mount of capital that has been employed and with the usual rate of profit. The remainder of the rent, on the other hand, must be considered as return from land, and forms the land-rent.
Now, according to Rodbertus, there must always be such a remainder in raw production, in virtue of the assumption that products exchange in proportion to the amount of labour incorporated in them. He proves this as follows. The amount of rent obtainable in manufacture depends, as we have seen, not on the amount of the capital laid out, but on the quantity of labour performed in the manufacture. This labour is made up of two constituent parts; on the one side, the immediate labour of manufacture, on the other side, that indirect labour "which must also be taken into calculation as representing the tools and machines used." Therefore of the different constituent portions of the capital laid out, only those portions will affect the amount of rent which consist of wages and expenditure for machines and tools. On the other hand, no such influence affects the capital laid out in raw materials, because this outlay does not express any labour performed in the manufacturing stage. Yet this part of the outlay increases the capital on which the rent obtainable as return is calculated. The existence of a portion of capital which increases the manufacturing capital on which the share of the rent that falls to it as profit is calculated, while it does not increase this profit itself, must evidently lower the proportion of the profit to the capital; in other words, it must lower the rate of profit on capital engaged in manufacture.
Now the profit on capital engaged in raw production also will be calculated at this reduced rate. But here (in raw production) the circumstances are generally more favourable. For as agriculture begins production ab ovo, and does not work up material derived from a previous production, its outlay of capital has no constituent "value of material." The analogue of material is simply land, and land in all theories is assumed to cost nothing. Hence no portion of capital has any share in the division of the profit which does not also have an influence upon its amount, and hence also the proportion between the rent gained and the capital employed must be more favourable in agriculture than in manufacture. As however, in agriculture also, the profit on capital is calculated at the reduced rate determined by manufacture, there must always remain a surplus of rent, which falls to the landowner as land-rent. This, according to Rodbertus, is the origin of land-rent, and its distinction from profit on capital.*35
I may shortly supplement this by remarking that, notwithstanding the very severe theoretical judgment that he pronounces on profit in describing it as plunder, Rodbertus will not hear of abolishing either private property in capital or profit on capital. Nay, he ascribes to property in land and capital "an educating power" which we cannot spare; a "kind of patriarchal power that could only be replaced after a completely altered system of national instruction, for which at present we have not got even the conditions."*36 Property in land and capital appear to him in the meanwhile to have "a kind of official position involving the national functions of managing the economic labour and the economic resources of the nation in correspondence with national need."
Thus from this, its most favourable point of view, rent may be regarded as a form of salary which certain "officers" receive for the execution of their functions.*37 I have already observed above how this remark, casually expressed in a mere note, formed the basis on which later writers, particularly Schäffle, have built up a peculiar form of the Labour theory.
To come now to criticism of Rodbertus's system. Without circumlocution I may say at once that I consider the theory which it contains to be an entire failure. I am convinced that it suffers from a series of grave theoretical defects which I shall endeavour to set forth in the following pages as clearly and as impartial