On the Thread of Time – The Sorcery of Ground Rent

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Money-less agriculture

To define the mode and epoch of capitalist production, it is insufficient that manufactured objects are produced by workers who are no longer isolated but concentrated in masses, and that the product ceases to belong to the worker.

Capitalism is also defined by the fact that the market character has begun to penetrate the products of the land, and into the land itself – even when the agricultural product still belongs to the worker, as it is the case in small peasant culture.

In a very general way, it can be said that, historically, there has never been a factory without a market and without money, even before the work of the fragmented artisan gave way to large-scale associated work. What must necessarily exist where a man lives only from a unique production activity, if he only makes pickaxes or shoes, for example, it is bartering, he must indeed exchange them for food.

Bartering, exchange, market and money, effectively appeared when the differentiation of the productive technique on the one hand, and that of the range of needs and consumption on the other, gave great importance to the systematic production of manufactured articles. There are therefore commodities before they left the great factories of the capitalist entrepreneur, the slaves of classical antiquity produced them for their master to sell, and the free craftsmen of the Middle Ages also produced them but only by selling them themselves.

If we go back to the primitive communist clan, the only thing we can find there is that, next to collective agriculture, without personal rights over food products, there were some members of the community who were assigned to work as workers but these were fed on the fund of common products, and they made the pickaxe that was to replace that which was unusable, when necessary, without there being a personal property right on it (no more on the part of the smith than on the part of the pickaxe).

At a time when private property is emerging, applying both to land and to man himself, agricultural production (which also includes the breeding of domestic animals) continues to take many forms and to spread, without the intervention of exchange and without the formation of commodities.

In the small family culture that is now exercised on a defined domain, all family members in a position to do so work, and agricultural products, accumulated according to specific cycles, are consumed by all. This kind of economy lives on an island, perfectly isolated from the outside, as has been said many times. From the economic point of view, no wealth or value enters or exits; from the physical point of view, no products of work emerge, and only thermal energy supplied by solar radiation enters, which is as capable of transforming itself into chemical energy in the earth as into muscle strength in animals and humans; it can also be transformed into a collective consciousness of organisation, which the sacristies of culture call Thought, by making it a virtue of the self – the only tool that, by itself, is useless, or, at the very least, could be used as manure, but this, we are told, is forbidden to it by its “spiritual” nature.

Suppose that in our island, or watertight compartment, there is a permanent equilibrium, a state of regime, between the number of men and animals, and the extent of the earth (the communist clan, very intelligent, did not make children indiscriminately, according to the existential itchings of the subject), without its fertility becoming exhausted. In this case, the earth’s revenues and expenditures, if we consider its chemical cycles, will be perfectly balanced. The soil will have given nothing to the living community. All the energy incorporated, in its successive forms, must take, at a given stage of the cycle, that of human muscular energy, or if you will, of organic energy, the brain is also an organ.

It is therefore from this situation of a distant epoch, and by not taking into account the consumption of spontaneous products which we have seen what case Lenin made of them (we know well that the natives adorned with flowers of the islands of happiness and idleness, who belong to one or two Pacific archipelagos, come to American film studios in exchange for sounding and stumbling dollars), that we can open the polemic values (for the moment, use values and not exchange values), are they generated by the Earth or by Work?

Natural economies

Surplus value may already exist in forms of production that ignore market exchange but are based on the property that has emerged. For the sake of brevity, we will call natural economies those in which there is neither exchange nor money, but only the circulation of material products, which does not exclude that the division of the members of society between workers and non-workers has already begun. When the old Adam Smith defines ground rent, although he is driven by the desire to explain the aspect it has long taken in bourgeois England, namely an inflow of money for the legal owner of the land, he includes in his definition the concept of natural relationship, and this formula is accepted by Marx, who also subjects many others of his formulas to severe criticism:

“As soon as the land of ally country has all become private property, the landlords, like all other men (he could even have added: like all animals), love to reap where they never sowed, and demand a rent even for its natural produce…” The labourer “…must give up to the landlord a portion of what his labour either collects or produces. This portion, or, what comes to the same thing, the price of this portion, constitutes the rent of land.”

The main concept is therefore a part of the product – and the historically contingent and specific concept of the market capitalist mode of production: its price in money.

Thus, locked up in one of these islets mentioned above, can live, on the one hand, a slave owner and his family, who not only reap what they have not sown, but also have others reap (Mussolini was not yet there to beat the wheat with his own hands) what they eat, and on the other hand, the slaves and slave families who do all the work. Everyone eats products from the same land, but the slave worker transforms four thousand calories provided by the solar power plant, for example, through his muscular physiological processes, whereas he consumes only two thousand. The surplus value is nothing more than that, although it is not yet measured in pounds sterling but in units of energy. And when the first economists seek the value of human labour, then immediately there is an abyss between them and us Marxists who do not measure it in manpower or calories (which is perfectly identical according to the equivalence determined for the first time by Joule), but they measure it according to the market price of the necessities that are sufficient to ensure the worker’s existence. That’s what Petty brutally said:

“The Law… should allow the Labourer but just wherewithal to live; for if you allow double, then he works but half so much as he could have done, and otherwise would; which is a loss to the Publick (!) of the fruit of so much labour.”

Obviously, the only audience that interests the first (as well as the last) theorists of capitalism is the one composed by those who reap where others have sown.

In reality, in the mechanism of feudal society, the market does exist, but it is mainly a market for artisanal manufactured products, and quite incidentally a market for agricultural products. It is true that in the less developed cities of the time, the artisanal class, as well as the small class of civil servants and liberal professions, found places to buy food for money that was brought in by suburban farmers, but it is also true that some of these classes already owned some plots of agricultural land transformed into private property and from which they took the products. But the relationship between the two fundamental classes, workers of the earth and nobles, is not regulated in a mercantile way; nor is it the case for the priestly order. The serf farmers of La Glèbe have a small field whose product they use to feed themselves, but, after harvesting it, they must subtract from this harvest a fraction that must be delivered in kind to the Lord’s house, as well as the tenth that they must also deliver in the form of food to the parish. The peasant farmer-serf of La Glèbe has no need for money, no more than the lord and the priest. Of course, during the period of the Middle Ages closest to us, we witness the first monetary accumulations that develop thanks to trade and usury, and the lord no longer limits his monetary activity to the traditional unconstrained money exchange that, on special occasions, he launches with contempt to his henchmen, but he begins to have a cashbox, administration and a personal treasure chest. The commercial fabric is constantly being woven and thickened, but the bulk of agricultural production functions without the need for its use.

Marx and his studies – which are not mere reading notes, but luminous schemas of the new revolutionary theory – on the economists who preceded him, will guide us in this transition from the natural economy to the economy of exchange, where the protagonist of the social struggle is the bourgeois class, and where the theories that it itself elaborates on its development are of immense interest, this is a striking illustration of the truth of the assertion that “consciousness”, even collective consciousness, is only the last element of a historical transformation, whereas, on the contrary, it is the economic base and the material shock of the human forces and masses at stake that are the key to its determination.

Modern commercial agriculture

The form that capitalism gives to agriculture is that of the market, after it has detached from the land, on the one hand, the worker who has become “free”, and, on the other hand, the feudal lord, by removing the inalienability of his fiefdom by assigning it to his bourgeois creditors, or by auctioning it to their competitors, or, in certain cases, by selling it, after subdivision, to small and medium-sized farmers.

It is from this immense process that the various forms of agricultural production exploitation, which still survive today and which accompany the powerful modern industrialisation in the field of the production of manufactured objects and various services, have emerged.

To distinguish between these different forms, we will refer mainly to the clear scientific exposition of the best authors, not without having reaffirmed the pre-eminence of the method which consists in uncovering these historical forms.

It is by referring once again to the study “Property and Capital”, published in “Prometeo”, that we will recall how the bourgeoisie replaced the old feudal laws and investitures with the full application of “Roman law” to the private property of idiots, both for its protection and for its inherited or contractual transmission. We will not go back over the fact that the same legislative mechanism serves both the plot of land of the small farmer’s family and the ownership of thousands of hectares, nor over the meaning of this legal mechanism.

This is because, in fact, the economic study highlights, instead of the purely legal criterion of ownership, the very different criterion of enterprise. This essential distinction was highlighted at a time when communists, whose horizon was limited to a trade unionism limited to the framework of the modern factory, showed that they had understood nothing about the agrarian theses of the Moscow International since they took them as novel they have still not been digested by the four schoolchildren who failed the examinations that today constitute the Sanhedrin specialised in this domain for official communism in Moscow. Their hollow and demagogic agitation collapsed to the positions – brilliant in their time – of the physiocrats, namely the struggle for land wealth and for the sharing of the poverty that constitutes the title to property.

The economics textbook therefore studies the anatomy of the agricultural enterprise, and not that of the property, in order to develop the genesis of the rent. Nevertheless, the first economists nonetheless acknowledged that, without the legal foundation, mercantile rent would not have been born:

“The proprietor has nothing except through the labour of the cultivator he receives from him his subsistence and that wherewith he pays the labours of other stipendiarlies … the cultivator has need of the proprietor only by virtue of conventions and laws …” (Turgot, “Physiocrat”).

By Jérôme Blanqui (“Histoire de l’Économie politique”, 1845), Marx then cites this definition of bourgeois agriculture (as brilliant as his famous formula, capitalism makes the earth an article of commerce):

“Landed property arose for the first time from the condition of torpor in which the feudal system had kept it for so long.  This was a real awakening for agriculture …  It passed now from out of a condition of mortmain and came into circulation”.

We will ask the textbook what the mortmain is. In Italy, before the law abolished it, it was the only feudal form that worked. The properties of mortmain are the real estate properties belonging to churches, convents (i.e. monastic orders that benefit from the rent, and not to direct working communities as those advocated by the Benedictine doctrine), and other pious institutions, properties that are neither alienable nor transferable that is why they pay a specific tax that replaces the taxes that normal free property pays the tax authorities when property is transferred following a sale or succession. For example, in Italy, in 1923-24, when transfers relating to the ownership of land in circulation provided the tax authorities with revenues of 500 million, the surviving mortmain (a somewhat abusive adjective in this case) provided them with only six million. This is proof that there is more to Italy than just eradicating feudalism! But let us continue our digression. On the basis of these taxes and the average frequency of property transfers, the author calculates that the value of Italian real estate assets in 1924 amounted to ITL 120 billion for its private agricultural part (out of a total of ITL 200 billion). We will compare this figure with the figure for buildings, which should therefore be 80 billion. Before the war, there were 30 million inhabited rooms in Italy; the number of rooms in non-public buildings used for all kinds of activities, in addition to housing, was almost double, i.e. 50 million; in the currency of that time, one room was worth, averaging between urban and rural rooms, three thousand lire, giving us 150 billion. This would mean that we should deduct soil and buildings in addition to the total; but the real reason, as the text warns us, is the underestimation of the values declared by taxpayers, even after verification. The value of agricultural land holdings in 1924 can therefore also be increased to 150 billion, which today would represent about 8,000 billion. The ground rent of all the lands in Italy, concentrated or fragmented, now stands at about 400 billion per year. Total national income has already reached 10,000 billion, so the struggle for the sharing of ground rents concerns only 2.5% of the country’s economy. But a large part of the land has already been divided up, so how much is the barons’ income, as we were wondering elsewhere? Out of 45 million Italians, we have more than 8 million property owners; we know that the statistics relating to the size of the properties is a confusing matter in any case, the difficulties of this happy people fall to these ghostly barons for no more than 0.5%. To hear the boasting of “L’Unità”, it costs him much more in contributions and subscriptions for the official Communist Party – he who really screws him.

The enterprise’s balance sheet

Before we go any further, just another small lesson.

“Cultivated land is first divided into properties, each of which may include one or more enterprises or operations, while the opposite rarely occurs (but may still occur on several small properties). By property or domain is meant all land close, or not very far from each other, belonging to a single natural or legal person; and by agricultural enterprise, farm or operating unit is meant cultivated land that is operated by a single entrepreneur, whether owner, long term tenant, farmer or sharecropper”.

Consequently (we repeat ourselves, but it is a habit in our country), the question of small or large culture must be related to the size of the enterprise and not to the size of the property, to what Lenin calls the enterprise monopoly and not to the monopoly of ownership of the land. Abolishing the second can constitute a bourgeois program that would mean, after having put the land into circulation by freeing it from the rights of the feudal lordship, withdrawing it from the market and assigning it to the domain of the State. But abolishing the monopoly of enterprise can only be done by abolishing it at the same time for land and factories, and it is therefore a revolutionary and communist task.

Since the definition of latifundium is very large property, small businesses, its fragmentation does not affect either the legal monopoly or the organisational monopoly; and it is neither a socialist programme nor even an advanced bourgeois programme, so it is a flawed proposal that concerns only business people and dreamers, nothing more.

But let us come to the general analysis of the different parts of the farm balance sheet, which amounts to defining the incomes of the different social elements involved, and studying the various forms of their combination in the current economy.

Assets, or inputs, are what is provided by gross production, or gross product, which, when sold at market price, gives us the cash amount of the gross annuity or gross income. Let us stop for a moment to establish that, quantitatively, annuity is the same as income, but that we will use the first term to refer to what a fund brings in, and the second to refer to what an owner receives, or any other person who has title to a business.

Thus, the only cash inflow into the farm coffers comes from the price of all the commodities produced in the year, brought to the market and sold.

All cash outflows must be subtracted from this amount. It is necessary to evaluate everything that material production has consumed in whole or in part, namely working capital. The official economy divides it into fixed capital (buildings, machinery, livestock, etc.) and working capital (seeds, fertilisers, fodder, plants, etc.). The distinction is that the former is partially consumed and the latter is totally consumed. The annual operating expenses must therefore include part (depreciation) of the fixed capital, which ensures its preservation, and the totality of the working capital. The term fixed capital has a completely different meaning in the Marxist economy, therefore, it is better to use the term constant capital, which will include, according to Marxist terminology, the totality of circulating capital and the consumed part of what the bourgeois define as fixed capital.

Once the working capital and annual depreciation have been deducted as withdrawals, the list of expenses is not over. Buildings, machinery, etc., in addition to depreciation, which represents a reserve for their renewal, require annual maintenance.

When the enterprise is wisely managed, another fraction of value must also be set aside to cover the risks to which the installations are exposed, and therefore a share for the insurance.

In addition, the farm business must also pay various other expenses if it has administrative staff; it must also pay taxes (on profit, on so-called agricultural income) and social insurance contributions for its employees; but the property tax imposed on the owner, or at least the owner’s taxable income, should not be taken into account here. We call all this overhead!

That’s not all. If the entrepreneur does not have liquid capital and borrows it, for example, from the bank, in order to advance the annual amount of all such expenses, he will have to pay corresponding interest on the annual operating capital.

Now, let’s get to what goes to the people who are concerned about this matter. The contractor employs day labourers and farm workers, and pays them a certain amount of wages annually. For the vulgar economy, this sum constitutes a part of the expenses, while for Marxists it is variable capital.

The entrepreneur, then, deploys all his activity with a view to a profit, and he therefore has a business profit left. Here, we apologise to our author for refuting his assertion that this part would represent the remuneration of the manager’s intellectual work. At most, two components could be found in this profit, partly affecting it, if there are agricultural technicians attached to the company, their salaries and wages, and the rest for the pure profit of the company.

If we were analysing a manufacturing company, we would have finished, that is, we would have exhausted the list of expenses that correspond to the income that was generated, at the very beginning, by the sale of the products. But since this is agricultural land, and under the Napoleonic code, it is still necessary to accept as legitimate an income paid to the legal owner, namely his net ground rent.

If we had used symbols, in the form of letters, we would have quickly summarised all this, but some would then have considered us with some indulgence as (wow!) theorists.

So let us use the popular way of speaking (so conducive to screwing the sovereign people), while still trying to be accurate.

What is involved: the gross rent, i.e. the proceeds from the sale of gross annual production at market price.

What comes out: 1) depreciation of fixed capital – 2) its maintenance – 3) annual working capital – 4) risk insurance – 5) amount of overhead costs – 6) interest on the annual capital advance – 7) amount of wages that go to agricultural workers – 8) profit that goes to the entrepreneur.

What remains: (once the above has been paid) a positive difference that represents the ground rent and goes to the landowner.

Dramatis personae

And now, the symbols and numbers are removed from the stage to make way for the living characters.

The landowner, even if he or she is having a good time in the city, receives the net property rent. If part of the technical capital belongs to him, he also receives part of the interest!

The direct owner-manager receives the annuity, profit and interest at the same time.

The capitalist farmer receives the profit and also part of the interest.

The farmer-worker (settler) receives both the profit and the salary.

The owner-worker (small farmer) combines ground rent, profit and salary.

The agricultural worker, daily or hired year-round, receives only the salary.

But it should be noted immediately that the mere legal aspect of what belongs to everyone does not in any way exhaust the reality of the economic and class relationship.

As a general rule, when the owner has leased his or her land to the farm contractor, he or she is certain to receive the ground rent due to him or her, either because he or she has a legal remedy to require it or because, as is often the case, he or she has a surety. The entrepreneur’s capitalist profit is nevertheless guaranteed, since it is guaranteed, as for any industrial company, by the possession of the product, source of the revenue, from which all expenses will be deducted: except in exceptional cases or market crisis situations, it provides a surplus over expenses. The payment of wages to the worker by the employer is also guaranteed by law.

But in mixed forms, the situation is different. The farmer-worker is required by law to pay his rent to the landowner, and if he has as a guarantee the gross proceeds of his farm, his net proceeds may prove to be very insufficient to ensure his share of the profit, and even be lower than his due salary, without him being able to make up for it in any way.

The owner-worker should accumulate annuity, profit and salary, but in reality, if the taxes and interest on his debts overwhelm him, he may sometimes, without any recourse, have insufficient product, the shares of annuity and profit appearing in the theoretical analysis disappear, and even work for a lower than average salary, thus compensating the State, the bank, the usurer or the legal advisor.

From this fact-based presentation, which is obvious for the different sociological orientations, it is therefore indisputable that, in agriculture, if only in terms of its aspect, we would say, purely accounting, mixed forms are the most miserable and the most appropriate to require excessive work in relation to their pay.

And now so-called Marxists are coming to campaign to increase the number of small landowners, small farmers and sharecroppers, in order to prevent their proletarianisation! The attitude of these people is in fact explained by their objective of preventing them from becoming revolutionaries and, to unmask them, it is enough to prove that they make them into beggars much more exploited than salaried workers. Instead of elevating the “people” above the proletariat, which they claim to do by appealing to the former rather than the latter alone, they lower it not only socially, intellectually and politically, but also in reality economically.

Lexical parenthesis

Since we are a party and not an academy, it is neither possible nor useful to avoid interference between the different ways of dealing with issues: written or oral statements, individual or serial articles (and the regular periodicity is seriously compromised by the modesty of our resources, our material poverty being no less than that of the “self-employed” worker, who does not exploit anyone and who is not in the service of anyone).

Having spoken of capital, salary and profit, terms that are constantly recurring in the Marxist economy applied to capitalist enterprises in general, and not only to agricultural enterprises, we must (at the same time) repeat things already said in “Property and Capital”, and in Volume 1, already published, of the “Elements of Marxist Economy”, and anticipate on things that will be said in Volumes II and III, to appear, of this booklet.

We will therefore limit ourselves here (and, indeed, the study of ground rent only gradually leads to the general doctrine of surplus value, as we can see from Marx) to the only clarifications that are essential in order not to make mistakes in the use of the terms, and to avoid erroneous comparisons or dissociations between statements that fall within the scope of the different chapters of the theory to which we must refer, without it being possible for us to provide a simple solution to this problem by referring the reader to pandects or systematic digests of Marxism, which even the rich institutes on various sides are unable to achieve.

Just as real estate rent is compared with business profit and financial interest, land, the factory with its machines, and cash are usually considered to be on the same level as the “patrimonial” capital of their owner.

All three are means of the current form of production, and they are all subject by the legislation in force to the monopoly of ownership. But the question is much more complex once two fundamental criteria are introduced: the historical process and class relations.

The farm business needs the support of land capital, technical capital and money capital. It seems that, quantitatively, the relationship between interest and capital-money roughly coincides with the relationship between rent and real estate value: but we must not be too hasty, even quantitatively, to make it coincide with the ratio between industrial profit and machine capital, which is often much higher.

Let us recall Marx’s terms, and apply them to the company described above.

For Marx, the cost of a land estate or machine shop, or even a sum of money, does not constitute capital. Its starting point is to assimilate capital into a mass of goods, of human labour products. The value derived from these goods is divided into three parts. The first is constant capital, that is, what the contractor, to whom the goods belong and who sells them, has spent on raw materials, plant wear and tear and other overhead costs. The second is variable capital, i.e. what has been spent on wages paid to workers. And the third is the surplus value, i.e. the profit margin that accrues to the entrepreneur.

The sum of these three parts constitutes the “arrival” capital, i.e. the value that is in the hands of the entrepreneur when the production cycle is completed, regardless of its duration.

Well, what was the constant capital of our company? This is recognised (whether the reader is willing to be patient and attentive) in the first, second, third, fourth and fifth parts of the advances (expenses, outputs) depreciation of the installations; their maintenance; “working capital”, or raw materials; insurance; general expenses. All this is constant insofar as, after these expenses have been incurred, they are reconstituted, as they were initially, at the beginning of the new production cycle (which, in agriculture, is only linked to the solar year).

What is the variable capital? Only the seventh part: wages (and possibly salaries).

What is the surplus value? The sum of three parts: the sixth part: interest; the eighth part: business profit; and the last part: net ground rent.

What is the sum of the three terms constant capital, variable capital and surplus value, i.e. the final capital ready for a new job? It is clear that the entire value of food production, which in the rural economy is called the gross ground rent, is worth a lot. For them, it is a gross annuity, for us, it is capital.

Therefore, the capital as it is broken down by Marx is a very different thing from the value of the land patrimony, and the capital installations (fixed).

In the case of a normal industrial enterprise, we call capital, in a given cycle, the sum of revenues, what the enterprise’s accounting refers to as turnover, i.e. its gross receipts, its operating revenues, etc. We do not call capital the estimated value (or inventory value) of installations, machines and inventories, nor the difference between this increased value of shareholders’ contributions and the nominal or real shareholder capital itself, which is calculated in the balance sheets prescribed by law.

This is all the more true since the company’s market value does not depend on the sum of the estimated values or inventory values, but on its ability to generate gross proceeds and, on this gross proceeds, a net profit margin, which can therefore be much higher than this sum, and even than the sum of the shareholders’ rights, where there are any.

If we were to continue the analysis of all this now, we would come to the fundamental distinction, which we have discussed in “Dialogue with Stalin“, among other things, between the rates of annuity, interest, profit, and the rate of appreciation. The surplus value is the sum of these three elements which are subtracted from the value produced; but since they relate it to the value of the installations, and we, to the living value of transformation, the law of the fall in these rates does not prevent the surplus value from constantly increasing in a huge way, be it in absolute or relative value.

We need only say here, to illustrate this somewhat with figures, that a fund with a market value of one million can generate a gross income of about 10% and a net income of about 5%, or 100,000 and 50,000. If, of the 50,000 difference between the two annuities, which represents the annual expenses, we have 20,000 in wages, the capital gain rate (net annuity on wages) is 250%. In a given industrial sector, with the same input and output figures, i. e. with 100,000 lire of annual turnover and 50,000 of expenses, the value of the installations can easily be as low as 500,000: in this case, the vulgar economist finds a profit rate of 10% (double) for this fund, while for us, the previously calculated capital gain rate will remain unchanged.

Interest and annuity

Referring therefore to subsequent presentations on the problem of corporate profit, which also concerns joint-stock companies, and para-state and state-owned enterprises, we return to the era when the economists of developing capitalism were not affected by this aspect of surplus value, but by the historical aspects of ground rent and interest, which were then openly described as usurious.

This is the path that Marx himself takes to reach an understanding of capitalism. If we take the right direction like him, it is easy to arrive at the end of this long road capital will be satisfied with a lower rate of profit, it will tolerate a rise in the standard of living of workers, and we will also, despite this, have proof, not so much of the continuous increase in the extorted surplus value, which would only constitute a platonic result, but especially of the threat of a revolutionary catastrophe.

It seems perfectly understandable to the first researchers that land ownership involves a rent, since land produces fruit; they need to make a greater effort to understand that a sum of money lent produces interest, reads far from understanding that, in both cases, the explanation will only be found when the origin of values in human labour is established, and that neither land nor money can be compared to purgative chocolates (“Dormez and Klingax will do the rest!”), and consequently no longer the machines, but that we must find in the social conglomerate the unfortunate ones who will remain awake while you sleep.

When the reader’s name is Karl Marx, he finds really interesting things in Petty. Writing in 1679, he was the first to discover that the value of a commodity, which he called its natural price, was determined by the average amount of labour contained in it. And he is soon confronted with the problems that can be summed up in the problem of surplus value: namely the inputs – the income – of those who do not provide work.

“But before we talk too much of Rents, we should endeavour to explain the misterious nature of them, with reference as well to Money, the Rent of which we call Usury; as to that of Lands and Houses.”

Unlike the French physiocrats, for whom ground rents are the only source of added value (insofar as manufacturing production, according to them, does not increase wealth but only transforms it, by achieving a balance of values that sustains the “sterile” classes, industrial and workers), Petty has taken the step of perceiving the following as being the only one that is capable of generating value from its own resources the existence of a second form of capital gain in the interest.

He assumes that, on a given land, a single man does all the necessary work himself, ploughing, sowing, harvesting, threshing, etc., that he saves the seeds for the following year, and that he deducts from the harvest what he needs to live on the wheat he has left is the true natural ground rent. Or better still, it will be the average of the surplus product obtained over a seven-year period.

For Marx, this means defining rent as an excess of the producer’s work, taking into account the work that corresponds to the wage and the reconstitution of capital, instead of: a simple excess of the work employed over the necessary labour (and thus, that is how we Marxists define it). A synthetic definition, of course, but one that has the merit of being stated. A surplus of wheat produced in relation to the lesser quantity that this single farmer should have produced for the sole purpose of eating it. The lyrics are by Petty, but the music is by Marx.

Then Petty wants to express this rent in English money, that is, to consult Robinson Crusoe’s current account at the Bank of England. In this, he shows a beautiful sagacity. In currency, he said, this rent would correspond to the quantity of precious metals, for example silver, that a miner could extract from a mine during the same period of time, after deducting from this quantity the quantity he would have to spend to live, reducing his consumption to the essential minimum: in other words, it is the maximum saving that the employed worker can achieve by feeding himself in the most frugal way. In Marx’s language, this means assuming that the rent is equal to all the capital gain, including profit. After finding the fruit, namely after calculating the annual cash income, Petty, with a “new stroke of genius”, wants to find the commercial value of the land (the French edition gives a bad translation of this last term by saying: of the country).

In fact he says: the natural value of the soil whose sale is free. Well, his process is really original. He wondered how many annuities the land could be worth, i.e. what price the buyer would be willing to pay in current currency for the land. He says that this is the life span that a 50-year-old man, a 28-year-old man and a child, i. e. grandfather, father and son, can expect to live together, and it is not necessary to take into consideration a more distant and unborn descent. Each of these three lives is valued in England at 21 years old (Petty actually gives us as differences between generations: 22 and 23) and therefore the land is worth 21 annuities.

Marx notes that this process is equivalent to the “capitalisation” technique of ordinary economists: 21 or 20 rents are equivalent to an annual rate of 5%, i.e. the buyer has calculated that the land will bring him as much as his money invested at an interest rate of 5% per year. Petty wants to start from the annuity as the mother form of the capital gain, but by reasoning in this way he actually deducts that the annuity is only a derivative of the interest form.

Petty’s reasoning is all the more interesting because it could be used to establish a general link between the prolongation of the lives of generations in the modern world and the decline in the rate of profit. We can estimate today the duration of a generation at 30 and not 21 years, and Stalin, who cared so much about Voronoff (even if it was a meagre success[1]), would have claimed at least 35 for the “country of socialism”. Why, under these conditions, deny the drop in the profit rate from 5 to 3% in three centuries?

But Petty does not answer Marx’s objection elsewhere, namely that, once the 21 annual rents have been consumed, the market value of the land in our example will continue to exist for another 21 years or for a sale at the same price. This is expressed in law through the hereditary nature of the land, with no generation limits.

To refute Petty, it is necessary to use a small integral calculation formula. That is why, in order to avoid scandal, we prefer to tell a short story.

The little maid and the integral calculation

When I was a primary school student, at the age of ten at the most, I knew all four arithmetic operations inside out, but the maid in the house constantly embarrassed me. “I am illiterate,” she said, “but you who are educated, calculate how much I must save so that I can stop working and still be assured of receiving one lira a day” (I see from here the insinuations that will be made about my age: until 1916, we could live with one lira a day, three or four hundred from today – he must be at least fifty years old). From the top of my mind, I replied with contempt: “Stupid! In order for me to do such a calculation, you have to tell me the year you will die. She looked at me with compassion and, with enormous effort, tried to explain to me that setting this date was not necessary (she obviously intended to live longer than Petty’s miserable 21 years). If I came out of this long struggle beaten, it was because the maid was using integral calculation, and I wasn’t.

The data required for the calculation was not the woman’s life expectancy, but the interest rate: not only would her nest egg have been enough for her even if she had lived as long as Methuselah, but it would certainly have survived her (devaluations aside!).

If it is invested at an interest rate of 5%, a sum of one lira becomes, after one year, (you still know as much as a poor illiterate person from, I was going to say from the last century), one lira and one penny. And if, on the other hand, I want to receive a sum of one lira in a year’s time, I will just have to set aside 95 cents (about) today (at the bank).

Therefore, a lira today is worth a lira; a lira next year is worth 0.95 today; a lira in two years’ time is just over 0.90 (about!). Do not deduce from this that a lira in 10 years will be worth half a lira today; it is worth 61 cents “in discounted value”; and a lira in 20 years is not worth zero but 38 cents.

I came to understand this calculation when I learned, in addition to the four classic operations, to use powers: take my word for it, if you will.

The problem is therefore as follows: how much do I have to “budget” to obtain the sum of the current values of these future annuities, all equal, but at collection dates that are gradually moving away over time? How many years? Every year until the end of capitalism.

Here, we could move from the infinitesimal calculation to the Einsteinian concepts of relativity that give a measure to the infinity of space and time – but let us leave it to bourgeois economists for whom the annuity is “perpetual” and the number of years to be taken into consideration in the infinite calculation.

Then I just have to add the following: one lira, plus 0.95, plus, plus, plus, plus, plus… 0.61, more…. 0.38, more, more, more, more… I know that the length of the “Fili” inspires respect, but the more would not contain in the entire newspaper. The terms of the addition decrease, decrease, but they never end. The word integration, which sounds opaque and obscure, means nothing more than addition. I’m not going to explain it to you at the end of the article, but I’ll make you understand it with a little story. At the Ponza relegation camp, there was a valuable comrade, always active, who denied that an infinite number of terms could give a finite total; it was in vain that the philosopher Zeno, Achilles and his fight against the turtle were mobilised to prove it to him: for him, Achilles could not be reunited with the tortoise.

Well, this sum is precisely twenty lire. By integrating the expression of the current value of future annuities, constant and in infinite number, at the rate of 5%, we obtain a capital equal to twenty times the annuity. Once you have found the knot of the question, the little rule becomes easy, and any loan shark knows it. Capital is found by dividing the annuity by the interest rate one lira divided by 5 cents is equal to twenty. Isn’t that difficult? Twenty cents in a lira.

The little maid had to have accumulated 7,300 lira (or extracted a two-kilogram nugget from the mine at 3.60 lira per gram) to enjoy 365 lira per year.

After all, Petty wasn’t stupid at all. And not boring either.

Source: “Il Programma Comunista” Nr. 22, 04 – 18 December 1953.

[1] Serge Voronoff: Russian surgeon, naturalised French (director since 1917 of the Institut de Clinique Expérimentale du Collège de France) introduced on 12.1.1920 the operation to obtain the rejuvenation of the human organism by means of the transplantation of glands taken from a chimpanzee. On this subject, Voronoff wrote: “To live, to study the means of realising vital energy and to prolong life”. Paris 1920.

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