Above we gave the current formulation of the now generally accepted proposition: “all Narodnik groups pronounce in favour of the nationalisation of the land.” But as a matter of fact this current formulation is very inaccurate, and there is very little that is “generally accepted” in it, if we have in mind a really identical conception of this “nationalisation” among representatives of different political trends. The peasant masses demand land spontaneously, being oppressed by feudal latifundia and not associating any more or less precise economic conceptions with the transfer of the land to the people. The peasant has only a fully matured, suffered, so to speak, and hardened by long years of oppression demand to renovate, strengthen, consolidate, expand small-scale farming, make it dominant, and nothing more. The peasant only pictures the transfer of the landlord latifundia into his hands; the peasant clothes the vague idea of the unity of all peasants as a mass in this struggle with words about popular ownership of the land. The peasant is guided by the instinct of an owner, hindered by the infinite fragmentation of the modern forms of medieval landownership and the impossibility of organising the cultivation of the land fully in conformity with “owner’s” requirements if all this medieval motley of landownership is preserved. The economic necessity of abolishing landlord landownership, of also abolishing the “fetters” of allotment landownership – these are the negative concepts that exhaust the peasant idea of nationalisation. About what forms of landownership will prove necessary subsequently for the renovated small-scale economy that has, so to speak, digested the landlord latifundia, the peasant does not think.

In the Narodnik ideology, which expresses the demands and hopes of the peasantry, the negative aspects in the concept (or in the vague idea) of nationalisation absolutely predominate. Eliminate the old obstacles, remove the landlord, “unfence” the lands, tear off the fetters of allotment landownership, strengthen small-scale farming, replace “inequality” (landlord latifundia) with “equality, fraternity, liberty” – this is what, nine-tenths, exhausts the Narodnik ideology. Equal right to land, equalised land tenure, socialisation – all these are only different forms of expressing the same ideas and all this is predominantly negative concepts, for the Narodnik does not picture to himself the new orders as a definite system of social-economic relations. For the Narodnik, the current agrarian revolution is a transition from serfdom, inequality, oppression in general to equality and freedom, and nothing more. This is the typical limitation of the bourgeois revolutionary, who does not see the capitalist properties of the new society he is creating.

Marxism, in contrast to the naive view of Narodism, investigates the emerging new system. With the fullest freedom of peasant farming, with the fullest equality of the small owners sitting on the land belonging to the whole people, or to nobody, or to “God,” we have before us the system of commodity production. The small producers are bound together and subordinated by the market. From the exchange of products emerges the power of money, the transformation of the agricultural product into money is followed by the transformation of labour-power into money. Commodity production becomes capitalist production. And this theory is not a dogma, but a simple description, a generalisation of what is happening in Russian peasant farming. The freer this farming is from land scarcity, from landlord oppression, from the pressure of medieval relations and orders in landownership, from bondage and arbitrary rule – the more strongly do capitalist relations develop within peasant farming itself. This is a fact, of which the entire post-Reform history of Russia testifies with the most perfect certainty.

Consequently, the concept of the nationalisation of the land, reduced to the ground of economic reality, is a category of commodity and capitalist society. Real in this concept is not what the peasants think or the Narodniks say, but what follows from the economic relations of the given society. The nationalisation of the land under capitalist relations is the transfer of rent to the state, no more, no less. And what is rent in capitalist society? It is by no means income from land in general. It is that part of surplus-value which remains after deducting the average profit on capital. Hence, rent presupposes wage-labour in agriculture, the transformation of the farmer into a capitalist entrepreneur. Nationalisation (in its pure form) presupposes the receipt of rent by the state from entrepreneurs in agriculture, who pay wages to wage-workers and receive the average profit on their capital – average in relation to all, both agricultural and non-agricultural, enterprises of the given country or group of countries.

Thus the theoretical concept of nationalisation is inseparably linked with the theory of rent, i.e., precisely capitalist rent, as a special form of income of a special class (the landowning) in capitalist society.

Marx’s theory distinguishes two kinds of rent: differential and absolute. The first is a result of the limitedness of land, its occupancy by capitalist farms, quite independently of whether there exists private property in land and what the form of landownership is. Between individual farms on the land there are inevitable differences, arising from differences in the fertility of the soil, in the location of the plots relative to the market, in the productivity of additional investments of capital in the land. For brevity, these differences can be summed up (not forgetting, however, the heterogeneity of the sources of these or those differences) as differences of better and worse land. Further. The price of production of the agricultural product is determined by the conditions of production not on the average, but on the worst lands, since the product of the better lands alone is not sufficient to cover demand. The difference between the individual price of production and the higher price of production constitutes differential rent. (Recall that by price of production Marx calls the capital expended on the production of the product plus the average profit on capital.)

Differential rent inevitably arises in capitalist farming, even with the complete abolition of private property in land. With the existence of landed property, this rent will go to the landowner, for the competition of capital will force the farmer (tenant) to content himself with the average profit on capital. With the abolition of private property in land, this rent will go to the state. The elimination of this rent is impossible as long as the capitalist mode of production exists.

Absolute rent originates from private property in land. In this rent there is an element of monopoly, an element of monopoly price[79]. Private property in land hinders free competition, hinders the equalisation of profit, the formation of an average profit in agricultural and non-agricultural enterprises. And since in agriculture the technique is lower, the composition of capital is distinguished by a greater share of variable capital as compared with constant, than in industry, the individual value of the agricultural product is higher than the average. Therefore, private property in land, by retarding the free equalisation of profit in agricultural enterprises on a par with non-agricultural ones, makes it possible to sell the agricultural product not at the higher price of production, but at the even higher individual value of the product (for the price of production is determined by the average profit on capital, and absolute rent prevents this “average” from forming, monopolistically fixing a higher than average individual value).

Thus, differential rent is inevitably inherent in all capitalist agriculture. Absolute rent is inherent not in all, but only under the condition of private property in land, only given a historically[80] created backwardness of agriculture, a backwardness fixed by monopoly.

Kautsky contrasts both kinds of rent, among other things, in their relation specifically to the nationalisation of the land, in the following theses:

“In so far as ground-rent is differential rent, it arises from competition. In so far as it is absolute rent, it arises from monopoly.... In practice, ground-rent confronts us not divided into parts; it is impossible to know which part of it is differential rent, which is absolute. Besides, as a rule, interest on capital for outlays made by the landowner is intermixed with it. Where the landowner is at the same time an agriculturalist, ground-rent is combined with agricultural profit.

Nevertheless, the distinction between the two kinds of rent is of the most important significance.

Differential rent arises from the capitalist character of production, not from private property in land.

This rent would also be preserved under the nationalisation of the land, which is demanded (in Germany) by the supporters of land reform who retain capitalist agriculture. Only then this rent would not go to private persons, but to the state.

Absolute rent arises from private property in land, from the antagonism of interests between the landowner and the rest of society. Nationalisation of the land would make it possible to eliminate this rent and to lower the prices of agricultural products by the amount of this rent (our italics).

Further, the second difference between differential and absolute rent is that the first does not, as a component part, influence the price of agricultural products, while the second does. The first arises from the price of production, the second from the excess of market prices over the prices of production. The first springs from a surplus, from a surplus-profit yielded by the more productive labour on better land or with a better location. The second does not spring from the additional income of certain kinds of agricultural labour; it is possible only as a deduction from the available quantity of values in favour of the landowner, a deduction from the mass of surplus-value – consequently, either a reduction of profit or a deduction from wages. If grain prices rise and wages also rise, then profit on capital falls. If grain prices rise without a rise in wages, then the workers bear the loss. Finally, it may happen – and this should even be considered the general rule – that the loss caused by absolute rent is borne by both workers and capitalists together.”[81]

Thus, the question of the nationalisation of the land in capitalist society splits into two, essentially different parts: the question of differential and of absolute rent. Nationalisation changes the owner of the first and undermines the very existence of the second. Hence, nationalisation is, on the one hand, a partial reform within the limits of capitalism (a change of the owner of a part of surplus-value), and on the other hand, the abolition of a monopoly that restricts the entire development of capitalism in general.

Without distinguishing these two sides, i.e., the nationalisation of differential and absolute rent, it is impossible to understand the whole economic significance of the question of nationalisation in Russia. But here we encounter the denial of the theory of absolute rent by P. Maslov.