Anti-Duhring, Part II, Political Economy, IX Natural Laws of Economics. Ground-Rent - Part 8 of 8

The real relation is obscured for Duhring, because he limits his world view to what he saw in Prussia, where the landowners did engage in capitalist farming, and employed managers. But, even in Prussia, there were capitalist farmers who paid ground-rent. What Duhring can provide no objective, scientific explanation of, therefore, is what determines the amount of this ground-rent, in these cases. He can only see it in terms of the original relation, of the appropriation of the total surplus labour by the landlord. Instead of rent being a deduction from profit, equal to surplus profit, Duhring sees the profit being a deduction from the landlord's rent. But, he has no basis for determining what that deduction from rent should be.

“What does Herr Dühring do? He pretends that he does not have the slightest inkling of the division of the surplus-product of agriculture into farmer’s profit and ground-rent, and therefore of the whole theory of rent of classical political economy; that the question of what farmer’s profit really is has never yet been raised “with this precision”, in the whole of political economy and that he is dealing with an entirely unexplored subject about which there is no knowledge but only illusion and uncertainty.” (p 289)

Had Duhing had to apply his theory to England, it would have collapsed immediately, because, there, the landlords had long since ceased to have a social function in production and capitalist farming predominated. But, even in Prussia, his theory cannot explain the relations between rent and profit, when it comes to the capitalist farmers. Assume that, as he says, the full surplus takes the form of rent, and that the landlord, then, hands back (in reality reduces the rent by an amount) to the farmer, a portion of it for having applied their capital. In effect this reduces profit to nothing more than interest. It is as though the capitalist farmer lends capital to the landlord, and the landlord pays interest to the capitalist farmer. Except the capital is not loaned. The farmer owns the capital – though they may have, themselves, borrowed to acquire it, and pay interest to the lender – and expects to obtain the average rate of profit for employing it. So, if the amount the landowner “hands back” to the farmer is not equal to the average profit that could be obtained, there would be no basis for the farmer having advanced the capital in the first place!

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Anti-Duhring, Part II, Political Economy, IX Natural Laws of Economics. Ground-Rent - Part 7 of 8

To illustrate, Engels quotes Adam Smith from The Wealth of Nations.

“The revenue derived from labour is called wages. That derived from stock, by the person who manages or employs it, is called profit... The revenue which proceeds altogether from land, is called rent, and belongs to the landlord... When those three different sorts of revenue belong to different persons they are readily distinguished; but when they belong to the same they are sometimes confounded with one another, at least in common language. A gentleman who farms a part of his own estate, after paying the expense of cultivation, should gain both the rent of the landlord and the profit of the farmer. He is apt to denominate, however, his whole gain, profit, and thus confounds rent with profit, at least in common language.” (p 287)

For Duhring, the real relation is turned on its head, with rent representing the primary form of surplus-value, and a part of it being handed to capital as a secondary form. Duhring says,

“The farmer's earnings depend on the exploitation of the “rural labour-power” and are therefore obviously a “part of the rent” by which the “full rent”, which really should flow into the landowner’s pocket, “is reduced”.” (p 288)

On this basis, for Duhring, the only difference between ground-rent and profit is that the former is the form of the surplus in agriculture, and the latter in industry.

“It was inevitable that Herr Dühring should arrive at this uncritical and confused view. We saw that his starting-point was the “truly historical conception”, that domination over the land could be based only on domination over man. Therefore, as soon as land is cultivated by means of any form of subjugated labour, a surplus arises for the landlord, and it is precisely this surplus which is the rent, just as in industry the surplus of the labour product over and above the earnings of labour constitutes the earnings of capital.” (p 288-9)

Engels quotes Duhring to that effect.

“Thus it is clear that ground-rent exists on a considerable scale wherever and whenever agriculture is carried on by means of any form of subjugation of labour.” (p 289)

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Anti-Duhring, Part II, Political Economy, IX Natural Laws of Economics. Ground-Rent - Part 6 of 8

As Marx sets out in Theories of Surplus Value, Chapter 21, as industrial production increased in the towns and cities, as capital expanded, the lack of a similar capitalist development in agriculture meant that agricultural output lagged behind. Exceptions were in relation to sheep farming, which expanded on an extensive rather than intensive basis, and cattle breeding. The consequence was that as supply lagged demand, agricultural prices rose. Existing peasant producers sought to expand output by increasingly destroying the longer-term fertility of the land.

“It is in the nature of capitalist production that it develops industry more rapidly than agriculture. This is not due to the nature of the land, but to the fact that, in order to be exploited really in accordance with its nature, land requires different social relations. Capitalist production turns towards the land only after its influence has exhausted it and after it has devastated its natural qualities.”

The labour-intensive nature of agricultural production meant that it produced large amounts of surplus value, in relation to the capital advanced. It had a higher than average rate of profit, meaning it produced surplus profit/rent. It is only on that basis that capital begins to invade agricultural production, and to put it on a rational, scientific basis, which, also, begins to undo some of the damage done by the earlier over farming and destruction of the soil.

“Here, therefore, we have the three classes of bourgeois society and the form of income peculiar to each: the landlord, drawing ground-rent; the capitalist, drawing profit; and the labourer, drawing wages. It has never occurred to any English economist to regard the farmer’s earnings as a kind of wages, as seems to Herr Dühring to be the case; even less could it be hazardous for such an economist to assert that the farmer’s profit is what it indisputably, obviously and tangibly is, namely, profit on capital. It is perfectly ridiculous to say that the question of what the farmer’s earnings actually are has never been raised in this definite form. In England there has been no need so much as to raise this question; both question and answer have long been present in the facts themselves, and since Adam Smith there has never been any doubt about them.” (p 286-7)

In Germany, the landowners did, often, still cultivate their own lands, employing managers to undertake the work on their behalf. But, as Marx had already set out in Capital, this does not change the fundamental position, once capital has invaded this agricultural production. The fact that, once capitalist production in industry grew to a size that the individual capitalist could not carry out the role of functioning capitalist, and had to employ professional managers paid a wage, had not changed the basic social relation that capital employed wage-labour, and produced surplus value, which assumed the form of profit. Similarly, if a landowner, also, produces on a capitalist basis, employing wage-labour, which produces surplus-value/profit, this profit is a different revenue from rent or interest, whether the landowner recognises it as such or not.

It is only the surplus profit that forms rent, which is one reason that, where no such surplus profit exists, landlords were led to operate it themselves accepting only profit.

“If the landowner also provides the capital and has the farm run for his own account, he pockets the profit on capital in addition to the ground-rent, which is self-evident and cannot be otherwise with the existing mode of production. If Herr Dühring asserts that up to now no one has found it necessary to conceive the rent (he should say revenue) resulting from owner-cultivation as divided into parts, this is simply untrue, and at best only proves his own ignorance once again.” (p 287)

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Anti-Duhring, Part II, Political Economy, IX Natural Laws of Economics. Ground-Rent - Part 5 of 8

On this basis, capitalist production creates an average industrial rate of profit. It has no basis for expansion into agricultural production, at this point. Firstly, the peasants provide for themselves via their own direct production. Secondly, capitalist production requires large-scale production, which requires large markets to sell into. Whilst peasants provide for their own needs for food etc., no such large market for agricultural commodities exists. It is only when the growth of capitalist production, in the towns, expands faster, itself spurred by the opening up of global trade, in the 16th and 17th century, that its demand for raw materials, particularly wool, means that existing agricultural production is inadequate. The landlords begin to clear some of their lands, turning them over to sheep etc.

As Marx sets out in Capital III, as markets expanded, the landlords moved from payment of feudal rent as Labour Rent, or Rent in Kind (i.e. handing over agricultural commodities) to Money Rent. As he sets out, Money Rent represents the dissolution of feudal rent itself. The landlords sought money to buy the expanding range of commodities both those produced by urban capitalists and those brought in from abroad by the expanding commercial bourgeoisie. Money rents require the peasants to devote more of their time to the production of commodities for sale in the market, and less to the production of products for their own consumption.

Commodity production and exchange expand once more, as a consequence. But, the cottage industry of the peasants is increasingly undermined by the centralised, larger-scale and more efficient capitalist production in the towns. Increasing numbers of peasants are ruined and must become wage labourers. They must now buy as commodities the the agricultural products they previously produced for themselves. The market expands, and the basis for buying up their land, consolidating it into larger capitalist farms is, thereby, established.

Some of those industrial capitalists who had made their fortunes in the towns and cities, themselves, now, begin to invest capital in agriculture and primary production, as the potential for consolidating large capitalist farms opens up. The process of land enclosures, imposed by law, accelerates this process. But, as set out earlier, capital does not have to invest in agricultural production. It will do so only if it can make at least the average industrial rate of profit, after the payment of any rent.

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Anti-Duhring, Part II, Political Economy, IX Natural Laws of Economics. Ground-Rent - Part 4 of 8

Only when Duhring has to face the reality of the existence of very large capitalist farms is he forced to recognise the fallacy of that position. He goes on,

“Wherever we are dealing with fairly large farms it can easily be seen that it will not do to treat what are specifically the farmer’s earnings as wages. For these earnings are themselves based on the antithesis existing in relation to the rural labour-power, through whose exploitation that form of income is alone made possible. It is clearly a part of the rent which remains in the hands of the tenant and by which the full rent, which the owner managing himself would obtain, is reduced.” (p 286)

So, even here, whilst he recognises that describing the profit obtained as “wages” is untenable, he still views the relation as one in which the landlord appropriates the full rent (surplus value), as though they were themselves working the land and exploiting the labourers, but in which they must allow the capitalist to retain a portion of that rent. As seen before, he has simply changed the nomenclature, but kept the basic concepts the same. If the relation is one in which the rent is appropriated by the landlord, but who allows the capitalist farmer to retain a part of it, how is this different to simply calling what is, in reality, profit wages? Why does the landlord allow the capitalist farmer to retain this portion of rent, whether termed profit or wages?

Engels says,

“The theory of ground-rent is a part of political economy which is specifically English, and necessarily so, because it was only in England that there existed a mode of production under which rent had in fact been separated from profit and interest.” (p 286)

The historical outline is given by Marx in Capital and Theories of Surplus Value. In the 15th century, serfs released from the land moved to the towns, where they become small, independent commodity producers and traders. As Lenin, also, describes, in relation to Russia, following the 1861 Emancipation of the Serfs, this growth of commodity production and exchange, itself, expands the market.

The more producers specialise, and only produce one type of commodity to sell, the more, also, do they increase their own demand for all of those other products they previously produced themselves. All of these products they now buy as commodities, and others specialise in the production of these commodities. This specialisation and social division of labour is synonymous with the expansion of the market, and the realm of exchange-value. This urban industrial production, as a result of this specialisation, quickly begins to undermine the basis of rural domestic industry, and so of direct production, because the peasants always relied on their own domestic industry to supplement their agricultural production.

The competition between the urban commodity producers meant that the winners, the more efficient producers, expanded, which first assumes the form of greater affluence (quantitative change). They acquire better means of production and so on, and have larger families, providing more domestic labour, to produce on a larger scale. The losers are ruined. Their own means of production are bought up (centralised) by the winners. The losers are, then, employed by the winners, and only allowed to use their own, previous means of production, if they agree to provide an amount of free labour to their new employer. The winners, thereby, become capitalists, and the means of production become capital (qualitative change). The losers become proletarians, who only have their labour-power to sell as a commodity. They must, now, buy everything required for their own reproduction as commodities. The market expands again.

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Anti-Duhring, Part II, Political Economy, IX Natural Laws of Economics. Ground-Rent - Part 3 of 8

Here, Duhring fails to distinguish between the capitalist farmer and the peasant farmer. The peasant farmer must utilise the land for their own subsistence. They must pay whatever rent is required by the landlord to do so. However, even here, as Marx set out in Capital, this is not just an arbitrary amount. The origin of this rent arises as tribute, and its material basis is the surplus product/labour of the peasant. But, the position of the capitalist farmer is quite different. As with any capitalist, they do not have to apply their capital to the land. Incidentally, this is why capitalist production had to first arise in the towns rather than agriculture. It is the urban capitalist production which not only establishes an average industrial rate of profit, and so the basis of surplus profit/rent, but also means that capital does not have to be employed on the land if that average profit can't be made.

They could apply it to textile production, or any other sphere, where the highest rate of profit can be obtained. So, the capitalist farmer does not start from the position of having to pay a given amount of rent, and so taking what is left as their income. Rather, the position is reversed. Capital is only employed on the land if the rate of profit obtained is greater than the average industrial rate of profit. So, even if the farmer obtained the average rate of profit, but had to pay rent, they would end up with less than the average rate of profit. They would invest that capital elsewhere. It is only the profit of capital invested on the land that is greater than the average industrial rate of profit that can form rent.

So, Duhring is quite wrong in saying, in relation to capitalist production, as against feudal production, or the position of the peasant farmer, that “it is not customary to regard tenants' earnings as the main income and ground-rent as a balance.” For capitalist production, that is precisely what the relation is.

Duhring says,

“... in the theory of ground-rent the case in which the land is worked by the owner is not separately treated, and no special emphasis is laid on the difference between the amount of rent in the case of a lease and where the owner produces the rent himself. At any rate no one has found it necessary to conceive the rent resulting from owner-cultivated land as divided in such a way that one portion represents as it were the interest on the landed property and the other the surplus earnings of enterprise.” (p 286)

No one in Prussia maybe, but the distinction between these different revenues had been made in English Political Economy, at least from the time of Adam Smith. It forms the basis of Ricardo's theory of rent, and was even more explicitly set out by Marx.

Duhring, again basing himself on Prussian agriculture, as with Rodbertus, reduces the capitalist farmer to the position of being merely a professional manager employed by the landlord, and so reduces the profit to “a form of wages”. He says,

“Apart from the tenant’s own capital which he brings into the business, it would seem that his specific earnings are mostly regarded as a kind of wages. It is however hazardous to assert anything on this subject, as the question has never been raised with this precision.” (p 286)

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