Chapter 46 is an extraordinarily short (8 pages in the Penguin Classics edition) section which follows multiple chapters on the vagaries of differential rent as well as the chapter on absolute rent, all wedged into the closing pages of Capital Volume 3. Where the previous discussion focused almost solely on rents in agriculture, (as is oft-noted by people who think this somehow invalidates or renders Marx’s rent theory as a historical curio) in chapter 46 the necessity of properly delineating the ways in which agricultural rents function is laid bare:
“Wherever rent exists, differential rent always appears and always follows the same laws as it does in agriculture. Wherever natural forces can be monopolized and give the industrialist who makes use of them a surplus profit, whether a waterfall, a rich mine, fishing grounds or a well-situated building site, the person indicated as the owner of these natural objects, by virtue of his title to a portion of the earth, seizes this surplus profit from the functioning capital in the form of rent”.1
He continues by approvingly citing Adam Smith’s Wealth of Nations, Book I, Chapter XI, noting that Smith insists that the basis of rent of land for building, and thus for all land in a capitalist economy, “is governed by agricultural rent proper”.2 It’s helpful to get a bit more into precisely what Smith says about agriculture, particularly about food, in all forms, as its product. He begins with the statement that, at the then-present stage of capitalist development in which he writes (and by no means superseded in our own time), “the improvement and cultivation of land enables the labor of one family to provide food for two families, the labor of half the society becomes enough to provide food for the whole”3 — continuing that “food not only constitutes the principal part of the riches of the world, but the abundance of food is what gives many other sorts of riches the principal part of their value” [emphasis mine].4 Put simply, Smith’s concern is about establishing a primary and more or less constant demand for the output of a single landed sector of production. Food is, of course, essential to the reproduction and survival of all, and while its demand is “limited by the narrow capacity of the human stomach”, other desires for clothing, accommodations, etc. have no limit.
Flipping this around, we may say that many things get hoarded and form stockpiles of wealth, but food does not; you would be hard pressed to find someone who continuously buys food with no intent of ever eating it (outside of doomsday preppers, I guess, but they’re economically irrelevant). The importance of this point is multiple: one, this undergirds the entire discussion of landed property in capitalism as dependent in the first instance on the supply of a necessary good. Second, the production level of this good is dependent on technological advances in agricultural production which may increase overall supply above supply availabilities both historically and between regions and nations. Finally, given continuous development and consolidation of agricultural production (to the point that we see today, in which one can argue agricultural production has been entirely ‘industrialized’), this defines the limit of total land that can be used for the construction of buildings – basically, agricultural land uses “eat first”. This is not a social imperative, but regulated both by the market and by state intervention. No state will allow massive food shortages to continue for extended periods if it has any power to mitigate them; and further, a decrease in food availability will prompt the sudden entry of agricultural capital into the sector to capitalize on the possibility of increased profits from the sale of their product. Thereby, agricultural rent governs all other rents because agricultural uses govern all other uses. This is less of an issue at the present stage of development, where food surpluses (and waste) are a problem in developed countries more than the converse, but nevertheless, there are still incomparably vast sections of the globe given over to production of particular foodstuffs, and the rents on these lands set the ‘lower limit’ of rents for land for other uses. This is an important consideration given that it offers an extension of the realization that absolute rent, the availability of which determines if a landowner will let their property for capitalist use, into the sphere of land use with respect to what capitals are lining up to pay rents for the privilege of investment: agriculture first, and all others second.
Moving on, Marx offers some further comments on house-rent, as he calls it. He notes, as he has elsewhere, that building-rent
“is characterized first by the preponderant influence that location exerts here on the differential rent (very important, for example, in the case of vineyards, and building land in big towns); secondly, by the palpable and complete passivity displayed by the owner, whose activity consists simply in exploiting advances in social development...towards which he does not contribute and in which he risks nothing, unlike the industrial capitalist; finally, by the prevalence of a monopoly price in many cases, and particularly the most shameless exploitation of poverty (for poverty is a more fruitful source for house-rent than the mines of Potosí were for Spain); the tremendous power this gives landed property when it is combined together with industrial capital in the same hands enables capital practically to exclude workers engaged in a struggle over wages from the very earth itself as their habitat”.5
To lay that out clearly: building-rent depends on
differential rent (as an economic manifestation of location and demand);
the parasitic nature of landownership; and
monopoly price and the exploitation of poverty;
all of which contribute to deprive workers of existence altogether and thus enforce the need for them to sell their labor in order to survive, and only gain access back, in a limited way, via payment out of their wages and revenues to the pocket of a particular landlord.
Here, Marx offers some further reading – particularly, Samuel Laing and F.W. Newman. Both pose a moral critique to landlordism which is limited but nevertheless devastating. Laing:
“We do not state these things for the purpose of swelling the clamor which has been raised against the manufacturing interest, as if they alone had bowed the knee to Mammon. On the contrary, we feel that the same remarks are only too applicable to other classes of society. Take, for instance, the landed aristocracy of England, a class who, from their position, were subjected to fewer temptations, and were called upon in an especial manner to set a good example to the community. How have they performed this duty? Let the result answer. Is it not notorious that the old kindly relations between landlord and tenant, between farmer and laborer, have, to a great extent, disappeared? Has not cash payment come to be the sole bond between man and man in country as well as in town? Do not too many landlords look practically upon their estates as machines for producing income?”6
And Newman:
“Whenever an incipient rise of house-rent was discerned, some new watering-place would begin to be frequented, and the flow of visitors would be diverted; but now, there is no such relief; for every place has a lord of the manor, whose expectations and demands rise, the moment that he perceives a chance that his strip of coast may attract visitors.
It therefore appears to me that Rent, involving always more or less the principle of monopoly, is apt to raise prices, and fall on the consumer, to a degree beyond that which English Economists since Ricardo have been willing to admit. The landlord in fact appropriates to himself not land only, but pure air, pure water, the sight of the sea and the mountains; and taxes all who desire to enjoy them”.7
He also cites Engels’ excellent Condition of the Working Class in England.8 There are further comments on speculation in building, with a particular focus on the way in which speculation unites industrial and land capital in brutalizing tenants, detailing the experience of a builder speaking in front of the Bank Acts Committee of 1857: “[The capitalist builder] makes a business out of building rows of houses and whole districts of towns for the market, just as individual capitalists make a business out of building railways as contractors”.9 The situation Marx describes is essentially identical to what happens today, and has in fact happened recently, where builders flood the market in times of rising house prices to better capitalize on the market, but with no assurances on there being buyers or favorable prices in several months, when the house is actually ready for move-in. The speculation is all; credit plays an intimate part in providing loans and mortgages for construction (and rent payments to the landlords); numerous vultures circle, all vying for the opportunity to extract building-rent as a positive augmentation of original ground-rent.
The above all comes from 2-3 pages of this extraordinarily short and dense chapter. One final point remains, however – a comment on the nature of rent itself. Here’s another long blockquote:
“The proportion of one part of the surplus-value, the money rent (for money is the independent expression of value), to the land is as it stands absurd and irrational; for it is incommensurable quantities that are measured against one another here, a particular use-value on the one hand, a piece of land of so and so many square feet, and value, in particular surplus value, on the other. All this means in actual fact is that, under the given conditions, the ownership of these square feet of land enables the landowner to seize a certain amount of unpaid labor, which capital has realized by rooting in the soil like a pig in potatoes. Prima facie, however, the expression is as if one were to speak of the ratio of a £5 note to the diameter of the earth. But these irrational forms in which certain economic relationships appear and are grasped in practice do not bother the practical bearers of these relationships in their everyday dealings; since they are accustomed to operating within these forms, it does not strike them as anything worth thinking about. A complete contradiction holds nothing at all mysterious for them”.10
This passage is probably one of my favorites in Marx’s entire oeuvre, and several lines of his thought on land and rent come together here wrapped nicely in a bow. First, we have money-rent as a portion of surplus-value, meaning rents are tied inexorably to production and do not augment ‘social wealth’; second, we have the split character of land as a use value of “so and so many square feet”, immovable and unique, weighed against the magic fungibility of the title for the land – an incommensurable absurdity like “the ratio of a £5 note to the diameter of the earth”; we also have capital investment and the condition in which past investments cohere and congeal into the land and come to be treated as its natural features insofar as rent is concerned; and finally, the absurdity of it all is turned on its head, precisely because it is not absurd to the ghouls who benefit from it – and thus capitalist irrationality is revealed to be, precisely, rational for capitalists.
As a final note on the chapter, throughout there are several interesting passages on land use as it relates to stewardship, representing something of an “eco-Marx”, if you’re into that sort of thing. Check it out.
Marx, K. (1993). Capital: A Critique of Political Economy, Vol. 3 (D. Fernbach, Trans.; Reissue edition). Penguin Classics, 908.
Ibid.
The citation of the copy I have is Smith, A. (1993). An Inquiry Into the Nature and Causes of the Wealth of Nations. Hackett Publishing Company. That said, it doesn’t contain all the volumes of Smith’s work, so I’m looking at the PDF here, page 72 in the PDF.
Ibid., 77.
Marx, K. (1993). Capital: A Critique of Political Economy, Vol. 3 (D. Fernbach, Trans.; Reissue edition). Penguin Classics, 908.
Laing, S. (1844). National distress; its causes and remedies. London Longman. http://archive.org/details/nationaldistress00lainuoft, 60-61.
Newman, F. W. (1851). Lectures on Political Economy. J. Chapman, 163.
See especially the chapter “The Great Towns”.
Marx, K., & Mandel, E. (1993). Capital: A Critique of Political Economy, Vol. 2 (D. Fernbach, Trans.; Reprint edition). Penguin Classics, 311.
Marx, K. (1993). Capital: A Critique of Political Economy, Vol. 3 (D. Fernbach, Trans.; Reissue edition). Penguin Classics, 914.