On Differential Rent 1851–53

Chapter 7: On Differential Rent 1851–53

In correspondence with Engels on 7 January of 1851, Marx expressed approval of the differential-rent principle, insisting only that it applied specifically to advanced capitalism and not universally as Ricardo allegedly maintained. This we will demon- strate, since it is easy to come away with a contrary impression.

Marx takes issue with Ricardo on the grounds that all his propositions “are everywhere refuted by history,” considering “the progress of science and industry,”

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whereby although “ever poorer types of soil are brought into cultivation . . . these poorer types of soil are relatively good as against those previously regarded as good” (MECW 38: 258). Second, the empirical evidence showed that British corn prices had fallen since 1815 but that rent had steadily risen. For all that, in interpreting the data Marx retains the differential principle, supposing, in effect, a rightward displacement of the marginal-product curve subject to a twist: “The more general the improvement in the land, the greater the variety of the fields it will embrace, and the country’s overall rental may rise, although there is a general fall in the price of corn. . . . [I]t is simply a question of . . . the extent to which the quality of the land varies as between the best and the poorest” (262). This amounted “to adjust[ing] the law of rent to progress in fertility in agriculture generally” in order “to explain the historical facts” (261). The point is that despite the historical increase in rent and fall in corn price “Ricardo’s law still holds good” (262; Marx’s emphasis) turning on the differential principle rather than a particular historical sequence: “The law of rent, as laid down by Ricardo . . . does not presuppose the diminishing fertility of the land, but only – and this despite the general increase in fertility that accompanies the development of society – the varying fertility of fields or the varying results obtained by the capital successively employed on the same land.” The defense of Ricardo is well founded. 2

In correspondence some two years later, Marx entered a surprisingly strong defense of Ricardian rent doctrine, this time against Carey. 3 And though he as usual ascribed to Ricardo a universalist doctrine, even this was turned to Ricardo’s advantage: “as I have proved in my book on Proudhon . . . [Ricardo’s] theory is true only of bourgeois society in a condition of full development. Rent, in its commercial form – the only one he mentions – does not otherwise exist at all. It therefore leaves him unaffected to maintain that at various historical epochs it was not the worse, but rather the better, lands that were successively cultivated” (to Adolf Cluss, 5 October 1853; MECW 39: 381–2). He also points out approvingly that “Ricardo does not speak only of the natural properties of the soil, but also of its situation, a social product, a social attribute;” and he reminds his correspondent: “The fertility of the soil, as I have likewise already said in the Anti-Proudhon, is something purely relative. Changes in the soil’s fertility and its degree in relation to society, and that is the only aspect of fertility with which we are concerned, depend on changes in the science of chemistry and its application to agronomy” (382).

2 The discussion closes with the assertion that while under Communal ownership the problem of diminishing returns would still exist – though what happens to the preceding insistence on

new technology is unclear – the marginal-cost pricing principle would be inapplicable: “Even after the elimination of bourgeois production, however, there remains the snag that the soil would become relatively more infertile, that, with the same amount of labour, successively less would be achieved, although the best land would no longer, as under bourgeois rule, yield as dear a product as the poorest” (MECW 38: 262). 3 Cf. also J. S. Mill’s defence of Ricardo against Carey (Hollander 1985: 213–16).

497 More generally, and as in the letter of 1851, Marx insisted that the differential-

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principle itself retained its validity, even allowing for shifting productivity curves. And he emphasized the endogeneity of the margin as a feature of Ricardo’s theory, whereby “the commodity produced under the most unfavourable circumstances, and made necessary because of the demand for it, determines the price of all other commodities of the same kind ” (383). But here, unfortunately, Marx falls into the common error of interpreting Ricardo as ascribing rent to “the land” as such: “What . . . gives rise to rent? Not the land, as supposed by Ricardo, but the mar-

ket price and the laws by which it is regulated.” 4 It followed that “if rent is to be overthrown” – alluding presumably to Communist arrangement – “it must not

be interpreted philanthropically; rather the laws of market price and thus of prices generally and thus the whole framework of the bourgeois economy must be over- thrown.”