## Rent

The population of a capitalist country is divided into 3 classes: 1) wage laborers, 2) landowners, and 3) capitalists. In studying the system, one must disregard local peculiarities where such a definite division may not yet have emerged.

According to Marx, the principal division of the product is the division into necessary and surplus products. A certain part of this surplus product constitutes land rent—namely, that part which remains after deducting the average profit on capital. Average profit is formed in developed capitalist society under the influence of competition, which distributes the surplus product among capitalists not in proportion to the number of workers, but in proportion to the size of the total capital invested in the enterprise.

Marx examines the formation of average profit in Volume III of *Capital*. On plots of varying fertility, capital will yield varying profits: on the poorest land the profit will be smaller, on the best land—larger, additional profit. (Before Marx, Ricardo laid the foundation for the theory of rent.) Due to the monopoly of prices on the grain market and the general insufficiency of grain, the price is determined by the poorest plot of land. The excess profit obtained on land of superior quality or on land lying close to the market, as compared with the poorest and most distant land, is called differential rent, according to Marx.

Rent is appropriated from farmers by landowners.

The varying magnitude of additional profit can be of 2 kinds: 1) that which arises from differences in fertility, and 2) that which arises from different applications of capital. Furthermore, besides the monopoly of private agricultural management of land, there exists the monopoly of private property in land: the landowner can refuse to lease land to a farmer until the price of grain rises, and then he levies absolute rent, which represents elementary monopoly. It can be: 1) monopoly in its pure form (then, strictly speaking, it should not be called rent). Secondly, absolute rent can be extracted from the additional profit on agricultural capital for the following reason. In agriculture, technique is lower, therefore the share of variable capital (= profit-creating) is higher than in industry. Therefore, the share of profit should be higher in agriculture than in industry. And so the monopoly of landownership prevents the equalization of high profit in agriculture and low profit in industry. Absolute rent in the proper sense of the word is extracted from this higher agricultural profit, which has not undergone equalization. Its source is the rise in the price of grain. Differential rent, meanwhile, is extracted from the product. Recent years, characterized by the involvement of new countries in trade, have led to crisis.

The price of land represents calculated, anticipated rent. Therefore it is regarded as income from a certain capital. In purchasing land one must expend capital, which could yield income of average rent. Therefore, the rapid course of industrial development has greatly inflated rent in Europe and consolidated it.

The greater part of Maslov's recently published book, *Conditions of Agricultural Development in Russia*, is devoted to the theory of rent, and on this question Maslov takes a completely erroneous position, repeating the arguments of so-called bourgeois "critics" of Marx, such as Mr. Bulgakov and others. Marx showed that old English political economy approached this question too simply—not as a process creating special historical conditions, but as a process creating natural ones; therefore, it reasoned as follows: rent is formed by necessity of transition from better plots of land to worse ones. But there is also reverse transition, since improvements occur. The critics retreated backward from Marx to bourgeois economy.

Another narrow understanding of rent theory is the conflation of the law of the formation of differential rent with the law of diminishing soil fertility, according to which profit allegedly diminishes on the same plot of land. Ricardo explains the transition from better plots to worse ones by the impossibility of applying ever greater amounts of capital. All Russian "critics" have sided with the defense of the theory of diminishing soil fertility, as has Maslov, who in other questions wishes to remain a Marxist. But the arguments in defense of this theory have gone no further than witticisms, such as that if one does not accept this theory, one must accept that an entire state could be fed from one small plot of land.

Marx fought against this theory. It regards the expenditure of capital arithmetically and falls into error by ignoring the conditions of general economy. If one were to assume that the application of ever greater capital were always possible, then it would be correct; but such a thing presupposes a transformation of systems, and systems in agriculture persist for centuries, and this has placed the application of capital within definite limits. If technique does not change, then further application of capital is impossible or possible only within narrow limits. Marx points out that in industry too one cannot develop production on a given plot of land without limit: if an enterprise occupies a definite plot of land, then to develop it further, one would need to increase it. If, however, land is subjected to rational cultivation, this should only improve production, so that Marx concludes there is not only no disadvantage in this regard with land, but quite the opposite. It is precisely this "if" that opponents of Marx's theory have ignored. Thus Maslov, as a purported Marxist, can mislead many with his views on this question. His book represents one of countless examples in our time—moving backward instead of forward.

The agricultural population is decreasing absolutely, yet agricultural production is progressing. During the nineteenth century this progress was closely linked with the growth of commodity agriculture. It characterizes one of the fundamental features of the present capitalist system, manifesting itself in the creation of competition in agriculture, a market for it, and the differentiation of the population. It gave powerful impetus to the development of agriculture, but each step of progress was accompanied by the emergence of contradictions, which made it impossible to utilize all the productive forces of new, scientific agriculture. Capitalism creates large-scale production and competition, accompanied by the squandering of the productive forces of land. The concentration of population in the city causes depopulated lands; an abnormal metabolism is created. The cultivation of land is not improved, or not improved as it ought to be improved.

Socialist criticism long ago drew attention to this (Marx). Mr. Hertz, and later in Russia, Messrs. Bulgakov, Chernov, and Struve pointed out that Marx's theory, relying on Liebig, had become obsolete. This opinion of the "critics" is completely erroneous. The disruption by capitalism of the equilibrium between the exploitation of land and the fertilization of land is beyond doubt (the role of the separation of city from countryside). Many writers, sympathetic not to Marxist theory but to its "critique," are contradicted by their own data. For example, Nossig. According to his data, it turns out that the productive forces of land are not being replenished—that it is not being returned what is taken from it. Artificial and animal fertilizers are necessary. On average, of 60,000 kilograms of fertilizer used per hectare, 1/3 must be natural fertilizer, yet the present system of agriculture is incapable of providing this.

Thus, the influence of capitalism in agriculture manifests itself as follows:

It demands the freedom of the wage laborer and displaces all forms of the old system of bondage. Yet the condition of agricultural wage laborers remains oppressed. Oppression has intensified and come to demand greater struggle.

Capitalism has increased to enormous proportions the tribute levied by the landowner—the magnitude of differential and absolute rent. Inflated rent creates an obstacle to further growth of agriculture.