Rent and the Ownership of the Soil: Going Back to Capital
Marx’s Capital has been the subject of a flood of written comments. How to reconcile volume 1 with volume 3, how to transform values into production prices and surplus value into profits; how to reconcile the two antagonistic classes— bourgeoisie and proletariat—and the ‘trinity formula’ at the end of volume 3? Discouraged, many writers have given up or have resorted to eclecticism, have reconsidered the marginalist ‘contribution’ or have revised their conception of social classes.
It was easy to argue that only volume 1 appeared during Marx’s lifetime and that the other two, uncompleted drafts, remained as they were because Marx had found no solutions to the questions raised above. I do not share this opinion and believe that the order of the three books, as well as the way the questions are put, are carefully thought out and are significant.The first two volumes deal with capital and labor alone and consider capital in its broadest sense, that is, in its social form and not in its component parts. Volume 1 contains only the most essential concepts, hence the most abstract and least empirical ones: the fetishism of commodities and the dialectics of value, social capital as a relation between classes, and labor power as a commodity. These concepts suffice for an understanding of the essence of the capitalist mode, the surplus characteristic of this mode, and the way it is generated, precisely by contrasting it with the one which historically precedes it. This explains why the general law of the capitalist mode, i.e., the law of accumulation, is formulated in this volume, together with its historical genesis—primitive accumulation. No additional concepts are required to answer these three essential questions: What is capitalism? Where does it come from? Where is it heading?
The commodity is the key to the system: it is the medium of exchange-value; it conceals use-value; it is fetishized.
Contrary to Althusser’s view that the ‘mature’ Marx abandoned the theory of alienation, we believe that Marx, going beyond the critique of humanism formulated by the young Hegelians and by Feuerbach, had discovered that alienation changes its form and its sphere with the development of capitalism. Until then it is based on religion, since society is still ruled directly by nature; it becomes commodity alienation as soon as the development of the productive forces free society from this dependence on nature by subjecting it to another form of dependence, that is, on its own ‘‘economic laws.’’[10]Labor power reduced to a commodity is the second key to the system. This commodity, whose use-value has the property of producing more value than it itself consumes, enables us to discover the source of the surplus (the surplus labor of the proletariat), to understand its specific form (surplus value), to define productive labor (productive of surplus value), to uncover its appearance (that of the productivity of capital), and to grasp the nature of the ideology of the capitalist mode (economism) and its relations with the base (the latter’s dominance).
Hence capital appears primarily as a relation between social classes: it exists only because one class controls the means of production while the other class sells its labor power. Capital is therefore an overall social relation involving the whole society. Empiricism views capital from the angle of immediate phenomena: the equipment in which it is embodied, the individual production units where the equipment is installed. The microeconomic approach of conventional economics simply reflects its inability to understand that the whole is greater than the sum of its parts. Marx begins with the whole.
Volume 2 is a logical continuation, a step closer to the concrete. With these concepts established, Marx is able to formulate the model of the reproduction of the system in terms of quantitative relations, between constant capital and variable capital (the organic composition of capital), and between the latter and surplus value (the rate of surplus value).
We have used this framework to reformulate the question of the relation between the objective forces (the law of accumulation) and the subjective forces (class struggle) at the level of the world capitalist system, that is, within a system of capitalist formations characterized by a compartmentalization of labor markets. Raising the question of international trade (unequal exchange) appears to us the only correct way to bring circulation and production into the reproduction process to form a comprehensive whole.In volume 3, two further steps are taken toward the concrete. The first is to analyze the redistribution of surplus value among the components of capital and the second is to analyze its redistribution between the capitalists (profit) and the landowners (rent). At this point the transition from mode of production to social formation begins and the question of class alliances is introduced.
Ladislaus von Bortkiewicz is no doubt the first author to have systematically studied these two questions raised in volume 3. As Luca Meldolesi remarked in an account of the work of Bortkiewicz,[11] the latter was not concerned with a ‘correct’ and ‘complete’ formulation of the ‘transformation’ problem, but rather with examining the consequences of his formulation on the central themes of Capital. In doing this, Bortkiewicz demonstrated in detail what Sraffa was to rediscover 50 years later: that profit would not exist without surplus value and that the attempt to find a different basis for profit (as in the work of Bohm-Bawerk and Walras, of which Bortkiewciz wrote a fundamental critique) was based on a tautology. Bortkiewicz also found that the rate of profit depends on real wages and on the productivity of labor in the production of both wage-goods and the intermediate goods which directly or indirectly enter into their production, excluding luxury goods (and gold). On that basis, he reformulated the question of technical progress and its effects on the rate of profit.
We have seen that the inequality between the rate of profit and the rate of surplus value is necessary to explain the hidden nature of the ‘‘economic laws of the market,’’ the basis of the economic alienation inherent in the capitalist mode and everything related to it (the dominance of the economic plane).
We have also seen that the conflict between capital as a global social reality (the class relation) and capital as a fragmented social reality (the competition between capitalists and the domination of the circulation process over the production process) reveals the irrational nature of capitalism and of the profitability calculus. For ‘‘resource allocation’’ depends not only on the relations between the proletarian and bourgeois classes but also on the internal contradictions characteristic of the bourgeoisie. Conventional economics, starting with the production unit, i.e., the firm, never achieves such insights: it becomes entangled in a host of superficial details, describes infinite varieties of competition (‘‘pure and perfect,’’ ‘monopolistic,’ ‘oligopolistic,’ etc.), and reaches no conclusion. The failure of neoclassical economics and of marginalist attempts to refute Marx was complete by 1914, at least on the continent of Europe. England alone, totally alienated owing to its empirical tradition, could ignore this debate and produce Alfred Marshall who, without understanding either Ricardo, Marx, or the refutation attempts of Bohm-Bawerk, Walras, and Pareto, was to appear as a ‘‘great man.’’ Europe’s somber years between the two world wars and the transfer of wealth to the United States explain how a man as intellectually poor and undeveloped as Samuelson was able to become an authority on ‘‘economic science’’ by simply reformulating Marshall’s eclectic idiocies, completely ignorant of the tautology on which this ‘science’ rested. Then came the ‘‘crisis of civilization” of the sixties, followed by that of the economic system itself in the seventies. At this point the whole structure collapsed, leaving an ideological void reminiscent of that of the end of the Roman Empire.The question of ground rent has elicited less commentary. The chapters devoted to it in Capital are reputedly the most difficult and this reputation is firmly entrenched. To Marx, rent is a precapitalist category which survives simply because capitalism did not originate in a void.
The class alliance between the nascent bourgeoisie and the landowner class (of feudal or peasant origin) plays a crucial role in the process of primitive accumulation. It is instrumental in taxing the surplus value or profit made by this landowning class, i.e., absolute rent.As we know, Marx distinguished between differential rent and absolute rent. It may be asked why he dealt at such length with differential rent. Contemporary economists, who possess no sense of history, thought it intelligent to ‘generalize’ the theory of rent once Marshall had opened the way. Are differences in ‘‘soil fertility’’ not of the same nature as the various differential advantages (of location, for example) found in industry? In this case, in addition to normal average profit, capital receives more or less substantial differential rents. In fact, differential rent is of an entirely different nature for the simple reason that it existed before capitalism came into being. As we have seen, the characteristic feature of feudal rent is that it is unequal: with the low level of development of the productive forces, nature’s superiority appeared in those terms precisely because feudal rent did not circulate. In contrast, the differential advantages accruing to capitalist industry arise from the (unequal) competition among capital which does circulate (though imperfectly because of contradictions within the bourgeoisie).
As regards absolute rent, Marx sees it as the manifestation of the class alliance in question. It is interesting to look at Bortkiewicz' attempt to understand the problem of absolute rent. His analysis led him to two conclusions. First, absolute rent does not necessarily require that the organic composition in agriculture be less than that in industry. Thus the rate of absolute rent is not necessarily fixed, as Marx said, by the difference between the production price of agricultural products as such (the surplus value generated in agriculture being withdrawn from its general circulation) and what the price would be if capital, in circulating, did not have to contend with the monopoly of landed property.
The rate of rent is determined through class struggle between the bourgeoisie and the landowners. I have reached the same conclusion, and have even drawn a parallel with industrial monopoly in which the redistribution of the surplus value depends on the struggle between the various segments of the bourgeoisie. It appears clearly when one compares urban ground rent in northern and southern Europe. In the first case, the industrial element of the bourgeoisie was strong enough to have reduced the small urban property owners to a state of bare subsistence: this became possible with the alliance between the social democrats and the working class, benefiting from better housing conditions. In the second case, the industrial bourgeoisie came up against a proletariat fighting against its integration; being less strong, this bourgeoisie formed an alliance with a parasitic middle class made up of urban property owners.This alliance was not free, and the industrial bourgeoisie had to tolerate extortionate rents. Again, there is no economic rationality above the class struggle. However, Marx’s apparent ‘mistake’ has an origin: in his time, the organic composition in agriculture, then still backward, was inferior to that in industry. Moreover, capitalism was emerging from the state of simple commodity relations of the preceding mercantilist period. These relations gave rise to a range of relative prices (from agricultural products to cottage industry, which eventually faced competition from industrial products) which explains the genesis of absolute rent in the terms in which Marx expresses it. Hence, it can be seen that rent necessarily brings history into play and prepares the transition from the capitalist mode as an abstract concept (it is in this sense that I qualified it as ahistorical) to the capitalist formation as a concrete and historical concept (a product of class struggle and alliances). Karl Kautsky has already analyzed absolute rent in historical and concrete terms. He noted that the organic composition in agriculture was less than the average organic composition because capitalism developed primarily in industry. But he further noted that as it penetrated agriculture, capitalism raised the latter’s ratio of organic composition.[12]
Bortkiewicz’ second solution is that absolute rent does not exist because the capitalist, instead of paying this rent for the least fertile land, can obtain the same result by intensifying his capital investment in more fertile land (in accordance with the model of intensive differential rent which Marx evolved side by side with the one for extensive differential rent). This assumes that the capitalists take advantage of the competition among the landowners in order to reduce absolute rent to zero. But such reasoning presupposes the very absence of a class alliance between the bourgeoisie and the landowners as a group. Again, the economistic error of considering competition as a rigid and unbounded rule overlooks the collective class nature of the state power which controls this competition. Yet again, the class (the whole) comes before its individual members (the parts); the whole represents more than the sum of its component parts.
Taking Bortkiewicz' reasoning a step further, Luca Meldolesi observed that the theory of rent rests on the assumption that only one agricultural product (i.e., wheat) is grown. With the possibility of producing several products (each having a different price), the scale of fertilities or investments cannot be established independently of prices. The only solution would be to determine at one and the same time rent, prices, and profit rates, as Sraffa has done. In my opinion, this is a return to the empiricism of apparent facts, since products are infinitely less specific than the market illusion suggests. The food products that serve as inputs in the reproduction of the labor force form a ‘‘composite group of products’’ which, in Marx’s time, was made up of a (large) proportion of cereals and a (small) proportion of meat. Today the proportions are different, varying with the evolution of the value of the labor power, itself related to the development of the productive forces, as we have seen. Ground rent therefore clearly invites us to switch our attention from the capitalist mode to the history of capitalist formations.[13]
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