The income from the land

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By JOSÉ MICAELSON LACERDA MORAIS*

The problem of capitalist income will only be adequately formulated based on the distinction between labor and labor power.

1.

For David Ricardo, the main issue of political economy consisted of determining the laws that regulate distribution, that is, the laws behind the “natural trajectory of income, profit and salary”; and the “influence of taxes on the different classes of society”. Based on the study that this author had made of the works of Malthus (“Study on the Nature and Progress of Income”, 1815), and of another author, referred to by him only as “a member of the University College, Oxford (“Essay on the application of capital to land”), David Ricardo formulated the so-called “income problem”.

For him, these two authors had “correctly examined the principles of income”, which resulted in a “true theory of income”, which neither Smith, Turgot, Stuart, Say, Sismondi or other “competent authors” had correctly examined: “[ …] without whose knowledge it is impossible to understand the effect of the progress of wealth on profits and wages, or even to satisfactorily monitor the influence of taxes on the different classes of society, especially when the goods taxed are products obtained directly from the surface of the earth [ …]” (RICARDO, 1982, p. 39).

Therefore, the “rent problem” for David Ricardo was related to the laws that govern, on the one hand, land rent and profits, and on the other, profits and wages. Therefore, the “rent problem” originates from land rent, understood as the “[…] compensation paid to its owner for the use of the original and indestructible forces of the land” (RICARDO, 1982, p. 66). From this perspective, land rent constitutes the remuneration of a productive factor, as is profit for capital and wages for the workforce.

However, when Ricardo added the hypotheses of population growth and the cultivation of more distant lands of different qualities, he also changed the concept of income. This income no longer refers only to the remuneration of the land factor, but also to a difference in productivity of equal capital invested in land that results in different income (the idea of ​​differential income). As there is a need to cultivate more distant portions of land with lower fertility, these higher production costs start to determine the market prices of agricultural products.

David Ricardo is right when he states that “[…] the reason why there is an increase in the comparative value of agricultural products is the use of more work to produce the last portion obtained and not the payment to the land owner […]”. Thus, by not making the distinction between income as remuneration and income as a difference in productivity in the cultivation of land of different qualities, the aforementioned author generated a major problem on the issue of income. He suggested that the entire value of the difference in productivity was appropriated by the landowner in the form of differential rent.

However, to correctly understand this issue we need to consider the role of the capitalist tenant in the income appropriation process; including the part of the income that refers to the economic surplus (in this case, differential income). David Ricardo, perhaps because he thought strictly in an abstract way, went directly to the relationship between the increase in the cost of land products, its repercussion on labor costs and from there to the reduction in the profit rate of the economic system, without carrying out other mediations needed.

2.

In chapter VI, “On Profits”, David Ricardo introduced the figure of the tenant as a totally passive agent, the one who delivers the entire value of the difference in productivity of the land's income to its owner. It is as if land rent always follows the increase in the price of agricultural products, when in fact land rent, as established by the author himself, refers to the payment for the use of land, which is assumed to have been established in advance through a contract. between the capitalist tenant and the landowner.

David Ricardo perhaps did not realize that treating land rent in this way implies, ultimately, disqualifying the tenant as a capitalist. But, on the contrary, as Marx (2017b, p. 675) also understands, “[…] agriculture is operated by capitalists, who initially distinguish themselves from other capitalists by the way their capital is invested and the wage labor put in place in movement for this capital […]”. In this way, the income that falls to the landowner is nothing more than a part of the surplus value produced by capital. Land rent can only be considered an autonomous component when it is defined as income from the productive factor land, as, in general, it is presented only as a transfer of a part of the surplus value produced by capital.

If our reasoning is correct, the price increase provided by the increase in production costs on land more distant and with lower fertility could increase the profit of the capitalist tenant on land closer to the market and with greater fertility, instead of generating a higher income. raised to the landowner in the form of differential rent, as defined by David Ricardo in his land rent theory. This is because the rent paid by the tenant to the owner represents a sum of money fixed by contract. In this sense, if economic conditions are favorable to the tenant during the contract period, assuming that the tenant's extra profit will simply be transferred to the owner does not seem to constitute a valid premise.

There is a paragraph in chapter 37 of book III, The capital, quite enlightening in this regard: “The prerequisite for the capitalist mode of production is, therefore, the following: the true cultivators of the soil are salaried workers, employed by a capitalist, the tenant, who only dedicates himself to agriculture as a field of specific exploitation of capital, as investment of its capital in a particular sphere of production. This tenant-capitalist pays to the landowner, to the owner of the land he exploits, at specified periods, say annually, a sum of money fixed by contract (in exactly the same way that the borrower of monetary capital pays him interest determined for him) in exchange permission to apply their capital in this particular field of production. This sum of money is called land rent, regardless of whether it is paid for cultivable land, land for construction, mines, fishing grounds, forests, etc. It is paid for the entire time during which the land owner lent, or rented by contract, the land to the tenant. In this case, ground rent is the way in which land property is economically realized, the way in which it appreciates in value. Furthermore, here are, gathered and confronted, the three classes ‒ the salaried worker, the industrial capitalist and the land owner ‒ that constitute the landmark of modern society” (MARX, 2017b, p. 679).

A brief analysis of the transformations that occurred in the countryside, between the 15th and 19th centuries, reveals both the active role of the capitalist tenant in the development of capitalism and the increasing decrease in the influence and power of the landlord about the economy. As Marx (2017a, p. 814) highlighted, “[…] The agricultural revolution, which occurred in the last third of the XNUMXth century and extended throughout almost the entire XNUMXth century […], enriched the tenant just as quickly as it impoverished the rural population […]”.

Other factors that contributed enormously to such enrichment were the fall in the value of precious metals and the constant increase in the prices of agricultural products: “In the 16th century […] the continuous fall in the value of noble metals and, consequently, of money, yielded golden fruits to the tenant. She reduced […] the salary level. A fraction of the latter was incorporated into the lessee's profit. The constant increase in the prices of grain, wool, meat, in short, of all agricultural products, inflated the tenant's monetary capital [...], while the land rent, which he had to pay, was contractually fixed at values outdated monetary values. In this way, he enriched himself, at the same time, at the expense of his salaried workers and his landlord. It is not surprising, then, that England, at the end of the sixteenth century, had a class of 'capitalist tenants', considerably wealthy by the standards of the time” (MARX, 2017, p. 814-815).

The problem with David Ricardo's theoretical formulation was that he treated agriculture, in particular land rent, as the main destabilizing element of the system. However, it was a period in which industrialization was taking great strides towards the mechanization of the department of production goods, through the creation of the railway sector, which would give capital a high degree of autonomy over the process of capital accumulation (subordinating the their interests the labor market, technical progress and factor and product markets), as well as a significant “annulment of space by time” with important implications for the cost of transport and communication and the capital turnover time.

As Eric Hobsbawm (2009, p. 181) noted, “[…] British agriculture no longer constitutes the general support of the entire economy, becoming just a branch of production, something similar to an 'industry', even though, naturally, by far the largest activity in terms of employment […]”. As this author explains, the share of agriculture in gross national income fell continuously between 1811 and 1851, from 1/3 to 1/5.

Let us return to the role of the capitalist tenant. The social and political structure of Great Britain, as Eric Hobsbawm (2009) further explains, was controlled by landowners. According to him, “the degree of concentration of land ownership had no parallel in other industrial countries”, and in this aspect also lay “the strength of British farming in the 2009th century. XVIII and XIX”. Because it was in the interest of the large landowner to rent his land, they were “[…] willing to encourage efficient partners with the terms of their lessors, capable of making substantial investments and bearing at least part of the burden of hard times, reducing the leasing or allowing the accumulation of debts […]” (HOBSBAWM, 186, p. XNUMX). In turn, the tenant was a “'progressive' farmer”, a fact expressed in his “more commercial spirit”.

Unlike what David Ricardo formulated, the tenants were active capitalists who became rich and applied their wealth as capital in other economic sectors, through the “inhumane economy of commercial agriculture”. Eric Hobsbawm (2009, p. 97) highlights this aspect of wealth when he writes “the very opulence of the farmers, increasingly prosperous, with their pianist daughters”. Furthermore, the landowning class itself can be considered a sterile class in the productive sense, but in terms of capitalist dynamics it contributed to the growth of cities and, consequently, to the increase in the system's effective demand; and it must have been a considerable contribution, as landowners constituted the richest class of people in Britain.

The landowner's income was an active element of the economy. It was not limited to luxury consumption, it was also used as a means of obtaining new income. Thus, Eric Hobsbawm's (2009) historical study of the period explains: “as the owner of really large lands, the rural lord did not necessarily depend on agricultural income. He could enjoy the income from urban properties, which were increasing in value, or the profits from mines and railways that a blessed providence had placed on his lands, or even the interest from his gigantic profits, invested in the past” (HOBSBAWM, 2009, p 99).

3.

Based on the analysis carried out in the previous paragraphs, we do not confirm differential income as a destabilizing element of the economic system. Differential rent presents itself more as a logical device formulated by Ricardo to justify the cause of what he thought was the limiting element of the accumulation process; the increase in land rents. David Ricardo's problem was to find a way to justify a single rate of profit for the economy. He did this through the abstraction that the difference in profit arising from the use of land with different levels of productivity was simply transferred from the tenants to the landowner.

In general, it was an artifice formulated to logically close his theory of land rent. A different solution to this problem was proposed by Marx as follows: “it is possible to consider that the simple entry of the capitalist tenant into agricultural production provides proof that the price of agricultural products, which have always paid rent in one form or another, needs to be situated itself, at least at the time of this entry, above the production prices of manufacturing, either because it rises to the level of a monopoly price, or because it has risen until it reaches the value of agricultural products and its value is, in fact, above of the price of production regulated by the average profit […]” (MARX, 2017b, p. 861).

In general, moving towards finalizing the analysis of income in David Ricardo, it is interesting to show that the treatment of the distribution of the economic surplus for him followed the same logic established by Adam Smith. The only difference was that in David Ricardo the “stationary state” became the “sole fault” of the landowner. However, it was an inopportune moment for such a formulation, as capital accumulation was heading towards its complete autonomy through the establishment of large mechanized industry.

If that wasn't enough, the dynamics of British capitalism in that historical period, as Marx explains to us in Economic-philosophical manuscripts, tried to dissolve the “[…] difference between capitalist and land owner, so that, in total, there are only two classes of population, the working class and the capitalist class. This sale at a discount (Verschacherung) of land property, the transformation of land property into a commodity is the final ruin of the old aristocracy and the final improvement of the aristocracy of money” (MARX, 2010, p. 74).

There is a passage in chapter 47, “Genesis of capitalist land rent”, from book III, of The capital, which is very enlightening and summarizes our argument about the income problem in David Ricardo, as we present it. The quote, despite being quite long, deserves our attention: “[…] With the emergence of the capitalist tenant between the land owner and the farmer who actually works, all relationships originating from the old rural mode of production are severed. The tenant becomes the true commander of these agricultural workers and the true exploiter of their surplus labor, while the land owner only establishes a direct relationship with this capitalist tenant, that is, a mere contractual monetary relationship. In this way, the nature of income is also transformed, not only in fact and fortuitously, as was already partly the case under previous forms, but in a normal way, in its recognized dominant form. In the normal way of surplus value and surplus labor, it is reduced to a surplus of this surplus labor over the part of it that becomes appropriated by the exploiting capitalist in the form of profit; in the same way, now this capitalist directly extracts all surplus labor ‒ profit and the surplus over profit ‒ in the form of total surplus product and converts it into money […] Thus, in the normal way of surplus value and surplus surplus-labor income then becomes a surplus of that particular sphere of production, the agricultural sphere, a surplus over that part of the surplus-labor that capital claims as belonging to it in advance and standard [normally]. Instead of rent, it is profit that has now been converted into the normal form of surplus value, and rent is considered only as a form, autonomous under special circumstances, not of surplus value in general, but of a certain branch of the latter: of extra profit […] No longer the land, but the capital, now began to directly subject agricultural work to itself and its productivity (MARX, 2017b, p. 860).

David Ricardo's theoretical formulation was a great contribution to making economics a science, in the modern sense of the term, but at the same time it became an obstacle to understanding the exploitation of the workforce in capitalism. Because, as Francisco Teixeira (2004) very appropriately put it, it was with him that the theory of value was formulated in a precise way, eliminating its ambivalent character given by Adam Smith (value as contained work and as commanded work): “If, in name of the principle of coherence, David Ricardo was forced to hide the origin of surplus value, how does he then explain profit and income from land? This issue becomes more dramatic, considering that, for him, the entire value of the product is resolved in work. If this is so, profit and income are nothing more than titles under which capitalists and owners share in the extra value generated by work; therefore, of a value that exceeds the paid labor used for its production. This raises the question from before: how to explain the origin of profit and income without violating the principle of coherence? For Ricardo, there is only one way out: simply admit them as a fact. That’s exactly what he did” (TEIXEIRA, 2004, p. 57).

4.

The problem of capitalist income will only be adequately formulated based on the distinction between work and labor power made by Marx. For, only from such a distinction and the understanding of work as a substance of value, in the context of bourgeois private property of production and subsistence goods, could a real analysis of the appropriation of social income be carried out, outside the common place of the economy. classical division of the social product between salary, profit and income.

In this way, only Marx's theoretical contribution has the potential to free us from the alienation formulated by the dominant economic theory that the distribution of the social product in capitalism is a natural aspect of our sociability/civility: “[…] In this way, capital it is already transformed into a highly mystical entity, insofar as all the social productive forces of work appear as forces belonging to capital, and not to work as such, as forces that originate within its own heart […] Surplus value, in the form of profit, it no longer refers to the part of capital disbursed in labor, from which it derives, but to the total capital [...] All this contributes to increasingly hiding the true nature of surplus value and, consequently, the true mechanism that moves capital […] Average profits themselves appear to be intrinsic to capital; independent of exploitation […] The autonomy of the surplus-value form, its ossification in relation to its substance, its essence, is completed with the division of profit into business profit and interest […] On the other hand, interest appears, then, as independent, whether from the worker's wage labor or from the capitalist's own labor, and as having its origin in capital as its own and independent source [...] The mystification of the capitalist mode of production, the reification of social relations, is complete [ …] the enchanted, distorted and upside-down world” […] (MARX, 2017b, p. 890-892).

Finally, there cannot be a clearer way of describing the problem of income than that expressed by Marx in the paragraph above. Through it, we intend to demonstrate that the trinitarian form is a social construction, not a law of nature. Since it is a social construction and has led us, as a society, to a dead end, in terms of promoting a combination of sociability/civility that is extremely contradictory – therefore, at the same time both asocial/anti-social and environmentally and belligerently self-destructive –, Either we change this construction or it will annihilate us as humanity.

*José Micaelson Lacerda Morais is a professor in the Department of Economics at URCA. Author, among other books, of Income, Class Struggles and Revolution (Authors Club).

References


HOBSBAWM. Eric J. From the English Industrial Revolution to Imperialism. Rio de Janeiro: Editora Forense Universitária, 2009.

MARX, Carl. Economic-philosophical manuscripts. Sao Paulo: Boitempo, 2010.

MARX, Carl. Capital: critique of political economy. Book I: the capital production process. 2nd ed. São Paulo: Boitempo, 2017a.

MARX, Carl. Capital: critique of political economy. Book III: The Global Process of Capitalist Production. São Paulo: Boitempo, 2017b.

RICARDO, David. Principles of Political Economy and Taxation. São Paulo: Abril Cultural, 1982. (The Economists)

TEIXEIRA, Francisco José Soares. Work and value: contribution to the critique of economic reason. São Paulo: Cortez Editora, 2004.


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