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

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

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

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

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

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

The entire bit is incorrect.

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

He even assumes

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

And therefore also the rest of Rodbertus’s conclusions:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

||471|

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

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

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

i.e., 20 per cent.

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

According to this apportionment:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Herr Rodbertus now wants to investigate:

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

[a) Rodbertus’s First Thesis]

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

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

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

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

The following is a somewhat peculiar notion:

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

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

Rodbertus correctly defines the necessary wage as equal to

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

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

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

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

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

[b) Rodbertus’s Second Thesis]

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

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

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

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

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

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

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

We repeat: quod non!

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Rodbertus goes on to say:

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

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

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

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

[c) Rodbertus’s Third Thesis]

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

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

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

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

Hence what Rodbertus says is fundamentally wrong:

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

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

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

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

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

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

And why?

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

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

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

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

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

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

***

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

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

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

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

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

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

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

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

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

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

Thus the cost of the 300 lbs. is:

in the first case:

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

in the second case:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

||485| Consequently:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Now to return briefly to the remainder of Rodbertus.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

* * *

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

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

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

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

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

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

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

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

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

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

[d] In the manuscript: “woods”.—Ed.

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

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

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

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