Sunday, 7 January 2018

Theories of Surplus Value, Part II, Chapter 12 - Part 9

The absolute rent equals the difference between the individual value and the individual price of production, i.e. between £120 and £110, whereas the differential value equals the difference between the individual value and the market value. So, if the individual value is lower than the market value, the particular capital will make a surplus profit, after the absolute rent is paid, and this will constitute a differential rent. However, if the individual value is greater than the market value, the individual capital would not even be able to pay all of the absolute rent, which is what gave rise to the negative differential rent seen in Table C.

 Class Capital £ Absolute Rent £ Number of tons Market- Value per ton £ Individual Value per ton £ Total value £ Rent £ Differential Rent £ I 100 0.769 60.00 1.846 2.000 110.769 0.769 -9.231 II 100 10.000 65.00 1.846 1.846 120.000 0 III 100 10.000 75.00 1.846 2.600 138.462 +18.462 IV 100 10.000 92.50 1.846 3.000 170.769 +50.769 Total 400 30.769 292.50 540.000 69. 231

This is resolved in Marx's reformulated Table C.

Table C
 Class C Capital £'s T Output Tons TV Total Value £'s MV Market-Value £'s Per Ton IV Individual Value £'s per Ton DV Differential Value £'s per Ton CP Cost-Price (price of production) £'s per ton AR Absolute Rent £'s DR Differential Rent £'s AR in T Absolute Rent in Tons DR in T Differential Rent in Tons TR Total Rent £'s TR in T Total Rent in Tons I 100 60 110.769 1.846 2.000 - 0.153 1.833 0.769 0 0.416 0 0.769 0.416 II 100 65 120.000 1.846 1.846 0 1.692 10 0 5.416 0 10 5.416 III 100 75 138.461 1.846 1.600 0.246 1.466 10 18.461 5.416 10 28.461 15.416 IV 100 92.5 170.769 1.846 1.297 0.548 1.189 10 50.769 5.416 27.50 60.769 32.916 Total 400 292.5 540.000 30.769 69.230 16.666 37.50 100 54.166

Suppose the individual value of a mine's output is £120, but its market value is £115, that would mean that its market value was still £5 above its price of production of £110. It would still be able to pay an absolute rent, but that rent would be £5 as opposed to the £10 required as absolute rent.

“If the market-value sank down to their cost-price, it would yield no rent for them at all. They could pay no rent, since rent is only the difference between value and cost-price, and for them, individually, this difference would have disappeared, because of the [fall in the] market-value. In this case, the difference between the market-value and their individual value is negative, that is, the market-value differs from their individual value by a negative amount. The difference between market-value and individual value in general I call differential value. Commodities belonging to the category described here have a minus sign in front of their differential value.” (p 268)

The absolute rent always equals the excess of the commodity's value over the price of production, but the differential rent equals the excess of the market value over the individual value. By the same token, the total rent – absolute rent plus differential rent – is equal to the excess of the market value over the individual price of production. In other words, if the market value of the commodity is £120, but the price of production is £110, then an absolute rent of £10 arises. If for a particular capital its individual price of production is £105, it would pay a differential rent of £5. Its total rent would be £15 being the difference between the market value of £120, and its individual price of production of £105.

Marx makes clear that, in dealing with rent, here, he has only done so “as an illustration of my theory of value and cost-prices—since I do not intend to give a detailed exposition of rent till dealing with landed property ex professo”. (p 269)

So, he has left out all complicating issues, such as location, the varying productivity of capital,the effect of different types of production and uses for the same land, for example, for building land and so on.