Wages of Labour

Profit of Capital

Rent of Land

[III. 1.]
....Let us now consider a society in which wealth is increasing. This condition is the only one favorable to the worker. Here, competition takes place among the capitalists. The demand for workers outstrips supply. But:
....In the first place, the rise of wages leads to overwork among the workers.
....The more they want to earn the more they must sacrifice their time and freedom and work like slaves in the service of avarice. In doing so, they shorten their lives. But this is all to the good of the working class as a whole, since it creates a renewed demand. This class must always sacrifice a part of itself if it is to avoid total destruction.
....Furthermore, when is a society in a condition of increasing prosperity? When the capitals and revenues of a country are growing. But this is only possible
....(a) as a result of the accumulation of a large quantity of labour, for
capital is accumulated labour; that is to say, when more and more of the workers' products are being taken from him, when his own labour increasingly confronts him as alien property and the means of his existence and of his activity are increasingly concentrated in the hands of the capitalist.
....(b)The accumulation of capital increases the division of labour, and
the division of labour increases the number of workers; conversely, the growth in the number of workers increases the division of labour, just as the growth in the division of labour increases the accumulation of capital. As a consequence of this division of labour, on the one hand, and the accumulation of capitals, on the other, the worker becomes more and more uniformly dependent on labour, and on a particular, very one-sided and machine-like type of labour. Just as he is depressed, therefore, both intellectually and physically to the level of a machine, and from being a man becomes an abstract activity and a stomach, so he also becomes more and more dependent on every fluctuation in the market price, in the investment of capital and in the whims of the wealthy. Equally, the increase in that

[IV. 1.]

[III. 2.]
...."The highest rate to which ordinary profits can rise may be such as, in the
price of the greater part of commodities, eats up the whole of the rent of the land and reduces the wages of labour expended in preparing the commodity and bringing it to market to the lowest rate, the bare subsistence of the labourer. The workman must always have been fed in some way or other while he was about the work; but the rent of land can disappear entirely. Examples: the servants of the East India Company in Bengal." [Smith, pp. 86-7]

....Besides all the advantages of limited competition which the capitalist can exploit in such a case, he can keep the market price above the natural price, by quite honorable means.
...."Firstly, by secrets in trade, where the market is at a great distance from the residence of those who supply it; that is, by concealing a change in price, an increase above the natural level. The effect of this concealment is that other capitalists do not invest their capital in this branch of industry.
....Secondly, by secrets in manufacture, which enable the capitalist to cut production costs and sell his goods at the same price, or even at a lower price than his competitors, while making a bigger profit. (Deceit by concealment is not immoral? Dealings on the Stock Exchange.) Furthermore, where production is confined to a particular locality (as in the case of select wines) and the effective demand can never be satisfied. Finally, through monopolies granted to individuals or companies. The price of monopoly is the highest which can be got." [Smith, pp. 53-4]

....Other chance causes which can raise the profit on capital:
...."The acquisition of new territory, or of new branches of trade, may sometimes rise the profits of stock even in a wealthy country, because part of the capital is withdrawn from the old branches of trade, competition comes to be less than before, and the market is less fully supplies with commodities, the prices of which then rise: those who deal in these commodities can then afford
to borrow at a higher interest." [Smith, p. 83]

...."As any particular commodity comes to be more manufactured, that part of the price which resolves itself into wages and profit comes to be greater in proportion to that which resolves itself into rent. In the progress of the manufacture of commodity, not only the number of the profits increase, but every subsequent profit is greater than the foregoing; because the capital from which
[IV. 2.]

[III. 3.]
application of the capitals employed about them. When the capitals are equal and equally well applied, it is in proportion to their natural fertility." [Smith, I, p. 249 ]
....These proportions of Smith are important, because they reduce the rent of land, where costs of production and size are equal, to the degree of fertility of the soil. This clearly demonstrates the perversion of concepts in political economy, which turns the fertility of the soil into an attribute of the landlord.
But let us now examine the relation between landlord and tenant.

...."In adjusting the terms of the lease, the landlord endeavors to leave him no greater share of the product than what is sufficient to keep up the stock from which he furnishes the seed, pays the labour, and purchases and maintains the cattle and other instruments of husbandry, together with the ordinary profits of farming stock in the neighborhood. This is evidently the smallest share with which the tenant can content himself without being a loser, and the landlord seldom means to leave him any more. Whatever part of the produce, or, what is the same thing, whatever part of the price is over and above this share, he naturally intends to reserve himself as the rent of his land, which is evidently the highest the tenant can afford to pay in the actual circumstances of the land
[IV. 3.]















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