 The main points were dealt with when discussing Rodbertus. Just a few more gleanings here. Firstly, some comments on the historical aspect: Ricardo was first of all concerned with the period 1770-1815, which came approximately within his own experience, and during which wheat prices were constantly rising. Anderson [on the other hand] was concerned with the eighteenth century, at the close of which he was writing. During the first half of that century wheat prices were falling and during the second half they were rising. Hence for Anderson, the law he discovered was in no way connected with a diminishing productivity of agriculture or a normal <for Anderson an unnatural> rise in the price of the product. For Ricardo however such a connection existed. Anderson believed that the abolition of the corn laws (at that time export premiums) caused the rise in prices during the second half of the eighteenth century. Ricardo knew that the introduction of corn laws (1815) was intended to prevent the fall in prices, and to a certain degree was bound to do so. With regard to the latter [it was] therefore necessary to point out that, if left to itself, the law of rent within a definite territory was bound to result in recourse to less fertile land, thus leading to dearer agricultural products and increased rent at the cost of industry and the mass of the population. And here Ricardo was right, both historically and in practice. Anderson on the other hand [maintained] that corn laws (and he also favours a duty on imports) must further the even development of agriculture within a definite territory and that for this even development agriculture needs security. Consequently he [maintained] that this progressive development in itself through the law of rent he discovered would lead to increased productivity in agriculture and thereby to a fall in the average prices of agricultural produce. Both of them, however, start out from the viewpoint which, on the continent, seems so strange: 1. That there is no Landed property to shackle any desired investment of capital in land. 2. That expansion takes place from better land to worse (this process is absolute for Ricardo, provided one leaves out of account the interruptions caused by the response of science and industry; for Anderson the worse land is in turn transformed into better land and so it is relative). 3. That a sufficient amount of capital is always available for investment in agriculture. Now so far as 1. and 2. are concerned, it must seem very odd to the continentals, that in the country in which, according to their conception, feudal landed property has maintained itself most stubbornly, the economists, Anderson as well as Ricardo, start out from the conception that no landed property exists. The explanation for this is: firstly: the peculiarity of the English law of enclosures , which is in no way analogous with the continental portioning out of common land; secondly: nowhere in the world has capitalist production, since Henry VII, dealt so ruthlessly with the traditional relations of agriculture, adapting and subordinating the conditions to its own requirements. In this respect England is the most revolutionary country in the world. Wherever the conditions handed down from history were at variance with, or did not correspond to, the requirements of capitalist production on the land, they were ruthlessly swept away; this applies not only to the position of the village communities but to the village communities themselves, not only to the habitats of the agricultural population but to the agricultural population itself, not only to the original centres of cultivation, but to cultivation itself. The German, for example, meets with economic relations that are determined by traditional circumstances such as land boundaries, the position of the economic centres, given conglomerations of the population. The Englishman meets with historical conditions of agriculture which have been progressively created by capital since the end of the 15th century. Clearing of estates , a technical term [well-known] in the United Kingdom, will not be found in any continental country. But what is the meaning of this clearing of estates ? It means that without any consideration for the local inhabitants, who are driven away, for existing village communities, which are obliterated, for agricultural buildings, which are torn down, for the type of agriculture, which is transformed in one fell swoop, for instance arable land converted into grazing pasture [in short] none of the conditions of production are accepted as they have traditionally existed but are historically transformed in such a way that under the circumstances, they will provide the most profitable investment for capital. To that extent, therefore, no landed property exists; it gives capital i.e., the farmer full scope, since it is only concerned with monetary income. A Pomeranian landowner, therefore, with his head full of ancestral land boundaries, centres of economy and lectures on agriculture etc., may well be amazed by Ricardo s unhistorical view of the ||561| development of conditions in agriculture. This shows merely that he na vely confuses Pomeranian conditions with those prevailing in England. But it cannot be said that Ricardo, who in this case starts from the conditions in England, is just as narrow-minded as the Pomeranian landowner, who can think only in terms of Pomeranian conditions. English conditions are the only ones in which modern landownership, i.e., landownership which has been modified by capitalist production, has been adequately developed. For the modern the capitalist mode of production, the English view is here the classical view. The Pomeranian, on the other hand, judges the developed relations from a historically lower and as yet inadequate form. Indeed, most of Ricardo s continental critics even take as their starting-point conditions in which the capitalist mode of production, adequate or inadequate, does not as yet exist at all. It is as if a guild-master wanted, lock, stock and barrel, to apply Adam Smith s laws which presuppose free competition to his guild economy. The presupposition of the movement from better to worse land relatively to the particular stage in the development of the productive power of labour as with Anderson, and not absolutely as with Ricardo could only arise in a country such as England, where within a relatively very small territory capital has farmed so ruthlessly and has for centuries mercilessly sought to adapt to its own needs all traditional relationships of agriculture. Thus it [the presupposition] could only arise where, unlike the continent, capitalist production in agriculture does not date from yesterday and does not have to fight against old traditions. A second factor influencing the English was the knowledge they gained through their colonies. We have seen that Adam Smith s work with direct reference to the colonies already contains the basis for the entire Ricardian viewpoint. In these colonies, and especially in those which produced only merchandise such as tobacco, cotton, sugar etc. and not the usual foodstuffs, where, right from the start, the colonists did not seek subsistence but set up a business, fertility was of course decisive, given the situation [of the land], and given the fertility, the situation of the land was decisive. They did not act like the Germans, who settled in Germany in order to make their home there, but like people who, driven by motives of bourgeois production, wanted to produce commodities, and their point of view was, from the outset, determined not by the product but by the sale of the product. That Ricardo and other English writers transferred this point of view which emanated from people who were themselves already the product of the capitalist mode of production from the colonies to the course of world history and that they took the capitalist mode of production as a premise for agriculture in general, as it was for their colonists, is due to the fact that they saw in these colonies, only in more obvious form, without the fight against traditional relations, and therefore untarnished, the same domination of capitalist production in agriculture as hits the eye everywhere in their own country. Hence, if a German professor or landowner belonging to a country which differs from all others in its complete lack of colonies considers such a view to be false , then this is quite understandable. Finally the presupposition of a continuous flow of capital from one sphere of production into another, this basic assumption of Ricardo s amounts to nothing more than the assumption that developed capitalist production predominates. Where this domination is not yet established, this presupposition does not exist. For instance, a Pomeranian landowner will find it strange that neither Ricardo nor indeed any English writer ever suspects that agriculture might lack capital. The Englishman does, indeed, complain of lack of land in proportion to capital, but never of a lack of capital in proportion to the land. Wakefield, Chalmers, etc. try to explain the fall in the rate of profit from the former circumstance. The latter does not exist for any English writer; Corbet notes as a self-explanatory fact, that capital is always redundant in all branches of production. On the other hand, bearing in mind the situation in Germany, the landowner s difficulties in borrowing money because mostly it is the landowner himself who cultivates the land and not a capitalist class which is quite independent of him it is understandable that Herr Rodbertus, for example, is surprised at the Ricardian fiction, that the supply of capital is regulated by the desire to invest it . ([Sociale Briefe an v. Kirchmann. Dritter Brief, Berlin, 1851] p. 211.) What the Englishman lacks is a field of action , opportunity for investment of the available stock of capital. But a desire for capital to invest , on the part of the only class which has capital to invest the capitalist class this does not exist in England. ||562| This desire for capital is Pomeranian. The objection made by English writers against Ricardo was not that capital was not available in any desired quantity for particular investments, but that the return flow of capital from agriculture encountered specific technical etc. obstacles. This kind of critical-continental censoriousness of Ricardo, therefore, only shows the lower stage in the conditions of production from which these sages start out. Now to the matter in hand. In the first place, in order to isolate the problem, we must leave aside entirely differential rent, which alone exists for Ricardo. By differential rent I understand the difference in the magnitude of rent the greater or smaller rent which is due to the different fertility of the various types of land. (Given equal fertility, differential rent can only arise from differences in the amounts of capital invested. This case does not exist for our problem and does not affect it.) This differential rent merely corresponds to the excess profits which, given the market-price or, more correctly, the market-value, will be made in every branch of industry, for example cotton spinning, by that capitalist whose conditions of production are better than the average conditions of this particular trade. For the value of the commodity of a particular sphere of production is determined, not by the quantity of labour which the individual commodity costs, but by the quantity which the commodity costs that is produced under the average conditions of the sphere. Manufacture and agriculture only differ from one another here in that in the one, the excess profits fall into the pocket of the capitalist himself, whereas in the other they are pocketed by the landowner, and furthermore, that in the former they are f l u i d, they are not lasting, are made by this capitalist or that, and always disappear again, while in the latter they become fixed because of their enduring (at least for a long period) natural basis in the variations in the land. This differential rent must therefore be left out of account, but it should be noted that it may exist not only when a movement from better to inferior land takes place but also from inferior to better land. In both cases the only requirement is that the newly cultivated land is necessary but at the same time only just sufficient to satisfy the additional demand. If the newly cultivated, better land were more than sufficient to satisfy the additional demand then, according to the volume of the additional demand, part or all of the inferior land would be thrown out of cultivation or, at any rate, out of cultivation of that product which forms the basis of the agricultural rent, i.e., in England of wheat and in India of rice. Thus differential rent does not presuppose a progressive deterioration of agriculture, but can equally well spring from a progressive improvement in it. Even where it is based on the descent to worse types of land, firstly this descent may be due to an improvement in the productive forces of agriculture, in that the cultivation of the worse land, at the price which is set by demand, is only made possible by greater productive power. Secondly, the worse land can be improved; the differences will nevertheless remain, although they will become smaller, so that as a result there is only a relative, comparative decrease in productivity whereas absolute productivity increases. This was in fact the presupposition made by Anderson, the original author of the Ricardian law. Then, in the second instance, only the agricultural rent in the strict sense should be considered here, in other words the rent of the land which supplies the chief vegetable foods. Smith has already explained that the rents of land which supplies the other products, such as stock-raising etc., are determined by that rent; that they are themselves derived, determined by the law of rent and not determining it. In themselves therefore these rents do not furnish any useful material for the understanding of the law of rent in its original, pure condition: There is nothing primary about them. This settled, the question is reduced to the following: Does an absolute rent exist? That is, a rent which arises from the fact that capital is invested in agriculture rather than manufacture; a rent which is quite independent of differential rent or excess profits which are yielded by capital invested in better land? It is clear that Ricardo correctly answers this question in the negative, since he starts from the false assumption that values and average prices of commodities are identical, If this were the case, it would be a tautology to say that the price of agricultural products is above their cost-price when ||563| the constant price of agricultural products yields, beyond the average profits, also an extra rent, a constant surplus over and above the average profit for this cost-price equals the advances plus the average profit and nothing else. Were the prices of agricultural products to stand above their cost-prices, and always to yield an excess profit, they would consequently stand above their value. There would be no alternative but to assume that agricultural products are perpetually sold above their value, which, however, equally presupposes that all other products are sold below their value, or that value in general is something quite different from that which the theory requires it to be. Taking into account all compensations which take place between the different capitals owing to differences arising from the process of circulation, the same quantity of labour (immediate and accumulated) would produce a higher value in agriculture than in manufacture. The value of the commodity would therefore not be determined by the quantity of labour contained in it. The whole foundation of political economy would thus be thrown overboard. Ergo, Ricardo rightly concludes: no absolute rents. Only differential rent is possible; in other words the value of the agricultural product grown on the worst land equals the cost-price of the product, as [with] every other commodity, [this is equal to its] value. The capital invested in the worst land differs from capital invested in manufacture only by the type of investment, by its being a particular species of investment. Here therefore the universal validity of the law of value becomes apparent. Differential rent and this is the sole rent on better land is nothing but the excess profit yielded by capitals employed in above-average conditions owing to the [establishment of] one identical market-value in every sphere of production. This excess profit consolidates itself only in agriculture because of its natural basis and, furthermore, the excess profit flows not into the pocket of the capitalist but into that of the landowner since it is the landowner who represents this natural basis. The entire argument collapses together with Ricardo s assumption, that cost-price equals value. The theoretical interest which forces him into a denial of absolute rent disappears. If the value of the commodities differs from their cost-price, then they necessarily fall into three categories. In the first category, cost-price is equal to the value of the commodity, in the second, the value is below its cost-price and in the third it is above its cost-price. The fact, therefore, that the price of the agricultural product yields a rent, only shows that the agricultural product belongs to that group of commodities whose value is above their cost-price. The only remaining problem requiring solution would be: why, in contrast to other commodities whose value is also above their cost-price, competition between capitals does not reduce the value of agricultural products to their cost-price. The question already contains the answer. Because, according to the presupposition, this can only happen in so far as the competition between capitals is able to effect such an equalisation, and this in turn can only occur to the extent that all the conditions of production are either directly created by capital or are equally elementally at its disposal as if it had created them. With land this is not the case, because landed property exists and capitalist production starts its career on the presupposition of landed property, which is not its own creation, but which was already there before it. The mere existence of landed property thus answers the question. All that capital can do is to subject agriculture to the conditions of capitalist production. But it cannot deprive landed property of its hold on that part of the agricultural product which capital could appropriate not through its own action but only on the assumption of the non-existence of landed property. Since landed property exists, capital must however leave the excess of value over cost-price to the landowner. But this difference [between value and cost-price] itself only arises from a difference in the composition of the organic component parts of capital. All commodities whose value, in accordance with this organic composition, is above the cost-price, thereby show that the labour expended on them is relatively less productive than that expended on the commodities whose value is equal to the cost-price and even less productive than that expended on the commodities whose value is below the cost-price; for they require a greater quantity of immediate labour in proportion to the past labour contained in the constant capital; they require more labour in order to set in motion a definite capital. This is a historical difference and can therefore disappear. The same chain of reasoning which demonstrates the possibility of the existence of absolute rent, shows its reality, its existence, as a purely historical fact, which belongs to a certain stage of development of agriculture and which may disappear at a higher stage. Ricardo explained differential rent from an absolute decrease in productivity in agriculture. Differential rent does not presuppose this, nor does Anderson make this assumption. On the other hand Ricardo denies the existence of absolute rent because he ||564| assumes the organic composition of capital to be the same in industry and agriculture and so denies the purely historical fact of the lower development of the productive power of labour in agriculture as compared with manufacture. Hence lie falls into a twofold historical error: On the one hand, he assumes that the productivity of labour in agriculture is absolutely the same as in industry, thus denying a purely historical difference in their actual stage of development. On the other hand, he assumes an absolute decrease in the productivity of agriculture and regards this as its law of development. He does the one in order to make cost-price on the worst land equal value and he does the other in order to explain the differences between the cost-prices [of the products] of the better kinds of land and their values. The whole blunder originates in the confusion of cost-price with value. Thus the Ricardian theory is disposed of. The rest was dealt with earlier, in the chapter on Rodbertus. I have already indicated that Ricardo opens the chapter by stating that it is necessary to examine whether the appropriation of land, and the consequent creation of rent ([David Ricardo, On the Principles of Political Economy, and Taxation, third edition, London, 1821], p. 53) do not interfere with the determination of value by labour-time. And he says later: This direct and conscious connection which Ricardo s theory of rent has with the determination of value is its theoretical merit. Apart from that this Chapter II On Rent is rather inferior to West s exposition. It contains much that is queer, petitio principii and unfair dealing with the problem. Actual agricultural rent, which Ricardo justifiably here treats as rent proper, is that which is paid for the permission to invest capital, to produce capitalistically, in the element land. Here land is the element of production. This does not apply, for example, to rent for buildings, waterfalls etc. The powers of nature which are paid for in these cases enter into production as a condition, be it as productive power or as sine qua non, but they are not the element in which this particular branch of production is carried on. Again, in rents for mines, coal-mines etc., the earth is the reservoir, from whose bowels the use-values are to be torn. In this case payment is made for the land, not because it is the element in which production is to take place, as in agriculture, not because it enters into production as one of the conditions of production, as in the case of the waterfall or the building site, but because it is a reservoir containing the use-values, which are to be got hold of through industry. Ricardo s explanation that: is poor. Firstly, the soil has no indestructible powers . (A note on this is to follow at the end of this chapter.) Secondly, it has no original powers either, since the land is in no way original , but rather the product of an historical and natural process. But let that pass. By original powers of the land we understand here those, which it possesses independently of the action of human industry, although, on the other hand, the powers given to it by human industry, become just as much its original powers as those given to it by the process of nature. Apart from this, it is correct to say that rent is a payment for the use of natural things, irrespective of whether it is for the use of the original powers of the soil or of the power of the waterfall or of land for building or of the treasures to be found in the water or in the bowels of the earth. As distinct from the agricultural rent proper, Adam Smith (says Ricardo) speaks of the rent paid for wood from virgin forests, rent of coal-mines and stone-quarries. The way in which Ricardo disposes of this is rather strange. He begins by saying that the rent of land must not be confused with the interest and profit of capital (l.c., p. 53), that is: From this he immediately [passes on] to the above-mentioned examples from Adam Smith. With regard to virgin forests: Similarly with the stone-quarries and coal-mines. This is very strange logic. One must distinguish rent paid to the owner of the land for the use of the original and indestructible powers of the soil from the interest and profit which is paid to him for the capital he has invested in ameliorating the land, etc. The compensation which is paid to the owner of naturally-grown forests for the right to remove wood, or to the owner of stone-quarries and coal-mines for the right to remove stones and coal, is not rent, because it is not a payment for the use of the original and indestructible powers of the soil . Very well. But Ricardo argues as though this compensation were the same as the profit and interest which are paid for capital invested in ameliorations of the land. But this is wrong. Has the owner of a virgin forest invested capital in it so that it may bear wood or has the owner of stone-quarries and coal-mines invested capital in these, so that they may contain stones and coal ? Whence, therefore, his compensation ? It is by no means as Ricardo tries to make out profit or interest of capital. Therefore it is rent and nothing else, even if it is not rent as defined by Ricardo. But this only shows that his definition of rent excludes those forms of it where the compensation is paid for mere natural things, in which no human labour is embodied, and where it is paid to the owner of these natural things only because he is the owner , the owner of land, whether this consists of soil, forest, fish pond, waterfall, building land or anything else. But, says Ricardo, the man who paid for the right to fell trees in the forest, paid in consideration of the valuable commodity which was then standing on the land and  actually repaid himself with a profit, by the sale of the timber [p. 54]. Stop! When Ricardo here calls the wood, i.e., the trees standing on the land in the virgin forest a valuable commodity , then this means only that it is potentially a use-value. And this use-value is expressed here in the word valuable . But it is not a commodity . Because for this it would, at the same time, have to be exchange-value, in other words, to contain a certain quantity of labour expended upon it. It only becomes a commodity by being separated from the virgin forest, by being felled, removed and transported by being transformed from wood into timber. Or does it only become a commodity by the fact it is sold? Then arable land too becomes a commodity by the mere act of selling? Then we would have to say: Rent is the price paid to the owner of natural forces or mere products of nature for the right of using those forces or appropriating (by labour) those products. This is in fact the form in which all rent appears originally. But then the question remains to be solved, how things which have no value can have a price and how this is compatible with the general theory of value. The question: for what purpose does the man pay a compensation for the right to remove timber from the land upon which it stands, has nothing to do with the real question. The question is: from what fund does he pay? Well, says Ricardo, by the sale of the timber . That is, out of the price of the timber. And furthermore, this price was such that, as Ricardo says, the man actually repaid himself with a profit . Now we know where we are. The price of the timber must at any rate equal the sum of money representing the quantity of labour necessary to fell the timber, to remove it, to transport it, to bring it to market. Now is the profit with which the man repays himself, an addition over and above this value, this exchange-value just imparted to the wood through the labour expended upon it? If Ricardo said this then he would fall into the crudest conception, far beneath his own doctrine. No. Given that the man was a capitalist, the profit is part of the labour he employed in the production of the timber , the part for which he did not pay; and the man would have made the same profit, if he had set in motion the same amount of labour, shall we say, in cotton spinning. (If the man is not a capitalist, then the profit is equal to that quantity of his labour which he exerts beyond that which is necessary to cover his wages, and which would have constituted the profit of the capitalist, had a capitalist employed him, but which now constitutes his own profit because he is his own wage-labourer and his own capitalist in one and the same person.) But here we come to the ugly word that this timber man actually repaid himself with a profit . This gives the whole transaction a very ordinary look and corresponds to the crude manner of thinking which this capitalist, who removes timber, may himself have of the source of his profit. First he pays the owner of the virgin forest for the use-value wood, which, however, has no value (value in exchange) and which, so long as it stands upon the land has not even a use-value. He may pay him 5 per ton. And then he sells the same wood to the public (setting aside his other costs) at 6 and so actually pays back to himself the 5 with a profit of 20 per cent. [He] actually repaid himself with a profit . If the owner of the forest had only demanded compensation of 2 (40 s.), then the timber man would have sold the ton at 2 8s. instead of at  6. ||566| Since he always adds the same rate of profit, the price of timber would be high or low here because the rent is high or low. The latter would enter into the price as a constituent part but would in no way be the result of the price. Whether the rent compensation is paid to the owner of the land for the use of the power of the land or for the use of the natural products of the land, in no way alters the economic relations, in no way alters the fact that money is paid for a natural thing (power or produce of the earth) upon which no previous human labour has been spent. And thus on the second page of his chapter On Rent Ricardo would have overthrown his whole theory in order to avoid a difficulty. It would appear that Adam Smith was a great deal more far-sighted here. The same case with the stone-quarries and coal-mines. No! But there is a very significant connection with the original and destructible productions of the soil . The word value is just as ugly here as the phrase repaid himself with a profit was above. Ricardo never uses the word value for utility or usefulness or value in use . Does he therefore mean to say that the compensation is paid to the owner of the quarries and coal-mines for the value the coal and stone have before they are removed from the quarry and the mine in their original state? Then he invalidates his entire doctrine of value. Or does value mean here, as it must do, the possible use-value and hence also the prospective exchange-value of coal and stone? Then it means nothing but that their owner is paid rent for the permission to use the original composition of the soil for the production of coal and stones. And it is absolutely incomprehensible why this should not be called rent , in the same way as if the permission were given to use the powers of the land for the production of wheat. Or we end up again with the annulment of the whole theory of rent, as explained in connection with wood. According to the correct theory, there are no difficulties involved here at all. The labour, or capital, employed in the production <not reproduction> of wood, coal or stone (this labour, it is true, does not create these natural products, but separates them from their elementary connection with the earth and so produces them as usable wood, coal or stone) evidently belongs to those spheres of production in which the part of capital laid out in wages is greater than that laid out in constant capital, [where consequently the amount of] direct labour is greater than that of past labour the result of which serves as a means of production. If, therefore, the commodity is sold at its value here, then this value will be above its cost-price, i.e., the wear and tear of the instruments of labour, the wages, and the average profit. The excess can thus be paid as rent to the owner of forest, quarry or coal-mine. But why these clumsy manoeuvres of Ricardo s, such as the wrong use of value etc.? Why this clinging to the explanation of rent as a payment for the use of the original and indestructible powers of the land ? Perhaps the answer will emerge later. In any case, he wants to distinguish, to mention specifically, the agricultural rent in the strict sense and at the same time to open the way for differential rent, by saying that payment for this elementary power can only be made in so far as it develops different degrees of power. [a] In the manuscript: soil . Ed.
Economic Manuscripts: Theories of Surplus-Value, Chapter 11