The premise of this case carries a further point with it: the market price is still governed by whatever capital is invested on the worst land, A.
I. Suppose extra capital is put into any of the rent-bearing types of land B, C or D. If it produces only as much as the same capital would produce on land A — that is, if at the governing price of production it brings in only the average profit and so no surplus profit — then the effect on rent is exactly zero. Everything stays as it was.
It comes to the same thing as if any number of acres of quality A, the worst land, had been added to the area cultivated so far.
II. On each type of land, the extra capitals yield extra products in proportion to their size — the scale of production grows, in line with the specific fertility of each type of land, in step with the size of the extra capital. In Chapter 39 we started out from Table I, the first table below:
Table I now turns into Table II:
Nothing here requires the capital invested in every type of land to double, as it does in the table. The law is the same whenever extra capital is put into one or more of the rent-bearing lands, in whatever proportion. All it needs is that on each type of land production grows in the same ratio as the capital applied to it.
Rent rises here only because more capital has been put into the land, and in proportion to that increase of capital. As far as the amount of product and the amount of rent go, this growth of product and rent — coming from the bigger capital and proportional to it — is exactly the same as if more rent-bearing land of the same quality had come under cultivation and had been worked with the same capital as those lands were worked with earlier. Table II gives an example: the result would come out unchanged if the extra £2 1/2 per acre had been laid out on a second acre apiece of B, C and D.
This assumption also supposes nothing more fruitful about how the capital is applied. What it supposes is more capital on the same area, achieving the same result as before.
Here all the proportionate ratios stay the same. It is true that the differential rent on the different types of land can change, if we look not at the proportionate differences but at the plain arithmetical ones. Suppose, for instance, that the extra capital had been put only into B and D. Then the difference between D and A is 7 qrs, against 3 before; between B and A, 3 qrs where there used to be 1; between C and B, minus 1 where there used to be plus 1, and so on.
But this arithmetical difference, the one that is decisive under differential rent I in so far as it expresses a difference in productivity at an equal capital investment, is here quite immaterial. It follows only from differing amounts of extra capital, or none at all, and not from anything about the soils themselves, while the difference for each equal slice of capital on the different lands stays the same.
Third case. The extra capitals still bring out an extra product, and so they do form surplus profits — but at a falling rate, and not in proportion to how much they have grown.
Once more, with this third assumption, it does not matter whether the second round of extra capital is spread over the different land types uniformly or not; whether the declining production of surplus profit keeps even proportions or uneven ones; whether the additional capital all lands on one and the same rent-bearing land type, or gets split, evenly or unevenly, over rent-bearing soil of differing quality. For the law that is to be worked out here, none of this counts. The single premise is this: extra capital put into any of the rent-bearing land types brings in surplus profit, but the amount it brings in falls as a proportion of each further addition to capital. In the examples of the table in front of us, the edges of that fall run from 4 qrs = £12, which is what the first capital investment yields on the best land D, to 1 qr = £3, which is what the same capital investment yields on the worst land A. With the capital investment the same: what the best land yields when capital I is invested sets the top limit, and what the worst land A yields — land that carries no rent and gives no surplus profit — sets the bottom limit of what successive capital investments bring in on any land type that yields surplus profit, once successive investments are losing productivity. Assumption II matches the case where new plots of the same quality are added to the area under cultivation, so that the quantity of some cultivated land type grows; assumption III matches, in the same way, the case where further plots are tilled whose differing degrees of fertility are spread out between D and A, between the best soil and the worst. If the successive capital investments go onto land D alone, they can take in the gaps that already exist: D against A, D against C, D against B. If they all go onto land C, then only the gaps between C and A and, respectively, C and B; if onto B, only the gap between B and A.
But the law is this: the rent on every one of these types of land grows absolutely, even if not in proportion to the extra capital invested.
The rate of surplus profit falls — take the extra capital by itself, or take the whole capital laid out on the land, it falls either way — but the absolute size of the surplus profit rises; just as the falling rate of profit on capital in general is usually combined with a growing absolute mass of profit. On B, for instance, the average surplus profit on the capital invested is 90 per cent, where the first capital investment gave 120 per cent. The total surplus profit, though, grows, from 1 qr to 1 1/2 qrs and from £3 to £4 1/2. The total rent, taken by itself — and not set against the doubled size of the capital advanced — has risen absolutely. The differences between the rents of the different types of land, and the relation of those rents to one another, may change here; but this change in the differences is the consequence of the rents rising against one another, not its cause.
IV. Extra capital invested on the better types of land, producing a greater product than the original investment did: this case needs no further analysis. On that assumption it goes without saying that rents per acre rise, and rise in a higher ratio than the extra capital, whatever the type of land the investment is made on. In this case the extra capital investment is bound up with an improvement. It also covers the case where a smaller addition of capital produces the same or a greater effect than an earlier, larger addition did. That case is not quite identical with the earlier one, and the difference matters for every capital investment.
Take an example. If 100 yields a profit of 10, and 200, applied in a particular form, yields a profit of 40, then profit has risen from 10 per cent to 20 per cent, and to that extent it is the same as if 50, applied in a more effective form, yielded a profit of 10 instead of 5. We assume here that profit goes together with a proportionate increase in the product. But the difference is this: in the one case I have to double the capital, in the other I bring about the doubled effect with the capital I already have.
It is by no means the same thing whether (1) I turn out the same product as before with half as much living and objectified labour, (2) I turn out twice the previous product with the same labour, or (3) I turn out four times the previous product with twice the labour. In the first case labour is set free, in living or in objectified form, and can be used elsewhere; the power of disposal over labour and capital grows. The release of capital (and labour) is in itself an increase in wealth; it has exactly the same effect as if this extra capital had been obtained by accumulation, but it spares the labour of accumulation.
Suppose a capital of 100 has produced a product of 10 metres of cloth. Those 100 include constant capital as well as living labour and profit. So a metre costs 10. If I can now produce 20 metres with the same capital of 100, a metre costs 5. If instead I can produce 10 metres with a capital of 50, a metre costs 5 as well, and a capital of 50 is set free, in so far as the old supply of goods is enough. If I have to lay out a capital of 200 in order to produce 40 metres, a metre likewise costs 5.
In these three cases the determination of value, or of price, reveals no difference, and neither does the mass of product in proportion to the capital advanced. But in the first case capital is set free; in the second case extra capital is spared, in so far as twice the production would be needed; in the third case the increased product can be obtained only if the capital advanced grows, though not in the same proportion as if the increased product had had to be supplied at the old productive power. (This belongs in Part One.)
Looked at from the standpoint of capitalist production, the aim is not a larger surplus-value but a lower cost price. A saving in costs on the element that forms surplus-value too, labour, does the capitalist the same service, and brings him profit as well, so long as the governing production price holds steady. Seen that way, constant capital is always the cheaper thing to employ. What this does assume, in fact, is the credit system and the plenty of loan capital that belong with the capitalist way of producing.
Take one side: I put an extra £100 of constant capital to work, and this £100 is what five workers turn out over the year. Take the other side: £100 laid out in variable capital. With the rate of surplus-value at 100 per cent, the value those five workers have made comes to £200, while £100 of constant capital is worth £100, and as capital perhaps £105, given a rate of interest of 5 per cent. So the same sums of money, once you look at what they produce, stand for very different values, depending on whether they are advanced to production as magnitudes of constant capital or of variable capital.
There is one further difference, again as the capitalist sees things, in what a commodity costs him. With that £100 of constant capital, where it is laid out in fixed capital, nothing but the wear and tear finds its way into the commodity's value, while the £100 paid out in wages has to be reproduced there in full.
With colonists, and with independent small producers generally, who cannot lay hands on capital at all, or only at high rates of interest, the part of the product that stands for wages is their revenue, whereas for the capitalist it is an advance of capital. Such a producer therefore regards this outlay of labour as an unavoidable precondition for the return from his labour, which is what he is concerned with first. As for his surplus labour, once that necessary labour is deducted, it is realized in a surplus product in any case; and as soon as he can sell it, or indeed use it himself, he regards it as something that has cost him nothing, because it cost no objectified labour. It is only the spending of objectified labour that counts for him as a parting with wealth. He naturally tries to sell as dear as possible; but even a sale below value and below the capitalist price of production still counts for him as profit, so far as that profit has not been anticipated by debt, mortgage and the like.
For the capitalist, by contrast, the outlay of variable capital and of constant capital alike is an advance of capital. The relatively greater advance of the latter lowers the cost price, other circumstances remaining the same, and in fact also the value of the commodities. So although profit springs only from surplus labour, that is, only from the use of variable capital, it can still seem to the individual capitalist that living labour is the dearest element in what his production costs him, and the one most to be cut down to a minimum. This is only a capitalistically distorted form of the correct statement that a relatively greater application of past labour, compared with living labour, means a greater productivity of social labour and greater social wealth. So false is everything, and so, turned on its head, does everything present itself from the standpoint of competition.
Hold production prices steady, and extra capital can be put into the better land — any land from B upwards — whether that extra capital works as productively as before, better than before, or worse. On A itself, given our assumption, this would be possible in only two ways: the added capital works just as productively as before, in which case the land goes on bearing no rent, or it works better, in which case one part of the capital laid on A would bear rent and the other part would not. It could not work worse. On the assumption that A's productivity declined it would be impossible, because the production price would then not stay constant — it would rise.
Whatever becomes of the surplus product these investments bring — whether it comes out in proportion to their size, or above that proportion, or below it, and so whether the rate of surplus profit on the capital stays the same, rises or falls as that capital grows — the surplus product per acre grows, and the surplus profit that answers to it, and so, as the case may be, does the rent, in corn and in money. Growth in the mere mass of surplus profit or of rent, reckoned on a unit that stays the same — an acre, or a hectare, some fixed quantity of land — shows itself as a rising proportion. The level of rent per acre therefore rises, under these conditions, for one reason only: more capital has been laid on the land. And this holds with production prices unchanged, and regardless of whether the extra capital is equally, less, or more productive. Those differences change how far the rent per acre rises; they do not change the fact that it rises.
This is something peculiar to differential rent II, and it is what separates it from differential rent I. Had those additional investments been made side by side in space, on new land of the same quality, rather than one after another in time on the same land, the mass of the rental would have grown, and so, as shown earlier, would the average rent of the whole cultivated area — but not the level of rent per acre. The result stays the same as far as the mass and value of total production and of the surplus product go, yet concentrating capital on a narrower stretch of land raises the level of rent per acre, where under the same conditions spreading it over a wider stretch, with everything else unchanged, does not bring that effect about. And the more capitalist production develops, the more capital concentrates on the same land, so the higher the rent per acre rises.
Hence two countries with identical production prices, identical differences between their land types, and the same mass of capital invested, but one putting more of it in as successive investments on a restricted area and the other more in as coordinated investments over a wider area: the rent per acre, and with it the land price, would be higher in the first country and lower in the second, even though the mass of rent was the same in both. The difference in the level of rent would thus be explained neither by a difference in the natural fertility of the land types nor by the quantity of labour applied, but exclusively by the different kind of capital investment.
When we speak of surplus product here, we always mean the aliquot portion of the product in which the surplus profit is expressed. Otherwise, by surplus produce or surplus product we mean the part of the product in which the total surplus-value is expressed, or, in particular cases, the part in which the average profit is expressed. The special meaning the word takes on in the case of capital that bears rent gives rise to misunderstandings, as was shown earlier.
The premise of this case carries a further point with it: the market price is still governed by whatever capital is invested on the worst land, A.
I. Suppose extra capital is put into any of the rent-bearing types of land B, C or D. If it produces only as much as the same capital would produce on land A — that is, if at the governing price of production it brings in only the average profit and so no surplus profit — then the effect on rent is exactly zero. Everything stays as it was.
It comes to the same thing as if any number of acres of quality A, the worst land, had been added to the area cultivated so far.
II. On each type of land, the extra capitals yield extra products in proportion to their size — the scale of production grows, in line with the specific fertility of each type of land, in step with the size of the extra capital. In Chapter 39 we started out from Table I, the first table below:
Table I now turns into Table II:
Nothing here requires the capital invested in every type of land to double, as it does in the table. The law is the same whenever extra capital is put into one or more of the rent-bearing lands, in whatever proportion. All it needs is that on each type of land production grows in the same ratio as the capital applied to it.
Rent rises here only because more capital has been put into the land, and in proportion to that increase of capital. As far as the amount of product and the amount of rent go, this growth of product and rent — coming from the bigger capital and proportional to it — is exactly the same as if more rent-bearing land of the same quality had come under cultivation and had been worked with the same capital as those lands were worked with earlier. Table II gives an example: the result would come out unchanged if the extra £2 1/2 per acre had been laid out on a second acre apiece of B, C and D.
This assumption also supposes nothing more fruitful about how the capital is applied. What it supposes is more capital on the same area, achieving the same result as before.
Here all the proportionate ratios stay the same. It is true that the differential rent on the different types of land can change, if we look not at the proportionate differences but at the plain arithmetical ones. Suppose, for instance, that the extra capital had been put only into B and D. Then the difference between D and A is 7 qrs, against 3 before; between B and A, 3 qrs where there used to be 1; between C and B, minus 1 where there used to be plus 1, and so on.
But this arithmetical difference, the one that is decisive under differential rent I in so far as it expresses a difference in productivity at an equal capital investment, is here quite immaterial. It follows only from differing amounts of extra capital, or none at all, and not from anything about the soils themselves, while the difference for each equal slice of capital on the different lands stays the same.
Third case. The extra capitals still bring out an extra product, and so they do form surplus profits — but at a falling rate, and not in proportion to how much they have grown.
Once more, with this third assumption, it does not matter whether the second round of extra capital is spread over the different land types uniformly or not; whether the declining production of surplus profit keeps even proportions or uneven ones; whether the additional capital all lands on one and the same rent-bearing land type, or gets split, evenly or unevenly, over rent-bearing soil of differing quality. For the law that is to be worked out here, none of this counts. The single premise is this: extra capital put into any of the rent-bearing land types brings in surplus profit, but the amount it brings in falls as a proportion of each further addition to capital. In the examples of the table in front of us, the edges of that fall run from 4 qrs = £12, which is what the first capital investment yields on the best land D, to 1 qr = £3, which is what the same capital investment yields on the worst land A. With the capital investment the same: what the best land yields when capital I is invested sets the top limit, and what the worst land A yields — land that carries no rent and gives no surplus profit — sets the bottom limit of what successive capital investments bring in on any land type that yields surplus profit, once successive investments are losing productivity. Assumption II matches the case where new plots of the same quality are added to the area under cultivation, so that the quantity of some cultivated land type grows; assumption III matches, in the same way, the case where further plots are tilled whose differing degrees of fertility are spread out between D and A, between the best soil and the worst. If the successive capital investments go onto land D alone, they can take in the gaps that already exist: D against A, D against C, D against B. If they all go onto land C, then only the gaps between C and A and, respectively, C and B; if onto B, only the gap between B and A.
But the law is this: the rent on every one of these types of land grows absolutely, even if not in proportion to the extra capital invested.
The rate of surplus profit falls — take the extra capital by itself, or take the whole capital laid out on the land, it falls either way — but the absolute size of the surplus profit rises; just as the falling rate of profit on capital in general is usually combined with a growing absolute mass of profit. On B, for instance, the average surplus profit on the capital invested is 90 per cent, where the first capital investment gave 120 per cent. The total surplus profit, though, grows, from 1 qr to 1 1/2 qrs and from £3 to £4 1/2. The total rent, taken by itself — and not set against the doubled size of the capital advanced — has risen absolutely. The differences between the rents of the different types of land, and the relation of those rents to one another, may change here; but this change in the differences is the consequence of the rents rising against one another, not its cause.
IV. Extra capital invested on the better types of land, producing a greater product than the original investment did: this case needs no further analysis. On that assumption it goes without saying that rents per acre rise, and rise in a higher ratio than the extra capital, whatever the type of land the investment is made on. In this case the extra capital investment is bound up with an improvement. It also covers the case where a smaller addition of capital produces the same or a greater effect than an earlier, larger addition did. That case is not quite identical with the earlier one, and the difference matters for every capital investment.
Take an example. If 100 yields a profit of 10, and 200, applied in a particular form, yields a profit of 40, then profit has risen from 10 per cent to 20 per cent, and to that extent it is the same as if 50, applied in a more effective form, yielded a profit of 10 instead of 5. We assume here that profit goes together with a proportionate increase in the product. But the difference is this: in the one case I have to double the capital, in the other I bring about the doubled effect with the capital I already have.
It is by no means the same thing whether (1) I turn out the same product as before with half as much living and objectified labour, (2) I turn out twice the previous product with the same labour, or (3) I turn out four times the previous product with twice the labour. In the first case labour is set free, in living or in objectified form, and can be used elsewhere; the power of disposal over labour and capital grows. The release of capital (and labour) is in itself an increase in wealth; it has exactly the same effect as if this extra capital had been obtained by accumulation, but it spares the labour of accumulation.
Suppose a capital of 100 has produced a product of 10 metres of cloth. Those 100 include constant capital as well as living labour and profit. So a metre costs 10. If I can now produce 20 metres with the same capital of 100, a metre costs 5. If instead I can produce 10 metres with a capital of 50, a metre costs 5 as well, and a capital of 50 is set free, in so far as the old supply of goods is enough. If I have to lay out a capital of 200 in order to produce 40 metres, a metre likewise costs 5.
In these three cases the determination of value, or of price, reveals no difference, and neither does the mass of product in proportion to the capital advanced. But in the first case capital is set free; in the second case extra capital is spared, in so far as twice the production would be needed; in the third case the increased product can be obtained only if the capital advanced grows, though not in the same proportion as if the increased product had had to be supplied at the old productive power. (This belongs in Part One.)
Looked at from the standpoint of capitalist production, the aim is not a larger surplus-value but a lower cost price. A saving in costs on the element that forms surplus-value too, labour, does the capitalist the same service, and brings him profit as well, so long as the governing production price holds steady. Seen that way, constant capital is always the cheaper thing to employ. What this does assume, in fact, is the credit system and the plenty of loan capital that belong with the capitalist way of producing.
Take one side: I put an extra £100 of constant capital to work, and this £100 is what five workers turn out over the year. Take the other side: £100 laid out in variable capital. With the rate of surplus-value at 100 per cent, the value those five workers have made comes to £200, while £100 of constant capital is worth £100, and as capital perhaps £105, given a rate of interest of 5 per cent. So the same sums of money, once you look at what they produce, stand for very different values, depending on whether they are advanced to production as magnitudes of constant capital or of variable capital.
There is one further difference, again as the capitalist sees things, in what a commodity costs him. With that £100 of constant capital, where it is laid out in fixed capital, nothing but the wear and tear finds its way into the commodity's value, while the £100 paid out in wages has to be reproduced there in full.
With colonists, and with independent small producers generally, who cannot lay hands on capital at all, or only at high rates of interest, the part of the product that stands for wages is their revenue, whereas for the capitalist it is an advance of capital. Such a producer therefore regards this outlay of labour as an unavoidable precondition for the return from his labour, which is what he is concerned with first. As for his surplus labour, once that necessary labour is deducted, it is realized in a surplus product in any case; and as soon as he can sell it, or indeed use it himself, he regards it as something that has cost him nothing, because it cost no objectified labour. It is only the spending of objectified labour that counts for him as a parting with wealth. He naturally tries to sell as dear as possible; but even a sale below value and below the capitalist price of production still counts for him as profit, so far as that profit has not been anticipated by debt, mortgage and the like.
For the capitalist, by contrast, the outlay of variable capital and of constant capital alike is an advance of capital. The relatively greater advance of the latter lowers the cost price, other circumstances remaining the same, and in fact also the value of the commodities. So although profit springs only from surplus labour, that is, only from the use of variable capital, it can still seem to the individual capitalist that living labour is the dearest element in what his production costs him, and the one most to be cut down to a minimum. This is only a capitalistically distorted form of the correct statement that a relatively greater application of past labour, compared with living labour, means a greater productivity of social labour and greater social wealth. So false is everything, and so, turned on its head, does everything present itself from the standpoint of competition.
Hold production prices steady, and extra capital can be put into the better land — any land from B upwards — whether that extra capital works as productively as before, better than before, or worse. On A itself, given our assumption, this would be possible in only two ways: the added capital works just as productively as before, in which case the land goes on bearing no rent, or it works better, in which case one part of the capital laid on A would bear rent and the other part would not. It could not work worse. On the assumption that A's productivity declined it would be impossible, because the production price would then not stay constant — it would rise.
Whatever becomes of the surplus product these investments bring — whether it comes out in proportion to their size, or above that proportion, or below it, and so whether the rate of surplus profit on the capital stays the same, rises or falls as that capital grows — the surplus product per acre grows, and the surplus profit that answers to it, and so, as the case may be, does the rent, in corn and in money. Growth in the mere mass of surplus profit or of rent, reckoned on a unit that stays the same — an acre, or a hectare, some fixed quantity of land — shows itself as a rising proportion. The level of rent per acre therefore rises, under these conditions, for one reason only: more capital has been laid on the land. And this holds with production prices unchanged, and regardless of whether the extra capital is equally, less, or more productive. Those differences change how far the rent per acre rises; they do not change the fact that it rises.
This is something peculiar to differential rent II, and it is what separates it from differential rent I. Had those additional investments been made side by side in space, on new land of the same quality, rather than one after another in time on the same land, the mass of the rental would have grown, and so, as shown earlier, would the average rent of the whole cultivated area — but not the level of rent per acre. The result stays the same as far as the mass and value of total production and of the surplus product go, yet concentrating capital on a narrower stretch of land raises the level of rent per acre, where under the same conditions spreading it over a wider stretch, with everything else unchanged, does not bring that effect about. And the more capitalist production develops, the more capital concentrates on the same land, so the higher the rent per acre rises.
Hence two countries with identical production prices, identical differences between their land types, and the same mass of capital invested, but one putting more of it in as successive investments on a restricted area and the other more in as coordinated investments over a wider area: the rent per acre, and with it the land price, would be higher in the first country and lower in the second, even though the mass of rent was the same in both. The difference in the level of rent would thus be explained neither by a difference in the natural fertility of the land types nor by the quantity of labour applied, but exclusively by the different kind of capital investment.
When we speak of surplus product here, we always mean the aliquot portion of the product in which the surplus profit is expressed. Otherwise, by surplus produce or surplus product we mean the part of the product in which the total surplus-value is expressed, or, in particular cases, the part in which the average profit is expressed. The special meaning the word takes on in the case of capital that bears rent gives rise to misunderstandings, as was shown earlier.