[OPE-L:737] price of land

Fred Moseley (fmoseley@laneta.apc.org)
Thu, 14 Dec 1995 12:22:06 -0800

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This is a continuation of my respone to Gil, this time on the subject of the

1. Marx's treatment of the price of land can be understood only in the
context of his overall logical method. The most important aspect of Marx's
logical method relevant to the price of land is that Marx assumed that
aggregate magnitudes (aggregate price and aggregate surplus-value) are
determined prior to individual magnitudes (individual prices and the
individual parts of surplus-value: industrial profit, merchant profit,
interest and rent). I have discussed this fundamental presupposition of
Marx's theory in the following papers:
"Marx's Logical Method and the Transformation Problem,"
(Humanities Press, 1993).

"The Development of Marx's Theory of the Distribution of Surplus-value"
forthcoming in in Moseley and Mattick (eds.), MARX'S METHOD: FURTHER
INVESTIGATIONS (Humanities Press, 1996).

The latter provides much textual evidence of this fundamental presupposition
relative to all the individual parts of surplus-value and from the various
drafts of CAPITAL. I will try to figure out how to put this paper in the
ope-l archives in case any are interested (Jerry: please send me
instuctions). We could discuss this presupposition further, if you wish,
but perphaps just accept it for the purpose of discussion and consider its
implication for Marx's theory of the price of land.

2. According to this method, the determination of the aggregate magnitudes,
and especially the aggregate amount of surplus-value, is the main subject
of Volume 1. These aggregate magnitudes are then taken as given in the
subsequent analysis in Volume 3 of the determination of individual prices
and the individual parts into which the total amount of surplus-value is

3. According to this method, rent is determined in Part 6 of Volume 3 as
one part of the total amount of surplus-value.

4. According to this method, the price of land is then explained as
capitalized rent, i.e. as based on the expected future returns of rent from
the ownership of land.

It is ground rent, capitalized in this way that forms the purchase price or
value of land, a category which is prima facie irrational, in the same way
as the price of labor is irrational, since the earth is not the product of
labor,and thus does not have a value...

This capitalization of the rent, however, PRESUPPOSES the rent
itself,whereas the rent cannot be conversely derived and explained from its
own capitalization. Its existence, independent of the sale, is rather the
PRESUPPOSITION proceeded from. (C.III. 760-61; emphasis added)
(see also C.III. 786-87 and 807).

5. Therefore, according to this logical method, Marx could not explain the
price of land in Chapter 1 of Volume 1. If the price of land is to be
explained as capitalized rent, rent must first be explained. And, according
to Marx's method, rent can be explained only after the total amount of
surplus-value is determined in Volume 1.

Therefore, Marx "abstracted from" land and the price of land in Chapter 1 of
Volume 1 (indeed in all of Volumes 1 and 2). Marx's deduction of the labor
theory of value from the objective general equality of commodities should be
understood within the context of this abstraction. This abstraction is not
simply a "fiat", as Gil argues, but rather follows necessarily from the
methodological presupposition of the prior determination of aggregate
magnitudes. When Gil says that "nothing in the logical structure of Marx's
argument in Chapter 1 requires that all exchangeables must be products of
labor," (732), he does not recognize this larger context of Marx's logical

6. Marx noted this abstraction from land in an 1858 letter to Engels
(SC.97-98), just after finishing the Grundrisse:

Throughout this section [on capital in general] ... landed property is
taken as = 0, that is, landed property as a particular economic relation
does not yet concern us. This is the only possible way to avoid dealing
with all relations when discussing each particular relation.

The main relation dealt with in Volume 1 is the relation between capital and
labor in order to explain the origin and determination of the total amount
of surplus-value. This then provides the basis for the later analysis of
the relation between capital and landed property in order to explain the
appropriation of a part of the surp`lus-value by landlords.

7. Marx also noted in other places in Volume 1 the same method of
abstraction from other individual parts of surplus-value: in Chapter 5 (pp.
266-67) relative to merchant profit and interest; and in Chapter 11 (pp.
422-22) relative to equal rates of profit across branches of production.
Marx argued that these particular forms of surplus-value appear to
contradict the law of value, but that these apparently contradictory
appearances can be explained, according to Marx's method, after the total
amount of surplus-value has been explained, which is what Marx did in Volume

Fred Moseley