harvey d - land rent and the transition to the capitalist mode of production

8/22/2019 Harvey D - Land Rent and the Transition to the Capitalist Mode of Production

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Land Rent and the Transition to the Capitalist Mode of ProductionDavid Harvey

Johns Hopkins University

Th e social interpretation to be put up on land rent st il lremains a matter of controversy in the M arxist l i terature.Theoretical diff icult ies ar ise because i t is hard to explaina payment made to land (as opposed to the improvem entsembedded in the land th rough hum an labor ) on the basisof a theory of value in which h uman labor is key. In addi-t ion, any solution proferred to this theoretical conun-drum must be robust enough to hand le a wide diversity ofmaterial circumstances - the payments made tolandlords by poor peasants hungry for land, oil richpotentates seeking prestigious penthouses in the worldscapital cit ies, industr ialists seeking adequ ate si tes for pro-duction, builders seeking land for deve lopment, m igrantsseeking room and board in the city, etc. The despairgenerated in the face of such diff icult ies has led some,such as P ierre-Philippe Rey, to argue that rent has no realbasis within 2 capitalist mode of production an d that it can beinterpreted only as a relation of distribution whichreflects a relation of production of pre-capitalist modesof production (e.g. Feudalism) with which capitalism isarticulated.In what follows 1 shall conced e the validity of Reys in-terpretation for the phase of transit ion from pre-capitalist to capitalist modes of production. But I shalldispute his conclusion tha t there is no basis fo r rent undera purely capitalist mo de of product ion . I shall accept thatrent is a relation of distr ibution bu t, l ike other form s ofdistr ibution ( interest , taxes, profit o n merchants capital)the appropr ia t ion of ren t fo rms the basis fo r impor tan tcoordinating functions, in particular the shaping of landuses an d spatial configurations t o the requirements of ac-cumula t ion of capital and class reprodu ction. H owever, Ishall also argue that ser ious misinterpretations can ariseif we fail to distinguish between rent a ppropria ted off th ecirculation of capital and from the circulation ofrevenues. Marxs categories were fashioned exclusivelywith respect to the circulation of capital , whereas muchof the complexity we observe in practice (particularlythough not exclusively in u rban areas) ar ises as rents a reap p r o p r i a t ed f r o m th e c i r cu la t io n of revenues.One other point deserves consideration by way ofintroduction. Land has distinctive use values under anymode of p roduct ion . Under cap i ta l i sm, fo r example , i t

can function as an element, means, or condition oproduct ion , or simply be a reservoir of other use value(such as mine ral resources). Exactly how these use valueacquire polit ical-economic signif icance depends upon thkind of society we are dealing with and the k inds of actvit ies set in m otion. In agriculture, for example, the lanbecomes a mea:is of production in the sense that a producti on process literallv flows throug h the soil itself. I f thproduction process is organized by capitalists, then thsoil becomes the co nduit for th e f low of capital througproduction, therefore a form of f ixed capital (or lancapital as Marx sometimes called i t). Wh en factoriand houses are placed o n the land, then that land is useas a condition of production(space) , though for thbuilding industry that puts them there in the f irst placland appears as an element of production. Landem ands i ts tribute (as Marx puts i t) in all of these diferent senses, bu t we m ust always bear in mind that thform a nd social meaning of rent varies according t o thediverse forms of use.

1. RENT IN TRANSITIONAL SOCIAL FORMATIONSTh e social interpretation to be pu t o n rent varies frosociety to society an d undergoes a fundamental alteratiowith the transit ion f r o m o n e mo d e of production another . In each historical epoch, Marx writes, property has developed differently an d under a set of entiredifferent social relations (Poverty of Philosophy,154). We will be grossly in error if we interpret feudrents, or rents in the transit ional phase when landecapita l held sw ay, directly by reference to the role of rein advan ced capitalist society. Yet a knowledge of the later is indispensable to an interpretation of the formeFur thermore , i t is in the n ature of the transit ion to mertwo often quite antagonistic roles indistinguishably. Tdifficulty is, then, to keep the social interpretatiodistinct from each other while simultaneously undestanding how they can coexist within the same monepayment for the use of land. Only in this way can wundersta nd how one fo rm of rent is gradually convertinto th e other through a m aterial historical process.17


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Marx cons idered tha t money ren t on l and and i t s cor -o l l a ry , the fo rmat ion of l an d mark e t s , w as a precondi t ionfor the r i se of cap i t al i sm. L ike m erchan t s cap i t a l andusury , l anded cap i ta l p recedes the moder n s t and ard fo rmof capi tal . Th e lat ter ul t imately s ubju gate s these earlierfo rms and conver ts them to i t s own requ i rements . Th e ac-tual his tory of this process is strewn with complexitiesgenerated ou t of the cross-currents of class s t ruggle andthe diversity of initial condi t ions of l and t enure andownership. Marxs general vers ion of this history, basedon the Wes t European exper ience , can be d iv ided in totwo phases . In the f i rs t , feudal labor rents ( the source ofa surp lus p roduct ) a re t rans forme d in to ren t in k ind andfinally into a money payment , whi le land is increasinglyreleased from those constr aints which prevcnt i t beingfreely t raded as a co mmo d i t y . Fu r t h e rmo re , t h e co n v e r-s ion to money paym ents impl ies e i ther a volun tary o r fo r -cible integration of land users (part icularly agricul turalproducers) into s o me k i nd of general system of co mmo d i -ty p roduct ion a nd exchange .N o n e of this ensures , however, that rent assumes i tsmo dern , pure ly cap i ta l is t ic fo rm , thoroughly in tegra tedin to the c i rcu la t ion of cap i tal (and revenues). Al l kinds ofintermediate forms can arise and here Reys concept ionof complex ar t i cu la t ions of different modes of p ro -d u c t i o n , o n e u p o n the other , makes eminen t sense . Andwhen wh at M arx v iewed as an inevi t ab le , though l eng thy ,t ransi t ion i s b locked f o r an ex tended per iod , a s o f t en ap-pears t o be the case in thi rd-world peasant societ ies , thenReys interpretation is crucial to t he degree tha t i t shedsl igh t on th e mater i a l cond i tions an d c lass conf igura t ion san d al l iances that freeze the t ransi t ion in a half-way s tatebetween pre-capi tal is t and capi tal is t modes of produc-t i o n . N o n e of this implies , however, acceptance of Reysconclusion t h a t no social basis exists within a purelycapi tal is t mode of p ro d u c t i o n fo r t h e ap p ro p r i a t io n ofl and ren t . We wi l l show how tha t conclus ion can berefu ted in the next sec t ion . But fo r the mo me nt we wi llfol low Reys percept ive l ine of argument as i t app l i es t othe t ransi t ional phase.Under t rans i t ional cond i t ions l and lords can p lay adirect and act ive role in the exploi tat ion of l abor (as op-posed to the backseat , passive role which Marx assignedto t hem under cap i ta l i sm) . Th i s is as t rue fo r s l aveeconomies ( the Am er ican So uth p r io r to the Civ il War) asi t is fo r l and lord- peasan t sys tems of agr icu ltu ra l p rodu c-t ion in the present era. There is a direct incentive fo r theland lord to ex tr ac t t h e max i m u m of rent (whether in kindor in mo ney does no t immedia te ly concern us) , no t on lybecause th is maximizes the l and lords revenues, bu t a l sobecause the peasant is forced to w o rk h a rd e r an d h a rd e ran d p ro d u ce mo re a n d mo re co mmo d i t i e s f o r t h e mark e tat ever lower prices (given the increase in supply). Themassive exploi tat ion of a ru ra l peasan t ry by a l and lordclass is , from this s tan dpoi nt , perfect ly consis tent wi th in-dustr ial capi tal ism all of t he t ime i t p rov ides cheap foodfor workers and cheap raw mater i a l s fo r indus t ry . Andeven i f the peasan t s nominal ly ow n the ir o wn land ( thereis no overt landlord class) , indebtedness at usurious in-terest rates a nd th e obl igat ion to pay t axes to th e s t a t e canhave the sam e ef fec t. I t i s no t hard t o see how a powerfu lal l iance of classes - ompri s ing l andown ers , indus t r ia lbourgeo i s i e , money l enders , backed by the s t a t e - an

for m a nd b lock a ny ful l t ran si t ion to capi tal ist social relat io n s o n t h e l an d .Bu t s u ch a f o r m of exploitation, l ike absolute surpluvalue (of which i t i s a bastard form) has negat ive sociaconsequences and inherent l imits . Firs t ly , the extract ioof a f ixed mo ney pay me nt fr om basical ly subsis tence producers may d imin i sh the supp ly of commodities wheprices r ise because producers have to sell less to reach f ixed money goal . Pr i ces con t inue to r ise as a consequence . When pr i ces go down, on the o ther handpeasan t s have to se ll mo re an d so increase the supply it he face of fal l ing prices . Price movem ents an d commodty suppl ies do no t , und er such condi t ions, integrate at awel l wi th the general dynamic of accumulat ion. Thadyn am ic, secondly, invariably requires an expansion ooutpu t which , wi th a f ixed techno logy of peasant product ion, means increasing rates of exploi tat ion. And as exploi tat ion increases so d o the condi t ions for revolut ionary movements r ipen. Even in the absence of sucresis tance, there is an absolute l imit to this kind of absolute exploi tat ion. At some point the product ive forceon the l and have to be revolut ionized to accommodatthe expanding demands of capitalism. We then discovetha t the t rans i t ional fo rms of organization inhibit thdevelopment of the social product ive forces of labousocia l fo rms of labour, social concentrat ion of capit. . . and the progressive appl icat ion of science (CapilaVolume 3, p. 807). New product ive forces have to bdep loyed and tha t means open ing up the l and lo the freflow of capi tal .This brings us to t he second pha se of Marxs version othe t ransi t ion to capi talis t form s of rental appropriat ionCapi t a l an d l abor m us t confron t each o ther on the lanf ree f rom any d i rec t in ter ference of the landlord clasThe l and lord mus t be reduced to a purely passive figurTh e class al l iance between an industr ial bourgeois ie andlandlord class breaks down and antagonis t ic relat ionarise between th em , unt i l such t ime a s the lat ter class et ire ly d i sappea rs as a coherent force in society. A nd all this must happen because this is the only way, undecapi tal ism, for product ive forces to be revolutionized othe la nd i tsel f .W e can und ers tand th i s t rans it ion f rom the s t andpoiof the landlord in the fol lowing way. The landlord cad o mi n a t e a peasantry t ied to t h e l an d an d has everythito gain from maximizing the extract ion of rent. But tlandlord cannot s imilarly compel the capi tal is t to inveand therefore has muc h t o lose f ro m m aximiz ing the et rac t ion o f ren t f rom the cap i t a li s t. The power of landproper ty then ac t s as a barrier to t he f ree f low of capion to the l and an d inh ib i ts the development of the produt ive forces . T he possibi l ity exis ts, however, for a terraof compromise be tween l andowner and cap i t a l i s t . Tuse value of land to the capi tal is t i s as an eleme nt , meaor condi t ion of product ion which , when worked onlab or, produces surplus value. T he capi tal is t i s concernwith rent in relat ion to su rplus value produced. Tland lord , on the o ther hand , i s concerned wi th the reper acre. Under condi t ions of st ron g capi tal f low onto tland , the rent per acre can r ise while the rent as a portiof surplus value produced decl ines (cf . Capital, Volum3, p. 683). Under these cond i t ions , the l and lord heverything to gain by lower ing the bar r i e r which l an18


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ed p roper ty p laces to t he f low of cap i t a l . Th i s was , ofcourse, the basis of t he compromise tha t ex i s t ed inEngland du r ing the per iod of h igh farming , 1850-73 .The re la t ionsh ip be tween cap i t a l and l anded p roper tyis not reduced thereby to one of p e rp e t u a l h a rmo n y . I t iso f t en h a rd to di s tingu ish , fo r e xamp le , be tween pea san tproducers and smal l -scale capi tal is t Droducers . whi lel and lords may not be sophis t icated enough to ap p rec i a t ethe long-term gain to t hem of t he sh i f t f rom rack-ren t ingpeasants to seducing capi tal is ts to invest . Also, to thedegree tha t the expans ion of social labor st imulates thedem and fo r l and i tse l f , l anded p roper ty acqu ires thecapaci ty of cap tur ing an ever - increas ing por t ion ofsurplus valuc (Cupilal, Volum e 3, pp. 637-9). Blessed withsuch an oppor tun i ty , what l and lord cou ld res i s t ex -ploi t ing i t? The landlord is perpetual ly caught betweenthe evident fool ishness of ex t rac t ing too l i t t l e f romcapi ta l a nd the penal ti es which accrue f ro m t ry ing to t ak etoo much . And there are , in add i t ion , all kinds of institu-tional problems relat ing to p e rman en t i mp ro v emen t s ,t enancy cond i t ions , l eas ing ar rangements , and the l ike ,which are the focus of interminable s t ruggles betweencapi tal is t and landlord. Like contractual issues whicharise between capi tal an d labo r, these inst i tut ional ar -rangements a re u l t imately regu la ted th r ough the s t a t e .

Marx evident ly did not feel too secure in his rendi t ionof how the capi talis t fo rm of p r iv a te p ro p e r t y came t o b e .He was l a t er to cla im tha t he had mere ly sought to t rac ethe path by which, in Western Europe, the capi tal is teconomic sys tem emerged f rom the womb of t he feudaleco no mi c s y s tem an d h e a t t a ck ed t h o s e w h o t r an s fo rm-ed his his torical sketch of the genesis of capi tal ism intoan his torico-phi losophical theory of t he genera l pa th ofdevelopme nt prescribed by fa te to all nat ions , whateverthe h i s to ri ca l c i rcu mstance s in which they f indthemselves (Selecled Corresponder~ce, p. 3 12-3 13). Hi sstudies of the evolut ion of l anded p roper ty in t he co lon iesand the Uni ted Sta tes , as wel l as Russ ia , conv inced h imthat the t ransi t ion was not uni l inear. Even in WesternEu rop e considerable variat ion exis ted in part because ofres idual fea tu res dragged over in to modern t imes f romt h e n a t u r a l e co n o my o f t he Midd le Ages bu t a l sobecause of t he uneven penet ra t ion of capi tal is t relat ionsunder his torical ci rcumstances showing infini te varia-t i o n s an d g r ad a t i o n s i n ap p ea ran ce w h i ch d eman dcarefu l empi r i ca l s tudy (Capita,, Volum e 3 , pp . 787-93) .Under such cond i t ions even the nea tness of t he two-phasetransi t ion breaks down. We almost certainly wil l f indrad ica l ly d i f fere n t fo rm s of ren ta l appropr ia t ion s ide byside.Proper ly used , Marxs f ramew ork can p rov ide m anyinsights . For example, in a careful reconstruct ion of t h ehistorical record of ren ta l appropr ia t ion in the So i ssonai sdistrict of France, Postel -Vinay shows that over the las ttwo cen tur i es l arge sca le farm ers work ing the be t t e r l andhave consis tent ly paid about half the rent per acre ex-t racted from small peasant prop rietor s working inferiorsoils. In Reys eyes this makes a mockery of both Marx-ian and neo-classical views of different ial rent (supposed-ly extracted f rom lan ds with superior product ivi ty) andconfirms his view that rent can be understood only a s afeudal relat ion 01 product ion perpetuated as a capitalistrelat ion oldis t r ibut ion through a process of articulation.

Rey is only partially right in all of this. If my reading oMarx is cor rec t , t hen the sup er io r ren ts pa id by peasan tis a reflection of a l and lord- l abo r re l a tion as opposed tt he l and lord-cap i t a l re l a t ion found on the be t t e r l andsT w o different social relat ionships co-exis t within thsam e region f or tw o centuries. Yet ren t is stil l paid bcapi tal is ts according to a logic that h as nothing to d o w i tthe ar t i cu la t ion of feudal and capi tal is t modes of produci ton. Reys depict ion of condi t ions during the t ranst ion ( including blocked t ransi t ions which freeze socire la t ions on the l and in to l and lord- l aborer pa t t e rns ) qu i t e appropr ia te . Bu t he is way off target when hasserts that this is the only form that rent can take undecapi tal ism. To back u p th is a rgum ent we have to considethe soc ia l in terp re ta t ion to be pu t o n the payment of lanren t under a purely capi tal is t mode of p ro d u c t i o n .2. RENT AND THE CIRCULATION OCAPITALT h e m o n o p o l y of private property in land is both ahis torical premise a nd a cont inuing basis f or thcap i t a l i s t mode of p ro d u c t i o n (Capital, Volume 3 , p617). But Marxs interpretat ion of t he ro le of rent undecap i t a l i sm poses var ious conundrums . How can raland, not i tsel f a p ro d u c t of human l abor , have a p r i c( the appearance i f not the real i ty of value)? How canbe , fu r th erm ore , tha t l and lord s sudden ly appear asthird major class r ight at t h e en d of an analysis whicrests on a two-class interpretat ion of cap i ta l i sm? M arx ,what a re admi t ted ly p rep ara to ry wr i t ings , makseemingly diametrical ly opposed s tatements on succrucia l mat t ers . On the one hand he charac ter i zes thvalue of l and as a totally i rrat ional expre ssion, which cahave no meaning under pure capi tal is t social relat ionwhi le on the o ther he a l so charac ter i zes g round ren t tha t fo rm in which p roper ly in l and . . . producevalue (Cupi/al, Volume 3, pp. 830-5; 618). I n Tlieoriof Surplus Value (Part 2, p. 152) he asserts that i f thdom ina nt class relat ion is between capi tal an d labor, theth e ci rcum stances under which the capi tal is t in turn hto s h a r e a p a r t of th e . . . surplus-value which he has catu red wi th a t h i rd , non-work ing person , a re o n l ysecondary impor tance , whereas i n Cap i / a / (Volume p. 618) he discusses how wage labo urer s , industricap i ta l i s ts , and l andow ners cons t itu te together in themu t u a l o p p o s i t i o n , t h e f r amew o rk of modern society.

W e h a v e to ma k e s en se of all t h is s o meh o w . W e h at o fo l l o w Marx an d t r y an d co n s t ru c t a scientifanalysis of g ro u n d - r en t, of t he independen t anspeci f ic econom ic fo rm of l anded p ro per ty on the bas i sthe cap i t a l is t mo de of product ion in i ts pure fo rm f rof all distort ing and obfuscat ing i rrelevancies (CapitVolume 3 , p. 624). Let us m ake four bas ic assumptions this end. Firs t , all t ransi t ional features (feudal res iduahave been e l iminated . Secondly , tha t the ren t on l and cbe clearly dis t inguished from all payments fo r comodi t i es embodied in the l and ( l and improvementbu i ldings , e t c. which are the p ro duct of human l aboThi rd ly , tha t the c i rcu la t ion of capital can be cleard i s tingu i shed f ro m the c i rcu la t ion of revenues (we taup the lat ter topic in the next sect ion). And, f inal la s s u me l an d h as a u se v a l u e a s an element, means o r codition of production ( r a t h e r t h an co n s u mp t i o n ) . W e a19


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then in a position to analyze land rent directly in relationto the circulation of capital.The best synoptic statement Marx provides of thecontinuing basis for land rent under capitalism is thefollowing:Landed property has nothing to do with the actual processof production. It s role is confined to transferring a portionof the produced surplus value from the pockets of capital toits own. However, the landlord plays a role in the capitalistprocess of production not merely through the pressure heexerts upon capital, nor merely because large landed pro-perty is a prerequisite and condition of capitalist produc-tion since t is a prerequisite and condition of the expropria-tion of t h e labourer from the meansof production, but par-ticularly because he appears as the personificationof one ofthe most essential conditions of production (Capital,Volume 3 , p. 821).

From this we can distinguish three distinctive roles.The expropriation of the laborer off the land was vital inthe stage of primitive accumulation precisely because theland can always be used as a means of production. Iflabor is to be kept as wage labor, then the laborer has tobe denied free access to the land. F rom this standpoint wecan see the barrier which landed property puts betweenlabor and the land as socially necessary to the perpetua-tion of capitalism. This function could just as well be per-formed, however, if the land became state property, thecommon property of the bourgeois class, of capital. Theproblem here is that many members of the bourgeoisie(including capitalists) are landowners, while an attackupon one form of property ... might cast considerabledoubt on the other form (Theories of Surplus Value,Part 2, pp. 44; 104). From this standpoint, rent can beregarded as a side-payment allowed to landowners topreserve the sanctity and inviolability of private propertyin general and private ownership of the means of produc-tion in particular. This ideological, juridical and politicalaspect to landed property is exceedingly important butnot in itself sufficient to explain the capitalist forms ofrent. The third role of private property, which turns outto be the most elusive to pin down firmly, is crucial,therefore, to the social interpretation of land rent undercapitalism.

The key to the interpretation of the role of landedproperty under capitalism lies in the pressure i t assertsupon the capitalist. The nature of the pressure varies ac-cording to the kind of rent extracted. Monopoly and ab-solute rents interfere with accumulation and arise only tothe degree that landed property acts as a barrier to thefree flow of capital. Absolute rent, Marx asserts, musteventually disappear (Capilal, Volume 3, p. 765;Theories of Surplus Value, Part 2, pp. 244; 393). Andmonopoly rents, to some degree unavoidable particularlyin urban areas and on land of special qualities (includinglocation), must be kept to a minimum. Absolute andmonopoly rents are not the important categories. Thisconclusion runs counter to Marxs often-quoted asser-tions concerning the importance of absolute rent (seeSelecled Corresporiderice, p. 134) but is consistent withthe brief treatments he accords these concepts in Capiialand Theories of Surplus Value compared to the pageafter page given over to wrestling with the nature of dif-ferential rents. I therefore follow Fine in thinking that

Marxs views on differential rent, particularly those partially worked out in Capital, are quite distinct from thosof Ricardo and provide the clue to the true interpretationto be put upon land rent in relation to the circulation ocapital.Marx follows Ricardo in distinguishing between twokinds of differential rent, but innovates by analyzing howthe two forms of rent relate and serve simultaneously alimits for one another (Capital, Volume 3 , p. 737)Marxs insights are hard to recuperate from chapters f uof convoluted argument and elaborate arithmetic calculations. I shall simply summarize the most importanfeatures.Differential rent of the first type (DR-I) arises becausproducers on superior soils or in superior locationreceive excess profits relative to production costs on thworst land in the worst locations. Superior soil and location, like superior technology, are indeed a source orelative surplus value to individual producers (which explains why all of them can appear as productive ovalue). But unlike superior technology, superior loctions and soils can form relatively permanent sources oexcess profits. If the latter are taxed a w a y as rent, thprofit rate is equalized across different soils and locations. Capitalists can then compete with each other onlthrough adoption of superior techniques. Which pushethe capitalist system back onto its central track of lookinto revolutions in the productive forces as the means to isalvation. The extraction of DR-I has a vital social function in relation to the dynamics of capital accumulationWithout it, some producers could sit complacently on thexcess profits conferred by natural or locationaladvantages and fail i n their mission to revolutionize thproductive forces on the land.This conception of DR-I, essentially no different fromthat of Ricardo, has to be modified in three importanrespects. First, trade-offs can exist between fertility anlocation so that the worst land has to be understood aa combination of characteristics. Secondly, both fertiliand location are social appraisals and subject tmodification either directly (through soil exhaustionimprovement, changing transport facilities, etc.) or indirectly (through changing techniques of productiowhich have different land or locational requirementsThe excess profits from superior soils or locations apermanent only in relation to changing appraisals. Thirly, DR-1 depends upon a normal flow of capital inproduction on the land. And when we switch to considwhat constitutes that normal flow of capital onto thland we immediately encounter the problem of the seond kind of differential rent (DR-2). The immediaimplication is that DR-I depends crucially on capitflows which automatically generate DR-2.

Imagine a situation in whcih no advantages due location or fertility existed. Differentials in productivion the land would then be due solely to the differequantities of capital invested (assuming some patternreturns to scale). Excess profits in this case are entiredue to the investment of capital. Conversion of these ecess profits into DR-2 will simply check the flowcapital onto the land except under two particular condtions. First, if the investments embed relatively permnent productive forces in the land then the flow of capi2o


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leaves behind a residue of improvements which form thebasis for the appropriation of DR-1. Such residues (in theform of drained and cleared land, and other forms ofland improvement) are widespread and of great im-portance. Secondly, the appropriation of DR-2 directlycan, under the right circumstances, prevent the flow ofcapital down channels which might be productive of pro-fit for the individual capitalist but which would have anegative impact upon the aggregate growth in surplusvalue production. We here encounter a classic situation inwhich individuals, left to their own devices and coercedby competition, would engage in investment strategieswhich would undermine the conditions for the reproduc-tion of capitalist class as a whole. Under such conditionsthe external discipline imposed by landowners, like theexternal discipline exercised through the credit system,has a potentially positive effect in relation to thestabilization of accumulation. The emphasis, however,has to be upon the potentiality of this result becausewhat Marxs tedious arithmetic examples appear to showis that the appropri ation of DR-2 can exercise a negative,neutral or positive pressure upon the accumulation ofcapital depending upon the circumstance. Furthermore,the flow of capital onto the land also depends upongeneral conditions of accumulation - plethora ofcapital in general or particular conditions prevailingwithin the credit system have direct implications for theflow of capital on to the land (Capital,Volume 3 pp. 770;676).Now combine the interpretations of DR-I and DR-2.We will be seriously in error, as Fine points ou t, if wetreat the two forms of rent as separate and additive. In-sofar as DR-I depends on a social appraisal of naturaland locational advantage it depends upon capital flowswhich often modify nature in crucial ways. The ap-propriation of DR-2, for its part, could not occur withoutDR-I as its basis. The two forms of differential rent in ef-fect merge to the point where what is due to land (withthe aim of equalizing the rate of profit and keeping theimpulsion to revolutionize the productive forces engaged)and what is due to capital (with the aim of keeping theflow of capital into revolutioninzing the productiveforces on the land at a level consistent with sustained ac-cumulation) is rendered opaque. In other words, the ap-propriation of rent internalizes contradictory functions.The permanent tension between landed property andcapitalists within a purely capitalistic mode of productionis a reflection of this contradiction. Furthermore, to thedegree that rental appropriation can have negative,neutral or positive effects in relation t o accumulation, thesocial relations which arise in response to this contradic-tion can have a powerful effect upon the allocation ofcapital to land, the whole structure of spatial organiza-tion, a nd, hence, upon the overall dynamic of accumula-tion. In order to explore these contradictions and their ef-fects, however, we must first establish the form thatprivate property in land must assume if it is to be in-tegrated within a purely capitalist mode of production,

The conclusion to which Marx points, without fullexplication, is that land must be treated as a pure finan-cial asset and that land has to become a form of fic-titious capital. This conclusion calls for some explana-tion. Fictitious capital amounts t o a property right

over some future revenue. Stocks and shares, fo r example, can be sold before any actual production takes placeThe buyers trade their money in return for a share of thfruits of future labor. Insofar as the money is used to selabor in motion (or create conditions, such as physicainfrastructures, to enhance the productivity of socialabor), then the fictitious capital stands to be realizedEven under the best conditions, fictitious capital entailspeculation and under the worst it provides abundanopportunity for fraud and devaluation. Capitalism coulnot function, however, without the large scale creatioand movement of fictitious forms of capital via the credsystem and capital markets. Only in this way can capitbe shifted rapidly from unprofitable t o profitable sectoand regions, new lines of activity opened up, centralization of capitals be achieved, etc. The credit system(capital markets in particular) becomes the central nevous system for the coordination of accumulation. I t alsbecomes the central locus of all capitalisms internal contradictions. Crises always appear, in the first instancetherefore, as financial and monetary crises.Once the significance of fictitious forms of capital iestablished, we can see how it is that property rights oveany form of future revenue might be bought and tradedGovernment debt (a right to a share of future taxes) anmortgages on land (a right to future rents) and propert(a right to amortization payments) all stand to be freeltraded. In the case of land, what is bought and sold is thtitle to the ground rent yielded by it. That ground renwhen capitalized at the going rate of interest, yields thland price. Hence arises an intimate relationship betweerent and interest. The money laid out by the buyer of lanis equivalent to an interest-bearing investment, a claimupon the future fruits of labor. Title to land becomes form of fictitious capital, in principle no different fromstocks and shares, government bonds, etc. (although has certain qualities of security, illiquidity, etc.). Land, ishort, can be regarded as a pure financial asset. This ithe condition, I argue, which dictates the pure form olanded property under capitalism.The theory of ground rent tells us that landownershould ruthlessly appropriate all excess profits due trelatively permanent advantages of fertility or locatio(no matter whether the product of capital or not). Anticipated future excess profits (due to future capital flowand future labor) affect the price of land in the present insofar as land becomes a pure financial asset, a form ofictitious capital. Marx excluded such speculative activitfrom his purview (except in a few rare instances, e.gCapital, Volume 3 , pp. 774-6) and was therefore contento view landownership as an entirely passive functionBut land markets, like capital markets, play a vital coodinating role in the allocation of future capital and laboto the land. Landowners leave behind their passivstances and can play an active role in the creation of conditions which permit enhanced future rents to be appropriated. In so doing, of course, they condemn futurlabor to ever-increasing levels of exploitation in the namof the land itself. But they also play a vital role in relatioto accumulation.Landowners can coerce or cooperate with capital to ensure the creation of enhanced ground rents in the futurBy perpetually striving to put the land under its highes21


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and best use, they create a sorting device which siftsland uses and forces allocations of capital and labor thatmight not otherwise occur. They also inject a fluidity anddynamism into the use of land which would otherwise behard to generate and so adjust the use of land t o social re-quirements. They thereby shape the geographical struc-ture of production, exchange and consumption, thetechnical and social division of labor in space, the socio-economic spaces of reproduction, and invariably exert apowerful influence over investment in physical infra-structures (particularly transportation). They typicallycompete for that particular pattern of development, thatparticular bundle of investments and activities, which hasthe best prospect for enhancing future rents. In this way,as Marx puts it, rent, instead of binding man to nature,merely bound the exploitation of the land tocompetition (Poverfyof Philosophy, p, 159).We can now bring the argument full circle. Not only isth L qppropriation of rent socially necessary undercapitalism by virtue of the key coordinating functions itperforms, but landowners must also treat the land as apure financial asset, a form of fictitious capital, and seek,thereby, an active role in coordinating the flow of capitalonto and through the land. The effect is to free up theland to the circulation of interest-bearing capital and tieland markets and land uses into the general circulationprocess of capital.But by the same token, the more open the land marketis, the more recklessly can surplus money capital buildpyramids of debt claims and seek to realize these claimsthrough the pillaging and destruction of the land itself.Investment in appropriation, so necessary if the landmarket is to perform its vital coordinating funcitons,simultaneously opens up the land to all manner of in-sane forms let loose within the credit system in general.What appears as a sane and sober device for coordinatingthe use of land to surplus value production and realiza-tion, can all too easily dissolve i n t o a nightmare of in -coherency and periodic orgies of insane speculation.Here, as elsewhere, the only ultimate form of rationalityto which capitalism responds is the irrationality of crisis.We can, at this point, rest our case, There is, contraryto Reys assertion, a form of landownership and landrent which fully integrates with the circulation of capital.Land markets, like capital markets, do not produce valuein the primary sense, but they play a vital role in coor-dinating the application of social labor. Capitalism sim-ply would not work without them. And land marketscould not exist without land rent, the appropriation ofexcess profit from capital. The crisis-prone character ofcapitalism is, of course, carried over and even heightenedwithin the credit system as well as within land markets.The detailed study of the specific form these internal con-tradictions take within land markets is an urgent matter.Yet all of this requires that land be treated as a purefinancial asset, a form of fictitious cap ital. This requiresthat the power of an distinct class of landowners be bro-ken, that ownership of land become from all standpoints(including psychological) simply a matter of choosing whatkinds of assets to include in a general portfolio of in-vestments. And this, of course, is increasingly how pen-sion funds, insurance companies and even private indi-viduals tend to view land investment. This is not to saythat in practice all traditional forms of landownership 22

have disappeared in the advanced capitalist world. But iis interesting to note that land has for long beendominantly viewed as a pure financial asset in the UnitedStates (the country least hindered by feudal residualsand that the direction of the transition in countries suchas Britain has been very much towards the acceptance oland as a form of fictitious capital. The point, of courseis that these forms of landownership (and the social attitudes they generate) are entirely consistent with the circulation of capital, at the same time as they are fully expressive of the internal contradictions within that circulation process.3. RENT AND TH E CIRCULATION OFREVENUESWithin a purely capitalist mode of production, alforms of revenue - ages, profit of enterprise, interesttaxes, rent, etc. - ave their origin in the production ovalue and surplus value. But, once distributed, revenueare free to circulate in a variety of ways thereby creatinopportunities for various secondary forms of exploita

tion, including rental appropriation. Rents cantherefo re, just as easily be appropriated from the circulation of revenues as from the circulation of capital itselfLandlords ar e presumably indifferent as to the immediatorigin of the rental payment. They are satisfied as long athe rent keeps rolling in. But the theoretical distinctionare of interest because circumstances often arise, particularly though not exclusively in urban areas, where itimpossible to understand the social meaning of rentapayments without taking account of the circulation orevenues. The intricacy of the circulation of revenuemust first be established in order to illustrate the argument.


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The total wage bill in society, the share of variablecapital in the total product, is fixed by an intersectionbetween the requirements of accumulation and the re-quirements for the reproduction of la bor power of a cer-tain sort at a given standard of living (affected byhistorical , moral, a nd class struggle considerations) . Theprinciples of wage rate d eterm ination are intr icate in theirdetails and different factions of the proletariat receivemore or less of their aliquot share of the total wage bil laccording to their reproduction needs and their gainsthrough class struggle. Money wages are highly differen-tiated as a result. C apitalis ts, furthe rm ore, do not nor-mally discriminate as to the individual needs of theirworkers and pay them the going rate for the job. But in-dividual worker needs vary enormou sly, depending upo nfamily status, age, health, an d, of course, tastes and fan-cies (which are just as much a part of working classculture as they are f or the bourgeoisie). O n a given day,therefore, some workers will possess money surpluseswhile others will be unable to meet their needs. Underthese conditions we can expect a variety of money t ran-sactions within the working class. These m oney transac-tions amo unt to a circulation of revenues- n this case, aredistribution of wage payments.The money transactions can be of two basic types.First , payments for services rendered (baby-sitting,mending, washing, cleaning, etc.) . Seco nd, workers mayborrow an d lend to each other , sometimes at a rate of in-terest . The early benefit societies, savings and loanassociations, building societies, etc., were simply at-tempts to institutionalize means to circulate revenueswithin the working class. The extent of such circulationvaries, but i t can be quite massive. The social securitysystem, for examp le, is simply a trans fer from those nowworking to those now retired, in return fo r a claim on thewages of those employed in the future. Social securitysimply socialized the circulation of revenues within theworking class and had nothing necessarily to do wi thsocializing the circulation of capital .Revenues can also circulate amongst various factionsof the bourgeoisie. Units in surplus can lend to those inneed (whether from want or fancy does not concern us).Services can be rendered fr om on e segment of thebourgeoisie to another a nd in t rica te pa t te rns of lendingcan also ar ise (read any tale of Balzac an d D ickens to getsome sense of the importance, socially, of this form ofthe circulation of revenues) . The bourgeoisie may hireworkers at a going wage to render the kinds of servicetha t tas te , fash ion , custom, fancy , and income d ic ta te .The cook , the valet a nd gardener are pa id ou t of the cir-

culation of revenues and not directly out of the circula-tion of capital . In this way, revenues can circulate be-tween the social classes. Work ers ma y likewise pay, o r beforced to pay, for services rendered by the bourgeoisis( legal, adm inistrative, etc.) . They m ay also pay la ndlordsfor the r ight to occup y space.The circulation of revenues is, evidently, both intricatein i ts detail and m assive in scale. Much of the detail ofwhat happens in bourgeois society has to be understoodin relation to i t . We will be seriously in erro r i f we seek toexplain that detail by reference to Marxs theory of thedynamics of the circulation of capital . Let us clarify thisargument .

The circulation of revenues necessarily integrates witthe circulation of capital at certain well-defined pointUnder capitalism, all revenues have their origin in valuand surp lus va lue product ion and u l timately re turn to thcirculation of capital through the purchase of commodities. I f this aggregate relation does not hold then thcirculation of capital would fail . Marx was suff icientimpressed with this requirement that he felt he could aford to relegate the redistr ibutions achieved throug h thcirculation of revenues to the background . In o rder to eamine the general dynamics of accumulation, i t wpossible to rely upon simple aggregates. He was nwrong in proceeding thus. W e simply must be careful nto ex tend his theoretical f indings to dom ains which he eplicity excluded from consideration.A cursory look a t what happens in the dom ain of thcirculation of revenues provides interesting insights. Foexample, to the degree that the speed of circulation ocapital is vital to sustaining accumulation, extendewanderings of money through the circulation of revenueappears undesirable. In other words, t ime taken irevenue circulation is t ime lost from the stand point of thcirculation of capital . But we can then see that the circulation of revenues also performs important functionIn particular , i t helps diminish voluntary and involuntarhoarding. If , for example, houses had to be bought focash, and this was the only way in which the need foshelter could be satisf ied, then the demand for housinwould be held in check (and an important field of operation for capital constrained) and vast sums of monewould be locked up as purchasers saved to buy thehouses ( the circulation of m oney as capital would also bheld in check). Such a disasterous si tuation from thstan dpo int of accu mu lation can be relieved either by rening or by a credit system which allows individuals isurplus to lend to those in need. In bo th cases the circult ion of revenues is facil i tated, hoards are thereby reduced, a nd the free circulation of capital maximized. Ainadequate structure for the circulation of revenues catherefore act as a barr ier to the circulation of capitaState policy, particularly in i ts welfare aspects, has oftebeen dedicated to creating more eff icient structures fothe circulation of revenues in relation to the circulation ocap i ta l . There is, in this, a certain convenience becausthe politics of the situation often lend themselves to exactly those reform s which ap pea r to satisfy workers needby rationalizing the circulation of revenues while leavinthe circulation of capital if anything enhanced rathethan d imin ished .Th e p r o b lem, of course, is that both the circulation o

revenues an d of capital occur as money transactions. I tnot always easy to separate the two conceptually (hencthe e laborate discussion over the distinction between productive and unproductive labor) and in daily l ife thdistinction often disappears entirely. This is particularltrue with respect to transactions within the credit systemIf workers can lend to other workers at a rate of interethen why cant they also lend to cap italists, particularlythe rate of interest is higher? And if workers borrowthen what is to stop th e r ise of usurious practices withithe working class, or the penetration of capitalist lendininto working class consu mption ? Such phenomena are ideed observable and create antagonistic relations 23


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cross-purposes to the primary forms of exploitationwhich Marx dwells upon at such length.The problem arises here because the distinction bet-ween workers and capitalists is obscured within the creditsystem where the primary relation is between lenders andborrowers, debtors and creditors, of whatever sort.Distinctions can arise, of course, which relate back to thefundamental class position of those involved (it would besurprising if the credit system was organized solelyto benefit workers, as opposed to capitalists). And ,furthermore, the rule that the circulation of revenuesmust accord somehow with the circulation of capitalmust always be observed. But the trap lies in thesomehow because it turns out that there are allmanner of diverse arrangements and roles which arisewithin the field of revenue circulation that give rise to allmanner of secondary forms of exploitation.Consider, now, how this relates to the interpretation ofrent. Any agent who controls land is in a position to usethat land as a pure financial asset, to speculate in landprice and to appropriate rent. If workers own small plotsof land and the property thereon, they can just as wellplay this game as anyone else. Indeed, petty land and pro-perty trading or renting has been a prime means for up-ward mobility within the working class and the pettitbourgeoisie for centuries. And i t continues to be of greatsocial importance. Workers are notoriously protective ofthe housing they own as an investment and can even tradei t for financial advantage if need be. It is a myth that theworking class is only interested in the use value of thehousing i t occupies. The same is true of transitional socialformations. If money is social power and land some formof financial asset, then the trading and renting of landplots and the consolidation of land ownership and con-t r o l , becomes a critical feature to the creation of newpower relations. Individuals and groups may try to takeadvantage of such possibilities to better their position insociety. This is as true for pioneer settlers as it is for theworking class homeowner, for squatter settlers and tradi-tional peasants.Rent is not only appropriated from capitalists. It canbe levied from workers, other members of the bourgeoisie(financiers, professionals, retired businessmen, otherlandlords, etc.), as well as from the state, cultural,religious and educational organizations, etc. Rent can beappropriated off the circulation of revenues of a l l sorts.We can hardly use Marxs categories (which deal solelywith the circulation of capital) to explain the rent paid bycompany executives for penthouses in Paris or London,the rent paid by rich retirees in Florida, etc. Yet we haveto find some way to see through the crazy patchworkquilt of social relations which arise out of such forms ofrental appropriation.Marxs analysis is helpful in two respects. First of all, i tindicates that there must be some sort of aggregate rela-tionship between the circulation of capital and rental ap-propriation. At its simplest we could argue that if allsurplus value was appropriated as rent then there wouldbe no room for accumulation of capital. Unfortunatelyeven that simple identity breaks down if we conceive ofrental appropria tion as a mere moment in the circula-tion of revenues. Landlords may receive a large portionof surplus value but they, in turn, spend the money they 24

receive on goods and services. In the end it is the continuous flow of money that is important. This view ovalue in motion is vital to Marxs conception ocapital and properly carries over to the study of the circulation of revenues. We must think, therefore, of thratio between two f lows- f revenue and capital - ndtry to situate rent as a social relation of momentary appropriation from both flows (both capital and revenuebased on the mere fact of land and property ownershipThere is, evidently, plenty of work to be done on ththeory of these relationships.And what of rent appropriated from the workingclass? Clearly, as Engels argued, this is a secondary formof exploitation. I t is nevertheless deserving of analysis. Inthis case rent is appropriated off of variable capital, buinsofar as wage rates reflect housing costs then the rate osurplus value should diminish with rising rents and vicversa. On this basis Engels attacked those who soughtsolution t o the housing question in the absence of any atack upon the wages question. But there is a lot more to than that. The manner, extent and form of rental appropriation has important economic, social and ideologicaconsequences - itness the debate over the politics ohomeownership for the working class, and the effects osocializing housing provision in many of the advancedcapitalist countries. Furthermore, to the degree thaelements within the working class become propertyowners, they, too, can seek to appropriate rents fromfellow-workers. We then encounter the theoretical problem of how to account for rental payments in establishinthe value of labor power as a datum for analysisAnalysis of such questions reveals some interesting insights. For example, if workers receive a uniform wagethen some who live close to work will have lower costs oreproduction because of low transport costs while otherwill pay more if they live further away. Properly structured rents on working class housing could then have theffect of equalizing the real wage to workers at differenlocations (the analogy with differential rent on capital iexact). The relationships between land and property rentransport availability and cost, then come into play. Thproblem, of course, is that there is nothing in the powerelations between landowners and workers to ensure tharents are properly structured in the first place. Futhermore, workers also compete for living space againscapitalists (both producers and consumers). The level oappropriation of rent from one kind of revenue cannot bunderstood without reference to levels of appropriatiofrom other forms of revenue as well as from capital itselThe full theory of such relationships remains to bworked out. Marxs theory of rent is partial because deals solely with the circulation of capital and excludeany direct analysis of the circulation of revenues. We canot, therefore, simply take Marxs categories and makthem work in the actual analysis of the total complex oland and property markets (particularly in urban areasSomething more is involved even presuming a sociedominated by a purely capitalist mode of productionAnd that something more is the circulation of revenuesalbeit in relation to the circulation of capital whicalways remains as its basis.


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4. CONCLUSIONRent is, we repeat, simply a money payment for the useof land and its appurtenances. This simple money pay-ment can conceal a host of possible social significationsthat can be unravelled only through careful socio-historical investigation. The task of theory under suchcircumstances is to establish the underlying forces thatgive social meaning to and fi x the level of the rental pay-ment. Under a purely capitalist mode of production theseforces merit disaggregation into those which attach to thecirculation of capital and those which relate to the cir-culation of revenues (while recognizing that the two cir-culation processes are dependent upon each other). Addi-tional complications arise because i t is not always easy todistinguish between interest on capital fixed in land (in-terest on buildings and permanent improvements) and renton land pure and simple. Furthermore the differentuses of land as a means, condition, or element of produc-tion, or as a reservoir of present or potential use values,means that the significance of land to users varies fromsector to sector. Project all of these complexities into theframework of land use competition in which land is justone out of several different forms of fictitious capital(stocks and bonds, government debt, etc.) competing forinvestment, and we are forced to conclude that there isnothing simple about that simple money payment evenunder conditions of a purely capitalist mode of produc-tion.Bu t the notion of a purely capitalist mode of produc-

tion is at best a convenient fiction, more or less usefudepending upon historical circumstance. And manysituations indeed arise in which the dominant forceunderlying the rental payment can best be understood iterms of the articulation of qui te different modes of production, one upon the other. To the degree that eachmode of production has associated with it a specifisystem of revenue circulation (based upon distinctivform of distribution), all of the complexity establishedfor a purely capitalist mode of production becomes compounded many times over.I do not regard the rich complexity of these theoreticadeterminations as anything other than an excitinchallenge to bring the theory of rent out from the depthof underlying simplicity (where some Marxists seek tconfine i t in perpetuity), step by step towards the surfacappearance of everyday life. 1 believe tha t the framewor1 have outlined here can have as much to say about circumstances as diverse as Soissonais, Iowa, Mexico CitySydney and Kinshasa. The theory does not tell us thanswers but it does help us pose the right questions angive meaning to otherwise incomprehensible phenomenaIt might also help us to get back to some basic issueabout class structures, class alliances, and the role of landownership as a form of social power in a given sociaformation. And all of this can be done, 1 would submiwithout refuting or going beyond supposedly outdateMarxian formulations , but simply through the proper application of Marxs own methods to a question that hnever himself resolved to his own satisfaction.

REFERENCESEngels, F., The Housing Question (InternationalPublishers, New York; 1935Fine, B . , On Marxs theory of agricultural rent,Economy and Society, 8 (1979), 241-78.Harvey, D., The Limits t o C apital (Basil Blackwell, Ox-ford; 1982).Marx K. , The Poverty of Philosophy (InternationalPublishers, New York; 1963).Marx K., Capital ( 3 Vols, International Publishers, NewYork; 1967).

Marx, K., Theories of Surplus Value (3 Parts, Lawrenand Wishart, London; 1969 and 1972).Marx, K., and Engels, F., Selected Correspondence (Prgress Publishers, Moscow; 1955).Postel-Vinay, G . , La R ente Fonciere dans le C apitalismAgricole (Maspero, Paris; 1974).Rey, P-P., Les Alliances de Classes (Maspero, Pari1973).Tribe, K. , Land, Labour and Economic Discour(Routledge and Kegan Paul, London; 1978).

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