Thursday, 23 June 2016

Capital III, Chapter 37 - Part 7

Marx points out that landed property has always been seen as a fairly secure investment. That means that, viewed in terms of interest and the price of land, the rate of interest has always been lower than for other types of investment. Thiers in a response to Proudhon, had, therefore, concluded that the level of ground-rent was low, whereas the reality was the opposite, that the price of land was high.

The fact that the price of land was based on capitalised ground-rent, and could be sold as a commodity, like any other, provided the apologists for landed property with a justification for its existence. But, Marx points out that slaves are bought and sold as commodities like any other, yet that is no justification for the existence of slavery.

The problem of studying ground-rent, Marx says, is that a number of separate things, such as the interest on capital, used to improve the land, are, in practice, all combined under the heading, and this has led to the theory itself being muddled.

“In practice, naturally, everything appears as ground-rent that is paid as lease money by tenant to landlord for the right to cultivate the soil. No matter what the composition of this tribute and no matter what its sources, it has this in common with the actual ground-rent — that the monopoly of the so-called landed proprietor of a portion of our planet enables him to levy such tribute and impose such an assessment. It has this in common with the actual ground-rent — that it determines the price of land, which, as we have indicated earlier, is nothing but the capitalised income from the lease of the land.” (p 624-5)

As indicated previously, capital invested in the land is appropriated by the landlord. The amount of capital thereby continuously increases, and the proportion of the ground-rent which is in reality interest on that capital, thereby also continuously increases, even beyond the amount that does truly represent rent.

But, in addition, Marx points out that the monopoly of landed property also creates the potential for the extraction of ground-rent, even on land that is actually worthless. It does so by by extracting rent from even the worst land, thereby reducing profit below the average, and even by eating into the wages of the workers.

“This portion, whether of profit or wages, appears here as ground-rent, because instead of falling to the industrial capitalist or the wage-worker, as would normally be the case, it is paid to the landlord in the form of lease money. Economically speaking, neither the one nor the other of these portions constitutes ground-rent; but, in practice, it constitutes the landlord's revenue, an economic realisation of his monopoly, much as actual ground-rent, and it has just as determining an influence on land prices.” (p 625)

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