(A rising price of production presupposes a decline in productivity on the lowest quality of land, which pays no rent. The production price we have taken as the governing one can rise above £3 per qr only if the £2 1/2 invested on A produces less than 1 qr, or the £5 less than 2 qrs, or if a still poorer soil than A has to be brought into cultivation.
Given that the productivity of the second capital investment remains the same or even rises, this would only be possible if the productivity of the first capital investment of £2 1/2 had declined. This case is found often enough. For example, if the exhausted top-soil gives declining yields on superficial ploughing, as long as the old method of cultivation is maintained, until the subsoil subsequently supplies higher yields than before when rational techniques lead to its being turned up. Strictly speaking, however, this special case does not belong here. The falling productivity of the first capital investment of £2 1/2 leads to a fall in differential rent I for the better types of land, even if conditions there are taken as analogous; here, however, we are concerned only with differential rent II. But since the present special case cannot come about unless we assume that differential rent II is already in existence, for it in fact represents the impact on II of a modification in differential rent I, we shall give an example of it.
Both rent and yield are the same in money terms as in Table II. The increased governing price of production exactly makes up for the deficit in the quantity produced; since the two things vary in inverse proportion, it is evident that their product remains the same.
In the following case we assume the productivity of the second capital investment is higher than the original productivity of the first investment. It is the same if we take the productivity of the
Type of land |
Acres |
Invested capital (£) |
Profit (£) |
Price of prod. (£) |
Output (qrs) |
Selling price (£) |
Proceeds (£) |
Cornrent (qrs) |
Moneyrent (£) |
Rate of rent |
A |
1 |
2 1/2 + 2 1/2 |
1 |
6 |
1/2 + 1 1/4 = 1 3/4 |
3 3/7 |
6 |
0 |
0 |
0 |
B |
1 |
2 1/2 + 2 1/2 |
1 |
6 |
1 + 2 1/2 = 3 1/2 |
3 3/7 |
12 |
1 3/4 |
6 |
120% |
C |
1 |
2 1/2 + 2 1/2 |
1 |
6 |
1 1/2 + 3 3/4 = 5 1/4 |
3 3/7 |
18 |
3 1/2 |
12 |
240% |
D |
1 |
2 1/2 + 2 1/2 |
1 |
6 |
2 + 5 = 7 |
3 3/7 |
24 |
5 1/2 |
18 |
360% |
|
|
20 |
|
|
17 1/2 |
|
60 |
10 1/2 |
36 |
240% |
second investment as simply the same as the original, as in the following Table VIII:
Table VIII
Type of land |
Acres |
Invested capital (£) |
Profit (£) |
Price of prod. (£) |
Output (qrs) |
Selling price (£) |
Proceeds (£) |
Rent |
Rate of surplus profit |
|
|
|
|
|
|
|
|
|
in corn (qrs) |
in money (£) |
|
A |
1 |
2 1/2 + 2 1/2 = 5 |
1 |
6 |
1/2 + 1 = 1 1/2 |
4 |
6 |
0 |
0 |
0 |
B |
1 |
2 1/2 + 2 1/2 = 5 |
1 |
6 |
1 + 2 = 3 |
4 |
12 |
1 1/2 |
6 |
120% |
C |
1 |
2 1/2 + 2 1/2 = 5 |
1 |
6 |
1 1/2 + 3 = 4 1/2 |
4 |
18 |
3 |
12 |
240% |
D |
1 |
2 1/2 + 2 1/2 = 5 |
1 |
6 |
2 + 4 = 6 |
4 |
24 |
4 1/2 |
18 |
360% |
|
|
20 |
|
|
15 |
|
60 |
9 |
36 |
240% |
Here, too, a production price that has risen in the same proportion fully makes up for the decline in productivity, both for product and money rent.
The third case emerges in its pure form only in a situation of falling productivity on the second capital investment, while that on the first investment remains constant, as was assumed throughout in the first and second cases. Here differential rent I is not affected, and the change takes place solely in the proportion arising from differential rent II. We give two examples: in the first the productivity of the second capital investment is reduced to a half and in the second to a quarter.
Table IX
Type of land |
Acres |
Invested captial (£) |
Profit (£) |
Price of prod. (£) |
Output (qrs) |
Selling price (£) |
Proceeds (£) |
Rent |
Rate of rent |
|
|
|
|
|
|
|
|
|
in corn (qrs) |
in money (£) |
|
A |
1 |
2 1/2 + 2 1/2 = 5 |
1 |
6 |
1 + 1/2 = 1 1/2 |
4 |
6 |
0 |
0 |
0 |
B |
1 |
2 1/2 + 2 1/2 = 5 |
1 |
6 |
2 + 1 = 3 |
4 |
12 |
1 1/2 |
6 |
120% |
C |
1 |
2 1/2 + 2 1/2 = 5 |
1 |
6 |
3 + 1 1/2 = 4 1/2 |
4 |
18 |
3 |
12 |
240% |
D |
1 |
2 1/2 + 2 1/2 = 5 |
1 |
6 |
4 + 2 = 6 |
4 |
24 |
4 1/2 |
18 |
360% |
|
|
20 |
|
|
15 |
|
60 |
9 |
36 |
240% |
Table IX is the same as Table VIII, except that the decline in productivity in VIII falls on the first capital investment, while that in IX falls on the second.
Table X
Type of land |
Acres |
Invested capital (£) |
Profit (£) |
Price of prod. (£) |
Output (qrs) |
Selling price (£) |
Proceeds (£) |
Rent |
Rate of rent |
|
|
|
|
|
|
|
|
|
in corn (qrs) |
in money (£) |
|
A |
1 |
2 1/2 + 2 1/2 = 5 |
1 |
6 |
1 + 1/4 = 1 1/4 |
4 4/5 |
6 |
0 |
0 |
0 |
B |
1 |
2 1/2 + 2 1/2 = 5 |
1 |
6 |
2 + 1/2 = 2 1/2 |
4 4/5 |
12 |
1 1/4 |
6 |
120% |
C |
1 |
2 1/2 + 2 1/2 = 5 |
1 |
6 |
3 + 3/4 = 3 3/4 |
4 4/5 |
18 |
2 1/2 |
12 |
240% |
D |
1 |
2 1/2 + 2 1/2 = 5 |
1 |
6 |
4 + 1 = 5 |
4 4/5 |
24 |
3 3/4 |
18 |
360% |
|
|
20 |
|
24 |
12 1/2 |
|
60 |
7 1/2 |
36 |
240% |
In this table, too, the total yield, money rental and rate of rent remain the same as in Tables II, VII and VIII, because the product and the sale price again vary in inverse proportion, while the capital investment remains the same.
What is the position, though, in the other possible situation, with a rising price of production, in particular if inferior land which it previously did not pay to cultivate is now taken into cultivation?
Let us assume that this land, which we can call a, enters into competition with the others. The formerly non-rent-bearing land A would then yield a rent, and the above Tables VII, VIII and X would take on the following form as Tables Vila, Villa and Xa.
Table VIIa
Type of land |
Acres |
Capital (£) |
Profit (£) |
Price of prod. (£) |
Output (qrs) |
Selling price (£) |
Proceeds (£) |
Rent |
Increase |
|
|
|
|
|
|
|
|
|
qrs |
£ |
|
a |
1 |
5 |
1 |
6 |
1 1/2 |
4 |
6 |
0 |
0 |
0 |
A |
1 |
2 1/2 + 2 1/2 |
1 |
6 |
1/2 + 1 1/4 = 1 3/4 |
4 |
7 |
1/4 |
1 |
1 |
B |
1 |
2 1/2 + 2 1/2 |
1 |
6 |
1 + 2 1/2 =3 1/2 |
4 |
14 |
2 |
8 |
1 + 7 |
C |
1 |
2 1/2 + 2 1/2 |
1 |
6 |
1 1/2 + 3 3/4 = 5 1/4 |
4 |
21 |
3 3/4 |
15 |
1 + 2 × 7 |
D |
1 |
2 1/2 + 2 1/2 |
1 |
6 |
2 + 5 = 7 |
4 |
28 |
5 1/2 |
22 |
1 + 3 × 7 |
|
|
|
|
30 |
19 |
|
76 |
11 1/2 |
46 |
|
Table VIIIa
Type of land |
Acres |
Capital (£) |
Profit (£) |
Price of prod. (£) |
Output (qrs) |
Selling price (£) |
Proceeds (£) |
Rent |
Increase |
|
|
|
|
|
|
|
|
|
qrs |
£ |
|
a |
1 |
5 |
1 |
6 |
1 1/4 |
4 4/5 |
6 |
0 |
0 |
0 |
A |
1 |
2 1/2 + 2 1/2 |
1 |
6 |
1/2 + 1 = 1 1/2 |
4 4/5 |
7 1/5 |
1/4 |
1 1/5 |
1 1/2 |
B |
1 |
2 1/2 + 2 1/2 |
1 |
6 |
1 + 2 = 3 |
4 4/5 |
14 2/5 |
1 3/4 |
8 2/5 |
1 1/5 + 7 1/5 |
C |
1 |
2 1/2 + 2 1/2 |
1 |
6 |
1 1/2 + 3 = 4 1/2 |
4 4/5 |
21 3/5 |
3 1/4 |
15 3/4 |
1 1/5 + 2 × 7 1/5 |
D |
1 |
2 1/2 + 2 1/2 |
1 |
6 |
2 + 4= 6 |
4 4/5 |
28 4/3 |
3 3/4 |
22 4/5 |
1 1/5 + 3 × 7 1/5 |
|
5 |
|
|
30 |
16 1/2 |
|
78 |
10 |
48 |
|
Type of land |
Acres |
Capital (£) |
Profit (£) |
Price of prod. (£) |
Output (qrs) |
Selling price (£) |
Proceeds (£) |
Rent |
Increase |
|
|
|
|
|
|
|
|
|
qrs |
£ |
|
a |
1 |
5 |
1 |
6 |
1 1/4 |
5 1/3 |
6 |
0 |
0 |
0 |
A |
1 |
2 1/2 + 2 1/2 |
1 |
6 |
1 + 1/4 = 1 1/4 |
5 1/3 |
6 2/3 |
1/3 |
2/3 |
2/5 |
B |
1 |
2 1/2 + 2 1/2 |
1 |
6 |
2 + 1/4 = 2 1/4 |
5 1/3 |
13 2/3 |
1 1/3 |
7 2/3 |
2/3+6 2/3 |
C |
1 |
2 1/2 + 2 1/2 |
1 |
6 |
3 + 3/4 = 3 3/4 |
5 1/3 |
20 |
2 5/8 |
14 |
2/3 + 2 × 6 2/3 |
D |
1 |
2 1/2 + 2 1/2 |
1 |
6 |
4 + 1= 5 |
5 1/3 |
26 2/3 |
3 7/8 |
20 2/3 |
2/3 + 3 × 6 2/3 |
|
|
|
|
30 |
13 5/8 |
|
72 2/3 |
8 |
42 2/3 |
|
The intervention of land a gives rise to a new differential rent I; on this new basis, differential rent II also develops in a different form. In each of the three above tables, land a has a different fertility; the series of proportionally rising fertilities only begins with A. Accordingly too, therefore, the series of rising rents. The rent of the poorest rent-bearing land, which formerly did not bear rent at all, forms a constant that is simply added on to all higher rents; it is only after this constant is deducted that the series of differences for the higher rents clearly emerges, and so too their parallelism with the series of land types arranged according to fertility. In all these tables, the fertilities from A to D are in the ratios 1:2:3:4, and the rents are accordingly:
– in VIIa, as 1:1 + 7: 1 + 2 × 7: 1 + 3 × 7;
– in VIIIa, as 1 1/5: 1 1/5 + 7 1/5: 1 1/5 + 2 × 7 1/5: 1 1/5 + 3 × 7 1/5
– in Xa, as 2/3: 2/3 + 6 2/3: 2/3 + 2 × 6 2/3: 2/3 + 3 × 6 2/3.
In short, if the rent of A = n, and the rent of the land of next higher fertility = n + m, the series is n: n + m: n + 2m: n + 3m etc. – F. E.)
*
(Since the above third case was not elaborated in the manuscript – there is only the title – it remained the task of the editor to complete this as best he could. Besides this, he also has to draw the resulting general conclusions from the overall investigation of differential rent II in its three major and nine subordinate cases. For this purpose, however, the examples given in the manuscript are of little help. Firstly, they compare lands whose yields, for equal areas, are in the ratios 1: 2: 3: 4, i.e. differences that are sharply exaggerated right from the start and which lead to completely impossible figures when calculations are made on this basis. Secondly, they give a completely false impression. If fertilities in the ratios 1:2:3:4 etc. lead to a series of rents in the ratios 0: 1: 2: 3 etc., we feel able to derive the second series immediately from the first and explain the doubling, trebling, etc. of rents from the doubling, trebling, etc. of the total yields. But this would be completely mistaken. Rents stand in the ratios 0: 1:2:3:4 whenever the scale of fertility is one of n: n + 1: n + 2: n + 3: n + 4; it is not the absolute level of fertility but rather the differences in fertility, reckoned from the non-rent-bearing land as the zero point, that give the ratio of rents.
Marx’s original tables had to be given for the sake of understanding the text itself. But in order to give an intuitive basis to the results of the investigation that follow below, I shall now provide a new series of tables in which the yields are given in bushels (1/8 qr, or 36.35 litres) and shillings (= marks).
The first table (XI) corresponds to the former Table I. It shows the yields and rents for five qualities of land A–E for a first capital investment of 50s., which with 10s. profit makes a total of 60s. in production costs. The yields of corn are given low values: 10,12,14,16,18 bushels per acre. The governing production price resulting from this is 6s. per bushel.
The subsequent thirteen tables correspond to the three cases of differential rent II dealt with in this chapter and the two previous ones, for an additional capital investment on the same land of 50s. per acre, and a price of production that may be constant, falling or rising. Each of these cases is again presented in the shape it assumes (1) with the same productivity for the second capital investment as for the first, (2) with falling productivity and (3) with rising productivity. A few variants arise in this connection which are particularly useful by way of illustration.
In case I, price of production constant, we have:
Variant 1. Productivity remains the same for the second capital investment (Table XII).
Variant 2. Productivity falls. This can happen only if no second investment is made on land A. And, moreover, either:
(a) in such a way that land B likewise yields no rent (Table XIII); or
(b) in such a way that land B is not completely devoid of rent (Table XIV).
Variant 3. Productivity rises (Table XV). This case, too, excludes a second capital investment on land A.
In case II, where the production price falls, we have:
Variant 1. Productivity remains the same for the second investment (Table XVI).
Variant 2. Productivity falls (Table XVII). These two variants both mean that land A is removed from competition, land B ceasing to bear rent and coming to govern the production price.
Variant 3. Productivity rises (Table XVIII). Here land A remains the governing one.
In case III, where the price of production rises, two modalities are possible. Land A may remain non-rent-bearing and price-governing, or else land inferior to A in quality may come into competition and govern price, which means that A then does yield rent.
First modality. Land A continues to govern price.
Variant 1. Productivity remains the same for the second investment (Table XIX). This is permissible, under our conditions, only if the productivity of the first investment declines.
Variant 2. The productivity of the second investment falls (Table XX). This does not rule out the possibility that the productivity of the first investment may remain the same.
Variant 3. The productivity of the second investment rises (Table XXI). This again reduces the productivity of the first investment.
Second modality. An inferior quality of land (denoted by a) comes into competition; land A bears rent.
Variant 1. Productivity on the second investment remains the same (Table XXII).
Variant 2. Productivity falls (Table XXIII).
Variant 3. Productivity rises (Table XXIV).
These three variants conform to the general conditions of the problem, and require no special remarks.
We now append the tables.
Type of land |
Price of production (s.) |
Output (bushels) |
Selling Price (s.) |
Proceeds (s.) |
Rent (s.) |
Rent increase |
A |
60 |
10 |
6 |
60 |
0 |
0 |
B |
60 |
12 |
6 |
72 |
12 |
12 |
C |
60 |
14 |
6 |
84 |
24 |
2 × 12 |
D |
60 |
16 |
6 |
96 |
36 |
3 × 12 |
E |
60 |
18 |
6 |
108 |
48 |
4 × 12 |
|
|
|
|
|
120 |
10 × 12 |
For the second capital investment on the same land:
First case. The price of production remains constant.
Variant 1. The productivity of the second capital investment remains the same.
Table XII
Type of land |
Price of production (s.) |
Output (bushels) |
Selling Price (s.) |
Proceeds (s.) |
Rent (s.) |
Rent increase |
A |
60 + 60 = 120 |
10 + 10 = 20 |
6 |
120 |
0 |
0 |
B |
60 + 60 = 120 |
12 + 12 = 24 |
6 |
144 |
24 |
24 |
C |
60 + 60 = 120 |
14 + 14 = 28 |
6 |
168 |
48 |
2 × 24 |
D |
60 + 60 = 120 |
16 + 16 = 32 |
6 |
192 |
72 |
3 × 24 |
E |
60 + 60 = 120 |
18 + 18 = 36 |
6 |
216 |
96 |
4 × 24 |
|
|
|
|
|
240 |
10 × 24 |
Variant 2. The productivity of the second capital investment falls; there is no second investment on A.
(a) Land B ceases to bear rent.
Table XIII
Type of land |
Price of production (s.) |
Output (bushels) |
Selling Price (s.) |
Proceeds (s.) |
Rent (s.) |
Rent increase |
A |
60 |
10 |
6 |
60 |
0 |
0 |
B |
60 + 60 = 120 |
12 + 8 = 20 |
6 |
120 |
0 |
0 |
C |
60 + 60 = 120 |
14 + 9 1/3 = 23 1/3 |
6 |
140 |
20 |
20 |
D |
60 + 60 = 120 |
18 + 16 2/3 = 26 2/3 |
6 |
160 |
40 |
2 × 20 |
E |
60 + 60 = 120 |
18 + 12 = 30 |
6 |
180 |
60 |
3 × 20 |
|
|
|
|
|
120 |
6 × 20 |
(b) Land B does not completely cease to bear rent.
Table XIV
Type of land |
Price of production (s.) |
Output (bushels) |
Selling Price (s.) |
Proceeds (s.) |
Rent (s.) |
Rent increase |
A |
60 |
10 |
6 |
60 |
0 |
0 |
B |
60 + 60 = 120 |
12 + 9 = 21 |
6 |
126 |
6 |
6 |
C |
60 + 60 = 120 |
14 + 10 1/2 = 24 1/2 |
6 |
147 |
27 |
6 + 21 |
D |
60 + 60 = 120 |
16 + 12 = 28 |
6 |
168 |
48 |
6 + 2 × 21 |
E |
60 + 60 = 120 |
18 + 13 1/2 = 31 1/2 |
6 |
189 |
69 |
6 + 3 × 21 |
|
|
|
|
|
150 |
4 × 6 + 6 × 21 |
Variant 3. The productivity of the second capital investment rises; here too, no second investment on land A.
Table XV
Type of land |
Price of production (s.) |
Output (bushels) |
Selling Price (s.) |
Proceeds (s.) |
Rent (s.) |
Rent increase |
A |
60 |
10 |
6 |
60 |
0 |
0 |
B |
60 + 60 = 120 |
12 + 15 = 27 |
6 |
162 |
42 |
42 |
C |
60 + 60 = 120 |
14 + 17 1/2 = 31 1/2 |
6 |
189 |
69 |
42 + 27 |
D |
60 + 60 = 120 |
16 + 20 = 36 |
6 |
216 |
96 |
42 + 2 × 27 |
E |
60 + 60 = 120 |
18 + 22 1/2 = 40 1/2 |
6 |
243 |
123 |
42 + 3 × 27 |
|
|
|
|
|
330 |
4 × 42 + 6 × 27 |
Second case. Price of production falls.
Variant 1. Productivity of the second capital investment remains the same. Land A is withdrawn from competition, land B ceases to bear rent.
Table XVI
Type of land |
Price of production (s.) |
Output (bushels) |
Selling Price (s.) |
Proceeds (s.) |
Rent (s.) |
Rent increase |
B |
60 + 60 = 120 |
12 + 12 = 24 |
5 |
120 |
0 |
0 |
C |
60 + 60 = 120 |
14 + 14 = 28 |
5 |
140 |
20 |
20 |
D |
60 + 60 = 120 |
16 + 16 = 32 |
5 |
160 |
40 |
2 × 20 |
E |
60 + 60 = 120 |
18 + 18 = 36 |
5 |
180 |
60 |
3 × 20 |
|
|
|
|
|
120 |
6 × 20 |
Variant 2. Productivity of the second capital investment falls; Land A is withdrawn from competition, land B ceases to bear rent.
Type of land |
Price of production (s.) |
Output (bushels) |
Selling Price (s.) |
Proceeds (s.) |
Rent (s.) |
Rent increase |
B |
60 + 60 = 120 |
12 + 9 = 21 |
5 5/7 |
120 |
0 |
0 |
C |
60 + 60 = 120 |
14 + 10 1/2 = 24 1/2 |
5 5/7 |
140 |
20 |
20 |
C |
60 + 60 = 120 |
16 + 12 = 28 |
5 5/7 |
160 |
40 |
2× 20 |
D |
60 + 60 = 120 |
18 + 13 1/2 = 31 1/2 |
5 5/7 |
180 |
60 |
3× 20 |
|
|
|
|
|
120 |
6 × 20 |
Variant 3. Productivity of the second capital investment rises. Land A remains in competition, land B bears rent.
Table XVIII
Type of land |
Price of production (s.) |
Output (bushels) |
Selling Price (s.) |
Proceeds (s.) |
Rent (s.) |
Rent increase |
A |
60 + 60 = 120 |
10 + 15 = 25 |
4 4/5 |
120 |
0 |
0 |
B |
60 + 60 = 120 |
12 + 18 = 30 |
4 4/5 |
144 |
24 |
24 |
C |
60 + 60 = 120 |
14 + 21 = 35 |
4 4/5 |
168 |
48 |
2× 24 |
D |
60 + 60 = 120 |
16 + 24 = 40 |
4 4/5 |
192 |
72 |
3× 24 |
E |
60 + 60 = 120 |
18 + 27 = 45 |
4 4/5 |
216 |
96 |
4× 24 |
|
|
|
|
|
240 |
10 × 24 |
Third case. The price of production rises.
[First modality.] If land A still bears no rent and governs price.
Variant 1. The productivity on the second capital investment remains the same; which means a declining productivity for the first investment.
Table XIX
Type of land |
Price of production (s.) |
Output (bushels) |
Selling Price (s.) |
Proceeds (s.) |
Rent (s.) |
Rent increase |
A |
60 + 60 = 120 |
7 1/2 + 10 = 17 1/2 |
6 6/7 |
120 |
0 |
0 |
B |
60 + 60 = 120 |
9 + 12 = 21 |
6 6/7 |
144 |
24 |
24 |
C |
60 + 60 = 120 |
10 1/2 + 14 = 24 1/2 |
6 6/7 |
168 |
48 |
2 ×24 |
D |
60 + 60 = 120 |
12 + 16 = 28 |
6 6/7 |
192 |
72 |
3 ×24 |
E |
60 + 60 = 120 |
13 1/2 + 18 = 31 1/2 |
6 6/7 |
216 |
96 |
4 ×24 |
|
|
|
|
|
240 |
10× 24 |
Variant 2. The productivity of the second capital investment falls; which does not rule out the possibility that the productivity of the first investment may remain the same.
Type of land |
Price of production (s.) |
Output (bushels) |
Selling price (s.) |
Proceeds (s.) |
Rent (s.) |
Rent increase |
A |
60 + 60 = 120 |
10 + 5 = 15 |
8 |
120 |
0 |
0 |
B |
60 + 60 = 120 |
12 + 6 = 18 |
8 |
144 |
24 |
24 |
C |
60 + 60 = 120 |
14 + 7 = 21 |
8 |
168 |
48 |
2 × 24 |
D |
60 + 60 = 120 |
16 + 8 = 24 |
8 |
192 |
72 |
3 × 24 |
E |
60 + 60 = 120 |
18 + 9 = 27 |
8 |
216 |
96 |
4 × 24 |
|
|
|
|
|
240 |
10 × 24 |
Variant 3. The productivity of the second capital investment rises; which, under the assumptions made, means a fall in productivity on the first investment.
Table XXI
Type of land |
Price of production (s.) |
Output (bushels) |
Selling price (s.) |
Proceeds (s.) |
Rent (s.) |
Rent increase |
A |
60 + 60 = 120 |
5 + 12 1/2 = 17 1/2 |
6 6/7 |
120 |
0 |
0 |
B |
60 + 60 = 120 |
6 + 15 = 21 |
6 6/7 |
144 |
24 |
24 |
C |
60 + 60 = 120 |
7 + 17 1/2 = 24 1/2 |
6 6/7 |
168 |
48 |
2 × 24 |
D |
60 + 60 = 120 |
8 + 20 = 28 |
6 6/7 |
192 |
72 |
3 × 24 |
E |
60 + 60 = 120 |
9 + 22 1/2 = 31 1/2 |
6 6/7 |
216 |
96 |
4 × 24 |
|
|
|
|
|
240 |
10 × 24 |
[Second modality.] If an earlier soil (denoted by a) comes to govern price, and land A accordingly yields rent. This allows constant productivity for the second investment in all variants.*
Variant 1. The productivity of the second investment remains the same.
Table XXII
Type of land |
Price of production (s.) |
Output (bushels) |
Selling price (s.) |
Proceeds (s.) |
Rent (s.) |
Rent increase |
a |
120 |
16 |
7 1/2 |
120 |
0 |
0 |
A |
60 + 60 = 120 |
10 + 10 = 20 |
7 1/2 |
150 |
30 |
30 |
B |
60 + 60 = 120 |
12 + 12 = 24 |
7 1/2 |
180 |
60 |
2 × 30 |
C |
60 + 60 = 120 |
14 + 14 = 28 |
7 1/2 |
210 |
120 |
3 × 30 |
D |
60 + 60 = 120 |
16 + 16 = 32 |
7 1/2 |
240 |
120 |
4 × 30 |
E |
60 + 60 = 120 |
18 + 18 = 36 |
7 1/2 |
270 |
150 |
5 × 30 |
|
|
|
|
|
450 |
15 × 30 |
Variant 2. The productivity of the second investment falls.
Table XXIII
Type of land |
Price of production (s.) |
Output (bushels) |
Selling price (s.) |
Proceeds (s.) |
Rent (s.) |
Rent increase |
a |
120 |
15 |
8 |
120 |
0 |
0 |
A |
60 + 60 = 120 |
10 + 7 1/2 = 17 1/2 |
8 |
140 |
20 |
20 |
B |
60 + 60 = 120 |
12 + 9 = 21 |
8 |
168 |
48 |
20+ 28 |
C |
60 + 60 = 120 |
14 + 10 1/2 = 24 1/2 |
8 |
196 |
76 |
20 + 2 × 28 |
D |
60 + 60 = 120 |
16 + 12 = 28 |
8 |
244 |
104 |
20 + 3 × 28 |
E |
60 + 60 = 120 |
18 + 13 = 31 1/2 |
8 |
252 |
132 |
20 + 4 × 28 |
|
|
|
|
|
380 |
5 × 20 + 10 × 28 |
Variant 3. The productivity of the second investment rises
Table XXIV
Type of land |
Price of production (s.) |
Output (bushels) |
Selling price (s.) |
Proceeds (s.) |
Rent (s.) |
Rent increase |
a |
120 |
16 |
7 1/2 |
120 |
0 |
0 |
A |
60 + 60 = 120 |
10 + 12 1/2 = 22 1/2 |
7 1/2 |
168 3/4 |
48 3/4 |
15 + 33 3/4 |
B |
60 + 60 = 120 |
12 + 15 = 27 |
7 1/2 |
202 1/2 |
82 1/2 |
15 + 2 × 33 3/4 |
C |
60 + 60 = 120 |
14 + 17 1/2 = 31 1/2 |
7 1/2 |
236 1/4 |
116 1/4 |
15 + 3 × 33 3/4 |
D |
60 + 60 = 120 |
16 + 20 = 36 |
7 1/2 |
270 |
150 |
15 + 4 × 33 3/4 |
E |
60 + 60 = 120 |
18 + 22 1/2 = 40 1/2 |
7 1/2 |
303 3/4 |
183 3/4 |
15 + 5 × 33 3/4 |
|
|
|
|
|
581 1/4 |
5 × 15 + 15 × 33 3/4 |
These tables now give the following results.
First of all, the series of rents is in exactly the same ratio as the series of differences in fertility, taking the non-rent-bearing, price-governing land as the zero point. It is not the absolute yields that determine rent, but simply the differences in yields. Whether the various types of land provide yields of 1, 2, 3, 4, 5 bushels per acre, or 11, 12, 13, 14, 15 bushels, the rents are in both cases successively 0, 1, 2, 3, 4 bushels or their respective monetary equivalents.
What is far more important, however, is the result as regards the total rents yielded in the case of repeated capital investment on the same land.
In five cases out of the thirteen investigated, the total sum of rents also doubles with the capital investment; from 10 × 12s., this becomes 10 × 24s. = 240s. These cases are:
Case I, constant price, variant 1: constant rise in production (Table XII).
Case II, falling price, variant 3: increasing rise in production (Table XVIII).
Case III, rising price, first modality, where land A continues to govern price, in all three variants (Tables XIX, XX, XXI).
In four cases, the rent rises to more than double, i.e.:
Case I, variant 3, constant price, but increasing rise in production (Table XV). The total rent rises to 330s.
Case III, second modality, where land A yields rent, in all three variants (Table XXII, rent = 15 × 30 = 450s.; Table XXIII, rent = 5 × 20 + 10 × 28 = 380s.; Table XXIV, rent = 5 × 15 + 15 × 33 1/4 = 581$ 1/4 s.).
In one case rent rises, but not to twice the rent in the case of the first capital investment:
Case I, price constant, variant 2: falling productivity for the second investment under conditions in which B does not completely cease to bear rent (Table XIV, rent = 4 × 6 + 6 × 21 = 150s.).
Finally, only in three cases does the total rent for the second capital investment remain the same for all kinds of land as with the first investment (Table XI); these are the cases in which land A is withdrawn from competition and land B comes to govern price, thus ceasing to bear rent. Thus not only does the rent for B disappear, it is also deducted from each following member of the rent series, and this is how the result is obtained.
These cases are:
Case I, variant 2, when conditions are such that land A drops out (Table XIII). The sum of rent is 6 X 20, i.e. 10 X 12 = 120s., as in Table XI.
Case II, variants 1 and 2. Here land A necessarily drops out, according to our assumptions (Tables XVI and XVII), and the sum of rents is again 6 X 20 = 10 X 12 = 120s.
This means, therefore, that in the great majority of all possible cases, rents rise, both per acre of the rent-bearing land and particularly in their total sum, as a result of increased capital investment on the land. Only in three cases out of thirteen investigated does the total rent remain unchanged. These are the cases where the most inferior quality of land, which formerly bore ho rent and governed price, drops out of competition, and its place is taken by the next higher quality, which thus ceases to bear rent. But in these cases, too, rents rise on the best types of land in comparison with the rents arising from the first capital investment; if the rent for C falls from 24s. to 20s., the rents for D and E rise from 36s. and 48s. to 40s. and 60s.
A case of the total rent being below the level for the first capital investment (Table XI) would be possible only if it was not just land A that dropped out of competition but also land B, so that land C ceased to bear rent and came to govern price.
Thus the more capital is applied to the land and the higher the development of agriculture and civilization in general in a country, the higher are the levels of rent per acre and the total sum of rent and the more gigantic therefore the tribute society pays the great landowners in the form of surplus profits – as long as types of land once taken into cultivation all remain able to compete.
This law explains the amazing vitality of the class of large landowners. No other social class lives in so extravagant a manner; no other class claims such a right as this does to a traditional luxury in keeping with its ‘estate’, irrespective of where the money for mis comes from; no other class piles debts upon debts in such a light-hearted way. And yet time and again they fall on their feet – thanks to the capital of other people that is put into the soil and yields them rent, completely out of all proportion to the profits the capitalist draws from this.
The same law, however, also explains why this vitality of the large landowner is gradually approaching its end.
When the Corn Laws were repealed in 1846, the English manufacturers believed they had thereby made the land-owning aristocracy into paupers. Instead, these aristocrats became richer than before. How did this happen? Very simply. Firstly, they now insisted in their contracts that the farmers should invest £12 a year on each acre instead of £8, while secondly, being represented in large numbers even in the House of Commons, the landlords granted themselves a hefty state subsidy for drainage and other permanent improvements to their estates. Since the worst land was not totally withdrawn from cultivation, but was at most used temporarily for other purposes, rents rose in proportion to the increased capital investment and the landed aristocracy did better than they had before.
But everything comes to an end eventually. The transoceanic steamships, and the railways in North and South America and in India, made some quite singular tracts of land able to compete on the European corn markets. First there were the North American prairies and the Argentine pampas, steppes which nature itself has made arable, virgin soil that offered rich yields for years even on rudimentary tilling and without fertilizer. Then there were the lands of the Russian and Indian communistic communities, which had to sell a portion of their product, and an ever growing one at that, to get money for the taxes exacted by a merciless state despotism – often enough by torture. These products were sold with no regard for their costs of production, sold at the price which the dealer offered, because the peasant absolutely had to have money at the payment date. And faced with this competition – from virgin prairie soil and from Russian and Indian peasants succumbing to the screws of taxation – the European farmer or peasant could not survive at the old rents. One portion of European soil became definitively uncompetitive for corn growing, while everywhere rents fell. Our ‘second case, variant 2’, falling prices and falling productivity on the additional capital investment, became the rule in Europe, and hence the agrarian complaint from Scotland to Italy, from the south of France to East Prussia. Fortunately, not all prairie land has yet been brought into cultivation by a long chalk; enough is still left to ruin European large-scale landownership completely – and small-scale ownership into the bargain. – F. E.)
*
Rent should be discussed under the following heads:
A. Differential rent.
1. The concept of differential rent. Example of water-power. Transition to agricultural rent proper.
2. Differential rent I, arising from the varying fertility of different portions of land.
3. Differential rent II, arising from successive capital investments on the same land. Differential rent II should be examined
(a) with price of production constant;
(b) price of production falling;
(c) price of production rising.
As well as
(d) The transformation of surplus profit into rent.
4. Influence of this rent on the rate of profit.
B. Absolute rent.
C. The price of land.
D. Final considerations on ground-rent.
*
We now have the following general result from considering differential rent as a whole.
Firstly, the formation of surplus profits can occur in various ways. On the one hand on the basis of differential rent I, i.e. the investment of the total agricultural capital on an acreage consisting of types of land of differing fertility. Then as differential rent II, on the basis of the varying differential productivity of successive capital investments on the same land, i.e. a greater productivity is obtained, in quarters of wheat, for example, than with the same capital investment on the most inferior land, which bears no rent but governs the production price. No matter how these surplus profits might arise, their transformation into rent, i.e. their transfer from the farmer to the landowner, always presupposes as its initial condition that the various actual individual prices of production (i.e. those independent of the general production price that governs the market) which the partial products of the individual successive capital investments possess are equalized in advance to give an individual average price of production. The excess of this general, governing production price of the product of an acre over the individual average production price, forms and measures the rent per acre. In the case of differential rent I, the differential results can be distinguished in and for themselves, because they take place on different areas of land, outside and alongside one another, given a capital outlay per acre that is taken as normal, and the normal cultivation corresponding to it. In the case of differential rent II, they must first be made distinguishable, they must in fact be transformed back into differential rent I, and this can only be done in the manner indicated.
Let us take Table III, for instance, on p. 826.
For the first capital investment of £2 1/2, land B yields 2 qrs per acre, and for the second capital of equal size, 1 1/2 qrs; a total of 3 1/2 qrs on the same acre. We cannot tell from this 3 1/2 qrs, which grows all on the same land, how much is the product of capital investment (1) and how much of capital investment (2). It is actually the product of the total capital of £5; and the fact of the matter is simply that a capital of £2 1/2 yielded 2 qrs, while one of £5 yields not 4 but 3 1/2 qrs. It would be exactly the same if the £5 were to yield 4 qrs, so that the yields of the two capital investments were equal, or even 5 qrs, so that the second capital investment produced an excess of 1 qr. The production price of the first 2 qrs is£1 1/2 per qr in our example, while that of the second 1 1/2 qrs is £2 per qr. The 3 1/2 qrs together therefore cost 6£. This is the individual production price of the total product, and makes an average of £1 5/7 per qr. For the general production price of £3 as determined by land A, this gives a surplus profit of £l 2/7 per qr, and thus for the 3 1/2 qrs a total of £4 1/2. Given the average production price for B, this is expressed in 1 1/2 qrs. B’s surplus profit is thus expressed in an aliquot part of its product, the 1 1/2 qrs that forms the rent expressed in corn and is sold at £4£, given the general production price. But the extra product from an acre of B over that of an acre of A does not directly represent surplus profit and hence surplus product. According to our assumption, the acre of B produces 3 1/2 qrs, the acre of A only 1 1/2 qr. The excess product on B is thus 2 1/2 qrs, but the surplus product is only 1 1/2 qrs, for twice as much capital is applied on B as on A, so that the production costs here are double. If there was a similar investment of £5 on A, and the rate of productivity remained the same, its product would be 2 qrs instead of 1 qr; the surplus product would be found by comparing not the 3 1/2 qrs and the 1 qr but rather the 3 qrs and the 2 qrs, so that it would not be 2 1/2 qrs but only 1 1/2 qrs. Moreover, if B invested a third portion of capital of £2 1/2 which yielded only 1 qr, so that this qr cost £3, as on A, its sale price of £3 would cover only the costs of production, yielding only the average profit and no surplus profit, and therefore nothing that could be transformed into rent. The product per acre of any other type of land, compared with the product per acre of land A, indicates neither whether it is the product of the same capital investment or a greater one, nor whether the excess product simply covers the production price or whether it is due to higher productivity of the extra capital.
Secondly. Given a declining rate of productivity on the extra capital investments – and the limiting capital investment, as far as the formation of new surplus profit is concerned, is the one that simply covers the production costs, i.e. that produces a quarter of wheat as expensively as the same capital investment would on an acre of land A, for £5 on our assumption – it results from our previous argument that the limit at which the total capital investment on the acre of B would form no more rent is that at which the individual average production price of the product per acre of B would rise to the production price per acre of A.
If B adds only capital investments that pay the production price, and thus do not form any surplus profit or new rent, then although this increases the individual average production price per quarter, it does not affect the surplus profit formed by the earlier capital investments, which would eventually affect the rent. For the average production price always remains below that of A, and if the extra price per quarter declines, the number of quarters increases in the same proportion, so that the total excess price remains the same.
In the case taken here, the first two capital investments on B, of £5 each, produce a yield of 3 1/2 qrs, i.e. a rent of 1 1/2 qrs, = £4 1/2, according to our assumption. If a third capital investment of £2 1/2 is now added, which however only produces one extra quarter, the total production price of the 4 1/2 qrs (including 20 per cent profit) = £9, i.e. the average price per qr = £2. The average production price per qr on B has thus risen from £l 5/7 to £2, and the surplus profit per qr compared with the governing price of A has fallen from £1 2/7 to £1. But £1 × 4 1/2 = £4 1/2, just as previously £l 2/7 × 3 1/2 = £4 1/2.
If we assume that fourth and fifth additional capital investments of £2 1/2 are made on B, each producing 1 qr only at its general production price, the total product per acre would now be 6 1/2 qrs, and its cost of production £15. The average production price per qr for B would have risen again from £2 to £2 4/13, while the surplus profit per qr, compared with the governing production price of A, would have fallen again from £1 to £9/13. But this £9/13 would now be multiplied by 6 1/2 qrs instead of 4 1/2 qrs, and £9/13 X 6 1/2 = £1 × 4 1/2 = £4 1/2.
The first thing that follows from this is that under these conditions no increase in the governing production price is needed to make additional capital investments possible on the rent-bearing types of land, even up to the level at which the additional capital completely ceases to provide surplus profit and simply still yields the average profit. It also follows that the total surplus profit per acre remains the same here, no matter how much the surplus profit per quarter declines; this decline is always offset by a corresponding increase in the quarters produced per acre. In order that the average production price may rise to the general production price (i.e. in this case to £3 for land B), additional capital must be added, the product of which has a higher production price than the governing one of £3. But we shall see that even this is not by itself sufficient to drive up the average price of production per quarter on B to the general production price of £3.
Let us assume that production on land B is as follows:
1. 3 1/2 qrs as before at a production price of £6; i.e. two capital investments of £2 1/2 each, which both form surplus profits, but of decreasing size.
2. 1 qr at £3; a capital investment in which the individual production price would be equal to the governing production price.
3. 1 qr at £4; a capital investment in which the individual price of production is 33 1/3 per cent higher than the governing price.
We would then have 5 1/2 qrs per acre at £13, for a capital investment of £10 7/10; four times the original capital investment, but less than three times the product of the first capital investment.
5 1/2 qrs at £13 gives an average production price of £2 4/11 per qr, i.e. at the governing production price of £3 there is an excess of £ 7/11 per qr which can be transformed into rent. 5 1/2 qrs for sale at the governing price of £3 gives £16 1/2. After deducting the production costs of £13, there remains £3 1/2 surplus profit or rent, which would represent 1 25/52 qrs at the prevailing average production price per qr on B, which is £2. 4/11 The money rent would have fallen by £1, the corn rent by about 1/2 qr, yet despite the fact that the fourth extra capital investment on B [heading 3 above] produces not only no surplus profit, but rather less than the average profit, there is still surplus profit and rent as before. If we assume that not only this fourth capital investment, but the third, too, produces at over the governing production price in this way, the total production would be 3 1/2 qrs at £6 plus 2 qrs at £8, altogether 5 1/2 qrs for a production cost of £14. The average production price per qr would be £2 6/11, and would leave a surplus of £ 5/11. The 5 1/2 qrs, sold at £3 per qr, gives £16 1/2; subtracting £14 for the cost of production, £2 1/2 is left for rent. This would be 55/56 qrs at the new average production price. Some rent is still lost, although less than before.
This shows us that the rent on the better lands need not disappear with additional capital investments whose production costs more than the governing production price, at least within the limits of permissible practice, but need only decline, this decline being in proportion on the one hand to the aliquot part that this relatively unproductive capital forms of the total capital outlay, and on the other hand to the decline in its productivity. The average price of its product would still always stand below the governing price and would thus still leave a surplus profit which can be transformed into rent.
Let us now assume that the average price for a quarter on B coincides with the general production price, as a result of four successive capital investments (£2 1/2,£2 1/2,£5 and £5) with declining productivity.
Capital (£) |
Profit (£) |
Output (qrs) |
Price of production |
Selling price (£) |
Proceeds (£) |
Surplus for rent |
|||
|
|
|
|
per qr (£) |
total (£) |
|
|
qrs |
£ |
1) |
2 1/2 |
1/2 |
2 |
1 1/2 |
3 |
3 |
6 |
1 |
3 |
2) |
2 1/2 |
1/2 |
1 1/2 |
2 |
3 |
3 |
4 1/2 |
1/2 |
1 1/2 |
3) |
5 |
1 |
1 1/2 |
4 |
6 |
3 |
4 1/2 |
– 1/2 |
–1 1/2 |
4) |
5 |
1 |
1 |
6 |
6 |
3 |
3 |
– 1/2 |
–3 |
|
15 |
3 |
6 |
|
18 |
|
18 |
0 |
0 |
In this case the farmer sells each quarter at its individual price of production, and hence sells the total number of quarters at their average production price per quarter, which coincides with the governing price of £3. Now as before, therefore, he makes a profit of 20 per cent = £3 on his capital of £15. But the rent has disappeared. Where does the surplus go when the individual production price of each quarter is equalized with the general production price in this way?
The surplus profit on the first £2 1/2 was £3; on the second £2 1/2 it was £1 1/2; the total surplus profit on this third of the capital advanced, i.e. on £5, was £4 1/2 = 90 per cent.
The third capital investment of £5 not only yields no surplus profit, but its product of 1 1/2 qrs, sold at the general price of production, brings a loss of £1 1/2. On the fourth capital investment, finally, which is also £5, the product of 1 qr, sold at the general price of production, brings a loss of £3. These two capital investments together thus involve a loss of £4 1/2, equal to the surplus profit of £4 1/2 produced by capital investments (1) and (2).
The surplus profits and the losses of profit cancel out. The rent therefore vanishes. In fact, however, this is possible only because the elements of surplus-value that formed surplus profit or rent now go into the formation of the average profit. The farmer makes this average profit of £3 on £15, or 20 per cent, at the expense of the rent.
The establishment of equality between the individual average production price on B and the general production price on A, which governs the market, presupposes that the amount by which the individual price of the product of the earlier capital investments stands below the governing price is offset more and more, and finally cancelled out by the amount by which the product of the later capital investments comes to stand above the governing price. What appears as surplus profit, as long as the product of the earlier capital investments is sold by itself, gradually becomes part of the average production price and thereby goes into the formation of the average profit, until it is finally absorbed by this entirely.
If, instead of £15 capital, only £5 is laid out on B and the extra 2 1/2 qrs in the last table are produced by £2 1/2 acres of A being freshly cultivated with a capital investment of £2 1/2 per acre, then the additional capital laid out would amount only to £6 1/4, i.e. the total outlay on A and B for the production of these 6 qrs would be only £11 1/4 instead of £15 and their total production costs, including profit, would be £13 1/2. The 6 qrs would still be sold together for £18, as before, but the capital outlay would have decreased by £3 3/4, and the rent on B would come to £4 1/2 per acre, again as before. It would be a different matter if in order to produce the extra £2 1/2 qrs it were necessary to resort to worse land than A, to A_1 A_2, with a resulting production price per qr for 1 1/2 qrs on land A_1 of £4, and for the final qr on A_2 of £6. In this case, £6 would be the governing production price per qr. The 3 1/2 qrs from B would be sold for £21 instead of for £10 1/2, which would give a rent of £15 instead of £4 1/2, and of 2 1/2 qrs in corn instead of 1 1/2 qrs. On A, similarly, the 1 qr would now yield a rent of £3 = 1/2 qr.
One final remark before we discuss this point further.
The average price of a quarter on B is equalized and coincides with the general production price of £3 per qr governed by A, as soon as the part of the total capital that produces the additional 1 1/2 qrs is offset by the part of the total capital that produces the deficient 1 1/2; qrs. How soon this equalization is reached, or how much capital must be invested on B with deficient productivity for it to be reached, depends, taking the surplus productivity of the first capital investments as given, on the relative under productivity of the capitals later applied, compared with an equally large capital investment on the poorest, price-governing land A, or on the individual production price of the product of this investment, compared with the governing price.
*
Here is the next point that arises from the foregoing.
Firstly, as long as the additional capitals are invested on the same land with surplus productivity, even if this is decreasing, the absolute corn and money rent per acre rises, even if it declines relatively, in proportion to the capital advanced (i.e. the rate of surplus profit or rent). The limit here is formed by that additional capital which yields only the average profit, or for whose product the individual production price coincides with the general one. The production price remains the same, under these conditions, as long as the increased supply does not make production from the poorer types of land superfluous. Even with a falling price, these additional capitals can still produce a surplus profit within certain limits, even if a smaller one.
Secondly, the investment of additional capital which produces only the average profit, i.e. whose surplus productivity = 0, does not alter the amount of surplus profit and hence rent that is formed. The individual average price per quarter therefore rises on the better types of land; the excess per quarter declines, but the number of quarters bearing this reduced excess increases, in such a way that the product of the two remains the same.
Thirdly, additional capital investments for which the individual production price of their products stands above the governing price, so that their surplus productivity is not just nothing but less than nothing, a negative quantity (i.e. a productivity less than that of the same capital investment on the price-governing land A), bring the individual average price of the total product of the better land ever closer to the general production price, and thus more and more reduce the difference between the two, which is what forms the surplus profit or rent. More and more of what would form surplus profit or rent goes into the formation of the average profit. And yet, for all that, the total capital invested on an acre of B continues to yield a surplus profit, even if this declines with the increasing amount of capital of deficient productivity and with the level of this underproductivity. The rent per acre in this case falls in absolute terms as capital grows and production increases, and does not just fall relatively to the growing size of the capital invested, as it does in the second case.
The rent can disappear only if the individual average production price of the total product on the better land B coincides with the governing price, i.e. if the entire surplus profit of the earlier and more productive capital investments has been used to form the average profit.
The minimum limit to the fall in the rent per acre is the point at which this disappears. But this point is not reached as soon as the extra capital investments produce with deficient productivity, but only when the extra investment of deficiently productive portions of capital becomes so great that its effect cancels out the surplus productivity of the first capital investments, so that the productivity of the total capital invested comes to be equal to that of the capital on A and hence the individual average price per quarter on B equal to that on A.
Even in this case, the governing price of production, £3 per qr, remains the same, although the rent has vanished. It is only beyond this point that the production price would have to rise, as the result of an increase either in the degree of deficient productivity of the surplus capital, or in the amount of extra capital of the same deficient productivity. If in the table on p. 865, for example, 2 1/2; qrs were produced at £4 per qr on the same land instead of 1 1/2; qrs, we would have altogether 7 qrs for a production cost of £22; the cost would now be £3 1/2; per qr; i.e. £ 1/7 higher than the general production price, which would have to rise.
Thus extra capital with deficient productivity, and even capital with increasingly deficient productivity, could still be applied for a long while before the individual average price per quarter on the best lands became equal to the general price of production, i.e. before the excess of the latter over the former, and hence surplus profit and rent, completely disappeared.
Even in this case, moreover, the disappearance of rent on the better types of land would mean only that the individual production price of the product from these better types would coincide with the general price of production; no rise in this general price would yet be required.
In the above example, taking the better land B, which however is lowest in the series of better or rent-bearing land types, 3 1/2 qrs was produced by a capital of £5 with surplus productivity and 2 1/2 qrs by a capital of £10 with deficient productivity, making a total of 6 qrs, i.e. five-twelfths of the total was produced by the latter portions of capital that are invested at deficient productivity. And it is only at this point that the individual average production price of the 6 qrs rises to £3 per qr, coinciding therefore with the general production price.
Under the law of landed property, however, the latter £2 1/2 qrs could not have been produced in this manner at £3 per qr, except in the case where it could be produced on £2 1/2 new acres of type A land. The case in which the extra capital only produces at the general price of production would have imposed a limit. Beyond this, extra capital investment on the same land would have to cease.
If the farmer has to pay, say, £4 1/2 rent for the first two capital investments, he must continue to pay it, and any capital investment that needs more than £3 to produce a quarter would involve a deduction from his profit. In the case of deficient productivity, therefore, equalization of the individual average price is thereby prevented.
Let us take this case in connection with the previous example, where the production price of £3 per qr on land A governs the price for B.
Capital (£) |
Profit (£) |
Price of production (£) |
Output (qrs) |
Price of production |
Selling price |
Surplus profit (£) |
Loss (£) |
|
|
|
|
|
|
per qr (£) |
total (£) |
|
|
2 1/2 |
1/2 |
3 |
2 |
1 1/2 |
3 |
6 |
3 |
– |
2 1/2 |
1/2 |
3 |
1 1/2 |
2 |
3 |
4 1/2 |
1 1/2 |
– |
5 |
1 |
6 |
1 1/2 |
4 |
3 |
4 1/2 |
– |
1 1/2 |
5 |
1 |
6 |
1 |
6 |
3 |
3 |
– |
3 |
15 |
3 |
18 |
|
|
|
18 |
4 1/2 |
4 1/2 |
The production costs of the 3 1/2 qrs from the first two capital investments are similarly £3 per qr for the farmer, since he has to pay a rent of £4 1/2, so that the difference between his individual production price and the general production price does not flow into his pocket. For him, therefore, the surplus in the price of the product of the first two capital investments cannot serve to balance the deficit suffered on the products of the third and fourth capital investments.
The 1 1/2 qrs from capital investment (3) cost the farmer £6, profit included; but he can only sell for £4 1/2, taking the governing price at £3 per qr. Thus he would lose not only the entire profit, but £ 1/2 or 10 per cent of his invested capital of £5 into the bargain. His loss in profit and capital for the third investment would come to £1 1/2, and for the fourth investment £3, together making £4 1/2, exactly as much as the rent for the better capital investments – whose individual production price, however, cannot go into the individual average production price of B’s total product as a compensating factor, since this surplus is paid out to a third party as rent.
If it were necessary for the third capital investment to produce its extra 1 1/2 qrs in order to meet the demand, the governing market price would have to rise to £4 per qr. As a result of this increase in the governing market price, the rent on B would rise for the first and second capital investment, and a rent would be formed on A.
Thus even though the differential rent is only a formal transformation of surplus profit into rent, and in this case landed property simply enables the landowner to transfer the farmer’s surplus profit to himself, it transpires that the successive investment of capital on the same stretch of land, or, what comes to the same thing, the increase in the capital invested on the same land, tends rather to find its limit in this transference, given a declining rate of productivity on capital and a constant governing price; in fact it comes up against a more or less artificial barrier, a result of the merely formal transformation of surplus profit into ground-rent which is the consequence of landed property. The rise in the general price of production which becomes necessary here, where the limit is narrower than elsewhere, is in this case therefore not only the basis for the rise in the differential rent, but the existence of differential rent as rent is at the same time the basis for the earlier and more rapid rise in the general price of production in order thereby to guarantee the increased supply of the product that has become necessary.
The following should also be noted.
The governing price could not rise to £4, as above, thanks to the extra capital on land B, if land A were to supply the extra product for less than £4, or if newer and poorer land than A came into competition, with a price of production that was above £3 but below £4. We thus see how differential rent I and differential rent II, while the first is the basis of the second, at the same time place limits on one another, leading sometimes to successive investments of capital on the same stretch of land and sometimes to adjacent investments of capital on new additional land. They have a similar effect as limits to one another in other cases, for example where better land is taken up.