Capital: A Critique of Political Economy, Vol. III. The Process of Capitalist Production as a Whole
By Karl Marx
One of Econlib’s aims is to put online the most significant works in the history of economic thought, and there can be no doubting the significance of Marx’s influence on both economic theory in the late 19th century and on the creation of Marxist states in the 20th century. From the time of the emergence of modern socialism in the 1840s (especially in France and Germany), free market economists have criticised socialist theory and it is thus useful to place that criticism in its intellectual context, namely beside the main work of one of its leading theorists,
Karl Marx.In 1848, when Europe was wracked by a series of revolutions in which both liberals and socialists participated and which both lost out to the forces of conservative monarchism or Bonapartism,
John Stuart Mill published his
Principles of Political Economy. The chapter on Property shows how important Mill thought it was to confront the socialist challenge to classical liberal economic theory. In hindsight it might appear that Mill was too accommodating to socialist criticism, but I would argue that in fact he offered a reasonable framework for comparing the two systems of thought, which the events of the late 20th century have finally brought to a conclusion which was not possible in his lifetime. Mill states in
Book II Chapter I “Of Property” that a fair comparison of the free market and socialism would compare both the ideal of liberalism with that of socialism, as well as the practice of liberalism versus the practice of socialism. In 1848 the ideals of both were becoming better known (and there were some aspects of the ideal of socialism which Mill found intriguing) but the practice of each was still not conclusive. Mill correctly observed that in 1848 no European society had yet created a society fully based upon private property and free exchange and any future socialist experiment on a state-wide basis was many decades in the future. After the experiments in Marxist central planning with the Bolshevik Revolution in 1917, the Chinese Communists in 1949, and numerous other Marxist states in the post-1945 period, there can be no doubt that the reservations Mill had about the practicality of fully-functioning socialism were completely borne out by historical events. What Mill could never have imagined, the slaughter of tens of millions of people in an effort to make socialism work, has ended for good any argument concerning the Marxist form of socialism.Econlib now offers online two important defences of the socialist ideal, Karl Marx’s three volume work on
Capital and the
collection of essays on Fabian socialism edited by George Bernard Shaw. These can be read in the light of the criticism they provoked among defenders of individual liberty and the free market: Eugen Richter’s anti-Marxist
Pictures of the Socialistic Future, Thomas Mackay’s
2 volume collection of essays rebutting Fabian socialism,
Ludwig von Mises post-1917 critique of
Socialism. One should not forget that
Frederic Bastiat was active during the rise of socialism in France during the 1840s and that many of his essays are aimed at rebutting the socialists of his day. The same is true for Gustave de Molinari and the other authors of the
Dictionnaire d’economie politique (1852). Several key articles on communism and socialism from the
Dictionnaire are translated and reprinted in Lalor’s
Cyclopedia.For further reading on Marx’s
Capital see David L. Prychitko’s essay
“The Nature and Significance of Marx’s
Capital: A Critique of Political Economy“.For further readings on socialism see the following entries in the
Concise Encyclopedia of Economics:
Poor Law Commissioners’ Report of 1834,
edited by Nassau W. Senior, et al.
March 1, 2004
Frederick Engels, ed. Ernest Untermann, trans.
First Pub. Date
Chicago: Charles H. Kerr and Co.
First published in German. Das Kapital, based on the 1st edition.
The text of this edition is in the public domain. Picture of Marx courtesy of The Warren J. Samuels Portrait Collection at Duke University.
- Preface, by Frederick Engels
- Part I, Chapter 1
- Part I, Chapter 2
- Part I, Chapter 3
- Part I, Chapter 4
- Part I, Chapter 5
- Part I, Chapter 6
- Part I, Chapter 7
- Part II, Chapter 8
- Part II, Chapter 9
- Part II, Chapter 10
- Part II, Chapter 11
- Part II, Chapter 12
- Part III, Chapter 13
- Part III, Chapter 14
- Part III, Chapter 15
- Part IV, Chapter 16
- Part IV, Chapter 17
- Part IV, Chapter 18
- Part IV, Chapter 19
- Part IV, Chapter 20
- Part V, Chapter 21
- Part V, Chapter 22
- Part V, Chapter 23
- Part V, Chapter 24
- Part V, Chapter 25
- Part V, Chapter 26
- Part V, Chapter 27
- Part V, Chapter 28
- Part V, Chapter 29
- Part V, Chapter 30
- Part V, Chapter 31
- Part V, Chapter 32
- Part V, Chapter 33
- Part V, Chapter 34
- Part V, Chapter 35
- Part V, Chapter 36
- Part VI, Chapter 37
- Part VI, Chapter 38
- Part VI, Chapter 39
- Part VI, Chapter 40
- Part VI, Chapter 41
- Part VI, Chapter 42
- Part VI, Chapter 43
- Part VI, Chapter 44
- Part VI, Chapter 45
- Part VI, Chapter 46
- Part VI, Chapter 47
- Part VII, Chapter 48
- Part VII, Chapter 49
- Part VII, Chapter 50
- Part VII, Chapter 51
- Part VII, Chapter 52
THE price of production may fall, when the additional investments of capital take place with an unaltered, a falling, or a rising rate of productivity.
In this case the assumption is that the product increases in the same proportion as the capital invested in the various soils and in accordance with their respective qualities. This implies, always assuming the differences of the various soil to remain unaltered, that the surplus-product increases in proportion to the increased investment of capital. This case, then, excludes any additional investment of capital upon soil A which might affect the differential rent. Upon this soil the rate of surplus-profit is 0; it remains 0, since we have assumed that the productive power of the additional capital and therefore the rate of surplus-profit remain the same.
But under these conditions the regulating price of production can fall only, because instead of the price of production of A that of the next best soil B, or of any better soil than A, becomes the regulator; so that the capital is withdrawn from A, or perhaps from B and A, in case the price of production of C should become the regulating one and all inferior soil should be eliminated from the competition of the wheat raising soils. The prerequisite for this would be, under the assumed conditions, that the additional product of the additional investments of capital should satisfy the demand, so
that the product of the inferior soils A, etc., would become superfluous for the formation of a full supply.
Take, for instance, Table II, but in such a way that 18 quarters instead of 20 will satisfy the demand. Soil A would drop out; D and its price of production of 30 shillings would become regulating. In that case the differential rent would assume the following form:
In other words, compared to Table II the ground-rent would have fallen in money from 36 pounds sterling to 9 pounds sterling and in grain from 12 quarters to 6 quarters, whereas the total output would have fallen only by 2, from 20 to 18. The rate of surplus-profit, calculated on the capital, would have fallen by one-half, from 180% to 90%. The fall of the price of production in this case is accompanied by a decrease of the rent in grain and money.
Compared to Table I there is merely a decrease in the money rent; the rent in grain in both cases is 6 quarters. But in the one case these bring 18 pounds sterling, in the other only 9 pounds sterling. So far as the soils C and D are concerned, the rent in grain compared to Table I remains the same. In face, owing to the additional production put forth by the uniformly working additional capital, the product of A has been pushed out of the market, the soil A has been eliminated from the competition of the producing agents, and a new differential rent No. 1 has thus been formed, in which the better soil B plays the same role as formerly the inferior soil A. Consequently the rest of B disappears on the one side; on the other side nothing has been altered in the differences
of B, C and D by the investment of additional capital, according to our assumption. For this reason that part of the product, which is converted into rent, is reduced.
If the above result, the satisfaction of the demand with A left out, should have been accomplished by the investment of more than double the capital upon C or D, or upon both, then the matter would assume a different aspect. Let us suppose, that a third investment of capital is made upon C.
In this case, compared to Table IV, the product of C has risen from 6 quarters to 9, the surplus product from 2 quarters to 3, the money rent from 3 pounds sterling to 4½ pounds sterling. Compared to Table II, in which the money rent was 12 pounds sterling, and Table I, in which it was 6 pounds sterling, it has fallen off. The total rental in grain is 7 quarters. It has fallen compared to Table II, in which it was 12 quarters, but has risen compared to Table I, in which it was 6 quarters. In money the rest is 10½ pounds sterling and has fallen compared to both of the other Tables, in which it was 18 and 36 pounds sterling respectively.
If the third investment of capital, amounting to 2½ pounds sterling, had been applied to soil B, it would indeed have altered the quantity of production, but would not have touched the rent, since the successive investments, according to our assumption, do not produce any differences upon the same soil, and soil B does not produce any rent.
Here the total product is 22 quarters, more than double that of Table I, although the invested capital is only 17½ pounds sterling as against 10 pounds sterling, in other words, not twice the size. The total product is also larger by 2 quarters than that of Table II, although the capital in it is larger, namely 20 pounds sterling.
Compared to Table I, the rent in grain upon soil D has increased from 2 quarters to 6, whereas the money rent has remained the same, 9 pounds sterling. Compared to Table II the grain rent of D is the same, namely 6 quarters, but the money rent has fallen from 18 pounds sterling to 9 pounds sterling.
Comparing the total rents, the grain rent of IV b is 8 quarters, larger than that of I which is 6 and than that of IV a which is 7 quarters; but it is smaller than that of II which is 12 quarters. The money rent of IV b, 12 pounds sterling, is larger than that of IV a, which is 10½ pounds sterling, and smaller than that of Table I, which is 18 pounds sterling and that of Table II, which is 36 pounds sterling.
In order that the total rental under the conditions of Table IV b, after the elimination of the rent upon B, may be equal to that of Table I, we need 6 pounds sterling of surplus product more, that is, 4 quarters at 1½ pounds sterling, which is the new price of production. Then we shall have once more a total rental of 18 pounds sterling, the same as in Table I. The magnitude of the required additional capital will differ, according to whether we invest it upon C or D, or distribute it between these two.
In the case of C 5 pounds sterling of capital result in a
surplus product of 2 pounds sterling, consequently 10 pounds sterling of additional capital will result in 4 quarters of additional surplus product. In the case of D 5 pounds sterling of additional capital would suffice for the purpose of producing 4 quarters of additional grain rent, under the conditions assumed here, namely that the productivity of the additional investments of capital will remain the same. We should then get the following Tables:
The total money rental would be exactly one-half of what it was in Table II, where the additional capitals were invested under conditions, in which the prices of production remained the same.
The most important thing is to compare the above Tables with Table I.
We find that the total money rental has remained the same, namely 18 pounds sterling, while the price of production has fallen by one-half, from 60 shillings to 30 shillings per quarter, and that the grain rent has been correspondingly duplicated, from 6 quarters to 12. The rent upon B has disappeared; the money rent has risen by one-half in IV c, but fallen by one-half in IV d; upon D the money rent has remained the same, 9 pounds sterling, in IV c, and has risen
from 9 pounds sterling to 15 pounds sterling in IV d. The production has risen from 10 quarters to 34 in IV c, and to 30 quarters in IV d; the profit from 2 pounds sterling to 5½ pounds sterling in IV c and to 4½ pounds sterling in IV d. The total investment of capital has risen in one case from 10 pounds sterling to 27½ pounds sterling, and in the other from 10 pounds sterling to 22½ pounds sterling, in either case by more than one-half. The rate of rent, that is, the rent calculated on the invested capital, is everywhere the same in all the Tables from IV to IV d for the respective kinds of soils, for this was implied by the assumption that every kind of soil should retain the same rate of productivity with the two successive investments of capital. But compared to Table I, this rate has fallen, both for the average of all kinds of soil and for each one of them individually. In Table I it was 180% on an average, whereas in IV c it is (18 ÷ 27½) × 100 = 65 5/11% and in IV d it is (18 ÷ 22½) × 100 = 80%. The average money rent per acre has risen. Formerly, in Table I, its average was 4½ pounds sterling per acre upon all four acres, whereas now, in IV c and IV d, it is 6 pounds sterling per acre upon the three acres. Its average upon the rent paying soil was formerly 6 pounds sterling, whereas now it is 9 pounds sterling per acre. Hence the money value of the rent per acre has risen, and represents now double the grain product that it did formerly; but the 12 quarters of grain rent are now less than one-half of the total product of 33 and 27 quarters respectively, whereas in Table I the 6 quarters represent 3/5ths of the total product of 10 quarters. Consequently, although the rent as an aliquot part of the total product has fallen, and has also fallen when calculated on the invested capital yet its money-value, calculated per acre, has risen and still more its value as a product. If we take soil D in Table IV d, we find that the cost of production expended in it amounts to 15 pounds sterling, of which 12½ pounds sterling are invested capital. The money rent is 15 pounds sterling. In Table I, for the same soil D, the cost of production was 3 pounds sterling, the invested capital 2½ pounds sterling the money rent 9 pounds sterling, that is, the
money rent amounted to three times the cost of production and almost four times the capital. In Table IV d, the money rent for D, 15 pounds sterling, is exactly equal to the cost of production and only by 1/5th larger than the capital. Nevertheless the money rent per acre is two-thirds larger, namely 15 pounds sterling instead of 9 pounds sterling. In Table I the grain rent of 3 quarters constitutes three quarters of the total product of 4 quarters; in Table IV d it is 10 quarters, or one-half of the total product of 20 quarters of one acre of D. This shows that the money value and grain value of the rent per acre may rise, although it forms a smaller aliquot part of the total yield and has fallen in proportion to the invested capital.
The value of the total product in Table I is 30 pounds sterling. The rent is 18 pounds sterling, more than one-half of it. The value of the total product of IV d is 45 pounds sterling, the rent is 18 pounds sterling, or less than one-half of it.
The reason, why in spite of the fall of the price by 1½ pounds sterling per quarter, a fall of 50%, and in spite of the reduction of the competing soil from 4 acres to 3, the total rent remains the same and the grain rent is doubled, while on a calculation per acre both the grain rent and money rent rise, is that more surplus product is created. The price of grain falls by 50%, the surplus product increases by 100%. But in order to accomplish this result, the total production under the conditions assumed by us must be trebled, and the investment of capital upon the superior soils must be more than doubled. In what proportion this last factor must increase, depends in the first place upon the distribution of the additional investments of capital among the superior and best kinds of soil, always assuming that the productivity of the capital upon every kind of soil increases proportionately to its size.
If the fall of the price of production were smaller, less additional capital would be required for the production of the same money rent. If the supply required for the purpose of throwing soil A out of cultivation—and this depends not
merely upon the product per acre of A, but also upon the proportional share taken by A in the entire cultivated area—were larger, and with it also the amount of additional capital required upon better soils they A, then, other circumstances remaining the same, the money rent and the grain rent would have increased still more, although both of them would disappear upon the soil B.
If the eliminated capital of A had been 5 pounds sterling, we should have to compare Tables II and IV d: The total product would have increased from 20 quarters to 30. The money rent would be only half as large, that is, 18 pounds sterling instead of 36 pounds sterling; the grain rent would be the same, namely 12 quarters.
If a total product of 44 quarters, valued at 66 pounds sterling, could be produced upon D with a capital of 27½ pounds sterling—corresponding to the old rate of D, 4 quarters per 2½ pounds sterling of capital—then the total rental would once more reach the level of Table II, and we should get the following diagram:
The total production would be 54 quarters as against 20 quarters in Table II, and the money rent would be the same, 36 pounds sterling. But the total capital would be 37½ pounds sterling, whereas it was 20 in Table II. The invested total capital would almost be doubled, while production would be nearly trebled; the grain rent would have been doubled, the money rent would have remained the same. Hence, if the price falls as a result of the investment of additional money-capital, while productivity remains the same, upon the better soils which pay rent, that is, all soils above A, then the total capital has a tendency not to increase in the same proportion as the production and the grain rent; so that the increase of the grain rent may offer
a compensation for the loss in money rent due to the falling price. The same law also manifests itself through the fact that the invested capital must be larger in proportion as it is more largely invested upon C than D, upon the soils paying a smaller rent rather than upon the soils paying a larger rent. The point is simply this: In order that the money rent may remain the same or rise, a certain additional quantity of surplus product must be created, and this requires less capital in proportion as the productivity of the soils yielding a surplus product is greater. If the difference between B and C, C and D were still greater, still less additional capital would be required. The proportion is determined 1) by the proportion in which the price falls, in other words, by the difference between soil B, which is not paying any rent now, and soil A, which formerly was the soil that did not pay any rent; 2) by the proportion between the differences of the better soils from B upward; 3) by the amount of newly invested additional capital, and 4) by its distribution among the different qualities of soil.
In fact, we see that this law expresses merely the same thing which we ascertained already in the case of the first illustration: When the price of production in given, no matter what may be its figure, the rent may increase in consequence of additional investments of capital. For owing to the elimination of A, we have now a new differential rent No. I with B as the worst soil and 1½ pounds sterling per quarter as the new price of production? This applies to Tables IV as well as to Table II. It is the same law, only that we have as a basis soil B instead of A, and a price of production of 1½ pounds sterling instead of 3 pounds sterling.
The important thing here is this: To the extent that so and so much additional capital was necessary for the purpose of withdrawing the capital from soil A and satisfying the supply without it, we find that this may be accompanied by an unaltered, a rising, or a falling rent per acre, if not upon all soils, then at least upon some and so far as the average of the cultivated lands is concerned. We have seen that the
grain rent and the money rent do not maintain a uniform ratio to one another. However, it is merely due to tradition that grain rent is still playing any role at all in political economy. One might demonstrate equally well that a manufacturer can buy much more of his own yarn with his profit of 5 pounds sterling than he could formerly with a profit of 10 pounds sterling. It shows at any rate, that the landlords, when they are at the same time owners or partners of manufacturing establishments, sugar factories, distilleries, etc., may still make a considerable profit even when the money rent is falling, in their capacity as producers of their own raw materials.
This does not carry anything new into the problem, in so far as the price of production may also fall in this case as in the previously considered one, when additional investments of capital upon better soils than A make the product of A superfluous and withdraw the capital from A, or lead to the employment of A for the production of other things. We have analysed this eventuality exhaustively. We have shown that in this case the rent in grain and money per acre may increase, decrease, or remain unchanged.
Now let us assume that the figure of 16 quarters, supplied by B, C, D, with a decreasing rate of productivity, suffices to throw A out of cultivation. In that case Table III is transformed into the following
Here the rate of productivity of the additional capitals is decreasing, and the decrease is different upon different soils, while the regulating price of production has fallen from 3 pounds sterling to 1 5/7 pounds sterling. The investment of capital has risen by one-half, from 10 pounds sterling to 15 pounds sterling. The money rent has fallen by almost one-half, from 18 pounds sterling to 9 3/7 pounds sterling, while the grain rent has fallen only by one-twelfth, from 6 quarters to 5½ quarters. The total product has risen from 10 to 16, or by 160%. The grain rent constitutes a little more than one-third of the total product. The advanced capital has a ratio of 15 to 9 8/7 to the money rent, whereas formerly this ratio was 10 to 18.
This differs from Case I in the beginning of this chapter, in which the price of production falls while the rate of productivity remains the same, merely by the fact that soil A is thrown more quickly out of competition, if an increase of the product is required to effect this.
This may work its effects differently, according to the distribution of the investments over the various soils, no matter whether productivity be rising or falling. In proportion as these different effects balance the differences, or accentuate them, the differential rent of the better soils, and with it the total rental, will fall or rise, as we have seen in discussing differential rent No. I. For the rest, everything depends upon the size of the area and of the capital, which are thrown out of competition together with soil A, and upon the relative advanced of capital required with a rising productivity for the purpose of supplying the capital which is to cover the demand.
The only point which it is worth while to analyse here, and which alone carries us back to the investigation of the way in which this differential profit is converted into differential rent, is the following:
In the first case, in which the price of production remains the same, the additional capital which may be invested in the soil A is immaterial for the differential rent as such, since this soil A does not yield any rent now any more than it did before, the price of its product remains the same and continues to regulate the market.
In the second case of Variant No. I, in which the price of production falls while the rate of productivity remains the same, soil A will necessarily be thrown out, and still more so in Variant No. II, in which both the price and production and the rate of productivity fall, since otherwise the additional capital upon soil A would have to raise the price of production. But here, in Variant No. III of the second case, in which the price of production falls, because
the productivity of the additional capital rises, this additional capital may eventually be invested upon the soil A as well as upon the better soils.
We will assume that an additional capital of 2½ pounds sterling, when invested upon the soil A, produces 1 1/5 quarter instead of 1 quarter.
This Table VI should be compared with both Basic Tables I and Table II, in which the double investment of capital is combined with a constant productivity proportional to the investment of capital.
According to our assumption the regulating price of production falls. If it were to remain constant, at 3 pounds sterling, then the worst soil which used to pay no rent with an investment of 2½ pounds sterling, would then yield a rent, although no worse soil would have been drawn into cultivation. This would have been accomplished by increasing the productivity of this soil, but only for a part, not for the original capital invested in it. The first 3 pounds sterling of cost of production bring 1 quarter; the second bring 1 1/5 quarter; but the entire product of 2 1/5 quarters is now sold at its average price.
Since the rate of productivity increases with the additional investment of capital, this implies an improvement. This may consist of a general increase of the capital per acre (more fertilizer, more mechanical labor, etc.), or it may be due exclusively to this additional investment that any difference in the quality and productiveness of the investment is brought about. In both cases the investment of 5 pounds sterling of capital per acre brings forth a product of 2 1/5 quarters, whereas
the investment of the one-half of this capital, or 2½ pounds sterling, brought forth a product of only 1 quarter. The product of the soil A, leaving aside the question of transient market conditions, could not continue to be sold at a higher price of production instead of all the new average price unless a considerable area of the class A would remain under cultivation with a capital of only 2½ pounds sterling. But as soon as the new scale of 5 pounds sterling of capital per acre would become universal, and with it an improvement of cultivation, the regulating price of production would have to fall to 2 8-11 pounds sterling. The difference between the two portions of capital would disappear, and in that case the cultivation of one acre of soil A with a capital of only 2½ pounds sterling would be abnormal, would not correspond to the new conditions of production. It would then no longer be a difference between the yields of different portions of capital upon the same acre, but between a sufficient and an insufficient investment of capital per acre. This shows, 1), that an insufficient capital in the hands of large number of capitalist farmers (it must be a large number, for a small number would simply be compelled to sell below their price of production) produces the same effect as a differentiation of soils in a descending line. The inferior cultivation upon inferior soil increases the rent upon the superior soils; it may even create a rent upon better cultivated soil of the inferior kind, which would otherwise yield no rent. It shows, 2), that differential rent, to the extent that it arises from successive investments of capital in the same total area, resolved itself in reality into an average, in which the effects of the different investments of capital are no longer visible and distinguishable, so that the worst soil does not yield any rent, but rather, a), the average price or the total product of, say, one acre of A is made the new regulating price, and, b), the effects of the different investment of capital appear as changes in the total quantity of capital per acre, which is required under the new conditions for the adequate cultivation of the soil, and thus the individual successions of invested capital as well as their respective effects are indistinguishably amalgamated. It is
the same with the individual differential rents of the superior kinds of soil. In every case they are determined by the difference of the average products of the various soils, compared to the product of the worst soil, with the increase of capital which has become the normal one.
No soil yields any product without an investment of capital. Even in the case of simple differential rent, or differential rent No. I, some capital must be invested. When we say that one acre of class A, which regulates the price of production, gives so and so much of a product at that and that price, and that the superior soils B, C and D yield so much differential product and so much money rent at the regulating price of production, it is always understood that a certain amount of capital is invested in A which is normal under the prevailing conditions. In the same way a certain minimum capital is required for every individual line of industry, in order that commodities may be produced at their price of production.
If this minimum is altered in consequence of successive investments of capital which are accompanied by improvements, it is done gradually. So long as a certain number of acres, say, of A, do not receive this additional first capital, a rent is created upon the better cultivated portions of A by the unaltered price of production, and the rent of all superior soils, such as B, C, D, is raised. But as soon as the new method of cultivation has become general enough to be the normal one, the prices of production falls; the rent of the superior soils declines then, and that portion of the soil A, which does not enjoy the normal running capital, must sell its product below its individual price of production, and therefore below the average profit.
In the case of a falling price of production this happens also, even assuming the productivity of the additional capital to be decreasing, as soon as the required total product is supplied in consequence of increased investments of capital by the superior classes of soil, so that the running capital is withdraw, say, from A and A does not compete any longer in the production of this one staple, say wheat. The quantity
of capital, which is now required on an average as an investment upon the new regulating soil, B, is now considered the normal one; and when we speak of the different fertility of the soils, it is understood that this new normal quantity of capital is employed per acre.
On the other hand, it is evident that this average investment of capital, for instance 8 pounds sterling per acre in England before 1848, and 12 pounds sterling after that year, will form the standard in the making of leases for land. For any capitalist farmer spending more than that the surplus profit does not assume the form of rent during the time of his contract. Whether this takes place after the expiration of his contract, will depend upon the competition of the capitalist farmers, who are in a position to make the same extra advance. We are not speaking here of such permanent improvements of the soil as continue to guarantee an increased product with the same or with even a decreasing investment of capital. Such improvements, although products of capital, have the same effect as the natural differences of quality of the land.
We see, then, that an element must be considered in the case of differential rent No. II, which does not appear in differential rent No. I as such, since this last rent may continue independently of any change in the normal investment of capital per acre. It is on one hand the obliteration of the results of different investments of capital upon the regulating soil A, the product of which now appears simply as a normal average product per acre. It is on the other hand the change in the average minimum, or in the average magnitude of invested capital per acre, so that this change presents itself as a quality of the soil. It is finally the difference in the manner of transforming surplus profit into the form of rent.
Table VI shows furthermore, compared with Tables I and II, that the grain has increased more than double as compared to I, and by 1 1/5 quarters as compared to II; while the money rent has doubled as compared to I, but has not changed as compared with II. It would have increased considerably, if (other conditions remaining the same) the additional capital
had been placed more upon the superior soils, or if the effects of the addition of capital to A had been less appreciable, so that the regulating average price of the quarter from A had stood higher.
If the increase of productivity by means of additional capital should produce different results upon different soils, it would cause a change in their differential rents.
At any rate we have demonstrated, that the rent per acre, for instance with a doubled capital, may not only be doubled, but more than doubled, while the price of production is falling in consequence of an increased rate of productivity of the additional capitals (as soon as the productivity grows at a greater rate than the advance of capital). But it may also fall, if the price of production should fall much lower as a result of a more rapid increase of productivity upon the soil A.
Let us assume that the additional investments of capital, for instance upon B and C, do not increase the productivity as much as they do upon A, so that the proportional differences would decrease for B and C, and the increase of the product did not make up for the fall in price, then, compared to Table II, the rent upon D would rise, and would fall upon B and C:
Finally, the money rent would rise, if more additional capital were invested upon the superior soils under the same proportional increase of fertility than upon A, or if the additional investments of capital upon the superior soils worked with an increasing rate of productivity. In both cases the differences would increase.
The money rent falls, when the improvement due to additional
investments of capital which reduces the differences all over, or in part, affects A more than B and C. It falls so much the more, the less the productivity of the superior soils increases. It depends upon the proportion of inequality in the effects, whether the grain rent shall rise, fall, or remain stationary.
The money rent rises, and so does the grain rent, assuming the proportional difference in the additional fertility of the different soils to remain unaltered, when more capital is added to the rent paying soils than to the rentless soil A, and more capital placed upon the soils with high than those with low rents, or when the fertility, assuming the same additional capital to be used, increases more upon the better and best soils than upon A, and at that in proportion as this increase in fertility is greater upon the better classes of soil than upon the lesser ones.
But under all circumstances the rent rises relatively, when the increased productive power is a result of an addition of capital, and not merely a result of increased fertility with an unaltered investment of capital. This is the absolute point of view, which shows that here, as in former cases, the rent and the increased rent per acre (as in the case of differential rent I upon the entire cultivated area—the amount of the average rental) are a result of an increased investment of capital in the soil, no matter whether this capital does its work with a constant rate of productivity at constant or decreasing prices, or with a decreasing rate of productivity at constant or falling prices, or with an increasing rate of productivity at falling prices. For our assumption of a constant price with a constant, falling, or rising rate of productivity of the additional capitals, and of a falling price with a constant, falling, or rising rate of productivity, resolves itself into a constant rate of productivity of the additional capital at constant or falling prices, a falling rate of productivity at constant or falling prices, and a rising rate of productivity at constant and falling prices. Although the rent may remain stationary or may fall in all these cases, it would fall more, if the additional investment of capital, other circumstances
remaining the same; were not a prerequisite of an increased fertility. An addition of capital, then, is always the cause of the relative magnitude of this rent, although it may have decreased absolutely.
Part VI, Chapter XLV.