Karl Marx
On the 140th Death Anniversary of the Great Teacher of the Proletariat, Karl Marx
(This time, in the ‘From the Classics’ column, we are giving this extremely important excerpt from the volume 3 of Capital. This excerpt is essential to understand what is capitalist ground-rent. Since, it is precisely the lack of this understanding that has led a number of communists in India to hop on the trolley of the movement of the rich kulaks and capitalist farmers of India for the demand of MSP, remunerative profitable prices, we thought it useful to present this section. In general too, the Marxist theory of ground-rent is one of the most complicated subjects of Marxist political economy and it would do good to read this particularly revealing section from Capital, volume 3. -Editor)
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With money rent, the traditional relationship fixed by customary law between the landowner and his dependant, who possesses and works one part of the land, is necessarily transformed into a contractual relationship, a purely monetary relationship determined by the firm rules of positive law. The tiller with possession is essentially transformed into a mere tenant. On the one hand this transformation is utilized, where general conditions of production are suitable, for the gradual expropriation of the old peasant possessor and the installation in his place of a capitalist farmer; on the other hand it allows the former possessor to buy himself out of his rent obligation and leads to his transformation into an independent peasant-farmer, with full ownership in the land he tills. The transformation of rent in kind into money rent, moreover, is not only necessarily accompanied, but even anticipated, by the formation of a class of non-possessing day-labourers, who hire themselves out for money. During the period of its rise, when this new class still appears only sporadically, the custom necessarily develops, among the better-off rent-paying peasants, of exploiting agricultural wage-labourers on their own account, just as in the feudal period the wealthier peasant serfs already kept serfs of their own. In this way it gradually becomes possible for them to build up a certain degree of wealth and transform themselves into future capitalists. Among the old possessors of the land, working for themselves, there arises a seed-bed for the nurturing of capitalist farmers, whose development is conditioned by the development of capitalist production, not just in the countryside but in general, and who advance particularly rapidly when, as in England in the sixteenth century, they are aided by such particularly favourable conditions as the progressive devaluation of money at that time, which, given the traditionally long terms of tenancy contracts, enriched them at the landowners’ expense.
Moreover, once rent takes the form of money rent and the relation between rent-paying peasant and landowner becomes a contractual relation – a transformation which is only possible given a certain relative level of development of the world market, trade and manufacture – land inevitably starts to be leased to capitalists, who were formerly outside rural limits and who now transfer to the land, and to the rural economy, capital that has been obtained in the town, together with the capitalist mode of operation which has also been developed there: the production of the product as a mere commodity and a mere means of appropriating surplus-value. As a general rule, this form can come about only in those countries that dominate the world market during the transition period from the feudal to the capitalist mode of production. With the intervention of the capitalist farmer between the landowner and the actual working tiller, all relationships that arose from the former rural mode of production are tom asunder. The farmer becomes the real controller of these agricultural workers and the real exploiter of their surplus labour, while the landowner stands in a direct relationship only to this capitalist farmer, and a mere monetary and contractual relationship at that. The nature of rent thereby changes, not only as a matter of fact and accidentally, which happened in places already under the previous forms, but rather normally, in its acknowledged and dominant form. From the normal form of surplus-value and surplus labour, it declines into the excess of this surplus labour over and above the part of it that is appropriated by the exploiting capitalist in the form of profit; the entire surplus labour, both profit and the excess over profit, is now directly extracted by him, received in the form of the total surplus profit and turned into money. It is now only an excess part of this surplus-value which he extracts by virtue of his capital, by the direct exploitation of the agricultural worker, that he hands over to the landowner as rent. How much or how little he parts with in this way is determined on average, as a limit, by the average profit that capital yields in the non-agricultural spheres of production and by the non-agricultural price of production that this governs. Rent has now been transformed from the normal form of surplus-value and surplus labour into an excess over the part of surplus labour that is claimed by capital as a matter of course and normally – an excess peculiar to one particular sphere of production, the agricultural. Instead of rent, the normal form of surplus-value is now profit, and rent now counts as an independent form only under special conditions, not a form of surplus-value in general but of a particular offshoot of this, surplus profit. It is unnecessary to go into any further detail as to how this transformation corresponds to a gradual transformation in the mode of production itself. This already results from the fact that it is now normal for this capitalist farmer to produce the agricultural product as a commodity, and that while formerly only the excess over his means of subsistence was transformed into a commodity, now a relatively minute part of these commodities is directly transformed into his own means of subsistence. It is no longer land, but capital, that has now directly subsumed even agricultural labour under itself and its productivity.
The average profit and the price of production governed by it are formed outside the rural situation, in the orbit of urban trade and manufacture. The profit of the rent-paying peasant does not enter into this equalization process, for his relationship to the landowner is not a capitalist one. In so far as he makes a profit, realizing an excess over and above his necessary means of subsistence, whether by his own labour or by exploiting the labour of others, this happens behind the back of the normal relationship; other factors being equal, it is not the level of this profit that determines the rent, but this profit is conversely determined by the rent as its limit. The high rate of profit in the Middle Ages was not due simply to the low composition of capital, with the variable element laid out on wages being predominant. It was a result of the fraud committed against the countryside, the appropriation of a part of the landowner’s rent and the income of his dependants. If the countryside exploited the town politically in the Middle Ages, wherever feudalism was not broken through by exceptional urban development as in Italy, then the town everywhere and without exception exploited the countryside economically through its monopoly prices, its taxation system, its guilds, its direct commercial trickery and its usury.
One might imagine that the very entry of the capitalist farmer into agricultural production would already provide proof that the price of agricultural products, which had always paid a rent in some form or other, would have to stand above the production price of manufactured goods, at least at the time of this entry; either reaching the level of a monopoly price, or having risen to the value of the agricultural products, which actually does stand above the price of production governed by the average profit. For if this were not so, the capitalist farmer, given the prevailing prices for agricultural products, could not possibly first realize the average profit from the price of these products and then pay out of this same price a further excess above this profit in the form of rent. One might conclude from this that the general rate of profit guiding the capitalist farmer in his contract with the landowner was formed without taking rent into account, and that as soon as this general rate comes to govern rural production it thus finds this excess and pays it to the landowner. It is in this traditional manner that Mr Rodbertus explains things, for example. However:
Firstly. This entry of capital into agriculture as an independent and leading power does not take place everywhere all at once, but rather gradually and in particular branches of production. At first it does not take hold of agriculture proper, but rather branches of production such as stock-raising and particularly sheepfarming, whose main product, wool, offers at first a market price permanently in excess of its price of production, in conditions of the rise of industry; this is not equalized until later on. That was the case in England during the sixteenth century.
Secondly. Since capitalist production sets in only sporadically at first, it can in no way be held against the assumption made here that it first of all takes hold of those farms which generally can pay a differential rent, as a result of their special fertility or particularly favourable location.
Thirdly. Even assuming that the prices of agricultural products do stand above their prices of production when this mode of production gets under way, which in fact presupposes an increasing weight of urban demand, as was undoubtedly the case in England in the latter third of the seventeenth century, it is still the case that once the new mode of production has extended beyond the mere subsumption of agriculture under capital and the improvement in agriculture necessarily bound up with this development, and a reduction in production costs has set in, this will be balanced by a reaction, a fall in the price of agricultural products, as was the case in England in the first half of the eighteenth century.
Thus rent as an excess above the average profit cannot be explained in this traditional way. Whatever the historical conditions under which it may first arise, once it has struck root rent can occur only under the modern conditions previously developed.
We should finally note in connection with the transformation of rent in kind into money rent that the capitalized rent, the price of land, and therefore its alienability and actual alienation, now becomes an important aspect; and that not only can the former rent-payer transform himself in this way into an independent peasant proprietor, but also urban and other holders of money can buy plots ofland with a view to leasing them either to peasants or to capitalists, and enjoy the rent on their capital thus invested as a form of interest. This factor, too, helps to promote the transformation of the former mode of exploitation, of the relationship between owner and actual tiller, and of rent itself.
(Karl Marx, 1991, Capital, Volume 3, Penguin Books, London, p. 934-38)
