which is realized by the capital in the non-agricultural spheres of production, and by the non-agricultural prices of production regulated by this average profit. From a normal form of surplus-value and surplus labor the rent has now transformed itself into a surplus peculiar to the agricultural sphere of production, exceeding that portion of the surplus labor, which is claimed at first hand by capital as its legitimate and normal share.
Profit, instead of rent, has now become the normal form of surplus-value, and rent exists only as a form, not of surplusvalue in general, but of one of its offshoots, called surplus profit, which assumes an independent existence only under very peculiar circumstances. It is not necessary to dwell any further upon the way in which this transformation is accom- 3G 930 Capitalist Production.
panied bv a gradual transformation of the mode of production itself. This is shown by the mere fact that it is the normal thing for the capitalist tenant to produce the products of the soil as commodities, and that, while formerly only the surplus over his means of subsistence was converted into commodities, now but a relatively small part of these commodities is directly used as means of subsistence for him. It is no longer the land, but the capital, which has now brought under its direct sway and under its o^vn productivity the labor of the agriculturalist.
The average profit and the price of production regulated by it are formed outside of the conditions of the rural country within the circles of city commerce and manufacture. The profit of the rent-paying farmers does not enter into it as a balancing element, for their relation to the landlord is not a capitalist one. To the extent that he makes profits, that is, realizes a surplus above his necessary means of subsistence, either by his own labor or by the exploitation of other people's labor, it is done behind the back of the normal relationship. Other circumstances being equal, the size of this profit does not determine the rent, but on the contrary, it is determined by the limits set by the rent. The high rate of profit in the Middle Ages is not entirely due to the low composition of the capital, in which the variable capital, invested in w^ages, predominates. It is due also to the robbery committed against the land, the appropriation of a portion of the landlord's rent and of the income of his vassals. While the country exploits the town politically m the Middle Ages, wherever feudalism has not been broken down by an exceptional development of the towns, the town, on the other hand, everywhere and without exception exploits the land economically by its monopoly prices, its system of taxation, its guild organizations, its direct mercantile fraud and its usury.
One might imagine that the mere advent of the capitalist tenant in agricultural production would prove that the price of those products of the soil, which had always paid a rent in one form or another, must stand above the prices of production of manufacture, at least at the time of this advent. And Money Rent. 931 this for the reason that the price of such products of the soil had reached the level of a monopoly price or that it had risen as high as the value of the products of the soil, and that this value actually stood above the price of production regulated by the average profit. Unless this were so, the capitalist tenant could not very well realize first the average profit out of the price of these products, at the existing prices of the products of the soil, and then pay out of this same price a surplus above his profit in the form of rent. One might conclude from this that the average rate of profit, which guides the capitalist tenant in his contract with the landlord, had been formed without including the rent, and that as soon as this average rate of profit assumes a regulating part in agricultural production it finds this surplus ready at hand and turns it over to the landlord. It is in this traditional manner that, for instance, Rodbertus explains this matter. But several points must be considered here.
1) This advent of capital as an independent and leading power in agriculture does not take place generally all at once, but gradually and separately in various lines of production. It seizes at first, not agriculture proper, but such lines of production as cattle raising, especially sheep raising, Avhose principal product, wool, offers a steady surplus of the market price over the price of production during the rise of industry, and this is not balanced until later. This was the case in England during the 16th century.
2) Since this capitalist production appears at first but sporadically, nothing can be argued against the assumption, that it takes hold in the beginning only of such groups of land as are able, through their particular fertility, or their exceptionally favorable location, to pay a differential rent in the long nm.
3) Even assuming that at the time of the advent of this mode of production, which indeed requires an increasing preponderance of the demand in the to^vns, the prices of the products of the soil stood higher than the price of production, as was doubtless the case during the last third of the 17th century in England, nevertheless, as soon as this mode 932 Capitalist Production.
of production will have worked its way somewhat out of the mere subordination of agriculture to capital, and as soon as the improvement of agriculture and the reduction of its cost of production, which accompany its development, will have taken place, the balance will be restored by a reaction, a fall in the price of the products of the soil, as happened in the first half of the 18th century in England.
In this traditional way, then, rent as a surplus above the average profit cannot be explained. Whatever may be the historical circumstances of the time in which rent appears at first, once that it has taken root it cannot exist under any other modern conditions than those previously explained.
Finally, it should be noted in the transformation of rent in kind into money rent, that with it capitalized rent, or the price of land, and its salableness and sale become essential elements, and that with them not only the formerly rent-paying tenant may be transformed into an independent peasant proprietor, but also urban and other moneyed people may buy real estate, in order to lease them either to peasants or to capitalists and thus to enjoy rent in the form of interest on capital so invested; that, therefore, this likewise assists in the transformation of the former mode of exploitation, of the relation between the owner and the actual tiller of the land, and of the rent itself.
V. Share Farming (Metairie System) and Small Peasants',, Property. %\ We have now arrived at the end of our line of development of ground-rent.
In all these forms of ground-rent, whether labor rent, rent in kind, or money rent (as a mere change of lorni of rent in kind), the rent-paying party is always supposed to be the actual tiller and possessor of the land, whose unpaid surplus labor passes directly into the hands of the landlord. Even in the last form, money rent — to the extent that it is " pure," in other words, a mere change of form of rent in kind — this is not only possible, but actually takes place.
f Share Farming. 933 As a form of transition from the original form of rent to capitalist rent, we may consider the metairie system, or share fanning, under which the manager (tenant) furnishes not only labor (his own or that of others), but also a portion of the first capital, and the landlord furnishes, aside from the land, another portion of the first capital (for instance cattle), and the product is divided between the tenant and the landlord according to definite shares, which differ in various countries. In this case, the tenant lacks the capital required for a thorough capitalist operation of agriculture. On the other hand, the share thus appropriated by the landlord has not the pure form of rent. It may actually include interest on the capital advanced by him and a surplus rent. It may also absorb practically all the surplus labor of the tenant, or leave to him a greater or smaller portion of this surplus labor. But the essential point is that rent no longer appears here as the normal form of suq^lus-value in general. On the one hand, the tenant, whether he employ his own labor or another's, is supposed to have a claim upon a portion of the product, not in his capacity as a laborer, but as a possessor of a part of the instruments of labor, as his own capitalist. On the other hand, the landlord claims his share not exclusively in his capacity as the owner of the land, but also as a lender of capital. ^^^ A remainder of the old community in land, which had been preser\'ed after the transition to independent peasant economy, for instance in Poland and Roumania, served there as a subterfuge for accomplishing a transition to the lower forms of ground-rent. A portion of the land belongs to the individual farmers and is tilled independently by them. Another portion is tilled collectively and creates a surplus product, which serves either for the payment of community expenses, or as a reserve in ease of crop failures, etc. These last two parts of the surplus product, and finally the whole surplus product together with the land, upon which it has been gro^\nQ, are gradually usurped by state officials and private individuals, and by this means the originally free peas- *'' Compare Buret, Tocqueville, Sismondi.
934 Capitalist Production.
ant proprietors, whose obligation to till this land collectively is maintained, are transformed into vassals, who are compelled to perform forced labor or pay rent in kind, while the usurpers are transformed into owners, not only of the stolen community lands, but of the lands of the peasants themselves. /We need not dwell upon actual slave economy (which like-/Wise passes through a development from the patriarchal sys-|tem, working pre-eminently for home use, to the plantation I system, working for the world market) nor upon that manlagement of estates, under which the landlords carry on agriculture for their own account, own all the instruments of production, and exploit the labor of free or unfree servants, who are paid in kind or in money. In this case, the landlord and the owner of the instruments of production, and thus the direct exploiter of the laborers counted among these instruments of production, are one and the same person.
Rent and profit likewise coincide then, there being no separation of the different forms of surplus-value. The entire surplus labor of the workers, which is here represented by the surplus product, is extracted from them directly by the owner of all the instruments of production, to which the land and, under the original form of slavery, the producers themselves, belong. Where capitalist conceptions predominate^as they did upon the American plantations, this entire surplusvalue is regarded as profit. In places where the capitalist mode' "of production does not exist, nor the conceptions cor- ■ responding to it have been transferred from capitalist coun- ' tries, it appears as rent. At any rate, this form does not present any difficulties. The income of the landlord, whatever may be the name given to it, the available surplus product appropriated by him, is here the normal and predominating form, under which the entire unpaid labor is directly appropriated, and the property in land forms the basis of this appropriation.
There is, furthermore, the small peasants' property. Here the farmer is the free owner of his land, which appears as I his principal instrument of production, the indispensable field ioi employment for his labor and his capital. No lease money Small Peasants' Property. 935 is paid under this form. Rent, therefore, does not appear as a separate form of surplus-value here, although in countries, in which capitalist industry in other lines is developed, it appears as a surplus profit by comparison with other lines of production. But it is a surplus profit which, like all the rest of the product of his labor, falls into the hands of the farmer himself.
This form of property in land requires that, as was the case under the earlier forms, the rural population should have a great preponderance over the city population, so that, while capitalist production may generally prevail, it is nevertheless but relatively little developed, concentration of capitals moves in narrow circles in the other lines of production, and dissipation of capitals predominates. Under these conditions, the greater part of the rural product will have to be consumed, as a direct means of subsistence, by the producers, the farmers themselves, and only the surplus above that will pass as commodities into the commerce with the cities. Whatever may be the manner, in which tlie average market price of the products of the soil is regulated in this case, the differential rent, a surplus portion of the price of commodities from the superior or more favorably located lands, must evidently exist in this case just as it does under the capitalist mode of production. This differential rent would exist, even if this form should appear under social conditions, in which no general market price has as yet been developed. It appears then in the spare surplus product. Only it flows into the pocket of the farmer, whose labor realises itself under favorable natural conditions. It is precisely under this form that the assumption is correct, as a rule, that no absolute rent exists, so that the worst soil does not pay any rent. For under this form the price of land enters as an element into the actual cost of production for the farmer, since in the course of the further development of this form the price of land may have been figured, for instance in the case of a division of an estate, at a certain money value, or, in view of the continuous change in the ownership of the whole property, or of its parts, the land may have been bought by the tiller him- 9^6 Capitalist Production.
self, largely by taking up money on a mortgage. In this way the price of land, which is nothing else but a capitalized rent, is a pre-existing condition and rent seems to exist independently of any differentiation in the fertility and location of the land. Absolute rent is conditioned either upon the realized surplus of the value of the product above its price of production, or a monopoly price exceeding the value of the product. But since agriculture is carried on here largely as an agriculture for direct subsistence, so that the land is an indispensable field of employment for the labor and capital of the majority of the population, the regulating market price of the product will come up to its value only under extraordinary circumstances. But its value will, as a rule, stand higher than its price of production on account of the predominance of the element of living labor, although this excess of its value over its price of production will be in its turn limited by the low composition of tlie capital, even of that of the industries outside of agriculture, in countries with a predominance of small farmers' property. For the small farmer the limit of exploitation is not set by the average profit of the capital, if he is a small capitalist, nor by the necessity of making a rent, if he is a landowner. Nothing appears as an absolute limit for him, as a small ca23italist, but the wages which He pays to himself, after deducting his actual costs.
So long as the price of the product covers these wages, he will cultivate his land, and will do so often down to the physical minimum of his wages. As for his capacity as a landlord, the barrier of property is eliminated in his case, since it can exert its influence only against a capital (including labor) separated from it, by erecting an obstacle against its investment. It is true that interest on the price of land, which generally has to be paid to another, the holder of the mortgage, also forms a barrier. But this interest can be paid out of that portion of the surplus labor, which would form the profit under capitalist conditions. The rent anticipated in the price of land, and in the interest paid for it, cannot be anything else but a portion of the capitalized surplus la- Small Peasants' Property. 937 Lor of tlie farmer, performed bj him beyond the labor indispensable for his subsistence, without realising this surplus labor in a part of the value of commodities equal to the entire average profit, and still less in a surplus profit, which would constitute a surplus above the surplus labor realised in the average profit. The rent may be a deduction from the average profit, or even the only portion of it which is realised. In order that the small farmer may cultivate his land, or may buy land for cultivation, it is therefore not necessary, as it is under a normal capitalist production, that the market price of his products should rise high enough to allow him the average profit, and still less a surplus above this average profit fixed in the form of a rent. Therefore it is not necessary that the market price should rise, either as high as the value or as high as the price of production of his product. Thi^ is one of the causes which keeps the price of cereals lower in""', countries with a predominance of small farmers than in countries with a capitalist mode of production. One portion of the surplus labor of the farmers, who work under the least favorable conditions, is given to society without an equivalent and does not pass over into the regulation of the price of production or into the formation of values in general. This lower price is also a result of the poverty of the producers and by no means of the productivity of their labor.
This form of free farmers' property managing their own affairs, as the prevailing, normal, form constitutes on the one hand the economic foundation of society during the best times \ of classical antiquity, on the other hand it is found among J, modern nations as one of the forms arising from the dissolu- / tion of feudal^lftndlofdtsYn. In this way we meet the yeo-V' manry in England, the peasantry in Sweden, the farmers in France and Western Germany. We do not mention the colonies here, since the independent farmer there develops under different conditions.
The free ownership of the selfemploying farmer is evidently the most normal form of landed property for small scale production, that is, for a mode of production, in which, 938 Capitalist Production.
the possession of the land is a prerequisite for the ownership of the product of his own labor by the laborer, and in which the agriculturist, whether he be a free owner or a vassal, always has to produce his own means of subsistence independently, as a single laborer with his family. The ownership of the soil is as necessary for the complete development of this mode of production as the ownership of the instrument is for the free development of handicraft production. This ownership forms here the basis for the development of personal independence. It is a necessary stage of transition for the development of agriculture itself. The causes which bring about its downfall show its limitations. These causes are: Destruction of rural house industries, which form its normal supplement, as a result of the development of great industries; a gradual deterioration and exhaustion of the soil subjected to this cultivation; usurpation, on the part of the great landlords, of the community lands, which form everywhere the second supplement of small peasants' property and alone enable them to keep cattle; competition, either of plantation systems or of great agricultural enterprises carried out on a capitalist scale. Improvements of agriculture, which on the one hand bring about a fall in the prices of the products of the soil, and on the other require greater investments and more diversified material conditions of production, also contribute towards this end, as they did in England during the first half of the 18th century.
Small peasants' property excludes by its very nature the development of the social powers of production of labor, the social forms of labor, the social concentration of capitals, cattle raising on a large scale, and a progressive application of science.
Usury and a system of taxation must impoverish it everywhere. The expenditure of capital in the price of the land withdraws this capital from cultivation. An infinite dissipation of means of production and an isolation of the producers themselves go with it. Also an enormous waste of human energy. A progressive deterioration of the conditions of production and a raising of the price of means of produc- Small Peasants' Property. 939 tion is a necessary law of small peasants' property. Fertile seasons are a misfortune for this mode of production. -^^^ One of the specific evils of small scale agriculture, when combined with the free ownership of the land, arises from the fact that the agriculturist invests a capital in the purchase of the land. (The same applies also to the form of transition, in which the great landlord invests capital, first, for the purpose of buying land, and secondly, for the purpose of managing it as his own tenant). Owing to the changeable nature, which the land here assumes as a mere commodity, the changes of ownership increase,^"*^ so that the land, from the point of view of the farmer, passes again into the calculation as a new investment of capital with every new generation, every division of estates, in other words, that it becomes land bought by him. The price of land here forms an overwhelming element of the individual false cost of production, or of the cost price of the product for the individual producer.
The price of land is nothing but the capitalized, and therefore anticipated, rent. If agriculture is carried on by capitalist methods, so that the landlord receives only the rent, and the tenant pays nothing for the land except his annual rent, then it is evident that the capital invested by the owner of the land himself in the purchase of the land constitutes an interest-bearing investment of capital for him, but that it has nothing to do with the capital invested in agriculture itself. It forms neither a part of the fixed nor of the circulating capital employed here;^^^ it merely secures for the buyer a title to the annual rent, but has nothing to do with the production **" See the speech of the king of France in Tooke.
"' See Mounier and Rubichon.
^" Dr. H. Maron (Extensive or Intensive?) [No further information given about this pamphlet]. He starts from the false assumption of those whom he combats. He assumes that the capital invested in the purchase of land is " first capital," and engages in a controversy about first capital and running capital that is, fixed and circulating capital. His wholly amateurish conceptions of capital, which may be excused in one who is not an economist in view of the condition of German political economy, conceal from him the fact that this capital is neither first nor running capital, any more than the capital, which some one may invest at the Stock Exchange in the purchase of consols or state bonds, and which represents a personal investment of capital for him, is " invested " in any productive line of industry.
940 Capitalist Production.
of the rent itself. For tbe buyer of land pays his capital out to the one who sells the land, and the seller relinquishes his ownership of the land for this consideration. This capital does not exist any more as the capital of the buyer after that. He has not got it any longer. Therefore it does not belong to the capital, which he can invest in any way in the land itself. Whether he bought the land at a high or a low price, or whether he received it for nothing, does not alter anything in the capital invested by the tenant in his establishment, and does not make any change in the rent, but merely changes the question, whether it appears to him as interest or not as interest, or as a high or a low interest.
Take, for instance, the slavery system. The price paid for a slave is nothing but the anticipated and capitalized surplusvalue or profit, which is to be ground out of him. But the capital paid for the purchase of a slave does not belong to the capital, by which profit, surplus labor, is extracted from him. On the contrary. It is capital, which the slave holder gives away, it is a deduction from the capital, which he has available for actual production. It has ceased to exist for him, just as the capital invested in the purchase of land has ceased to exist for agriculture. The best proof of this is the fact, that it does not come back into existence for the slave holder or the land owner, until he sells the slave or the land once more. Then the same condition of things holds good for the buyer. The fact that he has bought the slave does not enable him to exploit the slave without further ceremony. He is not able to do so until he invests some other capital in production by means of the slave.
The same capital does not exist twice. It does not exist one time in the hands of the seller, and a second time in the hands of the buyer of the land. It passes from the hands of the buyer to those of the seller, and that settles the matter. The buyer has then no longer any capital, but in its stead he has a piece of land. The fact that the rent produced by a real investment of capital in this land is figured by the new ovtmer of the land as interest on a capital, which he did not invest in the soil, but gave away as a purchase price for the Small Peasants' Property. 941 land, does not alter the economic nature of the factor land in the least, any more than the fact that some one may have l^aid 1,000 pounds sterling for 3% consols has anything to do with the capital, out of whose revenue the interest on the national debt is paid.
In fact, the money expended in the purchase of land, like that spent for the purchase of national bonds, is merely capital in itself, just as any amount of values is capital in itself on the basis of capitalist production. It is potential capital. The thing paid for the land, like that paid for national bonds or any other purchased commodity, is a sum of money. This is capital in itself, because it may be converted into capital. It depends upon the use to which the seller puts it, whether the money obtained by him really becomes capital or not. For the buyer it can never again perform the functions of capital, any more than any other money which he has finally spent. It figures in his calculations as interest-bearing capital, because he considers the income, which he receives as rent from his land or as interest on his bonds, as interest on the money, which he paid for his title to this revenue. He cannot realise it as capital unless he sells his title again. If he does, then the new buyer assumes the same relationship in which the old one was, and the money spent in this transaction cannot transform itself into actual capital by any change of hands.