^" \'ery conservative agricultural chemists, for instance Johnston, admit that a really rational agriculture meets everywhere insurmountable barriers through the existence of private property. So do writers, who are confessedly advocates of the monopoly of private property on the globe, for instance Charles Comte in his work of two volumes, which has for its special aim the defense of private property. " A nation," says he, " cannot attain to the degree of prosperity and power compatible with its nature, unless every portion of the soil nourishing it is assigned 724 Capitalist Production.
land on the one side from the relations between master and servant, and on the other hand totally separates land as an 'instrument of production from property in land and land owners, for whom it represents merely a certain tribute of money, which he collects by force of his monopoly from the industrial capitalist, the capitalist farmer. It dissolves all these connections so thoroughly, that the o-^^ner of the land may spend his whole life in Constantinople, while his estates are in Scotland. Private property in land thus receives its purely economic form by discarding all its former political and social trappings and implications, in brief all those traditional accessories, which are denounced as a useless and absurd attachment by the industrial capitalists and their theoretical spokesmen in the heat of their struggle with landed property, as we shall see later. The rationalising of agriculture on the one hand and thus rendering it capable of operation on a social scale, and the reduction ad dbsurdum of private property in land on the other hand, these are the great merits of the capitalist mode of production. Like all its other historical advances it bought these also by first completely pauperizing the direct producers.
Before we pass on to the problem itself, we must make a few more preliminary remarks in order to forestall misunderstanding.
The premises for a capitalist production in agriculture are these: The actual tillers of the soil are wage-laborers, emto that purpose which agrees best with the general interest. In order to give to its wealth a strong development, one sole and highly enlightened will should, if possible, take it upon himself to assign to each piece of his domain its task and make every piece contribute to the prosperity of all others. But the existence of such a will...would be incompatible with the division of the land into private plots...and with the ability of each owner to dispose of his property in an almost absolute manner, according to constitutional guarantees." — Johnston, Comte, and others, have in mind only the necessity of tilling the land of a certain country as a whole, when they speak of an antagonism of private property to a rational system of agronomics. But the dependence of the cultivation of particular products of the soil upon the fluctuations of market prices, and the continual changes of this cultivation with these fluctuations of prices, the whole spirit of capitalist production, which is directed toward the immediate gain of money, contradicts agriculture, which has to minister to the entire range of permanent necessities of life required by a network of human generations. A striking illustration of this is furnished by the forests, which are occasionally managed in a way befitting the interests of society as a whole, when they are not private property, but subject to the control of the state.
Preliminaries. 725 ployed by a capitalist, the capitalist farmer, who carries on agriculture merely as a special field of exploitation for his capital, an investment of his capital in a special sphere of production. This renting capitalist pays to the land owner, the owner of the soil exploited by him, a sum of money at definite periods fixed by contract, for instance annually (just as the borrower of money-capital pays a fixed interest), for the permission to invest his capital in this particular sphere of production. This sum of money is called ground-rent, no matter whether it is paid for agriculture soil, building lots, mines, fishing grounds, forests, etc. It is paid for the entire time, during which the land owner has rented his land to the capitalist by contract. Ground-rent, therefore, is that form, in which property in land realizes itself economically, that is, produces value. Here, then, Ave have all three classes together, which constitute the frame work of modern society, and they have divergent interests — wage-laborers, industrial capitalists, land owners.
Capital may be fixed in the soil, may be incorporated in it, either in a transient manner, as it is by improvements of a chemical nature, fertilization, etc., or more permanently, as in drainage canals, irrigation works, leveling, farm buildings, etc. In another place I have called the capital thus incorporated in the soil land-capital}'^^ It belongs in the categories of fixed capital. The interest on the capital thus incorporated in the soil and the improvements thus made in it as an instrument of production may form a part of the rent paid by the capitalist farmer to the land owner,^-^ but it does not constitute that ground-rent, strictly speaking, which is paid for the use of the soil as such, whether it be in a natural state or cultivated. In a systematic treatment of private property in land, which is not included in our plan, this part '™ The Poverty of Philosophy, p. 148. There I have made a distinction between land-capital and material land. " By merely applying additional capital to land already transformed into means of production land-capital may be augmented without adding anything to the material land, that is to say, to the extent of the land...As capital, land is not more eternal than any other capital. Land-capital is fixed capital, but fixed capital is used up as well as circulating capital."
^^ I say " may," because under certain circumstances this interest is regulated by the law of ground-rent and may disappear, for instance, in the case of competition between lands of great natural fertility.
726 Capitalist Production.
of the revenue of the land owner would have to be discussed at length. But a few words about it will suffice here. The more transient investments of capital which go wi'th the ordinary processes of production in agriculture, are made without exception by the capitalist farmer. These investments, like cultivation proper, improve the soil,^^^ if cultivation is carried on in a moderately rational manner and does not reduce itself to a brutal spoliation of the soil, such as used to be in vogue among the former slave holders in the United States, a thing against which the land owTiers may provide by contract. In this way material land is transformed into landcapital. A cultivated field is worth more than an uncultivated one of the same natural quality. Likewise the more permanent fixed capitals, which are incorporated in the soil and worn out in longer time, are largely, and in some spheres often exclusively, invested by the capitalist farmer. But as soon as the time stipulated by contract has expired — and this is one of the reasons why the land owners seek to shorten the time of contract as much as possible when capitalist production develops — the improvements embodied in the soil become the property of the land owner as an inseparable part of the land. In the new contract, which the land owner makes, he adds the interest for the capital incorporated in the soil to the real gi'ound-rent. And he does this whether he leases the land to the same capitalist who made these improvements or to some other capitalist fanner. His rent is thus increased; or, if he wishes to sell his land (we shall see immediately how its price is determined), its value has risen. He sells not merely the soil, but the improved soil, the capital incorporated in the soil for which he did not pay anything. Quite aside from the movements of real ground-rent, this is one of the secrets of the increasing enrichment of the land owners, of the continuous inflation of their rents, and of the growing money-value of real estate in proportion as economic development proceeds. Thus they pocket a result of social development brought about without '^ See James Anderson and Carey.
Preliminaries. 727 their help, fruges consumere nati, they are born to consume the fruits of the earth. But this is at the same time one of the greatest obstacles to a rational development of agriculture, because the capitalist renter avoids all improvements and expenses, for which he cannot expect any returns during the time of his lease. We find tliis fact denounced as such an obstacle, not only in the 18th century by James Anderson, the actual discoverer of the modern theory of rent, who was also a practical capitalist fanner and an advanced agronomist for his time, but also in our own days by the opponents of the present constitution of landed property in England.
A. A. Walton, in his " History of the Landed Tenures of Great Britain and Ireland/' London, 1865, says on this score: All the efforts of the numerous agricultural institutes in our country cannot accomplish any very important or really appreciable results in the actual progress of improved cultivation, so long as such improvements increase in a far highei degree the value of real estate and the size of the rent roll of the land o^\Tier, than they improve the condition cf the tenant or the farm laborer. The tenants in general know quite as well as the land owner, his rent collector, or even the president of an agricultural society, that good drainage, ample manuring, and good management, together with an increased application of labor, cleaning the land thoroughly and working it over, will produce wonderful results, both in the improvement of the soil and in an increased production. But all this demands considerable expense, and the tenants also know very well, that no matter how much they may improve the soil or raise its value, the land owner will in the long run get the princijDal benefit of it in raised rents and increased land values...They are cunning enough to observe, what those speakers [land owners and their agents speaking at agTicultural feasts] always forget to tell them, namely that the lion's share of all improvements made by the tenants must always pass ultimately into the pockets of the land owners. No matter how much the former tenant may have improved his leasehold, his successor will always find, that 728 Capitalist Production.
the land owner will raise the rent in proportion to the increased land value due to previous improvements. (Pages In agriculture proper this process does not yet appear quite so plainly as when the land is used for building lots. The overwhelming part of the land used in England for building purposes, but not sold as a freehold, is rented by the land owners for 99 years, or for a shorter time if possible. After the lapse of this time the buildings fall into the hands of the land owner together with the land. The tenants are obliged. says Walton, to deliver the house to the great land owner in a good inhabitable condition after the expiration of the lease, after they have paid up to this time an exorbitant groundrent. Hardly has the lease expired, when the agent or inspector of the landlord comes, inspects your house, takes care that you get it into good condition, takes possession of it and annexes it to the domain of his landlord. The fact is that if this system is permitted to exert its full effects for some time longer, the entire ownership of houses as well as of country real estate will be in the hands of the great landed proprietors. The whole West End of London, north and south of Temple Bar, belongs almost exclusively to half a dozen great landlords, is rented at enormous ground-rents, and if the leases have not quite expired, most of them expire in rapid succession. The same applies in a greater or smaller degree to every city in the Kingdom. But even here this greedy system of exclusiveness and monopoly does not stop.
Xearly all the docking facilities of our port cities are in the hands of the great land leviathans in consequence of the same process of usurpation. (L. c, p. 93.) Under these circumstances it is evident that if the census for England and Wales in 1861 gives the total population as 20,066,224 and the number of house owners as 36,032, the proportion of the owners to the number of houses and to the population would take on a very different aspect, if the great house owners were placed on one side and the small ones on the other.
This illustration of property in buildings is important. In the first place, it clearly shows the difference between real Preliminaries. 729 ground-rent and interest on fixed capital incorporated in the soil, which may form an addition to the ground-rent. The interest on buildings, like that on capital incorporated in the soil by the tenant, falls into the hands of the industrial capitalist, the building speculator, or the tenant, so long as the lease lasts, and has in itself nothing to do with the groundrent, which must be paid annually at stated dates for the use of the soil. In the second place it shows, that the capital incorporated in the soil ultimately passes into the hands of the landlord together with the land, and that the interest on it helps to swell his rent.
Some writers, either acting as spokesmen of landlordism against the attacks of bourgeois economists, or endeavoring to transform the capitalist system of production from' a system of antagonisms into one of '' harmonies," as did Carey, have tried to represent ground-rent, the specific economic expression of private property in land, as identical with interest.
For this would obliterate the antagonism between landlords and capitalists. The opposite method was employed in the beginning of capitalist production. In those days landed property was still regarded by popular conception as the primitive and respectable form of private property, while interest on capital was decried as usury. Dudley North, Locke and others, therefore represented interest on capital as a fonu analogous with ground-rent, just as Turgot deduced the justification of interest from the existence of ground-rent. — Aside from the fact that ground-rent may, and does, exist in its pure form without any addition for interest on capital incorporated in the soil, these more recent writers also forget, that in this way the landlord does not only receive interest on the capital of other people that cost him nothing, but also pockets this capital of others without any compensating re* turn. The justification of private property in land, like that of all other forms of property within a certain mode of production, is that the mode of production is itself a transient historical necessity, and this includes the conditions of production and exchange, which flow from it. It is true, as we shall see later, that property in land differs from the other 730 Capitalist Production.
kinds of property by the fact that it appears superfluous, and even noxious, at a certain stage of development, even from the point of view of capitalist production.
In another form, ground-rent may be confounded with interest and its specific character overlooked. Ground-rent assumes the shape of a certain sum of money, which the landlord draws annually out of the lease of a certain piece of the globe. We have seen that every sum of money may be capitalised, that is, considered as the interest on an imaginary capital. For instance, if the average rate of interest is 5%, then an annual ground-rent of 200 pounds sterling may be regarded as the interest on a cajjital of 4,000 pounds sterling. Ground-rent so capitalised forms the purchase price or value of the land, a category which is on its face irrational, just as the price of labor is, since the earth is not the product of labor and therefore has no value. But on the other hand a real relation in production is concealed behind this irrational form. If a capitalist buys land yielding a rent of 200 pounds sterling annually and pays 4,000 pounds sterling for it, then he draws the average interest of 5% on his capital of 4,000 pounds sterling, just as though he had invested this capital in interest-bearing papers or loaned it directly at 5% interest.
It is the utilisation of a capital of 4,000 pounds sterling at 5%. On this assumption he would recover the purchase price of his estate in twenty years by its revenues. In England, therefore, the purchase price of land is calculated on so many years' purchase, and this is merely a different expression for the capitalisation of tie ground-rent. It is in fact the purchase price, not of the land, but of the ground-rent yielded by it, calculated on the ordinary rate of interest. But this capitalisation of rent has for its premise the existence of rent, for rent cannot be explained and derived from its own capitalisation. Its existence, independent of its sale, is rather the condition from which the inquiry must start.
It follows, then, that the price of land may rise or fall inversely as the rate of interest rises or falls, if we assume that ground-rent is a constant magnitude. If the ordinary rate of interest should fall from 5% to 4%, then the annual Preliminaries. 731 ground-rent of 200 pounds sterling would represent the annual self-expansion of a capital of 5,000 pounds sterling instead of 4,000 pounds sterling. The price of the same piece of land would thus have risen from 4,000 to 5,000 pounds sterling, or from 20 years' to 25 years' purchase. The reverse would take place in the opposite case. This is a movement of the price of land, which is independent of the movement of ground-rent itself and regulated only by the rate of interest. But as w'o have seen that the rate of profit has a tendency to fall in the course of social progress, and that the rate of interest has the same tendency, so far as it is regulated by the rate of profit; and since, furthermore, the rate of interest has a tendency to fall in consequence of the growth of loanable capital, aside from the influence of the rate of profit, it follows that the price of land has a tendency to rise, even independently of the movement of ground-rent and the prices of the products of the soil, of which the rent forms a part.
The mistaking ground-rent for the interest form, which it assumes for the buyer of the land — a mistake due to a complete nnfamiliarity with tlie nature of groundrent — must lead to the most absurd conclusions. Since landed property is considered, in all old countries, as a particularly noble form of property, and its purchase also as an eminently safe investment of capital, the rate of interest at which ground-rent is bought is generally lower than that of other investments of capital for a long time, so that a buyer of real estate draws, for instance, only 4% on his purchase price, whereas he would draw 5% for the same capital in other investments. In other words, he pays more capital for the ground-rent than he would for the same amount of income in other investments. This leads Mr. Thiers to conclude in his utterly valueless work on La Propriete (a reprint of a speech of his made in 1849 against Proudhon in the French National Assembly) that ground-rent is low, while it proves merely that its purchase price is high.
The fact that capitalised ground-rent represents itself as the price or value of land, so that the earth is bought and sold like 732 Capitalist Production.
any other commodity, serves to some apologists as a justification of private property in land, seeing that tlie buyer pays an equivalent for it the same as he does for other commodities, and that the major portion of property in land has changed hands in this way. The same reason would, in that case, serve also to justify slavery, since the returns from the labor of the slave, whom the slave holder has bought, represent merely the interest on the capital invested in this purchase. To derive from the sale and purchase of ground-rent a justification for its existence signifies to justify its existence by its existence.
It is very important for a scientific analysis of groundrent, that is of the independent and specifically economic form of property in land on the basis of capitalist production, to study it in its pure form and free from all falsifying and obliterating by-work. And it is no less important for an understanding of the practical effects of property in land, even for a theoretical comprehension of a multitude of facts, which run counter to the conception and nature of groundrent and yet appear as modes of existence of ^ound-rent, to know the elements which give ri'^e to such t^'^Sscurities in theory.
In practice everything appears naturally as ground-rent that is paid in the form of lease money by the tenant to the landlord for the pei'mission of cultivating the soil. Whatever may be the composition of this tribute, whatever may be its sources, it has this in common with real ground-rent that the monopoly of the so-called owner of a piece of the globe enables him to levy such a tribute and impos*^ such a tax. This tribute furthermore shares with the real groundrent the fact that it determines the price of land, m Inch, as we have indicated above, is nothing but the capita] ised income from the lease of the land.
We have already seen, that the interest for the capital incorporated in the soil may form one of those foreign ingredients in ground-rent, an element which must become a continually growing addition to the total rent of a certain country Preliminaries. 733 in proportion as economic development proceeds. But aside from this interest it is possible that the lease money may conceal a deduction from the average profit or from the normal wages, or both, being made up of them either in part or wholly, so that in some cases it may not represent any real ground-rent at all and the soil may be valueless. This portion of the profit, or of wages, appears then as ground-rent, because instead of falling normally into the hands of the industrial capitalist or the wage worker, it is paid to the landlord in the form of lease money. Economically speaking neither the one nor the other of these portions constitutes any ground-rent; but in practice they constitute some of the revenue of the landlord, an economic utilisation of his monopoly, just as real ground-rent does, and they have a determining influence on land prices just as ground-rent has.
We are not now speaking of conditions, in which groundrent, the form of landed property adapted to the capitalist mode of production, fomially exists without the capitalist mode of production itself, so that the tenant is not an industrial capitalist, nor the mode of his management a capitalist one. Such is the case in Ireland. The tenant is here generally a small farmer. What he pays to the landlord in the shape of rent absorbs frequently not merely a part of his profit, that is, of his ovra surplus-labor, to which he is entitled as the possessor of his own instruments of production, but also a part of his normal wages, which he would receive under different conditions for the same amount of labor. Besides, the landlord, who does not do anything for the improvement of the soil, also expropriates him from his small capital, which he incorporates for tlie greater part in the soil by his own labor, just as a usurer would do under similar circumstances. Only the usurer would at least risk his own capital in the operation. This continual robbery is the center of the disputes over the Irish Land Bill, which has for its principal aim to compel the landlord, when giving notice to his tenant to vacate, should pay him an indemnity for the improvements made by him in the soil, or for the capital in- 734 Capitalist Production.
corporated by him in the laud. Pahuerston used to meet this demand with the cynical answer: " The House of Commons is a house of landlords."
A'^or do we sj^eak of exceptional circumstances, in which the landlord may enforce a high rent even in countries with a capitalist production, although this rent may not be in any way connected with the product of the soil. Of such a nature is the renting of small patches of ground to laborers in English factory districts, either for small gardens or for amateur agriculture in spare hours. (Reports of Inspectors of Factories.)
We are speaking of ground-rent in countries with a developed capitalist production. Among English tenants, for instance, there is a number of small capitalists, who are destined and compelled by education, training, tradition, competition, and other circumstances, to invest their capital as tenants in agriculture. They are compelled to be satisfied with less than the average profit, and to yield up a part of it to the landlords for rent. This is the only condition on which they are permitted to invest their capital in the soil, in agriculture. Since the landlords exert everywhere a considerable, in England even an overwhelming, influence on legislation, they are in a position to exploit this for the purpose of grinding do^^^l the entire class of tenants. The corn laws of 1815, for instance, a bread tax confessedly imposed upon the country for the purpose of securing for the idle landlords a continuation of their abnormally increased rentals during the anti-Jacobin wars, had indeed the effect, with the exception of a few extraordinarily rich years, of keeping the prices of agricultural products above the level which they could have held in free competition. But they did not have the effect of keeping prices at that level, which had been ordered by the law-making landlords to seiwe as standard prices in such a way as to form the legal limit for the importation of foreign corn. But the leases were made out under the impression created by these normal prices. As soon as the illusion passed away, a new law was made, with new normal prices, which were as much an impotent expression of the greedy land-