And it should not be forgotten that after the lapse of the ^^' The paving of the London streets has enabled the proprietors of some naked rocks on the Scotch coast to draw a rent out of fortnerly absolutely useless stonn soil. Adam Smith, Book I, Chapter XI, 2.
900 Capitalist Production.
lease, at the end of 99 years^ as a rule, the land with all the buildings upon it and with the ground-rent, generally in- creased to twice or thrice its original amount, reverts from the building speculator or from his legal successor to the original landlord w^ho was the last to rent it.
The mining rent, in its strict meaning, is determined in the same way as the agricultural rent.
There are some mines, the product of which barely suffices to pay for the labor and to reproduce the capital invested in it together with the ordinary profit. They yield some profit to the contractor, but no rent to the landlord. They can be worked to advantage only by the landowner, who in his capacity of a contractor makes the ordinary profit out of his invested capital. Many coal mines in Scotland are operated in this way, and cannot be operated in any other way. The landowner does not permit anybody to work them without the payment of rent, but no one can pay any rent for them. (Adam Smith, Book I, Chapter XI, 2.)
It is necessary to distinguish, whether the rent flows from a monopoly price, because a monopoly price of the product or of the soil exists independently of it, or whether the prod- ucts are sold at a monopoly price, because a rent exists. When we speak of a monopoly price, we mean in a general way a price which is determined only by the eagerness of the pur- chasers to buy and by their solvency, independently of the price which is determined by the general price of production and by the value of the products. A vineyard producing wine of very extraordinary quality, a wine which can be produced only in a relatively small quantity, carries a monopoly price. The winegrower w^ould realize a considerable surplus profit from this monopoly price, the excess of w^hich over the value of the product would be wholly determined by the wealth and the fine appetite of the rich wine drinkers. This surplus profit, which flows from a monopoly price, is converted into rent and in this form falls into the hands of the landlord, thanks to his title to this piece of the globe, which is endowed with peculiar properties. Here, then, the monopoly price Price of Land. 901 creates the rent. On tlie other hand, the rent would create a monopoly price, if grain were sold not merely above its price of production, but also above its value, owing to the barrier erected by the private ownership of the land against the investment of capital upon uncultivated soil without the payment of rent. That it is only the title of a number of persons to the possession of the globe which enables them to appropriate a portion of the surplus labor of society to them- selves, and to do so to an increasing extent with the develop- ment of production, is concealed by the fact that the capi- talized rent, this capitalized tribute, appears as the price of the land, and that the land may be sold like any other article of commerce. The buyer, therefore, does not feel that his title to the rent is obtained gratis, and without the labor, the risk, and the spirit of enterprise of the capitalist, but rather that he has paid for it with an equivalent. To the buyer, as we have previously remarked, the rent appears merely as in- terest on the capital, with which he has bought the land and consequently his title to the rent. In the same way, the slave- holder considers a negro, whom he has bought, his property, not because slavery as such entitles him to that negTo, but because he has acquired him just as he does any other com- modity, by means of sale and purchase, but the title itself is only transferred, not created by sale. The title must exist, before it can be sold, and a series of sales cannot create this title by repetition any more than one single sale can. It was created in the first place by the conditions of production. As soon as these have arrived at a point, where they must shed their skin, the material source of the title, justified eco- nomically and historically and arising from the process which creates the material requirements of life, falls to the ground, and with it all transactions based upon it. From the point of view of a higher economic form of society, the private ownership of the globe on the part of some individuals will appear quite as absurd as the private ownership of one man by another. Even a whole society, a nation, or even all societies together, are not the owners of the globe. They are 902 Capitalist Production.
only its possessoi's, its users, and they have to hand it down to the coming generations in an improved condition, like good falJiers of families.
In the following analysis of the price of land we leave out of consideration all fluctuations of competition, all land specu- lation, and small landed property, in which the land is the principal instrument of the producers and must^ therefore, be bought by them at any price.
I. The price of land may rise, although the rent may not rise with it. This may take place, 1) by a mere fall of the rate of interest, which may cause the rent to be sold more dearly, so that the capitalized rent, the price of land rises; 2) because the interest of the capital incorporated in the land rises.
II. The price of land may rise, because the rent increases. The rent may increase, because the price of the product of the land rises, in which case the rate of differential rent always rises, whether the rent upon the worst cultivated soil be large, small or nonexistent. But by the rate we mean the ratio of that portion of surplus-value, which is converted into rent, to the invested capital, which produces the product of the soil. This differs from the ratio of the surplus product to the total product, for tlie total product does not comprise the entire invested capital, namely not the fixed capital, which continues to exist by the side of the product. But it includes the fact that upon the soils carrying a differential rent an increasing portion of the product is converted into an overplus of a surplus product. Upon the worst soil the increase in the price of the product of the soil first creates a rent and con- sequently a price of land.
But the rent may also increase without a rise in the price ol the product of the soil. This price may remain unaltered, or may even decrease. | If the price remains constant, the rent can grow only (aside frcm monopoly prices) because, on the one hand, the same t Price of Land. 903 amount of capital remains invested in the older lands, while new lands of a better quality are cultivated, which, however, suffice only to cover the increased demand, so that the regulat- ing market price remains unchanged. In this case the price of the old lands does not rise, but the price of the newly culti- vated lands rises above that of the older lands.
Or, on the other hand, the rent rises because the mass of the capital exploiting the land increases, while the relative produc- tivity and the market price remain the same. Although the rent remains the same in this case, compared to the invested capital, still its mass, for instance, may be doubled, because the capital itself has doubled. Since no fall in the price has occurred, the second investment of capital yields a surplus profit as well as the firsts and it likewise is converted into rent after the expiration of the lease. The mass of the rent rises here, because the mass of capital producing a rent increases. The contention that different investments of capital in suc- cession upon the same piece of land can produce a rent only to the extent that their yield is unequal, so that a differential rent arises, amounts to the contention that when two capitals of 1,000 pounds sterling each are invested upon fields of equal productivity, only one of them can produce a rent, although these fields belong to the better class of soil, which produces a differential rent. (The mass of the rental, the total rent of a ■certain country, grows therefore with the mass of capital in- vested, although the price of the individual pieces of land, or the rate of rent, or the mass of rent upon the individual pieces of land, does not necessarily increase; the mass of the rental grows in this case with the extension of cultivation over a wider area. This may even be combined wuth a fall of the rent upon the individual holdings.) On the other hand, this contention would lead to another, to the effect that the invest- ment of capital upon two different pieces of land side by side follows different laws than the successive investment of capi- tal upon the same piece of land, whereas differential rent is precisely derived from the identity of the law in both cases, that is, from the increased productivity of investments of cap- ital either upon the same field or upon different fields. The 904 Capitalist Production.
only modification which exists here and is overlooked is that successive investments of caj)ital, when invested upon different pieces of land, meet the barrier of private OAvnership of land, w^hich is not the case wdth successive investments of capital upon the same piece of land. This accounts for the opposite effects^ by which these two forms of investments»keep each other in check in practice. Whatever difference appears here is not due to capital. If the composition of the capital re- mains the same, and with it the rate of surplus-value, then the rate of profit remains unaltered, so that the mass of profits is doubled when the capital is doubled. In like man- ner the rate of rent remains the same under the conditions assumed by us. If a capital of 1,000 pounds sterling produces a rent of x, then a capital of 2,000 pounds sterling, under the assumed conditions, produces a rent of 2 x. But calculated with reference to the area of land, which has remained un- altered, since the doubled capital works upon the same field, according to our assumption, the level of the rent has risen together with its mass. The same acre, which brought a rent of 2 pounds sterling, now brings 4 pounds sterling.^^^ The relation of a portion of the sui^lus-value, of money rent — for money is the independent expression of value — to the land is in itself absurd and irrational. For the magni- tudes, which are here measured by one another, are incom- mensurable, a certain use-value, a piece of land of so and so many square feet on the one hand, and of so much value, especially surplus-value, on the other. This expresses in fact ^" It is one of the merits of Rodbertus whose important work on rent we shall discuss in volume IV (" Theories of Surplus-Value," volume II, Part I), to have enlarged upon this point. He commits the mistake, however, to assume, in the first place, that in the case o^ capital the increase in profits is always expressed by an increase of capital, so tl;at the ratio remains the same, when the mass of the profits increase. But this is an error, since the rate of profit may increase when the composition of the capital is changed, even if the exploitation of labor remains the same, just because the proportional value of the constant portion of capital, com- pared to its variable portion, may fall. In the second place he commits the mistake of dealing with the ratio of the money rent to a quantitatively limited piece of land, for instance to an acre, as though it had been the general assumption of classic economics in its analysis of the rise or fall of rent. This, again, is wrong. Classic economics always treats the rate of rent, so far as it considers rent in its natural form, with reference to the product, and so far as it considers rent as money rent, with reference to the advanced capital, because these are in fact its rational expressions.
Price of Land. 905 Price of Land. 905 nothing else but that, under the existing conditions, the owner- ship of so and so many square feet of land enables the land- owner to catch a certain quantity of unpaid labor, which cap- ital wallowing in square feet like a hog in potatoes has realized [The manuscript here has in brackets, but crossed out, the name '' Liebig."] But on first sight the expression is the same as though some one were to speak of the relation of a five-pound note to the diameter of the earth. However, the reconciliation of the irrational forms, in which certain eco- nomic conditions appear and assert themselves in practice, does not concern the active agents of these relations in their every day life. And as they are accustomed to moving about in them, they do not find anything strange about them. A complete contradiction has not the least mystery for them, They are as much at home among the manifestations which, separated from their internal connections and isolated by them- selves, seem absurd, as a fish in the water. The same thing that Hegel says with reference to certain mathematical formulie applies here. The thing which seems irrational to ordinary common sense is rational, and what seems rational to it is irrational.
When considered in connection with the land area itself, a rise in the mass of the rent expresses itself in the same way that a rise in the rate of the rent does, and this accounts for the embarrassment caused to some thinkers when the condi- tions, which would explain the one case, are absent in the other.
Finally, the price of land may also rise, even when the price of the products of the soil decreases.
In this case, the differential rent and with it the price of land of the better classes may have risen, owing to further dif- ferentiations. Or, if this should not be the case, the price of the products of the soil may have fallen through a greater productivity of labor, but in such a way that the increased productivity more than balances this. Let us assume that one quarter cost 60 shillings. Xow, if the same acre, with the same capital, should produce two quarters instead of one, and the price of one quarter should fall to 40 shillings, tlien two 9o6 Capitalist Production. ' quarters would cost 80 shillings, so that the value of the prod- uct of the same caj^ital upon the same acre would have risen bj one-third, although the price per quarter would have fallen by one-third. How this is possible without selling the prod- uct above its price of production or above its value, has been shown in the analysis of differential rent. As a matter of fact it is possible only in two ways. Either some bad soil is placed outside of competition, but the price of the better soil increases with the increase of differential rent, owing to the fact that the general improvement affects the various kinds of soil differently. Or, the same price of production (and the same value, in case absolute rent should be paid) ex- presses itself upon the worst soil tlirough a larger mass of products, when the productivity of labor has become greater. The product represents the same value as before, but the price of its aliquot parts has fallen, while their number has in- creased. This is impossible, when the same capital has been employed; for in this case the same value always expresses itself through any portion of the product. It is possible, on the other hand, when additional capital has been used for gypsum, guano, etc., in short for improvements which extend their effects over several years. The premise is that the price of the individual quarter falls, but not to the same extent that the number of quarters increases.
III. These different conditions under which rent may rise and with it the price of land in general, or of particular kinds of land, may partly exist side by side and compete, or the one may exclude the other, so that they act alternately. But it follows from the foregoing that it will not do to con- clude offhand that a rise in the price of land signifies also a rise of rent, or that a rise of rent, which always carries with it a rise in the price of land, also signifies a rise in the price of the products of the land.-^^^ Instead of tracing to their source the natural causes which lead to an exhaustion of the soil, and which, by the way, were ^^ Concerviing a fall in the price of land as a fact when the rent rises, see Passy.
Price of Land. 907 unknown to all economists who have written anything on dif- ferential rent, owing to the condition of agricultural chemistry in their day, the shallow conception has been advanced, that any amount of capital cannot be invested in a limited space of land. For instance, the '' Westminister Review " main- tained against Richard Jones, that all England could not be fed by cultivating Soho Square. If this is considered a special disadvantage of agriculture, it is precisely the opposite which is true. It is possible to invest capital successively with good results, because the soil itself serves as a means of production, which is not the case with a factory, or is true of it only to a limited extent, since there the land serves only as a basis, as a space, as a foundation for operations upon a certain area. It is true that, compared to scattered handi- crafts, great industries may concentrate large productive plants in a small space. But even so, a definite space is always required at any stage of development, and the building of high structures has its practical limits. Beyond these limits any expansion of production demands also an extension of the land area. The fixed capital invested in machinery, etc., does not improve through use, but on the contrary, it wears out. New inventions may, indeed permit some improvement in this respect, but with any given development of the productive power the machine will always deteriorate. If the productive power is rapidly developed, the entire old machinery must be replaced by a better one, so that the old is lost. But the soil, if properly treated, improves all the time. The advantage of the soil is that successive invest- ments of capital may bring gains without losing the older ones, and this implies the possibility of differences in the yields of these successive investments of capital.
9o8 Capitalist Production.
CHAPTER XLVII.
GENESIS OF CAPITALIST GEOUND-EENT.
I. Introductory RemarTcs.
We must be clear in our minds about the real difficulty in the analysis of ground-rent from the point of view of modern economics, to the extent that it is a theoretical expression of the capitalist mode of production. Even many of the more modem writers have not grasped this yet, as is shown by every renewed attempt to find a " new " explanation of ground-rent. The novelty consists almost always in a relapse into long outgrown conceptions. The difficulty is not to explain the surplus product and the surplus-value produced by agricul- tural capital. This question is solved by the general analysis of the surplus-value produced by all productive capital, no matter in what sphere it may be invested. The difficulty consists rather in demonstrating the source of the surplus over and above the general surplus-value paid by capital in- vested in the soil to the landlord in the form of rent after the general surplus-value has been distributed among the various capitals by means of the average profit, in other words, after the various capitals have shared in the total sur- plus-value produced by the social capital in all spheres of production in proportion to their relative size. Quite aside from the practical motives, which urged the modern economists as spokesmen of the industrial capitalists against the landlords to investigate this question, motives which we shall indicate more clearly in the chapter on the history of ground- rent, the question was of paramount interest for them as a theory. To admit that the rising of rent for capital invested in agriculture was due to some particular effect of the sphere of investment, to peculiar qualities of the land itself, was equivalent to giving up the conception of value as such, Genesis of Capitalist Ground-Rent. 909 equivalent to abandoning all attempts at a scientific under- standing of this field. Merely the simple observation that the rent is paid out of the price of the products of the soil, 2 thing which takes place even where rent is paid in kind, provided that the tenant is to get his price of production out of the land, showed the absurdity of the attempt to explain the excess of this price over the ordinary price of production, in other words, to explain the relative dearness of the prod- ucts of agriculture out of the excess of the natural produc- tivity of agricultural industry over the productivity of the other lines of industry. For the reverse is true. The more productive labor is, the cheaper is every aliquot part of its product, because the mass of use-values is so much greater, in which the same quantity of labor and with it the same value is incorporated.
The entire difficulty in the analysis of rent, therefore, consists in the explanation of the excess of agricultural profit over the average profit. It is not a question of surplus-value as such, but of the peculiar surplus of surplus-value found in this sphere of production, not a question of the " net product," but of the excess of this net product over the net product of the other lines of industry. The average profit itself is a product, formed under very definite historical con- ditions of production by the movement of the process of social life, a product which requires very far-reaching interrelations, as we have seen. In order that we may be able to speak at all of a surplus over the average profit, this average profit itself must already exist as a standard and as a regulator of production, such as it is under capitalist production. For this reason there can be no such thing as a rent in the modern sense, a rent consisting of a surplus over the average profit, over and above the proportional share of each individual cap- ital in the total surplus-value produced by the entire social cap- ital, so long as capital does not perform the function of enforc- ing all surplus-labor and appropriating at first hand all surplusvalue, so long as capital has not yet brought under its control the social labor, or has done so only sporadically. It shows the naivete of a man like Passy (see further along) that he Qio Capitalist Production.
speaks of a rent, a surplus over the profit, in primitive society, a surplus over and above a historically defined form of surplus-value, which, according to Passy, might almost exist without any society.
For the older economists, who make the first beginning in an analysis of the capitalist mode of production, which was still undeveloped in their day, the analysis of rent either offers no difficulty, or a difficulty of another sort. Petty, Cantillon, and in general the writers who are closer to feudal times, assume that ground-rent is the normal form of surplus- value, whereas profit to them is still vaguely combined with wages, or at best looks to them like a portion of surplus-value filched by the capitalist from the landlord. These writers take their departure from a condition, in which the agricul- tural population still constitutes the overwhelming majority of the nation, and in which the landlord still appears as the individual, who appropriates at first hand the surplus labor of the direct producers through his land monopoly, in which land therefore still appears as the chief requisite of produc- tion. These writers could not yet face the question, which, contrary to them, seeks to investigate from the point of view of capitalist production, how it happens that private owner- ship in land manages to wrest from capital a portion of the surplus-value produced by it at first hand (that is, filched by it from the direct producers) and first appropriated by it.
The physiocrats are troubled by a difficulty of another kind. Being in fact the first systematic spokesman of capi- tal, they try to analyze the nature of surplus-value in general. This analysis coincides for them with the analysis of rent, the only form of surplus-value that exists for them. There- fore the rent-paying, or agricultural capital, is to them the only capital which produces any surplus-value, and the agri- cultural labor set in motion by it the only labor which makes for surplus-value, which quite correctly is considered the only productive labor from a capitalist point of view. They are right in considering the production of surplus-value as the essential thing. Aside from other merits set forth by us in Genesis of Capitalist Ground-Rent. 911 the volume dealing with " Theories of Surplus-Value/' they have the great merit of going back from the merchants' cap- ital, which perforais its functions wholly in the sphere of circulation, to the productive capital. In this they are op- posed to the mercantile system, which, with its crude realism, constitutes the dominating vulgar economy of that time pushing the beginnings of scientific analysis by Petty and his successors into the background by means of its practical in- terests. By the way, in this critique of the mercantile system we aim only at its conceptions of capital and surplus-value. We have already indicated previously that the monetary sys- tem correctly proclaims production for the world market and the transformation of the product into commodities, and thus into money, as the prerequisite and condition of capitalist production. In the further development of this system into the mercantile system, it is no longer the transformation of the value of commodities into money, but the production of surplus-value, which decides the point, but merely from the meaningless point of view of the sphere of circulation and with the understanding that this surplus-value must present itself as surplus money in the surplus of the balance of