PART II

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

(Digression)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The general form of capital advanced is:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[b) Formulation of the Problem of Rent]

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

||456| These various examples illustrate the following:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Now to Herr Rodbertus.

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

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

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

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

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

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

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

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

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

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

For example:

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

Given a rate of profit of 10 per cent, then

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

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

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

Continuing to analyse this rubbish, we obtain the following:

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

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

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

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

But first, one other comment.

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

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

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

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

How does this tally?

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

Then his accounting would look like this:

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

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

Evidently two different problems are involved here.

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

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

Let us go into these points separately.

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

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

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

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

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

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

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

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