Ricardo is completely right on the statements that follow:
Ricardo's word 'rent' means differential rent; he assumes that there is no rent at all in existence besides this one. And it is always the difference between what you get from employing two equal quantities of capital and labour. That is from his Principles.
Ricardo should have added: on equal quantities of land — that is, so far as what is being dealt with is ground-rent and not surplus profit in general.
Another way of saying it: a surplus profit that is normal, and not something chance events in the circulation process throw off, always arises as the difference between the products that two equal quantities of capital and labour yield. And it becomes ground-rent when two equal quantities of capital and labour, working on equal areas of land, produce unequal results.
Still, it is by no means absolutely necessary that this surplus profit come from unequal results produced by equal quantities of capital. In the various investments, capital sums of unequal size can also be at work; indeed, this is mostly what is assumed. But equal proportional parts — for instance £100 from each — give unequal results; that is, the rate of profit is not the same. This is the general precondition for surplus profit to exist in any sphere of capital investment at all. The second point is the transformation of this surplus profit into the form of ground-rent (or rent generally, as a form distinct from profit). We always have to examine when, how, and under what circumstances this transformation occurs.
Ricardo is also right about the next statement, so far as it is confined to differential rent:
Whatever reduces the inequality in the produce got from the same land or from new land tends to lower rent; and whatever increases that inequality necessarily has the opposite effect, and tends to raise rent.
What makes for that inequality, however, is not only the general causes — fertility and location. There are also: first, the way taxes are distributed, according to whether it works evenly or not; it is always uneven where taxation is not centralized, as in England, and where the tax is levied on the land and not on the rent. Second, the inequalities that come out of the different development of agriculture in different parts of the country, since this branch of industry, on account of its traditional character, is harder to level out than manufacture. And third, the uneven way in which capital is divided among the farmers.
Because the capitalist mode of production's takeover of agriculture — the transformation of the peasant who works for himself into a wage-labourer — is in fact the last conquest of that mode of production, these inequalities are greater here than in any other branch of industry.
After these preliminary remarks, I want to begin by setting out quite briefly what is peculiar to my own development, as against Ricardo's and the rest.
We start with the unequal results that equal amounts of capital give when they are put to work on different pieces of land of the same size. Where the pieces are not the same size, the results are worked out per equal area of ground.
These unequal results have two general causes, and neither of them lies in capital itself: (1) fertility — and on this point there is still to be set out everything that is included in the natural fertility of land, and what different factors it takes in; (2) the location of the land.
Location is decisive in colonies, and decisive in general for the sequence in which lands can be brought into cultivation one after another. It is also clear that these two different bases of differential rent, fertility and location, can pull in opposite directions. A soil can be very well located and very little fertile, and the other way round. That matters, because it explains why, when a given country's soil is first brought under cultivation, one can move from better land to worse just as well as the other way round.
And finally it is clear that the progress of social production in general works in one direction to level location as a basis of differential rent, by creating local markets and by creating location through the provision of means of communication and transport; and in the other direction to sharpen the differences between the local locations of lands — through the separation of agriculture from manufacture and the formation of great centres of production on the one side, and through the relative isolation of the countryside on the other.
First, though, we leave location aside and look only at natural fertility. Setting aside climate and similar factors, the difference in natural fertility lies in a difference in the chemical composition of the soil surface — that is, in how much plant nutrient it contains.
But suppose two areas of land have the same chemical content, and in that sense the same natural fertility: their real, effective fertility will still differ, depending on whether those nutrients are in a form in which they are more or less assimilable, directly usable as food for the plants. So how far the same natural fertility can actually be made available on lands that are naturally equally fertile depends partly on the chemical and partly on the mechanical development of agriculture. Fertility, then, though an objective property of the soil, always involves in economic terms a relation — a relation to the given chemical and mechanical stage of development of agriculture — and so changes with that stage.
The obstacles that made equally fertile soil in fact less productive can be removed, by chemical means (liquid fertilizers on stiff clayey soil, say, or the burning of heavy clayey soil) or by mechanical means (special ploughs for heavy soil — drainage belongs here too). The very sequence in which soil types are brought into cultivation can shift for this reason, as it did for one period of English agriculture as between light sandy soil and heavy clayey soil. This again shows how historical the order is: in the successive course of cultivation one can move from more fertile soil to less fertile soil just as well as the other way round. The same can happen through artificially produced improvement in the composition of the soil, or through a mere change of agricultural method. And the same result can grow out of a change in the hierarchy of soil types, once different conditions of the subsoil come into play and the subsoil too is drawn into cultivation and turned into topsoil — brought about partly by new farming methods (fodder crops, say) and partly by mechanical means that either turn subsoil into topsoil, or mix the two together, or work the subsoil without bringing it up.
All these influences on the differential fertility of different lands come down to one thing: for economic fertility, the level of the productive power of labour — here, agriculture's ability to make the natural fertility of the soil immediately exploitable, an ability that differs at different stages of development — is just as much a factor in the so-called natural fertility of the soil as its chemical composition and its other natural properties are.
So we assume a given stage of development of agriculture. We also assume that the hierarchy of soil types is calculated in relation to that stage of development — which is of course always the case where capital is invested at the same time on the different lands. Differential rent can then present itself as an ascending or a descending series; for although the order stands given for the whole of the lands actually cultivated, a successive movement has always been going on, and it was in that movement that the order was formed.
Take four kinds of soil: A, B, C and D. Suppose too that a quarter of wheat goes for £3, or 60 shillings. Because the rent here is simply differential rent, that price of 60 shillings a quarter is what the worst soil's production costs come to — its capital plus the average profit, and nothing above that.
Let A be this worst soil. An outlay of 50 shillings on it would give 1 quarter = 60 shillings, so a profit of 10 shillings, or 20 per cent.
Let B give 2 quarters = 120 shillings for the same outlay. That would be a profit of 70 shillings, or a surplus profit of 60 shillings — which is just the difference from A's profit.
Let C give 3 quarters = 180 shillings on the same outlay; the total profit would be 130 shillings, and the surplus profit 120 shillings.
Let D give 4 quarters = 240 shillings — that is 180 shillings of surplus profit.
The order would then be this:
Take each soil's rent. D's is 190 shillings minus 10, which is just the difference between D and A; C's is 130 minus 10, the difference between C and A; B's is 70 minus 10, the difference between B and A. And the total rent for B, C and D comes to 6 quarters, or 360 shillings — the sum of those differences: D against A, C against A, and B against A.
This same series — one given product in one given state — could just as well have been brought about in any of three ways. Considered in the abstract it could have been produced by moving downward, from D down to A, from fertile soil to ever less fertile soil; or by climbing upward, from A up to D, from relatively infertile soil to ever more fertile; or else by fluctuation, now down and now up — from D to C, from C to A, from A to B, say. And we have already given the reasons why this can be the case in reality too.
In the descending order the process ran like this. The price of a quarter climbs by degrees, from a posited 15 shillings up to 60. Once the 4 quarters that D produces — think of them as millions — are no longer enough, the wheat price rises far enough for the missing supply to be got from C. That is, the price must have risen to 20 shillings a quarter. Once the wheat price reaches 30 shillings a quarter, B can be taken into cultivation, and once it reaches 60, A can, and in each case the capital used on it need not put up with a rate of profit below 20 per cent. So a rent forms on D: first 5 shillings a quarter, 20 shillings for the 4 quarters it produces; then 15 shillings a quarter, 60 shillings; then 45 shillings a quarter, 180 shillings for 4 quarters.
If D's rate of profit was also 20 per cent to start with, then its total profit on the 4 quarters was also only 10 shillings — but those 10 shillings stood for more corn at a corn price of 15 shillings than at a price of 60. And since corn goes into the reproduction of labour-power, and part of every quarter has to replace wages while another part replaces constant capital, surplus-value was higher under this assumption, and so too, with other things remaining equal, was the rate of profit. (The question of the rate of profit has to be looked into separately and in more detail.)
Suppose instead the order ran the other way and the process began with A. Then, as soon as new farmland had to be taken into cultivation, the price of a quarter first rose above 60 shillings; but since the needed supply came from B, the needed supply of 2 quarters, it fell back to 60 shillings. B produced its quarter at 30 shillings and sold it at 60, because its supply was only just enough to cover the demand. And so a rent formed, to begin with 60 shillings on B, and in the same way on C and D — always on the assumption that the market price stays at 60 shillings, because the supply of the one quarter A provides is still needed to satisfy the total demand, even though, relatively, C and D supply their quarter at a real value of 20 and of 15 shillings. In this case the demand rising above what A first, and then A and B, supplied would not have brought B, C and D into cultivation one after another; it would only have meant that the area brought under the plough was extended as a whole, with the more fertile lands happening to fall into it only later.
In the first series, ground-rent would climb as the price increased, while the profit rate would drop. Countervailing circumstances might wipe out that drop altogether, or only in part; this point needs a closer look later. Nor may we forget this: surplus-value in every sphere of production does not fix the general rate of profit in one uniform way. Agricultural profit does not set the standard for industrial profit; the line of determination runs the other way. On that, however, more later.
In the second series the rate of profit on the capital laid out would stay the same; the mass of profit would be represented by less corn; but the relative price of corn, compared with other commodities, would have risen. Only, wherever the profit does increase, the increase would not flow into the pockets of the industrialist farmers and show itself as growing profit — it would branch off from profit in the form of rent. Under the assumption made here, though, the price of corn would remain stationary.
The development and growth of differential rent would remain the same whether prices stayed level or rose, and whether there was a steady progression from worse soil to better or a steady regression from better soil to worse.
So far we have assumed two things. First, that the price rises in one ordering and stays put in the other. Second, that the advance is always from better soil to worse, or the other way round, from worse soil to better.
Now suppose instead that the demand for grain rises from its original 10 qrs to 17. Suppose too that the worst soil, A, is displaced by another soil which, on a production cost of 60 shillings (50 shillings of costs plus 10 shillings for 20 per cent profit), yields 1 1/3 qrs, so that its production price per quarter is 45 shillings. Or suppose that the old soil A has been improved through continued rational cultivation, or farmed more productively at constant cost, for example by the introduction of clover, so that its product rises to 1 1/3 qrs on the same advance of capital. And suppose further that soils B, C and D still yield the same product as before, but that new soils have come into cultivation: A´, of a fertility between A and B, and B´ and B´´, of a fertility between B and C. In that case the following things would take place.
First: a quarter of wheat would have had a production price of 45 shillings instead of 60 — the same figure as its governing market price — which is a fall of 25 per cent.
Second: the advance would have gone in both directions at once, from more fertile soil to less fertile and from less fertile soil to more fertile. A´ is more fertile than A, but less fertile than B, C and D, the soils cultivated up to now; and B´ and B´´ are more fertile than A, A´ and B, but less fertile than C and D. So the sequence would have gone crosswise, this way and that. It would not have moved to soil absolutely less fertile as against A and the rest, but to soil relatively less fertile as compared with C and D, the most fertile soils up to now. Nor, on the other hand, would it have moved to soil absolutely more fertile; it would have moved to soil relatively more fertile than the least fertile soils up to now, A, or A and B.
Third: the rent on B would have fallen, and so would the rent on C and D; but the total rental in corn would have risen, from 6 qrs to 7 2/3. The amount of cultivated land bearing rent would have grown, and the product would have grown from 10 qrs to 17. Profit, if it stayed the same for A, would have risen when expressed in corn; but the profit rate itself could have risen, because relative surplus-value had risen. In that case, as the means of subsistence grew cheaper, wages would have fallen, and with them the outlay on variable capital, and so the total outlay as well.
In money, the total rental would have fallen from 360 shillings to 345.
Let us now set out the new sequence.
Suppose, finally, that the only soil types still under cultivation are A, B, C and D, exactly as before, but that their yields have been raised like this: A produces 2 quarters instead of 1, B 4 instead of 2, C 7 instead of 3, and D 10 instead of 4. The same causes would then have worked differently on the different soils, and total production would have risen from 10 quarters to 23. And suppose demand had taken up those 23 quarters, as the population grew and the price came down. The outcome would then be this:
The numbers in this table, like those in all the other tables, are arbitrary. The assumptions are not: they are entirely rational.
The first and main assumption is that improvement in agriculture works unevenly on different soils, and here does more for the better soils C and D than for A and B. Experience has shown that this is the general rule, although the opposite case can also occur. Had the improvement worked more on the poorer soil than on the better, the rent on the better soil would have fallen instead of rising.
The table assumes two things at once. Fertility grows in absolute terms on every soil; and alongside that, the better soils C and D grow in relative fertility. So the gap between what equal capital brings in from each soil widens, and with it the differential rent.
The second assumption is that total demand keeps pace with the growing total product. It rests on five things.
First, the growth need not be imagined as sudden; series III can be imagined as coming about gradually. Second, it is false that consumption of necessary means of subsistence does not grow as they get cheaper. The repeal of the Corn Laws in England (see Newman) proved the opposite, and the contrary idea arose only because large, sudden differences in the harvest, which are owed to nothing but the weather, now bring an out-of-all-proportion fall and now an out-of-all-proportion rise in corn prices. If, in that case, the sudden and short-lived cheapening does not get the time to have its full effect on expanding consumption, the opposite holds where the cheapening comes from a fall in the governing production price itself, and so lasts. Third, part of the grain can be consumed as spirits or beer, and the growth in consumption of these two is in no way confined within narrow limits. Fourth, it depends partly on the growth of population, and partly a country may be a corn exporter, as England still was past the middle of the eighteenth century, so that demand is not governed by the limits of national consumption alone. Finally, an increase in wheat production and a cheaper wheat can mean that wheat becomes the main food of the mass of the people instead of rye or oats, so the market for it grows through that alone; and with a declining product and a rising price the reverse can occur.
On these assumptions, then, and with the figures assumed, series III gives this result: the price per quarter falls from 60s. to 30s., i.e. by 50 per cent; production, compared with series I, grows from 10 to 23 qrs, i.e. by 130 per cent; rent on soil B stays as it was, on C rises by 25 per cent and on D by 33 1/3 per cent; and the total rental rises from £18 to £22 1/2, i.e. by 25 per cent.
Set the three tables side by side and a set of results falls out. Series I has to be counted twice: once rising from A to D, once falling from D to A. The whole set can be read either as fixed gradations that exist within one given state of society — three different countries standing side by side, say — or as following one another in different periods of the same country's development. Comparing the three tables gives the following.
(1) Once the series is complete, it always appears as a descending one — whatever the course of its process of formation may have been. The reason lies in how a rent table gets looked at: you always start from the soil that carries the maximum of rent, and only come last to the soil that carries none.
(2) The production price of the worst soil, the one carrying no rent, is always the governing market price — though with Table I, if that series formed as an ascending one, this market price would stay stationary only because ever better soil kept being cultivated. In that case the price of the corn grown on the best soil is the governing one, in so far as how far soil A stays governing depends on the quantity produced on that best soil. If B, C and D produced beyond the demand, A would cease to be governing. This is what Storch has a vague sense of when he makes the best type of soil the governing one. In this way American grain prices govern English ones.
(3) Differential rent springs from the difference in the natural fertility of soil types as that difference is given for the stage of cultivation reached at the time (location still left out of account here) — and so from the limited extent of the best lands, and from the fact that equal capitals have to be laid out on unequal soil types, which therefore yield unequal products for the same capital.
(4) A differential rent, and a graduated differential rent, can arise just as well on a declining scale, moving from better soil to worse, as the other way round, from worse soil to better — or through criss-cross moves that change direction. (Series I can form by moving from D to A as much as from A to D. Series II contains movements of both kinds.)
(5) Depending on how it is formed, differential rent can develop with a stationary price of the agricultural product, a rising one or a falling one. In the falling case, total production and the total rental can rise, and rent can form on land that carried none before — even though the worst soil A has been displaced by better soil, or has itself become better, and even though rent falls on other, better soils and even on the best types of soil (Table II). This process can also go together with a fall in the total rental in money.
Then again, when falling prices are owed to a general improvement in cultivation, so that both the product of the worst soil and its price fall, rent on part of the better soil types may stay the same or fall, but grow on the best soil types.
The differential rent of any soil, compared with the worst soil, does depend on the price of a quarter of wheat, say, when the size of the difference in the amount produced is given. But when the price is given, it depends on the size of the difference in the amount produced; and if the absolute fertility of all soil rises, with the fertility of the better soil types rising relatively more than that of the worse ones, then the size of this difference grows as well. So at a price of 60 shillings (Table I), the rent on D is fixed by its differential product against A, that is by the excess of 3 qrs; the rent is therefore 3 × 60 = 180 shillings. But in Table III, where the price is 30 shillings, it is fixed by the mass of D's excess product over A, which is 8 qrs — but 8 × 30 = 240 shillings.
This is where the first false premise of differential rent falls away — the one still held by West, Malthus and Ricardo: that differential rent necessarily presupposes a move to ever worse soil, or an ever declining fertility in agriculture. As we have seen, it can occur with a move to ever better soil; it can occur when a better soil takes the bottom place instead of the worse one there before; it can go together with steady progress in agriculture. Its only condition is inequality of soil types. So far as the development of productivity is concerned, it assumes that a rise in the absolute fertility of the whole area does not abolish this inequality, but either increases it, leaves it stationary, or only reduces it.
During the eighteenth century's opening half, England's grain prices kept falling even though gold or silver was getting cheaper, and over that same stretch (taking the whole period together), ground-rent, the total rental, the amount of land under cultivation, agricultural output and population all grew. This matches Table I joined to Table II on an ascending line, though with the proviso that soil A, the poorest sort, is either improved or pushed out of grain growing; all the same, this does not mean it went unused for other farm or factory purposes.
From the beginning of the nineteenth century (the date still to be given more precisely) through to 1815, a continuing rise in grain prices, with steady growth in rent, in the total rental, in the extent of land under cultivation, in agricultural production and in population. This matches Table I on a descending line. (A citation on the cultivation of worse lands in that period is still to be supplied here.)
In Petty's and Davenant's time, complaints from country people and landowners about the improvements and the bringing of waste land into cultivation; a fall in rents on the better lands, a rise in the total rental through the extension of rent-bearing land.
(Further citations on these three points are still to be given later; likewise on the difference in fertility between the different cultivated parts of the soil within one country.)
One general point about differential rent: the market value always stands above the total production price of the whole mass of product. Take Table I, the one reckoned in shillings. The ten qrs that make up the total product are sold for 600 shillings, because the market price is fixed by the production price of soil A, which comes to 60 shillings a quarter. The real production price, however, is this:
The real production price of the ten qrs is 240 shillings; they are sold for 600, which is 250 per cent too dear. The real average price of one quarter is 24 shillings; the market price is 60 shillings, likewise 250 per cent too dear.
This is determination by market value, the way it asserts itself through competition on the basis of the capitalist mode of production; and competition is what produces a false social value. It follows from the law of market value, the law that products of the soil are subject to.
Fixing the market value of products — of products of the soil as much as any other — is a social act. Society performs it unconsciously and unintentionally, and it rests necessarily on the exchange-value of the product, not on the soil and the differences in its fertility.
Suppose now that the capitalist form of society were abolished and society were organized as a conscious association working to a plan. Then the ten qrs would stand for a quantity of autonomous labour-time equal to the labour-time contained in 240 shillings. Society would therefore not buy this product of the soil at two and a half times the actual labour-time that is in it, and with that the basis of a class of landowners would fall away. The effect would be just the same as if the product had been made cheaper by that amount through imports from abroad.
So it is right to say that, keeping the present mode of production but assuming that differential rent went to the state, the prices of products of the soil would stay the same, other things being equal. And it is wrong to say that the value of those products would stay the same if capitalist production were replaced by association.
That commodities of the same kind have one and the same market price is the way the social character of value asserts itself, on the basis of the capitalist mode of production and, more generally, of production resting on commodity exchange between individuals. What society, considered as consumer, pays too much for products of the soil is a minus for the realization of its labour-time in agricultural production — and it now forms the plus for one part of society, the landowners.
A second circumstance matters here, and it will matter for what the next chapter sets out as differential rent II.
What is at issue is not simply the rent for an acre or a hectare, or, more broadly, the gap between production price and market price - or between the individual and the general production price per acre. It also matters how many acres of each type of soil are under cultivation.
What this bears on here, directly, is only the size of the rental, the total rent from the whole cultivated area. At the same time it serves as a transition to the account of how the rate of rent rises, even though prices do not rise, and even though, when prices fall, the differences in the relative fertility of the soil types do not rise either. We had earlier:
Suppose now that the number of acres under cultivation doubles in every class. Then we get:
Let us take two further cases. The first is one in which production expands onto the two inferior soil types, like this:
And finally the second case, an uneven expansion of production and of the cultivated area across all four soil classes:
Across all four cases — I, Ia, Ib, Ic — one thing stays the same: the rent per acre. The same amount of capital on one acre of the same kind of soil has in fact given the same result, unchanged.
What is assumed here is only what is the case in every country at any given moment: the different types of soil take definite shares of the whole cultivated area. And what is always the case when two countries are compared with each other, or when the same country is looked at at different points in time, is that the ratio in which the total cultivated area is divided among those soil types changes.
If we compare Ia with I, we see that when the cultivation of the land in all four classes grows in the same proportion, a doubling of the cultivated acres doubles the total product — and with it the corn rent and the money rent.
If we compare Ib and then Ic with I, in both cases the area under cultivation is tripled: it rises from 4 acres to 12. But in Ib it is classes A and B that take the biggest share of the increase — A pays no rent, and B pays the smallest differential rent. Of the 8 newly cultivated acres, 3 each go to A and B, 6 together, while only 1 each goes to C and D, 2 together. In other words: three-quarters of the increase falls on A and B, and only one-quarter on C and D.
On that assumption, tripling the scale of cultivation in Ib does not correspond to a tripled product, for the product rises from 10, not to 30, but only to 26. And since a substantial part of the increase took place on A, which yields no rent, while of the increase on the better land the main part went to class B, the corn rent rises only from 6 qrs to 14 qrs, and the money rent from £18 to £42.
If we compare Ic with I instead, there the soil that pays no rent does not grow in extent at all, the soil that pays the smallest rent grows only slightly, and the bulk of the increase falls on C and D. We then find that with the cultivated area tripled, production has risen from 10 to 36 qrs, that is, to more than three times its former level; the corn rent from 6 to 24 qrs, or fourfold; and the money rent likewise from £18 to £72.
In all of these cases the price of the agricultural product stays where it is, by the nature of the case; and in all of them the total rental grows with the expansion of cultivation, so far as that expansion does not take place exclusively on the worst soil, the soil that pays no rent.
But this growth differs from case to case. To the extent that the expansion falls on the better types of soil, so that the mass of product grows not merely in proportion to the expansion of the land but more steeply, the corn rent and the money rent grow. To the extent that the worst soil and the soil types next above it take the principal share of the expansion instead — which assumes that the worst soil is a constant class — the total rental does not rise in proportion to the expansion of cultivation.
So take two countries where the rent-free soil A is of the same quality. The rental stands in inverse proportion to the share of the total cultivated area made up by the worst and the less good soil types, and hence also in inverse proportion to the mass of product from the same capital outlay on equally large total areas. The relation between the quantity of the worst cultivated soil and the quantity of better soil within a country's total soil area therefore acts on the total rental. It acts in the opposite direction from the way the relation between the quality of the worst cultivated soil and the quality of the better and best acts on the rent per acre — and hence, other circumstances remaining the same, on the rental too. The confusion of these two aspects has given rise to all kinds of confused objections to differential rent.
The total rental, then, grows through the mere extension of cultivation, and through the wider application of capital and labour to the soil that goes with it.
But the most important point is this. We are holding fixed all along that the rents of the different soils, reckoned per acre, stay in the same ratio to one another, and so does the rate of rent looked at in relation to the capital laid out on each acre. On that assumption, here is what we find.
Compare Ia with I — the case where the number of cultivated acres has grown in proportion, and the capital invested along with it. The total product has grown in proportion to the larger area under cultivation: both have doubled. And the same has happened to the rental. It has risen from £18 to £36, just as the number of acres has risen from 4 to 8.
Take the whole area of 4 acres. The total rental on it was £18 — which gives an average rent of £4 1/2, counting in the soil that bears no rent at all. This is a figure a landowner with all 4 acres might work out for himself, for instance; and it is how the average rent for a whole country is statistically reckoned. The total rental of £18 comes from laying out a capital of £10. The ratio between those two figures is what we call the rate of rent: here, 180 per cent.
We get the very same rate of rent in Ia, where 8 acres are cultivated instead of 4, but the increase fell on every soil type in the same proportion. The total rental of £36, on 8 acres and £20 of capital laid out, gives an average rent of £4 1/2 per acre and a rate of rent of 180 per cent.
Now take Ib instead, where the increase has fallen mainly on the two poorer soils. Here we have a rent of £42 on 12 acres, so an average rent of £3 1/2 per acre. The total capital laid out is £30, so the rate of rent is 140 per cent. The average rent per acre has therefore dropped by £1, and the rate of rent has fallen from 180 to 140 per cent.
So here the total rental grows, from £18 to £42, and at the same time the average rent falls — both per acre and reckoned on the capital. Production likewise grows, but not in proportion. And all of this happens although the rent on every soil type stays the same, whether reckoned per acre or on the capital laid out. It happens because three-quarters of the increase falls on soil A, which bears no rent, and on soil B, which bears only the minimum rent.
Suppose that in case Ib the whole expansion had fallen on soil A alone. Then we would have 9 acres of A, 1 of B, 1 of C and 1 of D. The total rental would be £18 just as before, so the average rent per acre over those 12 acres would be £1 1/2; and £18 of rent on £30 of capital laid out would give a rate of rent of 60 per cent. The average rent would have fallen a long way, both reckoned per acre and reckoned on the capital applied, even though the total rental had not grown at all.
Last of all, put Ic side by side with I and Ib. Set against I, the soil area has tripled, and the capital laid out has done the same. The total rental comes to £72 across 12 acres; that is £6 per acre, whereas case I gave £4 1/2 per acre. The rate of rent, taken on the capital laid out (£72: £30), is 240 per cent, not 180 per cent. The total product has climbed to 36 from 10 qrs.
Compare this with Ib. In Ib the total number of cultivated acres, the capital applied and the differences between the cultivated soils are all the same — only the distribution is different. And yet in Ic the product is 36 qrs instead of 26 qrs, the average rent per acre is £6 instead of £3 1/2, and the rate of rent, against an equally large total capital advanced, is 240 per cent instead of 140 per cent.
Take the different situations set out in Tables Ia, Ib and Ic either as situations existing side by side in different countries at the same time, or as stages that follow one another in the same country. Either way, this account gives us the following.
The assumptions held fixed are these: a stationary price of grain, and stationary because the yield of the worst, rentless soil stays the same; an unchanged difference in fertility between the different cultivated classes of soil; an equal respective product, therefore, from equal capital laid out on equal aliquot parts (acres) of the area cultivated in each soil class; and so a constant ratio between the rent per acre of each type of soil, together with an equal rate of rent on the capital laid out on each piece of land of the same type.
First: the total rental always grows as the cultivated area expands, and so as more capital is laid out — except in the case where the whole of the increase would fall on the rentless soil.
Second: both the average rent per acre (the total rental divided by the total number of acres tilled) and the average rate of rent (the total rental divided by the total capital laid out) can vary very considerably — and the two move in the same direction, yet in different proportions from one another.
If we leave aside the case in which the increase takes place only on the rentless soil A, it follows that the average rent per acre and the average rate of rent on the capital laid out in agriculture depend on the proportionate shares that the different soil classes make up of the total cultivated area — or, what comes to the same thing, on how the total capital applied is distributed among soil types of different fertility. However much land is tilled, and so however much larger or smaller the total rental is (apart from that same case where the increase falls only on A), the average rent per acre, or the average rate of rent on the capital applied, stays the same as long as the proportions in which the different soil classes share in the total area stay constant.
Even though the total rental rises as cultivation extends and more capital is laid out — even rises substantially — the average rent per acre and the average rate of rent on capital fall when the expansion of the rentless land and of land bearing only a small differential rent is greater than the expansion of the better land bearing a higher rent. Conversely, the average rent per acre and the average rate of rent on capital rise to the extent that the better land makes up a relatively larger share of the total area, and relatively more capital is therefore laid out on it.
Look at the average rent per acre or per hectare over the whole of the cultivated soil — which is what statistical works mostly do, comparing either different countries in the same period or different periods in the same country — and you see this: the average level of rent per acre, and with it the total rental, corresponds in a certain proportion, though by no means an equal one, but rather a faster-stepping one, not to the relative fertility of agriculture in a country but to its absolute fertility, that is, to the mass of products it yields on average from an equal area. For the larger the share of the total area made up by the better soil types, the greater the mass of products from the same capital laid out and on the same area of soil; and the greater the average rent per acre. And the other way round.
So rent appears determined not by the relation of differential fertility but by absolute fertility, and the law of differential rent appears to be set aside with it. That is why certain phenomena get denied, or attempts get made to explain them by non-existent differences in average grain prices and in the differential fertility of the cultivated lands — phenomena whose ground is simply this: the ratio of the total rental, whether to the total area of cultivated soil or to the total capital laid out in the soil, given the same fertility of the rentless soil and hence equal prices of production, and given the same difference between the different soil types, is determined not only by the rent per acre or by the rate of rent on capital, but just as much by the relative number of acres of each soil type within the total number of cultivated acres; or, what comes to the same thing, by the distribution of the total capital applied among the different soil types. This circumstance has so far been completely overlooked, in a quite striking way.
In any case one thing shows, and it matters for the further course of our investigation: the relative level of the average rent per acre, and the average rate of rent, or the ratio of the total rental to the total capital laid out in the soil, can rise or fall while prices, while the difference in fertility of the cultivated lands, and while the rent per acre or the rate of rent for the capital laid out per acre in each soil class that actually bears rent (or for all capital that actually bears rent) all stay the same — and this by a mere extensive expansion of cultivation.
The following points have still to be added here. They are made in relation to the first form of differential rent, the one we have just been looking at, though in part they also fit the second form.
First. We have seen how the average rent per acre, or the average rate of rent on the capital laid out, can rise as cultivation spreads, given stationary prices and an unchanged differential fertility of the lands already tilled. Now take the case where all the land in a country has been appropriated, and investment in the soil, cultivation and population have all reached a certain level; these are all taken for granted once the capitalist mode of production becomes dominant and takes hold of agriculture too. Then the price of untilled land of the various qualities (assuming only differential rent) is fixed by the price of tilled land of the same quality and an equivalent location. It is the same price — after deducting the extra cost of breaking the new land in — even though this land bears no rent.
The price of land is of course nothing but capitalized rent. But with tilled land too, only future rents are paid in the price: twenty years' rents handed over at one stroke, for example, where the governing rate of interest is 5 per cent. As soon as land is sold, it is sold as rent-bearing, and the prospective character of the rent — rent being taken here as the fruit of the soil, which it only is in appearance — does not set untilled land apart from tilled. The price of untilled land, like its rent, whose compressed formula that price is, is pure illusion so long as the land is not actually used. But it is fixed in advance in this way, and it is realized as soon as buyers are found. So while the actual average rent of a country is fixed by its actual average yearly rental and by how that stands to the whole cultivated area, the price of the untilled part is fixed by the price of the tilled part, and is therefore nothing but a reflex of the capital invested in the tilled lands and of what it produces there.
Since every type of soil except the worst bears rent — and that rent, as we shall see under the second form, rises with the mass of capital and the intensity of cultivation that goes with it — a nominal price forms for the untilled parts, and so they become a commodity, a source of wealth for their owners. This also explains why the price of land rises for the whole area, untilled land included. (Compare the American writer Opdyke.) Land speculation, in the United States for example, rests on nothing but this reflex which capital and labour cast on untilled land.
Second. The extension of cultivated land in general moves either onto worse soil or onto the various given types of soil in different proportions, depending on how those types are found there. Progression to worse soil is of course never a matter of free choice: with the capitalist mode of production presupposed it can only be the result of rising prices, and under any mode of production it can only be the result of necessity. But this is not unconditional. Worse soil is preferred to relatively better soil on account of its location, which is decisive for every extension of cultivation in young countries. And also because, even where a stretch of country belongs on the whole to the more fertile formation, better and poorer soils are jumbled up together in detail, so that the poorer soil has to be brought under cultivation simply because it lies alongside the better. If the worse soil forms enclaves inside the better, the better gives it the advantage of location against more fertile land that is not connected with land already cultivated or about to be cultivated.
Michigan, then, was among the earliest states in the West to export grain. Its soil, taken as a whole, is poor. Yet, at first, Michigan had the edge over states lying further west, even though those states had greater natural fertility. It was close to New York, and water routes through the lakes and the Erie Canal let it move goods. Michigan's case, set beside New York, also lets us trace how better soil gives way to worse. New York's soil, especially its western section, is much more fertile, above all for wheat farming. Ruthless farming turned this fertile soil barren, and then Michigan's soil seemed the more fertile.
Johnston reports: in 1838, wheat flour was shipped at Buffalo for the West, mainly from the wheat region of New York and Upper Canada. Today, after only twelve years, huge stores of wheat and flour are brought from the West, along Lake Erie and on the Erie Canal, and shipped east at Buffalo and the neighbouring port of Blackrock. The export of wheat and flour was especially stimulated by the European famine of 1847. This made wheat cheaper in western New York and wheat-growing less profitable, and it led the New York farmers to turn more to stock-rearing and dairy farming, fruit-growing and so on — branches in which, in their view, the North-West would be unable to compete with them directly. (J. W. Johnston, Notes on North America, London 1851, I., p. 222, 223.)
Third. It is a false assumption that the soil in colonies, and in young countries generally, is for that reason necessarily of greater natural fertility just because they can export corn at cheaper prices. Grain there is sold not only below its value, but below its price of production: below the production price fixed by the average rate of profit in the older countries.
When we, as Johnston says (p. 223), are used to linking the idea of great natural productiveness and endless stretches of rich soil with these new states, from which such large supplies of wheat come to Buffalo every year, this depends first of all on economic conditions.
The whole population of such a country, Michigan for instance, is at first almost exclusively busy with farming, and especially with its bulk crops, since those are the only things it can exchange for industrial goods and tropical products. So its entire surplus product appears in the shape of corn. That is what from the outset sets the colonial states founded on the modern world market apart from those of earlier times, and especially of antiquity: through the world market they get ready-made the products they would otherwise have had to make themselves, clothing, tools and so on. Only on that basis could the Southern states of the Union make cotton their main product. The division of labour on the world market allows them to. So when they seem, given how new they are and how relatively few people they hold, to produce a very large surplus product, that is owed neither to the fertility of their soil nor to the fertility of their labour, but to the one-sided form of their labour, and therefore of the surplus product in which that labour is expressed.
Further, a relatively less fertile stretch of arable soil that is only now being tilled and has never been touched by cultivation has, so long as the climate is not altogether unfavourable, piled up in its top layers at least so many easily soluble plant nutrients that it yields harvests for a long time without fertilizer, and yields them under quite superficial tilling. With the western prairies there is the further point that they require hardly any clearing costs, since nature has already made them arable.
In less fertile regions of this kind the surplus comes out not through the high fertility of the soil, that is, not through the yield per acre, but through the mass of acres that can be cultivated in a superficial way, because this soil costs the tiller nothing, or, compared with older countries, only a vanishingly small amount — as, for example, where share-cropping exists, in parts of New York, Michigan, Canada and elsewhere. A family works say 100 acres superficially, and although the product per acre is not large, the product of 100 acres gives it a considerable surplus for sale. Add to that the almost cost-free keeping of cattle on natural pasture, with no artificial meadows. What decides here is not the quality of the soil but its quantity. The possibility of this superficial cultivation is, of course, used up more or less rapidly, in inverse proportion to the fertility of the new soil and in direct proportion to the export of its product.
Johnston adds that such a country will still give excellent first harvests, even of wheat: whoever skims the first cream off the soil will be able to send a rich surplus of wheat to market (op. cit., p. 224).
In countries where cultivation is older, property relations, the price of uncultivated land as determined by the price of cultivated land, and so on, make this kind of extensive farming impossible.
That this soil is therefore not necessarily very fertile — as Ricardo imagines it must be — and that soils of equal fertility are not the only ones tilled, can be seen from the following. In the state of Michigan, 465,900 acres were sown to wheat in 1848 and produced 4,739,300 bushels, or an average of 10 1/5 bushels per acre; after the seed corn is deducted, that comes to less than 9 bushels per acre. Of the state's 29 counties, two averaged 7 bushels, three 8, two 9, seven 10, six 11, three 12 and four 13 bushels, and only one 16 and another 18 bushels per acre (op. cit., p. 225).
For practical cultivation, greater fertility of the soil coincides with greater immediate exploitability of that fertility. And that immediate exploitability can be greater in a soil that is naturally poor than in one that is naturally rich; but it is the kind of soil the colonist will reach for first, and must reach for when capital is lacking.
Finally, the extension of cultivation over larger areas — leaving aside the case just looked at, where recourse has to be had to worse soil than what has been tilled up to now — over the various soil types from A to D, so for instance the tilling of greater areas of B and C, presupposes no previous rise in grain prices, any more than the anticipatory annual expansion of cotton spinning, say, requires a continuous rise in the price of yarn. A major rise or fall in market prices does affect the scale of production; but apart from that, even at average prices, whose level neither holds production back nor exceptionally encourages it, there goes on in agriculture, as in every other branch run on capitalist lines, that perpetual relative overproduction which is in itself identical with accumulation, and which under a different mode of production is brought about directly by the growth of population and in colonies by continual immigration. Demand grows steadily, and in that prospect new capital is continually invested in new soil, though for different soil products according to circumstances. It is the formation of new capitals that brings this about of itself.
As for the individual capitalist, he measures the scale of his production by the scale of the capital at his disposal, so far as he can still supervise it himself. What he has in view is taking up as much room as possible on the market. If too much has been produced, he pushes the blame onto his competitors, not onto himself. A single capitalist can expand his production just as well by appropriating a larger aliquot share of a given market as by enlarging that market itself.
Ricardo is completely right on the statements that follow:
Ricardo's word 'rent' means differential rent; he assumes that there is no rent at all in existence besides this one. And it is always the difference between what you get from employing two equal quantities of capital and labour. That is from his Principles.
Ricardo should have added: on equal quantities of land — that is, so far as what is being dealt with is ground-rent and not surplus profit in general.
Another way of saying it: a surplus profit that is normal, and not something chance events in the circulation process throw off, always arises as the difference between the products that two equal quantities of capital and labour yield. And it becomes ground-rent when two equal quantities of capital and labour, working on equal areas of land, produce unequal results.
Still, it is by no means absolutely necessary that this surplus profit come from unequal results produced by equal quantities of capital. In the various investments, capital sums of unequal size can also be at work; indeed, this is mostly what is assumed. But equal proportional parts — for instance £100 from each — give unequal results; that is, the rate of profit is not the same. This is the general precondition for surplus profit to exist in any sphere of capital investment at all. The second point is the transformation of this surplus profit into the form of ground-rent (or rent generally, as a form distinct from profit). We always have to examine when, how, and under what circumstances this transformation occurs.
Ricardo is also right about the next statement, so far as it is confined to differential rent:
Whatever reduces the inequality in the produce got from the same land or from new land tends to lower rent; and whatever increases that inequality necessarily has the opposite effect, and tends to raise rent.
What makes for that inequality, however, is not only the general causes — fertility and location. There are also: first, the way taxes are distributed, according to whether it works evenly or not; it is always uneven where taxation is not centralized, as in England, and where the tax is levied on the land and not on the rent. Second, the inequalities that come out of the different development of agriculture in different parts of the country, since this branch of industry, on account of its traditional character, is harder to level out than manufacture. And third, the uneven way in which capital is divided among the farmers.
Because the capitalist mode of production's takeover of agriculture — the transformation of the peasant who works for himself into a wage-labourer — is in fact the last conquest of that mode of production, these inequalities are greater here than in any other branch of industry.
After these preliminary remarks, I want to begin by setting out quite briefly what is peculiar to my own development, as against Ricardo's and the rest.
We start with the unequal results that equal amounts of capital give when they are put to work on different pieces of land of the same size. Where the pieces are not the same size, the results are worked out per equal area of ground.
These unequal results have two general causes, and neither of them lies in capital itself: (1) fertility — and on this point there is still to be set out everything that is included in the natural fertility of land, and what different factors it takes in; (2) the location of the land.
Location is decisive in colonies, and decisive in general for the sequence in which lands can be brought into cultivation one after another. It is also clear that these two different bases of differential rent, fertility and location, can pull in opposite directions. A soil can be very well located and very little fertile, and the other way round. That matters, because it explains why, when a given country's soil is first brought under cultivation, one can move from better land to worse just as well as the other way round.
And finally it is clear that the progress of social production in general works in one direction to level location as a basis of differential rent, by creating local markets and by creating location through the provision of means of communication and transport; and in the other direction to sharpen the differences between the local locations of lands — through the separation of agriculture from manufacture and the formation of great centres of production on the one side, and through the relative isolation of the countryside on the other.
First, though, we leave location aside and look only at natural fertility. Setting aside climate and similar factors, the difference in natural fertility lies in a difference in the chemical composition of the soil surface — that is, in how much plant nutrient it contains.
But suppose two areas of land have the same chemical content, and in that sense the same natural fertility: their real, effective fertility will still differ, depending on whether those nutrients are in a form in which they are more or less assimilable, directly usable as food for the plants. So how far the same natural fertility can actually be made available on lands that are naturally equally fertile depends partly on the chemical and partly on the mechanical development of agriculture. Fertility, then, though an objective property of the soil, always involves in economic terms a relation — a relation to the given chemical and mechanical stage of development of agriculture — and so changes with that stage.
The obstacles that made equally fertile soil in fact less productive can be removed, by chemical means (liquid fertilizers on stiff clayey soil, say, or the burning of heavy clayey soil) or by mechanical means (special ploughs for heavy soil — drainage belongs here too). The very sequence in which soil types are brought into cultivation can shift for this reason, as it did for one period of English agriculture as between light sandy soil and heavy clayey soil. This again shows how historical the order is: in the successive course of cultivation one can move from more fertile soil to less fertile soil just as well as the other way round. The same can happen through artificially produced improvement in the composition of the soil, or through a mere change of agricultural method. And the same result can grow out of a change in the hierarchy of soil types, once different conditions of the subsoil come into play and the subsoil too is drawn into cultivation and turned into topsoil — brought about partly by new farming methods (fodder crops, say) and partly by mechanical means that either turn subsoil into topsoil, or mix the two together, or work the subsoil without bringing it up.
All these influences on the differential fertility of different lands come down to one thing: for economic fertility, the level of the productive power of labour — here, agriculture's ability to make the natural fertility of the soil immediately exploitable, an ability that differs at different stages of development — is just as much a factor in the so-called natural fertility of the soil as its chemical composition and its other natural properties are.
So we assume a given stage of development of agriculture. We also assume that the hierarchy of soil types is calculated in relation to that stage of development — which is of course always the case where capital is invested at the same time on the different lands. Differential rent can then present itself as an ascending or a descending series; for although the order stands given for the whole of the lands actually cultivated, a successive movement has always been going on, and it was in that movement that the order was formed.
Take four kinds of soil: A, B, C and D. Suppose too that a quarter of wheat goes for £3, or 60 shillings. Because the rent here is simply differential rent, that price of 60 shillings a quarter is what the worst soil's production costs come to — its capital plus the average profit, and nothing above that.
Let A be this worst soil. An outlay of 50 shillings on it would give 1 quarter = 60 shillings, so a profit of 10 shillings, or 20 per cent.
Let B give 2 quarters = 120 shillings for the same outlay. That would be a profit of 70 shillings, or a surplus profit of 60 shillings — which is just the difference from A's profit.
Let C give 3 quarters = 180 shillings on the same outlay; the total profit would be 130 shillings, and the surplus profit 120 shillings.
Let D give 4 quarters = 240 shillings — that is 180 shillings of surplus profit.
The order would then be this:
Take each soil's rent. D's is 190 shillings minus 10, which is just the difference between D and A; C's is 130 minus 10, the difference between C and A; B's is 70 minus 10, the difference between B and A. And the total rent for B, C and D comes to 6 quarters, or 360 shillings — the sum of those differences: D against A, C against A, and B against A.
This same series — one given product in one given state — could just as well have been brought about in any of three ways. Considered in the abstract it could have been produced by moving downward, from D down to A, from fertile soil to ever less fertile soil; or by climbing upward, from A up to D, from relatively infertile soil to ever more fertile; or else by fluctuation, now down and now up — from D to C, from C to A, from A to B, say. And we have already given the reasons why this can be the case in reality too.
In the descending order the process ran like this. The price of a quarter climbs by degrees, from a posited 15 shillings up to 60. Once the 4 quarters that D produces — think of them as millions — are no longer enough, the wheat price rises far enough for the missing supply to be got from C. That is, the price must have risen to 20 shillings a quarter. Once the wheat price reaches 30 shillings a quarter, B can be taken into cultivation, and once it reaches 60, A can, and in each case the capital used on it need not put up with a rate of profit below 20 per cent. So a rent forms on D: first 5 shillings a quarter, 20 shillings for the 4 quarters it produces; then 15 shillings a quarter, 60 shillings; then 45 shillings a quarter, 180 shillings for 4 quarters.
If D's rate of profit was also 20 per cent to start with, then its total profit on the 4 quarters was also only 10 shillings — but those 10 shillings stood for more corn at a corn price of 15 shillings than at a price of 60. And since corn goes into the reproduction of labour-power, and part of every quarter has to replace wages while another part replaces constant capital, surplus-value was higher under this assumption, and so too, with other things remaining equal, was the rate of profit. (The question of the rate of profit has to be looked into separately and in more detail.)
Suppose instead the order ran the other way and the process began with A. Then, as soon as new farmland had to be taken into cultivation, the price of a quarter first rose above 60 shillings; but since the needed supply came from B, the needed supply of 2 quarters, it fell back to 60 shillings. B produced its quarter at 30 shillings and sold it at 60, because its supply was only just enough to cover the demand. And so a rent formed, to begin with 60 shillings on B, and in the same way on C and D — always on the assumption that the market price stays at 60 shillings, because the supply of the one quarter A provides is still needed to satisfy the total demand, even though, relatively, C and D supply their quarter at a real value of 20 and of 15 shillings. In this case the demand rising above what A first, and then A and B, supplied would not have brought B, C and D into cultivation one after another; it would only have meant that the area brought under the plough was extended as a whole, with the more fertile lands happening to fall into it only later.
In the first series, ground-rent would climb as the price increased, while the profit rate would drop. Countervailing circumstances might wipe out that drop altogether, or only in part; this point needs a closer look later. Nor may we forget this: surplus-value in every sphere of production does not fix the general rate of profit in one uniform way. Agricultural profit does not set the standard for industrial profit; the line of determination runs the other way. On that, however, more later.
In the second series the rate of profit on the capital laid out would stay the same; the mass of profit would be represented by less corn; but the relative price of corn, compared with other commodities, would have risen. Only, wherever the profit does increase, the increase would not flow into the pockets of the industrialist farmers and show itself as growing profit — it would branch off from profit in the form of rent. Under the assumption made here, though, the price of corn would remain stationary.
The development and growth of differential rent would remain the same whether prices stayed level or rose, and whether there was a steady progression from worse soil to better or a steady regression from better soil to worse.
So far we have assumed two things. First, that the price rises in one ordering and stays put in the other. Second, that the advance is always from better soil to worse, or the other way round, from worse soil to better.
Now suppose instead that the demand for grain rises from its original 10 qrs to 17. Suppose too that the worst soil, A, is displaced by another soil which, on a production cost of 60 shillings (50 shillings of costs plus 10 shillings for 20 per cent profit), yields 1 1/3 qrs, so that its production price per quarter is 45 shillings. Or suppose that the old soil A has been improved through continued rational cultivation, or farmed more productively at constant cost, for example by the introduction of clover, so that its product rises to 1 1/3 qrs on the same advance of capital. And suppose further that soils B, C and D still yield the same product as before, but that new soils have come into cultivation: A´, of a fertility between A and B, and B´ and B´´, of a fertility between B and C. In that case the following things would take place.
First: a quarter of wheat would have had a production price of 45 shillings instead of 60 — the same figure as its governing market price — which is a fall of 25 per cent.
Second: the advance would have gone in both directions at once, from more fertile soil to less fertile and from less fertile soil to more fertile. A´ is more fertile than A, but less fertile than B, C and D, the soils cultivated up to now; and B´ and B´´ are more fertile than A, A´ and B, but less fertile than C and D. So the sequence would have gone crosswise, this way and that. It would not have moved to soil absolutely less fertile as against A and the rest, but to soil relatively less fertile as compared with C and D, the most fertile soils up to now. Nor, on the other hand, would it have moved to soil absolutely more fertile; it would have moved to soil relatively more fertile than the least fertile soils up to now, A, or A and B.
Third: the rent on B would have fallen, and so would the rent on C and D; but the total rental in corn would have risen, from 6 qrs to 7 2/3. The amount of cultivated land bearing rent would have grown, and the product would have grown from 10 qrs to 17. Profit, if it stayed the same for A, would have risen when expressed in corn; but the profit rate itself could have risen, because relative surplus-value had risen. In that case, as the means of subsistence grew cheaper, wages would have fallen, and with them the outlay on variable capital, and so the total outlay as well.
In money, the total rental would have fallen from 360 shillings to 345.
Let us now set out the new sequence.
Suppose, finally, that the only soil types still under cultivation are A, B, C and D, exactly as before, but that their yields have been raised like this: A produces 2 quarters instead of 1, B 4 instead of 2, C 7 instead of 3, and D 10 instead of 4. The same causes would then have worked differently on the different soils, and total production would have risen from 10 quarters to 23. And suppose demand had taken up those 23 quarters, as the population grew and the price came down. The outcome would then be this:
The numbers in this table, like those in all the other tables, are arbitrary. The assumptions are not: they are entirely rational.
The first and main assumption is that improvement in agriculture works unevenly on different soils, and here does more for the better soils C and D than for A and B. Experience has shown that this is the general rule, although the opposite case can also occur. Had the improvement worked more on the poorer soil than on the better, the rent on the better soil would have fallen instead of rising.
The table assumes two things at once. Fertility grows in absolute terms on every soil; and alongside that, the better soils C and D grow in relative fertility. So the gap between what equal capital brings in from each soil widens, and with it the differential rent.
The second assumption is that total demand keeps pace with the growing total product. It rests on five things.
First, the growth need not be imagined as sudden; series III can be imagined as coming about gradually. Second, it is false that consumption of necessary means of subsistence does not grow as they get cheaper. The repeal of the Corn Laws in England (see Newman) proved the opposite, and the contrary idea arose only because large, sudden differences in the harvest, which are owed to nothing but the weather, now bring an out-of-all-proportion fall and now an out-of-all-proportion rise in corn prices. If, in that case, the sudden and short-lived cheapening does not get the time to have its full effect on expanding consumption, the opposite holds where the cheapening comes from a fall in the governing production price itself, and so lasts. Third, part of the grain can be consumed as spirits or beer, and the growth in consumption of these two is in no way confined within narrow limits. Fourth, it depends partly on the growth of population, and partly a country may be a corn exporter, as England still was past the middle of the eighteenth century, so that demand is not governed by the limits of national consumption alone. Finally, an increase in wheat production and a cheaper wheat can mean that wheat becomes the main food of the mass of the people instead of rye or oats, so the market for it grows through that alone; and with a declining product and a rising price the reverse can occur.
On these assumptions, then, and with the figures assumed, series III gives this result: the price per quarter falls from 60s. to 30s., i.e. by 50 per cent; production, compared with series I, grows from 10 to 23 qrs, i.e. by 130 per cent; rent on soil B stays as it was, on C rises by 25 per cent and on D by 33 1/3 per cent; and the total rental rises from £18 to £22 1/2, i.e. by 25 per cent.
Set the three tables side by side and a set of results falls out. Series I has to be counted twice: once rising from A to D, once falling from D to A. The whole set can be read either as fixed gradations that exist within one given state of society — three different countries standing side by side, say — or as following one another in different periods of the same country's development. Comparing the three tables gives the following.
(1) Once the series is complete, it always appears as a descending one — whatever the course of its process of formation may have been. The reason lies in how a rent table gets looked at: you always start from the soil that carries the maximum of rent, and only come last to the soil that carries none.
(2) The production price of the worst soil, the one carrying no rent, is always the governing market price — though with Table I, if that series formed as an ascending one, this market price would stay stationary only because ever better soil kept being cultivated. In that case the price of the corn grown on the best soil is the governing one, in so far as how far soil A stays governing depends on the quantity produced on that best soil. If B, C and D produced beyond the demand, A would cease to be governing. This is what Storch has a vague sense of when he makes the best type of soil the governing one. In this way American grain prices govern English ones.
(3) Differential rent springs from the difference in the natural fertility of soil types as that difference is given for the stage of cultivation reached at the time (location still left out of account here) — and so from the limited extent of the best lands, and from the fact that equal capitals have to be laid out on unequal soil types, which therefore yield unequal products for the same capital.
(4) A differential rent, and a graduated differential rent, can arise just as well on a declining scale, moving from better soil to worse, as the other way round, from worse soil to better — or through criss-cross moves that change direction. (Series I can form by moving from D to A as much as from A to D. Series II contains movements of both kinds.)
(5) Depending on how it is formed, differential rent can develop with a stationary price of the agricultural product, a rising one or a falling one. In the falling case, total production and the total rental can rise, and rent can form on land that carried none before — even though the worst soil A has been displaced by better soil, or has itself become better, and even though rent falls on other, better soils and even on the best types of soil (Table II). This process can also go together with a fall in the total rental in money.
Then again, when falling prices are owed to a general improvement in cultivation, so that both the product of the worst soil and its price fall, rent on part of the better soil types may stay the same or fall, but grow on the best soil types.
The differential rent of any soil, compared with the worst soil, does depend on the price of a quarter of wheat, say, when the size of the difference in the amount produced is given. But when the price is given, it depends on the size of the difference in the amount produced; and if the absolute fertility of all soil rises, with the fertility of the better soil types rising relatively more than that of the worse ones, then the size of this difference grows as well. So at a price of 60 shillings (Table I), the rent on D is fixed by its differential product against A, that is by the excess of 3 qrs; the rent is therefore 3 × 60 = 180 shillings. But in Table III, where the price is 30 shillings, it is fixed by the mass of D's excess product over A, which is 8 qrs — but 8 × 30 = 240 shillings.
This is where the first false premise of differential rent falls away — the one still held by West, Malthus and Ricardo: that differential rent necessarily presupposes a move to ever worse soil, or an ever declining fertility in agriculture. As we have seen, it can occur with a move to ever better soil; it can occur when a better soil takes the bottom place instead of the worse one there before; it can go together with steady progress in agriculture. Its only condition is inequality of soil types. So far as the development of productivity is concerned, it assumes that a rise in the absolute fertility of the whole area does not abolish this inequality, but either increases it, leaves it stationary, or only reduces it.
During the eighteenth century's opening half, England's grain prices kept falling even though gold or silver was getting cheaper, and over that same stretch (taking the whole period together), ground-rent, the total rental, the amount of land under cultivation, agricultural output and population all grew. This matches Table I joined to Table II on an ascending line, though with the proviso that soil A, the poorest sort, is either improved or pushed out of grain growing; all the same, this does not mean it went unused for other farm or factory purposes.
From the beginning of the nineteenth century (the date still to be given more precisely) through to 1815, a continuing rise in grain prices, with steady growth in rent, in the total rental, in the extent of land under cultivation, in agricultural production and in population. This matches Table I on a descending line. (A citation on the cultivation of worse lands in that period is still to be supplied here.)
In Petty's and Davenant's time, complaints from country people and landowners about the improvements and the bringing of waste land into cultivation; a fall in rents on the better lands, a rise in the total rental through the extension of rent-bearing land.
(Further citations on these three points are still to be given later; likewise on the difference in fertility between the different cultivated parts of the soil within one country.)
One general point about differential rent: the market value always stands above the total production price of the whole mass of product. Take Table I, the one reckoned in shillings. The ten qrs that make up the total product are sold for 600 shillings, because the market price is fixed by the production price of soil A, which comes to 60 shillings a quarter. The real production price, however, is this:
The real production price of the ten qrs is 240 shillings; they are sold for 600, which is 250 per cent too dear. The real average price of one quarter is 24 shillings; the market price is 60 shillings, likewise 250 per cent too dear.
This is determination by market value, the way it asserts itself through competition on the basis of the capitalist mode of production; and competition is what produces a false social value. It follows from the law of market value, the law that products of the soil are subject to.
Fixing the market value of products — of products of the soil as much as any other — is a social act. Society performs it unconsciously and unintentionally, and it rests necessarily on the exchange-value of the product, not on the soil and the differences in its fertility.
Suppose now that the capitalist form of society were abolished and society were organized as a conscious association working to a plan. Then the ten qrs would stand for a quantity of autonomous labour-time equal to the labour-time contained in 240 shillings. Society would therefore not buy this product of the soil at two and a half times the actual labour-time that is in it, and with that the basis of a class of landowners would fall away. The effect would be just the same as if the product had been made cheaper by that amount through imports from abroad.
So it is right to say that, keeping the present mode of production but assuming that differential rent went to the state, the prices of products of the soil would stay the same, other things being equal. And it is wrong to say that the value of those products would stay the same if capitalist production were replaced by association.
That commodities of the same kind have one and the same market price is the way the social character of value asserts itself, on the basis of the capitalist mode of production and, more generally, of production resting on commodity exchange between individuals. What society, considered as consumer, pays too much for products of the soil is a minus for the realization of its labour-time in agricultural production — and it now forms the plus for one part of society, the landowners.
A second circumstance matters here, and it will matter for what the next chapter sets out as differential rent II.
What is at issue is not simply the rent for an acre or a hectare, or, more broadly, the gap between production price and market price - or between the individual and the general production price per acre. It also matters how many acres of each type of soil are under cultivation.
What this bears on here, directly, is only the size of the rental, the total rent from the whole cultivated area. At the same time it serves as a transition to the account of how the rate of rent rises, even though prices do not rise, and even though, when prices fall, the differences in the relative fertility of the soil types do not rise either. We had earlier:
Suppose now that the number of acres under cultivation doubles in every class. Then we get:
Let us take two further cases. The first is one in which production expands onto the two inferior soil types, like this:
And finally the second case, an uneven expansion of production and of the cultivated area across all four soil classes:
Across all four cases — I, Ia, Ib, Ic — one thing stays the same: the rent per acre. The same amount of capital on one acre of the same kind of soil has in fact given the same result, unchanged.
What is assumed here is only what is the case in every country at any given moment: the different types of soil take definite shares of the whole cultivated area. And what is always the case when two countries are compared with each other, or when the same country is looked at at different points in time, is that the ratio in which the total cultivated area is divided among those soil types changes.
If we compare Ia with I, we see that when the cultivation of the land in all four classes grows in the same proportion, a doubling of the cultivated acres doubles the total product — and with it the corn rent and the money rent.
If we compare Ib and then Ic with I, in both cases the area under cultivation is tripled: it rises from 4 acres to 12. But in Ib it is classes A and B that take the biggest share of the increase — A pays no rent, and B pays the smallest differential rent. Of the 8 newly cultivated acres, 3 each go to A and B, 6 together, while only 1 each goes to C and D, 2 together. In other words: three-quarters of the increase falls on A and B, and only one-quarter on C and D.
On that assumption, tripling the scale of cultivation in Ib does not correspond to a tripled product, for the product rises from 10, not to 30, but only to 26. And since a substantial part of the increase took place on A, which yields no rent, while of the increase on the better land the main part went to class B, the corn rent rises only from 6 qrs to 14 qrs, and the money rent from £18 to £42.
If we compare Ic with I instead, there the soil that pays no rent does not grow in extent at all, the soil that pays the smallest rent grows only slightly, and the bulk of the increase falls on C and D. We then find that with the cultivated area tripled, production has risen from 10 to 36 qrs, that is, to more than three times its former level; the corn rent from 6 to 24 qrs, or fourfold; and the money rent likewise from £18 to £72.
In all of these cases the price of the agricultural product stays where it is, by the nature of the case; and in all of them the total rental grows with the expansion of cultivation, so far as that expansion does not take place exclusively on the worst soil, the soil that pays no rent.
But this growth differs from case to case. To the extent that the expansion falls on the better types of soil, so that the mass of product grows not merely in proportion to the expansion of the land but more steeply, the corn rent and the money rent grow. To the extent that the worst soil and the soil types next above it take the principal share of the expansion instead — which assumes that the worst soil is a constant class — the total rental does not rise in proportion to the expansion of cultivation.
So take two countries where the rent-free soil A is of the same quality. The rental stands in inverse proportion to the share of the total cultivated area made up by the worst and the less good soil types, and hence also in inverse proportion to the mass of product from the same capital outlay on equally large total areas. The relation between the quantity of the worst cultivated soil and the quantity of better soil within a country's total soil area therefore acts on the total rental. It acts in the opposite direction from the way the relation between the quality of the worst cultivated soil and the quality of the better and best acts on the rent per acre — and hence, other circumstances remaining the same, on the rental too. The confusion of these two aspects has given rise to all kinds of confused objections to differential rent.
The total rental, then, grows through the mere extension of cultivation, and through the wider application of capital and labour to the soil that goes with it.
But the most important point is this. We are holding fixed all along that the rents of the different soils, reckoned per acre, stay in the same ratio to one another, and so does the rate of rent looked at in relation to the capital laid out on each acre. On that assumption, here is what we find.
Compare Ia with I — the case where the number of cultivated acres has grown in proportion, and the capital invested along with it. The total product has grown in proportion to the larger area under cultivation: both have doubled. And the same has happened to the rental. It has risen from £18 to £36, just as the number of acres has risen from 4 to 8.
Take the whole area of 4 acres. The total rental on it was £18 — which gives an average rent of £4 1/2, counting in the soil that bears no rent at all. This is a figure a landowner with all 4 acres might work out for himself, for instance; and it is how the average rent for a whole country is statistically reckoned. The total rental of £18 comes from laying out a capital of £10. The ratio between those two figures is what we call the rate of rent: here, 180 per cent.
We get the very same rate of rent in Ia, where 8 acres are cultivated instead of 4, but the increase fell on every soil type in the same proportion. The total rental of £36, on 8 acres and £20 of capital laid out, gives an average rent of £4 1/2 per acre and a rate of rent of 180 per cent.
Now take Ib instead, where the increase has fallen mainly on the two poorer soils. Here we have a rent of £42 on 12 acres, so an average rent of £3 1/2 per acre. The total capital laid out is £30, so the rate of rent is 140 per cent. The average rent per acre has therefore dropped by £1, and the rate of rent has fallen from 180 to 140 per cent.
So here the total rental grows, from £18 to £42, and at the same time the average rent falls — both per acre and reckoned on the capital. Production likewise grows, but not in proportion. And all of this happens although the rent on every soil type stays the same, whether reckoned per acre or on the capital laid out. It happens because three-quarters of the increase falls on soil A, which bears no rent, and on soil B, which bears only the minimum rent.
Suppose that in case Ib the whole expansion had fallen on soil A alone. Then we would have 9 acres of A, 1 of B, 1 of C and 1 of D. The total rental would be £18 just as before, so the average rent per acre over those 12 acres would be £1 1/2; and £18 of rent on £30 of capital laid out would give a rate of rent of 60 per cent. The average rent would have fallen a long way, both reckoned per acre and reckoned on the capital applied, even though the total rental had not grown at all.
Last of all, put Ic side by side with I and Ib. Set against I, the soil area has tripled, and the capital laid out has done the same. The total rental comes to £72 across 12 acres; that is £6 per acre, whereas case I gave £4 1/2 per acre. The rate of rent, taken on the capital laid out (£72: £30), is 240 per cent, not 180 per cent. The total product has climbed to 36 from 10 qrs.
Compare this with Ib. In Ib the total number of cultivated acres, the capital applied and the differences between the cultivated soils are all the same — only the distribution is different. And yet in Ic the product is 36 qrs instead of 26 qrs, the average rent per acre is £6 instead of £3 1/2, and the rate of rent, against an equally large total capital advanced, is 240 per cent instead of 140 per cent.
Take the different situations set out in Tables Ia, Ib and Ic either as situations existing side by side in different countries at the same time, or as stages that follow one another in the same country. Either way, this account gives us the following.
The assumptions held fixed are these: a stationary price of grain, and stationary because the yield of the worst, rentless soil stays the same; an unchanged difference in fertility between the different cultivated classes of soil; an equal respective product, therefore, from equal capital laid out on equal aliquot parts (acres) of the area cultivated in each soil class; and so a constant ratio between the rent per acre of each type of soil, together with an equal rate of rent on the capital laid out on each piece of land of the same type.
First: the total rental always grows as the cultivated area expands, and so as more capital is laid out — except in the case where the whole of the increase would fall on the rentless soil.
Second: both the average rent per acre (the total rental divided by the total number of acres tilled) and the average rate of rent (the total rental divided by the total capital laid out) can vary very considerably — and the two move in the same direction, yet in different proportions from one another.
If we leave aside the case in which the increase takes place only on the rentless soil A, it follows that the average rent per acre and the average rate of rent on the capital laid out in agriculture depend on the proportionate shares that the different soil classes make up of the total cultivated area — or, what comes to the same thing, on how the total capital applied is distributed among soil types of different fertility. However much land is tilled, and so however much larger or smaller the total rental is (apart from that same case where the increase falls only on A), the average rent per acre, or the average rate of rent on the capital applied, stays the same as long as the proportions in which the different soil classes share in the total area stay constant.
Even though the total rental rises as cultivation extends and more capital is laid out — even rises substantially — the average rent per acre and the average rate of rent on capital fall when the expansion of the rentless land and of land bearing only a small differential rent is greater than the expansion of the better land bearing a higher rent. Conversely, the average rent per acre and the average rate of rent on capital rise to the extent that the better land makes up a relatively larger share of the total area, and relatively more capital is therefore laid out on it.
Look at the average rent per acre or per hectare over the whole of the cultivated soil — which is what statistical works mostly do, comparing either different countries in the same period or different periods in the same country — and you see this: the average level of rent per acre, and with it the total rental, corresponds in a certain proportion, though by no means an equal one, but rather a faster-stepping one, not to the relative fertility of agriculture in a country but to its absolute fertility, that is, to the mass of products it yields on average from an equal area. For the larger the share of the total area made up by the better soil types, the greater the mass of products from the same capital laid out and on the same area of soil; and the greater the average rent per acre. And the other way round.
So rent appears determined not by the relation of differential fertility but by absolute fertility, and the law of differential rent appears to be set aside with it. That is why certain phenomena get denied, or attempts get made to explain them by non-existent differences in average grain prices and in the differential fertility of the cultivated lands — phenomena whose ground is simply this: the ratio of the total rental, whether to the total area of cultivated soil or to the total capital laid out in the soil, given the same fertility of the rentless soil and hence equal prices of production, and given the same difference between the different soil types, is determined not only by the rent per acre or by the rate of rent on capital, but just as much by the relative number of acres of each soil type within the total number of cultivated acres; or, what comes to the same thing, by the distribution of the total capital applied among the different soil types. This circumstance has so far been completely overlooked, in a quite striking way.
In any case one thing shows, and it matters for the further course of our investigation: the relative level of the average rent per acre, and the average rate of rent, or the ratio of the total rental to the total capital laid out in the soil, can rise or fall while prices, while the difference in fertility of the cultivated lands, and while the rent per acre or the rate of rent for the capital laid out per acre in each soil class that actually bears rent (or for all capital that actually bears rent) all stay the same — and this by a mere extensive expansion of cultivation.
The following points have still to be added here. They are made in relation to the first form of differential rent, the one we have just been looking at, though in part they also fit the second form.
First. We have seen how the average rent per acre, or the average rate of rent on the capital laid out, can rise as cultivation spreads, given stationary prices and an unchanged differential fertility of the lands already tilled. Now take the case where all the land in a country has been appropriated, and investment in the soil, cultivation and population have all reached a certain level; these are all taken for granted once the capitalist mode of production becomes dominant and takes hold of agriculture too. Then the price of untilled land of the various qualities (assuming only differential rent) is fixed by the price of tilled land of the same quality and an equivalent location. It is the same price — after deducting the extra cost of breaking the new land in — even though this land bears no rent.
The price of land is of course nothing but capitalized rent. But with tilled land too, only future rents are paid in the price: twenty years' rents handed over at one stroke, for example, where the governing rate of interest is 5 per cent. As soon as land is sold, it is sold as rent-bearing, and the prospective character of the rent — rent being taken here as the fruit of the soil, which it only is in appearance — does not set untilled land apart from tilled. The price of untilled land, like its rent, whose compressed formula that price is, is pure illusion so long as the land is not actually used. But it is fixed in advance in this way, and it is realized as soon as buyers are found. So while the actual average rent of a country is fixed by its actual average yearly rental and by how that stands to the whole cultivated area, the price of the untilled part is fixed by the price of the tilled part, and is therefore nothing but a reflex of the capital invested in the tilled lands and of what it produces there.
Since every type of soil except the worst bears rent — and that rent, as we shall see under the second form, rises with the mass of capital and the intensity of cultivation that goes with it — a nominal price forms for the untilled parts, and so they become a commodity, a source of wealth for their owners. This also explains why the price of land rises for the whole area, untilled land included. (Compare the American writer Opdyke.) Land speculation, in the United States for example, rests on nothing but this reflex which capital and labour cast on untilled land.
Second. The extension of cultivated land in general moves either onto worse soil or onto the various given types of soil in different proportions, depending on how those types are found there. Progression to worse soil is of course never a matter of free choice: with the capitalist mode of production presupposed it can only be the result of rising prices, and under any mode of production it can only be the result of necessity. But this is not unconditional. Worse soil is preferred to relatively better soil on account of its location, which is decisive for every extension of cultivation in young countries. And also because, even where a stretch of country belongs on the whole to the more fertile formation, better and poorer soils are jumbled up together in detail, so that the poorer soil has to be brought under cultivation simply because it lies alongside the better. If the worse soil forms enclaves inside the better, the better gives it the advantage of location against more fertile land that is not connected with land already cultivated or about to be cultivated.
Michigan, then, was among the earliest states in the West to export grain. Its soil, taken as a whole, is poor. Yet, at first, Michigan had the edge over states lying further west, even though those states had greater natural fertility. It was close to New York, and water routes through the lakes and the Erie Canal let it move goods. Michigan's case, set beside New York, also lets us trace how better soil gives way to worse. New York's soil, especially its western section, is much more fertile, above all for wheat farming. Ruthless farming turned this fertile soil barren, and then Michigan's soil seemed the more fertile.
Johnston reports: in 1838, wheat flour was shipped at Buffalo for the West, mainly from the wheat region of New York and Upper Canada. Today, after only twelve years, huge stores of wheat and flour are brought from the West, along Lake Erie and on the Erie Canal, and shipped east at Buffalo and the neighbouring port of Blackrock. The export of wheat and flour was especially stimulated by the European famine of 1847. This made wheat cheaper in western New York and wheat-growing less profitable, and it led the New York farmers to turn more to stock-rearing and dairy farming, fruit-growing and so on — branches in which, in their view, the North-West would be unable to compete with them directly. (J. W. Johnston, Notes on North America, London 1851, I., p. 222, 223.)
Third. It is a false assumption that the soil in colonies, and in young countries generally, is for that reason necessarily of greater natural fertility just because they can export corn at cheaper prices. Grain there is sold not only below its value, but below its price of production: below the production price fixed by the average rate of profit in the older countries.
When we, as Johnston says (p. 223), are used to linking the idea of great natural productiveness and endless stretches of rich soil with these new states, from which such large supplies of wheat come to Buffalo every year, this depends first of all on economic conditions.
The whole population of such a country, Michigan for instance, is at first almost exclusively busy with farming, and especially with its bulk crops, since those are the only things it can exchange for industrial goods and tropical products. So its entire surplus product appears in the shape of corn. That is what from the outset sets the colonial states founded on the modern world market apart from those of earlier times, and especially of antiquity: through the world market they get ready-made the products they would otherwise have had to make themselves, clothing, tools and so on. Only on that basis could the Southern states of the Union make cotton their main product. The division of labour on the world market allows them to. So when they seem, given how new they are and how relatively few people they hold, to produce a very large surplus product, that is owed neither to the fertility of their soil nor to the fertility of their labour, but to the one-sided form of their labour, and therefore of the surplus product in which that labour is expressed.
Further, a relatively less fertile stretch of arable soil that is only now being tilled and has never been touched by cultivation has, so long as the climate is not altogether unfavourable, piled up in its top layers at least so many easily soluble plant nutrients that it yields harvests for a long time without fertilizer, and yields them under quite superficial tilling. With the western prairies there is the further point that they require hardly any clearing costs, since nature has already made them arable.
In less fertile regions of this kind the surplus comes out not through the high fertility of the soil, that is, not through the yield per acre, but through the mass of acres that can be cultivated in a superficial way, because this soil costs the tiller nothing, or, compared with older countries, only a vanishingly small amount — as, for example, where share-cropping exists, in parts of New York, Michigan, Canada and elsewhere. A family works say 100 acres superficially, and although the product per acre is not large, the product of 100 acres gives it a considerable surplus for sale. Add to that the almost cost-free keeping of cattle on natural pasture, with no artificial meadows. What decides here is not the quality of the soil but its quantity. The possibility of this superficial cultivation is, of course, used up more or less rapidly, in inverse proportion to the fertility of the new soil and in direct proportion to the export of its product.
Johnston adds that such a country will still give excellent first harvests, even of wheat: whoever skims the first cream off the soil will be able to send a rich surplus of wheat to market (op. cit., p. 224).
In countries where cultivation is older, property relations, the price of uncultivated land as determined by the price of cultivated land, and so on, make this kind of extensive farming impossible.
That this soil is therefore not necessarily very fertile — as Ricardo imagines it must be — and that soils of equal fertility are not the only ones tilled, can be seen from the following. In the state of Michigan, 465,900 acres were sown to wheat in 1848 and produced 4,739,300 bushels, or an average of 10 1/5 bushels per acre; after the seed corn is deducted, that comes to less than 9 bushels per acre. Of the state's 29 counties, two averaged 7 bushels, three 8, two 9, seven 10, six 11, three 12 and four 13 bushels, and only one 16 and another 18 bushels per acre (op. cit., p. 225).
For practical cultivation, greater fertility of the soil coincides with greater immediate exploitability of that fertility. And that immediate exploitability can be greater in a soil that is naturally poor than in one that is naturally rich; but it is the kind of soil the colonist will reach for first, and must reach for when capital is lacking.
Finally, the extension of cultivation over larger areas — leaving aside the case just looked at, where recourse has to be had to worse soil than what has been tilled up to now — over the various soil types from A to D, so for instance the tilling of greater areas of B and C, presupposes no previous rise in grain prices, any more than the anticipatory annual expansion of cotton spinning, say, requires a continuous rise in the price of yarn. A major rise or fall in market prices does affect the scale of production; but apart from that, even at average prices, whose level neither holds production back nor exceptionally encourages it, there goes on in agriculture, as in every other branch run on capitalist lines, that perpetual relative overproduction which is in itself identical with accumulation, and which under a different mode of production is brought about directly by the growth of population and in colonies by continual immigration. Demand grows steadily, and in that prospect new capital is continually invested in new soil, though for different soil products according to circumstances. It is the formation of new capitals that brings this about of itself.
As for the individual capitalist, he measures the scale of his production by the scale of the capital at his disposal, so far as he can still supervise it himself. What he has in view is taking up as much room as possible on the market. If too much has been produced, he pushes the blame onto his competitors, not onto himself. A single capitalist can expand his production just as well by appropriating a larger aliquot share of a given market as by enlarging that market itself.