I.3. Ground-Rent

[I] The right of the landowners has its origin in robbery. Say, vol. I, p. 136, note. The landowners, like all men, love to reap where they have not sown, and they demand a rent even for the natural produce of the earth. Smith, vol. I, p. 99. “One might imagine that ground-rent is only the profit on the capital the owner has used to improve the soil.... There are cases where ground-rent may partly be this ... but the landowner demands (1) a rent even for unimproved land, and what may be regarded as interest or profit on the costs of improvement is mostly only an addition to this original rent; (2) moreover, these improvements are not always made with the landowner’s funds, but sometimes with the tenant’s: nevertheless, when it comes to renewing the lease, the landowner usually demands such an increase of rent as if all these improvements had been made with his own funds; (3) indeed, he sometimes demands a rent even for what is quite incapable of the least improvement by human hand.” Smith, vol. I, pp. 300–301.

As an example of the last case Smith gives kelp (sea-wrack, salicorne),

a kind of seaweed which, when burnt, yields an alkaline salt used in making glass, soap, etc. It grows in Great Britain, especially in Scotland, in various places, but only on rocks lying below high-water mark, which are covered by the sea twice a day, and whose produce has therefore never been increased by human industry. Nevertheless the owner of such a piece of land where this kind of plant grows demands a rent just as he would for corn land. Near the Shetland Islands the sea is exceptionally rich. A large part of their inhabitants [II] live by fishing. But to draw profit from the produce of the sea one must have a dwelling on the neighbouring land. The ground-rent stands in proportion not to what the tenant can make with the land, but to what he can make with the land and the sea together. Smith, vol. I, pp. 301–302. “Ground-rent may be regarded as the product of the power of nature whose use the owner lends to the tenant. This product is greater or smaller according to the extent of this power, or, in other words, according to the extent of the natural or artificial fertility of the land. It is the work of nature that remains after deducting or balancing everything that can be regarded as the work of man.” Smith, vol. II, pp. 377–378. “Ground-rent, considered as the price paid for the use of land, is therefore naturally a monopoly price. It stands in no proportion at all to the improvements the landowner has made on the land, or to what he must take so as not to lose, but to what the tenant can possibly give without losing.” Vol. I, p. 302, Smith. “Of the three productive classes, that of the landowners is the one whose revenue costs it neither labour nor care, but comes to it, so to speak, of its own accord, without its adding any intention or plan.” Smith, vol. II, p. 161.

We have already heard that the quantity of ground-rent depends on the relative fertility of the soil.

Another factor in determining it is location.

“Rent varies with the fertility of the land, whatever its produce, and with its location, whatever its fertility.” Smith, vol. I, p. 306. “If lands, mines and fisheries are of equal fertility, their produce will stand in proportion to the extent of the capitals employed in cultivating and working them, and to the more [III] or less skilful way in which the capitals are employed. If the capitals are equal and equally skilfully employed, the produce will stand in proportion to the natural fertility of the lands, fisheries and mines.” Vol. II, p. 210.

These propositions of Smith are important because, with equal costs of production and equal extent, they reduce ground-rent to the greater or lesser fertility of the soil. They therefore clearly prove the perversion of concepts in political economy, which turns the fertility of the land into a property of the landowner.

But let us now consider ground-rent as it takes shape in actual dealings.

Ground-rent is settled by the struggle between tenant and landowner. Everywhere in political economy we find the hostile opposition of interests, struggle, war, recognised as the foundation of social organisation.

Let us see, then, how landowner and tenant stand towards each other.

“In settling the terms of the lease, the landowner tries as far as possible to leave the tenant no more than suffices to replace the capital that provides the seed, pays the labour, buys and maintains cattle and other instruments, and in addition yields the ordinary profit of other farms in the district. This is evidently the smallest share with which the tenant can content himself without falling into loss, and the landowner is seldom of a mind to leave him more. Whatever remains of the produce or its price above this portion, whatever the remainder may be, the proprietor tries to reserve for himself as ground-rent, the highest the tenant can pay in the present condition of the land. [IV] This surplus may always be regarded as the natural ground-rent, or the rent at which most land is naturally let.” Smith, vol. I, pp. 299–300. “The landowners,” says Say, “exercise a certain kind of monopoly over the tenants. The demand for their commodity, land, can expand without limit; but the quantity of their commodity extends only to a certain point.... The bargain struck between landowner and tenant is always as advantageous as possible to the former ... besides the advantage he draws from the nature of things, he draws another from his position, his greater fortune, credit and standing; but the first alone suffices to make him always able to profit alone from the favourable circumstances of the land. The opening of a canal or a road, the growth of the population and prosperity of a district, always raise the rent.... The tenant himself may improve the land at his own expense; but he draws advantage from this capital only for the duration of his lease, and when it expires it remains with the landowner; from that moment the latter draws the interest on it without having made the advance, for the rent now rises proportionately.” Say, vol. II, pp. [142,] 143. “Ground-rent, considered as the price paid for the use of the land, is therefore naturally the highest price the tenant is able to pay in the present circumstances of the land.” Smith, vol. I, p. 299. “The ground-rent of the surface of the earth therefore mostly amounts to a third of the total produce, and is mostly a fixed rent, independent of the accidental fluctuations [V] of the harvest.” Smith, vol. I, p. 351. “This rent seldom amounts to less than a quarter of the total produce.” Ibid., vol. II, p. 378.

Ground-rent cannot be paid on all commodities. In some districts, for example, no ground-rent is paid for stones.

“Usually only those products of the earth can be brought to market, only those parts of the produce of the earth, whose ordinary price is sufficient to replace the capital needed for transporting them, together with the ordinary profits of this capital. If the price is more than sufficient for this, the surplus naturally goes to ground-rent. If it is only sufficient, the commodity can indeed be brought to market, but it is not enough to pay the landlord a ground-rent. Will the price be more than sufficient or not? That depends on the demand.” Smith, vol. I, pp. 302–303. “Ground-rent enters into the composition of the price of commodities in a quite different way from wages and the profit of capital. The high or low rate of wages and profits is the cause of the high or low price of commodities; the high or low rate of ground-rent is the effect of the price.” Vol. I, pp. 303[–304], Smith.

Among the products that always yield a ground-rent is food.

“Since men, like all animals, multiply in proportion to their means of subsistence, there is always more or less demand for food. Food will always be able to buy a greater or smaller [VI] amount of labour, and there will always be people disposed to do something to obtain it. The labour that food can buy is not always equal, it is true, to the labour that could subsist on it if it were distributed in the most economical way, because of the sometimes high wages of labour. But food can always buy as much labour as it can maintain at the rate at which that kind of labour is usually paid in the country. In almost every possible situation the land produces more food than is needed for the subsistence of all the labour that helps to bring this food to market. The surplus of this food is always more than sufficient to replace with profit the capital that sets this labour in motion. So something always remains to give the landowner a rent.” Vol. I, pp. 305–306, Smith. “Ground-rent not only takes its first origin from food; but if another part of the produce of the earth later comes to yield a rent, the rent owes this addition of value to the growth of the power that labour has acquired to produce food by means of the cultivation and improvement of the land.” P. 345, vol. I, Smith. “The food of men is therefore always sufficient to pay ground-rent.” Vol. I, p. 337. “Countries are peopled not in proportion to the number their produce can clothe and house, but in proportion to the number it can feed.” Smith, vol. I, p. 342. “The two greatest human needs after food are clothing and lodging, heating. They mostly yield a ground-rent, not always necessarily.” Vol. I, ibid., p. 288. [VI]

[VIII] Let us now see how the landowner exploits all the advantages of society.

(1) Ground-rent increases with population. Smith, vol. I, p. 335.

(2) We have already heard from Say how ground-rent rises with railways, etc., with the improvement, safety and multiplication of the means of communication.

(3) “Every improvement in the state of society tends either directly or indirectly to raise ground-rent, to increase the real wealth of the proprietor, that is, his power to buy other men’s labour or its produce.... The increase in the improvement of lands and of cultivation tends to this directly. The proprietor’s share of the produce necessarily increases with the increase of the produce.... The rise in the real price of these kinds of raw produce, for example the rise in the price of cattle, also tends directly to raise ground-rent, and in a still greater proportion. Not only does the real value of the landowner’s share, the real power this share gives him over other men’s labour, necessarily increase with the real value of the produce; the size of this share in proportion to the total produce also increases with this value. Once the real price of this produce has risen, it requires no greater labour to supply it and to replace the capital employed together with its ordinary profits. The remaining part of the produce, which belongs to the landowner, will therefore be much greater in relation to the total produce than it was before.” Smith, vol. II, pp. 157–159.

[IX] The greater demand for raw produce, and so the rise in its value, may arise partly from the increase of population and of its needs. But every new invention, every new use that manufacture makes of a raw material hitherto unused or little used, increases ground-rent. Thus, for example, the rent of coal mines has risen enormously with railways, steamships, etc.

Besides this advantage that the landowner draws from manufacture, discoveries and labour, we shall at once see another.

(4) “The kinds of improvement in the productive power of labour that aim directly at lowering the real price of manufactured products tend indirectly to raise the real ground-rent. For the landowner exchanges for manufactured products the part of his raw produce that exceeds his personal consumption, or the price of this part. Everything that reduces the real price of the first kind of product increases the real price of the second. The same quantity of raw produce now corresponds to a greater quantity of manufactured produce, and the landowner finds himself able to obtain a greater quantity of conveniences, ornaments and luxuries.” Smith, vol. II, p. 159.

But when Smith concludes from the fact that the landowner exploits all the advantages of society [X] (p. 161, vol. II) that the landowner’s interest is always identical with that of society, that is absurd. In political economy, under the rule of private property, the interest that a man has in society stands in exactly inverse proportion to the interest society has in him, just as the moneylender’s interest in the spendthrift is in no way identical with the interest of the spendthrift.

We mention only in passing the landowner’s greed for monopoly against the landed property of foreign countries, from which, for example, the Corn Laws date. Likewise we pass over here medieval serfdom, slavery in the colonies, the misery of the country people, the day labourers, in Great Britain. Let us keep to the propositions of political economy itself.

(1) That the landowner is interested in the welfare of society means, according to the principles of political economy, that he is interested in its growing population, its artificial production, the increase of its needs, in a word in the growth of wealth; and according to our observations so far this growth is identical with the growth of misery and slavery. The rising proportion of house rent to misery is an example of the landowner’s interest in society, for with house rent ground-rent rises, the interest on the land on which the house stands.

(2) According to the political economists themselves, the interest of the landowner is the hostile opposite of the interest of the tenant, and so already of a considerable part of society.

[XI] (3) Since the landowner can demand the more rent from the tenant the less wages the tenant pays, and since the tenant presses wages down the more the more ground-rent the owner demands, the interest of the landowner stands in just as hostile a relation to the interest of the farm servants as that of the manufacturers to their workers. He likewise presses wages down to a minimum.

(4) Since a real fall in the price of manufactured products raises ground-rent, the landowner has a direct interest in pressing down the wages of manufacturing workers, in competition among the capitalists, in overproduction, in the whole misery of manufacture.

(5) If, then, the interest of the landowner, far from being identical with the interest of society, stands in hostile opposition to the interest of the tenants, the farm servants, the manufacturing workers and the capitalists, the interest of one landowner is not even identical with that of another, because of competition, which we will now consider.

In general, large and small landed property already stand in the same relation as large and small capital. But there are also special circumstances that unconditionally bring about the accumulation of large landed property and the swallowing up of small property by it.

[XII] (1) Nowhere does the relative number of workers and implements diminish with the size of the stock more than in landed property. Likewise nowhere does the possibility of many-sided exploitation, of saving on the costs of production and of skilful division of labour, increase more with the size of the stock than in landed property. However small a field may be, the implements it requires, such as plough, saw, etc., reach a certain limit below which they cannot be further reduced, while the smallness of the holding can go far beyond this limit.

(2) Large landed property accumulates to itself the interest on the capital the tenant has put into improving the land. Small landed property must use its own capital; for it this whole profit therefore disappears.

(3) While every social improvement benefits large landed property, it harms small property, because it makes ever more ready money necessary for it.

(4) There are two more important laws to consider in this competition:

(α) The rent of the land cultivated to produce human food regulates the rent of the greater part of the other cultivated land. Smith, vol. I, p. 331.

In the end only large landed property can produce foodstuffs such as cattle, etc. It therefore regulates the rent of the other land and can press it down to a minimum.

The small, self-working landowner then stands in the same relation to the big landowner as a craftsman who owns his own instrument stands to the factory owner. Small landed property has become a mere instrument of labour. [XVI] Ground-rent disappears entirely for the small landowner; at most he is left with the interest on his capital and his wages; for competition can drive ground-rent down to the point where it is no more than the interest on capital he has not invested himself.

(β) We have, besides, already heard that with equal fertility and equally skilful working of lands, mines and fisheries, the produce stands in proportion to the extent of the capitals. So the big landowner wins. Likewise, with equal capitals, the produce stands in proportion to fertility. So with equal capitals the owner of the more fertile land wins.

(γ) “A mine may in general be called fertile or barren according as the quantity of mineral that can be drawn from it by a certain quantity of labour is greater or smaller than that which the same quantity of labour can draw from the majority of other mines of the same kind.” Vol. I, pp. 345–346, Smith. “The price of the most fertile mines regulates the price of coal for all the other mines of the neighbourhood. Landowner and entrepreneur both find that they will have, the one a larger rent, the other a larger profit, if they sell the thing more cheaply than their neighbours. The neighbours are then forced to sell at the same price, though they are less able to do so and though this price falls more and more and sometimes takes away all their rent and all their profit. Some workings are then abandoned altogether; others yield no more rent and can be worked further only by the landowner himself.” P. 350, vol. I, Smith. “After the discovery of the mines of Peru most of the silver mines of Europe were abandoned.... The same happened with the mines of Cuba and Santo Domingo, and even with the old mines of Peru after the discovery of those of Potosí.” P. 353, vol. I.

Exactly what Smith says here of mines holds more or less of landed property in general.

(δ) “It should be noted that the current price of land always depends on the current rate of interest.... If ground-rent fell below the interest on money by a very great difference, nobody would want to buy land, which would soon bring back its current price. If, on the contrary, the advantages of ground-rent much more than compensated for the interest on money, everybody would want to buy land, which would likewise soon restore its current price.” Vol. II, pp. [367,] 368.

It follows from this relation of ground-rent to the interest on money that ground-rent must fall more and more, so that in the end only the richest people can live on ground-rent. So competition among the landowners who do not let their land grows ever greater. Ruin of a part of them. Renewed accumulation of large landed property.

[XVII] This competition further has the result that a large part of landed property falls into the hands of the capitalists, and the capitalists thus at the same time become landowners, just as the smaller landowners are already in general no more than capitalists. Likewise a part of large landed property at the same time becomes industrial.

The final consequence is therefore the dissolution of the distinction between capitalist and landowner, so that on the whole there remain only two classes of the population, the working class and the class of capitalists. This huckstering of landed property, the transformation of landed property into a commodity, is the final overthrow of the old aristocracy and the final completion of the aristocracy of money.

(1) We do not share the sentimental tears that romanticism weeps over this. It always confuses the shamefulness that lies in the huckstering of the earth with the quite rational consequence, necessary and desirable within private property, that is contained in the huckstering of private property in the earth. In the first place, feudal landed property is already in its essence the huckstered earth, the earth estranged from man and therefore confronting him in the shape of a few great lords.

The domination of the earth as an alien power over men already lies in feudal landholding. The serf is the accident of the land. Likewise the lord of an entailed estate, the first-born son, belongs to the land. It inherits him. In general the rule of private property begins with landholding; that is its basis. But in feudal landholding the lord at least seems to be king of the land. Likewise there still exists the appearance of a more intimate relation between the owner and the land than that of mere material wealth. The estate is individualised with its lord; it has its rank, is baronial or comital with him, has its privileges, its jurisdiction, its political position, etc. It appears as the inorganic body of its lord. Hence the proverb nulle terre sans maître, “no land without its lord”, in which the fusion of lordship and landholding is expressed. Likewise the rule of landed property does not appear directly as the rule of mere capital. Those belonging to it stand to it rather in the relation of their fatherland. It is a narrow-chested kind of nationality.

[XVIII] In the same way feudal landed property gives its name to its lord, as a kingdom does to its king. His family history, the history of his house, etc., all this individualises the landholding for him and makes it formally his house, a person. Likewise those who work the land do not stand in the relation of day labourers to it; they are partly themselves its property, like the serfs, and partly stand in a relation of respect, subjection and duty to it. Its position towards them is therefore directly political, and also has a sentimental side. Customs, character, etc., change from one estate to another and seem to be one with the plot of land, while later it is only a man’s purse, not his character, his individuality, that relates him to the land. Finally, the lord does not seek to draw the greatest possible advantage from his estate. Rather he consumes what is there, and calmly leaves the care of producing it to the serfs and tenants. That is the noble relation of landholding, which casts a romantic glory over its lord.

It is necessary that this appearance be abolished; that landed property, the root of private property, be dragged completely into the movement of private property and become a commodity; that the rule of the owner appear as the pure rule of private property, of capital, stripped of all political tincture; that the relation between owner and worker be reduced to the economic relation of exploiter and exploited; that [the] [illegible] personal relation of the owner to his property cease, and that it become mere material wealth; that the marriage of interest take the place of the marriage of honour with the land, and the land sink to the level of a huckstering value, just as man does. It is necessary that what is the root of landed property, filthy self-interest, also appear in its cynical form. It is necessary that the dormant monopoly turn into the moving and restless monopoly, competition; that the idle enjoyment of other men’s blood and sweat turn into busy trade in them. It is necessary, finally, that in this competition landed property, in the form of capital, show its rule both over the working class and over the owners themselves, as the laws of the movement of capital ruin them or raise them up. Then the medieval proverb nulle terre sans seigneur, “no land without its lord”, gives way to the modern proverb l’argent n’a pas de maître, “money has no master”, in which the whole rule of dead matter over men is expressed.

[XIX] (2) As regards the dispute over the division or non-division of landed property, the following should be noted.

The division of landed property negates the large-scale monopoly of landed property and abolishes it, but only by generalising this monopoly. It does not abolish the ground of monopoly, private property. It attacks the existence of monopoly, but not its essence. The consequence is that it falls victim to the laws of private property. For the division of landed property corresponds to the movement of competition in the industrial sphere. Besides the economic disadvantages of this division of instruments and of labour carried on separately (to be clearly distinguished from the division of labour: labour is not divided among many, but the same labour is carried on by each for himself; it is a multiplication of the same labour), this division, like that competition, necessarily turns back into accumulation.

Where the division of landed property takes place, therefore, nothing remains but to return to monopoly in a still more odious form, or to negate, to abolish, the division of landed property itself. That is not a return to feudal property, but the abolition of private property in land altogether. The first abolition of monopoly is always its generalisation, the extension of its existence. The abolition of the monopoly that has attained its broadest and most comprehensive existence is its complete destruction. Association, applied to the land, shares the economic advantage of large landed property and first realises the original tendency of division, namely equality; just as it also restores the sentimental relation of man to the earth in a rational way, no longer mediated by serfdom, lordship and a silly mysticism of property, since the earth ceases to be an object of huckstering and through free labour and free enjoyment becomes once more a true, personal property of man. A great advantage of division is that its mass, a mass that can no longer resign itself to servitude, perishes through property in a different way from the mass in industry.

As for large landed property, its defenders have always sophistically identified the economic advantages offered by large-scale agriculture with large landed property, as if this advantage did not first receive its greatest possible [XX] extension, and first become of social use, precisely through the abolition of property. Likewise they have attacked the huckstering spirit of small landed property, as if large landed property, even in its feudal form, did not contain huckstering latent within it; not to speak of the modern English form, in which the feudalism of the landlord is combined with the huckstering and industry of the tenant.

Just as large landed property can return the reproach of monopoly that the division of landed property makes against it, since division too rests on the monopoly of private property, so the division of landed property can return to large landed property the reproach of division, for division rules here too, only in a rigid, frozen form. Indeed, private property rests in general on being divided. Moreover, just as the division of landed property leads back to large landed property as capitalist wealth, so feudal landed property must necessarily go on to division, or at least fall into the hands of the capitalists, turn and twist as it will.

For large landed property, as in England, drives the overwhelming majority of the population into the arms of industry and reduces its own workers to complete misery. It thus creates and increases the power of its enemy, capital, industry, by throwing the poor and a whole, complete activity of the country on to the other side. It makes the majority of the country industrial, and so the opponent of large landed property. When industry has reached great power, as now in England, it gradually forces large landed property to give up its monopoly against foreign countries and throws it into competition with the landed property of other countries. Under the rule of industry, landed property could secure its feudal greatness only through monopolies against foreign countries, so as to protect itself from the general laws of trade, which contradict its feudal nature. Once thrown into competition, it follows the laws of competition like any other commodity subject to it. It becomes just as fluctuating, shrinking and growing, flying from one hand to another, and no law can keep it any longer in a few predestined hands. [XXI] The immediate consequence is fragmentation among many hands, and in any case subjection to the power of industrial capitals.

Finally, large landed property that has been forcibly maintained in this way, and has produced a terrible industry alongside itself, leads to crisis still more quickly than the division of landed property, beside which the power of industry always remains of the second rank.

Large landed property, as we see in England, has already laid aside its feudal character and taken on an industrial character in so far as it wants to make as much money as possible. It gives the owner the greatest possible ground-rent, the tenant the greatest possible profit on his capital. The farm workers have therefore already been reduced to the minimum, and the class of tenants already represents within landed property the power of industry and capital. Through competition with foreign countries, ground-rent for the most part ceases to be able to form an independent income. A large part of the landowners must take the place of the tenants, who in this way [illegible] partly sink into the proletariat. On the other hand, many tenants will also seize landed property; for the big owners, who with their comfortable revenue have for the most part given themselves up to extravagance and are mostly also unfit to direct large-scale agriculture, partly possess neither the capital nor the ability to exploit the land. So a part of these too is completely ruined. Finally, wages, already reduced to a minimum, must be reduced still further to stand up to the new competition. That then necessarily leads to revolution.

Landed property had to develop in each of the two ways so as to experience its necessary downfall in both, just as industry had to ruin itself in the form of monopoly and in the form of competition in order to learn to believe in man. [XXI]