13. Rent

If, with an increase in the value of land, a corresponding augmentation took place in the value of the products of the soil, I could understand the opposition that the theory I have explained in the present work (part 1, chapter 9) has encountered. It might be argued, “that in proportion as civilization is developed the condition of the laborer becomes worse in comparison with that of the proprietor. This may be an inevitable necessity, but assuredly it is not a law of harmony.”

Happily it is not so. In general those circumstances that cause an augmentation of the value of land diminish at the same time the price of landed produce. . . . Let me explain this by an example.

Suppose a field worth £100 situated ten leagues from a town. A road is made that passes near this field, and opens up a market for its produce. The field immediately becomes worth £150. The proprietor having by this means acquired facilities for improvement and for a more varied culture, then increases the value of the land, and it comes to be worth £200.

The value of the field is now doubled. Let us examine this added value—both as regards the question of justice and as regards the utility that accrues, not to the proprietor, but to the consumers of the neighboring town.

As far as concerns the increase of value arising from ameliorations the proprietor has made at his own cost, there can be no question. The capital he has expended follows the law of all capital.

I venture to say the same thing of the capital expended in forming the road. The operation is more circuitous, but the result is the same.

In point of fact, the proprietor has contributed to the public expenditure in proportion to the value of his field. For many years he contributed to works of general utility executed in more remote parts of the country, and at length a road has been made in a direction that is profitable to him. The gross amount of taxes which he has paid may be compared to shares taken in a Government enterprise, and the annual augmentation of rent he derives from the formation of this new road may be compared to dividends upon these shares.

Will it be said that a proprietor may pay taxes forever, without receiving anything in return? . . . But this just comes back to the case we have already put. The amelioration, although effected by the complex and somewhat questionable process of taxation, may be considered as made by the proprietor at his own cost, in proportion to the partial advantage he derives from it.

I have put the case of a road. I might have cited any other instance of Government intervention. Security, for example, contributes to give value to land, like capital, or labor. But who pays for this security? The proprietor, the capitalist, the laborer.

If the State expends its revenue judiciously, the value expended will reappear and be replaced, in some form or other, in the hands of the proprietor, the capitalist, or the laborer. In the case of the proprietor, it must take the form of an increase in the value of his land. If, on the other hand, the State expends its revenue injudiciously, it is a misfortune. The tax is lost; and that is the taxpayer’s risk. In that case, there is no augmentation of the value of the land, but that is no fault of the proprietor.

But for the produce of the soil thus augmented in value, by the action of Government and by individual industry, do the consumers of the neighboring town pay an enhanced price? In other words, does the interest of the £100 become a charge on each quarter of wheat the field produces? If we paid formerly £15 for it, shall we now be obliged to pay more than £15? That is an interesting question, seeing that justice and the universal harmony of interests depend on its solution.

I answer boldly, No.

No doubt the proprietor will get £5 more (I assume the rate of interest to be 5 percent); but he gets this addition at the expense of nobody. On the contrary, the purchaser will derive a still greater profit.

The field we have supposed having been formerly at a distance from the market, was made to produce little, and on account of the difficulty of transit what was sent to market sold at a high price. Now, production is stimulated, and transport made cheaper, a greater quantity of wheat comes to market, and comes there at less cost, and is sold cheaper. While yielding the proprietor a total profit of £5, its purchaser, as we have already said, may realize a still greater profit.

In short, an economy of power has been realized. For whose benefit? For the benefit of both of the contracting parties. According to what law is this gain distributed? According to the law we have described in the case of capital, seeing that this augmentation of value is itself capital.

When capital increases, the portion falling to the proprietor or capitalist increases in absolute value and diminishes in relative value, while the portion falling to the laborer (or consumer) increases both in absolute and relative value

Observe how this takes place. In proportion as civilization advances, lands that are situated near populous centers rise in value. Productions of an inferior kind in such places give way to productions of a superior description. First of all, pasture gives way to cereal crops, then cereal crops give way to market gardening. Products are brought from a greater distance at less cost, so that (and this in point of fact is incontestable) meat, bread, vegetables, even flowers, are sold in such places cheaper than in neighborhoods less advanced, although manual labor costs more.

LE CLOS-VOUGEOT¹

Services are exchanged for services. Frequently services prepared beforehand are exchanged for present or future services.

The value of services is determined not by the labor they exact or have exacted, but by the labor they save.

Now, in point of fact, human labor goes on constantly improving in efficiency.

From these premises we may deduce a phenomenon that is very important in social economy, which is that in general anterior labor loses in exchange with present labor.

Twenty years ago I manufactured a commodity that cost me 100 days’ labor. I propose an exchange, and I say to the purchaser, Give me in exchange a thing that cost you also 100 days’ labor. Probably he will be in a situation to make this reply, That great progress has been made in twenty years. What you ask 100 days’ labor for can be made now in 70 days. I don’t measure your service by the time it has cost you, but by the service it renders me. That service is equal only to 70 days’ labor, for in that time I can render it to myself, or find one who will render it to me.

The consequence is that the value of capital goes on continually deteriorating, and that anterior labor and capital are not so much favored as superficial economists believe.

Apart from wear and tear, there is no machine a little old but loses value, for the single reason that better machines of the same kind are made nowadays.

The same thing holds in regard to land. There are few soils, to bring which into their present state of culture and fertility, has not cost more labor than would be necessary now with our more effective modern appliances.

This is what happens in the usual case, but not necessarily so.

Anterior labor may, at the present day, render greater services than it did formerly. This is rare, but it sometimes happens. For example, I store up wine which cost me twenty days’ labor to produce. Had I sold it immediately, my labor would have yielded me a certain remuneration. I have preserved my wine; it has improved; the succeeding vintage has failed; in short, the price has risen, and my remuneration is greater. Why? Because I render a greater amount of service—my customers would have greater difficulty in procuring themselves such wine than I myself experienced—I satisfy a want that has become greater, more felt, etc This is a consideration that must always be looked to.

There are a thousand of us. Each has his piece of land, and clears it. Some time elapses, and we sell it. Now it so happens that out of the 1,000 there are 998 who never receive as many days’ present labor in exchange for their land as it cost them formerly; and this just because the anterior labor, which was of a ruder and less efficient description, does not render as great an amount of service comparatively as present labor. But there are two of the proprietors whose labor has been more intelligent, or, if you will, more successful. When they bring their land to market, they find that it is capable of rendering service that cannot be rivaled. Every man says to himself, It would cost me a great deal to render this service to myself, therefore I must pay well for it, for I am quite certain that it would cost me more to obtain what I am in quest of by my own exertions.

This is just the case of the celebrated vineyard, the Clos Vougeot, and it is the same case as that of the man who finds a diamond, or possesses a fine voice, or other personal advantages or peculiarities, etc.

In my neighborhood there is much uncultivated land. A stranger asks, Why not cultivate this field? Because the soil is bad. But here, alongside of it you have another of the same quality that is cultivated. To this objection the native has no answer.

Was he wrong in the first answer he gave, namely, It is bad?

No. The reason that induces him not to clear new fields is not that they are bad, for there are excellent fields that also remain uncultivated. His reason is that it would cost him more to bring this field into the same state of cultivation as the adjoining field that is cultivated, than to buy the latter.

Now, to any thinking man this proves incontestably that the field has no intrinsic value.

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¹Celebrated vineyard of Burgundy.