## Tuesday, 9 August 2016

### Capital III, Chapter 43 - Part 5

The final examples refer to the situation where an even worse soil, type a, is brought into cultivation. In that case, land type A produces rent.

Table XXII indicates the situation where the marginal productivity of the second investment is constant.

 TABLE XXII TypeofSoil Price ofProductionShillings OutputBushels SellingPriceShillings ProceedsShillings RentShillings RentIncrease a 120 16 7.50 120 0 0 A 60 + 60 = 120 10 + 10 = 20 7.50 150 30 30 B 60 + 60 = 120 12 + 12 = 24 7.50 180 60 2 × 30 C 60 + 60 = 120 14 + 14 = 28 7.50 210 90 3 × 30 D 60 + 60 = 120 16 + 16 = 32 7.50 240 120 4 × 30 E 60 + 60 = 120 18 + 18 = 36 7.50 270 150 5 × 30 450 15 × 30
Likewise, Tables XXIII and XXIV show the situation where it is declining or increasing respectively.

 TABLE XXIII TypeofSoil Price ofProductionShillings OutputBushels SellingPriceShillings ProceedsShillings RentShillings RentIncrease A 120 15 8 120 0 0 A 60 + 60 = 120 10 + 7.50 = 17.50 8 140 20 20 B 60 + 60 = 120 12 + 9 = 21 8 168 48 20 + 28 C 60 + 60 = 120 14 + 10.50 = 24.50 8 196 76 20 + 2 × 28 D 60 + 60 = 120 16 + 12 = 28 8 224 104 20 + 3 × 28 E 60 + 60 = 120 18 + 13.50 = 31.50 8 252 132 20 + 4 × 28 380 5 × 20 + 10 × 28

 TABLE XXIV TypeofSoil Price ofProductionShillings OutputBushels SellingPriceShillings ProceedsShillings RentShillings RentIncrease A 120 16 7.50 120.00 0 0 A 60 + 60 = 120 10 + 12.50 = 21.50 7.50 168.75 48.75 15 + 33.75 B 60 + 60 = 120 12 + 15 = 27 7.50 202.50 82.50 15 + 2 × 33.75 C 60 + 60 = 120 14 + 17.50 = 31.50 7.50 236.25 116.25 15 + 3 × 33.75 D 60 + 60 = 120 16 + 20 = 36 7.50 270.00 150.00 15 + 4 × 33.75 E 60 + 60 = 120 18 + 22.50 = 40.50 7.50 303.75 183.75 15 + 5 × 33.75 581.25 5 × 15 + 15 × 33.75
The following conclusions can be drawn.

It is not the absolute yield but the relative differences in yield, which determine the rent.

[“Whether the various soils yield 1, 2, 3, 4, 5 bushels, or whether they yield 11, 12, 13, 14, 15 bushels per acre, the rents in both cases form the sequence 0, 1, 2, 3, 4 bushels, or their equivalent in money.”] (p 723)

More important is the consequence of additional investments of capital, because it is this more intensive cultivation that is the distinguishing characteristic of capitalist farming.

In five out of the thirteen cases examined, the rent doubles when capital investment is doubled. These are presented in Tables XII (Part 3), XVIII, XIX, XX and XXI (Part 4).

In four cases, the rent more than doubles – in Tables XV (Part 3), XXII, XXIII, and XXIV (Part 5).

In one case, Table XIV (Part 3), the rent rises, but by proportionally less than the increased investment. In this case, land type B does not become totally rentless.

There are just three cases where the rent remains the same, after additional investment, shown in Tables XIII (Part 3), XVI, and XVII (Part 4), where land type A is excluded, and B becomes the regulator.

[“Thus, this means: In the great majority of all possible cases the rent rises — per acre of rent-bearing land as well as particularly in its total amount — as a result of an increased investment of capital in the land. Only in three out of the thirteen analysed cases does its total remain unaltered. These are the cases in which the lowest quality soil — hitherto the regulator and rentless — is eliminated from competition and the next quality soil takes its place, i.e., becomes rentless. But even in these cases, the rents upon the superior soils rise in comparison with the rents due to the first capital investment; when the rent for C falls from 24 to 20, then those for D and E rise from 36 and 48 to 40 and 60 shillings respectively.” ](p 725)

There is, of course, a logical fallacy contained in the argument here. In terms of the examples provided, the latter scenarios of falling rent represent a minority or less probable outcome than where the rent is rising, but this does not mean that in reality, the latter scenarios are not themselves more likely. That would depend on the material conditions, and the extent to which rising marginal productivity of capital, not to mention the possibility of introducing new, even more fertile soils than represented by D or E, was able to quickly push out soil type A, or even B and C.

If, in reality, it is seen that marginal productivity continues to increase, as additional capital is added, and it does, then all those scenarios that take that as their assumption become more probable than those that do not.

Engels conclusion,

[“Thus, the more capital is invested in the land, and the higher the development of agriculture and civilisation in general in a given country, the more rents rise per acre as well as in total amount, and the more immense becomes the tribute paid by society to the big landowners in the form of surplus-profits — so long as the various soils, once taken under cultivation, are all able to continue competing.” ](p 725)

therefore, does not follow, precisely because this more capital intensive farming means that the more marginal lands are increasingly pushed out of production, or the small peasant farmers that inhabit them, are forced to accept not only below average profits, but even inroads into their own subsistence.

Moreover, as industrialisation proceeds, the landlords are able to sell off some of these poorer quality lands for industrial or residential development. Increasingly, the value of this urban land far exceeds that of agricultural land, and the rents obtainable from it. In fact, the explanation of rising rents and land prices has to be sought not in increasing investments of capital on agricultural land and production, but increasing investment in urban land development.

[“This law accounts for the amazing vitality of the class of big landlords. No social class lives so sumptuously, no other class claims the right it does to traditional luxury in keeping with its "estate," regardless of where the money for this purpose may be derived, and no other class piles debt upon debt so lightheartedly. And yet it always lands again on its feet — thanks to the capital invested by other people in the land, which yields it a rent, completely out of proportion to the profits reaped therefrom by the capitalist.” ](p 725)

However, Engels recognised that this same law threatened those same landlords. In the 19th century, the liberal bourgeoisie were engaged in a political battle with the landlords. There were many such representatives of that class in the crowd, during the Peterloo Massacre, as the demands for bourgeois democratic reform were raised. Indeed, not only did that liberal industrial bourgeoisie press its interests, against those of the landlords, in the demand for the repeal of the Corn Laws, but many went further, demanding the nationalisation of all land, so that rents would be paid to the capitalist state, thereby defraying its costs and their payment of taxes out of profits.

[“When the English corn duties were abolished in 1846, the English manufacturers believed that they had thereby turned the land-owning aristocracy into paupers. Instead, they became richer than ever. How did this occur? Very simply. In the first place, the farmers were now compelled by contract to invest £12 per acre annually instead of £8. And secondly, the landlords, being strongly represented in the Lower House too, granted themselves a large government subsidy for drainage projects and other permanent improvements on their land. Since no total displacement of the poorest soil took place, but rather, at worst, it became employed for other purposes — and mostly only temporarily — rents rose in proportion to the increased investment of capital, and the landed aristocracy consequently was better off than ever before.” ](p 725)

But, as Engels then goes on to note, the very point that Marx had made against Malthus and Ricardo's conceptions began to manifest itself, as the process evolved, not of the bringing into cultivation of ever more inferior land, and falling marginal productivity of capital, but the very opposite.

[“Transoceanic steamships and the railways of North and South America and India enabled some very singular tracts of land to compete in European grain markets. These were, on the one hand, the North American prairies and the Argentine pampas — plains cleared for the plough by Nature itself, and virgin soil which offered rich harvests for years to come even with primitive cultivation and without fertilisers. And, on the other hand, there were the land holdings of Russian and Indian communist communities which had to sell a portion of their produce, and a constantly increasing one at that, for the purpose of obtaining money for taxes wrung from them — frequently by means of torture — by a ruthless and despotic state. These products were sold without regard to price of production, they were sold at the price which the dealer offered, because the peasant perforce needed money without fail when taxes became due. And in face of this competition — coming from virgin plains as well as from Russian and Indian peasants ground down by taxation — the European tenant farmer and peasant could not prevail at the old rents. A portion of the land in Europe fell decisively out of competition as regards grain cultivation, and rents fell everywhere; our second case, variant 2 — falling prices and falling productivity of the additional investment of capital — became the rule for Europe; and therefore the lament of landlords from Scotland to Italy and from southern France to East Prussia. Fortunately, the plains are far from being entirely brought under cultivation; there are enough left to ruin all the big landlords of Europe and the small ones into the bargain.”] (p 726)