Land Rent, Interest And Profit
The Incomes from ‘Exploitation of Labour’!
Ranganayakamma
For centuries, human
society has perpetuated itself
through three kinds of Exploitative incomes. These three faulty incomes are land rent, interest, and profit. These incomes exist today and have been there for a very long time. Of these, the income called ‘profit’ emerged later, only during the era of the capitalist system. These three terms represent three types of ingenuine incomes!
What does land-rent mean?
This faulty income is associated solely with the land. Land is not an object or matter that human beings have created! The entirety of the land is a natural entity. It is a natural entity encompassing mountains, mines, rivers, and oceans.( ‘From the standpoint of a higher economic form of society, private ownership of the globe by single individuals will appear quite as absurd as private ownership of one man by another. Even a whole society, a nation, or even all simultaneously existing societies taken together, are not the owners of the globe.’–Marx in Capital-3, ch.46.)
However, in human society, these natural elements have become the ‘property’ of a few individuals. One cannot discuss how all this has transpired right now and here, but the reality is that a small number of people own all the land in the world. This means that most others either do not own any land or possess only a tiny piece of it.
Land is an essential element human beings need for sustenance, necessary for building a shelter or growing grains or vegetables. Even those who do not own land must stand on it–but on whose land? On land to which they have no rights. Such a person might approach the land-owning person with a proposal, ‘Allow me to grow crops on your land.’ The land-owning person might agree to the proposal willingly, ‘Sure, I will let you use a piece of my land. Grow any crop you like, but you must give me a portion of your harvest as payment. This is called land-rent.’ Thus, a rent deal is made! The landed person is the owner of the land–the landlord, and the cultivating person is a tenant farmer! A landowner may rent his land to multiple tenant farmers to earn more rent!
Land rent embodies an entirely unjustified income! Why so? Because the landowner takes the rent from the labour of the tenant farmers without contributing any labour of his own. Neither the land nor the rent is a product of his labour! (‘The landlord has a claim-through landed property to absolute rent)… which enables him to pocket a part of surplus labour or surplus value, to whose... creation he contributes nothing’.–Marx, Theories of Surplus Value-2, ch. 13) Therefore, rent represents a false income! Then, there must be a solution to this issue. What could that be? It will be discussed later.
What does ‘interest’ mean?
The concept of ‘interest’ might not have existed in ancient societies. However, it gradually came into being.How so? When people need something, an object, or a substance, they will borrow it from someone else. After using the item, they will return the object to its owner. However, while returning the item, they must add something more to the original one borrowed. For example, if ten Rupees of money are borrowed, while returning the money, more money–one, two, or four Rupees more–must be added to the initial ten. The extra money is called ‘interest’! The term interest must have emerged alongside the concept of a ‘loan’. The money taken as interest is also an unjustified income. (‘Interest… is from the outset is quite an irrational expression’.–Marx, Capital-3, ch. 21) What labour has the person done to claim the interest? The lender gets back, not loses, the money he lent earlier, doesn’t he? Then, what justifies claiming more than what was lent earlier? One can take back what was given to help others, but why must one take more than what was originally lent?
Some may argue, ‘Is it wrong to take a bit more after helping someone?’ Occasional and mutual help between human beings is necessary. However, will it be appropriate to take back more than what was lent? Let us examine this matter further.
No matter how you look at it, the ‘interest system’ is flawed! The practice of ‘interest’ is faulty whether a person or a bank perpetrates it! Therefore, people need a solution to this problem as well. What could that be?
What is ‘profit’?
This term appeared alongside ‘capital’! A person invests money and hires workers at a wage to produce some articles. After the products are made, he would get them sold through other workers. After the products are sold, he recovers the money equivalent to the value of the products. However, a portion of this money will be ‘profit’!
Among the three false incomes mentioned above, understanding ‘profit’ in greater detail is crucial! This is how it happens: The price of the newly made product comprises labour of all kinds expended in its making. When this product is sold, some money will come back in exchange for the value of this object! Isn’t all this money the value of these labours? How, then, can there be profit within this value? How can it be inappropriate for profit to be intrinsic to the value of the product? How can one term profit as false? Is profit also a false income? Many questions arise! Indeed, profit is an unjustified income!
Indeed, when a new product is sold, the money equivalent of its value will return. A product, any product, can be made only when new and essential labour is consumed, comprising both the ‘old labour’ of the raw materials and a ‘new labour’ expended on the raw materials. The money invested in these old and new labours is called ‘capital’, and the person who invests this money is known as a ‘capitalist’.
Let us assume that the capitalist invests 10 rupees of money and purchases the raw materials (the means of production needed initially) for the making of the new product. Next, ‘new labour’is expended on his worksite to produce the new product. Any machines, such as sewing machines, present at the worksite are considered readily available means of production. Let us also assume that the value of the new labour performed by the wage worker is 90 rupees.
A capitalist, to get new things produced, (1) purchases the means of production and (2) pays the wages of the workers. Will a new product be made with these two costs? It is assumed that the value of the labour of the worker who performed the new labour is 90 rupees. Let us also assume that the worker received a wage of only 60 rupees. Then, what is the value of the amount he did not receive? The value of the amount the worker did not receive is 30 rupees.
The value of the labour performed– 90
The value of the wage received– 60
The value of the labour ot received– 30
Does an employer who undertakes the production of an article know that the value of the labour of the worker is more,but he paid less amount as the wage? Today, employers might be aware of this fact, but not during the early period of the capitalist system.
What about the price of a new product? The owner himself fixes the price. He knows that the cost of the means of production is 10 rupees, and the cost of wages is 60 rupees, totalling 70 rupees. However, the owner will also feel that he must get some profit in addition to 70 rupees. Let us assume that the owner fixed the price of the new product at 100 rupees, and the object is sold at this price!
The price of the product–100
The costs expended–70
The balance–30
This amount represents the profit earned on a single unit of the product! This does not mean that the capitalist was satisfied with 30 as profit. He would be content, looking at the profit rates of other capitalists. If the product is sold in 10 minutes, this is the profit earned in that brief time! What must be the overall profit when many products are sold all over the day, week, month, year, and beyond?
According to the principles of rationale conomic science, one ought to assume that a product is sold at its actual value only. Although fluctuations in supply and demand might cause the price to be slightly higher or lower, overall, the prices of the commodities will be equal to their original value.
In this example, the price of the new product is 100 rupees because that is its value! The product acquires this value depending on the labour elements expended in its making. However, a labour of a value of only 70 rupees–the old labour of 10 of the means of production and the new labour of 60 of wages–has been performed, isn’t it? Then, how was this product sold for a cost of 100 rupees when a labour of 100 did not go into its making?
Based on logical economics, the product must have acquired a value of only 70 rupees, isn’t it? But the labour done to produce that article is not 70 only. One must assume that labour of 100 value was done. How does one know this? Even a profit of 30 is also labour, isn’t it? If the product is sold for 100, its price is formed by the value of the labour. If 100 price is the actual value of labour, how was that value formed? One must assume that labour of so much value was done to make that product. In this example, a value of more than 10 will not be obtained from the means of production.
Now here is the second aspect. The new labour of the worker! If this labour receives 60 as a wage, one must assume that the value of this new labour should be more than 60 rupees. However, the owner of the product does not assume so. Those who can think honestly, and logically should consider this point.
So, what is the inference finally? Ascribing a value of only 60 rupees to the worker’s labour is a lie! Then, how much must the actual value of this labour be?
One must examine how and from where the profit of 30 rupees the capitalist earned has come. One must realise that the real value of the worker’s labour is 90 rupees, higher than the 60-rupee wage he earned. Therefore, the true value of the worker’s labour–90 rupees–includes his wage of 60 rupees plus the 30 rupees of profit that the owner earned. This means the value of the new labour of the worker indeed is 90 rupees, not 60! The worker received only 60 rupees as his wage and lost 30 rupees, which became the owner’s profit. (‘The capitalist’s profit is derived from the fact that he has something to sell for which he has paid nothing. – Marx, Capital-3, ch. 2) The worker is entirely unaware of this fact.
The capitalist might have fixed the price of the product based on his experience concerning profits. Suppose the capitalist fixes the price of the product at 120, not 100, and the product sells at that price without difficulty. In that case, the additional value of 20 rupees must be ascribed only to the value of the worker’s labour, making it 110, not 90! Then, the price of the product is 120 rupees, comprising 10 rupees for the means of production combined with 110 for the new labour. This is the price fixed by the capitalist. However, the worker still earns a wage of only 60 rupees,which means one can recalculate the value of the labour he did not receive.
What is the need for recalculation! Factually speaking, the amount the capitalist declares as his profit is the value which the worker did not receive, isn’t it? This value that the worker does not receive must be called ‘surplus value’, the value over and above the ‘wage’ value! As capitalists unjustly raise prices and snatch money, the surplus value extracted from the workers increases proportionately!
So ‘profit’ represents unjust income
One other issue: Profit cannot exist in isolation without Land rent and interest. Under certain circumstances, all three forms of false incomes–land rent, interest, and profit are collectively referred as profit. In this scenario, the capitalist claims all three incomes:
1. The capitalist will claim a ‘rent’ for the piece of land on which his factory stands, even if the land belongs to him.
2. Having spent money on the costs of the means of production and wages, the capitalist will not consider these expenses as simple money that should just come back. He calls the money invested ‘capital’ and demands‘interest’ on that capital.
3. Finally, the capitalist claims ‘profit’!
A profit must come only from the ‘price’ of a commodity (product) when it is sold. But how? How does the capitalist fix a price for his commodity? He calculates the cost of the commodity as the sum of two expenses (means of production and wages) combined with three incomes (land rent, interest, and profit) that he expects to receive. After the commodity is sold, he expects not only to recover the two expenses but also to earn the three additional incomes, including a profit! It is not enough to say that land must get rent, money lent must get interest and the industry must get profit.
The question is, what labour a person claiming the land rent will offer in exchange for the rent? What labour a person claiming the interest will offer in exchange for the interest? And what labour will a person claiming the profit will offer in exchange for the profit? Can the capitalists answer these questions? All these incomes represent the exploitation of others’ labour without performing any labour themselves! (‘Surplus value… splits up into various parts. Its fragmentats fall to various categories of persons, and take various forms, independent of one another, such as profit, interest, merchants’ profit, rent etc.’–Marx, Capital-1, ch. 23)
Even today, ninety-nine out of 100 workers subjected to Exploitation of Labour are unaware of these facts about ‘profit’, unlike the capitalist who exploits it!
Due to these three unjust sources of income, manual workers among those performing labour remain poor and unemployed. Even those intellectual workers who are employed will occupy an intermediary position, neither rich nor poor. This does not imply that all workers must become rich! The rest of them, all who earn unjust incomes, will be rich, small or big.
‘So and so firm has made significant profits in the past quarter,’ joyously report the daily newspapers in their business pages. How brazenly the profiteers make such daring statements about profits! How are they so bold? Because their opposing class (working class) does not know anything. Readers must realise the fact that the source of all profits is the surplus value created by workers! Those who consider these three incomes as just earnings administer the state to sustain and consolidate these incomes forever through legislation! (Marx and Engels:‘The state is the form in which the individuals of a ruling class assert their common interests…’ - The German Ideology, ch.1) ‘The executive of the modern state is but a committee for managing the common affairs of the whole bourgeoisie.’–Manifesto of the Communist Party, ch. 1) Even to this day, the administrations of all global nations foster the Exploitation of Labour!
What is the solution to these three unjust incomes, in other words, to the Exploitation of Labour?
When one understands the cause of a problem, one will also realise that the solution is embedded within it! Who must find a solution to this problem? Those who are subjected to Exploitation of Labour -the manual and intellectual workers!They must find a solution for the Exploitation of Labour!
(1) The solution for the problem of rent:The earth was not formed by the labour of human beings. Therefore, individuals should not have ‘property rights’ over land. The land must belong to the entire society, meaning it belongs to all human beings! The land should be available to individuals or families to live on until death and even after death as a place of rest or for cremation. The right to land of individuals must be abolished, not only from legislation but also from culture!
(2) The solution for the problem of interest: The concept and the associated rights must be abolished! This applies to both individuals and organisations.
(3) The solution for the problem of profit:The solution is the same as addressing that of wages and surplus value! Some people might ask, ‘How will those who live off profit will live without it?’Such questions reflect a lack of understanding of social relations! How do workers live without an income called ‘profit’? Don’t they live on their labour? That is the solution! The terms, like workers and owners, must vanish from the language! When the underlying causes of these terms disappear, the terms themselves will also disappear, leading to the end of the entire culture of exploitation!
All human beings will be equal living entities!
Without such a solution, human society will remain as a society of exploiters. In contrast, when these changes begin and progress, human society will transform into a pure and honest society of genuine individuals! The present-day capitalist society does not and cannot belong to all human beings!
[Nava Telangana, May 18, 19 and 20, 2024. Translation: R Udaykumar.]
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