substance of the paragraphs that contain the argument; referring to the author quoted, or any other writer on the same side, to remove the suspicion of misrepresentation,—and marking with italics the stages where the fallacy appears. { Land is of different degrees of fertility. &c. Lands, of the highest fertility, do not yield the whole of what they are capable of yielding, with the same facility. &c. Till the whole of the best land is brought under cultivation, and till it has received the application of a certain quantity of capital, all the capital employed on the land is employed with an equal return. At a certain point, however, no additional capital can be employed on the same land, without a diminution of return. &c. When capital producing a lower return is applied to the land, it is applied in one of two ways. It is either applied to new land of the second degree of fertility, then for the first time brought under cultivation; or it is applied to land of the first degree of fertility, which has already received all the capital which can be applied without a dimination of return. Whether capital shall be applied to land of the second degree of fertility, or in a second dose to the land of the first degree of fertility, will depend, in each instance, on the nature and qualities of the two soils. &c. The land of the different degrees of fertility; first, or highest sort; se cond, or next highest, &c. No. 1, No. 2, No. 3, &c. 1st dose, 2d dose, 3d dose, and so on. So long as land produces nothing, it is not worth appropriating. &c. 1. The time, however, arrives, as population, and the demand for food increase, when it is necessary either to have recourse to land of the second quality, or to apply a second dose of capital, less productively, upon land of the first quality. If a man cultivates land of the second quality, upon which a certain quantity of capital will produce only eight quarters of corn, while the same quantity of capital upon land of the first quality will produce ten quarters; it will make no difference to him, whether he pay two quarters for leave to cultivate the first sort, or cultivate the second without any payment. He will therefore be content to pay two quarters for leave to cultivate the first sort; and that payment constitutes rent. Let us suppose, again, that instead of cultivating land of the second quality, it is more advisable to apply a second dose of capital to land of the first quality;-&c. The effect upon rent is thus the same in both cases. It follows that rent increases in proportion as the productive power of the capital, successively bestowed upon the land, decreases. &c.{\\@ We may thus obtain a general expression for rent. In applying capital, either to lands of various degrees of fertility, or, in successive doses, to the same land, some portions of the capital so employed are attended with a greater produce, some with a less. That which yields the least, yields all that is necessary for re-imbursing and rewarding the capitalist. The capitalist will receive no more than this remuneration for any portion of capital which he employs, because the competition of others will prevent him. All that is yielded above this remuneration, the landlord will be able to appropriate. Rent, therefore, is the difference between the return made to the more productive portions, and that which is made to the least productive portion, of capital, employed upon the land.―Mill, p. 29–33. A The matters of fact stated in the outset are entirely and absolutely true. The fallacy lies in assuming to be the cause what in reality is only a consequence. A man of six feet in height is a foot taller than a man of five, and two feet taller than a man of four, and if it had happened that there were men of all heights down to absolutely nothing, his height would have been equal to the difference between the highest and lowest classes;-therefore men of six feet exist because there are men of smaller altitudes, and would not have existed without them. Proof spirit sells for a certain price, and more diluted spirits sell for inferior prices till they come to that which is worth no more than water; therefore the reason why proof spirit sells for a high price, is that there are weaker spirits which are selling for a lower, and if there had happened to have been no weaker spirits the proof spirit would not have sold at all. These are specimens of the kind of fallacy involved. There is precisely the same nullity of proof, that what is quite true with respect to the concomitant circumstances when they happen to exist, is therefore the essential and inseparable cause, without which the principal phenomenon could not have taken place. When it happens, or even if it always happens, that there exist soils of various degrees of productiveness down to that which does no more than replace the expense of cultivation with the necessary profit, and that men are moreover acquainted with the art of forcing increased crops by the application of more capital, all that is stated with respect to the rent being equal to the difference between the highest and lowest returns, is as necessarily and undeniably true as any thing that has been stated with respect to proof spirit or men of six feet. But all this is no manner of evidence that these circumstances are the causes of the principal phenomenon and that it could not have existed without them, in one case more than in the others. In all the cases, this kind of conclusion is a pure fallacy, a simple non causa pro causâ. On the truth or falsehood of this, depend the merits of the whole Theory of Rent and its consequences. It is easy to imagine the existence of a country in which the land should be of a uniform and high quality, and where, from the great facility of procuring crops and the consequent non-improvement of agricultural science, the cultivators should, for ages together, have no idea of the processes by which a European farmer forces an increased crop through the expenditure of an increased quantity of capital on the land. The whole of the cultivated portion of Egypt, and great part of India, present specimens of such a state of things; and yet in both these countries, a heavy rent is paid to the great landlord which is the government. If it was shown before, that the Theory of Rent is not true by virtue of the reasoning contained in it, this supplies the experimental proof that it is not true by accident either. The simple cause of rent, in such countries and every where else, is what Adam Smith described it to be long, ago. It is the same that gives rise to the rent of the vineyard that produces Tokay. It is the limited quantity of the land, in comparison with the competitors for its produce; or, as it is sometimes called, the monopoly. Let the case be supposed of a small number of settlers taking possession of a large and fertile island; and let the soil be so good, and their habits of agricultural energy so limited, that a slight scratching of the ground and throwing in the seed shall be all the cultivation they ever think of bestowing, as, for ages together has been a picture of the agriculture of many tropical countries. If the land was unappropriated and every man might occupy at will, it is plain that in the commencement no man would pay another any rent. Or if instead of the land being entirely unappropriated, the right of property in it was yested in a number of owners, but who were without the means of bringing the land into immediate cultivation, it would be equally plain that the competition among these owners would in the commencement reduce the rent which any of them could obtain, to the lowest possible magnitude, which is in fact no magnitude at all. In such an establishment, the degree of each man's wealth, supposing him to possess the brief capital required for setting his industry in motion, would be in proportion to the exertions of himself or of his family. He that by his activity could raise or collect much corn, fruit, sheep, furs, or whatever else were the objects of industry within his reach, would be comparatively rich. Such manufactures as he stood in need of, he must obtain either by the uneconomical process of employing part of his own labour or that of his dependents in their production, or by paying for them with part of his agricultural produce to such artisans as in the progress of the division of labour would make their appearance. But as he would have no alternative but either to pay the artisans their price, or have recourse to the uneconomical and wasteful method of manufacturing the articles himself, the recompense of these artisans would in the commencement be exceedingly liberal, and their lives easy. They would be a comparatively idle and insolent race, working when they pleased, and almost for what they pleased; as artisans are always described to be in newly 1 1 2 When the term monopoly is applied to land, it means a monopoly arising, not from any immediate act of the owner, but from the limited quantity of the land in comparison with the competitors for its produce. It is therefore, in one sense, an involuntary monopoly, not an arbitrary one. This distinction is sometimes of importance. peopled agricultural countries. But when population and cultivation had increased so as to begin to press against the limits of the soil, and there was no longer new land to be had for asking, a very different scene would begin to arise. All the population which was not employed in agricultural labour, or supported without labour upon some kind of previous accumulation, must apply itself to manufacturing industry. And as the number of persons so employed increased, a competition would arise among them for the products of agriculture upon which they must live; and this competition would oblige them to give a greater portion of the results of their own labour, in return for a smaller and less luxurious quantity of agricultural produce than they had been accustomed to receive. It is true that the land must finally find food for all that live on it, as the vineyard finds wine for all that finally drink Tokay; but it does not therefore follow, that many of those who live on it may not, when their numbers have increased, live much less abundantly than they used to do, and give a much greater quantity of the results of their own labour in return for a given quantity of the produce. It is proved by the experience of all countries, that moderately good land is capable of producing food for many times the number of hands required for its cultivation; hence all these numbers may be called into being, to assist in the demand. If the exchange of commodities was conducted by the intervention of a circulating medium, the money price of agricultural produce must rise in comparison with the money prices of other commodities. Whether this comparative rise would take place by an increase in the money price of corn, or by a diminution in the money prices of other commodities, or by both these processes at once, would depend on the manner and degree in which the community had the opportunity of supplying itself with the metals employed in coins, or on other circumstances connected with the principles of Currency. But in whatever manner it took place, its effects would be virtually the same; so that it is sufficient to consider the case where the whole alteration is supposed to take place in the money price of agricultural produce. The land-owners, then, would begin to get rich, through the simple fact of their being the land-owners and there being no more land to own. If it should be found some day that a contiguous island had sprung up of the same nature with the first, their prospect of increased wealth would drop at once; and every thing would go on as it did at the commencement, till the new island had been cultivated and peopled like the other. But if this does not happen, the lucky land-owners will incontinently begin to swell into men of landed wealth. If they keep their land in their own hands, they -- will rise into what are termed gentlemen-farmers, or men who unite in their own persons the characters of landlord and cultivator. But as soon as what they obtain by the sale of their produce, is sufficiently greater than the amount for which they can hire one of their less fortunate neighbours, who is heir to his own industry and no land beside, the greater part of them will hire a farming-man or overseer with part of the produce, and sit down in the enjoyment of the otium cum dignitate of landed gentlemen with the remainder. And from this step of the farming-man, they will soon proceed to the further one, of finding a farming-man who will advance his own capital, making an adequate deduction out of the produce in return, or in other words a farmer or tenant. The reason of this further step will be, their desire to get more completely rid of the trouble of superintending the employment of the capital; for a tenant has his own interest at stake in watching it with the utmost exactness, while a farmingman, having no such interest, must still be superintended in a considerable degree. And all the residuum left after delivering to the tenant the portion of the proceeds which the competition among individuals of his class obliges him to accept, will go to the landlord as rent.' And what the tenant will be obliged to accept, will be such a part of the price of the produce as will return him the capital he must lay out, with the lowest rate of profit for which men under the existing habits of the society will consent to lay out farming capital and superintend its employment. But of the existence of this residuum, the primary cause is manifestly the increase in the comparative price of corn. As it has been accurately expressed by another author, "Rent will be paid because corn sells high; and not corn sell high because rent is paid." If it should be objected, that a rise in the money price of corn must create a corresponding rise in the money prices of other commodities, the answer is, that this is as far from following, as that a rise in the price of corn must create rise in wages, at a time when the fact avowedly is that the increase of competition "When the term residuum is employed in the sequel, it invariably means alf that is left after satisfying the tenant; out of which it is evident that rent, taxes, and every thing else must come. This residuum is often loosely called rent, in cases which demand a clearer term. There are in fact two popular meanings of the word rent; one, the total residuum here mentioned; and the other, the share finally left for the landlord, which will be called for distinction rent to the landlord. In making this distinction nothing is done towards prejudging the question of whether the residuum may not rise with taxation, so as to leave the landlord's share the same as before; which is in fact the principal question at issue. 2 Principles of Political Economy and Taxation. By David Ricardo, Esq. p. 62. |