Anwar M. Shaikh states that "These remarkably rich and insightful sections of his work are seldom mentioned in the Marxian literature, and are even less understood.
"[7] In good part, Marx's theory is a critique of David Ricardo's Law of rent,[8] and it examines with detailed numerical examples how the relative profitability of capital investments in agriculture is affected by the productivity, fertility, and location of farmland, as well as by capital expenditure on land improvements.
Marx aims to show that capitalism turns agriculture into a business like any other,[10] operated for purely commercial motives; and that the ground rents appropriated by landowners are a burden for the industrial bourgeoisie both because they imply an additional production-cost and because they raise the prices of agricultural output.
[13] Eventually, however, the production of farm products is completely reorganized according to the exchange-value of farm output – foodstuffs are then produced mainly according to their expected trading value in the market (this is not always completely true, e.g. because it may be feasible to cultivate only a limited variety of crops, or run a limited variety of cattle on particular lands, or because there is no perfect knowledge about what the market will do in the future, if there is great price volatility, climate uncertainty etc.).
For example, a poor harvest in a major agricultural region due to adverse weather conditions, or the monopolization of the supply of farmland, could have a big effect on world market prices for farm products.
[15] This theory is the least known part of Marx's economic writings, and among the more difficult ones,[16] because earnings from farm production can be affected by many different variables, even at a highly abstract level of analysis.
However the theory became very important to neo-Marxists such as Ernest Mandel and Cyrus Bina who interpreted late capitalism as a form of increasingly parasitic rentier capitalism in which surplus profits[17] are obtained by capitalists from monopolising the access to resources, assets and technologies under conditions of imperfect competition.
[20] Another possible reason for the relative obscurity of the theory is that in modern macro-economic statistics and national accounts, no separate and comprehensive data are provided on the amounts of land rents and subsoil rents charged and earned, because they are not officially regarded as part of value-added, and consequently are not included in the calculation of GDP (except for the value of productive lease contracts).
Marx calls this Differential rent II and he examines what would be the effect of more capital-intensive agriculture when the production price remains stable, and when it falls, while the extra yield from additional capital investments varies.
Differential rent II implies the appropriation of surplus profits created by temporary differences in yield, which are due to the application of unequal capitals to the same type of lands.
[26] According to Marx's own concept, absolute rent cannot exist when the organic composition of capital in agriculture becomes higher than the social average.