Land Rent

in exploitative socioeconomic formations, that part of the surplus product created by the direct producers in agriculture and appropriated by the owners of the land. It is the basic part of the rent paid to the landowners by those who lease the land. Land rent presupposes a separation of the use of the land from its ownership. Landed property is changed into a mere title, but it gives the landowner the right to receive income from the land (which is being used by others) and the right to extract tribute from those who directly work the land. “Whatever the specific form of rent may be, all types have this in common: the appropriation of rent is that economic form in which landed property is realized …” (K. Marx, in K. Marx and F. Engels, Soch., 2nd ed., vol. 25, part 2, p. 183).

Under feudalism, land rent was the surplus labor or the surplus product of serfs (dependent peasants) appropriated by the feudal landowners. The serf owners, utilizing extra-economic methods of coercion against peasants personally dependent on them, appropriated not only the surplus product but also a significant part of the necessary product of the serfs. Feudal land rent had three fundamental forms, which reflected the successive stages of development of the feudal mode of production: payment in labor, or barshchina (corvée); payment in provisions, or quitrent in kind; and monetary quitrent. Land rent under feudalism was the tangible form of the exploitative relationship of the feudal landowners to the immediate agricultural producers, the serfs.

The development of capitalism in agriculture is connected with the separation of the immediate producers of agricultural output from the land and with the formation of a class of agricultural hired laborers, as well as a class of capitalist agricultural entrepreneurs. These entrepreneurs farm their own land or leased land, exploiting the labor of hired workers. With the movement of agriculture into the sphere of capitalist enterprise, feudal land rent is transformed into capitalist land rent. Under capitalism, land rent represents part of the surplus value created by the hired agricultural laborers and paid by the capitalist entrepreneurs to the land-owners for the leased land. The distribution of the surplus value between the capitalist leaseholders and the landowners occurs as a brutal competitive struggle. Land rent under capitalism expresses the exploitative relationship between the immediate agricultural producers (the hired agricultural laborers) and the landowners and capitalist entrepreneurs.

The surplus value can exceed the average profit appropriated in the form of land rent by the landowners; this situation arises as a result of two forms of monopolies in agriculture: the monopoly of management in land and the monopoly of private property in land. The monopoly of management in land is possible because the area of agricultural land is limited, and each plot of land to be used for farming is at the monopolistic disposal of a certain entrepreneur who does not permit the investment of capital by other entrepreneurs in this land. This monopoly in farmland makes it possible for the lessees of the best and average quality land to receive a differential superprofit, which is appropriated by the landowners in the form of a differential rent.

The monopoly of private property in land allows landowners to appropriate in the form of absolute rent the excess of the surplus value above the average profit; this excess is created in agriculture independent of the quality of the plots of land being cultivated.

The tangible form of land rent is rent payments, which are collected from the lessees by the landowners. Although rent (considered in its abstract economic meaning) is the basic component of rent payments, the two forms are not identical. Along with rent proper, which is a payment for the use of land, rent payments often include a percentage on the capital invested in the land and amortization of this capital. Furthermore, with high lease rates the landowners can also appropriate part of the average profit of the entrepreneurs and sometimes even part of the wages of agricultural workers.

Rent relations arise under capitalism in other connections than the leasing of land for agricultural production. Rent is also paid when land is leased by capitalists for the construction of buildings and structures, mining, and other entrepreneurial aims.

Landowners who live off rent are the most parasitical class of bourgeois society. On the one hand, they appropriate the fruits of progress of the productive forces of agriculture, because their rent increases as the productivity of agriculture increases. On the other hand, they are also enriched by the backwardness of this sector of the economy under capitalism, because the more expensive agricultural products are, the greater is the profit of the agricultural capitalists, whose excess profits are appropriated by the landowners. The increase in the wealth of the big landowners is reflected in the increase of the price of land. In the USA, the price of land increased by 240 percent from 1950 to 1969; in Great Britain, by 174 percent from 1960 to 1968; and in France, by almost 400 percent from 1950 to 1968.

Capitalist land rent in all its forms has a negative effect on agricultural development. Part of the surplus value created in agriculture and appropriated in the form of land rent is used for the unproductive consumption of the landowners, whereas these resources could be contributing to agricultural development. The limited terms of leases undermine the interest of capitalist leaseholders in capital investments that would not repay themselves within the term of the lease agreement. As the price of land increases, capitalist entrepreneurs spend larger and larger amounts of capital for the purchase of land, instead of investing the capital in production. All this has served over a long period of time to promote the backwardness of the productive forces in agriculture. In contemporary developed capitalist states, the scientific and technological revolution has led to a narrowing of the gulf between agriculture and industry, but the position of large landed property is not weakening; its ability to impose a unique tribute on all of society in the form of absolute land rent remains intact. In addition, the bourgeoisie has itself become the owner of land.

Millions of peasants engaged in agriculture in the capitalist countries farm on leased land. It is necessary to distinguish between the leaseholders who are part of the working people and leaseholders who are entrepreneurs. A labor lease based on the leaseholder’s own labor and sometimes also on the labor of the leaseholder’s family is characterized by relatively small-scale production, which excludes the possibility of unearned accumulation. The stratum of small leaseholders who use primitive methods of farming that secure for them only an existence of semistarvation is especially numerous in the colonies and in the economically underdeveloped countries. The cultivation of more fertile lands gives small (poor) peasants who till their own land the possibility of producing additional product, but they are not able to appropriate this product or its value. Competition, high prices for industrial products bought by the peasants, and the exploitation of the peasants by commercial middlemen all lead to the result that the additional product they create in the cultivation of average land and the most fertile land (product which makes up the material content of differential rent) is taken from the peasants. In the USA, the index of prices for farmers’ products increased from 100 in 1940 to 248 in 1965, but the index of prices for goods purchased by farmers increased during this same period from 124 to 321 (1910–14 prices = 100).

In the era of imperialism, agriculture in the leading capitalist countries is characterized by an increasing concentration and centralization of capital, that is, by the concentration of agricultural production in bigger and bigger enterprises. In 1964 the largest capitalist farms in the USA, constituting 4.5 percent of the total number of farms, contributed 42.6 percent of the total commodity output in agriculture. The 12.6 percent of capitalist enterprises that had over $20,000 in commodity output produced 62.8 percent of the commodity output in agriculture. At a certain stage of development, the concentration of agricultural production creates the objective preconditions for the rise of agricultural monopolies. In agriculture as well as in industry, contemporary capitalism is, above all, state-monopoly capitalism. Monopolies introduce a number of new elements into agrarian relations as expressed in land rents. The character of big landed property is modified under imperialism. The individual big landed property of the hereditary landlord yields to the landed property of monopolies, banks, and joint-stock companies.

The transformation of the individual big landed property into the landed property of a monopoly does not eliminate the contradictions between agricultural entrepreneurs and land-owners, which are characteristic of capitalism. Under imperialism, rent continues to be the expression of the relationship of exploitation of the toiling masses by the agricultural entrepreneurs and the landowners, who, in a fierce struggle, divide the surplus value created by the direct producers in this sector of the economy. The exploitative social forces may appear to change, but these relations themselves remain the unchanged foundation of capitalist agriculture. Monopolies using every possible method, exploit the direct producers of agricultural output (agricultural workers, peasants, and small farmers), appropriating much or even all the surplus product of their labor. Rent relations in the era of imperialism express to an even greater degree than in prior eras the exploitation of the toiling masses by agricultural monopoly capital. Finance capital in the biggest imperialist countries becomes intertwined with landed property through joint-stock agricultural companies, mortgage banks, and other means. Thus, the number of joint-stock companies engaged in agriculture in Italy increased from 29 in 1938 to 226 in 1952 and 1,830 in 1967. Their capital increased correspondingly from 497 million lira to 11 billion lira and then to 79 billion lira. In Japan in 1964, 3,654 joint-stock companies were engaged in agriculture (including the timber and fishing industries), and the capital at their disposal equaled 486.379 billion yen. In the USA, the King Ranch Corporation owned 440,000 hectares (ha) of land. Buying up agricultural land, finance capital leases it to farmers or organizes agricultural enterprises of a monopolistic type. A merging of land rent with monopoly profit takes place. This intertwining of landed property with finance capital, which leads to the merging of land rent with monopoly profit, is also a result of the investment by landowners of their income in the stock of industrial and banking monopolies. Monopolies receive especially large incomes from the exploitation of enormous tracts that they have seized in the colonial and dependent countries. In the mid-1950’s, monopolies of the USA, Great Britain, France, and other imperialist states owned 14.3 million ha of agricultural and timber concessions in Western and Equatorial Africa, 2.5 million ha in the Ivory Coast, over 2 million ha in Cameroon, and approximately 2 million ha in the Congo. The monopolies organize plantations, mines, warehouses, and bases on the lands that they have seized, thus securing for themselves colonial superprofits, which merge with colonial rent.

The scientific theory of land rent was created by K. Marx and developed by V. I. Lenin. In their teachings on land rent, Marx and Lenin demonstrated the groundlessness of attempts to connect differential rent with the so-called “law of the diminishing fertility of the soil.” Actual data on the development of agriculture confirm the groundlessness of this “law.” The application of agronomy and agricultural technology raises the fertility of the soil. Agricultural yields and the productivity of livestock increase. Nature places no limits on the development of the productive forces of agriculture. Therefore, differential rent is not connected with opening up to cultivation increasingly worse land. Fertility is not the only factor determining which lands are drawn into cultivation. Bourgeois economists attempt to prove that rent “grows from the land,” that is, that the income of landowners is a product of the land and not of the labor expended. However, in any sector of production, labor uses certain means of production for the creation of the product. In agriculture, the product is created by the labor of those who work the land. This product embodies the expenditure of the labor of the immediate producers of agricultural output. Therefore, the class of receivers of rent is an exploiting class.

In developing the theory of rent, Marx demonstrated the groundlessness of the denial of absolute rent by the representatives of bourgeois political economy. D. Ricardo, in particular, proceeding from the incorrect position of identifying the cost of production of goods with their value, asserted the incompatibility of absolute rent with the law of value. Marx demonstrated that the existence of absolute rent does not violate the law of value, because, while it is true that agricultural goods are sold at prices higher than their cost of production, these prices are not higher than the value of the agricultural goods. The Marxist-Leninist teaching of the development of capitalism in agriculture is the theoretical basis of the agrarian programs of Communist and workers’ parties.

The conditions for the existence of absolute and monopoly rent are eliminated in a socialist society. There are different points of view among economists and scholars on the question of the existence of differential rent in the socialist countries.