Marx sets out the argument, discussed earlier, as to why it is the cost of production on the least fertile land that determines the market value of primary products, and why this is then the basis of the differential rent, as the surplus profits obtained, by capital, on the more fertile land. But, Proudhon's moral imperative sees history driving towards his goal of equality, and so,
“M. Proudhon supposes equality of the market price, with unequal costs of production, in order to arrive at an equalized sharing out of the product of inequality.” (p 149)
Marx also refers to the point made earlier, in relation to the bourgeois ideologists, like Spence, who argued for land nationalisation.
“We understand such economists as Mill, Cherbuliez, Hilditch, and others demanding that rent should be handed over to the state to serve in place of taxes. That is a frank expression of the hatred the industrial capitalist bears towards the landed proprietor, who seems to him a useless thing, an excrescence upon the general body of bourgeois production.” (p 149)
The same is true, today, with the owners of fictitious capital, who form such a useless parasitic excrescence on real capital, except, today, they, like the landed aristocracy of the past, still form the ruling-class, in whose interests the state continues to operate. Proudhon, however, was making no such openly class-war argument, on behalf of the bourgeoisie against the landed aristocracy. He was arguing a moral case on behalf of “society”, for equality, much as today the same petty-bourgeois ideological trends make a moral case on behalf of “society”, “the people”, “the nation” for “democracy”, “ peace”, and other such abstract concepts.
“But first to make the price of the hectolitre of corn 20 francs in order then to make a general distribution of the 10 francs overcharge levied on the consumer, is indeed enough to make the social genius pursue its zigzag course mournfully – and knock its head against some corner.
Rent becomes, under M. Proudhon’s pen,
“an immense land valuation, which is carried out contradictorily by land-owners and farmers... in a higher interest, and whose ultimate result must be to equalize the possession of land between exploiters of the soil and the industrialists.”” (p 149)
However, any such land reform would imply an end to capitalist production, and without that capitalist production there would be no rent, and no such basis for land valuation. Moreover, as described earlier, the actual rents charged by landlords do not represent this scientifically determined economic rent. They include all sorts of feudal vestiges, as well as interest payments, deductions from wages and so on. Consequently, those actual rents could not form the basis of the calculation of land valuation.
“On the other hand, rent could not be the invariable index of the degree of the fertility of the land, since every moment the modern application of chemistry is changing the nature of the soil, and geological knowledge is just now, in our days, beginning to revolutionise all the estimates of relative fertility. It is only about twenty years since vast lands in the Eastern counties of England were cleared; they had been left uncultivated due to the lack of proper comprehension of the relation between the humus and the composition of the sub-soil.
Thus history, far from supplying, in rent, a ready-made land valuation, does nothing but change and turn topsy-turvy the land valuations already made.” (p 150)
As I have set out elsewhere, land, as an asset, is bought and sold, as with other assets, such as stocks and bonds. If a £1 million bond produces £10,000 of interest per year that is a yield of 1%. The owner of this bond may look at a piece of land that produces £10,000 of rent, and, so value it, also at £1 million. In practice, they will take into account the illiquid nature of land, compared to bonds, additional costs of ownership, and so on, thereby, placing a value of less than £1 million on the land. In addition, especially as the owners of these assets have become more concerned with speculative capital gains than the revenues produced by them, they will be concerned with their perception of how the demand and supply for these different assets will change their market prices.
“M. Proudhon has improvised his land valuation, which has not even the value of an ordinary land valuation, only to give substance to the providentially equalitarian aim of rent.” (p 150)
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