Chapter 52 Chapter IX Ground Rent

Section 1. Ground rent is one of a large class.For the moment we assume that the land is cultivated by its owner.To reiterate the previous discussion. As stated in Chapter 5, land rent is not a unique fact, but a major category of various economic phenomena; the theory of land rent is not an isolated economic theory, but only a major application of a specific system in the general theory of supply and demand. ; it is divided into several grades, from the real rent of the bounties of nature in man's possession, through the income from the permanent improvement of the land, to the income afforded by farms, factory buildings, steam-engines, and less durable goods.In this and the next chapter we study exclusively the net income of land.This study is divided into two parts.One part is about the total amount of net land income, or producer surplus; the other part is about the manner in which that income is distributed to those who have an interest in the land.The first revenue, which is always the general revenue, whatever the form of land tenure, we shall begin our discussion from, assuming that the cultivation of the land is undertaken by the landowner himself.

We should not forget that the "inherent" income of the land is heat, sunlight, air, and rainfall, which are beyond human influence; A few are the direct result of individual landowners investing capital and labor in the land.These are the principal attributes of land, that its supply is independent of human effort, and therefore not increased by the remuneration of that labour; its taxes are borne solely by the proprietor. On the other hand, those chemical and physical properties, upon which the fertility of the soil is chiefly dependent, can be enhanced, and in extreme cases entirely altered, by human effort.But a tax on the income of land improvements (which, though they may be extended generally, are slowly advanced and exhausted) will not for a short time affect the supply of improvements, and therefore will not Will affect the supply of improved agricultural products.It is thus mainly borne by the owner.The renter, for a short time, may also be regarded as the owner.In the long run, however, the tax reduces the supply of improvements, raises the normal supply price of agricultural products, and is thus borne by consumers.

Before the second quarter. Let us now restate our investigation of the tendency to diminishing returns in agriculture in Book IV; it is still assumed that the landowners cultivate the land themselves, and that our reasoning, therefore, may be general, independent of the particular form of land tenure. We have seen that, in the successive investments of stock and labour, though the returns of the first few investments may increase, they will begin to decrease when the land is well cultivated.The cultivator continues to add capital and labor until the point at which the remuneration is only sufficient to cover his expenses, and to compensate him for his own labour.Regardless of whether it is invested in superior or inferior land, it will be an investment on the marginal side of cultivation; there needs to be an amount equal to the return on this investment, which is sufficient to compensate him for his previous investments, and the total output exceeds this amount. It is the surplus of his producers.

He tries to see as far as possible, but it is very rare for him to see too far.At any given time he takes for granted the abundance of the land from permanent improvement, while the income (or quasi-rent) from permanent improvement and from the original character of the land is his producer surplus or rent.Thereafter, only the proceeds of the new investment appear as income and profit; His producer's surplus, or rent, is the excess of the total revenue from the improvement of the land over the amount required to repay his annual invested capital and labour. This surplus depends firstly on the abundance of the land, and secondly on the relative value of those things which he has to buy and sell.The fertility, or abundance, of land, as we know, cannot be measured absolutely, for it varies with the nature of the crops sown, and with the method and intensity of its cultivation; As a result of equal capital and labor, if the same amount of barley can be harvested, the same amount of wheat may not be harvested.When primitive farming methods are used, the same amount of wheat can be harvested, but once intensive farming or modern methods are used, the harvested amounts are likely to be unequal.Moreover, the prices of what the farm needs, and the prices at which its produce can be sold, depend on the industrial environment, which changes constantly alter the relative values ​​of the various crops, and consequently of the differently situated lands. .

Finally, we assume that the cultivator has normal abilities, normal in relation to the job he holds and the circumstances of his time and place.If his power is less than normal, his actual total product will be less than the normal total produce of the land, and the part it affords him will be less than the surplus of its real producers.Conversely, if his ability is higher than the normal ability, in addition to the producer's surplus on the land, he also gets the producer's surplus on rare ability. The third section increases the actual value of agricultural products generally increases the value of the remaining products, and makes its actual value increase even more.The difference between the labor value of an agricultural product and its general purchasing power.

We have studied at some length how an increase in the value of agricultural produce increases the surplus (measured in terms of the product) of the producers of all kinds of land, especially those in which the tendency to diminishing returns is weak.We also know that, generally speaking, it increases the value of inferior land more than superior land.In other words, if someone expects the value of agricultural products to rise, the future income he can expect to invest in inferior land with a certain amount of money at the current price is greater than that in superior land. Next, the real value of the producer's surplus, that is, its value calculated in terms of general purchasing power, will increase relative to the value of its product in the same proportion as the value of the product calculated in the same way.That is to say, an increase in the value of the product increases the value of the producer's surplus.

The term "real value" of a product is ambiguous.Historically, it has tended to refer to actual value to consumers.This usage is quite dangerous.For there are occasions when it is more expedient to consider real values ​​from the point of view of the producers. But having noticed this, we may use the term "value of labor" to denote the quantity of a certain kind of labor which the product is about to buy; and the number of luxuries.The increase in the labor value of agricultural products may mean that the pressure of the population on the means of subsistence is increasing, and the increase in the producer's surplus (from the land) caused by this reason is accompanied by the deterioration of the people's living conditions, and it is also its a scale.On the other hand, if an increase in the real value of agricultural produce is due to an improvement in the technique of production outside agriculture, the result may be an increase in the purchasing power of wages.

Section 4. The Effect of Improvements on Land Rent. What all the above illustrates is that the producer's surplus from the land is not due to the greatness of nature's bounty, as the Physiocrats and Adam Smith (in a modified form) maintained, but to nature's miserliness.But it must never be forgotten that, as far as market outlets are concerned, unequal positions are as important a cause of unequal surplus for producers as unequal absolute productive forces. This truth and its principal consequences, many of which now seem so obvious, were first articulated by Ricardo.He was fond of arguing that if the bounties of nature were in unlimited supply and everywhere available, the possession of them would produce no surplus; Surplus will never be provided.He further developed his argument, and demonstrated that improvements in the art of cultivation, which are equally applicable to all land (that is, equal to a general increase in the natural abundance of the land), would reduce the total surplus of corn, and would necessarily reduce the land available to supply a given population with agricultural products. the real remaining total.He also pointed out that improvement, if it affected mainly those lands which were originally the most fertile, would increase the total surplus, but if it affected mainly the poorer kinds of land, the total surplus would therefore be greater. reduce.

Consistent with the above proposition is the view that an improvement in the cultivation of land in England would increase the aggregate surplus supplied by the land, because it increases the agricultural produce without substantially lowering its price, unless it is supplied to England. The same improvements, or measures with like effect, are followed by those countries which export the produce, to improve the communications of these countries.As Ricardo said, if all the land supplying the same market were equally improved, "this improvement would give a great incentive to population, and at the same time make it possible for us to cultivate the less fertile land with less labour, and finally, It is of great benefit to the landlord class."

It is not without interest to distinguish, from the value of land, what part of that value is due to human labor, and what part is due to the primitive nature of nature. A part of the value of the land is derived from roads and other improvements made by the state for general purposes rather than agriculture.In light of this, Lister, Carlyle, Bastiat, and others argued that the cost of transforming the original land into its present state exceeded the full present value of the land.They assert, therefore, that the whole value of land is derived from human labour.The facts they cite are worth discussing, but are in fact irrelevant to their conclusions.What they have to argue is that the present value of the land should not exceed the real agricultural cost of making the original land as fertile and arable as it is now.

Many of the changes which have been applied to the methods of agriculture have long since become obsolete and unfit for use; and many of these changes, instead of increasing, detract from the value of the land. Moreover, the expense in this respect must be pure, that is, plus the interest of the yearly expenses, and less the total value of the extra produce which has been obtained from improvements over the years.In more populous districts the value of the land is generally much greater, and often many times greater, than this expense. The main theories of land rent in Section 5 are applicable to almost all tenancy systems.But also in the tenancy system of modern England, the sharp demarcation between the landowner's share and the agricultural capitalist's share is of the utmost importance to economic science.See Appendix XII. This chapter applies to the various systems of land tenancy under any form of private ownership of land; for it concerns the surplus of the producer, and this surplus, if the land is cultivated by the landowner himself, belongs to him, as he If the land is not cultivated by himself, it belongs to him and his tenants who are considered to be farming partnerships.This applies, therefore, however much custom, law, or contract requires them to each share in the expense of cultivation, and in how much of its fruit.Much of it also does not depend on the stage of economic development already reached; it stands even if the product is not sold, or if very little is sold, and the tax levied is paid in kind. There are now those parts of England where, in the transactions of the uses of land, free competition and enterprise are valued, and custom and sentiment are regarded as of little importance, where it is generally accepted that improvements which are slow to make and perish are supplied by landowners and maintained to a certain extent.Therefore, all the producer's surplus that the land can provide in the year under normal harvest and normal price, except the normal profit of the agricultural capitalist, belongs to the landlord. , the loss shall be borne by oneself.In this calculation it has been implicitly assumed that the agricultural capitalist has normal ability and enterprise to run such a lease; therefore, if his ability is higher than normal, he gains for himself, while if his ability has If you fall short, you will lose at your own risk, and may end up leaving the farm. In other words, that portion of the landowner's income from the land is determined, for a short period of time, by the market for agricultural produce, and has little to do with the cost of the various factors required for cultivation; The nature of rent.And that part of the income of the capitalist in agriculture may be regarded as profit, even in the short run, and enters directly in the normal price of the agricultural produce, since it would not be produced unless it afforded that profit. Thus, the more fully developed are the characteristics of English tenancy, the more true is the fact that the line of income between landlord and tenant coincides with the deep and significant line drawn in economic theory.This fact, more than any other, is perhaps the chief cause of the predominance of British economic theory in the early part of this century; it has enabled British economists to contribute so much that even in our century the study of economics has been pursued in other countries, such as In England as well, but nearly all of those new constructive ideas are merely further developments of other concepts implied in earlier English writings. This fact itself seems accidental, but perhaps it is not.Because this particular line of demarcation causes less friction than any other line, it takes less time and effort to review.It is doubtful whether this so-called British system will last.It has serious drawbacks and may not be considered the best system in a future stage of civilization.But when we compare it with other institutions, we see that it has given England the great advantage of being the standard-bearer in the development of free enterprise in the world; Give people freedom, courage, resilience and strength.