[3. Adam Smith’s Explanation of How the Relation Between Supply and Demand Affects the Various Types of Products from the Land. Smith’s Conclusions Regarding the Theory of Rent]
Its only in Part II of Smith's examination of the produce of land that sometimes does, and sometimes doesn't produce rent, Marx says, that he discusses the general nature of rent. Human food is the only produce of land according to Smith, which always produces rent. The reason Smith believed that was set out previously, but, as Marx says, he has not shown why that is “always” and “necessarily” the case. Other produce of the land, Smith says, may or may not produce a rent. Whether they do or not, Smith argues, comes down to whether the demand for them exceeds the supply, causing the price to exceed the sufficient price. A lot of raw materials exist in abundance, relative to demand, Smith argues, and so their price can never sustain a rent. This is always the case, Smith argues, relative to the amount of food available to sustain a population of a particular size. Smith says,
“A large part of these “materials” lies around unused and useless “and the price of what is used is considered as equal only to the labour and expense of fitting it for use.” This price however affords “no rent to the landlord”. On the other hand, where the land is in an improved state, the number of people whom “it can feed”, i.e., the population, is greater than the quantity of those materials which it supplies, at least “in the way in which they require them, and are willing to pay for them”. There is a relative “scarcity” of these materials “which necessarily augments their value” … “there is frequently a demand for more than can be had.” More is paid for them than “the expense of bringing them to market. Their price, therefore, can always afford some rent to the landlord” ([O.U.P., Vol. I, p. 184; Garnier,] l.c., pp. 338 to 339).” (p 359)
Smith gives an example of the animal furs and skins that are produced as a by-product of animals killed for food. A large animal may provide food for several people for several days, but the skin of the animal would provide clothing that would last for a year or more.
“Without foreign trade, the greater part of them would be thrown away as useless. Through the additional demand provided by foreign trade, the price of this surplus of materials is raised “above what it costs to send them” to be sold. This price “affords, therefore, some rent to the landlord”. Through its market in Flanders, English wool thus added “something to the rent of the land which produced it” ([O.U.P., Vol. I, pp. 184-85; Garnier,] l.c., pp. 339-40).” (p 359)
A similar thing applies to materials, such as stone and timber, used to provide shelter. On some land that is heavily forested, but where it might be required for agriculture, the timber might be a nuisance that requires clearing. The supply of the timber will be so great as to keep the price at a level that does not support a rent, and the landlord may be glad of someone clearing it, so as to make the land available to be rented for arable farming.
““The materials of lodging cannot always be transported to so great a distance as those of clothing, and do not so readily become an object of foreign commerce. When they are superabundant in the country which produces them, it frequently happens, even in the present commercial state of the world, that they are of no value to the landlord.” Thus a stone quarry in the neighbourhood of London may yield a rent, whereas in many parts of Scotland and Wales, it may not. Similarly with timber. “In a populous and well-cultivated country” it will provide a rent, but “in many parts of North America” it will rot on the ground. The landowner would be glad to get rid of it. “When the materials of lodging are so superabundant, the part made use of is worth only the labour and expense of fitting it for that use. It affords no rent to the landlord, who generally grants the use of it to whoever takes the trouble of asking it. The demand of wealthier nations, however, sometimes enables him to get a rent for it” ([O.U.P., Vol. I, pp. 185-86; Garnier,] l.c., pp. 340-41).” (p 359-60)
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