CARVED IN STONE above the Royal Exchange in the City of London is the Biblical legend "The earth is the Lord's and the fullness thereof", to which we reply "The earth is the landlord's and the rent therefrom". In the same Biblical strain we add "And he reaps where he does not sow".
The ancient forms of rent paid to a feudal lord, or lord of the manor,
or to the Church, were usually levied in kind, and met either by the
supply of a portion
of the produce from the land, or by performing unpaid labour on land
belonging to these groups. These old social relations of feudal society
have been replaced with other higher social relations of production
associated with the land and its capacity to attract rent. Land use,
including agriculture, has been specifically adapted to the needs of
capitalism. The vast bulk of society's food is obtained from the land,
and takes the form of commodities, i.e. articles
produced for sale and profit. Consequently agriculture is under the domain of capital.
Rent is the money tribute levied by one section of society (landlords)
against other sections for permission to use certain portions of the
globe which they (landlords) have appropriated and monopolized to the
exclusion of others. To grow food, to build houses, factories,
shipyards, etc., a ground rent must be paid to the owner of the soil.
Private property of land, and this includes land owned by the State, is a
prerequisite for extracting rent. History is full of instances as to
how the rural labourers were driven off the land by force, bloody
violence, threats of imprisonment and deportation, as in the case of the
Land Enclosures over the last few hundred years.
The fact remains that
permission even to inhabit the earth has to be obtained from a group of
rentier parasites who monopolize it. Ground rent is surplus-value which
has previously been extracted from the working class. Whether this is
paid to private individuals, the State or the Church makes no
difference. It is an element in the overall economic organization of
Land has no value - that is, it contains no socially necessary labour,
the source of value. The labour of society has not participated in its
creation. It cannot be reproduced, and is not a commodity. Not being a
commodity it does not have exchange value, and consequently does not
contain surplus value. Surplus-value comes from unpaid labour, and as no
labour at all has gone into its creation it cannot contain value. Land
has use-value as have commodities
generally, but whereas you can have use-value (the utility of a thing)
without exchange-value (price), you cannot have exchange value without
The landlord cannot sell non-existent commodities; the service he
provides is the service of rent collection. It is obvious that land is
bought and sold both as building plots and agricultural land. To that
extent it assumes the commodity form. Capital can be fixed in the soil
either through the erection of buildings, land improvements like
ploughing, drainage and fertilization, mining and quarrying operations
This capital forms part of the labour of society generally and does not
spring from the soil. The capitalist farmer produces wheat etc. in the
same way as the capitalist manufacturer produces other commodities. They
differ only in the element in which their capital is invested. Their
capital, like all other, qualifies for the average rate of profit, and
if needs be can move from one sphere of production into another. Capital
fixed in the soil - plant, factories, office blocks etc., as with
capital elsewhere, would be entitled (under the laws of capitalism) to
attract interest, but strictly speaking this is not the same thing as
ground rent, which is specifically paid for the use of the soil and for
permission to fix the capital in it in the first place.
and industrial plant which wears away and has to be replaced, the land
(apart from natural catastrophe) with normal care and attention,
fertilized and drained regularly in the case of arable land, or
developed with office blocks and shopping precincts, continues to
improve. To that extent it can attract a higher price for its use in the
form of ground rent, or fetch a higher price should the landlord decide
to sell it. The price of land has nothing to do with its value, which
is nil. The price of building land depends purely on the oscillations of
the market, or competition between buyers and sellers.
The location of the land is a very important factor in this
competition. Land required for building in a big commercial centre like
London will fetch a higher price than land elsewhere. With agricultural
land the position is somewhat different, but the monopoly of the land
owner is a major factor in the determining of the final price in both
cases. Obviously good agricultural naturally-fertile land which can
yield 2 tons of grain per acre would fetch a higher price than land of
lesser quality which would only produce 30 cwts of grain per acre. The
rent charged for the use of these lands would vary, and bear some
relation to their yields.
Certain vineyards in the Bordeaux/Medoc area - Pauillac, Pomerel, etc.
because of certain chemical properties in the soil, are able to produce
fine wine. Other vineyards which lack these properties in the soil are
unable to produce such fine wines, although the same amount of useful
labour has gone into their production. The finer wines and
lesser-quality wines contain, broadly speaking, the same amount of
useful labour, but there is a considerable difference between the price
of a bottle of Chateau neuf de Pape from the Rhone valley, and a bottle
of Chateau Petrus or Chateau Lafite from Pomerel or
Pauillac, as any wine- drinking capitalist will tell you - at £5 per bottle this is hardly a worker's tipple.
The difference in price does not arise from the labour involved but
purely because of the natural properties of the soil. The owner of land
where the vines
were grown would be able to charge a higher rent for the use of this
land, and the wine producer would have to part with a larger share of
the surplus value to the landlord than would the Rhone wine producers.
Were the fine-wine producer the owner of the vineyards instead of the
tenant this would make no difference. In that case, he would pocket the
extra profit in his capacity as a landlord and not as a wine-growing
capitalist. In any event, before he could
become a landlord, he would have to acquire the land from the previous
owner, and spend a capital sum in order to achieve this. To that extent,
the rent that he virtually paid to himself instead of to the landlord
would merely represent the interest on the capital which he had invested
in the purchase of the land.
Rent is the way in which land realizes itself economically, and whilst
rent itself is not interest (i.e. money paid for the use of c apital),
it is influenced by the rate of interest, as also is the buying and
selling of the land. Naturally, market conditions intervene because of
the monopoly of landlords (sellers) and demand from the other portions
of the capitalist class (buyers), particularly competition for building
sites in city centres where any price may be paid.
During periods of inflation the price of land will rise with other
prices, not only because the value of money has fallen but because
ownership of land provides a certain protection against the depreciation
of money. The price of farmland rose from approximately £50 per acre in
1949 to £800 per acre in
1973, due to inflation. Prices are now falling. They fell 22 per first
half of 1974, and are expected to fall to £582 per acre towards the end
(Farmland market, Farmer's Weekly: The Times 3rd February 1975).
Mr. Donald Campbell, editor of the report, said "The market is highly
volatile; only a few years ago changes in value were gradual and their
range was small."
Over a period, the yardstick for measuring the price of land is by a
capitalization of the rent. That is, by assuming that the rent
represents the interest on an imaginary capital. If the prevailing rate
of interest is 10 per cent, and the landlord receives a ground rent of
£500 p.a., that £500 would represent the interest on an imaginary
capital of £5,000. Were the rate of interest to fall to 5 per cent, the
£500 p.a. would represent the interest on an imaginary capital of
£10,000. The price of land is arrived at under normal conditions by the
number of years it would take for the rents to reach the capital sum. In
the first case the price of land would be £5,000 i.e. 10 years' ground
purchase. The external rate of interest can and does influence the price
of land. During a period of low interest rates, the price of land will
tend to rise, and during a period of high interest rates the price of
land will tend to fall,without affecting the rent at all. In England
particularly, land is usually sold at so many years' purchase, usually
twenty years or more.
A value is therefore conferred on land by circumstances outside, i.e.
the rate of interest, and does not arise from the land itself, simply
because those who own the monopoly can prevent others from having access
except on terms and conditions decreed by them. In this the landlord is
joined by capitalists generally who operate in the same way by
excluding society at large from access to the means of production and
distribution, as well as monopolizing the social wealth.
develops, and the population increases, and there is a growing demand
for land for all purposes, the landlord will share in the fruits of this
social progress without contributing anything at all. The industrial
capitalists who dominate the political machinery take legislative
measures to curb the appetite of the landlord, but you cannot abolish
rent without abolishing private property in land, and as this forms the
basis of the capitalist system of production, you cannot abolish private
property in one sphere and retain it in another.
Private property includes State property, which will be dealt with later.
From Socialist Standard No. 847 March 1975
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