OF FORESTS AND TREES, Part 1

1. I could start off by saying “Marx has some problems in his analysis of ground-rent.” However, it’s not exactly the case that Marx is wrong in his analysis of the derivation of ground-rent or in his calculations of the comparative rates of ground-rent. It’s more that Marx misses a few things, a few important things; he misses the transformation of British agriculture that underlies the fluctuations in ground-rent and the fluctuations in agricultural commodity prices. It’s more that he takes Ricardo’s and others’ assertions about the availability of land, the “insatiability” of demand, about the “natural” fertility of land as not just accurate, but eternal. Does Marx do this as a matter of regard for Ricardo? Of faith? Of expediency so he can get to what he really wants to discuss, which is not really ground-rent at all? Beats the hell out of me, almost literally, which upon reflection means I need to change what I want to start off saying.

So… so after thinking about it for a little bit, I want to start off by saying that I have some problems with Marx’s analysis of ground-rent. He misses a few things, a few important things, like the transformation of English agriculture; like the transformation of English landlords; like the transformation of the social relations of production which rent does not cause, but which rent serves. Some things, some really important things, he doesn’t miss.

And more than that, I think various mis-apprehensions of Marxism, and mis-analyses of advanced capitalism stem from the ambiguity in Marx’s analysis of ground-rent. Normally, I could start that off by identifying Lenin’s theory of imperialism as an example; Lenin’s and others’ theories of rentier capitalism as another example; the various theories according to which monopoly has transcended the law of value for capitalism as an example; the theories that have US capital as a monopoly capital, and/or a financial hegemon extracting tribute, extracting rent, from

a) Other developed capitalisms

b) Other less developed capitalisms or

c) Both;

Through either

a) Artificial inflation of prices for its highly processed (large value-added) goods or

b) currency manipulation or

c) Both,

as an example. And all those examples, I would identify as so wrong, so transparently “left” recapitulations of the capitalists’ own mythology of “having finally, seriously, this time we’re sure, once and for all we have conquered the business cycle” mantras that it makes me laugh. I could start off by saying that. But only later.

2. We know how Marx engages with these categories of rent, capital, wage-labor, value. He engages through opposition and the opposition is elaborated through critique. Marx begins his critique of ground-rent when he begins his critique of capitalism. In the Economic and Philosophic Manuscripts of 1844 Marx launches his initial probe into the complexities of ground-rent. We see Marx establishing the characteristics, the determinants in and of rent that will occupy him for the next 25 years. We get fertility, the relation of rent to population, the ever-present and always unrealizable demand for food, and the landlord and rent as obstacles to both the industrial capitalist and the development of industrial capitalism.

In the first manuscript, we have Marx telling us:

(5) While, thus, the landlord’s interest, far from being identical with the interest of society, stands inimically opposed to the interest of tenant farmers, farm laborers, factory workers and capitalists, on the other hand, the interest of one landlord is not even identical with that of another, on account of the competition which we will now consider.

I’m not about to disagree with the accuracy of Marx’s characterization of the landlord as all that is petty, venal, and vicious in human history, however much I think those attributes are better applied to the nuclear family. If the landlord isn’t the sum total of cynicism, avarice, pettiness, dishonesty and brutality in all of human history, then he or she still comes close. And close does count.

However, Marx’s claim that the landlord stands inimically opposed to the interest of the industrial capitalist is indicative of the ambiguity that persists throughout his analysis of rent.

Marx regards rent as the way in which:

…property in land realizes itself economically, that is produces value. [Capital, Volume 3, Chapter 37 “Transformation of Surplus Profit into Ground-Rent]

Rent is the means by which land produces value. Except it isn’t because the land doesn’t produce value. Ground-rent is the mechanism by which labor in agriculture manifests its transformation from the supplier of surplus-product and into the source of surplus value. Marx says, but does not pursue as much in Theories of Surplus Value, Part 2:

…the very existence of rent is feasible because the average wage of the agricultural laborer is below that of the industrial worker. Since, to start with, by tradition (as the farmer turns capitalist before the capitalists turn farmers) the capitalist passed on part of his gain to the landlord, he compensated himself by forcing wages down below their level…Surplus-value can be increased, without the extension of labour-time or the development of productive power of labour, by forcing wages below their traditional level. And indeed this is the care wherever agricultural production is carried on by capitalist methods…Here then we already have a potential basis of rent since, in fact, the agricultural labourer’s wage does not equal the average wage. This rent would be feasible quite independent of the price of the product, which is equal to its value.

Ground-rent is the capitalization of land; its organization as a means of production for exchange rather than a means of consumption.

Still, this transformation, this capitalization of land is stymied, incomplete, and necessarily so. Capital does not encounter land, at least not in Europe, in either its “natural” state, or in its “commodity” condition. Capital encounters landed property as encumbered by the pre-existing relations of production. Capital encounters land as constrained by a form of private ownership that is at once archaic and powerful.

Ground-rent then is a bit more than just the capitalization of land. It is capital adapting, and adapting itself to, feudal property that is refracted through the lens of market exchange and market value.

Even in, especially in, the most advanced capitalist country in Europe, capital is confronted with the obstacle of its own uneven and combined development.

Marx’s target is not this uneven and combined development. His target is not ground-rent as the preservation, extension, and dissolution of the archaic relations of production. His target is not the part ground-rent, and landed property play in the reproduction of capital. His target is not the part ground-rent plays in driving the social differentiation, the class relations, which accompany and signify the transition to capitalism.

Marx’s target, more than anything else, more than anyone else is David Ricardo.

3. For Marx, Ricardo is the best bourgeois political economy can produce; a figure of profound analytic capabilities and severe shortcomings, like capital itself. Ultimately Ricardo is constrained by the power of his own analysis. Ricardo’s examination of the economic categories of capitalist production begins with, requires, and reproduces the excision of those economic categories from the social relations of production that give the categories life. At its end, Ricardo’s analysis substitutes ideology for history.

Next to bayonets, cruise missiles, and beehive rounds, ideology is the bourgeoisie’s sharpest tool. Ideology tells the bourgeoisie exactly what they want to hear: There was a history. History has come to its end. The circumstances surrounding the birth of capital, the origin of the bourgeoisie, are not immortal, but rather completely natural. Capitalist markets are nature’s way of organizing humanity. There was creation. Capital is the crown of creation.

Landed property, as capital confronts it, is not so natural, but the political economist regards economic categories of landed property, and rent as excised from their social relations. To the political economist ground-rent is a-historical. For the English political economist, the origin, function, movement, and result of ground-rents in the period 1794-1815 versus the period 1500-1550 are immaterial. Ground-rent by any other name is ground-rent, and is an obstacle to the accumulation of industrial capital.

Marx is in hot pursuit of Ricardo, and in this hot pursuit he is inclined to allow, repeat, and even accept Ricardo’s less-than-historical critique of landed property and ground-rent. Marx is not doing this for the purpose of exposing the inadequacy of Ricardo’s critique. Before Marx begins his own critique of Ricardo’s theory of ground-rent, it’s as if Marx feels he needs to defend Ricardo’s “natural/unnatural” a-historical conceptualization of ground-rent in order to achieve his real objective. That objective is the rescue and recovery of the labor theory of value from the equivocation, the qualification and disqualification it suffers in Ricardo’s analysis of rent.

So we have Marx repeating Ricardo’s “materialist basis” for ground-rent: The supply of fertile land is limited. The supply is limited by “natural” conditions as the “more fertile” land is the land occupied; as “less fertile” land is always brought into cultivation as the population grows. The supply is limited by the social relations in that landlords monopolize the land.

Ricardo maintains, and Marx accepts, that not only is land of inferior quality brought into cultivation as the population expands, but also that proportionately less productivity gains are realized with successive applications of additional capital to the same plots of land. In Capital, Volume 3, Chapter 37 Marx writes:

That Mr. Lavergne is not only familiar with the economic achievements of English agriculture, but also subscribes to the prejudices of the English tenants and landlords, is shown on page 48:

"One great drawback attends cereals generally ... they exhaust the soil which bears them."

Not only does Mr. Lavergne believe that other plants do not do so, but also believes that fodder crops and root crops enrich the soil:

"Forage plants derive from the atmosphere the principal elements of their growth, while they give to the soil more than they take from it; thus both directly and by their conversion into animal manure contributing in two ways to repair the mischief done by cereals and exhausting crops generally; one principle, therefore, is that they should at least alternate with these crops; in this consists the Norfolk rotation" (pp. 50, 51).

No wonder that Mr. Lavergne, who believes these English rustic fairy-tales, also believes that the wages of English farm labourers have lost their former abnormality since the duties on corn have been lifted.

The Norfolk four-course rotation was no fairy tale, and the ability of clover, legumes, etc. to fix nitrogen in the soil is no myth. As Mark Overton writes:

The effects of the rotation were to increase yields of grain and to allow much higher stocking densities. These effects are modeled in Table 3.19 which demonstrates convincingly that the Norfolk four-course could indeed have been responsible for unprecedented changes in both crop and livestock productivity and output…

Partly because the integrated mixed-farming systems comprised so many mutually dependent components their evolution took time. Hence the long lag between the appearance in England of clover, turnips and other components of the Norfolk four-course system and the perfection of the system itself, whose widespread diffusion must be dated to the first half of the nineteenth century. Nevertheless there can be no doubt of the superiority of the new system at whose root quite literally lay the improved management of soil nitrogen. This of course was not the farmer’s intention, since the chemistry was unknown to them. Their concern was with fodder. Sowing grass leys focused attention on the range and suitability of grasses that could be grown and so clover was selected…; turnips were an alternate source of fodder. Once grown, and integrated into arable rotations, their probably unintended outcome was an increase in overall output. Although systems such as the Norfolk four-course rotation increased output of both stock and crops their major contribution maybe have been that optimum output occurred with a larger proportion of arable crops than under a system of permanent grass and permanent arable. The much increased amounts of manure from more efficient fodder crops, and the rotational use of crop residues, allowed this substantial increase in grain area, while still maintaining, or even boosting, yields. [Mark Overton, Agricultural Revolution in England, p. 117, 120-121, Cambridge University Press, 1996]

So here’s my point, what I would have said first, if I didn’t have to provide the background: Marx, in his pursuit of Ricardo, fails to comprehend exactly what Ricardo failed to apprehend: the revolution in English agriculture, the revolutionary increase in output and yield between 1750 and 1850. This failure is not so much a case of Marx failing to see the forest because of the trees as it is the case of Marx failing to see the deforestation because of the tree farms.

4. For Marx, the transformation of agricultural, the capitalist transformation of agricultural that actually operates through rent just isn’t the issue, and that’s a shame. This is the only instance in Marx’s writings, that I know of, where Marx actually adopts the position, the attitude, and the analysis of an economist, in essence abstracting the economic categories from the historical relations, and the historical development, that produce the economic category.

Ground-rent, for Marx, is the grand exception that is the proof of the rule of the law of value. Ground-rent will be the vector by which Marx, accepting the elements of ground-rent as Ricardo describes them, will prove how the apparent anomaly in the prices of agricultural commodities—where the less efficient producer, and the dearer product, set the market –actually validates the labor theory of value.

For Marx, following Ricardo, ground-rent exists as a transfer of value from industrial capital to the landlord. Rent is a deduction from profit, but not just from the profit of the tenant capitalist-farmer. Value moves, through the mechanism of price, from the superior productivity of industrial capital, and lower cost of industrial commodities, to the inferior productivity of agricultural capital and the higher cost of agricultural commodities.

Says Marx:

Incidentally, however the phenomenon of rent may be explained, the significant difference between agriculture and industry remains in that in the latter, excess surplus value is created by the cheaper production, in the former by dearer production. [Theories of Surplus Value, Part 2, Chapter 8]

So… ground-rent does not cause the higher prices, or the increase in price of agricultural commodities. The possibility for rent exists in those higher prices. The values of agricultural commodities are, like the values for all commodities, determined by the labor-time embodied therein as mediated by the time necessary for their reproduction. In agriculture, however, increased production necessarily entails, creates, an increase in the time necessary for the reproduction of any individual commodity. In agriculture, unlike industry, the expansion of production does not mean the relatively greater production of use-values with the same or proportionally less expansion of exchange-value.

In agriculture, the increased production does not reduce the socially average time necessary for reproduction and all of this occurs because demand is not satisfied.

Says Marx:

If the area of fertile land were enlarged or the fertility of the poorer soil so improved that I could satisfy demand, then this game would end. [TSV, Part 2, Chapter 8].

In The Poverty of Philosophy, Marx gives us the outline of Ricardo’s argument that he will use, and maintain, for his own examination of rent throughout his economic manuscripts, including volume 3 of Capital:

We have seen that, according to the Ricardian doctrine, the price of all objects is determined ultimately by the cost of production, including the industrial profit; in other words, by the labour time employed. In manufacturing industry, the price of the product obtained by the minimum of labour regulates the price of all other commodities of the same kind, seeing that the cheapest and most productive instruments of production can be multiplied to infinity and that competition necessarily gives rise to a market price – that is, a common price for all products of the same kind.

In agricultural industry, on the contrary, it is the price of the product obtained by the greatest amount of labour which regulates the price of all products of the same kind. In the first place, one cannot, as in manufacturing industry, multiply at will the instruments of production possessing the same degree of productivity, that is, plots of land with the same degree of fertility. Then, as population increases, land of an inferior quality begins to be exploited, or new outlays of capital, proportionately less productive than before, are made upon the same plot of land. In both cases a greater amount of labour is expended to obtain a proportionately smaller product. The needs of the population having rendered necessary this increase of labour, the product of the land whose exploitation is the more costly has as certain a sale as that of a piece of land whose exploitation is cheaper. As competition levels the market price, the product of the better soil will be paid for as dearly as that of the inferior. It is the excess of the price of the products of the better soil over the cost of their production that constitutes rent. [Poverty of Philosophy, Chapter 4, “Property of Ground Rent”]

Marx concludes the paragraph with what he regards as near insurmountable obstacles to the “parity” of industrial and agricultural production:

If one could always have at one’s disposal plots of land of the same degree of fertility; if one could, as in manufacturing industry, have recourse continually to cheaper and more productive machines, or if the subsequent outlays of capital produced as much as the first, then the price of agricultural products would be determined by the price of commodities produced by the best instruments of production, as we have seen with the price of manufactured products. But, from this moment rent would have disappeared also.

Yet, here is exactly the transformation imposed upon agriculture by capitalism, a transformation that finds its agents, in part, through the receivers of rent, the rent-seeking, profit-seeking landlords.

5. Marx certainly achieves his objective. He pursues Ricardo and brings him to ground [-rent]. The critique of Ricardo that Marx produces using ground-rent as a vector absolutely restores the integrity and viability of the labor theory of value.

The analysis of cost-price and the differentiation of cost-price from value establish the mediation through which the law of value must operate given the private ownership of the means of production. Marx demonstrates not only why prices deviate from values, but more importantly how the deviation of specific, individual, numerous prices from specific, individual, numerous values is the mechanism through which the law of value enforces itself. The analysis by Marx at one and the same time answers the “transformation question” before it is asked; embeds the labor theory of value as the center around which all of capital spins and morphs; proves that profit is derived from exchanging commodities at their values, but the profit so derived for any commodity is a distribution of, a proportion, a relation to the totality of value of all commodities.

Marx has climbed the ladder of Ricardo’s labor theory of value, and having done so, has no more need for ladders. The labor theory of value is firmly established at ground [-rent] level.

Here are the determining conditions of Ricardo’s theory of ground-rent, and Marx reproduces in and as his own in the critique of Ricardo: increased and increasing population; increased demand for agricultural commodities; inability of cultivated land to satisfy the demand for agricultural commodities; cultivation of less fertile lands; inability of new areas of cultivation and/or successive applications of capital to old areas to maintain or improve yields.

Marx certainly recognizes the weaknesses in Ricardo’s theory of the persistent, if not eternal, scarcity of agricultural output. We have Marx’s recognition of the feasibility of rent in the lower wage paid the agricultural laborer. We have Marx explaining how the new land brought into production is not necessarily less fertile, naturally, but that successive applications of capital are required to this new land to establish productivity equal to that of the already cultivated property. We don’t see Marx recognizing that his very recognition of this quality contradicts the assertion that successive application of capital produce declining returns.

We hear Marx telling us that if, in agricultural production, the machinery and constant capital inputs stood in the same ratio to the labor, variable capital as the ratio is industry, then rent would disappear:

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. [Marx, TSV Part 2 “Herr Rodbertus. New Theory of Rent (Digression) {9} Differential Rent and Absolute Rent in Their Reciprocal Relationship. Rent as an Historical Category. Smith’s and Ricardo’s Method of Research”]

We don’t hear Marx analyzing exactly this trend in the development of capitalist agriculture, even though he writes:

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.

But this is exactly the point where the historical analysis of rent, of its function in expanding the capitalist relations of production in agriculture, the capitalist organization of labor in agriculture should begin.

6. Ricardo’s study of ground-rent and price formation in agriculture is heavily informed by the dramatic price inflation in agricultural commodities in the period 1794-1815, the period of the anti-Jacobin and then Napoleonic Wars. In part, it was the military’s demand for agricultural commodities, and not just agricultural commodities, that drove the price inflation of these years.

This period is also the initialization period of the industrial revolution, when steam power was harnessed to the production of textiles; to the production of coal; and to the processing of grain.

The military’s requirements in the midst of this dramatic transition in the technical basis of production worked to the benefit of some, but not to the benefit of all. There was little or no benefit to the cottagers living in and around the villages and manors, who depended on rights of common for pasture, for maintaining production and productivity of their smaller, rented plots. There was no benefit to the commoners who rented almost no land for their direct production and relied almost completely on the common rights. There was certainly no benefit to the agricultural laborers. Between 1780 and 1810, real wages for agricultural workers declined by twenty percent.

For the most part, the dramatic price inflation and the subsequent climb in rents were driven by the number of poor harvest years, and the number of successive poor harvest years. Bad harvests were recorded in 1794, 1795, 1799, 1800, 1809, 1810, 1811, and 1812.

During this period of bad harvests, the population of England continued to grow, nearly doubling in the 1780 to 1806 period.

All the elements for the basis of rent are in place: population growth, inability of agriculture to meet demand, declining wages, apparent failure of successive applications of capital to maintain yield, cultivation of less fertile lands. Marx writes:

But apart from absolute rent, the following question remains for Ricardo:

The population grows and with it the demand for agricultural products. Therewith their price rises, as happens in similar cases in industry. But in industry, this rise in price ceases as soon as demand has become effective and brought about an increased supply of commodities. The product now falls to the old, or rather below the old, level of value. But in agriculture this additional product is thrown on to the market neither at the same price nor at a 1ower price. It costs more and effects a constant rise in market-prices and along with that, a raising of rent. How is this to be explained if not by the fact that ever less fertile types of land are being used, that ever more labour is required in order to produce the same product, that agriculture becomes progressively more sterile? Why, apart from the influence of the depreciation [of money], did agricultural products rise in England from 1797 to 1815 with the rapid development of the population? That they fell again later proves nothing. That supplies from foreign markets were cut off proves nothing. On the contrary. This in fact created the right conditions for demonstrating the effect of the law of rent as such. For it was the very cutting off of foreign supplies which forced the country to have recourse to ever less fertile land. This cannot be explained by an absolute increase in rent, because not only did the rental rise but also the rate of rent. The quarter of wheat, etc. rose in price.

It cannot be explained by depreciation because although this might well explain why, with greater productivity in industry, industrial products fell, hence why the relative price of agricultural products rose, it would not explain why in addition to this relative rise, the prices of agricultural products were continuously rising absolutely. Similarly, it cannot be explained as a consequence of the fall in the rate of profit. This would never explain a change in prices, but only a change in the distribution of value or of price between landlord, manufacturer and worker. [Karl Marx, Theories of Surplus Value, (Chapter IX) History of the Ricardian Law of Rent [6] Ricardo’s Thesis on the Constant Rise in Corn Prices. Table of Annual Average Prices of Corn from 1641 to 1859].

Marx is a bit over-zealous, but he is writing in his notebooks. If the price increases tell us something about the mechanisms of accumulation and apportionment, then the price declines also tell us something about accumulation and apportionment. In fact, it is Marx’s contention, at least for industrial capital and industrial commodities, that it is only in the totality of those changes in those prices, in that inflation and devaluation that the truth of accumulation and apportionment is manifested.

The correlation between population growth and price increase is a strong correlation, but it is not an absolute correlation. Again, Mark Overton in his Agricultural Revolution in England points out that there is a positive correlation between the rate of growth of the population in England and the rate of growth in prices:

It indicates a strong positive relationship from the 1540s to 1780s: the rate at which prices were growing followed the rate of population growth. But after the 25 year period starting 1781 the relationship changes: population growth rates rise to unprecedented levels [over 1 per cent per annum], but the rate of growth in prices starts to fall, from a peak of over 2 per cent per annum…Although population was growing, the agricultural sector of the economy was able to expand output to meet the additional demand, so that prices failed to rise so rapidly as they had done under pressure of demand in previous centuries. [emphasis added] …at the start of the eighteenth century English agriculture seemed unable to expand output significantly, but by the end of the century such expansion was well under way. [Overton, Agricultural Revolution in England, p.69-70]

As a matter of fact, after 1800 the correlation between population growth and rate of growth of prices turns negative, with the steady population growth rate of about 1.4 percent per annum coincident with a negative rate of growth of prices. This negative trend is reversed only when the rate of population growth declines after about 1825.

It’s not Ricardo’s fault that the poor state of English record-keeping regarding its agricultural revolution prevented him from recognizing that such a transformation had occurred. It’s not Marx’s fault that the English record-keeping and analysis of the record that did exist was still in a poor state at the time he undertook his critique. However, it is Marx’s “fault” that in his defense of the law of value, he abstracts, in his discussion of rent, that law from the social relations that it embodies and reproduces.

The law of value is not some deus ex machine, nor is it some divinitus machine. It is a law derived from the social relations of production. It is derived from and reproduces the relations of classes. It is a law containing and expressing the way society organizes its own reproduction. That organization is of time itself as the means of exchange. It is the conversion of time into labor-time; the conversion of labor-time into the production of values; it is the exchange of labor-time for value. The law of value is nothing but the reproduction of the conflict between labor and the conditions of labor. The core to that reproduction, to that law, is the dispossession of the immediate, direct, producers.

So if the law of value is not compromised by ground-rent but rather confirmed and expressed through ground-rent, and Marx most definitely proves exactly this, then ground-rent must be vehicle, a vector, a mechanism, a mediation for the realization of that core to the reproduction of value. Through ground-rent, the class renting out the ground, must be reproducing the social relation of value even to, especially to, the point of transforming itself as a class in the process, and in the relation, itself.

This transformation is exactly what ground-rent accomplishes. This transformation is exactly what ground-rent accomplishes painfully, acutely, chaotically in the inflationary period of failed harvests during the anti-Jacobin and then Napoleonic Wars.

7. So what is this revolution? What is transformation of English agriculture? And what about the period 1794-1815, what processes are quickened by and during this period of inflation? What is the legacy of this period?

First and foremost, the effects of the price inflation, the changes in land use, land tenure, rights of common are very different for different regions, and for different villages within the same region in England. Still there are trends, and the trend is our friend.

During this English “revolution,” the growth in agricultural yield outpaced the increase in new lands brought into cultivation. Jonathan Theobold in his paper “Agricultural Productivity in Woodland High Suffolk 1600-1850,” [from the Agricultural History Review available on the website of the British Agricultural Historical Society: www.bahs.org.uk volume 50, part 1, 2002. See note at end on how to access paper from this site] writes:

For example, figures show that although the area under grain grew by approximately 160 percent between 1670 and 1850, the total grain yield in this period increased by over 500 percent implying that land productivity was noticeably improving.

…in the 170 years after 1700 the agrarian economy of England was utterly transformed, and agricultural practice and productivity significantly improved. Overton noted in 1996 that ‘the magnitude of changes that occurred [in Norfolk between 1750 and 1850] were out of all proportion to those which had occurred during the preceding 500 years, and changes of similar magnitude were happening elsewhere’ in England.

Output exceeded, and by far, increases in arable acreage. Yields improved, but yield is a very “soft” measure of agricultural improvement, as one of the factors determining yield is the amount of land devoted to the cultivation of crops.

Liam Brunt in his paper “Estimating English Wheat Production in the Industrial Revolution,” [available at: http://www.nuff.ox.ac.uk/economics/history/paper29/29bruntweb.pdf] writes:

By 1771 the effect of crop rotation reached a peak because the average crop rotation featured a large proportion of turnips and a relatively small proportion of grain crops- so the wheat yield was correspondingly high. But as the price of wheat rose dramatically through the Revolutionary and Napoleonic Wars (1793 onwards) farmers grew a higher proportion of wheat and accepted a lower wheat yield per acre. In the post-war depression the proportion of wheat in the rotation shrank dramatically (thus improving yields) but thereafter increased in response to rising prices. Two aspects of this process need to be stressed.

First, the change in crop rotation was a rational response to temporarily high prices. The soil is effectively a ‘nutrient bank’ where the farmer can either make a deposit or a withdrawal. When wheat prices were temporarily high during the Napoleonic Wars it was optimal for the farmer to make a withdrawal (i.e. grow more wheat in the rotation) and run down the quality of the soil.

We see there is a moment that corresponds to Ricardo’s claim, and Marx’s endorsement of the claim, that successive applications of capital to the same land provide a declining rate of return in agriculture. But this moment is not a “natural event” but a market decision to apply capital in order to deplete the land of its potential, improved yield and output in favor of a compressed, reduced but more valuable immediate yield and output.

We see a possible moment that corresponds to Ricardo’s and Marx’s theory of increased agricultural prices due to the incorporation of marginal, less fertile land. There follows increased effort for increased production, theoretically, but at a higher price, practically. The marginal lands require more capital, more labor, more time to provide the yield and output of the land already in cultivation. The increased cost of this expanded production to meet the moment of insufficient supply or increased demand raises the average social cost of reproducing the total agricultural product. Again, however, this is a moment, a market decision, and not the permanent characteristic of agricultural production.

Says Brunt:

The point to note is that variations in total wheat output are much more sensitive to changes in crop rotation than changes in arable acreage. There are two methods of raising wheat output by 25 percent. Once option is to keep the same crop rotation and increase the arable acreage by 25 percent. This is clearly very costly because it involves a high fixed cost for bringing new land into production (even if the farmer simply ploughs up pasture land). Moreover since the new land is likely to be of lower quality it will require an acreage increase in excess of 25 percent… The second option is to keep the same arable acreage and grow 25 percent wheat instead of 20 percent wheat.

Marx’s claim that agricultural producers cannot multiply and reproduce their critical instrument, the land, at will and with the same level of productivity as the bourgeoisie can multiply their machines ignores the ability to bring fallow land into production, and to alter rotations.

Certainly the price inflation of 1790-1813 brought new lands, formerly marginal lands into production but neither massively nor quickly enough to determine the price of wheat. The weather conditions that limited the harvest by exacerbating the underlying low level of technology, in particular the poor drainage, of most English agriculture did act that massively and that quickly.

J.A Perkins, in his paper “The Prosperity of Farming on the Lindsey Uplands: 1813-1837,” [available on the BAHS website, volume 24.2, 1976] writes:

The high prices of cereal prevailing during the majority of the war years offered the prospects of a return to farmers for bringing the light soils of the Lindsey uplands permanently under the plough, to be cultivated with cereal and fodder crop rotations designed to raise the fertility of the soil and the profitability of farming in the longer term. To bring the land to a peak of fertility required a considerable investment of capital, which was largely borne by a tenantry occupying their farms without the security of leases, and which—although inflation during the war years reduced the time-span between investment and return—was not completely returned before a number of years had elapsed. The landlords provided the framework [emphasis added] for progress by financing the enclosure of the land and the relocation of farmsteads…Thereafter, the landlords mainly assisted their tenants by permitting a lag to exist between the level of farm rents and the productivity and profitability of farm. But the initiators of the agricultural revolution on the Lindsey uplands were the tenant farmers, and the overwhelming bulk of investment in the land from the turn of the 19^th century consisted of tenant outlays.

In converting the land from pasture to permanent tillage the tenants had to expend a total of £ 8 to £ 9 per acre, of the equivalent of fifteen to twenty times the unimproved annual value of the land in the late 1790s…. the land had first to “pared and burnt,” by gangs of men….Next the land war “marled” or dressed with chalk at the rate of 80 cubic feet per acre to…counteract…the tendency of turnips grown on light soils to run to a taproot. Finally the process of reclaiming the land for tillage was completed by a dressing of 60 bushels of bones per acre on the initiating turnip crop in the rotation…..

…There were, however, important differences of emphasis between the farming of the wartime and that of the postwar years. Where previously the farmers had striven to raise output without according much consideration to costs, whose increase was retarded in the instances of rent and wages by custom and tradition, and whose general significance was eroded by inflations, after 1813 they were motivated to increase the productivity of labor and capital as well as the productiveness of land. After 1813, the prosperity of farming came to depend not only upon the farmer’s ability to increase the gross output of their farms, to maintain the level of their farm by means of a larger volume of produce, but also upon a lowering of costs per unit of output to maintain profit margins. Both of these objectives were achieved by the continued development of the farming system.

What we have here is half the story of the revolution in English agriculture, the story of increasing applications of capital providing increased output and demanding the modern measure of value, profitability.

No revolution is so benign as to simply be the product and the record of hardy, hard working entrepreneurs, conquering nature with drill and plow, overturning the soil inspired by their innate acquisitiveness. Revolutions, even those that don’t overthrow kings, tyrants, and classes; even those that don’t establish kings, tyrants, classes; even revolutions in the prosaic practice of agriculture involve more than just “improvement.” Within, and under, those indexes of output, yields, productivity—those measures of the change in the forces of production—are the measures changing the relations of production.

Within those measures that record, between 1700 and 1850, the 100 percent increase in sown arable acreage; that productivity of land doubled; of the 100 percent growth in labor productivity [Mark Overton, “Re-establishing the English Agricultural Revolution,” BAHS website, volume 44.1, 1996]; is the coded record of the transformation of the land and its products into capital, and the changes in the proportions of that capital to the labor it commanded. That code, when deciphered into its measures of capital and labor, tells us that improvement was a by-product of acquisition and accumulation.

The level of technology circumscribed by capital sets for the farmer an optimum scale of operations—an expanded area to be cultivated where the relationship between costs and benefits is optimized. This expanded area, this “new” land brought into cultivation is not “virgin” land of unknown fertility, existing at the edges of established agriculture, but the land cultivated by the cottagers, and small farmers who cannot afford the cost of enclosure and must sell or abandon the land. The expanded area is the “wastes,” the fens and moors and marshes utilized as resources for subsistence by cottagers, commoners, small farmers, hunters, artisans, day laborers, seasonal laborers. The “improvement” of agriculture is the attack on the right of common to tillage and pasture, to gleanings, to the folding of livestock. The expansion is the expansion of private property.

“The landlords provide the framework by financing the enclosure of land,” the major result of which was the increase in average farm size. J.A. Perkins writing again about Lindsey in “Tenure, Tenant Right, and Agricultural Progress in Lindsey 1780-1850” [BAHS website, volume 23.1, 1975 ] states:

In 1787, to take one example, the 2200 acres of land in the parish of Beelsby on the Wolds were divided between four farms of over 300 acres each, four small farms of between 10 and 40 acres each, and eight small holdings of from 3 to 9 acres each, which shared with two other cottages without land in the exploitation of the 70 acres of “Cottagers Pasture.” Thirty years later, the whole parish was divided into two large farms of 1,086 and 1,080 acres respectively.

The loss of rights to common, of access to the wastes, fens, marshes, all these made the market dependency of producers, big and small, more acute… and more desperate. The high prices of the Napoleonic War years seemed to provide relief, and prosperity, to the small farmers and the cottagers, as prices for their surplus product brought higher prices. However, the rising prices of inputs to production, of the means of subsistence, and the rising rents that the small farmers and cottagers had to absorb made them that much more market dependent, and that much less capable of withstanding any economic adversity such as reduced harvest due to poor weather. Subsistence required income. Income meant production for exchange, for the market.

And when income was not enough to provide for subsistence and rent? Then the direct producer, the smaller tenant, the commoners, the cottagers were dispossessed, and were left with only one thing of value to exchange in the markets, their labor-power.

And here we can see the social function of the price inflation of agriculture products, and the resulting high rents. Inflation is accumulation by almost, but not quite, primitive means. Landlords are the personification of that almost, but not quite, primitive means.

8. Enclosure effectively concentrated capital—land, buildings, implements, livestock, seed—into fewer hands, operating expanded acreage. Certainly the process was uneven, but the trend was the trend to larger farms cultivated “in severality”—without obligation to the community of producers, large, small, poor, and even landless.

The trend to larger farms was not confined to enclosed acreage but was the trend in both open and enclosed field farming. Enclosure, however, was the dominant response to increased market dependency. The effects of enclosure on the social relations of agricultural production were the “other half” of the agricultural revolution in England, transforming class relations from those of common right, common obligation, common allocation, and common service to those of private accumulation. With the transformation of the relations of land to labor there comes, necessarily, the “disappearance” of those who depended upon the common appropriation, on the reproduction of the common right. The disappearance is, of course, the transformation through dispossession of that class reproducing itself as private producers engaged in agricultural production through the common management, supervision, regulation of the source of surplus-- landed labor.

J. M. Neeson writing in Commoners: Common Right, Enclosure and Social Change in England 1700-1820 [Cambridge University Press, 1993] concludes in his study of twenty-three parishes in Northamptonshire between 1780 and 1815:

We can summarize the findings on disappearance of landholders and decline of survivors’ holdings as follows: First: half of all landholders sold all their lands in enclosing parishes during the enclosure period, compared to only one quarter of those in open parishes. Occupiers sold as frequently as owners who let their lands; and tenants left the land at the same rate. The smaller the holding, the more likely was the sale of land….One exception to this rule seems to have occurred in forest parishes, where smallholders stayed on the land in greater numbers than elsewhere, perhaps encourage by continued enjoyment of common right.

Second: surviving landholders sold some of their land too, and tenants worked smaller holdings. One third of the remaining original landholders lost a significantly larger amount of their lands than would have gone to the tithe-owner for tithe compensation. In contrast only one eighth of open parish landholders lost land on this scale…. [p.239-240].

Thus, with the possible exception of parishes where pat of the old common-right economy survived, many smallholders sold all their land at enclosure and most sold some of it. Although there was no common parish experience, there was a common shareholder experience…

…it becomes that enclosure dealt small peasants a double blow, for not only did they lose common right, they lost land too. No argument about the rise and fall of classes can do justice to this effect of enclosure. Whether the English peasantry disappeared or not, the effect of enclosure on the last generation of open field peasants was profound. [p.242-243]

Open-field agricultural communities were no utopias for small proprietors, for small tenants, for cottagers, and commoners, but they were less market-dependent, less exchange-driven. The organization of production, the use of land and labor, was fundamentally opposed to the capitalization of agriculture.

Open-field agricultural practices were not less “efficient,” less “productive” than enclosed field agricultural practices. Much of the advance in crop rotation, land “conditioning,” and convertible husbandry had been developed on and incorporated into open-field cultivation without reductions in common rights.

Enclosure was first and foremost the reconfiguration of the relation of land to labor, of landed labor, institutionalizing profit and accumulation as the determinants of production. The reconfiguration of labor was not limited to the small holder of land but extended to the village. Destroying the common rights excluded the landless, the small-holding artisan, the craftsman from supplementing his or her income; from maintaining himself or herself as a small private producer insulated from the expanding market dependency. Destroying the common right also prevented the artisan, the landless, from presenting himself or herself as a casual wage-laborer, seeking wages only at various times and only as individual circumstances dictated.

Enclosure was not simply dispossession from land, from property, but the dispossession of labor from any direct attachment to the products of its own creation. It is the extended moment in English history that transforms production into production for exchange; where the market becomes the mechanism for subordinating labor to property by transforming land into capital.

In this historical transformation of the social relations of production, we can determine why it was that while modern capitalism begins its existence in the transformation of agriculture, the accumulation of capital proceeds more slowly in agriculture than in industry. We can even account for the different rates of capitalist accumulation and development among countries.

Those different rates have little to do with the “strength” of the landlords, the level of rents, the “diversion” of profits from the industrial capitalists and to the landlords through rents. That difference indeed has its origin, as Marx noted, in the fact that capital does not confront landed property in a “pristine” state, but in its pre-existing social organization. However, that condition is not the “one-sided” domination of the feudal lords. The social organization of agriculture in England was also the prevalence of the small-scale, “subsistence plus surplus” cultivators of open-field, common right land.

The more that small scale “subsistence plus surplus” mode reproduces itself, actually “fractalizes” itself, the more difficult is it for capital, and the capitalists, to establish the commercial relations of land to production, of labor to product, that can create and sustain the market. The more difficult it is to create those relations that can transform production into production for exchange, and exchange into accumulation.

Rent is no integument to that market relationship. On the contrary, rent is its hand-maiden. The rent-seeking, profit-seeking landlord, in the very process of rent-seeking, is transforming land into capital and, at the same time, doing away with class of landlords. After the wave of enclosures during and after the Napoleonic Wars, the number of landlords in some parishes of the English countryside was reduced by one-third, as landlords too sold out, and cashed in.

In the end, the revolution in English agriculture sets the stage for eclipse of those old tenets of ground-rent theories, where less productive land is always brought into cultivation, where demand can never be satisfied, where successive applications of capital provide reduced yields, and where excess surplus value accrues to the higher priced product, to the least efficient producer. In the end, the revolution in English agriculture sets the stage transforms agricultural production into the reproduction of capital and thus sets the stage for overproduction.

In his paper “Adjustments in Arable Farming after the Napoleonic Wars” [BAHS site, volume 28.2, 1980], A.R. Wilkes writes:

For twenty years after the Napoleonic War the response of England’s farmers to low wheat prices was to produce more. While some of the increase was obtained from higher yields, the major part came from vastly expanded acreages. This development seems to have taken place throughout the country. Although on some farms, it was a positive economic response…on many it represented the only possible response by farmers already growing wheat as their main crop. Such people were unable or unwilling to adjust to other types of farming, and they were forced increasingly to pin their hopes on the traditional rent-payer, often at the expense of good farming. This pattern did not change until the mid-1830s.

9. Capital accumulates so much faster in industry than in agriculture for the very reason, in part, that Marx identifies as being the basis for rent—the lower average wage paid to agricultural labor in comparison to the wage paid to industrial labor.

Accelerated accumulation in industry is precipitated by the higher wages paid to urban workers who cannot supplement their own subsistence through access to common rights in agriculture. Consequently, the source of industrial capital, the wage, and the wage alone as the source of reproduction of the laborer consistently pushes against the capitalists’ need to restrain costs.

Capital attempts to resolve this tension by aggrandizing greater wage labor through proportional expulsion—by reducing the amount of time of the working day required for the reproduction of the workers’ wages. The expulsion requires the substitution of the inanimate, insensate, machine—the application of increasing amounts of fixed capital to the production process.

The fixed component only transfers its value, its cost to the capitalist, piecemeal, incrementally in the value of the individual product. The ability of fixed capital to amplify accumulation exists solely in its ability to reduce the time of production of the commodity, which also reduces the amount of value transferred from the machinery to commodity. The capitalist has no choice save to operate the fixed capital on the largest scale, running continuously, ceaselessly.

No such continuity of production is possible in agriculture practiced on the small scale, limited by subsistence, circumscribed not only in space by area, but in time, by its very seasonality, disrupting the continuing of production, extending the lag between production and product.

Only through expansion of the area for cultivation, through dispossession of the small producer, can capital in agriculture begin that process leading to accumulation. In this, the trajectory of capital, rent is not the barrier, it is the facilitator. Rent launches capital.

S. Artesian

December 29, 2010

Part 2 will examine rent and “natural resources”- and the suitability of rent as an explanation for price fluctuations in a representative natural resource like… oil.

Note: How to access papers from the BAHS website.

1. go to www.bahs.org.uk

2. in the left margin, click on Agricultural History Review

3. on the new screen click on “search and read past articles from the Review…”

4. on the new screen click on “to search an index to articles with links…”

5. Scroll to volume in which the paper appears and click.

Facets of Value, 3

The English translation of vol 1 of Capital that most of us have is not based on the the first edition of Capital, but on the 4th German edition.

If we look at a translation from that first German edition [the Marxist Internet Archive has one of Chapter 1, The Commodity, by Albert Dragstedt], Marx's language, analysis, and demonstration of the relative, equivalent, and value forms of the commodity are clear examples of Marx's extraction of the rational kernel from Hegel's dialectic.

Marx in this first chapter is explaining the most critical facet of his investigation into capital [which is why it is the first chapter] and his materialist dialectic- the interpenetration of form and substance, of identity and opposition are clear.

He writes:

Quote:

The expression of the value of linen in the coat impresses a new form upon the coat itself. After all, what is the meaning of the value-form of linen? Evidently that the coat is exchangeable for it. Whatever else may happen to it, in its mundane reality it possesses in its natural form [coat] now the form of immediate exchangeability with another commodity, the form of an exchangeable use-value. or Equivalent. The specification of the Equivalent contains not only the fact that a commodity is value at all, but the fact that it in its corporeal shape [its use-value]counts as value for another commodity and consequently is immediately at hand as exchange-value for the other commodity.. Marx continues: But commodities are objects. They have to be what they are in an object-like way or else reveal it in their own object-like relationships. In the production of linen, a particular quantum of human labour exists in having been expended. The linen's value is the merely objective reflection of the labour so expended, but it is not reflected in the body of the linen. It reveals itself [i.e., acquires a sensual expression] by its value relationship it to the coat. By the linen's equating the coat to itself as value-- while at the same time distinguishing itself from the coast as object of use-- what happens is that the coat becomes the form of appearance of line-value as opposed to linen-body: its value-form as distinguished from its natural form.

"..what happens is that the coat becomes the form of appearance of linen-value as opposed to linen-body"

The emphasis is in the original, as supplied by Marx.

Where does this get Marx? Where it always gets us-- back to the specific social organization of labor:

Quote:

The use value coat only becomes the form of appearance of linen-value because linen relates itself to the material of the coat as to an immediate materialization of abstract human labour, and thus to labour which is of the same kind as that which is objectified within the linen itself. The object, coat, counts for it as a sensually palpable objectification of human labour of the same kind, and consequently as value in its natural form. Since it is, as value, of the same essence as the coat,the natural form coat thereby becomes the form of appearance of its own value. But the labour represented in the use-value, coat, is not simply human labour, but is rather a particular useful labour: tailoring.Simple human labour [expenditure of human labour-power] is capable of receiving each and every determination, it is true, but is undetermined just in and for itself. It can only realize and objectify itself as soon as human labor-power is expended in a determined form, as determined and specified labour; because it is only determined and specified labour which can be confronted by some natural entity-- an external material in which labour objectifies itself. It is only the 'concept' in Hegel's sense that manages to objectify itself without external material.

Here we have Marx's material extraction of the rational kernel from Hegel's dialectic. Human labor is capable of receiving every determination, and remaining human labor. But the labor can only realize itself as labour power embedded in the specific commodity. the labor can only realize itself as labour power, as an abstract quality-less expression when expressed in specific, determined material.

So the determination is two-fold-- as the concrete specific object of production, in all articles of production as value. It is the social determination, transforming labor into raw undifferentiated labor power, that contains the antagonism, the conflict, in Marx's word, the "contradiction" where labor power becomes opposite to and the negation of the power of labor.


S. Artesian November 23, 2010

sartesian@earthlink.net

Facets of Value, 2

In the exchange of commodities Marx examines the different rotations, appearances, of the commodity in its relative and equivalent forms of the expression of value. For exchange to expand, to dominate, to determine production, an equivalent for all commodities must be established. Just as human labor in general, in abstract, in its distilled, estranged existence as labor time is projected into the commodity as value, value is projected out of the commodity into the abstract, general, featureless, existence of money. Estrangement is now complete. Accumulation begins.

From here, Marx takes us to his essay on the fetishism of commodities in which Marx explores how and why it is the form of labor, the organization of production in capitalism that expresses human relations as the relations between things, and endows those relations between things with power over the relations of human beings. Direct production for direct need has disappeared. Production and need are associated only indirectly, mediated by the market, by exchanged. Value appears as an independent force, even a rational one, commanding equivalence, ensuring equity with a wave of its invisible hand.

As concise as Marx’s essay is, the essay itself is condensed in one sentence in the second footnote Marx provides: “When, therefore, Galiani says: Value is a relation between persons—‘La Ricchezza e una ragione tra due persone,’—he ought to have added: a relation between persons expressed as a relation between things.”

Having established the relative and equivalent forms of value from the exchange of commodities; the money form from the relative and equivalent forms of value in the process, the circuits of exchange; fetishism, form supreme, from the value expressed as money over human beings, Marx now returns to examine exchange— not simply to reiterate the different forms, or moments of the commodity as value, but rather as expressing historical moments, measures and manifestations of commerce. The transformation of exchange from barter or simple trade into commerce is the “record” of the transformation of a useful surplus article into a commodity.

The commodity as a specific product, a useful article, and organized as value, then manifests the conditions of its production, i.e. labor as a specifically useful article that is organized as value.

S. Artesian November 21, 2010

address all comments to: sartesian@earthlink.net

Facets of Value

1. In his preface to the first edition of Capital, Volume 1, Marx writes that this work is the continuation of his work in A Contribution to the Critique of Political Economy, published 1859. Marx states:

The substance of that earlier work is summarised in the first three chapters of this volume. This is done not merely for the sake of connexion and completeness. The presentation of the subject matter is improved. As far as circumstances in any way permit, many points only hinted at in the earlier book are here worked out more fully, whilst, conversely, points worked out fully there are only touched upon in this volume.

Of course, it is these three chapters on commodities, exchange, and money that constitute not the core, but the entry, the vector to the core of Marx's critique which is that capital is a historical relation of production, of property to labor; that value is the expropriation of the powers of labor.

Marx advises the reader that the exploration of value will present the greatest challenge, and then Marx proceeds to give the reader the key to meeting that challenge. He identifies the commodity as the commodity form of the product of labor. The value form of the commodity is labor in commodity form.

Marx assumes that the reader will be willing to struggle through the discussion of the value forms in order to learn something new. In this, Marx was displaying uncharacteristic optimism.

"The wealth of those societies in which the capitalist mode of production prevails, presents itself as ―an immense accumulation of commodities,..."

The above, the opening sentence of chapter 1, might just be an understatement. It, the wealth of the capitalist mode of production is more than an immense accumulation of commodities. It is a universe of commodities. It is the commodity as the universe. Both product and its means of production are at one and the same time expressions of each other, each other's relation to labor, and the expression of each other's relations to all commodities. Both, all can be exchanged for the other, for an other, for all others. Exchange mediates the expression, the materialization, the realization, the accumulation, and the pocketing of value. Exchange then becomes the purpose of production.

Capital begins where value commands the labor of others. The commodity begins where its production is of no use, satisfies no direct need of the producer, but rather is produced for exchange. Capital begins where labor itself is not for the use of the laborer, satisfies no direct need of the producer, has no value for the laborer save its value in exchange for the means of its own sustenance or an equivalent thereof. Capital expands its reproduction, accumulates, as value commanding the labor of others.

Capitalist production, capitalist organization, ownership of the means of production is measured by its products, is the measure of the products. Production is, of, by, for value.

Social living labor, and the labor objectified, materialized in the private ownership, in the property of the means of production are each reproduced in the existence of the other. The value form of the means of production is the existence of labor as a commodity. This mutual reproduction is based on the historical separation, the opposition of the means of production which are simply the conditions of labor to labor itself. Without that separation, that opposition, there is no organization of labor in commodity form. Value is itself the composed identity of this opposition, where the opposites are mediated.

The commodity in its specific form, as a shirt, a gallon of milk, a locomotive, is useless to the producer. It exists as a sink, a mule, a vehicle for carrying value to market. The capitalist purchaes the use-value of labor, its ability to produce commodities, paying a wage which is calculated and distributed by the time of production. With this purchase, the capitalist obtains the power of labor to reproduce its social organization, its wage, its equivalent of subsistence [and even improvement] in less time than working time required by the capitalist. It is this power of labor to sustain more than its own existence, "more" than just its individual existence and "more" than just the immediate needs of both its individual and collective existence, in less than the total time of its existence, that is purchased by the capitalist. It is this power of labor when purchased that becomes the property of the capitalist, that becomes the basis of accumulation, that is converted into greater masses of the commodities that now command it to labor for the creation of greater masses of commodities that command it. It is this power that is inverted into value.

II. Marx continues his exploration of the commodity with an analysis of "The two poles of the expression of value: Relative form and Equivalent form." Here Marx states, "The whole mystery of the form of value lies hidden in this elementary form. Its analysis, therefore, is our real difficulty."

Using the well-worn example of the line and the coat, Marx begins his critique through the representation of the relation of equivalence, 20 yards of linen = 1 coat. The linen, for Marx, expresses its value in the coat. The linen has value relative to the coat. The coat represents value in the equivalent form.

Marx continues:

The relative form and the equivalent form are two intimately connected, mutually dependent and inseparable elements of the expression of value; but, at the same time, are mutually exclusive, antagonistic extremes – i.e., poles of the same expression. They are allotted respectively to the two different commodities brought into relation by that expression. It is not possible to express the value of linen in linen. 20 yards of linen = 20 yards of linen is no expression of value. On the contrary, such an equation merely says that 20 yards of linen are nothing else than 20 yards of linen, a definite quantity of the use value linen. The value of the linen can therefore be expressed only relatively – i.e., in some other commodity. The relative form of the value of the linen presupposes, therefore, the presence of some other commodity – here the coat – under the form of an equivalent. On the other hand, the commodity that figures as the equivalent cannot at the same time assume the relative form. That second commodity is not the one whose value is expressed. Its function is merely to serve as the material in which the value of the first commodity is expressed.

Here is where we get some head scratching-- expressions of the value form that are inseparable, mutually dependent, and mutually exclusive? How can any things be mutually dependent, inseparable, and at the same time mutually exclusive? No things can exist simultaneously that are inseparable and mutually exclusive. But Marx is not discussion the physical quantities of being. He is exploring the expressions, the manifestations, the commerce of and in social relations. In that commerce value has forms, moments of expression in commodities that, while dependent upon the existence of the commodity itself as a value, excludes the expression of that other moment in that particular commodity.

Is it really, can it really be, that simple? Yes, and as Marx explicitly remarks, the very simplicity is the source of such difficulty.

If we look back at a previous iteration of these value expressions in Marx's notebooks, we find what is in my opinion, a much cleaner expression, and resolution, of this apparent antagonism:

Let us consider exchange between linen-producer A and coat-producer B. Before they come to terms,

A says: 20 yards of linen are worth 2 coats (20 yards of linen = 2 coats),

But B responds: 1 coat is worth 22 yards of linen (1 coat = 22 yards of linen).

Finally, after they have haggled for a long time they agree:

A says: 20 yards of linen are worth 1 coat,
and B says: 1 coat is worth 20 yards of linen.

Here both, linen and coat, are at the same time in relative value-form and in equivalent form. But, nota bene, for two different persons and in two different expressions of value, which simply occur (ins Leben treten) at the same time. For A his linen is in relative value-form – because for him the initiative proceeds from his commodity – and the commodity of the other person, the coat, is in equivalent form. Conversely from the standpoint of B. Thus one and the same commodity never possess, even in this case, the two forms at the same time in the same expression of value.

(c) Relative value and equivalent are only forms of values.

Relative value and equivalent are both only forms of commodity-value. Now whether a commodity is in one form or in the polar opposite depends exclusively on its position in the expression of value. This comes out strikingly in the simple value-form which we are here considering to begin with. As regards the content, the two expressions:

1. 20 yards of linen = 1 coat or 20 yards of linen are worth 1 coat,
2. 1 coat = 20 yards of linen or 1 coat is worth 20 yards of linen

are not at all different. As regards the form, they are not only different but opposed. In expression 1 the value of the linen is expressed relatively. Hence it is in the relative value-form whilst at the same time the value of the coat is expressed as equivalent. Hence it is in the equivalent form. Now if I turn the expression 1 round I obtain expression 2. The commodities change positions and right away the coat is in the relative value-form, the linen in equivalent form. Because they have changed their respective positions in the same expression of value, they have changed value-form (die Wertform gewechselt).

The forms are the moments of expression of the different facets composing the value relation. Marx makes it clear that regarding the content of the value relation itself, the expressions are not at all different. Regarding the forms, they exist only opposite to each other. A single commodity can never exist in the two forms at the same time. The forms are moments.

So.... so if it's that simple, can it really be that important? Again, the answer is "yes." In exploring the forms of expression of value, Marx is essentially rotating the commodity through the value relationship. Through this rotation, Marx establishes that the value in exchange of the commodity is not produced in the markets. Value is not a result of the relation of the commodity to all other commodities. Value is not the product of all commodities in relation to each other. Value is not the product of any or all commodities relative to the single commodity that exists as equivalent to all commodities but is itself no commodity, money.

The forms of the expression of value are important in the process of exchange in that these forms are moments in the calculus of the realization of the value aggrandized in production.

Further, because all commodities can be expressed in both relative and equivalent forms, all labors are equivalent, all labors are relative. All labors, no matter the advanced or rudimentary level of technique, can be expressed in any other labor. All labors can be expressed in relative and equivalent forms. All labors are equivalent, because they can be expressed, compared, quantified by and in a single measure, a single dimension, a single proportion. Labor is the source of value because labor itself has been transformed, clarified, reduced to a common social substrate, time. Time really is of the essence.

Marx puts it this way in The Poverty of Philosophy: 'Time is everything, man is nothing; he is at most time's carcass.' And he puts it this way in the Grundrisse: 'Economy of time - to this all economy ultimately reduces itself.' He wasn't kidding.

III. Because value has the relative and equivalent forms of expression, because all commodities are values, and because no commodity can simultaneously express its relative and equivalent forms, some representation of value which mediates these forms is required for exchange to proceed. The mediations of value require the services of an inter-mediation. The inter-mediation must embody the disembodied value from the commodity.

What is embedded in the commodity, value, exists in latency, as potential. The commodity's actual existence as both useful article and a value, given the social relations of production that give it life, the social relations that give the commodity the power over the human being, the social relations that give the commodity its existence as private property, is threatened by these exact relations, by its existence as private and not social production.

The commodity may not be useful, and the value goes unrealized. The commodity may be useful, but the market may discount its value based on the average time required for the reproduction of all such commodities. The value aggrandized in production is comes to the market on a wing and a prayer, as wing and a prayer, and money is the answer to all the prayers. It is the ascension of the commodity, its transubstantiation.

Without the inter-mediation, commerce cannot proceed. Accumulation cannot occur. Reproduction ceases. The individual commodities remain individual commodities, oscillating in value forms, but not realizing the value relationship. Barter can continue. Trade can grow. Capital, however, as the expanding universe of commodity production, as the accumulation of value as value is impossible.

And this is where Marx is taking us in this first chapter of volume, to the role of money as the mediator of the value forms; to money as the disembodied embodiment of all the substance of all commodities; toward the conflict between accumulation of value and the growth of the means of production.

S.Artesian

November 14, 2010

address all comments to: sartesian@earthlink.net

Pledge to [Bank of] America

Those wonderful wacky, populist, regular guy, small town, main street, non-elitist, backslapping, teabagging, Republicans are on the upswing again, boosted into power as only a Democrat can boost a Republican, as only the Democrats can boost Republicans, as only a lackey can boost a bigger, better, more belligerent, lackey.

First order of business? Rescue our brave bankers from the Abu Ghraib, the Guantanamo of the
Dodd-Frank Financial Reform Law, and stop their waterboarding at the hands of the Financial Stability Oversight Council.

According to the Financial Times of 4 November, Spencer Bachus, a candidate to succeed Barney Frank as chairman of the House Financial Services Committee has warned the black ops members of the FSOC against harming US banks by curbing their adventures in proprietary trading.

You know what proprietary trading is. That's where the banks use some of your money to leverage foolish, ridiculous, insupportable, debt instruments into a "new economy" of foolish, ridiculous, insupportable, debt instruments that will consume the rest of your money.

Bachus says that the ban on proprietary trading-- known as the Volcker Rule in honor of Paul Volcker who never flinched when turning millions out of factory and home when employed as Ronald Reagan's Fed but found religion when confronted with his own offspring-- will "impose substantial costs on the American economy and market participants" [read bankers] while yielding "doubtful" benefits.

Spence worries aloud that implementing the law might spark a mass exodus of clients from US banks to banks abroad, an event which certainly would outrank Katrina, Rita, the earthquake in Haiti [especially the earthquake in Haiti] as a disaster of massive proportions.

And you know why that is too. Goddamit, most of these clients are white. We can't afford to lose them with the Mexicans, and the Guatemalans, and the Ecuadoreans streaming across the border in the millions!

Mr. Bachus, not to be confused with Bacchus, has expressed his concern that the flight of the capitalists might hurt the common people of this country-- the common men and common women of Greenwich, Connecticut; of Kenilworth, Illinois, of Mt. Kisco, New York, of West Palm Beach, Florida who are shareholders of Goldman Sachs and JP Morgan Chase.

I'd wish I could think that the American electorate is made up of suckers and saps, but sometimes I think the electorate is more like the audience at a worldwide wrestling smackdown-- so juiced by the sight of the two juiced goons breaking chairs over each other's head that they start breaking the chairs over their own heads, not realizing until it's way too late that the goons are using fake chairs; that the goons have fake heads.

S. Artesian
November 4, 2010

Insurgent Notes 2

Issue 2 is available. Not yet banned in China, but we're working on it:

This issue of Insurgent Notes attempts to grapple with a number of important issues:

1. the profound economic bind that world capitalism has been twisting itself inside out to address–without success (see the Editorial and Elephant on a Skateboard);
2. the fundamental flaws of what might be considered “common sense” leftism as it applies to the unions (see The Demise of Andy Stern and the Question of Unions in Contemporary Capitalism;
3. the complex character of explosive class struggles in several countries where industry still matters (see articles on China, Bangladesh, Turkey);
4. the complex character of Marx’s thought on matters of race, nation and class (see the review of Marx at the Margins;
5. the race between socialism and barbarism (see the article on the Gulf oil spill)

Shock and Au-sterity

1. Scared to death that all the lights were about to go out after pulling the plug on Lehman Brothers, the bourgeoisie rolled up its sleeves, girded its loins, crossed its fingers, and reached deeper than deep for that thing of all things, that relation of all relations that is the life of all lives for the bourgeoisie—OPM, other people's money.

Tapping the unrestricted credit lines offered by the banker's banker—the government—the bourgeoisie helped themselves to what they knew they were entitled to, the public purse.

For the bourgeoisie, it's always other people's something or other. For capital to be capital, it must command other people's labor. For finance to be finance it must command other people's money. So when the bourgeoisie through those great organizations of inter-governmental cooperation, regulation, and exchange call for austerity, it's always somebody else's austerity.

After the billions in direct transfers from public treasuries to private accounts, after further billions in government guaranteed debts, after more billions in government sponsored special investment vehicles, after more than more billions in toxic assets, non-performing loans, bad debts bought and overpaid for—after all that expenditure of other people's money, the bourgeoisie had come to the shocking conclusion that: 1) money changes everything; 2) whatever changed, it wasn't enough; 3) a hundred billion dollars here and a hundred billion Euros there and pretty soon you're talking about serious money; 4)somebody has to pay; 5)somebody else has to pay; 6)there is no such thing as being too rich or too thin. "We," say the bourgeoisie "can never be too rich. You [meaning all of us] can never be too thin."

So first from the hack economists, journalists, commentators, representatives, ministers, senators—those agents and bagmen employed by the bourgeoisie—come the expressions of shock that other hack economists, journalists, commentators, representatives, ministers, senators—other agents and bagmen of the same bourgeoisie—could have acted so irresponsibly, could have acted with such profligacy. This only means that the bourgeoisie needs this other section of hacks to act even more irresponsibly, with even more profligacy. This time, however, the wastefulness requires a specific universality—a wastefulness in the very basis for human existence; a wastefulness determined to deprive human lives of the bare necessities for living a human life. Then even and ever greater misery and poverty must be piled atop that mountain of misery and poverty already piled up as the more than equal but opposite symbols of capitalist wealth.

First comes the shock then comes the austerity.

2. When in April and May of this year the government of Greece stood just a stone's throw from collapse, suspended between pit of bankruptcy and the pendulum of mass demonstrations and strikes, the European Union hesitated to provide a "rescue" package, transfixed so it seemed, not by the spectacle of the conflict, but by the image of itself it saw in Greece. It wasn't the cost that paralyzed the governments of the European Union, it was the mirror.

Merkel was reluctant to approve the "rescue" of the government of Greece without assurance that Germany's interests would be protected, which meant that Germany's contributions would be considered as senior to, and secured prior to, any other obligations. Merkel, of course, was only reprising the role she thought her mentor and role model would have played in the discussions. Her role model is Margaret Thatcher, but not the Thatcher of 1981, of Attila the Hen fame, but the Thatcher of today whose addled brain and lack of recognition of her current environment make her the once and future champion of everything bourgeois.

After the hemming and hawing, the toing and froing, the after you Alphonse-ing, after you Johann-ing, the half-hearted and half-assessed agreement on a "rescue," the high command of the European Union received a phone call from US Treasury Secretary Geithner. Geithner's elevated stature among the titans of finance is due as much to the fact that he sits on a telephone book at his desk and in restaurants as to his previous and ongoing service in Maiden Lane I, Maiden Lane II, Bear Stearns, Lehman Brothers TALF, TARP, PPIP, ABCPFF campaigns.

"You guys and dolls need to do something big," said secretary Geithner to his counterparts, counter-parties, across the Atlantic. "You need to do something dramatic. You need to impress the markets," he said getting to the real issue, the only issue.

"Yeah," he said, gaining confidence if not height with each pregnant pause. "You've got to do something completely different. Like create an off-balance sheet funding facility with a really big number and guarantee its initial capital with the revenue of the EU itself, and then you get the IMF to supplement, to partner, in this vehicle, with the IMF vetting the economic program of any government stupid enough—check that—finding it advantageous to request funding by this off-balance sheet special funding facility guaranteed by your own revenues. How does that sound?"

They looked at each other, these ministers, presidents, financiers. "It sounds just like Greece to us," they said.

"Exactly," said Tim, sounding less like a munchkin and more like a wizard in Oz. "That's the point. You're all Greek to me."

Word.

3. Greece revealed that Europe was the sick man of Europe. The markets translated that as "you're all Greek to us."

Banks in the sixteen euro zone countries had amassed a euro 1.25 trillion exposure to sovereign and private debt instruments of Greece, Portugal, Ireland and Spain. UK banks had amassed euro 270 billion in exposure. French banks accounted for euro 370 billion, and German banks for euro 394 billion, with approximately euro 624 billion of the total in private debt instruments and euro 140 billion in government debt issues [it was this sovereign debt exposure that Deutsche Bank was so reluctant to reveal to EU bank commissioners during the "stress test" evaluation].

The total amount of debt outstanding from these four countries exceeds euro 2 trillion. Outside this group of four, Italy alone has outstanding debt of approximately euro 1.7 trillion.

With so much debt concentrated in such poorly performing economies, the European Union commercial banks and other financial institutions found themselves virtually unable to refinance their own operating requirements in the commercial paper money markets. Banks that did attempt to circulate their short-term instruments in these markets were forced to pay three or four times their previous average interest rates.

The European Central Bank, by the end of 2009 having guaranteed bank debts in the amount of euro 433 billion, increased its direct loans to euro zone commercial banks. At the end of June 2010 the volume of these loans measured euro 879 billion. In addition to finance the operating needs of its member countries, the ECB took to directly purchasing government debt issues.

With the commercial paper markets inaccessible, with cross border lending essentially frozen, the banks themselves decided that the best, if not the only place, to risk their cash was no place at all, depositing over euro 300 billion with the ECB itself.

Meanwhile, the costs of credit default protection on the sovereign debt of Greece, Portugal, Spain, Ireland and the UK soared. The credit default swap costs on the debt of EU private financial institutions reached the levels of costs after the collapse of Lehman Brothers in 2008. Debt auctions failed in Hungary, and in Germany, with issues not being fully subscribed and discounts from face value exceeding discounts planned by the issuers.

It was all Greek to the markets, with Greece itself emerging as the leader of a new world economy—a Dubai World economy with the world itself running out of Abu Dhabis.

4. So, enter austerity. Austerity appears to aim at ensuring the repayment of debt, the bourgeoisie's first and last words being, "pay me." In essence, in its social reproduction, austerity serves a different purpose.

If debt originates in the lags, delays, the a-synchronicity of capitals' metamorphoses from money through commodity production and back to even more money as a claim on that expansion of value, debt concludes, realizes, itself on the extinguishing, the annihilation, the devaluation of the accumulated values of society necessary for the reproduction of value but which themselves, can no longer be sustained, be reabsorbed, recirculated, reproduced as value. Primary among that expanse of social accumulation that can no longer be sustained is the reproduction of labor power, and all that makes up labor power, itself.

So to that part of the population who are working, austerity means some will be working harder, longer, some will be working less, and shorter, but all will be reproducing a lesser social basis for reproduction. All that was substantial will become marginal, and the marginal will become substantially greater.

For that part of the population retired and receiving a pension, fewer will retire; fewer will receive pensions, those that do will receive less.

For that part of the population born into poverty, deprived of a basic, necessary education, of proper medical care, even more will be born into greater poverty. Even more will be cheated of and by an even poorer education. Even more will be excluded from already inadequate medical care.

All value must be devalued. "Everything must go!" is the slogan of this bourgeoisie's staying in business forced liquidation sale.

The call for austerity, the programs of austerity are about destroying the overproduction of accumulated values, even and especially the miserably paltry assets of public health, transportation, education—those things that make up the social basis for expanded reproduction which is inverted into overproduction and becomes a burden to capital.

5. "Everything must go!" proclaim our salesmen of austerity. But not exactly everything will go.

Military spending—that's one thing that doesn't really have to go, as Greece itself has shown.

Greece, the largest importer of conventional weaponry in Europe; Greece, with military spending as a percentage of its GDP twice that of the European Union; Greece whose deficit revision "scandal" has in fact been driven by military expenditures; Greece who year ago purchased two submarines from Germany neither of which has been delivered; Greece with plans to buy six frigates and 15 military helicopters from France; Greece having purchased 24 F-16 fighters from the US , has managed to exempt those expenditures from its austerity program.

Military spending is the near perfect vehicle for non-reproducible accumulation by the bourgeoisie. It is not-reproductive production, it is finance made real, its values only being realizable in not only their own destruction, but in the destruction of all other values. Military spending acts as a conduit of recuperation for the bourgeoisie, with taxes transferring and restoring a portion of the wage expenditure to capitalism and without any need for enhanced social reproduction to make use of the commodities.

If revolution is one way, the exploit-ed's way, of resolving the contradiction of use value and exchange value, military spending is the exploiter's penultimate way of resolving the same contradiction. War, of course, is the bourgeoisie's ultimate method of resolving that contradiction.

Greece shows the way to, for, and of the brave new Dubai World where submarines that list to one side, helicopters with nowhere to go, circulate among the artificial islands bursting with abandoned homes, vacant condominiums, and empty streets.

When Greece, upon agreeing to the EU rescue package, enacted the terms of its austerity program, a financial analyst remarked, "They were supposed to make these changes ten years ago." Maybe "they" were, as part of the entry into the European Union, but guess what? Seven years ago, Portugal did make such reforms as part of its adherence to the European Union, and today it finds itself in the same predicament as Greece.

And something else not for the guessing: This is the economic contraction capitalism was supposed to have ten years ago, after the capital spending bubble of the 1994-2000 period.

6. Besides collateralized debt obligations and synthetic asset backed securities, the legacy of the administration of Ronald Reagan, the US's idiot version of the UK's Thatcher, includes "new federalism." "New federalism" was designed as the mechanism through which the national government dramatically reduced its participation in, and administration of, social welfare programs. Some forty three social welfare programs were returned to the administration of the individual states, with the national government awarding block grants which the states were to utilize toward defraying some of the costs of these programs.

The "reasoning" behind this policy was painfully clear to the most casual observer. The legislatures of many states were configured to dramatically reduce the political strength of the urban centers, and consequently, the urban poor. State governments were much more permeable to corporate influence, and much less vulnerable to that of organized labor.

Capital thought globally and acted locally well before any leftist made that a slogan.

Lobbying by corporate and large-scale agricultural interests, allied with the small town and rural distrust of big cities could, and did, effectively maintain the burden of regressive financing on the urban and poor populations. The fact that these same corporate interests proceeded to close industries, reduce employment, shatter the wage structure and generally devastate the small town and agricultural areas was precisely part of the agenda tucked within the "revenue sharing" of the "new federalism."

The enduring legacy of the Reagan era, manifested initially in the collapse of the asset-backed securities markets, is evident both in the condition of the state budgets of the United States, and the austerity programs generated by those states.

Sales tax and personal income taxes account for 80 percent of state government revenues in the United States. Since 2008, these flows have declined by 12 percent. So while US corporations have booked over $1 trillion in cash and liquid assets, over the next two years, state governments are facing budget shortfalls amounting to $127 billion. In some states, pension liabilities are underfunded by half.

After imposing furloughs, wage reductions, and cutting support to education and transit, states have responded, as states always respond, by attacking the weakest, the most vulnerable, those most in need of service and support. Home care services to the elderly and disabled have been reduced. Illinois has ended its support for Meals-on-Wheels programs. Alabama has reduced its provisions for housekeeping assistance to elderly people. California is proposing to eliminate adult day care centers and home support for 400,000 disabled or elderly people. Nearly every state has reduced eligibility in and payment for Medicaid services.

As reported in The New York Times of July 21, said the director of senior and disabled service for Rogue Valley, Oregon, "I've seen, in a matter of months, thirty years of work go down to drain."

"In a matter of months, thirty years of work down the drain." There in a dozen words is the liquidation of pensions, 401Ks, the attacks on immigrant laborers, the destruction of wages, the rolling back of opportunity and equity for women in the workplace, in the doctor's office, in the schools. There in a dozen words is the past, present, and future of capitalism, of human beings under capitalism. There in a dozen words is all you need to know about valorisation and devaluation.

7. It is not the task of the working class, or of Marxists, to reverse capitalism, to restore capitalist valorisation in the face of capital's self-devaluation. It is the task of the working class, of Marxists; it is the task for revolution to oppose this devaluation that capital imposes upon all human relations, not things, not commodities, but actual human relations.

It is the most essential, critical task of the working class to defend the need for better than adequate medical care, better than basic education, better than tolerable public transit; to meet the needs for home care assistance, day care centers; to defend immigrant labor, women's access to safe health care; to defend the social basis for human beings actually reproducing themselves as social human beings.

That defense requires the disavowal, rejection, cancellation, shredding of the debts accumulated by capital in its own attacks on that social basis; of the debts accumulated by our asset-liquidationist bourgeoisie. That disavowal of debt requires in turn the immediate end to all military spending.

And that's just the beginning.

July 31, 2010

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