Capital, Volume 3
Parts 6 and 7
Ground-Rent
The question of land
values and ground-rent is such a prominent question for the economy, for
money-investors, and hence for traditional economists that it might seem odd
that Marx leaves it to this final section of Part 3, almost an appendix to the
work. It figures here in the structure
of the work, though, whereas it might be the point of departure for other
economists, because in Marx's view land values and ground-rent in capitalist
society are derivative of the circuit of industrial production (and thus the
land-owner becomes a completely parasitical figure). Now, Marx makes several assumptions here that he recognizes are
not yet the case, but he claims are tendentially the cases. The most important assumptions, it seems to
me, are
1 - The capitalist
mode of production "dominates all spheres of production and bourgeois
society" -- particularly agriculture, but also the others -- "so that
its preconditions, such as the free competition of capitals, their
transferability from one sphere of production to another, an equal level of
average profit, etc. are also present in their full development"
(751). [I think we have to put emphasis
on the word "dominates" here.
It does not mean that all spheres actually are capitalist, but that they
come under the influence or domination of capital? It would be an interesting project to study what this “dominates”
means. In this specific case, I think
it means that profits in agricultural production are governed by the general
rate of profit that is determined primarily in industrial production. It would be interesting too to extend this
to a discussion of globalization in which the capitalist mode of production
predominates throughout the world, even though there still exist many forms of
noncapitalist production.]
2 - Through the
processes of primitive accumulation, land becomes subject to the modern, legal
conception of private property and that "landed property thus receives its
purely economic form by the stripping away of all its former political and
social embellishments and admixtures, in short all those traditional
accoutrements that are denounced as uselessly and absurdly superfluous by the
industrial capitalists themselves" (755).
In other words, in the process of primitive accumulation and the
construction of modern private property, land becomes a commodity that can be
freely exchanged and is stripped of the connections it had to family and
community title. [Here we can come back
to another example of “dominates”: “The wealth of societies in which the
capitalist mode of production prevails appears as an ‘immense collection of
commodities.’”]
3 - There is a
separation (at least a conceptual one) between the capitalist farmer and the
land owner. The capitalist farmer
employs the workers and organizes production, renting the land from the land
owner, who does nothing but collect rent.
Value of Land
These are (at least
some of) the prerequisites for understanding the value of land and rent in
capitalist society. Let's start with
the value of land, which is really secondary, and then go on to ground- rent,
which turns out to be primary. We
should say first of all that land itself has no value: "the earth is not
the product of labour, and thus does not have a value" (760). This is a necessary consequence of the labor
theory of value we got in the beginning of volume 1. Now, Marx doesn’t mean by this that the earth does not produce
and he even says that it is not an active agent of production. Nonetheless, he claims, the earth itself
does not have value and does not create value.
Read p. 955: “The earth, for example, is active . . . particular
use-value of this material.”
To say that land itself has no
value, however, does not mean that it cannot be sold at a price: "we must
keep in mind ... that the prices of things that have no value in and of
themselves [such as land] ... may be determined by quite fortuitous
combinations of circumstances. For a
thing to be sold, it simply has to be capable of being monopolized and
alienated" (772). In other words,
modern property laws establish monopolies on land and allow these monopolies to
be exchanged (alienated), so that land, although it has no value, can be sold at
a price. When we are talking about the
value of land, therefore, we are not talking about the value of the earth as
such but the value of monopolized portions of the earth, that is what
landed-property is.
Now, it's not quite right to say
that all land has no value, because land can be worked and developed. Value can be added to the land. That is why Marx finds useful the
distinction between terre-matière and terre-capital (757). Terre-matière is what has no value in
itself, but terre-capital does have value.
This improved land is in effect capital incorporated into the
earth. Any parcel of land is a hybrid
of terre-matière and terre-capital.
The question remains, however, how
the price of land is determined since we have said that the price does not
correspond to whatever value it might have.
With respect to other commodities, we said that the price of other
commodities oscillated around its value and in general tended toward its
value. In the case of valueless commodities,
like land, this cannot be the case. The
price or value of land is an irrational figure that derives from the rent of
the property and the average interest rate, just as government securities have
a fictive value that derives from the fixed and periodic revenue they pay. Read p. 760 bottom: "If the average
interest ... at 5 per cent" (760).
In other words, the price of the land is the annual rent of the land
divided by the average annual interest.
200/.05=4,000. "The price
of land is nothing but the capitalized and thus anticipated rent" (944).
Differential Rent
Marx's theory of
differential rent focuses on the difference that a certain piece of land has
over other piece of land for the purposes of production. The difference of one piece of land over
another determines a surplus profit (a profit above the general rate of profit)
for the one who produces on that land.
Generally, Marx presents this difference of land as resulting from a
monopolized natural force associated with that land, such as a waterfall that
will provide power for a mill: "The surplus profit that arises from this
use of the waterfall thus arises not from the capital but rather from the use
by capital of a monopolizable and monopolized natural force. Under these conditions, the surplus profit
is transformed into ground-rent" (785 top). The differential rent, then, arises from the production advantage
associated with the particular monopoly of that land, or in specific
quantitative terms "it always arises from the difference between the
individual production price of the particular capital which has the monopolized
natural force available to it and the general production price for capital
invested in the sphere of production in question" (785 bottom). In other words, if a flour mill that can be
powered by a waterfall can produce flour at £100 less per month than a flour
mill that buys coal for a steam engine, then the plot of land with the
waterfall will rent for £100 more than the plot of land without it. That £100 per month is the difference that
defines differential rent. We should
note that the waterfall does not have any value (since it is not produced by
labor), but is rather an "irrational expression": "the waterfall
does not itself have value but ... its price is simply the reflection of the
surplus profit extracted" (787) -- surplus profit being that profit above
what the production processes without that monopoly produce.
The operative concept here is the monopoly
of natural forces. The steam power of a
steam engine is also a natural force, just as natural as the waterfall. The difference is that steam power is not
monopolizable. Any capitalist can build
one and buy coal. The waterfall in
contrast is the monopoly of the one who owns the land. A very important corollary of this monopoly
is its fixed location. Read p. 784
bottom: “the natural force that can be monopolized in this way is always
chained to the earth.” David Harvey
makes a great deal of this fact in Limits to Capital. Harvey argues that Marx pays too much
attention to time and not enough to space.
Marx often assumes a smooth space over which capital moves without
barriers to equalize profit and so forth.
This fact of the differences of geography, of being chained to the earth
runs counter to that, poses important barriers.
The differential theory of rent
tries to explain the differences of rents above the minimum rent. Marx assumes in much of the explanation that
the worst land pays no ground-rent, but that need not be true. He calls the rent for the land with no
special advantage, the worst land, absolute rent.
Part 7 is a good
conclusion to the 3 volumes -- not so much as a summary of the whole, but
rather as a demonstration of the difference between Marx’s approach and that of
the classical economists. As such, it
might also be seen as a good transition to the so-called volume 4, Theories of
Surplus Value, which does consist primarily of critiques of the previous
economic theories. Through the entire
book Marx has been trying to present the inner connections of things and now he
contrasts that to the mystified way the traditional economics has presented
them.
So the trinity formula is the
traditional economic notion of the 3 principle sources of income or revenue in
society: for an income one must have either capital, land, or labor.
·Read:
"Capital-profit (or better still ... characters and mere things"
(968-69).
This is the false
appearance of bourgeois ideology. This
ideology tells us there are three fountains of value: the value that is
produced by labor is returned in the wage, the value produced by capital
returned in profit, and the value produced by the earth is return in
ground-rent.
This trinity is a mystification
first because it imagines that these things, capital and earth, produce value
when only labor produces value. At
several points in the book – in particular in the section on the real
subsumption – Marx has critiqued the appearance that capital is the source of
value not labor as a mystification.
Here he comes back to that point again: "Capital thereby already
becomes a very mystical being, since all the productive forces of social labour
appear attributable to it, and not to labour as such, as a power springing
froth from its own womb" (966).
The source of value is misrecognized.
Only labor produces value and it is the real source of all three
incomes. Read p. 965: “Landed property,
capital and wage-labour are therefore . . . as its ultimate source.”
This trinity is a mystification
second because it makes the capitalist relations of production appear natural
and eternal. Read p. 964 "If labor
and wage-labour thus coincide . . . elements of the production process"
(964). Means of production separated
from capital is relatively easy to understand, as is earth separated from
landed property. Pause a minute to
consider, though, what labor is conceptually separated from waged-labor. Obviously wage-labor is not a natural and
eternal social form, but what is the general category labor that is? The general point is that the capitalist
mode of production and its component parts are not natural and eternal.
These are two projects of
demystification that Marx has pursued from the beginning of volume 1:
recognizing labor as the source of all value; and recognizing the capitalist
mode of production as a historical and transitory, not natural and eternal
social and economic form.
In all of this "the threads of
the inner connection get more and more lost" (967) and they are eclipsed
by appearances: that capital not labor produces value, for instance. You might remember the phrase “inner
connection” from preface of Volume 1: "Of course the method of
presentation must differ in form from that of inquiry. The latter has to appropriate the material
in detail, to analyse its different forms of development and to track down
their inner connection" (102). (I
wonder if we could say that this inner connection this essential layer of the
process of the whole sphere of value, which we have seen throughout is
foundation but also invisible and ungraspable.
Everything is more or less determined by value but we can never get a
hold of it. It's not price, it's not
profit, it's not the wage -- even though in one way or another they are all
determined by the value produced.)
Classes
The final chapter on classes is very
disappointing, of course, because the manuscript drops off just as it gets
started, but it does give a few elements to think about. The question is “What makes a class?” and
Marx begins as a mystified point of departure with the trinity formula of three
classes. So the initial question is
“What makes wage-laborers, capitalists and landowners the formative elements of
the three great social classes?” The
trinity formula suggests the three classes are distinguished by their revenues
or the sources of their incomes, but Marx has already dealt with that
mystification.
Marx suggests a second answer to
what makes a class in the first paragraph.
Read p. 1025: “The owners of mere labor-power . . . capitalist mode of
production.” So perhaps we could say
that a class is defined by what it owns.
This is perhaps an improvement – and this is as far as we get here – but
I think Marx would have to invert this relationship to get a satisfactory
answer to the question “What is a class?”
In other words, rather than the owners of capital, land, and
labor-power, the classes are bearers of capital, land, and
labor-power. The capitalist class is
the personification or expression of the economic category capital, the
landowning class the personification of monopolized earth, the working class of
labor-power. As Marx says, “this class
articulation does not emerge in pure form” (1025) and the real boundaries get
blurred. But however messy the social
articulation looks these would be the boundaries that underlie it. Now, the obvious and crucial question is
what does it mean to bear, personify, or express an economic category? An interesting question.
Let me give an example of this in
terms of Gramsci’s critique of traditional intellectuals. (This is a famous brief section of the Prison
Notebooks that poses a distinction between traditional and organic
intellectuals.) Gramsci claims that
most intellectuals view themselves as belonging to a separate class, a class of
intellectuals, such that, for example, a contemporary philosopher might think
of him- or herself closer to Aristotle that to Bill Gates or the sweatshop
worker. After all, the philosopher
spends all day in dialogue with Aristotle and other intellectuals, and has
nothing to do with Bill Gates or the worker.
What would it mean, however, for intellectuals to be a class? What economic category do they bear or
personify? Gramsci says that
intellectuals in fact are not a class.
Traditional intellectuals might think they are, but in fact traditional
intellectuals (often without being conscious of this fact) act as ideological
support for the hegemonic social class.
Marx often describes the function of political economists this way. Read p. 969 bottom: “This formula . . .
corresponds to the this into a
dogma.” But Gramsci extends it to all
intellectuals. So, intellectuals are
not a separate class, but they can function as part of classes. Organic intellectuals are intellectuals who
function organically (like various organs of a body) with a specific
class. Capital has its organic intellectuals;
labor has its organic intellectuals too.
Now, we should be able to see that these intellectuals that Gramsci
calls organic are in fact explicitly bearers, personifications, or expressions
of economic categories.
An interesting consequence of this
notion of class is that it allows for some people to be confused or blurred
personifications (perhaps of more than one class contradictorily). Also we can imagine that some people are
bearers of no economic category and thus belong to no class.
As a kind of summary, let’s look at
a passage where Marx gives the two characteristic traits that mark the
capitalist mode of production. Read p.
1019 bottom: “Firstly. It produces its
products . . . appears as wage-labor.”
(Here again note dominant and determining.) So the fact of commodity production is not a
characteristic trait, but the fact that labor-power is a commodity is. The dominant character of commodity as
product also implies reification and fetishism. Read 1020 bottom: “What is also implied . . . capitalist mode of
production.”
The second distinctive trait is
surplus value. Read p. 1020 bottom:
“The second thing that . . . decisive motive of production.” Now, we should be careful here that the
production of surplus value itself is not characteristic of capital, but rather
the production of surplus value as the direct object and decisive motive of
production. Insurance fund, read p.986
bottom: “This is also the only part . . . capitalist mode of production.” Read p. 958 top: “Surplus labor in some form
must always remain . . . one section of society.” “It is one of the civilizing aspects of capital . . . slavery,
serfdom, etc.”
This leads Marx to
take up the Hegelian distinction between the realm of necessity and the realm
of freedom. The alternative social use
of surplus value in the postcapitalist mode of production will be a step toward
the realm of freedom. Read 958 middle:
“Thus on the one hand . . . devoted to material labor.”
Freedom is
nonwork. Read p. 958-959: “The realm of
freedom . . . material production proper.”
Read p. 959 middle:
“The true realm of freedom . . . basic prerequisite.” What is this nonwork in the realm of freedom? It is not inactivity. It is the development of human powers as an
end in itself.