individual value; in one case because they find that the market-value is determined by the unfertile class and the additional supply provided by them is not great enough to occasion any change in the market-value as determined by class I; in the other case, because the market-value originally determined by them—determined by class III or II—is now determined by class I, which provides the additional supply required by the market and can only meet this at a higher value, which now determines the market-value.
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[b) The Connection Between Ricardo’s Theory of Rent and the Conception of Falling Productivity in Agriculture. Changes in the Rate of Absolute Rent and Their Relation to the Changes in the Rate of Profit]
In the case under consideration, for example, Ricardo would say: We start out from class III. The additional supply will, in the first place, come from II. Finally, the last additional supply—demanded by the market—comes from I, and since I can provide the additional supply of 60 tons only at £ 120, that is at £ 2 per ton, and since this supply is needed, the market-value of a ton which was originally £ 1 12 s. and later £ 1 16 12/13 s., now rises to £ 2. But, on the other hand, it is equally true, that if we start out from I, which satisfied the demand for 60 tons at £2, then, however, the additional supply is provided by II, the product of II is sold at the market-value of £ 2 although the individual value of it is only £ 1 16 12/13 s., for it is still only possible to supply the 125 tons required if I provides 60 tons at a value of £ 2 per ton. The same applies, if a new additional supply of 75 tons is required, but III provides only 75 tons, only supplies the additional demand, and therefore, as before, 60 tons have to be supplied by I at £ 2. Had I supplied the whole demand of 200 tons, they would have been sold at £ 400. And this is what they are [sold] at now, because II and III do not sell at the price at which they can satisfy the additional demand for 140 tons, ||XII-581| but at the price at which I, which only supplies three-tenths of the product, could satisfy it. The entire product required, 200 tons, is in this case sold at £ 2 per ton, because three-tenths of it can only be supplied at a value of £ 2 per ton, irrespective of whether the additional portions of the demand were met by proceeding from III via II to I or from I via II to III.
Ricardo says: If III and II are the starting-points, their market-value must rise to the value (cost-price with him) of I, because the three—tenths supplied by I are required to meet the demand and the decisive point here is therefore the required volume of the product and not the individual value of particular portions of it. But it is equally true that the three-tenths from I are just as essential as before when I is the starting-point and II and III only provide the additional supply. If, therefore, I determined the market-value in the descending line, it determines it in the ascending line for the same reasons. Table A thus shows us the incorrectness of the Ricardian concept that differential rent depends on the diminishing productivity of labour, on the movement from the more productive mine or land to the less productive. It is just as compatible with the reverse process and hence with the growing productivity of labour. Whether the one or the other takes place has nothing to do with the nature and existence of differential rent but is a historical question. In reality, the ascending and descending lines will cut across one another, the additional demand will sometimes be supplied by going over to more, sometimes to less fertile types of land, mine or natural agent. [In this it is] always supposed that the supply provided by the natural agent of a new, different class—be it more fertile or less fertile—only equals the additional demand and does not, therefore, bring about a change in the relation between demand and supply. Hence it can only bring about a change in the market-value itself, if the supply, can only be made available at higher cost not however if it can be made available at lower cost.
Table A thus reveals to us from the outset the falseness of this fundamental assumption of Ricardo’s, which, as Anderson shows, was not required, even on the basis of a wrong conception of absolute rent.
If production proceeds in a descending line, from III to Il and from II to I with recourse to natural agents of a gradually decreasing fertility—then III, in which a capital of 100 has been invested, will at first sell its commodities at their value, at £ 120. This, since it produces 75 tons, will amount to £ 1 12s. per ton. If an additional supply of 65 is then required, II, which invests a capital of 100, will similarly sell its product at a value of £ 120. This amounts to £ 1 1612/13s. per ton. And if, finally, an additional supply of 60 tons were required, which can only be provided by I, then it too will sell its product at its value of £ 120, which amounts to £ 2 per ton. In this process III would yield a differential rent of £ 18 6/13 as soon as II came on the market, whereas previously it only yielded the absolute rent of £ 10. II would yield a differential rent of £ 10 as soon as I came into the picture and differential rent of III would then rise to £30.
Descending from III to I, Ricardo discovers that I does not yield a rent, because in considering III he started out from the assumption that no absolute rent exists.
There is indeed a difference between the ascending and descending line. If the passage is from I to III, so that II and III only provide the additional supply, then the market-value remains equal to the individual value of I which is £ 2. And if, as the supposition is here, the average profit is 10 per cent, then it can be assumed that the price of coal ([or] price of wheat—a quarter of wheat etc. can always be substituted for a ton of coal) will have entered into its calculation, since coal enters into the consumption of the worker as a means of subsistence as well as figuring as an auxiliary material of considerable importance in constant capital. It can therefore also be assumed that the rate of surplus-value would have been higher and therefore the surplus-value itself greater, hence also the rate of profit higher than 10 per cent, if I [were] more productive or the value of the ton had been below £ 2. This, however, would be the case if III was the starting-point. The [market]-value of the ton of coal was then only £ 1 12 s.; when ||582| II entered, it rose to £1 16 12/13s. and finally when I appeared, it rose to £ 2. It can thus be assumed that when only III was being worked—all other circumstances, length of surplus labour-time and other conditions of production etc. being taken as constant and unchanged—the rate of profit was higher (the rate of surplus-value was higher because one element of the wage was cheaper; because of the higher rate of surplus-value, the mass of surplus-value, and therefore also the rate of profit, was higher; in addition however—with the surplus-value thus modified—the rate of profit was higher because an element of cost in the constant capital was lower). The rate of profit became lower with the appearance of II and finally sank to 10 per cent, as the lowest level, when I appeared. In this case therefore one would have to assume that (regardless of the data) for instance the rate of profit was 12 per cent when only III was being worked; that it sank to 11 per cent when II came into play and finally to 10 per cent when I entered into it. In this case the absolute rent would have been £8 with III because the cost-price would have been £ 112; it would have become £ 9 as soon as II came into play because now the cost-price would have been £ 111 and it would finally have been raised to £ 10 because the cost-price would have fallen to £ 110. Here then a change in the rate of absolute rent itself would have taken place and this in inverse ratio to the change in the rate of profit. The rate of rent would have progressively grown because the rate of profit had progressively fallen. The latter would, however, have fallen because of the decreasing productivity of labour in the mines, in agriculture, etc. and the corresponding increase in the price of the means of subsistence and auxiliary materials.
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[c)] Observations on the Influence of the Change in the Value of the Means of Subsistence and of Raw Material (Hence also the Value of Machinery) on the Organic Composition of Capital
In this case the rate of rent rose because the rate of profit fell. Now did it fall because there was a change in the organic composition of the capital? If the average composition of the capital was £ 80c+£20v, did this composition remain the same? It is assumed that the normal working-day remains the same. Otherwise the influence of the increased price of the means of subsistence could be neutralised. We must differentiate between two factors here. Firstly, an increase may occur in the price of the means of subsistence, hence reduction in surplus-labour and surplus-value. Secondly, constant capital may become more expensive because, as in the case of coal, the auxiliary material, or in the case of wheat, another element of constant capital, namely seeds, rises in value or also, [because] due to the increased price of wheat, the cost-price of other raw produce (raw material) may rise. Finally, if the product was iron, copper etc., the raw material of certain branches of industry and the raw material of machinery (including containers) of all branches of industry would rise.
On the one hand it is assumed that no change has taken place in the organic composition of capital; in other words that no change has taken place in the manner of production decreasing or increasing the amount of living labour employed in proportion to the amount of constant capital employed. The same number of workers as before is required (the limits of the normal working-day remaining the same) in order to work up the same volume of raw material with the same amount of machinery etc., or, where there is no raw material, to set into motion the same amount of machinery, tools, etc. Besides this first aspect of the organic composition of capital, however, a second aspect has to be considered, namely, the change in the value of the elements of capital although as use-values they may be employed in the same portions. Here again we must distinguish:
The[b] change in value affects both elements—variable and constant—equally. This may never occur in practice. A rise in the price of certain agricultural products such as wheat etc., raises the (necessary) wage and the raw material (for instance seeds). A rise in coal prices raises the necessary wage and the auxiliary material of most industries. While in the first case the rise in wages occurs in all branches of industry, that in raw materials occurs only in some. With coal, the proportion in which it enters into wages is lower than that in which it enters into production. As regards total capital, the change in the value of coal and wheat is thus hardly likely to affect both elements of capital equally. But let us suppose this to be the case.
Let the value of the product of a capital £ 80c+£ 20v be £ 120. Considering capital as a whole, the value of the product and its cost-price coincide, for the difference is equalised out for the aggregate capital [of the country]. The rise in value of an article such as coal which, according to the assumption, enters into both component parts of capital in equal proportions, brings about a rise in cost by one-tenth for both elements. Thus £ 80c would now only buy as many commodities as could previously be bought with [approximately] £70c and with £20v only as many workers could be paid as previously with [approximately] £18v. Or, in order to continue production on the old scale, [approximately] £ 90c and £ 22v would now have to be laid out. The value of the product, as previously, is now £ 120, of which, however, the outlay amounts to £ 112 (£90 constant and £22 variable). Thus the profit is £8 and on £ 112 this works out at 1/14, which is 7 1/7 per cent. Hence the value of the product from £ 100 capital advanced is now equal to £ 107 1/7.
What is the ratio in which c and v now enter into this new capital? Previously the ratio v:c was as 20:80, as 1:4; now it is as 22:90 [or] as 11:45. 1/4=45/180; 11/45=44/180. That means that variable capital has decreased by 1/180 ||583| as against constant capital. In keeping with the assumption that the increase in price of coal etc. has proportionally the same effect on both parts of the capital, we must put it as £ 88c+£ 22v. For the value of the product is £ 120; from this has to be deducted an outlay of £ 88+£ 22=£ 110. This leaves a profit of £ 10. 22:88=20:80. The ratio of c to v would have remained the same as in the old capital. As before, the ratio would be v:c as 1:4. But £ 10 profit on £ 110 is 1/11, which is 9 1/11 per cent. If production is to be continued on the same scale, £ 110 capital will have to be invested instead of £ 100, and the value of the product [would continue to be] £ 120. The composition of a capital of £ 100 however would be £ 80c+£ 20v, the value of the product being £ 109 1/11.
If, in the above case, the value £ 80c had remained constant and only v had varied, i.e., £ 22v instead of £ 20v, then the previous ratio having been 20:80 or 10:40, it would now be 22:80 or 11:40. Now if this change had taken place, then [the capital would amount to] £ 80c+£ 22v [and the] value of the product would be £ 120; therefore the outlay [would be] £ 102 and the profit £ 18 i.e., 17 33/51 per cent. [But] 22:18 is as 21 29/51:17 33/51. If £ 22v capital need to be laid out in wages, in order to set in motion a constant capital of £ 80 in value, then £ 21 29/51 are required in order to move a constant capital of £ 78 22/51 in value. According to this ratio, only £ 78 22/51 would be laid out in machinery and raw material from a capital of £ 100; £ 21 29/51 would have to go to wages, whereas previously £ 80 was spent on raw material etc. and only £ 20 on wages. The value of the product is now £ 117 33/51. And the composition of the capital: £ 7822/51c+£ 21 29/51v. But £ 21 29/51+£ 17 33/51=£ 39 11/51. Under the previous composition [of capital], the total labour put in was equal to 40; now it is 39 11/51 or less by 40/51, not because the constant capital has altered in value, but because there is less constant capital to be worked on, hence a capital of £ 100 can set in motion a little less labour than before, although more dearly paid for.
If, therefore, a change in an element of cost, here a rise in price—a rise in value—only alters (the necessary) wage, then the following takes place: Firstly, the rate of surplus-value falls; secondly, with a given capital, less constant capital, less raw material and machinery, can be employed. The absolute amount of this part of the capital decreases in proportion to the variable capital, and provided other conditions remain the same, this must always bring about a rise in the rate of profit (if the value of constant capital remains the same). The [physical] volume of the constant capital decreases although its value remains the same. But the rate of surplus-value decreases and also the [amount of] surplus-value itself, because the falling rate is not accompanied by an increase in the number of workers employed. The rate of surplus-value—of surplus-labour—falls more than the ratio of variable to constant capital. For the same number of workers as before, that is the same absolute quantity of labour, needs to be employed in order to set in motion the same amount of constant capital. Of this absolute quantity of labour more, however, is necessary labour and less of it is surplus-labour. Thus the same quantity of labour must be paid for more dearly. Of the same capital—£ 100 for instance—less can thus be laid out in constant capital, since more has to be laid out in variable capital to set in motion a smaller constant capital. The fall in the rate of surplus-value in this case is not connected with an increase in the absolute quantity of labour which a particular capital employs, or with the increase in the number of workers employed by it. The [amount of] surplus-value itself cannot therefore rise here, although the rate of surplus-value falls.
Provided, therefore, that the organic composition of the capital remains the same, in so far as its physical component parts regarded as use-values are concerned; that is, if change in the composition of the capital is not due to a change in the method of production within the sphere in which the capital is invested, but only to a rise in the value of the labour-power and hence to a rise in the necessary wage, which is equal to a decrease in surplus-labour or the rate of surplus-value, which in this case can be neither partly nor wholly neutralised by an increase in the number of workers employed by a capital of given size—for instance £ 100—then the fall in the rate of profit is simply due to the fall in surplus-value itself. If the method of production and the ratio between the amounts of immediate and accumulated labour used remain constant, this same cause then gives rise to the change in the organic composition of capital—a change which is only due to the fact that the value (the proportional value) of the amounts employed has changed. The same capital employs ||584| less immediate labour proportionately as it employs less constant capital, but it pays more for this smaller amount of labour. It can therefore only employ less constant capital because the smaller amount of labour which sets in motion this smaller amount of constant capital, absorbs a greater part of the total capital. In order, for example, to set in motion £ 78 of constant capital, it must lay out £ 22 in variable capital, while previously £ 20v sufficed to set in motion £80c.
This therefore happens when an increase in the price of a product subjected to landed property, only affects wages. The converse would result from the product becoming cheaper.
But now let us take the case assumed above. The increased price of the agricultural product is supposed to affect constant and variable capital proportionately to the same degree. According to the assumption, therefore, there is no change in the organic composition of the capital. Firstly, no change in the method of production. The same absolute amount of immediate labour sets in motion the same amount of accumulated labour as before. The ratio of the amounts remains the same. Secondly, no change in the proportion of value as between accumulated and immediate labour. If the value of one rises or falls, so does that of the other in the same proportion to its relative size, which thus remains unchanged. But previously [we had] : £ 80c+£ 20v; value of the product £ 120. Now £ 88c+£ 22v, value of the product [likewise] £ 120. This yields £ 10 on £ 110 or 9 1/11 per cent [profit; for a capital of] £ 80c+£ 20v therefore the value of [the product is] £ 109 1/11,
Previously we had:
Constant Capital Variable capital Surplus-value Rate of profit Rate of surplus-value £80 £20 £20 20 per cent 100 per cent Now we have:
Constant Capital Variable capital Surplus-value Rate of profit Rate of surplus-value £80 £20 £9 1/11 9 1/11 per cent 45 5/11 per cent £ 80c represents less raw material etc. here and £ 20v less absolute labour in the same proportion. The raw material etc. has become dearer and [a capital of] £ 80 therefore buys a smaller quantity of raw material etc.; thus, because the method of production has remained the same, it requires less immediate labour. But the smaller quantity of immediate labour costs as much as the larger quantity of immediate labour did before, and it has become dearer exactly to the same extent as the raw material etc, and has therefore decreased in the same proportion. If, therefore, the surplus-value had remained the same, then the rate of profit would have sunk in the same proportion in which the raw material etc. had become dearer and in which the ratio of the value of the variable to the constant capital had changed. The rate of surplus-value however has not remained the same, but has changed in the same proportion as the value of the variable capital has grown. Let us take [another] example.
The value of a pound of cotton has gone up from 1s. to 2s. Previously, £ 80 (we take machinery etc. here as equal to nil) could buy 1,600 lbs. Now £80 will only buy 800 lbs. Previously, in order to spin 1,600 lbs., £ 20 [were] required to pay the wages of, say, 20 workers. In order to spin the 800 lbs, only 10 [workers are needed], since the method of production has remained the same. The 10 had previously cost £ 10, now they cost £ 20, just as the 800 lbs. would previously have cost £ 40, and now cost £ 80. Assume now that the profit was previously 20 per cent. This would involve:
Constant capital Variable capital Surplus-value Rate of surplus-value Rate of profit Product Price per lb. of yarn I £80=1,600 lbs. cotton £20=20 workers £20 100per cent 20 per cent 1600 lbs. yarn 1s. 6d. II £80=800 lbs. cotton £20=10 workers £10 50 per cent 10 per cent 800 lbs. yarn 2s. 9d For if the surplus-value created by 20 workers is 20, then that created by 10 is 10; in order to produce it, however, £ 20 needs to be paid out, as before, whereas according to the earlier relationship, only 10 was paid. The value of the product, of the ||585| lb. of yarn, must in this case rise at any rate, because it contains more labour, accumulated labour (in the cot-ton which enters into it) and immediate labour.
If only cotton had risen and wages had remained the same, then the 800 lbs. of cotton would also have been spun by 10 workers. But these 10 workers would only have cost £ 10. That is, the surplus-value of 10 [would] as before have amounted to 100 per cent. In order to spin 800 lbs. of cotton, 10 workers [would be] needed with a capital outlay of 10. Thus total capital outlay would have been £ 90. Now according to the assumption there would always be 1 worker per 80 lbs. of cotton. Hence on 800 lbs. 10 workers and on 1,600 lbs. 20. How many pounds therefore could the total capital of £ 100 spin now? £ 88 8/9 could be used to buy cotton and £ 11 1/9 could be laid out in wages.
The relative proportions would be:
Constant capital Variable capital Surplus-value Rate of surplus-value Rate of profit Product Price per lb. of yarn III £88 8/9= 88 8/9 lbs. £11 1/9 = 11 1/9 workers £11 1/9 100per cent 11 1/9 per cent 888 8/9 lbs. yarn 2s. 6d. In this case, where no change in the value of variable capital takes place, and the rate of surplus-value therefore remains the same, [we have the following]:
In I, variable capital is to constant capital as 20:80=1:4. In III, it is as 11 1/9:88 8/9=1:8; it has thus fallen proportionally by one half, because the value of constant capital has doubled. The same number of workers spin up the same amount of cotton, but £ 100 now only employ 11 1/9 workers, while the remaining £ 88 8/9 only buy 888 8/9 lbs. of cotton instead of 1,600 lbs. [as in] I. The rate of surplus-value has remained the same. But owing to the change in the value of the constant capital, the same number of workers can no longer be employed by a capital of £ 100; the ratio between variable and constant capital has changed. Consequently the amount of surplus-value falls and with it the profit, since this surplus-value is calculated on the same amount of capital outlay as before. In the first case, the variable capital (i.e. 20) was 1/4 of the constant capital (20:80) and 1/5 of the total capital. Now it is only 1/8 of the constant capital (11 1/9:88 8/9) and 1/9 of 100, the total capital. But 100 per cent on 100/5 or 20 is 20 and 100 per cent on 100/9 or 11 1/9 is only 11 1/9. If the wage remains the same here, or the value of the variable capital remains the same, its absolute amount falls, because the value of the constant capital has risen. Therefore the percentage of the variable capital falls and with it surplus-value itself, its absolute amount, and hence the rate of profit.
If the value of the variable capital remains the same and the method of production remains the same, and therefore the ratio between the amounts of labour, raw material and machinery employed remains the same, a change in the value of the constant capital brings about the same variation in the composition of capital as if the value of constant capital had remained the same, but a greater amount of capital of unchanged value (thus also a greater capital value) had been employed, in proportion to the capital laid out in labour. The consequence is necessarily a fall in profit. (The opposite takes place if the value of constant capital falls.)
Conversely, a change in the value of the variable capital—in this case a rise—increases the proportion of variable to constant capital and therefore also the percentage of variable capital, or its proportional share in the total capital. Nevertheless, the rate of profit falls here, instead of rising, for the method of production has remained the same. The same amount of living labour as before is employed now, in order to convert the same amount of raw materials, machinery etc. into products. Here, as in the above case, only a smaller total amount of immediate and accumulated labour can be set in motion with the same capital of £ 100 ||586|; but the smaller amount of labour costs more. The necessary wage has risen. A larger share of this smaller amount of labour represents necessary labour and therefore a smaller amount forms surplus-labour. The rate of surplus-value has fallen, while at the same time the number of workers or the total quantity of labour under the command of the same capital has diminished. The variable capital has increased in proportion to constant capital and hence also in proportion to total capital, although the amount of labour employed in proportion to the amount of constant capital has decreased. The surplus-value consequently falls and with it the rate of profit. Previously, the rate of surplus-value remained the same, while the rate of profit fell, because the variable capital fell in proportion to the constant capital and hence in proportion to the total capital, or the surplus-value fell because the number of workers decreased, its multiplier decreased, while the rate remained the same. This time the rate of profit falls because the variable capital rises in proportion to the constant capital, hence also to the total capital; this rise in variable capital is, however, accompanied by a fall in the amount of labour employed (of labour employed by the same capital), in other words, the surplus-value falls, because its decreasing rate is bound up with the decreasing amount of labour employed. The paid labour has increased in proportion to the constant capital, but the total quantity of labour employed has decreased.
These variations in the value therefore always affect the surplus-value itself, whose absolute amount decreases in both cases because either one or both of its two factors fall. In one case it decreases because the number of workers decreases while the rate of surplus-value remains the same, in the other, because both the rate decreases and the number of workers employed by a capital of £ 100 decreases.
Finally we come to case II, where the change in the value of an agricultural product affects both parts of capital in the same proportion and where this change of value is therefore not accompanied by a change in the organic composition of capital.
In this case (see p. 584) the pound of yarn rises from 1s, 6d. to 2s. 9d., since it is the product of more labour-time than before. It contains just as much immediate (although more paid and less unpaid) labour as before, but more accumulated labour. Due to the change in the value of cotton from is, to 2s., 2s. instead of 1s. is incorporated in the value of the lb. of yarn.
Example II on page 584 however is incorrect. We had:
Constant capital Variable capital Surplus-value Rate of surplus-value Rate of profit Product Price per lb. of yarn I £80=1,600 lbs. cotton £20=20 workers £20 100 per cent 20 per cent 1,600 lbs. yarn 1s. 6d. The labour of 20 workers is represented by £ 40. Of this, half is unpaid labour here, hence [£]20 surplus-value. According to this ratio, 10 workers will produce (a value of) £ 20 and of this [£] 10 [are] wages and [£] 10 surplus-value.
If, therefore, the value of the labour-power rose in the same proportion as that of the raw material, i.e., if it doubled, then it would be £ 20 for 10 workers as compared with £ 20 for 20 workers before. In this case, there would be no surplus-labour left. For the value, in terms of money, which the 10 workers produce is equal to £ 20, if that which the 20 produce is equal to £ 40. This is impossible. If this were the case, the basis of capitalist production would have disappeared.
Since, however, the changes in value of constant and variable capital are supposed to be the same (proportionally), we must put this case differently. Therefore say the value of cotton rose by one-third; £80 now buy 1,200 lbs. cotton, whereas previously they bought 1,600. Previously £ 1=20 lbs. [cotton] or 1 lb. [cotton]=£ 1/20=1s. Now £ 1=15 lbs, or 1 lb.=£ 1/15= =1 1/3s. or 1s. 4d. Previously 1 worker cost £ 1, now £ 1 l/3= £ 1 6 2/3s. or £ 1 6s. 8d. and for 15 men [that] amounts to £ 20 (£15+£l5/3). ||587| Since 20 men produce a value of £40, 15 men produce a value of £ 30. Of this value, £ 20 [are] now their wages and £ 10 surplus-value or unpaid labour,
Thus we have the following:
Constant capital Variable capital Surplus-value Rate of surplus-value Bate of profit Product Price per lb. of yarn IV £80=1,200 lbs. cotton £20= 15 men £10 50 per cent 10 per cent 1,200 lbs. yarn 1s. 10d. This 1s. 10d. [contains] cotton worth 1s. 4d. and labour worth 6d.
The product becomes dearer because the cotton has become dearer by a third. But the product is not dearer by a third. Previously, in I, it was equal to 18d.; if, therefore, it had become dearer by one-third, it would now be 18d.+6d.=24d., but it is only equal to 22d. Previously 1,600 lbs. yarn contained £40 labour, i.e., 1 lb., £ 1/40 or 20/40s. or 1/2s.=6d. labour. Now 1,200 lbs. [yarn] contain £30 labour, 1 lb. therefore contains £ 1/40=1/2s. or 6d. labour. Although the labour has become dearer in the same ratio as the raw material, the quantity of immediate labour contained in 1 lb. of yarn has remained the same, though more of this quantity is now paid and less unpaid labour. This change in the value of wages does not, therefore, in any way affected the value of the lb. of yarn, of the product. Now as before, labour only accounts for 6d., while cotton now accounts for 1s. 4d., instead of is., as previously. Thus, if the commodity is sold at its value, the change in the value of wages cannot after all bring about a change in the price of the product. Previously, however, 3d. of the 6d. were wages and 3d. surplus-value; now 4d. are wages and 2d. surplus-value. In fact 3d. on wages per lb. of yarn comes to 3×1,600d.=£ 20 for 1,600 lbs. yarn. And 4d. per pound amounts to 4×1,200= £20 for 1,200 lbs. And 3d. on 15d. (1s. cotton plus. 3d. wages) in the first example comes to 1/5 profit=20 per cent. On the other hand, 2d. on 20d. (16d. cotton and 4d. wages) comes to 1/10 or 10 per cent.
If, in the above example, the price of cotton had remained the same [then we would have the following]: 1 man spins 80 lbs., since the method of production has remained the same in all the examples, and the pound is again equal to 1s.
Now the capital is made up as follows:
Constant capital Variable capital Surplus- value Rate of surplus-value Rate of profit Product Price per lb. of yarn £73 1/3= 1,466 2/3 lbs. cotton £26 2/3 (20 men) £ 13 1/3 50 per cent 13 1/3 per cent 1,466 2/3 lbs. 1 6/11s. This calculation is wrong; for if a man spins 80 lbs., 20 [men] spin 1,600 and not l,466 2/3, since it is assumed that the method of production has remained the same. This fact can in no way be altered by the difference in the remuneration of the man. The example must therefore be constructed differently.
Constant capital Variable capital Surplus- value Rate of surplus-value Rate of profit Product Price per lb. of yarn II £75= 1,500 lbs. cotton £25 (18 3/4 men) £12 1/2 50 per cent 12 1/2 per cent 1,500 lbs. yarn 1s. 6d. Of this 6d., 4d. wages and 2d, profit. 2 on 16=1/8=12 1/2 per cent.
Finally, if the value of the variable capital remained the same as before, [i.e.], 1 man received £ 1, whereas the value of the constant capital altered, so that l lb. cotton cost 1s. 4d. or 16d., instead of 1s. then:
Constant capital Variable capital Surplus- value Rate of surplus-value Rate of profit Product Price per lb. of yarn III £84 4/19 = 1,263 3/19 lbs. cotton £15 15/19 = (15 15/19 men) £15 15/l9 100 per cent 1515/19 percent 1,263 3/19 lbs. [yarn] 1s. l0d. ||588| The profit [would be] 3d. On 19d. this comes to exactly 15 15/19 per cent.
Now let us put all these examples together, beginning with I, where no change of value has as yet taken place.
Constant capital Variable capital Surplus -value Rate of surplus-value Rate of profit Product Price per lb. of yarn Profit I £80=1,600 lbs. cotton £20=20 workers £20 100 per cent 20 per cent 1,600 lbs. yarn 1s. 6d. 3d. II £75= 1,500 lbs. cotton £25= 18 3/4 workers £12 1/2 50 per cent 12 1/2 per cent 1,500 lbs. yarn 1s. 6d. 2d. III £84 4/19 = 1,263 3/19 lbs. [cotton] £15 15/19 =15 15/19 workers £15 15/19 100 per cent 15 15/19 per cent 1,263 3/19 lbs. yarn 1s. 10d. 3d. IV 280= 1,200 lbs. [cotton] £20= 15 workers £10 50 per cent 10 per cent 1,200 lbs. yarn 1s. l0d. 2d. The price of the product has changed in III and IV, because the value of constant capital has changed. On the other hand, a change in the value of variable capital does not bring about a change in price because the absolute quantity of immediate labour remains the same and is only differently apportioned between necessary labour and surplus-labour.
Now what happens in example IV, where the change in value affects constant and variable capital in equal proportions, where both rise by one-third?
If only wages had risen (II), then the profit would have fallen from 20 per cent to 12 1/2, i.e., by 7 1/2 per cent. If constant capital alone had risen (III), profit would have fallen from 20 per cent to 15 15/19 per cent, i.e., by 4 4/19 per cent. Since both rise to the same extent, profit falls from 20 per cent to 10 per cent, i.e., by 10 per cent. But why not by 7 1/2+4 4/19 per cent or by 11 27/38, which is the sum of the differences of II and III? This 1 27/38 must be accounted for; in accordance with that, the profit should have fallen (IV) to 8 11/38, instead of to 10. The amount of profit is determined by the amount of surplus-value and this is determined by the number of workers, when the rate of surplus-labour is given. In I there are 20 workers and half their labour-time is unpaid. In II, only a third of the total labour is unpaid, thus the rate of surplus-value falls; moreover, 1 1/4 less workers are employed and therefore the number [of workers] or the total labour decreases. In III the rate of surplus-value is again the same as in I, one-half of the working-day is unpaid, but as a result of the rise in value of the constant capital, the number of workers falls from 20 to 15 15/19 or by 4 4/19. In IV (the rate of surplus-value having fallen again to the level of that in II, namely, one-third of the working-day), the number of workers decreases by 5, namely, from 20 to 15. Compared with I, the number of workers in IV decreases by 5, compared with II by 3 3/4 and compared with III by 15/19; but compared with I it does not decrease by 11/4+4 4/19, i.e., by 5 35/76. Otherwise the number of workers employed in IV would be 14 41/76.
Hence it follows that variations in the value of commodities which enter into constant or variable capital—when the method of production, or the physical composition of capital, remains the same, in other words, when the ratio of immediate and accumulated labour remains constant—do not bring about a change in the organic composition of the capital if they affect variable and constant capital in the same proportion, as in IV (where for instance cotton becomes dearer to the same degree as the wheat which is consumed by the workers). The rate of profit falls here (while the value of constant and variable capital increases), firstly because the rate of surplus-value falls due to the rise in wages, and secondly, because the number of workers decreases.
The change in value—if it affects only constant capital or only variable capital—acts like a change in the organic composition of capital and changes the relative value of the component parts of capital, although the method of production remains the same. When only the variable capital is affected, it rises in relation to the constant capital ||589| and to the total capital; and not only the rate of surplus-value decreases, but also the number of workers employed. Consequently the amount of constant capital (whose value [remains] unchanged) employed is also smaller (II).
If the change in value only affects the constant capital, then the variable capital falls in proportion to the constant capital and to the total capital. Although the rate of surplus-value remains the same, its amount decreases because the number of workers employed falls (III).
Finally, it would be possible for the change in value to affect both constant and variable capital, but in uneven proportions. This case only requires to be fitted into the above categories. Suppose, for instance, that constant and variable capital were affected in such a way that the value of the former rose by 10 per cent and the latter by 5. Then in so far as they both rose by 5 per cent, one by 5+5 and the other by 5, we would have case IV. But in so far as the constant capital changed by a further 5 per cent, we would have case III.
In the above, we have only assumed a rise in value. With a fall we have the opposite effect. For example, going from IV to I can be considered as a fall in value which affected both component parts in equal proportions. To assess the effect of a fall in only [one component part], II and III would have to be modified. |589||
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||600| I would make the following further observation on the influence of the variation of value upon the organic com-position of capital: With capitals in different branches of production—with an otherwise equal physical composition—it is possible that the higher value of the machinery or of the material used, may bring about a difference. For instance, if the cotton, silk, linen and wool [industries] had exactly the same physical composition, the mere difference in the cost of the material used would create such a variation. |600||
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[d) Changes in the Total Rent, Dependent on Changes in the Market-Value]
||589| Returning to Table A it thus follows, that the assumption, that the profit of 10 per cent has come about through a decrease (in that the rate of profit, starting from III was higher, in II it was lower than in III, but still higher than in I, where it was 10 per cent) may be correct, namely, if the development actually proceeded along the descending line; but this assumption by no means necessarily follows from the gradation of rents, the mere existence of differential rents; on the contrary with the ascending line, this [gradation of rents] presupposes that the rate of profit remains the same over a long period.
Table B. As has already been explained above, in this example the competition from III and IV, forces [the cultivator of] II to withdraw half his capital. With a descending line, it would on the contrary appear that an additional supply of only 32 1/2 tons is required, hence only a capital of £ 50 has to be invested in II.
But the most interesting aspect of the table is this: Previously a capital of £ 300 was invested, now only £ 250, i.e., one-sixth less. The amount of product has however remained the same— 200 tons. The productivity of labour has thus risen and the value of the individual commodity fallen. The total value of the commodities has likewise fallen, from £ 400 to £ 369 3/13. As compared with A, the market-value per ton has fallen from £ 2 to £ 1 16 12/13s., since the new market-value is determined by the individual value of II instead of, as previously, by the higher one of I. Despite all these circumstances—decrease in the capital invested, decrease in the total value of the product with the same volume of production, fall in the market-value, exploitation of more fertile classes=the rent in B, as compared with A, has risen absolutely, by £ 24 3/13 (£ 94 3/13 as against £ 70). If we examine how far the individual classes participate in the increase in total rent, we find that in class II the absolute rent, in so far as its rate is concerned, has remained the same for £ 5 on £ 50 equals 10 per cent; but its amount has fallen by half, from £ 10 to £ 5, because the capital investment in II B has fallen by half, from £ 100 to £ 50. Class II B, instead of effecting an increase in the rental, effects a decrease by £ 5. Furthermore, the differential rent for II B has completely disappeared, because the market-value is now equal to the individual value of II; this results in a second loss of £ 10. Altogether then the reduction in rent for class II amounts to £ 15.
In III the amount of absolute rent is the same; but as a result of the fall in market-value, its differential value has also fallen; hence also the differential rent. It amounted to £ 30, now it amounts only to [£] 18 6/13. This is a reduction by [£] 11 7/13. The rent for II and III taken together has therefore fallen by [£] 26 7/13. It remains to account for a rise, not of 24 3/13, as at first sight it would seem, but of £ 50 10/13. Furthermore, however, for B as compared with A, the absolute rent of I A has disappeared as class I itself has disappeared. This represents a further reduction by £ 10. Thus, all in all, £ 60 10/13 must be accounted for. But this is the rental of the new class IV B. The rise in the rental of B is therefore only to be explained by the rent from IV B. The absolute rent for IV B, like that of all other classes, is £ 10. The differential rent of £ 50 10/13, however, is due to ||590| the fact that the differential value of IV is 10 470/481s. per ton, and this has to be multiplied by 92 1/2 for that is the number of tons. The fertility of II and III has remained the same. The least fertile class has been removed entirely and yet the rental rises because, due to its relatively great fertility, the differential rent of IV alone is greater than the total differential rent of A had been previously. Differential rent does not depend on the absolute fertility of the classes that are cultivated for 1/2 II, III, IV [B are] more fertile than I, II, III [A], and yet the differential rent for 1/2 II, III, IV [B] is greater than it was for I, II, III [A] because the greatest portion of the product—92 1/2 tons—is supplied by a class whose differential value is greater than that occurring in I, II, III A. When the differential value for a class is given, the absolute amount of its differential rent naturally depends on the amount of its product. But this amount itself is already taken into account in the calculation and formation of the differential value. Because with £ 100, IV produced 92 1/2 tons, no more and no less, its differential value in B where the market-value is £ 1 16 12/13s. per ton, amounts to 10 470/481s. per ton.
The whole rental in A amounts to £ 70 on £ 300 capital, which is 23 1/3 per cent. On the other hand in B, leaving out of account the 3/13, it is £ 94 on £ 250, which is 37 3/5 per cent.
Table C. Here it is assumed that class IV having come into the picture and class II determining the market-value, demand does not remain the same, as in Table B, but it increases with the falling price, so that the whole of the 92 1/2 tons which have been newly added by IV is absorbed by the market. At £ 2 per ton only 200 tons would be absorbed; at £ 1 11/13, the demand grows to 292 1/2. It is wrong to assume that the limits of the market are necessarily the same at £ 1 11/13 per ton as at £ 2 per ton. On the contrary, the market expands to a certain extent with the falling price—even in the case of a general means of subsistence, such as wheat.
This, for the time being, is the only point to which we want to draw attention in Table C. Table D. Here it is assumed that the 292 1/2 tons are absorbed by the market only if the market-value falls to £ 1 5/6, which is the cost-price per ton for class I, which therefore bears no rent but only yields the normal profit of 10 per cent. This is the case which Ricardo assumes to be the normal case and on which we should therefore dwell at somewhat greater length.
As in the preceding tables, the ascending line is here presupposed at the outset; later we shall look at the same process in the descending line.
If II, III and IV only provided an additional supply of 140, that is, an additional supply which the market absorbs at £ 2 per ton, then I would continue to determine the market-value.
But this is not the case. There is an overplus of 92 1/2 tons on the market, produced by class IV. If this were, in fact, surplus production, which exceeded the absolute requirements of the market, then I would be completely thrown out of the market and II would have to withdraw half its capital as in B. II would then determine the market-value as in B. But it is assumed that if the market-value decreases, the market can absorb the 92 1/2 tons. How does this occur? IV, III and 1/2II dominate the market absolutely. In other words if the market could only absorb 200 tons, they would throw out I.
But to begin with let us take the actual position. There are now 292 1/2 tons on the market whereas previously there were only 200. II would sell at its individual value, at £ 1 11/13, in order to make room for itself and to drive I, whose individual value is £ 2, out of the market. But since, even at this market-value, there is no room for the 292 1/2 tons, IV and III exert pressure on II, until the market-price falls to £ 1 5/6, at which price the classes IV, III, II and I find room for their product on the market, which at this ||591| market-price absorbs the whole product. Through this fall in price, supply and demand are balanced. As soon as the additional supply surpasses the capacity of the market, as determined by the old market-value, each class naturally seeks to force the whole of its product on to the market to the exclusion of the product of the other classes. This can only be brought about through a fall in price, and moreover a fall to the level where the market can absorb all products. If this reduction in price is so great that the classes I, II etc. have to sell below their costs of production, they naturally have to withdraw [their capital from production]. If, however, the situation is such that the reduction does not have to be so great in order to bring the output into line with the state of the market, then the total capital can continue to work in this sphere of production at this new market-value.
But it is further clear that in these circumstances it is not the worst land, I and II, but the best, III and IV, which determines the market-value, and so also the rent on the best sorts of land determines those on the worse, as Storch correctly grasped in relation to this case.
IV sells at the price at which it can force its entire product on to the market overcoming all resistance from the other classes. This price is £ 1 5/6. If the price were higher, the market would contract and the process of mutual exclusion would begin anew.
That I determines the market-value [is correct] only on the assumption that the additional supply from II etc. is only the additional supply which the market can absorb at the market-value of I. If it is greater, then I is quite passive and by the room it takes up, only compels II, III, IV to react until the price has contracted sufficiently for the market to be large enough for the whole product. Now it happens that at this market-value, which is in fact determined by IV, IV itself pays a differential rent of £ 49 7/12 in addition to the absolute rent, III pays a differential rent of £ 17 1/2 in addition to the absolute rent, II, on the other hand, pays no differential rent and moreover, only pays a part of the absolute rent, £ 9 1/6, instead of £ 10, i.e., not the full amount of the absolute rent. Why? Although the new market-value of £ 1 5/6 is above its cost-price, it is below its individual value. If market-value were equal to its individual value, it would pay the absolute rent of £ 10, which is equal to the difference between individual value and cost-price. But since it is below that, it only pays a part of its absolute rent, £ 9 1/6 instead of £ 10; the actual rent it pays is equal to the difference between market-value and cost-price, but this difference is smaller than that between its individual value and its cost-price.
<The actual rent is equal to the difference between market-value and cost-price.>
The absolute rent is equal to the difference between individual value and cost-price.
The differential rent is equal to the difference between market-value and individual value.
The actual or total rent is equal to the absolute rent plus the differential rent, in other words, it is equal to the excess of the market-value over the individual value plus the excess of the individual value over the cost-price or [it is] equal to the difference between market-value and cost-price.
If, therefore, the market-value is equal to the individual value, the differential rent is nil and the total rent is equal to the difference between individual value and cost-price.
If the market-value is greater than the individual value, the differential rent is equal to the excess of the market-value over the individual value, the total rent, however, is equal to this differential rent plus the absolute rent.
If the market-value is smaller than the individual value, but greater than the cost-price, the differential rent is a negative quantity, hence the total rent is equal to the absolute rent plus this negative differential rent, i.e., the excess of the individual value over the market-value.
If the market-value is equal to the cost-price, then on the whole rent is nil.
In order to put this down in the form of equations, we shall call the absolute rent AR, the differential rent DR, the total rent TR, the market-value MV, the individual value IV and the cost-price CP. We then have the following equations:
||592| 1. AR=IV-GP=+y
2. DR=MV-IV=x
3. TR=AR+DR=MV-IV+IV-CP= y+x=MV-CP
If MV>IV then MV-IV=+x. Hence: DR positive and TR= y+x.
And MV-CP=y+x. Or MV-y-x=CP or MV=y+x+CP. If MV<IV then MV-IV=-x. Hence: DR negative and TR=y-x.
And MV-CP=y-x. Or MV+x=IV. Or MV+x-y=CP. Or MV=y-x+CP.
If MV=IV, then DR=0, x=0, because MV-IV=0.
Hence TR=AR+DR=AR+0=MV-IV+IV-CP=0+IV-CP=IV-CP=MV-CP=+y.
If MV=CP [then] TR or MV-CP=0
In the circumstances assumed, I pays no rent. Why not? Because the absolute rent is equal to the difference between the individual value and the cost-price. The differential rent, however, is equal to the difference between the market-value and the individual value. But the market-value here is equal to the cost-price of I. The individual value of I is £ 2 per ton, the market-value £ 1 5/6. The differential rent of I is therefore £ 1 5/6-£ 2, which is -£ 1/6. The absolute rent of I, however, is £ 2=£ 1 5/6, in other words, it is equal to the difference between its individual value and its cost-price, which is +£ 1/6. Since, therefore, the actual rent of I is equal to the absolute rent (+£1/6) and the differential rent (-£1/6), it is equal to +£1/6-£1/6=0. Thus category I pays neither differential rent nor absolute rent, but only the cost-price, The value of its product is £2; [it is] sold at £ 1 5/6, that means 1/12 below its value which is 8 1/3 per cent below its value. Category I cannot sell at a higher price, because the market is determined not by I but by IV, III, II in opposition to I. Category I can merely provide an additional supply at the price of £ 1 5/6.
That I pays no rent, is due to the fact that the market-value is equal to its cost-price.
This fact, however, is the result:
Firstly of the relatively low productivity of I. What it has to supply, is 60 additional tons at £ 1 5/6. Suppose instead of supplying only 60 tons for [£] 100, I supplied 64 tons for [£] 100, i.e., 1 ton less than class II. Then only £ 93 3/4 capital would have to be invested in I in order to supply 60 tons. The individual value of one ton in I would then be £ 1 7/8 or £ 1 17 1/2s.; its cost-price: £ 1 14 3/8s. And since the market-value is £ 1 5/6= =£ 1 16 2/3s., the difference between cost-price and market value is 2 7/24s. And on 60 tons this would amount to ||593| a rent of £ 6 17 1/2s.
If therefore all the circumstances remained the same and I were more productive than it is by 1/15 (since 60/15=4), it would still pay a part of the absolute rent because there would be a difference between the market-value and its cost-price, although a smaller difference than between its individual value and its cost-price. Here the worst land would therefore still bear a rent if it were more fertile than it is. If I were absolutely more fertile than it is, II, III IV would be relatively less fertile compared with it. The difference between its [value] and their individual values would be smaller. The fact that I bears no rent is therefore just as much due to the circumstance that it is not absolutely more fertile as to the fact that II, III, IV are not relatively less fertile.
Secondly, however: Given the productivity of I as 60 tons for £ 100. If II, III, IV, and especially IV, which enters the market as a new competitor, were less fertile, not only relatively as against I, but absolutely, then category I could yield a rent, even though this would only consist of a fraction of the absolute rent. For since the market absorbs 292 1/2 tons at £ 1 5/6, it would absorb a smaller number of tons, for instance 280 tons at a market-value higher than £ 1 5/6. Every market-value, however, which is higher than £ 1 5/6, i.e., higher than the production costs of I, yields a rent for I, equal to the market-value minus the cost-price of I.
It can thus equally well be said that I yields no rent because of the absolute productivity of IV, for as long as II and III were the only competitors on the market, it yielded a rent and would continue to do so even despite the advent of IV, despite the additional supply—although it would be a lower rent—if for a capital outlay of £ 100 IV produced 80 tons instead of 92 1/2 tons.
Thirdly: We have assumed that the absolute rent for a capital outlay of £ 100 is £ 10, that is, 10 per cent on the capital or 1/11 on the cost-price, and that therefore the value [of the product yielded by] a capital of £ 100 in agriculture is £ 120 of which £ 10 are profit.
It would be wrong to assume that if we [say]: £ 100 capital is laid out in agriculture and if one working-day equals £ 1, then 100 working-days are laid out. In general, if a capital of £ 100 equals 100 working-days then, in whatever branch of production this capital may be laid out, [the newly-created value] is never [equal to 100 working-days]. Supposing that one gold sovereign equals one working-day of 12 hours, and that this is the normal working-day, then the first question is, what is the rate of exploitation of labour? That is, how many of these 12 hours does the worker work for himself, for the reproduction (of the equivalent) of his wage, and how many does he work for the capitalist gratis? [How great], therefore is the labour-time which the capitalist sells without having paid for it and which is therefore the source of the surplus-value and serves to augment the capital? If the rate of exploitation is 50 per cent, then the worker works 8 hours for himself and 4 gratis for the capitalist. The product equals 12 hours, which is £ 1 (since according to the assumption, 12 hours labour-time are contained in one gold sovereign). Of these 12 hours, equal to £ 1, 8 recoup the capitalist for the wage and 4 form his surplus-value. Thus on a wage of 13 1/3s., surplus-value equals 6 2/3s.; or on a capital outlay of £ 1, it is 10s, and on £ 100, £ 50. Then the value of the commodity produced with the £ 100 capital would be £ 150. The profit of the capitalist in fact consists in the sale of the unpaid labour contained in the product. The normal profit is derived from this sale of that which has not been paid for.
||594| But the second question is this: What is the organic composition of the capital? That part of the value of the capital which consists of machinery etc. and raw material is simply reproduced in the product, it reappears remaining unaltered. This part of the capital the capitalist must pay for at its value. It thus enters into the product as a given predetermined value. Only the labour used by the capitalist is merely partly paid for by him, although it enters wholly into the value of the product [and] is wholly bought by him. Assuming the above to be the rate of exploitation of labour, the amount of surplus-value for capital of the same size will, therefore, depend on its organic composition. If the capital A consists of £ 80c+£ 20v, then the value of the product is £ 110 and the profit is £ 10 (although it contains 50 per cent unpaid labour). If the capital B consists of £ 40c+£ 60v, then the value of the product is £ 130, and the profit is £ 30 although it too contains only 50 per cent unpaid labour. If the capital C consists of £ 60c+ +£ 40v, then the value of the product is £ 120 and the profit is £ 20 although, in this case too, it comprises 50 per cent unpaid labour. Thus the three capitals, equal to £ 300, yield a total profit of £ 10+£ 30+£ 20=£ 60, and this makes an average of 20 per cent for £ 100. This average profit is made by each of the capitals if it sells the commodity it produces at £ 120. The capital A: £ 80c+£ 20v, sells at £ 10 above its value; capital B: £ 40c+£ 60v, sells at £ 10 below its value; capital C:£ 60c+£ 40v sells at its value. All the commodities taken together, are sold at their value: £ 120+£ 120+ £ 120=£ 360. In fact the value of A+B+C equals £ 110+£ 130+£ 120=£ 360. But the prices of the individual categories are partly above, partly below and partly at their value so that each yields a profit of 20 per cent. The values of the commodities, thus modified, are their cost-prices, which competition constantly sets as centres of gravitation for market-prices.
Now assume that the £ 100 laid out in agriculture is composed of £ 60c+£ 40v (which, incidentally, is perhaps still too low for v), then the value [of the product] is £ 120. But this would be equal to the cost-price in the industry. Suppose therefore in the above case that the average price [of the product produced] by a capital of [£]100 is £110. We now say that if the agricultural product is sold at its value, its value is £ 10 above its cost-price. It then yields a rent of 10 per cent and this we assume to be the normal thing in capitalist production, that in contrast to other products, the agricultural product is not sold at its cost-price, but at its value, as a result of landed property. The composition of the aggregate capital is £ 80c+£ 20v, if the average profit is 10 per cent. We assume that that of the agricultural capital is £ 60c+£ 40v, that is, in its composition wages— immediate labour—have a larger share than in the total capital invested in the other branches of industry. This indicates a relatively lower productivity of labour in this branch. It is true, that in some types of agriculture, for instance in stock-raising, the composition may be £ 90c+£ l0v, i.e., the ratio of v:c may be smaller than in the total industrial capital. Rent is, however, not determined by this branch, but by agriculture proper, and, furthermore, by that part of it which produces the principal means of subsistence, such as wheat, etc. The rent in the other branches is not determined by the composition of ||595| the capital invested in these branches themselves, but by the composition of the capital which is used in the production of the principal means of subsistence. The mere existence of capitalist production presupposes that vegetable food, not animal food, is the largest element in the means of subsistence. The interrelationship of the rents in the various branches is a secondary question that does not interest us here and is [therefore] left out of consideration.
In order, therefore, to make the absolute rent equal to 10 per cent, it is assumed that the general average composition of the non-agricultural capital is £ 80c+£ 20v and that of agricultural capital is £ 60c+£ 40v.
The question now is whether it would make any difference to case D, where class I pays no rent, if the agricultural capital were differently constituted, for example £ 50c+£ 50v or £ 70c+£ 30v? In the first case, the value of the product would be £ 125, in the second, £ 115. In the first case, the difference arising from the different composition of the non-agricultural capital would be £ 15, in the second it would be 5. That is, the difference between the value of the agricultural product and cost-price would in the first case be so per cent higher than has been assumed above, and in the second 50 per cent lower.
If the former were the case, if the value [of the product] of £ 100 were £ 125, then the value per ton for I [would be] equal to £ 2 1/12 in Table A. And this would be the market-value for A, for class I determines the market-value here. The cost-price for I A, on the other hand, would be £ 1 5/6, as before. Since, according to the assumption, the 292 1/2 tons are only saleable at £ 1 5/6, this would therefore make no difference, just as it would make no difference if the agricultural capital [were] composed of £ 70c+£ 30v or the difference between the value of the agricultural produce and its cost-price [were] only £ 5, i.e., half the amount [previously] assumed. If the cost-price, and therefore the average organic composition of the non-agricultural capital, were assumed to be constant at £ 80c+£ 20v, then it would make no difference to this case <I D> whether it [the organic composition of the agricultural capital] were higher or lower, although it would make a considerable difference to Table A and it would make a difference of 50 per cent in the absolute rent.
But let us now assume the opposite, that the composition of the agricultural capital remains £ 60c+£ 40v, as before and that of the non-agricultural capital varies. Instead of being £ 80c+£ 20v, let it be either £ 70c+£ 30v or £ 90c+£ l0v. In the first case the average profit [would be] [£] 15 or 50 per cent higher than in the supposed case; in the other, £ 5 or 50 per cent lower. In the first case the absolute rent [would be] £ 5. This would again make no difference to I D. In the second case the absolute rent [would be] £ 15. This too would make no difference to the case I D. All this would therefore be of no consequence to I D, however important it may continue to be for tables A, B, C, and E, i.e., for the absolute determination of the absolute and differential rent, whenever the new class— be it in the ascending or the descending line—only supplies the necessary additional demand at the old market-value.
***
Now the following question arises:
Can this case D occur in practice? And even before this, we must ask: is it, as Ricardo assumes, the normal case? It can only be the normal case:
Either: if the agricultural capital is equal to £ 80c+£ 20v, that is, to the average composition of the non-agricultural capital, so that the value of the agricultural produce would be equal to the cost-price of the non-agricultural produce. For the time being this is statistically wrong. The assumption of this relatively lower productivity of agriculture is at any rate more appropriate than Ricardo’s assumption of a progressive absolute decrease in its productivity.
||596| In Chapter I “On Value” Ricardo assumes that the average composition of capital prevails in gold and silver mines (although he only speaks of fixed and circulating capital here; but we shall “correct” this). According to this assumption, these mines could only yield a differential rent, never an absolute rent. The assumption itself, however, in turn rests on the other assumption, that the additional supply provided by the richer mines is always greater than the additional supply required at the old market-value. But it is absolutely incomprehensible why the opposite cannot equally well take place. The mere existence of differential rent already proves that an additional supply is possible, without altering the given market-value. For IV or III or II would yield no differential rents if they did not sell at the market-value of I, however this may have been determined, that is, if they did not sell at a market-value which is determined independently of the absolute amount of their supply.
Or: case D would always have to be the normal one, if the [conditions] presupposed in it are always the normal ones; in other words, if I is always forced by the competition from IV, III and II, especially from IV, to sell its product below its value by the whole amount of the absolute rent, that is, at the cost-price. The mere existence of differential rent in IV, III, II proves that they sell at a market-value which is above their individual value. If Ricardo assumes that this cannot be the case with I, then it is only because he presupposes the impossibility of absolute rent, and the latter, because he presupposes the identity of value and cost-price.
Let us take case C where the 292 1/2 tons find a sale at a market-value of £ 1 16 12/13 s. And, like Ricardo, let us start out from IV, So long as only 92 1/2 tons are required, IV will sell at £1 5 35/37s. per ton, i.e., it will sell commodities that have been produced with a capital of £ 100 at their value of £ 120, which yields the absolute rent of £ 10. Why should IV sell its commodity below its value, at its cost-price? So long as it alone is there, III, II, I cannot compete with it. The mere cost-price of III is above the value which yields IV a rent of £ 10, and even more so the cost-price of II and I. Therefore III etc. could not compete, even if they sold these tons at the bare cost-price.
Let us assume that there is only one class—the best or the worst type of land, IV or I or III or II, this makes no difference whatsoever to the theory—let us assume that its supply is unlimited, that is, relatively unlimited compared to the amount of the given capital and labour which is in general available and can be absorbed in this branch of production, so that land forms no barriers and provides a relatively unlimited field of action for the available amount of labour and capital. Let us assume, therefore, that there is no differential rent because there is no cultivation of land of varying natural fertility, hence there is no differential rent (or else only to a negligible extent). Furthermore, let us assume that there is no landed property; then clearly there is no absolute rent and, therefore (as, according to our assumption, there is no differential rent), there is no rent at all. This is a tautology. For the existence of absolute rent not only presupposes landed property, but it is the posited landed property, i.e., landed property contingent on and modified by the action of capitalist production. This tautology in no way helps to settle the question, since we explain that absolute rent is formed as the result of the resistance offered by landed property in agriculture to the capitalist levelling out of the values of commodities to average prices. If we remove this action on the part of landed property—this resistance, the specific resistance which the competition between capitals comes up against in this field of action—we naturally abolish the precondition on which the existence of rent is based. Incidentally (as Mr. Wakefield sees very well in his colonial theory), there is a contradiction in the assumption itself: on the one hand, developed capitalist production, on the other hand, the non-existence of landed property. Where are the wage-labourers to come from in this case?
A somewhat analogous development takes place in the colonies, even where, legally, landed property exists, in so far as the government gives [land] gratis as happened originally in the colonisation from England; and even where the ||597| government actually institutes landed property by selling the land, though at a negligible price, as in the United States, at 1 dollar or something of the sort per acre.
Two different aspects must be distinguished here.
Firstly: There are the colonies proper, such as in the United States, Australia, etc. Here the mass of the farming colonists, although they bring with them a larger or smaller amount of capital from the motherland, are not capitalists, nor do they carry on capitalist production. They are more or less peasants who work themselves and whose main object, in the first place, is to produce their own livelihood, their means of subsistence. Their main product therefore does not become a commodity and is not intended for trade. They sell or exchange the excess of their products over their own consumption for imported manufactured commodities etc. The other, smaller section of the colonists who settle near the sea, navigable rivers etc., form trading towns. There is no question of capitalist production here either. Even if capitalist production gradually conies into being, so that the sale of his products and the profit he makes from this sale become decisive for the farmer who himself works and owns his land; so long as, compared with capital and labour, land still exists in elemental abundance providing a practically unlimited field of action, the first type of colonisation will continue as well and production will therefore never be regulated according to the needs of the market—at a given market-value. Everything the colonists of the first type produce over and above their immediate consumption, they will throw on the market and sell at any price that will bring in more than their wages. They are, and continue for a long time to be, competitors of the farmers who are already producing more or less capitalistically, and thus keep the market-price of the agricultural product constantly below its value. The farmer who therefore cultivates land of the worst kind, will be quite satisfied if he makes the average profit on the sale of his farm, i.e., if he gets back the capital invested, this is not the case in very many instances. Here therefore we have two essentially different conditions competing with one another: capitalist production is not as yet dominant in agriculture; secondly, although landed property exists legally, in practice it only exists as yet sporadically, and strictly speaking there is only possession of land. Or although landed property exists in a legal sense, it is—in view of the elemental abundance of land relative to labour and capital—as yet unable to offer resistance to capital, to transform agriculture into a field of action which, in contrast to non-agricultural industry, offers specific resistance to the investment of capital.
In the second type of colonies—plantations—where commercial speculations figure from the start and production is intended for the world market, the capitalist mode of production exists, although only in a formal sense, since the slavery of Negroes precludes free wage-labour, which is the basis of capitalist production. But the business in which slaves are used is conducted by capitalists. The method of production which they introduce has not arisen out of slavery but is grafted on to it. In this case the same person is capitalist and landowner. And the elemental [profusion] existence of the land confronting capital and labour does not offer any resistance to capital investment, hence none to the competition between capitals. Neither does a class of farmers as distinct from landlords develop here. So long as these conditions endure, nothing will stand in the way of cost-price regulating market-value.
All these preconditions have nothing to do with the preconditions in which an absolute rent exists: that is, on the one hand, developed capitalist production, and on the other, landed property, not only existing in the legal sense but actually offering resistance and defending the field of action against capital, only making way for it under certain conditions.
In these circumstances an absolute rent will exist, even if only IV or III or II or I are cultivated. Capital can only win new ground in that solely existing class [of land] by paying rent, that is, by selling the agricultural product at its value. It is, moreover, only in these circumstances that there can first be talk of a comparison and a difference between the capital invested in agriculture (i.e., in a natural element as such, in primary production) and that invested in non-agricultural industry.
But the next question is this:
If one starts out from I, then clearly II, III, IV, if they only provide the additional supply admissible at the old market-value, will sell at the market-value determined by I, and therefore, apart from the absolute rent, they will yield a differential rent in proportion to their relative fertility. On the other hand, if IV is the starting-point, then it appears that certain objections ||598| could be made.
For we saw that II [in tables B and C] draws the absolute rent if the product is sold at its value of £ 1 11/13 or at £ 1 16 12/13s.
In Table D the cost-price of III, the next class (in the descending line) is higher than the value of IV, which yields a rent of £ 10. Thus there cannot be any question of competition or underselling here—even if III sold at cost-price. If IV, however, no longer satisfies the demand, if more than 92 1/2 tons are required, then its price will rise. In the above case, it would have to rise by 3 43/111s. per ton, before III could enter the field as a competitor, even at its cost-price. The question is, will it enter into it in these circumstances? Let us put this case in another way. For the price of IV to rise to £ 1 12s., the individual value of III, the demand would not have to rise by 75 tons. This applies especially to the dominant agricultural product, where an insufficiency in supply will bring about a much greater rise in price than corresponds to the arithmetical deficiency in supply. But if IV had risen to £1 12s., then at this market-value, which is equal to III’s individual value, the latter would pay the absolute rent and IV a differential rent. If there is any additional demand at all, III can sell at its individual value, since it would then dominate the market-value and there would be no reason at all for the landowner to forgo the rent.
But say the market-price of IV only rose to £ 1 9 1/3s., the cost-price of III. Or in order to make the example even more striking: suppose the cost-price of III is only £ 1 5s., i.e., only 1 8/37s. higher than the cost-price of IV. It must be higher because its fertility is lower than that of IV, Can III be taken in hand now and thus compete with IV, which sells above III’s cost-price, namely, at £1 5 35/37 s.? Either there is an additional demand or not. In the first case the market-price of IV has risen above its value, above £ 1 5 35/37s. And then, whatever the circumstances, III would sell above its cost-price, even if not to the full amount of its absolute rent.
Or there is no additional demand. Here in turn we have two possibilities. Competition from III could only enter into it if the farmer of III were at the same time its owner, if to him as a capitalist landed property would not be an obstacle, would offer no resistance, because he has control of it, not as capitalist but as landowner. His competition would force IV to sell below its hitherto prevailing price of £ 1 5 35/37 s, and even below the price of £ 1 5s. And in this way III would be driven out of the field. And IV would be capable of driving III out every time. It would only have no reduce the price to the level of its own costs of production, which are lower than those of III. But if the market expanded as a result of the reduction in price engendered by III, what then? Either the market expands to such an extent that IV can dispose of its 92 1/2 tons as before, despite the newly-added 75, or it does not expand to this degree, so that a part of the product of IV and III would be surplus. In this case IV, since it dominates the market, would continue to lower [the price] until the capital in III is reduced to the appropriate size, that is until only that amount of capital is invested in it as is just sufficient for the entire product of IV to be absorbed. But at £ 1 5s. the whole product would be saleable and since III sold a part of the product at this price, IV could not sell above that. This however would be the only possible case: temporary over-production not engendered by an additional demand, but leading to an expansion of the market. And this can only be the case if capitalist and landowner are identical in III—i.e., if it is assumed once again that landed property does not exist as a power confronting capital, because the capitalist himself is landowner and sacrifices the landowner to the capitalist. But if landed property as such confronts capital in III, then there is no reason at all why the landowner should hand over his acres for cultivation without drawing a rent from them, why he should hand over his land before the price of IV has risen to a level which is at least above the cost-price of III. If this rise is only ||599| small, then, in any country under capitalist production, III will continue to be withheld from capital as a field of action, unless there is no other form in which it can yield a rent. But it will never be put under cultivation before it yields a rent, before the price of IV is above the cost-price of III, i.e., before IV yields a differential rent in addition to its old rent. With the further growth of demand, the price of III would rise to its value, since the cost-price of II is above the individual value of III. II would be cultivated as soon as the price of III had risen above £ 1,13 11/13s., and so yielded some rent for II.
But it has been assumed in D that I yields no rent. But this only because I has been assumed to be already cultivated land which is being forced to sell below its value, at its cost-price because of the change in market-value brought about by the entry of IV. It will only continue to be thus exploited, if the owner is himself the farmer, and therefore in this individual case landed property does not confront capital, or if the farmer is a small capitalist prepared to accept less than 10 per cent or a worker who only wants to make his wage or a little more and hands over his surplus-labour, which is equal to [£] 10 or £ 9 or less, to the landowner instead of the capitalist. Although in the two latter cases fermage is paid, yet economically speaking, no rent, and we are concerned with the latter. In the one case the farmer is a mere labourer, in the other something between labourer and capitalist.
Nothing could be more, absurd than the assertion that the landowner cannot withdraw his acres from the market just as easily as the capitalist can withdraw his capital from a branch of production. The best proof of this is the large amount of fertile land that is uncultivated in the most developed countries of Europe, such as England, the land which is taken out of agriculture and put to the building of railways or houses or is reserved for this purpose, or is transformed by the landlord into rifle-ranges or hunting-grounds as in the highlands of Scotland etc. The best proof of this is the vain struggle of the English workers to lay their hands on the waste land.
Nota bene: In all cases where the absolute rent, as in II D, falls below its normal amount, because, as here, the market-value is below the individual value of the class or, as in II B, owing to competition from the better land, a part of the capital must be withdrawn from the worse land or where, as in I D, rent is completely absent, it is presupposed:
1. that where rent is entirely absent, the landowner and capitalist [are] one and the same person; here therefore the resistance of landed property against capital and the limitation of the field of action of capital by landed property disappear but only in individual cases and as an exception. The presupposition of landed property is abolished as in the colonies, but only in separate cases;
2. that the competition of the better lands—or possibly the competition from the worse lands (in the descending line)— leads to over-production and forcibly expands the market, creates an additional demand by forcing prices down. This however is the very case which Ricardo does not foresee because he always argues on the assumption that the supply is only sufficient to satisfy the additional demand;
3. that II and I in B, C, D either do not pay the full amount of the absolute rent or pay no absolute rent at all, because they are forced by the competition from the better lands to sell their product below its value, Ricardo on the other hand presupposes that they sell their product at its value and that the worst land always determines the market-value, whereas in case I D, which he regards as the normal case, just the opposite takes place. Furthermore his argument is always based on the assumption of a descending line of production.
If the average composition of the non-agricultural capital is £80c+£ 20v, and the rate of surplus-value is 50 per cent, and if the composition of the agricultural capital is £ 90c+£ l0v, i.e., higher than that of industrial capital—which ||600| is historically incorrect for capitalist production— [then there is] no absolute rent; if it is £ 80c+£ 20v, which has not so far been the case, [there is] no absolute rent; if it is lower, for instance £ 60c+£ 40v, [there is an] absolute rent.
On the basis of the theory, the following possibilities can arise, according to the relationship of the different categories to the market—i.e., depending on the extent to which one or another category dominates the market:
A. The last class pays absolute rent. It determines the market-value because all classes only provide the necessary supply at this market-value.
B. The last class determines the market-value; it pays absolute rent, the full rate of rent, but not the full previous amount because competition from III and IV has forced it to withdraw part of the capital from production.
C. The excess supply which classes I, II, III, IV provide at the old market-value, forces the latter to fall; this however, being regulated by the higher classes, leads to the expansion of the market. I pays only a part of the absolute rent, II pays only the absolute rent.
D. The same domination of market-value by the better classes or of the inferior classes by oversupply destroys rent in I altogether and reduces it to below its absolute amount in II; finally in
E. The better classes oust I from the market by bringing down the market-value below the cost-price [of I]. II now regulates the market-value because at this new market-value only the necessary supply [is] forthcoming from all three classes. |600||
||600| Now back to Ricardo.
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It goes without saying that when dealing with the composition of the agricultural capital the value or price of the land does not enter into this. The latter is nothing but the capitalist rent.
[a] This paragraph is in English in the manuscript.—Ed.
[b] In the manuscript:”First. The”.—Ed.