Comment on the Table

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 Vs of the total capital advanced, or a surplus value = ^[100]/5. If, therefore, the capital advanced=£100, the value of the total product must be £120. Supposing furthermore that the average profit=10%, 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=120, simply means that the product contains the labour time materialised in the £100 capital + /e of labour time which is unpaid but appropriated by the capitalist. The total value of the product=£120, whether the capital of 100 produces 60 tons in one class of mines or 65, 75 or 92'/2 in another. But clearly, the value of the individual part, be it measured by the ton, as here, 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 1 ton=£2, if the total product of the capital=60 tons, i.e., 60 tons are worth £120 or represent labour time=to that which is materialised in £120. If the total product=65 tons, then the value of the individual ton=£l 16^[12]/^[13]s. or £ln/i3', if it amounts to 75 tons, then the value of the individual ton=£l^[9]/i5 or £1 12s.; finally, if it=92'/2 tons, then the value per ton=£l n/37 or £1 5 3o/37S. Because the total mass of commodities or tons produced by the capital of 100 always has the same value,=£\20, 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'/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 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=the quantity of labour time contained in the capital (constant and variable) consumed in its production+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% on the variable capital, in other words, the rate of surplus value=50%, then the value of the total mass of commodities produced by the capital of 100=£120. As we have seen in the first part of this work,^[3] if the commodities are to circulate, their exchange value must first be converted into a price, i.e., expressed in terms of money. Thus [XI-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=£120, = the total value as expressed in terms of money. Price here=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=60 tons of coal, 60 tons=£120 and 1 ton=£ I 2%o=£2; if the product is 65 tons, the value of the individual ton=£I20/^[6]5=£ln/i3 or £1 16l2/^[13]s. (=£1 16s. ll'/is d). If the product=75 tons, the value of the individual ton=^[120]/^[75]=£l 12s.; if it=92'/^[2] tons, then it=£l u/ ^[3]7=£l 5^[35]/s7S. The value (price) of the individual commodity thus=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.

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=the price of the individual commodityXthe total number of individual commodities or it equals the price of a definite quantity of individual commodities x 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+the surplus value; that is of labour time contained in the capital advanced-Hthe 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 92Va tons, so the £20 surplus value is distributed among them. When the number of tons=60, and therefore the value of the individual ton=^[120]/^[60]=£2 or 40s., then 7e of this 40s. or £2=6^[2]/^[3]s., 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—°/6o=2/6=1/3 of 20,= '/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,⁽¹⁾ 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, which is the same, the value of the labour capacity. 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 capacity, therefore increases the surplus or unpaid labour contained in the value of the total product and hinc* 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 [XI-577] quantity 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 1 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=£'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,=£110 if, as has been assumed, the average prof it =10%. The excess in value of the total product, whatever its size,=£10 = 7i2 of the total value or Vio 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, d o n o t p r e v e n t t h e 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,=£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 COALMINES 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 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=the difference between their individual [XI-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 market value. In this case, the difference between their individual value and the market 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 above 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 =£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=£l 12s. the capital of 100 produces 75 tons, the total differential value of these 75 tons = 8s. x 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, it should be noted that 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=£l 97ss., since the total value=£120 and the [total] cost price =£110, and if the market value=the individual value in this class, i.e.,=£l 12s., 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 =£2 and its cost price=£l 16^[2]/ss.; 55 tons would be equal to £110 or to the cost price of the total product. If, however, the capital of 100 produces 75 tons, then the value per ton=£l 12s., its cost price=£l 9V3S.

and 68^[3]At 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 5 tables, that absolute rent always=the excess of the [individual] 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+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 [XI-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.^[153]

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.

Ad Table A. 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 ni plus, ni moins.^[3] The market value cannot be above the value of a ton in I, i.e., of that commodity which is produced under the least 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 (TRADE), 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, moreover, supplies ^[3]/io of the entire product on the market, since II and III only supply sufficient amounts to meet the total DEMAND, 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 [XI-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 = £ 1 0 . II yields a differential rent of £ 1 0 and III of £30, because the market value, which is determined by I, yields an excess of £ 1 0 for II and of £ 3 0 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 £ 2 0 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 7io 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]/i3S. 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.

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 12s. and later £ 1 16^[12]/iss., 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]/i3S., 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

32-176 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 ^[3]/io of the product, could satisfy it. The entire product required, 200 tons, is in this case sold at £2 per ton „because ^[3]/io 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 ^[3]/io 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 ^[3]/io 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,^[3]

was not required, even on the basis of a wrong conception of absolute rent.

If production proceeds in a DESCENDING LINE, from III to II and f r o m I I 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 16^[12]/i3S. 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]/i3 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 play 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%, then it can be assumed that the price of coal (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 a matière instrumentale 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%, if I [were] more productive or the value of the ton of coal 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 [XII-582] II entered, it rose to £1 16^[12]/iss. 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 surplus value, and therefore also profit, was higher, in addition however— with the surplus value thus modified — the rate of profit was

n* 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%, 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=12% when only III was being worked; that it SANK to 11% when II came into play and finally to 10% 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 matières instrumentales.

Here 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 matière instrumentale, 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, zinc, 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 mode 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 as before. Here again we must distinguish:

First: The change in value affects both elements — variable and constant element— 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

matière instrumentale 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 GENERAL 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 + 20u = 120. Considering GENERAL CAPITAL, the value of the product and its cost price coincide, for the difference is equalised out for the GENERAL CAPITAL. 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 Vio for both elements. Thus 80 c would now only buy as many commodities as could previously be bought with 70c and with 20v only as many workers could be paid as previously with [approximately] 18t;. Or, in order to continue production on the old scale, [approximately] 90 c and 22 v would now have to be laid out. The value of the product, as previously, is now 120, of which, however, the outlay=112 (90 constant capital and 22 variable). Thus the profit=8 and on 112 this works out at Vu, which is 7 Vv%. Hence the value of the product from 100 capital advanced is now equal to 107 VT.

What is the ratio in which c and v now enter into this new capital? Previously the ratio v.c =20:80= 1:4; now it is as 22:90=11:45. V^[4]=^[45]/i8o; u/45=^[44]/i8o. That means that variable capital has decreased by Viso [XII-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+22u. For the value of the product=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 = l-A. But 10 profit on 110 = ^[1]/n=9^[1]/ii[%]. 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.^[154] The composition of a capital of 100 however would be 80c+20v, the value of the product being

109Vn.

[Second:] 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]/go or ^[10]/40, it would now be ^[22]/^[80] or 'Ao- 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]%.

22:18 = 21^[29]/^[5]i:17^[33]/^[5]i. 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^[2]%i are required in order to move a constant capital of 78^[22]/^[5]i in value. According to this ratio, only 78^[22]/^[5]i would be laid out in machinery and raw material from a capital of 100; 21^[29]/si 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 now=117^[33]/^[51]. And the composition of the capital: 78^[22]/5Ic + 21^[29]/5iv. But 21^[29]/^[6]i+l7^[33]/^[5]i=39u/5i. Under the previous composition [of capital], the total labour put in was equal to 40; now it is 39 "/si or less by ^[4]%i, 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 volume of the constant capital decreases although its value remains the same. But the rate of surplus value decreases and also the 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 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 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 mode of production within the sphere in which the capital is invested, but only to a rise in the value of the labour capacity 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 mode 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 [XII-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 to set in motion 78 of constant capital, it must lay out, for example, 22 in variable capital, while previously 20 v sufficed to set in motion 80 c.

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.^[3] The increased

a See this volume, p. 492-93.— Ed.

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 mode of production. T h e same absolute amount of IMMEDIATE LABOUR sets in motion the same amount of ACCUMULATED LABOUR as before. T h e 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=120. This yields 10 on 110 or 9 ' / H % [profit]; for 80c+20w therefore the value of 109Vu-

Previously we had:

Constant Variable Surplus Rate of Rate of capital [capital] value profit surplus

value

80 20 20 20% 100%

Now we have:

Constant Variable Surplus Rate of Rate of capital [capital] value profit surplus value

80 20 9 i / ^[1] 9>/^[1][%] 455/n%

80c represents less raw material, etc., here and 20i» less absolute labour in the same proportion. T h e raw material, etc., has become dearer and [a capital of] 80 therefore buys a smaller quantity of raw material, etc.; thus, because the mode 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. T h e 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 an example. T h e value of a pound of cotton has gone u p from Is. 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 mode 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%. This would involve:

Constant capital

Variable capital

Rate of surplus value

Rate of profit

Surplus value

Product Price per lb. of

yarn

I £80 = 1,600 lbs cotton

[£]20=20 workers

100[%] 20[%] [£]20 1,600 lbs yarn

Is. 6d.

II £80=800 lbs cotton

[£]20=10 workers

50[%] 10[%] [£]io 800 lbs yarn 2s. 9d.

For if the surplus value created by 20 workers=20, then that created by 10=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 [XII-585] lb. of yarn, must in this case rise at any rate, because it contains more labour, ACCUMULATED LABOUR (in the cotton 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 only 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%. 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 /^[9] could be used to buy cotton and £11^[1]/g could be laid out in wages.

The relative proportions would be:

Constant Variable Surplus Rate of Rate of Product Price capital capital value surplus profit per lb. value of yarn

III£888/ ^[9]= £ l l ^[1] / ^[9] = £ll ^[1]/g 100% 11 V^[9]% 8888/^[9] 1 lb.= 888^[8]/^[9] HV9 lb. 2s. 6d. lbs workers yarn

In this case, where no change in the value of variable capital takes place, the rate of surplus value therefore remains the same.

In I, variable capital is to constant capital as 20:80=1:4. In III, it is as 11 '/9:88^[8]/9=l: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 /g workers, while the remaining £88 ^[8]/^[9] only buy 888 ^[8]/g 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 was XU of the constant capital (20:80) and Vs of the total capital ( = 20). Now it is only Vs of the constant capital (11 79:88^[8]/^[9]) and 7^[9] (11 Vg) of 100, the total capital. But 100% on ^[10]% or 20 is 20 and 100% on ^[100]/^[9] or 11 Va is only 11 V9. 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 mode of production remains the same, and therefore the ratio between the amounts of labour, raw material and machinery employed remains the same, a CHANCE 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 [constant] 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 mode 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 [XII-586]; but the smaller amount of labour costs more. The necessary wage has risen. A larger share of this smaller amount of labour replaces 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 ; this CHANGE OF VALUE is therefore not accompanied by a

CHANGE IN THE ORGANIC COMPOSITION OF CAPITAL.

In this case (see p. 584)⁽²⁾ the pound of yarn rises from Is. 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 Is. is incorporated in the value of the lb. of yarn.

Example II on page 584 however is incorrect. We had:

I Constant Variable Surplus Rate of Rate of Product Price capital capital value surplus profit per lb. value of yarn

£80 = 1,600 £20=20 £20 100[%] 20% 1,600 lbs Is. 6d. lbs COTTON workers yarn 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 £ 2 0 and of this 10 [are] wages and 10 surplus value. If, therefore, the value of the labour capacity rose in the same proportion as that of the raw material, i.e., if it doubled, then it would be £ 2 0 for 10 workers as compared with £ 2 0 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 = £ 2 0 , if that which the 20 p r o d u c e = £ 4 0 . 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 Va! £ 8 0 now buy 1,200 lbs COTTON, whereas previously they bought 1,600. Previously £ 1 = 2 0 lbs [cotton] or 1 lb. [cotton]=£'/2o=ls. Now £ 1 = 15 lbs or 1 lb.=£'/i5=l'/3S. or Is. 4d. Previously 1 worker cost £ 1 , now £ lVs = £ l 6^[2]/3S. or £ 1 6s. 8d. and for 15 men [that] amounts to £ 2 0 (£15+£ ^{[1 6]}/s). [XII-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:

IV Constant Variable Surplus Rate of Rate of Product Price capital capital value surplus profit per lb. value of yarn

£80=1,200 lbs £20= £10 50% 10% 1,200 lbs Is. lOd. cotton 15 men yarn

This Is. 10d. [contains] cotton worth Is. 4d. and labour worth 6d.

The product becomes dearer because the COTTON has become dearer by V3. But the product is not dearer by Vs- Previously, in I, it was equal to 18d.; if, therefore, it had become dearer by Vs, it would now be 18d.+6d.=24d., but it is only equal to 22d. Previously 1,600 lbs yarn contained £ 4 0 labour, i.e., 1 lb., £'/4o or ^[2]%oS. or V2S.=6d. labour. Now 1,200 lbs [yarn] contain £ 3 0 labour, 1 lb. therefore contains £^[1]/w=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 affect the value of the lb. of yarn, of the product. Now as before, labour only accounts for 6d., while COTTON now accounts for Is. 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 3x l,600d.=£20 for 1,600 lbs yarn. And 4d. per lb. amounts to 4x 1,200=£20 for 1,200 lbs. And 3d. on 15d. (Is. coTTON + 3d. wages) in the first example comes to Vs profit=20%. On the other hand, 2d. on 20d. (16d. COTTON and 4d. wages) comes to '/io or 10%.

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 mode of production has remained the same in all the examples, and the pound is again equal to Is.

Now the capital is made up as follows:

Constant Variable Surplus Rate of Rate of Product Price capital capital value surplus profit per lb. value of yarn

£73V ^[3]= £262/^[3] £132/^[6] 50% 132/^[6]% l,466 2/s l ^[6]/„s. l,466^[2]/^[3] (20 men) lbs lbs COTTON

This calculation is wrong; for if a man spins 80[lbs], 20 [men] spin 1,600 and not 1,466 ^[2]/s, since it is assumed that the mode 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 Variable Surplus Rate of Rate of Product Price capital capital value surplus profit per lb. value of yarn

II £75=1,500 £25 £12 V^[2] 50% 12V^[2]% 1,500 Is. 6d. lbs cotton (18 s/ ^[4] men) lbs yarn

Of this 6d., 4d. wages and 2d. profit. 2 on 16='/s=12 7^[2]%. Finally, if the value of the variable capital remained the same as before (1 man received £1), whereas the value of the constant capital altered, so that 1 lb. COTTON cost Is. 4d. or 16d., instead of Is. then:

Constant Variable Surplus Rate of Rate of Product Price capital capital value surplus profit per lb. value [of yarn]

III £84*/i9= £15i5/ 1 9 15 is/,9 100% 15 is/19 1,263»/^[19] Is. lOd. 1,263 3/ig (=15 1 5/ 1 9 [%] lbs lbs COTTON men) [yarn]

[XII-588] T h e profit=3d. O n 19d. this comes to exactly 15 ^[15]/,9%.

Now let us put all 4 CASES together, beginning with I, where n o CHANGE of value has as yet taken place.

Constant Variable Surplus Rate Rate of Product Price Profit capital capital value of profit per lb. surplus of yarn value

I £80 = 1,600 £20=20 £20 100% 20% 1,600 Is. 6d.=3d. lbs workers lbs yarn COTTON

II £75=1,500 £25 = 18 3/ 4 £12 V^[2] 50% 12V^[2]% 1,500 Is. 6d.=2d. lbs workers lbs yarn COTTON

HI £84«/, ^[9]= £15 ^[1]s/ ^{[1 9]}= [£]15'5/19 100% 15 »^[6]/^[19]% 1,263S/^[19] Is. 10d.=3d. 1,263 3/19 15 I 5/ ] 9 lbs yarn lbs workers [cotton]

IV £80=1,200 £20=15 £10 50% 10% 1,200 Is. 10d. = 2d. lbs men lbs yarn [cotton]

T h e price of the product has changed in III and IV, because the value of constant capital has changed. On the other hand, a CHANGE of VALUE in the variable capital does not bring about a change in price because the absolute quantity of IMMEDIATE LABOUR remains the same a n d is only differently apportioned between NECESSARY LABOUR and SURPLUS LABOUR.

Now what happens in CASE IV, where the CHANGE IN VALUE affects constant and variable capital in equal proportions, where both rise by 7s?

If only wages had risen (II), then the profit would have fallen from 20% to 12 72%, i-e., by 7 72- If constant capital alone had risen (III), profit would have fallen from 20 to 15 ^[15]/i9, i.e., by 4^[4]/i9%- Since both rise to the same extent, profit falls from 20 to 10, i.e., by 10%. But why not by 7 72+4 ^[4]/ ^{[1 9]}% or by 11 ^{[2 7]}/ ^{[3 8]}, 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 n/s8, 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 V3 of the total labour is UNPAID, thus the rate of surplus value falls; moreover, 1 V4 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]/i9 or by 4^[4]/i9- In IV (the rate of surplus value having fallen again to the level of that in II, namely, Vs 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]/i9; but compared with I it does not decrease by 3^[3]/4+I5/^[19], i.e., by 4^[41]/76- Otherwise the number of workers employed in IV would=10^[35]/76-

Hence it follows that variations in the value of commodities which enter into constant or variable capital — when the mode of production, or the physical composition of capital, remains the same, in other words, when the ratio of IMMEDIATE and ACCUMULATED LABOUR employed 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 mode of production remains the same. When only the variable capital is affected, it rises in relation to the constant capital [XII-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% and the latter by 5. Then in so far as they both rose by 5%, 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%, 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, to return from IV to I would be to consider a fall in value affecting both components in equal proportions. To assess the effect of a fall in only [one component part], II and III would have to be modified.

Returning to Table A it thus follows," that the assumption, that the profit of 10% 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 10) 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. Here, as has already been explained above,⁽³⁾ the competition from III and IV forces II to WITHDRAW half his capital. With a DESCENDING LINE, it would on the contrary appear that AN ADDITIONAL SUPPLY OF only 32 V2 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., ⁽⁴⁾U 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]/is. As compared with A, the market value per ton has fallen from £2 to £1 16^[12]/iss., 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]/is (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=10%; 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=£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]/i3. This is a reduction by ll ^[7]/i3. The rent for II and III taken together has therefore fallen by 26^[7]/is. It remains to account for a rise, not of 24^[3]/is, as at first sight it would seem, but of 50^[10]/i3. 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, summa summarum,^[1] £60 ^[10]/i3 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, =£10. The differential rent of [£] 50^[10]/i3, however, is due to [XII-590] the fact that the differential value of IV = 10470/48is. per ton, and this has to be multiplied by 92 V2 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 V2 II, HI, IV [B are] more fertile than I, II, III [A], and yet the differential rent for V2 II, III, IV [B] is greater than it was for I, II, III [A] because the greatest portion of the product — 92 V2 tons — is supplied by a class whose differential value is greater than that occurring in general 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 produces 92'/ä tons, ni plus ni moins,h its differential value in B where the market value =£1 16^[12]/iss. per ton, amounts to 10s. etc. per ton.

The whole RENTAL in A amounts to [£] 70 on [£] 300 capital, which=23 ^[1]/s%. On the other hand in B, leaving out of account the ^[3]/i3, it is £94 on £250, which is 37^[3]/^[5]%.

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 V2 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 n/i3, the demand grows to 292 '/2- It is wrong to assume that the limits of the market are necessarily the same at £1 n/i3 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, above all, is the only point to which we want to draw attention in Table C.

Table D. Here it is assumed that the 292 V2 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%. 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 de prime abord^[3]; 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 V2 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 continues to decrease, the market can absorb the 92V2 tons. How does this occur? IV, III and V2 II 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 V2 tons on the market whereas previously there were only 200. II would sell at its individual value, at £1 n/i3, in order to make room for itself and to drive I, whose individual value=£2, out of the market. But since, even at this market value, there is no room for the 292 V2 tons, IV and III exert pressure on II, until the market price falls to £l ^[5]/6, at which price the classes IV, III, II and I find room for their product on the market, which at this [XII-591] market price absorbs the whole product. Through this fall in price, supply and demand are balanced. As soon as the ADDITIONAL suppLv 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 production costs,^[155] 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.^[116]

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 £l^[5]/e- If the price were higher, the limits of 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]/i2 in addition to the absolute rent, III pays a differential rent of £17 V2 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 VÔ, instead of £10, i.e., not the full amount of the absolute rent. Why? Although the new market value of £1 ^[5]/& 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, £9l/^[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 =the difference between market value and cost price.//

The absolute rent = the difference between individual value and cost price.

The differential rent = the difference between market value and individual value.

The actual or total rent = the absolute rent+the differential rent, in other words, it is equal to the excess of the market value over the individual value+the excess of the individual value over the cost price or=the difference between market value and cost price.

If, therefore, the market value=the individual value, the differential rent=0 and the total rent=the difference between individual value and cost price.

If the market value is > than the individual value, the differential rent=the excess of the market value over the individual value; the total rent, however,=this differential rent+the absolute rent.

If the market value is < than the individual value, but greater than the cost price, the differential rent is a negative quantity, hence the total rent=the absolute rent+this negative differential rent, i.e., minus the excess of the individual value over the market value.

If the market value=the cost price, then on the whole rent=0. 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:

[XII-592] 1. AR=IV-CP=+3>

2. DR=MV-IV=x 3. TR=AR+DR=MV-IV+IV-CP=)> + x = MV-CP IF MV, > IV, then MV-IV= + x. HENCE: DR positive and TR=3) + x

And MV-CP=;y + x Or MV~y-x=CP or MV=y + x+CP. IF MV<IV, then M V - I V = - x HENCE: DR negative and TR=y—x

And M V - C P = ) i - s Or MV+x = IV. Or MV+3t-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 - I V + IV-CP=0 + IV-CP= = I V - C P = M V - C P = + 3i.

IF MV=CP, [then] TR or MV-CP=0.

In the CIRCUMSTANCES assumed, I pays no rent. Why not? Because the absolute rent=the difference between the individual value and the cost price. The differential rent, however,=the difference between the market value and the individual value. But the market value here = the cost price of I. The individual value of I = £ 2 per ton, the market value=£l ^[5]/e- The differential rent of I therefore=£l ^[5]/6—£2, which=— £i/&. The absolute rent of I, however,=£2—£1^[5]I%, in other words,=the difference between its individual value and its cost price =z+£^[1]le- Since, therefore, the actual rent of I = the absolute rent (£ Vß) and the differential rent (—£l/tj), it=+£^[1]/6—£lU=0. Thus category I pays neither differential rent nor absolute rent, but only the cost price. The value of its product=£2; [it is] sold at £1 ^[5]/Ô, that means V12 below its value, = 8'/3% below its value. I cannot sell at a higher price, because the market is determined not by I but by IV, III, II in opposition to I. I can merely provide AN ADDITIONAL SUPPLY at the price of £1^[5]/e-

That I pays no rent, is due to the FACT that the market value=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 £l^[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 £l ^[7]/8 or £1 17'/2S.; its cost price: £1 14^[3]/^[8]s. And since the market value=£l ^[5]/6=£l 16^[2]/3S., the difference between cost price and market value=2^[7]/24S. And on 60 tons this would amount to [XII-593] a rent of £6 17 V^[2]s.

If therefore all the circumstances remained the same and I were more productive than it is by Vis (since ^[6]%5=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 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 I could yield a rent, even though this would only consist of a fraction of the absolute rent. For since the market absorbs 292 V2 tons at £1^[5]/e, 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,=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 suppLV — although it would be a lower rent — if for a capital outlay of £100 IV produced 80 tons instead of 92 V2 tons.

Thirdly: We have assumed that the absolute rent for a capital outlay of £100=£10,= 10% on the capital, or V11 on the cost price, and that therefore the value [of the product yielded by] a capital of £100 in agriculture=£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=£l, then 100 working days are laid out. In general, if a capital of £100=100 working days then, in whatever branch of production this capital may be laid out, [the value of the product created by this capital] is never [=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]=50%, then the worker works 8 hours for himself and 4 gratis for the capitalist. The product=12 hours=£l (since according to the assumption, 12 hours labour time are contained in one gold sovereign). Of these 12 hours=£l, 8 recoup the capitalist for the wage and 4 form his surplus value. Thus on a wage of I3V3S., surplus value=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.

[XII-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,=80c + 20u, then the value of the product=110 and the profit=10 (although it contains 50% unpaid labour). If the capital b,=40c+60t>, then the value of the product=130, and the profit=30 although it too contains only 50% unpaid labour. If the capital c=60c+40u, then the value of the product=120 and the profit=20% although, in this case too, it comprises 50% unpaid labour. Thus the 3 capitals = 300 yield a total profit= 10 + 30 + 20=60, and this makes an average of 20% 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+60t>, sells at £10 below its value; capital c: 60c+40u 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=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%. 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+40f (which, incidentally, is perhaps still too low for v), then the value=120. But this would be=to the cost price in the industry. Suppose therefore in the above case that the average price for a capital of [£] 100=£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% 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 total capital is 80c+20v, if the average profit=10%. We assume that that of the agricultural capital=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 + 10T;, 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 [XII-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 left out of consideration.

In order, therefore, to make the absolute rent=10% it is assumed

that the general average composition of the NON-AGRICULTURAL capital = 80 c+ 20 v, that of AGRICULTURAL capital=60 c +40 v. 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 + 30t>? In the first case, the value of the product would=£125, in the second, £115. In the first case, the difference arising from THE DIFFERENT COMPOSITION OF THE NON-AGRICULTURAL CAPITAL would=£15, in the second it would=5. That is, the difference between the value of the agricultural product and cost price would in the first case be 50% higher than has been assumed above, and in the second 50% lower.

If the former were the case, if the value of £100=£125, then the value per ton for 1 = 2 V12 in Table A. And this would be the market value for A, for class I determines the market value here. The cost price for / A, on the other hand, would be £1 bU, as before. Since, according to the assumption, the 292 V2 tons are only saleable at £l ^[5]/6, this would therefore make no difference, just as it would make no difference if the agricultural capital = 70c + 30v or the difference between the value of the AGRICULTURAL PRODUCE and its cost price=only £ 5 , only half the amount assumed. If the cost price, and therefore the average organic composition of the NON-AGRICULTURAL capital, were assumed to be constant at 80c + 20t>, then it would make no difference to this CASE [I D] whether it were higher or lower, although it would make a considerable difference to Table A and it would make a difference of 50% in the ABSOLUTE RENT.

But let us now assume the opposite, that the composition of the AGRICULTURAL CAPITAL remains 60c+40i>, as before and that of the NON-AGRICULTURAL CAPITAL varies. Instead of being 80c + 20u, let it be either 7 0 c + 3 0 v or 90c + 10u. In the first case the average profit=[£] 15 or 50% higher than in the SUPPOSEDCASE; in the other; £ 5 or 50% lower. In the first case the absolute rent = £ 5 . This would again make no difference to I D. In the second case the absolute rent = £ 1 5 . This too would make no difference to the CASE I D. All this would therefore be of no consequence to / 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 if the AGRICULTURAL CAPITAL = 80 c +201>, equal, that is, to the average composition of the NON-AGRICULTURAL CAPITAL, so that the value of the AGRICULTURAL PRODucE=the cost price of the NON-AGRICULTURAL PRODUCE. For the time being this is statistically wrong. T h e 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. [XII-596] In CHAPTER I " O n Value" ^[3] 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. T h e 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 V2 tons find a sale at a market value of £1 16^[12]/i3S. And, like Ricardo, let us start out from IV. So long as only 92 V2 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 it 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 an elemental quantity exists, relatively, that is, to the amount of the given capital and labour which is in general disponible" 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, there is a contradiction in the assumption itself: on the one hand, developed capitalist production (as Mr. Wakefield sees very well in his colonial theory ), 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 [XII-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 a capitalist class, nor do they carry on capitalist production. They are MORE OR LESS SELF-WORKING PEASANTS 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 comes into being, so that the sale of his products and the profit he makes from this sale become decisive for the SELF-WORKING AND sELFowNiNG FARMER; 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 essential conditions competing with one another: [firstly,] 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 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 mode 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 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 [XII-598] could be made.

For we saw that II draws the absolute rent if the product is sold at its value of £1 n/is or at £1 16^[12]/iSs.

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 V2 tons are required, then its price will rise. In the above case, it would have to rise by 3^[43]/ms. 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 Ill'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'/sS-, 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]/s7S. 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 Ill's cost price, namely, at £1 5^[35]/37S.? 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 2 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]/s7S. 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 to reduce the price to the level of its own production costs, 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 V2 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 [XII-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 13n/iss., 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 the landed property which confronted capital has disappeared,

or if the FARMER is a small capitalist prepared to accept less than 10% or a worker who only wants to make his wage or a little more and hands over his surplus labour=10 or 9 or < 10, to the landowner instead of the capitalist. Although in the two latter cases fermage^[3] is paid, yet economically speaking, no rent, and we are concerned only 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 piece of land, a part of the capital MUST BE WITHDRAWN FROM THE WORSE one or where, as in / 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 THE LATTER BY THE FORMER disappear but only in individual cases and as an exception. The presupposition of

a Rental.—Ed.

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 necessary 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 / D, which he regards as the normal case, just the opposite takes place. Furthermore his raisonnement is always based on the assumption of

a DESCENDING LINE OF PRODUCTION. If the average composition of the NON-AGRICULTURAL CAPITAL=80c + 20v, and the rate of surplus value=50%, and if the composition of the AGRICULTURAL capital=90c + 1 Of, i.e., higher than that of INDUSTRIAL CAPITAL — which [XI1-600] is historically incorrect for capitalist production—[then there is] no absolute rent; if it=80c + 20f, which has not so far been the case, [there is] no absolute rent; if it is lower, for instance 60c-t-40v, [there is an] absolute rent

On the basis of the theory, the following possibilities can arise, according to the relationship of the different classes to the market — i.e., depending on the extent to which one or another class 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. II now regulates the market value because at this new market value only the necessary SUPPLY [is] forthcoming from all 3 classes.

I would make the following further observation on the influence Of t h e VARIATION OF VALUE UPON THE ORGANIC COMPOSITION OF CAPITAL! W i t h 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. Now back to Ricardo.

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 capitalised rent. Back to:

Ricardo, CHAPTER II "On Rent": He begins by presenting the "colonial theory", already known from Smith," and here it is sufficient to state briefly the logical sequence of ideas.

* " O n the first settling of a country, in which there is an abundance of rich and fertile land, a very small proportion of which is required to be cultivated for the support of the actual population, or indeed can be cultivated with the capital which the population can command, there will be no rent; for n o one would pay for the use of land, when there was an abundant quantity not yet appropriated, and, therefore," * (because NOT APPROPRIATED, which Ricardo entirely forgets later on), *at the disposal of whosoever might choose to cultivate it" * (p. 55). //Here the assumption therefore is: no landed property. Although this description of the process is approximately correct for the SETTLINGS OF MODERN PEOPLES, it is, firstly, inapplicable to developed capitalist production; and [secondly] equally false if put forward as the historical course of events in the OLD EUROPE.// or for any other of the gifts of nature which exist in boundless quantity... no charge is made for the use of these [XII-601] natural aids, because they are inexhaustible, and at every man's disposal.... If all land had the same properties, if it were unlimited in quantity, and uniform in quality, no charge could be made for its use" * (because it could not be converted into private property at all), * "unless where it possessed peculiar advantages of situation"* (and, he should add, were AT THE DISPOSAL OF A PROPRIETOR). * "It is only, then, because land is not unlimited in quantity and uniform in quality, and because in the progress of population, land of an inferior quality, or less advantageously situated, is called into cultivation, that rent is ever paid for the use of it. When in the progress of society, land of the second degree of fertility is taken into cultivation, rent immediately commences on that of the first quality, and the amount of that rent will depend on the difference in the quality of these two portions of land" * (pp. 56-57).

We shall examine this point more closely. T h e logical sequence is this:

If land, rich and fertile land],exists IN elemental abundance in practically UNLIMITED quantity compared to the ACTUAL POPULATION and capital — and Ricardo assumes this on the FIRST SETTLING OF A COUNTRY (Smith's colonial theory)—and if, furthermore, an "ABUNDANT QUANTITY" of this land is "NOT YET APPROPRIATED" a n d therefore, because it is "NOT YET APPROPRIATED" , is " AT THE DISPOSAL OF WHOSOEVER MIGHT CHOOSE TO CULTIVATE IT" , in this case, naturally, nothing is paid for the USE OF LAND, NO RENT. If LAND were [available] "in UNLIMITED QUANTITY" — not only relatively to capital and population, but if it were in fact an UNLIMITED ELEMENT (UNLIMITED like AIR and WATER)—then indeed its appropriation by one person could not exclude its appropriation by another. N o PRIVATE (also no "PUBLIC" or STATE) PROPERTY IN the soil could exist. In this case — if all LAND is OF THE SAME QUALITY — no rent could be paid for it at all. At most, [rent would be paid] to the POSSESSOR OF LAND which "POSSESSED PECULIAR ADVANTAGES OF SITUATION".

Thus, under the circumstances assumed by Ricardo — namely, that LAND is " NOT APPROPRIATED" and UNCULTIVATED LAND is "therefore AT THE DISPOSAL OF WHOSOEVER MIGHT CHOOSE TO CULTIVATE IT" — if rent is paid, then this is only possible BECAUSE "LAND IS NOT UNLIMITED IN QUANTITY AND UNIFORM IN QUALITY", in other words, because different types of land exist and land of the same type is "LIMITED". We say that, on Ricardo's assumption, only a differential rent can be paid. But instead of confining it to this, HE JUMPS AT ONCE TO THE CONCLUSION that — quite apart from his assumption of the non-existence of landed property—ABSOLUTE RENT IS NEVER PAID FOR THE USE OF LAND, only differential rent.

T h e whole point therefore is: If land confronts capital in elemental abundance, then capital operates in agriculture in the same way as in every other branch of industry. There is then no landed property, no rent. At most, where one piece of land is more fertile than another, there can be excess profits as in industry. In this case these will consolidate themselves as differential rent, because of their natural basis in the DIFFERENT DEGREES OF FERTILITY OF

THE SOIL.

If, on the other hand, land is 1. LIMITED, 2. appropriated, and capital finds landed property as a precondition — and this is the case where capitalist production develops: where capital does not find this precondition, as it does in the old Europe, it creates it itself, as in the UNITED STATES — thus land is from the outset not an elementary FIELD OF ACTION for capital. HENCE [there is absolute] rent, in addition to differential rent. But in this case also the transitions from one type of land to another — be it ASCENDING: I, II, III, IV or DESCENDING IV, III, II, I — work out differently than they did under Ricardo's assumption. For the employment of capital meets with the resistance of landed property both in category I and in II, III, IV; and similarly, in the reverse process, when the transition is from IV to III, etc. In the transition from IV to III, etc.! it is not sufficient for the price of IV to rise high enough to enable the capital to be employed in III with an average profit. The price must rise to such an extent that rent can be paid on III. if the transition is made from I to II, etc., then it is self-evident that the price which paid a rent for I, must not only pay this rent for II, but a differential rent besides. By postulating the non-existence of landed property, Ricardo has not, of course, eliminated the law that arises with the existence and from the existence of landed property.

Having just shown how, on his assumption, a differential rent can come into being, Ricardo continues:

* "When land of the third quality is taken into cultivation, rent immediately commences on the second, and it is regulated, as before, by the difference in their productive powers. At the same time, the rent of the first quality will rise, for that must always be above the rent of the second, by the difference between the produce which they yield with a given quantity of capital and labour. With every step in the progress of population, which shall oblige a country to have recourse to land of a worse quality" (which, however, by no means implies THAT EVERY STEP IN THE PROGRESS

OE POPUIJ^TION WILL OBLIGE A COUNTRY TO HAVE RECOURSE TO LAND OF WORSE

QUALITY), * "On the first settling of a country, in which there is an abundance of rich and fertile soil ... not yet appropriated" * (p. 55).

But the CASE would [be] the same, if, relatively to the colonists,

THERE WAS AN ABUNDANCE OF POOR AND STERILE S O U NOT YET APPROPRIATED". T h e non-payment of rents does not depend on the RICHNESS or FERTILITY OF THE soil, but on the fact that it is UNLIMITED, UNAPPROPRIATED and UNIFORM in QUALITY, WHATEVER MIGHT BE THAT QUALITY IN RESPECT TO THE DEGREE OF ITS FERTILITY. Hence Ricardo himself goes on to formulate his assumption thus:

* "If all land had the same properties, if it were unlimited in quantity, and uniform in quality, no charge could be made for its use" * (p. 56).

H e does not say and cannot say, IF IT "WERE RICH AND FERTILE", because this condition would have absolutely nothing to do with the law. If, INSTEAD OF being RICH AND FERTILE, the LAND were POOR AND STERILE, then each colonist would have to cultivate A GREATER PROPORTION OF THE WHOLE LAND, and thus, even where the LAND is UNAPPROPRIATED, they would, with the growth of population, more rapidly approach the point where the practical abundance of land, its actual unlimited-ness IN PROPORTION TO POPULATION AND CAPITAL, would cease to exist.

It is of course quite certain that the colonists will not pick out the least fertile land, but will choose the most fertile, i.e., the land that will produce most, with the means of cultivation at their disposal. But this is not the sole limiting factor in their choice. T h e first deciding factor for them is the situation, the situation near the sea, large rivers, etc. The land in West America, etc., may be as fertile as any; but the SETTLERS of course established themselves in New England, Pennsylvania, North Carolina, Virginia, etc., in short, on the east coast of the Atlantic. If they selected the most fertile land, then they only selected the most fertile land in this region. This did not prevent them from cultivating more fertile land in the West, at a later stage, as soon as growth of population, formation of capital, development of means of communication, building of towns, made the more fertile land in this more distant region accessible to them. They d o not look for the most fertile region, but for the most favourably situated region, a n d within this, of course — given equal conditions so far as the situation is concerned — they look for the most fertile land. But this certainly does not prove that they progress from the more fertile region to the less fertile region, only that within the same region — provided the situation is the same — the more fertile land is naturally cultivated before the unfertile.

Ricardo, however, having rightly amended "ABUNDANCE OF RICH AND FERTILE LAND" to read LAND OF THE "SAME PROPERTIES, UNLIMITED IN QUANTITY, UNIFORM IN QUALITY" , comes to his example and from there JUMPS back, into the first false assumption:

* "The most fertile, and most favorably situated, land will be first cultivated"* (p. 60).

H e senses the weakness and spuriousness [in this] and therefore adds the new condition to the "MOST FERTILE LAND": "AND the MOST FAVOURABLY SITUATED", which was missing at the outset. " T H E MOST FERTILE LAND WITHIN THE MOST FAVOURABLE SITUATION" is how it should obviously read, a n d surely this absurdity cannot be carried so far [as to say] that the region of the country that happens to be the MOST FAVOURABLY SITUATED for the NEWCOMERS, since it enables them to keep IN CONTACT with the mother country and THE OLD FOLKS AT HOME and the outside world, is "THE MOST FERTILE REGION" in the whole of the land, which the colonists have not yet explored and are as yet unable to explore.

The assumption of the DESCENDING LINE, the transition from the more fertile to the less fertile region, is thus surreptitiously brought in. All that can be said is this: In the region that is first cultivated, because it is the MOST FAVOURABLY SITUATED, no rent is paid until, within this region, there is a transition from the more fertile to the less fertile land. Now if, however, there is a transition to a second, more fertile region than the first, then, according to the assumption, this is WORSE SITUATED. Hence it is possible THAT THE

GREATER FERTILITY OF THE SOIL IS MORE THAN COUNTERBALANCED BY THE GREATER

DISADVANTAGE OF THE SITUATION, and in this case the land of region I will continue to pay rent. But the "SITUATION" is a circumstance which changes historically, according to the economic development, and must continually improve with the installation of means of communication, the building of new towns, etc., and the growth of the population. Hence it is clear that BY AND BY, the product produced in region II will be brought on to the market at a price which will lower the rent in region I again (for the same• product), and that in time it will emerge as THE MORE FERTILE SOIL in the measure in which the DISADVANTAGE OF SITUATION disappears. [XII-603] It is therefore clear, that where Ricardo himself states the condition for the formation of differential rent correctly a n d in general form:

"...ALL LAND... OF THE SAME PROPERTIES., UNLIMITED IN QUANTITY... UNIFORM IN QUALITY..." [p. 56],

the circumstance of the transition from more fertile to less fertile land is not included,

that this is also historically incorrect for the SETTLEMENT in the UNITED STATES which, in common with Adam Smith, he has in mind; therefore Carey's objections,^[3] which were justified on this point,

that he himself reverses the problem again, by his a d d e n d u m on

SITUATION "... : " T H E MOST FERTILE , AND MOST FA VOURABL Y SITUATED, LAND WILL BE

FIRST CULTIVATED",

that he proves his arbitrary presupposition by an example in which that which is to be proved, is postulated, namely, the transition from the best to increasingly worse land,

that, finally //it is true, already WITH AN EYE TO THE EXPLANATION OF THE TENDENCY OF THE GENERAL RATE OF PROFIT TO FALL// h e preSUppOSeS this, because h e could not otherwise account for differential rent, although the latter in no way depends on whether there is a transition from I to II, III, IV or from IV to III, II, I.

In the example, 3 sorts of land are postulated, Nos. 1, 2, 3, which, with an equal capital investment, yield 100, 90, 80 qrs of corn. No. 1 is the first to be cultivated

* "in a new country, where there is an abundance of fertile land compared with the population, and where therefore it is only necessary to cultivate No. 1" (p. 57).*

In this case the "WHOLE NET PRODUCE" belongs to the "CULTIVATOR" and "WILL BE THE PROFITS OF THE STOCK WHICH HE ADVANCES" (p. 57). That this "NET PRODUCE" is immediately regarded as PROFIT OF STOCK, although no capitalist production has been postulated in this case // we are not speaking of PLANTATIONS // is also unsatisfactory here. But it may be that the colonist, coming from "THE OLD COUNTRY", looks at it in this way himself. If the population grows only to such an extent that No. 2 has to be cultivated, then No. 1 bears a rent of 10 qrs. It is of course assumed here that No. 2 and No. 3 are "UNAPPROPRIATED" and that their QUANTITY has remained practically "UNLIMITED" IN PROPORTION TO POPULATION AND CAPITAL. Otherwise there could be a different turn to events. Under this assumption, therefore, No. 1 will bear a rent of 10 qrs:

* "For either there must be two rates of profit on agricultural capital, or ten quarters, or the value of ten quarters, must be withdrawn from the produce of No. 1, for some other purpose. Whether the proprietor of the land, or any other person, cultivated No. 1, these ten quarters would equally constitute rent; for the cultivator of No. 2 would get the same result with his capital, whether he cultivated No. 1, paying 10 qrs for rent, or continued to cultivate No. 2, paying no rent"* (p. 58).

I N FACT, THERE WOULD BE TWO RATES OF PROFIT IN AGRICULTURAL CAPITAL, t h a t is, No. 1 supplied an excess profit of 10 quarters (which, in this CASE, can consolidate itself as rent). But 2 pages later, Ricardo himself says that not only two but many VERY DIFFERENT RATES OF PROFIT ON CAPITAL OF THE SAME DESCRIPTION within the same sphere of production, HENCE also on AGRICULTURAL CAPITAL, are not only possible but inevitable:

* "The most fertile, and most favorably situated, land will be first cultivated, and the exchangeable value of its produce will be adjusted in the same manner as the exchangeable value of all other commodities, by the total quantity of labour necessary in various forms, from first to last, to produce it, and bring it to market. When land of an inferior quality is taken into cultivation, the exchangeable value of raw produce will rise, because more labour is required to produce it.

"The exchangeable value of all commodities, whether they be manufactured, or the produce of the mines, or the produce of land, is always regulated, not by the less quantity of labour that will suffice for their production under circumstances highly favorable, and exclusively enjoyed by those who have peculiar facilities of production; but by the greater quantity of labour necessarily bestowed on their production by those who have no such facilities; by those who continue to produce them under the most unfavorable circumstances; meaning — by the most unfavorable circumstances, the most unfavorable under which the quantity of produce required," * (at the old price) * "renders it necessary to carry on the production"* (pp. 60-61).

Thus in each particular industry there are not only TWO, BUT MANY

RATES OF PROFIT, THAT IS T O SAY, DEVIATIONS f r o m THE GENERAL RATE OF PROFIT. At this point it is not necessary to go into the further details of the example (pp. 58-59), which is concerned with the effect of employing different amounts of capital ON THE SAME LAND. Only these 2 propositions:

* "Rent is always the difference between the produce obtained by the employment of two [X1I-604] equal quantities of capital and labour" * (p. 59).

In other words, there is only a differential rent (according to the assumption that there is no landed property). For:

* "there cannot be two rates of profit" (p. 59). "It is true, that on the best land, the same produce would still be obtained with the same labour as before, but its value would be enhanced in consequence of the diminished returns obtained by those who employed fresh labour and stock on the less fertile land. Notwithstanding, then, that the advantages of fertile over inferior lands are in no case lost, but only transferred from the cultivator, or consumer, to the landlord, yet, since more labour is required on the inferior lands, and since it is from such land o n l y that we are enabled to furnish ourselves with the additional supply of raw produce, the comparative value of that produce will continue permanently above its former level, and make it exchange for more hats, cloth, shoes, etc., in the production of which no such additional quantity of labour is required" (pp. 62, 63).

would only enable some farmers to live like gentlemen, but would not diminish the quantity of labour necessary to raise raw produce on the least productive land in cultivation" * (p. 63).

My earlier explanations render it unnecessary to expand here on the erroneousness of the proposition THAT "THE VALUE OF CORN IS

REGULATED BY THE QUANTITY OF LABOUR BESTOWED ON ITS PRODUCTION ON THAT

QUALITY OF LAND ... WHICH PAYS NO RENT". I have shown that whether the last type of land pays rent, [or] pays n o rent, [whether it] pays the whole of the absolute rent, [only a] part of it, or it pays besides the absolute rent a differential rent (if the LINE is ASCENDING), partly depends on the DIRECTION OF THE LINE, WHETHER IT IS ASCENDING OR DESCENDING, and at all events, it depends on the relative COMPOSITION OF AGRICULTURAL CAPITAL AS COMPARED WITH THE COMPOSITION OF NON-AGRICULTURAL CAPITAL and, if as a result of the difference in this COMPOSITION absolute rent is presupposed, the above CASES depend on the state of the market. But the Ricardian case in particular can only occur under two circumstances (ALTHOUGH even then fermage CAN yet BE PAID, though NO RENT); either when LANDED PROPERTY DOES NOT EXIST, INLAW OR IN FACT, or when the best land provides an ADDITIONAL SUPPLY which CAN only FIND ITS PLACE WITHIN THE MARKET if there is a fall in market value.

But there is more besides which is wrong or one-sided in the above PASSAGE. T h e COMPARATIVE VALUE — which here means nothing but market value — of RAW PRODUCE can RISE for reasons other than the above. [Firstly] if, u p to now, it was sold below its value, perhaps below its cost price; this is always the case IN A CERTAIN STATE OF SOCIETY, where the production of RAW PRODUCE is as yet largely directed to the subsistence of the cultivator (also in the Middle Ages, when the product of the town secured a monopoly price); secondly, it can also happen when the raw produce— in contrast to the other commodities which are sold at their cost price — is not yet sold at its VALUE.

Finally, it is correct to say that it makes n o difference to the price of CORN if the LANDLORD FORGOES the differential rent and the FARMER POCKETS IT. But this does not apply to absolute rent. It is wrong to say here that LANDED PROPERTY does not ENHANCE THE PRICE OF THE RAW PRODUCE. O n the contrary the price goes u p because the INTERVENTION of LANDED PROPERTY CAUSES THE RAW PRODUCE TO BE SOLD AT ITS VALVE WHICH EXCEEDS ITS COST PRICE. Supposing, as above, that the average NON-AGRICULTURAL CAPITAL=80c + 20v, the surplus value=50%, then the rate of profit=10[%] and the value of the PRODUCE=110. T h e AGRICULTURAL [XII-605] CAPITAL on the other hand = 6 0 e + 4 0 u , the value [of the produce] =120. T h e RAW PRODUCE is sold at this v a l u e . If l a n d e d p r o p e r t y d i d n o t exist legally — o r i n practice, because of t h e RELATIVE ABUNDANCE OF LAND as i n t h e c o l o n i e s — then it w o u l d b e sold at 1 1 5 . F o r t h e total profit of the first a n d t h e second capital (i.e., o n t h e 2 0 0 ) = 3 0 , h e n c e a v e r a g e p r o f i t = 1 5 . T h e

NON-AGRICULTURAL PRODUCE w o u l d b e sold at 115 i n s t e a d of 110; the

AGRICULTURAL PRODUCE at 115 instead of 120. T h e RELATIVE VALUE of the

AGRICULTURAL PRODUCE c o m p a r e d w i t h t h e non-AGRicuLTURAL PRODUCE w o u l d t h u s fall b y V12*. t h e average profit f o r b o t h c a p i t a l s — o r t h e total capital, AGRICULTURAL AS WELL AS INDUSTRIAL — would, h o w e v e r , rise by 5 0 % , f r o m 10 t o 15.

* "The rise of rent is always the effect of the increasing wealth of the country, and of the difficulty of providing food for its augmented population" * (pp. 65-66).

T h e latter is wrong.

* "Wealth increases most rapidly in those countries where the disposable land is most fertile, where importation is least restricted, and where through agricultural improvements, productions can be multiplied without any increase in the proportional quantity of labour, and where consequently the progress of rent is slow " * (pp. 66-67).

T h e ABSOLUTE AMOUNT OF RENT c a n also g r o w w h e n t h e rate of rent r e m a i n s t h e s a m e a n d only t h e capital invested i n AGRICULTURE is g r o w i n g with t h e GROWTH OF POPULATION ; it can g r o w w h e n n o r e n t is p a i d o n I a n d only a p a r t of the a b s o l u t e r e n t o n I I , b u t t h e differential rent h a s risen considerably as a result of t h e i r relative fertility, etc. (See the table.)*

*"If the high price of corn were the effect, and not the cause of rent, price would be proportionally influenced as rents were high or low, and rent would be a component part of price. But that corn which is produced by the greatest quantity of labour is the regulator of the price of corn; and rent does not and cannot enter in the least degree as a component part of its price.... Raw material enters into the composition of most commodities, but the v a l u e of that raw material, as well as corn, is regulated by the productiveness of the portion of capital last employed on the land, and paying no rent; and therefore rent is not a component part of the p r i c e of commodities" * (p. 67).

T h e r e is m u c h CONFUSION here , r e s u l t i n g f r o m t h e j u m b l i n g u p of NATURAL "PRICE" (for t h a t is the p r i c e u n d e r discussion here ) a n d VALUE. R i c a r d o h a s a d o p t e d this CONFUSION f r o m S m i t h . I n t h e case of t h e latter it is relatively correct , b e c a u s e , a n d i n so far as, S m i t h d e p a r t s f r o m his own c o r r e c t e x p l a n a t i o n of VALUE. N e i t h e r r e n t n o r p r o f i t n o r w a g e s f o r m A COMPONENT PART OF THE VALUE OF A

COMMODITY. O n t h e c o n t r a r y , the VALUE OF A COMMODITY BEING GIVEN, THE

DIFFERENT PARTS INTO WHICH THAT VALUE MAY BE DIVIDED, BELONG EITHER TO THE CATEGORY OF ACCUMULATED LABOUR (CONSTANT CAPITAL) OR WAGES OR PROFIT OR

RENT. O n t h e o t h e r h a n d , w h e n r e f e r r i n g t o t h e NATURAL PRICE o r cost price, S m i t h c a n s p e a k of its COMPONENT PARTS as given preconditions . B u t b y c o n f u s i n g NATURAL PRICE with VALUE, h e carries this over t o t h e

VALUE of the COMMODITY. A p a r t f r o m t h e fact that t h e r a w m a t e r i a l a n d m a c h i n e r y (in s h o r t t h e constant capital) e n t e r i n t o p r o d u c t i o n with a fixed price, w h i c h t o t h e capitalist i n e a c h p a r t i c u l a r s p h e r e of p r o d u c t i o n a p p e a r s as d e t e r m i n e d f r o m o u t s i d e , there a r e t w o t h i n g s t h e capitalist must d o w h e n calculating t h e p r i c e of his c o m m o d i t y : h e h a s t o a d d t h e price of the wages, a n d this also appears t o h i m as

g i v e n (WITHIN CERTAIN LIMITS). T h e NATURAL PRICE of t h e c o m m o d i t y is n o t t h e market price b u t t h e a v e r a g e m a r k e t p r i c e o v e r a l o n g p e r i o d , o r t h e c e n t r a l p o i n t t o w a r d s w h i c h t h e m a r k e t price gravitates. I n this c o n t e x t t h e r e f o r e t h e price of wages is o n t h e w h o l e d e t e r m i n e d b y t h e VALUE of l a b o u r capacity. B u t t h e rate of profit—the NATURAL RATE OF PROFIT — is d e t e r m i n e d b y t h e value of the a g g r e g a t e of c o m m o d i t i e s c r e a t e d b y t h e a g g r e g a t e of capitals e m p l o y e d in NON-AGRICULTURAL INDUSTRY. For it is t h e excess of this v a l u e o v e r t h e v a l u e of the c o n s t a n t capital c o n t a i n e d i n t h e c o m m o d i t y + t h e v a l u e of wages. T h e total s u r p l u s v a l u e w h i c h t h e total capital creates , f o r m s t h e ABSOLUTE AMOUNT OF PROFIT. T h e ratio of

t h i s ABSOLUTE AMOUNT TO THE WHOLE CAPITAL ADVANCED DETERMINES THE GENERAL

RATE OF PROFIT. T h u s this GENERAL RATE OF PROFIT, t o o , appears — n o t o n l y to t h e i n d i v i d u a l capitalist, b u t t o t h e capital in e a c h p a r t i c u l a r s p h e r e of p r o d u c t i o n — t o b e d e t e r m i n e d externally. T h e capitalist m u s t a d d t h e GENERAL PROFIT, SAY OF 1 0 % [ X I I - 6 0 6 ] t o t h e p r i c e of the

ADVANCES IN RAW MATERIAL, E T C , c o n t a i n e d i n t h e p r o d u c t , a n d t h e NATURAL

PRICE OF WAGES THUS — AS IT MUST APPEAR TO HIM — BY WAY OF ADDITION OF COMPONENT

PARTS, OR BY COMPOSITION — TO FORM THE NATURAL PRICE OF A GIVEN COMMODITY. W h e t h e r t h e NATURAL PRICE is p a i d , o r m o r e , o r less, depends o n t h e level of the market price p r e v a i l i n g at the time . O n l y wages a n d profit e n t e r i n t o cost price as d i s t i n g u i s h e d f r o m VALUE ; r e n t e n t e r s o n l y in so far as it is a l r e a d y c o n t a i n e d in the PRICE of the e x p e n d e d r a w m a t e r i a l , machinery , etc. T h a t is, it d o e s n o t e n t e r as rent f o r t h e capitalist, t o w h o m , in any case, t h e PRICE OF RAW

PRODUCE, MACHINERY, in s h o r t of the constant capital, a p p e a r s as a p r e d e t e r m i n e d total.

R e n t d o e s n o t e n t e r i n t o cost price as a COMPONENT PART. If, in special CIRCUMSTANCES, t h e a g r i c u l t u r a l p r o d u c t is sold a t its cost p r i c e , then no rent exists. Economically l a n d e d p r o p e r t y d o e s n o t t h e n exist for capital, that is, w h e n t h e p r o d u c t of t h e t y p e of l a n d t h a t sells at the cost price, r e g u l a t e s t h e m a r k e t value of the product of its sphere. (The position in I, Table D is different.^[3]) O r (absolute) rent exists. In this case the agricultural product is sold above its cost price. It is sold at its value, which is above its cost price. Rent, however, enters into the market value of the product, or, rather, forms a part of the market value. But to the farmer rent appears as predetermined, in the same way as profit does to the industrialist. It is determined by the excess of the value of the agricultural product over its cost price. T h e farmer, however, calculates just like the capitalist: FIRST the outlay, secondly wages, thirdly the average profit, finally the rent, which likewise appears to him as fixed. This is for him the NATURAL PRICE OF WHEAT, for instance. Whether he obtains it, depends, in turn, on the prevailing STATE OF THE MARKET.

If the distinction between cost price and VALUE is properly maintained, then rent can never enter into cost price as a

CONSTITUENT PART, and one can talk of CONSTITUENT PARTS only in relation to the cost price as distinguished from the VALUE of the COMMODITY. (Like excess profit, differential rent never enters into

COST PRICE, because it is nothing but the EXCESS OF THE INDIVIDUAL COST

^[157] PRICE OVER MARKET COST PRICE, OR THE EXCESS OF THE INDIVIDUAL VALUE OVER

MARKET VALUE.)

Accordingly, Ricardo is in substance right when, in opposition to Adam Smith, he declares that rent never enters into cost price. But again he is wrong in that he proves this, not by differentiating between COST PRICE a n d VALUE, but by identifying the two, as A d a m Smith did, for neither rent nor profit, nor wages form CONSTITUENT

PARTS OF VALUE, ALTHOUGH VALUE IS DISSOLVABLE INTO WAGES AND PROFITS AND RENT, and, furthermore, the 3 parts are of equal importance, if all 3 exist. Ricardo reasons thus: Rent forms NO CONSTITUENT PART OF THE NATURAL PRICE OF AGRICULTURAL PRODUCE, because the price of the product of the worst land, which is=to the cost price of this product, and to the value of this product, determines the market value of AGRICULTURAL PRODUCE. Thus rent forms no PART OF THE VALUE because it forms no PART OF THE NATURAL PRICE and this latter is=to VALUE. This however is wrong. T h e price of the product grown on the worst land=its cost price, either because this product is sold below its value — therefore not as Ricardo says, because it is sold at its value—or because the agricultural product belongs to that type, to that class, of commodities in which, by way of exception, VALUE and cost price are identical. This is the case when the surplus value which is made in a particular sphere of production on a given capital, of say 100, happens to coincide with the surplus value which on the average falls to the same relative portion of the total capital (say 100). This then is Ricardo's CONFUSION.

As TO Adam Smith : in so far as h e identifies COST PRICE with VALUE, he is justified, on the basis of this false assumption, in saying that RENT, as well as PROFIT and WAGES, form "CONSTITUENT PARTS OF THE NATURAL PRICE". O n the contrary, it is rather inconsistent that later in his further exposition he asserts that RENT does not enter into the NATURAL PRICE in the same way as WAGES and PROFITS. H e commits this inconsistency because observation and correct analysis compel him nevertheless to recognise that there is a difference in the determination of the NATURAL PRICE OF NON-AGRICULTURAL PRODUCE and the MARKET VALUE OF AGRICULTURAL PRODUCE. But more about this when discussing Smith's theory of rent. ^[3]

[XII-607] * "We have seen, that with every portion of additional capital which it becomes necessary to employ on the land with a less productive return, rent would rise." *

( B u t n o t EVERY PORTION OF ADDITIONAL CAPITAL YIELDS A LESS PRODUCTIVE

RETURN.)

* "It follows from the same principles, that any circumstances in the society which should make it unnecessary to employ the same amount of capital on the land, and which should therefore make the portion last employed more productive, would lower rent" * (p. 68).

That is absolute rent, not necessarily differential rent. (See Table B.) b

Such circumstances might be the "REDUCTION IN THE CAPITAL OF A COUNTRY" followed by a REDUCTION in the population. But also a higher development of the PRODUCTIVE POWERS OF AGRICULTURAL LABOUR.

* "The same effects may however be produced, when the wealth and population of a country are increased, if that increase is accompanied by such marked improvements in agriculture, as shall have the same effect of diminishing the necessity of cultivating the poorer lands, or of expending the same amount of capital on the cultivation of the more fertile portions" * (pp. 68-69).

(Oddly enough, Ricardo forgets here: IMPROVEMENTS AS SHALL HAVE THE EFFECT OF IMPROVING THE QUALITY OF POORER LANDS AND CONVERTING THESE INTO RICHER ONES, an aspect stressed by Anderson. c Ricardo's proposition is entirely wrong:

Q u i t e a p a r t f r o m t h e fact that , WITH A FALL IN THE PRICE OF CORN, AN

ADDITIONAL DEMAND FOR OTHER RAW PRODUCE, GREEN VEGETABLES, MEAT, ETC., WILL SPRING up and that schnaps, etc., can be made from corn, Ricardo assumes here that the entire POPULATION CONSUMES AS MUCH CORN AS IT

LIKES. T H I S IS FALSE.

//* "Our enormous increase of consumption in 1848, 49, 50, shows that we were previously underfed, and that prices were forced up by the deficiency of supply." * (F. W. Newman, Lectures on Political Economy, London, 1851, p. 158.)

The same Newman says:

* "The Ricardo argument, that rent cannot enhance price,^[3] turns on the assumption that the power of demanding rent can in no case of real life diminish supply. But why not? There are very considerable tracts which would immediately have been cultivated if no rent could have been demanded for them, but which were artificially kept vacant, either because landlords could let them advantageously as shooting ground, or prefer the romantic wilderness to a petty and nominal rent which alone they could get by allowing them to be cultivated."* (p. 159.)//

(Indeed, [it is] in any case wrong to say that if he * withdraws the land from the production of corn, he may not get a rent by converting it into pasture or building grounds or, as in some counties in the highlands of Scotland, into artificial woods for hunting purposes.*)

Ricardo distinguishes two kinds of IMPROVEMENTS IN AGRICULTURE. T h e one type

* "increases the productive powers of the land,... such as the more skilful rotation of crops, or the better choice of manure. These improvements absolutely enable us to obtain the same produce from a smaller quantity of land."* (p. 70).

I n this CASE, a c c o r d i n g t o R i c a r d o , t h e r e n t must fall

* "If, for example, the successive portions of capital yielded 100, 90, 80, 70; whilst I employed these four portions, my rent would be 60, or the difference between

70 and 100=30 100 70 and 90=20 whilst the produce would be 90 70 and 80=10 80 70

60 340

and while I employed these portions, the rent would remain the same, although the produce of each should have an equal augmentation."* *"If, instead of 100, 90, 80, 70, the produce should be increased to 125, 115, 105, 95, the rent would still be 60, or the difference between

[XII-608] 95 and 125=30 125 95 and 115 = 20 whilst the produce 115 95 and 105 = 10 would be increased 105 to 440 95

60 440

"But with such an increase of produce, without an increase of demand, there could be no motive for employing so much capital on the land; one portion would be withdrawn, and consequently the last portion of capital would yield 105 instead of 95, and rent would fall to 30, or the difference between

105 and 125=20 whilst the produce will be still 125 105 and 115=10 adequate to the wants of the popula-115 tion, for it would be 345 qrs... 105

30 345"*

(pp. 71-72).

A p a r t f r o m DEMAND b e i n g able t o rise without a growth in p o p u l a t i o n w h e n t h e price falls ( R i c a r d o himself a s s u m e s t h a t it h a s risen by 5 qrs), t h e r e is a c o n s t a n t g o i n g o v e r t o SOILS OF

DECREASING FERTILITY, b e c a u s e t h e p o p u l a t i o n g r o w s every year, i.e., t h e p a r t of the p o p u l a t i o n t h a t c o n s u m e s c o r n , eats bread , a n d this p a r t g r o w s m o r e r a p i d l y t h a n t h e population , b e c a u s e b r e a d is the chief means of subsistence of the majority. I t is t h u s n o t necessary to a s s u m e t h a t t h e DEMAND d o e s n o t g r o w with t h e PRODUCTIVITY OF

CAPITAL, a n d t h a t c o n s e q u e n t l y t h e r e n t falls. A n d t h e r e n t c a n rise, if the DIFFERENCE IN THE DEGREE OF FERTILITY h a s b e e n u n e v e n l y affected

b y t h e IMPROVEMENT.

O t h e r w i s e it is c e r t a i n (Tables B a n d E ⁽⁵⁾ ) , t h a t t h e i n c r e a s e in FERTILITY — while DEMAND r e m a i n s c o n s t a n t — can n o t only throw t h e w o r s t l a n d out of t h e m a r k e t b u t CAN e v e n FORCE a p a r t of the capital o n b e t t e r l a n d ( Table B) TO WITHDRAW FROM THE PRODUCTION OF

CORN. I n this case t h e corn rent falls, if the AUGMENTATION OF THE PRODUCE is EQUAL o n t h e d i f f e r e n t types of l a n d . N o w R i c a r d o passes o n to the 2 n d a s p e c t of AGRICULTURAL

IMPROVEMENTS.

the capital applied to the land, than to the cultivation of the land itself. Improvements in agricultural implements, such as the plough and the thrashing machine, economy in the use of horses employed in husbandry, and a better knowledge of the veterinary art, are of this nature. Less capital, which is the same thing as less labour, will be employed on the land; but to obtain the same produce, less land cannot be cultivated. Whether improvements of this kind, however, affect corn rent, must depend on the question, whether the difference between the produce obtained by the employment of different portions of capital be increased, stationary, or diminished".*

//Ricardo should also have adhered to this when dealing with the NATURAL FERTILITY OF THE SOILS. Whether the transition to these reduces the differential rent, leaves it stationary, or increases it, depends on whether the difference in the produce of the capital employed on these DIFFERENT MORE FERTILE SOILS, BE INCREASED, STATIONARY,

OR DIMINISHED.//

* "If four portions of capital, 50, 60, 70, 80, be employed on the land, giving each the same results, and any improvement in the formation of such capital should enable me to withdraw 5 from each, so that they should be 45, 55, 65 and 75, no alteration would take place in the corn rent; but if the improvements were such as to enable me to make the whole saving on that portion of capital, which is least productively employed, corn rent would immediately fall, because the difference between the capital most productive, and the capital [XII-609] least productive, would be diminished; and it is this difference which constitutes rent" * (pp. 73-74).

This is correct for differential rent, which alone exists for Ricardo.

On the other hand, Ricardo does not touch upon the real question at all. For the solution of this question it does not matter whether the value of the individual quarter falls or whether the same quantity of land, the quantity of the same types of land as previously, needs to be cultivated, but whether as a result of the reduction in the price of constant capital—which, according to the assumption, costs LESS LABOUR — the quantity of IMMEDIATE LABOUR EMPLOYED IN AGRICULTURE is reduced, increased or unaltered. In short, whether or not the capital undergoes an organic CHANGE.

Let us take our example from Table A (page 574, notebook XI) a and let us substitute QRS OF CORN for tons.

It is assumed here that the composition of the NON-AGRICULTURAL capital=80c+ 20v, that of the AGRICULTURAL capital = 60c+40v, the rate of surplus value in both cases=50%. HENCE THE RENT ON THE LATTER CAPITAL, OR THE EXCESS OF ITS VALUE OVER ITS COST-PRICE,=£10. Thus we have the following:

Capital Qrs of £ corn

Total value

£

Market value per qr

£

Individual value per qr

I 100 60 120 2 £2[=40s.] II 100 65 130 2 £1 U / l 3 =£1 16i2/^[13]s. III 100 75 150 2 £1^[9]/ ^{[1 5]}=£1 12s.

Total 300 200 400

I

Differential value per qr

0

Cost price per

£ i ^[5] / ^[6] = £ i 16 S/jS.

Absolute rent

£

10

Differential rent £

0 II £ ^[2]/i ^[3]=3V ^{[1 3]}s. £ 1 % 3 = £1 13 n/i,s. 10 10 III £ ^[2]/ ^[6]=8s. £ i ^[7] / ^{[1 5]} : =£1 9 V^[3]s. 10 30

30 40

I

Absolute Differential rent rent in qrs in qrs 5 0

Rental £

10

Rental i qrs

5

n

II 5 5 20 10 III 5 15 40 20

15 20 70 35

In order to examine the problem in its pure form, one must assume that the magnitude of the capital employed in I, II, III is in all 3 classes affected equally by the reduction in the price of constant capital (100). For the uneven effect only concerns differential rent, and has nothing to do with the matter in hand. Supposing, therefore, that as a result of IMPROVEMENTS, the same amount of capital, which previously cost £100, now only costs 90, it would thus be reduced by Vio, or 10%. The question is then how the IMPROVEMENTS affect the composition of AGRICULTURAL capital.

If the proportion of capital used as wages [to constant capital] remains the same, then, if 100=60c+40v, 90 = 54c + 36i/, and in this case the value of the 60 qrs on land I=£108. But if the reduction in price were such that the same constant capital which previously cost 60, now only cost 54, but that v (or the capital laid out in wages) now only cost 32 ^[2]/s instead of 36 (had also fallen by Vio), then 86^[2]/ä would be laid out instead of 100. The composition of this capital would be 54c + 32^[2]/sii. And reckoned on 100, the composition would be 62 '/2C + 37 lfav. Under these circumstances, the value of the 60 qrs on I would =£102 ^[3]/^[5]- Finally, let us assume that although the value of the constant capital decreases, the capital laid out in wages remains the same absolutely, it therefore grows in proportion to the constant capital; so that the capital of 90 which has been laid out=50c+40f, the composition of [a capital of] 100 would=55^[5]/^[9]c+44^[4]/^[9]f.

Now let us see what happens to corn and money rent in these 3 cases. In case B the proportion of c to v remains the same although the value of both decreases. In C the [XII-610] value of c decreases, but proportionately, that of v decreases even more. In D, only the value of c decreases, not that of v.

First let us reproduce the original table contained on the previous page*

[XII-611] From the accompanying table it is evident that:

Originally in A the ratio is 60c+40u; the capital invested in each class is [£] 100. The rent in money amounts to £70, in corn to 35 qrs.

In B the constant capital becomes cheaper so that only £90 [are] invested in each class, the variable capital however becomes cheaper in the same proportion, so that the ratio remains the same. Here the money rent falls, the corn rent remains the same; [the] absolute rent is also the same. Money rent decreases because the capital invested decreases. Corn rent remains the same, because less money [produces] more corn the ratio remaining the same.

In C cheaper constant capital; but [the value of] v decreases even more, so that the constant capital becomes relatively dearer. Absolute rent falls. Corn rent falls and money rent falls. Money rent, because capital in general has decreased significantly, and corn rent, because absolute rent has fallen while the differences [between the classes] have remained the same, therefore all of them [corn rents] fall equally.

In D, however, the case is completely the reverse. Only the constant capital falls; the variable capital remains the same. This was Ricardo's assumption. In this case, because of the fall in capital, the money rent falls, though the fall is quite insignificant, in absolute figures it is only V3, but in proportion to the capital laid out, it rises considerably. The corn rent, on the other hand, grows absolutely. Why? Because the absolute rent has risen from 10 to 12^[2]/g%, because v has grown in proportion to c. Hence:

Absolute Abso-Differ-Absol-Diffe-Rent-Rent-rent lute ential ute ren-al al % rent rent rent tial £ qrs £ £ qrs rent qrs

10[%] 30 40 15 20 70 35

10[%] 27 36 15 20 63 35

Capital

A) 60c+40 v B) 54c+36u (60c+40v) C) 54c+32^[2]/^[3]f

(62V^[2]c + 37i/^[2]i;) 8V^[4]% 2217/25 £34 4s. 1345/171 20 5622/^[25] 3 3 « / m D) 50c+40»

(55ä/gc+44t/^[9]v) 122/9% 33 362/^[3] 18 20 692/^[3] 38

Ricardo continues:

* "Whatever diminishes the inequality in the produce obtained from successive portions of capital employed on the same or on new land, tends to lower rent; and whatever increases that inequality, necessarily produces an opposite effect, and tends to raise it" * (p. 74).

T h e * inequality can be increased, while capital is withdrawn and while sterility decreases, or even while the less fertile land is thrown out of the market.*

(LANDLORD and capitalist. In a LEADER of 15th July, 1862, the Morning Star [examines] whose duty it is (voluntarily or compul-sorily) to SUPPORT the DISTRESSED (as a result of the COTTON FAMINE and

t h e CIVIL WAR IN AMERICA) WORKMEN IN THE COTTON MANUFACTURE DISTRICTS OF

LANCASHIRE, etc. It says:

* "These people have a legal right to maintenance out of the property they have mostly created by their industry.... It is said that the men who have made fortunes by the cotton industry are those upon whom it is especially incumbent to come forward with a generous relief. No doubt it is so ... the mercantile and manufacturing sections have done so.... But are these the only class which has made money by the cotton manufacture? Assuredly not. The landed proprietors of Lancashire and North Cheshire have enormously participated in the wealth thus produced. And it is the peculiar advantage of these proprietors to have participated in the wealth without lending a hand or a thought to the industry that created it.... The mill-owner has given his capital, his skill, and his unwinking vigilance to the [XII-612] creation of this great industry, now staggering under so heavy a blow; the mill-hand has given his skill, his time, and his bodily labour; but what have the landed proprietors of Lancashire given? Nothing at all — literally nothing; and yet they have made from it more substantial gains than either of the other classes ... it is certain that the increase of the yearly income of these great landlords, attributable to this single cause, is something enormous, probably not less than threefold." * The capitalist is the direct exploiter of the workers, NOT ONLY the direct APPROPRIATOR, BUT the direct CREATOR OF SURPLUS LABOUR. But since (for the industrial capitalist) this can only take place through and in the process of production, he is himself a functionary of this production, its DIRECTOR. The LANDLORD, on the other hand, has a claim — through landed property (to absolute rent) and because of the physical differences of the various types of land (differential rent)—which enables him to pocket a part of this SURPLUS LABOUR or SURPLUS VALUE, to whose DIRECTION and CREATION he contributes nothing. Where there is a conflict, therefore, the capitalist regards him as a mere super fetation, a Sybarite excrescence, a parasite on capitalist production, the louse that sits upon him.)

CHAPTER III "On the Rent of Mines". Here again:

* "this rent" (of mines) "as well as the rent of land, is the effect, and never the cause of the high value of their produce" * (p. 76).

So far as absolute rent is concerned, it is neither EFFECT nor CAUSE OF THE "HIGH VALUE", but the * effect of the excess of value over cost price. That this excess is paid for the produce of the mine, or the land, and thus absolute rent is formed, is the effect, not of that excess, because it exists for a whole class of trades, where it does not enter into the price of the produce of those particular trades, but is the effect of landed property.

In regard to differential rent it may be said, that it is the effect of "high value"; so far as by "high value" is understood the excess of the market value of the produce over its real or individual value, for the relatively more fertile classes of land or mine.

That Ricardo understands by the "exchangeable value" regulating the produce of the poorest land or mine, nothing but cost price, by cost price nothing but the advances+the ordinary profit, and that he falsely indentifies this cost price with real value, will also be seen from the following passage:

"The metal produced from the poorest mine that is worked, must al least have an exchangeable value, not only sufficient to procure all the clothes, food, and other necessaries consumed by those employed in working it, and bringing the produce to market, but also to afford the common and ordinary profits to him who advances the stock necessary to carry on the undertaking. The return for capital from the poorest mine, paying no rent, would regulate the rent of all the other more productive mines. This mine is supposed to yield the usual profits of stock. All that the other mines p r o d u c e m o r e t h a n this, will necessarily be paid to the owners for rent"* (pp. 76-77).

Here, therefore, [he says] in plain language: RENT= EXCESS OF THE PRICE (EXCHANGEABLE VALUE is the same here; OF THE AGRICULTURAL PRODUCE OVER ITS COST PRICE, THAT IS OVER THE VALUE OF CAPITAL

35* ADVANCED+THE USUAL (AVERAGE) PROFITS OF STOCK. Hence , if the Vaille o f t h e AGRICULTURAL PRODUCE is higher than its COST PRICE, it can pay rent quite irrespectively of differences in land, THE POOREST LAND AND THE POOREST MINE can PAY THE SAME ABSOLUTE RENT AS THE RICHEST. If its value were no higher than its cost price, rent could only arise from the EXCESS OF

THE MARKET VALUE OVER THE REAL VALUE OF THE PRODUCE DERIVED FROM RELATIVELY

MORE FERTILE SOILS, ETC.

* "If equal quantities of labour, with equal quantities of fixed capital, could at all times obtain, from that mine which paid no rent, equal quantities of gold... the quantity" (of gold) "indeed would enlarge with the demand, but its value would be invariable" * (p. 79).

What applies to gold and mines, applies to corn and LAND. Hence if the same types of land continued to be exploited and continued to yield the same product for the same outlay in labour [XII-613], then the value of the pound of gold or the quarter of wheat would remain the same, although its quantity would increase with the demand. T h u s its rent (the AMOUNT, not the RATE OF RENT) would also grow without any CHANGE in the PRICE OF PRODUCE. More capital would be employed, ALTHOUGH WITH CONSTANTLY UNIFORM PRODUCTIVITY. This is one of the major causes of the rise in the ABSOLUTE AMOUNT of RENT,

QUITE APART FROM ANY RISE IN THE PRICE OF PRODUCE, AND, THEREFORE, WITHOUT ANY

PROPORTIONAL CHANGE IN THE RENTS PAID BY PRODUCE OF DIFFERENT SOILS AND MINES.

CHAPTER XXIV "Doctrine of Adam Smith concerning the Rent of Land."

This chapter is of great importance for the difference between Ricardo and Adam Smith. We shall postpone a fuller discussion of this (in so far as it affects Adam Smith), to when we consider ex professo Adam Smith's doctrine after that of Ricardo."

Ricardo begins by quoting a passage from Adam Smith showing that he correctly determined when the PRICE of the AGRICULTURAL PRODUCE yields a rent and when it does not. But on the other hand Smith thought that SOME PARTS OF THE PRODUCE OF LAND, such as FOOD, must always yield a rent.

In this context Ricardo says the following, which is significant for him:

Indeed, these PRINCIPLES are substantially "DIFFERENT". W h e r e no landed property exists — actual or legal — no absolute rent can exist. It is this rent, not differential rent, which is the adequate expression of landed property. T o say that the same principles regulate rent, where landed property exists and where it does not exist, means that the economic form of landed property is independent of whether landed property exists or not.

Besides, what is the meaning of "THERE IS LAND OF SUCH A QUALITY THAT

IT CANNOT YIELD A PRODUCE MORE THAN SUFFICIENTLY VALUABLE TO REPLACE THE STOCK ... WITH THE ORDINARY PROFITS"? If the same quantity of labour produces 4 qrs, the product is no more VALUABLE than if it produces two, although the VALUE of the individual quarter is in one case twice as great as in the other. Whether or not it yields a rent, is therefore in no way dependent on the magnitude of this -VALUE- of the PRODUCE as such. It can only yield a rent if its value is higher than its cost price, which is regulated by the cost price of all other products or, in other words, by the quota of unpaid labour which is, ON AN AVERAGE, appropriated by a capital of 100 in each TRADE. But whether its value is higher than its cost price is in no way dependent on its absolute size, but on the composition of the capital employed on it, compared with the AVERAGE COMPOSITION of the capital EMPLOYED IN NON-AGRICULTURAL INDUSTRY.

* "But if it were true that England had so far advanced in cultivation, that at this time there were no lands remaining which did not afford a rent, it would be equally true, that there formerly must have been such lands; and that whether there be or not, is of no importance to this question, for it is the same thing if there be any capital employed in Great Britain on land which yields only the return of stock with its ordinary profits, whether it be employed on old or on new land. If a farmer agrees for land on a lease of 7 or 14 years, he may propose to employ on it a capital of £10,000, knowing that at the existing price of grain and raw produce, he can replace that part of his stock which he is obliged to expend, pay his rent, and obtain the general rate of profit. He will not employ £11,000, unless the last £1,000 can be employed so productively as to afford him the usual profits of stock. In his calculation, whether he shall employ it or not, he considers only whether the price of raw produce is sufficient to replace his expenses and profits, for he knows that he shall have no additional rent to pay. Even at the expiration of his lease his rent will not be raised; for if his landlord should require rent, because this additional £1,000 was employed, he would withdraw it; since, by employing it, he gets, by the supposition, only the ordinary and usual profits which he may obtain by any other employment of stock; and, therefore, he cannot afford to pay rent for it, unless the price of the raw produce should further rise, or, which is the same thing, unless the usual and general rate of profits should fall"* (pp. 390-91).

Ricardo admits here that also the worst land can bear a rent. How does h e explain this? T o provide the ADDITIONAL SUPPLY WHICH HAS BECOME NECESSARY IN CONSEQUENCE OF AN ADDITIONAL DEMAND, a second amount of capital is employed on the worst land [XII-614]. This will only yield the COST PRICE if the price of grain is rising. Hence the first amount would now yield a SURPLUS—=RENT — over and above this COST PRICE. In FACT therefore before the second amount is invested the first amount of capital yields a rent on the worst land, because the market value is above the cost price. Thus the only question is whether, for this to happen, the market value has to be above the value of the worst product, or whether on the contrary its value is above its cost price, and the RISE IN PRICE merely enables it to be sold at its value.

Furthermore; Why must the price be so high that it=the cost price, ADVANCES+AVERAGE PROFIT? Because of the competition of capitals in the different TRADES and the TRANSFER of capital from one TRADE to another. That is, as a result of the action of capital upon capital. But by what action could capital compel landed property to allow the value of the product to fall to the cost price? WITHDRAWAL OF CAPITAL FROM AGRICULTURE cannot have this EFFECT, unless it is accompanied by a FALL OF THE DEMAND FOR AGRICULTURAL PRODUCE. It would achieve the reverse, and cause the market price of AGRICULTURAL PRODUCE to rise above its value. TRANSFER OF NEW CAPITAL to land can have as little effect. For it is precisely the competition of capitals amongst themselves which enables the LANDLORD to demand from the individual capitalist that he should be satisfied with -AN AVERAGE PROFIT" and pay over to him the OVERPLUS OF THE VALUE OVER THE PRICE AFFORDING THIS PROFIT.

But, it may be asked: If landed property gives the power to sell the product above its cost price, at its value, why does it not equally well give the power to sell the product above its value, at an arbitrary monopoly price? O n a small island, where there is no foreign trade in corn, the corn, FOOD, like every other product, could unquestionably be sold at a monopoly price, that is, at a price only limited by the state of demand, i.e., of demand backed by ability to pay, and according to the price level of the product supplied the magnitude and extent of this effective demand can vary greatly.

Leaving out of account exceptions of this kind — which cannot occur in European countries; even in England a large part of the fertile land is artificially withdrawn from agriculture and from the market in general, in order to raise the value of the other part — landed property can only affect and paralyse the action of capitals, their competition, in so far as the competition of capitals modifies the determination of the values of the commodities. T h e conversion of values into cost prices is only the consequence and result of the development of capitalist production. Originally commodities are (on the average) sold at their values. Deviation from this is in agriculture prevented by landed property.

Ricardo says that when a FARMER takes LAND on a lease of 7 or 14 years, he calculates that with a capital investment of, say, £10,000, the value of the corn (average market value) permits him to replace his outlay+average profit+the contracted rent. In so far as he takes a "lease" of a piece of land, therefore, his prius* is the average market value, which is equivalent to the value of the product; profit and rent are only parts into which this value is resolved, but they do not constitute it. The existing market price is for the capitalist what the presupposed value of the product is for the theory and the inner relationships of production. Now to the conclusion which Ricardo draws from this. If the FARMER adds another £1,000, he only considers whether, at the given market price, it yields him the USUAL profit. Ricardo therefore seems to think that the cost price is the determining factor and that profit enters into this cost price as a regulating element, but rent does not.

Firstly, profit too does not enter into it as a CONSTITUTIVE ELEMENT. For, according to the assumption, the FARMER takes the MARKET PRICE as his prius, and weighs up whether, at this given market price, the £1,000 will yield him the usual profit. This profit is therefore not the CAUSE, but the EFFECT OF THAT PRICE. But — Ricardo continues his train of thought — the investment of the £1,000 itself is determined by the calculation of whether or not the price yields the [usual] profit. Thus the profit is the decisive factor for the investment of the £1,000 and for the price of production.^[159]

Furthermore: If the capitalist found that the £1,000 did not yield the USUAL PROFIT, he would not invest it. The production of the ADDITIONAL FOOD would not take place. If it were necessary for the ADDITIONAL DEMAND, then the demand would have to raise the price, i.e., the market price, until it yielded the profit. Thus profit — in contradistinction to rent — enters as a CONSTITUTIVE ELEMENT, not because it creates the value of the product, but because the product [XII-615] itself would not be created if its priceb did not rise high enough to pay the USUAL RATE OF PROFIT as well as the capital expended. In this case, however, it is not necessary for it to rise so high as to pay rent, HENCE, THERE EXISTS AN ESSENTIAL DIFFERENCE BETWEEN RENT AND PROFIT, and in a certain sense, it can be said that profit is A CONSTITUTIVE ELEMENT OF PRICE, whereas rent is not. (This thought is evidently also at the back of Adam Smith's minda).

In this case, it is correct. BUT WHY? Because in this case landed property cannot confront capital as landed property, thus the very combination [of circumstances] under which rent, absolute rent, is formed, is not present— according to the assumption. The ADDITIONAL CORN produced with the second investment of £1,000, provided the market value remains the same, in other words when an ADDITIONAL demand arises only on the assumption that the price remains the same, must be sold below its value at the cost price. This ADDITIONAL PRODUCE of the £1,000 thus occurs under the same CIRCUMSTANCES as when new worse land is cultivated, which does not determine the market value, but can provide the ADDITIONAL SUPPLY only on the condition that it supplies it at the previously existing market value, i.e., at a price determined independently of this new production. Under these circumstances it depends entirely on the relative fertility of the ADDITIONAL SOIL whether it yields a rent precisely because it does not determine the market value. It is just the same with the ADDITIONAL £1,000 on the old land. And for this very reason, Ricardo concludes conversely, that the ADDITIONAL land or the ADDITIONAL amount of CAPITAL determines the market value0 because, with a given, quite independently determined market value, the price of its product yields not rent, but only profit, and only covers the cost price but not the value of the product. This is a contradictio in adjecto.c

Nevertheless, the product is produced in this case, without yielding rent! CERTAINLY. Landed property as an independent opposing element does not exist for the FARMER, i.e., the capitalist, during the period in which the lease in fact makes him the landowner of the land which he has rented. Capital moves unimpeded in this element, and capital is satisfied with the cost price of the product. Even when the lease expires, the farmer will naturally make the amount of rent dependent on how far capital investment in the land will supply a product which can be sold at its value thus yielding a rent. Capital investment which, with the given market value, yields no excess over the cost price, no more enters into the calculation than would the payment of rent — or contractual undertaking to pay r e n t — o n land whose relative fertility is so low that the market price is merely equal to the cost price.

In practice matters do not always work out in the Ricardian manner. If the farmer possesses some SPARE CAPITAL or acquires some during the first years of a LEASE of 14 years, he does not demand the USUAL PROFIT, unless he has borrowed ADDITIONAL CAPITAL. For what is h e to do with the SPARE CAPITAL? Conclude a new lease for additional land? AGRICULTURAL PRODUCTION favours to a much higher degree more intensive capital investment, than a more extensive cultivation of land with a larger capital. Moreover, if n o land could be leased in the IMMEDIATE VICINITY of the old land, 2 FARMS would split u p the farmer's work of SUPERINTENDING them to a much greater extent than 6 factories would split u p the work of one capitalist in manufacture. O r should he invest the money with the bank, for interest, in government bonds, railway shares, etc.? Then, from the outset, h e forgoes AT LEAST a half or Vs of the USUAL PROFIT. Hence if he can invest it as ADDITIONAL CAPITAL on the old farm, even below the AVERAGE [rate of] PROFIT, say at 10%, if his profit=T2%, then, he will still be gaining 100%, if the rate of interest is 5%. It is, therefore, still a profitable speculation for him to invest the ADDITIONAL £1,000 [XII-616] in the old FARM.

Hence it is quite wrong for Ricardo to identify this investment of ADDITIONAL CAPITAL with the APPLICATION OF ADDITIONAL CAPITAL TO NEW SOILS." In the first case, the product does not have to yield the USUAL PROFIT, even in capitalist production. It must only yield as much above the USUAL RATE OF INTEREST as will make WORTH WHILE THE TROUBLE

AND RISK OF THE FARMER TO PREFER THE INDUSTRIAL EMPLOYMENT OF HIS SPARE CAPITAL

TO ITS EMPLOYMENT AS "MONIED" CAPITAL.

But the following conclusion which Ricardo draws from this observation is, as has been shown, quite absurd.

*"If the comprehensive mind of A. Smith had been directed to this fact, he would not have maintained that rent forms one of the component parts of the price of raw produce; for price is everywhere regulated by the return of this last portion of capital, for which no rent whatever is paid" * (p. 391).

His illustration proves just the reverse: THAT THE APPLICATION TO LAND

OF THIS LAST PORTION OF CAPITAL HAS BEEN REGULATED BY A MARKET PRICE, INDEPENDENT OF THAT APPLICATION, EXISTING BEFORE IT TOOK PLACE, AND, THEREFORE ALLOWING NO RENT, BUT ONLY PROFIT. T h a t profit is the only regulator for capitalist production is quite true. And it is therefore true that no absolute rent would exist if production were regulated solely by capital. It arises precisely at the point where the conditions of production enable the landowner to set u p barriers against the

EXCLUSIVE REGULATION OF PRODUCTION BY CAPITAL.

Secondly, Ricardo reproaches Adam Smith (p. 391, et seq.) for developing the correct principles of rent with regard to COALMINES; [he] even says:

* "The whole principle of rent is here admirably and perspicuously explained, but every word is as applicable to land as it is to mines; yet he affirms that 'it is otherwise in estates above ground',"* etc. (p. 392).

Adam Smith senses that, u n d e r CERTAIN CIRCUMSTANCES, the LANDLORD has the power to offer effective resistance to capital, to bring landed property into play, and thus to demand absolute rent, though, under different circumstances, he does not possess this power; that in particular however the production of FOOD establishes the law of rent, whereas IN OTHER APPLICATIONS OF CAPITAL TO LAND, the rent is determined by the agricultural rent.

* "The proportion,^[3] both of their produce and of their rent, is in proportion" * (says Adam Smith) *"to their absolute, and no to their relative fertility"* (p. 392).

I n h i s reply , R i c a r d o c o m e s closest t o t h e real principle of r e n t . H e says:

* "But, suppose that there were no land which did not afford a rent; then, the amount of rent on the worst land would be in proportion to the excess of the v a l u e of the p r o d u c e above the expenditure of capital and the ordinary profits of stock ; the same principle would govern the rent of land of a somewhat better quality, or more favourably situated, and, therefore, the rent of this land would exceed the rent of that inferior to it, by the superior advantages which it possessed; the same might be said of that of the third quality, and so on to the very best. Is it not, then, as certain, that it is the relative fertility of the land, which determines the portion of the produce, which shall be paid for the rent of land, as it is that the relative fertility of mines, determines the portion of their produce, which shall be paid for the rent of mines?" * (pp. 392-93).

Here Ricardo formulates the correct principle of rent. If the worst land pays a rent, if therefore rent is paid independently of the different NATURAL FERTILITY OF THE SOILS — ABSOLUTE RENT — then this rent must="THE EXCESS OF THE VALUE OF THE PRODUCE ABOVE THE EXPENDITURE

OF CAPITAL AND THE ORDINARY PROFITS OF STOCK", THAT IS TO SAY, it must=THE EXCESS OF THE VALUE OF THE PRODUCE ABOVE ITS COST PRICE. Ricardo presupposes that such an EXCESS cannot exist, because, in contradiction to his own principles, he wrongly accepts the Smithian doctrine [ X I I - 6 1 7 ] that VALUE=COST PRICE OF THE PRODUCE.

As for the rest, he falls again into error.

Differential rent would of course be determined by the "RELATIVE FERTILITY". Absolute rent would have nothing to do with the "NATURAL FERTILITY".

Smith however would indeed be right when he asserts that the actual, rent paid by the worst land may depend on the ABSOLUTE FERTILITY of the other SOILS and the RELATIVE FERTILITY of the worst soil, or on the ABSOLUTE FERTILITY of the worst soil and the RELATIVE FERTILITY of the other soils.

For the ACTUAL AMOUNT OF RENT paid by the worst land depends not, as Ricardo thinks, on the EXCESS OF THE VALUE OF ITS OWN PRODUCE OVER ITS COST PRICE, but on the EXCESS OF THE MARKET VALUE OVER ITS COST PRICE. But these are very different things. If the MARKET PRICE were determined by the product of the worst land, then the MARKET VALUE would b e = t o

ITS REAL VALUE, HENCE, THE EXCESS OF ITS MARKET VALUE OVER ITS COST PRICE would b e = t o THE EXCESS OF ITS OWN INDIVIDUAL value, ITS REAL VALUE, OVER ITS COST PRICE. But this is not the case if quite irrespective of this product the market price is determined by the other types of land. Ricardo assumes a DESCENDING LINE. H e assumes that the worst land is cultivated last and is only cultivated (in the case postulated), when

t h e ADDITIONAL DEMAND HAS NECESSITATED AN ADDITIONAL SUPPLY AT THE VALUE OF

THE PRODUCE DERIVED FROM THE WORST AND LAST CULTIVATED SOIL. I n t h i s C a s e the value of the worst land regulates the market value. In the ASCENDING LINE (even according to him) this will only occur when the ADDITIONAL SUPPLY of the better sorts of land only=the ADDITIONAL DEMAND at the old market value. If the ADDITIONAL SUPPLY is greater, Ricardo assumes that the old land must be thrown out of cultivation, but it only follows from this that it will yield a lower rent than before (or n o rent at all). The same happens in the DESCENDING LINE. Whether, and to what extent, the worse land yields rent, if the ADDITIONAL SUPPLY can only be provided at the old market value, depends on how much this market value stands above or below the value of the product of the new, worse land. In both cases its rent is determined by the absolute fertility, not the relative fertility. It depends on the absolute fertility of the new land how far the MARKET VALUE of the PRODUCE of better lands stands above its own REAL,

INDIVIDUAL VALUE.

Adam Smith makes a correct distinction here between LAND and MINES, because with the latter he presupposes that there is never a transition to worse sorts — always to better ones — a n d that [they] always provide more than the necessary ADDITIONAL SUPPLY. T h e rent of the worst land is then dependent on its ABSOLUTE FERTILITY.

working, together with the ordinary profits of the capital employed, we should expect that he would admit that it was these particular mines which regulated the price of the produce from all mines. If the old mines are insufficient to supply the quantity of coal required, the price of coal will rise, and will continue rising till the owner of a new and inferior mine finds that he can obtain the usual profits of stock by working the mine.... It appears, then, that it is always the least fertile mine which regulates the price of coal Adam Smith, however, is of a different opinion: he observes that 'the most fertile coal-mine, too, regulates the price of coals at all the other mines in its neighbourhood. Both the proprietor and the undertaker of the work find, the one that he can get a greater rent, the other, that he can get a greater profit, by somewhat underselling all their neighbours. Their neighbours are soon obliged to sell at the same price, though they cannot so well afford it, and though it always diminishes, and sometimes takes away altogether, both their rent and their profit. Some works are abandoned altogether; others can afford no rent, and can be wrought only by the proprietor'. If the demand for coal should be [XII-617a]^[160] diminished, or if by new processes the quantity should be increased, the price would fall, and some mines would be abandoned; but in every case, the price must be sufficient to pay the expenses and profit of that mine which is worked without being charged with rent It is, therefore, the least fertile mine which regulates price. Indeed, it is so stated in another place by Adam Smith himself, for he says:

' The lowest price at which coals can be sold for any considerable time, is like that of all other commodities, the price which is barely sufficient to replace, together with its ordinary profits, the stock which must be employed in bringing them to market. At a coal-mine for which the landlord can get no rent, but which he must either work himself, or let it alone all together, the price of coals must generally be nearly about this price' " * (pp. 393-95).

Adam Smith is mistaken when he declares the particular COMBINATION of the market, under which the most fertile mine (or land) dominates the market, to be the rule. But provided such a case is assumed his reasoning is correct (on the whole) and Ricardo's wrong. Adam Smith presupposes that as a result of the STATE OF DEMAND and because of its RELATIVE SUPERIOR FERTILITY, the best mine can only force the whole of its product on to the market if it undersells its competitors, if its product is below die old market value. This causes the price to fall for the worse mines too. The market price falls. This in any case lowers the rent on worse mines and can even make it disappear completely. For the rent is equal he is concerned it annuls the resistance which other capitalists meet who wish to APPLY CAPITAL TO LAND. Landed property does not exist for him because h e himself is the landed proprietor. Hence h e can use his LAND as a mine, or in any OTHER TRADE, i.e., he can employ it if the market price, which he finds predetermined and does not determine himself — if the market price of the product YIELDS him the AVERAGE PROFIT, that is, his cost price.

And from this Ricardo concludes that Smith contradicts himself! Because the old market price determines how far new mines can be opened u p by their owners — in other words they can be worked in circumstances where landed property disappears, since at the old market price they yield their cultivators the cost price—he concludes that this cost price determines the market price! But again h e takes refuge in the DESCENDING LINE and allows the less fertile mine to be cultivated only when the market price of the product rises above the value of the product of the better mines, whereas it is only necessary that it rises above the cost price or even that it pays the cost price in the case of the worse mines exploited by their PROPRIETORS themselves.

Incidentally, his assumption that * "if by new processes the quantity" (of coal) "should be increased, the price would fall, and some mines would be abandoned"* (p. 394), depends only on the

DEGREE OF THE FALL IN PRICE a n d t h e STATE OF DEMAND. If, w i t h t h i s fall o f PRICES, the market can absorb the whole product, then the bad mines will still yield a rent provided the FALL OF MARKET PRICE still leaves AN EXCESS OF MARKET VALUE OVER THE COST PRICE OF the poorer MINES, and [the mines will] be worked by their owners, if the MARKET VALUE

ONLY COVERS, or is ADEQUATE TO, THIS COST PRICE. In either case, however, [it is] absurd to say that the COST PRICE of the worst mine REGULATES

THE MARKET PRICE. Although THE COST PRICE OF THE WORST MINE determines the relation OF THE PRICE OF ITS PRODUCE TO THE REGULATING MARKET PRICE, AND

THEREFORE DECIDES THE QUESTION WHETHER OR NOT [ X I I - 6 1 8 ] t h e m i n e CAN BE WORKED. But the fact that a piece of land or a mine of a particular DEGREE OF FERTILITY can be exploited at a given market price, is obviously not related to or identical with the determination of the market price by the COST PRICE of the PRODUCE of these mines. If an increased market value would make an ADDITIONAL SUPPLY necessary or possible then the worst land would regulate the market value, but then it would also yield absolute rent. This is the exact opposite of the case assumed by Adam Smith.

Thirdly, Ricardo reproaches Smith for believing (p. 395 et seq.) that CHEAPNESS OF RAW PRODUCE, for instance substitution of potatoes for corn, which would lower the wage a n d DIMINISH the COST OF PRODUCTION, w o u l d c a u s e A LARGER SHARE AS WELL AS A LARGER QUANTITY t o fall to t h e LANDLORD. Ricardo o n the other hand [maintains that]:

* "No part of that additional proportion would go to rent, but the whole invariably to profits — while lands of the same quality were cultivated, and there was no alteration in their relative fertility or advantages, rent would always bear the same proportion to the gross produce" * (p. 396).

This is POSITIVELY wrong. RENT WOULD FALL IN SHARE, AND, THEREFORE, RELATIVELY IN QUANTITY. The introduction of potatoes as the principal means of subsistence, would reduce the value of labour capacity, shorten the necessary labour time, increase the surplus labour time and therefore the rate of surplus value, HENCE — other circumstances remaining the same — the composition of the capital would be altered, the value of the variable part would diminish in comparison with that of the constant part, although the quantity of living labour employed remained the same. The rate of profit would therefore rise. In this case [there would be] a fall in absolute rent and proportionately in differential rent. (See page 610 Table C.)⁽⁶⁾ This factor would affect equally AGRICULTURAL and NON-AGRICULTURAL capital. The general rate of profit would rise and the rent would consequently fall.

* CHAPTER XXVIII. "On the comparative Value of Gold, Corn, and Labour, in Rich and Poor Countries."

"Dr. Smith's error, throughout his whole work, lies in supposing that the value of corn is constant; that though the value of all other things may, the value of corn never can be raised. Corn, according to him, is always of the same value because it will always feed the same number of people. In the same manner, it might be said, that cloth is always of the same value, because it will always make the same number of coats. What can value have to do with the power of feeding and clothing?" (p. 449-50).

"...Dr. Smith ... has so ably supported the doctrine of the natural price of commodities ultimately regulating their market price" (p. 451).

"...estimated in corn, gold may be of very different value in two countries. I have endeavoured to show that it will be low in rich countries, and high in poor countries; Adam Smith is of a different opinion: he thinks that the value of gold, estimated in corn, is highest in rich countries" (p. 454).

Chapter XXXII. "Mr. Malthus's Opinions on Rent."

"Rent is a creation of value ... but not a creation of wealth" (p. 485). "In speaking of the high price of corn, Mr. Malthus evidently does not mean the price per quarter or per bushel, but rather the excess of price for which the whole produce will sell, above the cost of its production, including always in the term 'cost of its production', profits as well as wages. One hundred and fifty qrs of corn at £3 10s. per qr, would yield a larger rent to the landlord than 100 qrs at £4, provided the cost of production were in both cases the same" (p. 487). "Whatever the nature of the land may be, high rent must depend on the high price of the produce; but, given the high price, rent must be high in proportion to abundance and not to scarcity" (p. 492).

"As rent is the effect of the high price of corn, the loss of rent is the effect of a low price. Foreign corn never enters into competition with such home corn as affords a rent; the fall of price invariably affects the landlord till the whole of his rent is absorbed;—if it falls still more, the price will not even afford the common profits of stock; capital will then quit the land for some other employment, and the corn, which was before grown upon it, will then, and not till then, be imported. From the loss of rent, there will be a loss of value, of estimated money value, but, there will be a gain of wealth. The amount of the raw produce and other productions together will be increased; from the greater facility with which they are produced, they will, though augmented in quantity, be diminished in value" * (p. 519).

---

Endnotes

3 None.— Ed.

[75] As is clear from the contents of notebooks VII and VIII of the manuscript of 1861-63 (see Note 2), Marx originally intended to consider Ricardo's views after those of Necker. But later he decided to proceed from an analysis of Necker's theory to a study of Linguet, a contemporary of the Physiocrats. Marx wrote down the section on Linguet in a separate notebook along with "Digression. Tableau économique, according to Quesnay", having interrupted the work on Notebook IX somewhere between pages 407 and 419 of the manuscript. Later this separate notebook was included in the manuscript of 1861-63 and became Notebook X with the relevant pagination. Therefore, "some quotations from Linguet above" refer to those to be found in the separate notebook (see this volume, pp. 241-45).—200

[60] Marx again discussed Th. Tooke's views on the issue on pp. XVII — 1061-1063 of the manuscript of 1861-63 (present edition, Vol. 33).—150

a See K. Marx, A Contribution to the Critique of Political Economy (present edition, Vol. 29, pp. 303-05).— Ed.

(1) See this volume, pp. 109-11.— Ed.

a Hence.— Ed.

[153] When working on the manuscript of 1861-63 Marx drew on the plan of his economic work evolved when preparing the manuscript of 1857-58. It envisaged that the second book was to be totally devoted to a study of landed property (see present edition, Vol. 29, p. 261). Later, when working on Volume III of Capital, Marx found it expedient to expound his theory of rent there (see present edition, Vol. 37).—487

a Neither more nor less.— Ed.

a See this volume, pp. 371-76, 457-61.— Ed.

[45] should come to £1,840. But this figure would have greatly complicated the

[44] times as much as the rest of the capital, which amounts to £460 (150+310), it

[154] In the example given by Marx the product whose production depends on landed property enters in equal proportions into both component parts of the capital advanced. Marx assumes that, regardless of the increase in constant capital (88 c instead of 80 c due to the increased price of the raw material) and variable capital (22 v instead of 20 v due to the increased price of the workers' means of consumption), the value of the aggregate product is still 120 (in another example, considered on pp. 496-504 of this volume, Marx proceeds from a change in value). The maintenance of the former market value of the aggregate product is only possible if the surplus value appropriated by the capitalist has gone down from 20 to 10. Such a reduction is due to an increase of the differential rent by 10 points on the more productive patches of land when the less productive patches began to be exploited. In this way the newly created value, which continues to be 40 (since the same method of production is employed), is redistributed in the following way: 10 points now form the surplus value which falls to the capitalist, 20 points are used to replace variable capital, and 10 points serve to increase the differential rent, an increase caused by the rise in the value of constant capital (by 8 points) and variable capital (by 2 points). Below, on pp. XIII — 684-686 of the manuscript (present edition, Vol. 32), Marx considers a similar case.—494 Here Marx uses the term "production costs" (Produktionskosten) in the sense of cost price, price of production. See also Note 139.— 507 See E. G. Wakefield, England and America. A Comparison of the Social and Political State of Both Nations, London, 1833. Marx makes a thorough analysis of Wakefield's theory of colonisation in Capital, Vol. I, Ch. XXXIII (present edition, Vol. 35).—515

[20] This quotation is a free rendering of a passage from D'Avenant. What D'Avenant actually wrote was: "The lazy Temper (which is now grown inveterate Nature in the Spaniards) came undoubtedly upon them, with that Affluence of Money... And the Common People being the Stomach of the Body 38-176 Politick and that Stomach being thus weaken'd and not performing its due Functions, the Food, that had been plentifully thrown in, was not at all digested... Trade and Manufactures are the only Mediums by which such a digestion and distribution of Gold and Silver can be made, as will be Nutritive to the Body Politick."—34

[80] Marx is referring to A Contribution to the Critique of Political Economy, Part One (see present edition, Vol. 29).— 219

(2) See this volume, p. 497.— Ed.

[16] Marx discussed concentration of capital as a prerequisite for raising labour productivity in Notebook IV of the manuscript of 1861-63 (present edition, Vol. 30, pp. 294-96).—26

[38] Marx cites this kind of data in Notebook V of the manuscript of 1861-63 (present edition, Vol. 30, p. 303).—96

[41] Marx analyses Smith's various determinations of value in notebooks VI-VII of the manuscript of 1861-63 (present edition, Vol. 30, pp. 377-78, 381-84, 402-08; cf. also Vol. 29, pp. 299-300).—106

(3) See this volume, pp. 491-92.— Ed.

(4) Ibid., pp. 472-73.— Ed.

a All in all.— Ed. b No more and no less.— Ed. 33-176

[155] By the market cost price Marx understands the general cost price which regulates the market prices of commodities in a particular sphere of production. Cf. pp. 355-56 of this volume, where Marx uses the terms "general average price" and "average market price" to designate the same concept.—531

a At the outset.— Ed.

[116] See H. Storch, Cours d'économie politique.,., Vol. 2, St. Petersburg, 1815, pp. 78-79. Marx also discusses this view of Storch's in Capital, Vol. Ill, chapters X and XXXIX (present edition, Vol. 37).—331, 507

33»

a See D. Ricardo, On the Principles of Political Economy..., London, 1821, pp. 43-44.— Ed.

a Available.— Ed.

[43] Strictly speaking, on the assumption that the value of the machinery is four

* " O n the common principles of supply and d e m a n d , no rent could be paid for such land, for the reason stated why nothing is given for the use of air and water, a See this volume, p p . 449-50, 460.— Ed. 34-176

* "to enable it to raise its supply [XII-602] of food, rent, on all the more fertile land, will rise" * (p. 57). This is ALL RIGHT. Ricardo now passes on to [an] example. But, quite apart from other points to be noted later, this example presupposes the DESCENDING LINE. This, however, is mere presupposition. In order to smuggle it in, he says: 34*

a See H. Ch. Carey, The Past, the Present, and the Future, Philadelphia, 1848, pp. 128-29. Cf. also this volume, p. 579.— Ed.

"The reason then, why raw produce rises in comparative value, is because more labour is employed in the production of the last portion obtained, and not because a rent is paid to the landlord. The value of corn is regulated by the quantity of labour bestowed on its production on that quality of land, or with that portion of capital, which pays no rent. Corn is not high because a rent is paid, but a rent is paid because corn is high; and it has been justly observed, that no reduction would take place in the price of corn, although landlords should forego the whole of their rent Such a measure

a See the insertion between pages 479 and 480.— Ed.

[157] Ricardo calls rent "a creation of value" in the sense that it enables the

a See this volume, pp. 507, 509.— Ed.

* "With the same population, and no more, there can be no demand for any additional quantity of corn"* (p. 69). a See this volume, pp. 551-78.— Ed. b Ibid., pp. 476-77.— Ed. c Ibid., pp. 371-76.— Ed.

(If it had AN UNEQUAL AUGMENTATION, it would be possible for the rent to rise despite the increased fertility.) 3 Newman has here: "argument, which J. Stuart Mill adopts".— Ed.

* "But there are improvements which may lower the relative value of produce without lowering the corn rent, though they will lower the money rent of land Such improvements do not increase the productive powers of the land; but they enable us to obtain its produce with less labour. They are rather directed to the formation of

(5) See this volume, pp. 477, 479.— Ed.

a See the insertion between pages 479 and 480.— Ed.

a See the insertion between pp. 536 and 537.— Ed. 35-176

[25] Marx analyses the impact of various factors on the dynamics of the rate of surplus value in Volume I of Capital, parts III and IV (present edition, Vol. 35), and the rate of profit, in Volume III of Capital, Part I (present edition, Vol. 37).—55

* "I believe that as yet in every country, from the rudest to the most refined, there is land of such a quality that it cannot yield a produce more than sufficiently valuable to replace the stock employed upon it, together with the profits ordinary and usual in that country. In America we all know that this is the case, and yet no one maintains that the principles which regulate rent, are different in that country and in Europe" * (pp. 389-90). a See this volume, pp. 551-78.— Ed.

[159] which, according to Ricardo, results from the increased difficulty of producing

a First consideration, starting-point.— Ed. b The manuscript has: "value".— Ed.

a See A. Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, Vol. 1, Edinburgh, London, 1828, pp. 303-04.— Ed. b See D. Ricardo, On the Principles of Political Economy..., London, 1821, p. 390 et seq.— Ed. c Contradiction in terms.— Ed.

a See D. Ricardo, On the Principles of Political Economy..., London, 1821, p. 390 et seq.— Ed.

3 Smith has "value".— Ed.

* "After Adam Smith has declared that there are some mines which can only be worked by the owners, as they will afford only sufficient to defray the expense of

[160] part of the corn. In Chapter XXXII of his Principles Ricardo criticises Malthus'

t O t h e EXCESS OF MARKET VALUE OVER COST PRICE OF THE PRODUCE, WHETHER THAT MARKET VALUE BE=THE INDIVIDUAL VALUE OF THE PRODUCE OF A CERTAIN CLASS [ o f land], OR MINES, OR NOT. What Smith fails to notice, is that the profit can only be diminished by this in case WITHDRAWAL OF CAPITAL AND DIMINUTION OF THE AMQUNT OF PRODUCTION BECOMES NECESSARY. If the market price — regulated, as it is UNDER THE GIVEN CIRCUMSTANCES, BY THE PRODUCE OF THE BEST MINES — falls so LOW AS TO AFFORD NO EXCESS ABOVE COST PRICE FOR THE PRODUCE OF THE WORST MINE, then it can be worked only by its owner. At this market price, no capitalist will pay him a rent. His ownership of land does not, in this case, give him power over capital, but as far as

(6) See the insertion between pages 536 and 537.— Ed.

[100] In this instance, by raw materials Marx understands objects of labour provided by nature.—256

[12] Marx is referring to Malthus' remark that the differentiation between productive and unproductive labour is the cornerstone of Adam Smith's work and the basis on which the main line of his reasoning rests (T. R. Malthus, Principles of Political Economy..., 2nd ed., London, 1836, p. 44).—12

[13] By its substance the text in double oblique lines belongs not to p. VII — 300 but to p. VII — 299 of the manuscript of 1861-63 (see present edition, Vol. 30, pp. 450-51).—13

[9] Marx analyses the Physiocrats' views in Notebook VI of the manuscript of 1861-63 (see present edition, Vol. 30, pp. 354-55 and 358-61).—9

[3] This is in fact not the conclusion but only the continuation of the section on Smith. The conclusion of this section can be found in Notebook IX.—6

[6] The Economists was the name given to the Physiocrats in France during the second half of the 18th and first half of the 19th centuries. By the 1850s the name acquired a more general meaning and ceased to designate exponents of a particular economic doctrine.— 7, 116

[120] Here Marx disregards the profit accruing to the agricultural capital laid out in classes I, II, III and IV. If the £100 capital laid out in I produces 330 bushels at 6s. 8d. per bushel, the value of the total product of I amounts to £110, of this £10 falls to rent and, consequently, there is no profit. The same applies to the value of the total product of the four classes with an outlay of £100 in each, which comes to £500, consisting of £400 to replace the capital outlay, and £100, the total rent of classes I, II, III and IV, that is, £10+£20+£30+£40.— 339

[2] The entries below were made by Marx on the inside covers of notebooks VIII-XII of the manuscript of 1861-63. The table of contents of Notebook \ II is published in Volume 30, p. 347, and its text in Volume 30 and in this volume. The tables of contents had been corrected several times. Marx's original plan was to analyse Adam Smith's doctrine in notebooks VII and VIII and then to pass on to Necker and Ricardo. But later he rejected this scheme. He also proposed to examine Ricardo's views in Notebook X, first after the analysis of Linguet and then of Bray. In the contents of Notebook XI, point "g) Rodbertus" was originally followed by point "h) Ricardo". Later Marx inserted several other points preceding that on Ricardo, probably after the notebooks had been filled in. In Notebook XII, next to the line "5) Theories of Surplus Value", Marx wrote in pencil without the mark of insertion, "(CIRCULATING AND FIXED CAPITAL p. 643) in Ricardo". The last two points in the contents of this notebook were later crossed out in pencil and replaced with "Theories of COST PRICE". The inside cover of Notebook IX has a note "Mercantilists (408)" made in pencil later. Written on the inside cover of Notebook XI are a number of quotations (see this volume, pp. 579-80). Alongside the contents, the inside cover of Notebook XII contains Marx's notes and quotations (see this volume, p. 580).—6

[35] Up to this point, Marx used the letter x to designate the product considered as use value, and the letter z, the value of the product. From here onwards he uses x for value, and z for use value.—85

[4] Marx gave an in-depth analysis of the problem of productive and unproductive labour on pp. XXI — 1317-1331 of the manuscript of 1861-63 (present edition, Vol. 34).—7

[1] Theories of Surplus Value, on which Marx began work in March 1862, constituted the fifth, concluding section of the first chapter of his research into capital, "The Production Process of Capital". The original intention was to examine absolute and relative surplus value in their combination. Theories of Surplus Value was to be an historical survey included in the chapter on surplus value, similar to the historical notes introducing the chapters on commodity and on money in A Contribution to the Critique of Political Economy. However, during the work, the character of the manuscript of Theories of Surplus Value had changed substantially. Both in its length and content, it surpassed the tasks the author had originally set himself. Marx not only considered the views of bourgeois economists but also put forward a number of major theoretical propositions. Theories of Surplus Value were published in English for the first time, in an abridged form, in: K. Marx, Theories of Surplus Value. A selection from the volumes published between 1905 and 1910 as Theorien über den Mehrwert, edited by Karl Kautsky, taken from Karl Marx's preliminary manuscript for the projected fourth volume of Capital. Translated from the German by G. A. Bonner and Emile Burns. Lawrence & Wishart, London, 1951. The work was first published in full between 1963 and 1971: K. Marx, Theories of Surplus-Value (Vol. IV of Capital), Part I, Foreign Languages Publishing House, Moscow, 1963; Part II, Progress Publishers, Moscow, 1968; Part III, Progress Publishers, Moscow, 1971. This volume contains the sequel to Marx's Theories of Surplus Value. The first five notebooks of the Economic Manuscript of 1861-63 and the beginning of Theories of Surplus Value (Notebook VI and part of Notebook VII), in which Marx critically analyses the views of James Steuart, the Physiocrats, and Adam Smith's determinations of value, are to be found in Volume 30 of the present edition.—6

[10] Marx examines the Mercantilists' views in Notebook VI of the manuscript of

[22] Further on Marx analyses the views of John Stuart Mill, a disciple of Ricardo. Cf. present edition, Vol. 32, p. XIV — 851, where Marx writes that Mill in his work, Essays on Some Unsettled Questions of Political Economy, tried to derive "Ricardo's law of the rate of profit (in inverse proportion to wages) directly from the law of value without distinguishing between surplus value and profit".—36

[33] This phrase has not been located in Rousseau's works.—78

[51] Marx quotes Say in French according to Ganilh's Des systèmes d'économie politique...,

[29] Marx is referring to part three of his work, "Third Chapter. Capital in General". In the Draft Plan of the Chapter on Capital drawn up in 1860, this part is entitled "III. Capital and Profit" (see present edition, Vol. 29, p. 516). The beginning of this work is to be found on pp. XVI —973-1021 and XVII — 1022-1028 of the manuscript (see present edition, Vol. 33).—70, 162, 282, 397

[5] Marx is referring to the section of the manuscript of 1861-63 in Notebook VII entitled in the contents "Inquiry into how it is possible for the annual profit and wages..." (see present edition, Vol. 30, pp. 347, 411 et seq.).—7, 149

[8] See this volume, pp. 389-400 and pp. XIII — 711, XIV — 818, 821-822, 840-841 of the manuscript of 1861-63 (present edition, Vol. 32).—8

[19] Marx is referring to Charles D'Avenant's work Discourses on the Publick Revenues..., Part II, London, 1698. Discourse IV deals with the defence of An Essay on the East-India Trade. Marx's note on McCulloch refers to the latter's remark in his Introduction to Adam Smith's An Inquiry into the Nature and Causes of the Wealth of Nations, Edinburgh, London, 1828, p. xli. McCulloch confused An Essay on the East-India Trade with D'Avenant's later work, Considerations on the East-India Trade, published in 1701 — 33

[15] On bankers and their parasitical role in capitalist society, see K. Marx, Capital, Vol. Ill, chapters XXX-XXXIII (present edition, Vol. 37).—20

[27] On Ricardo's concept of real wages, see pp. XII — 653, 655, 661 and 665 of the manuscript of 1861-63 (present edition, Vol. 32).—62

[7] Marx is referring to the vicious circle in Adam Smith's doctrine of the "natural price of wages", which he had discussed in the manuscript of 1861-63 (see present edition, Vol. 30, p. 401).—8