Land Rent

Traducido por los compañeros de Balance y Avante

 

 

When we started working on land rent it was because of a specific concern. As with other types of problems such as patriarchy or racism, the idea is widespread in radical media that the ecological crisis is undoubtedly related to capitalism, but that its explanation is not limited to it. We should not be unicausal. The system of techno-industrial domination, the praise of the machine and progress, and the consumer society are factors of equal or greater importance than the economic system. What’s more, far from being included in it, the ecological issue determines that economic system and is its true limit, an external limit that once reached will make it collapse into another social system, better or worse depending on how our management of that collapse goes. With this explanation, two birds were killed with one stone: it is not the class struggle but other forms of struggle—interclass—that are truly effective in the face of the climate crisis, and the revolution can be good or bad, but it is certainly not necessary or relevant to end capitalism.

In contrast to this approach, which necessarily leads to reformism, however radical it may seem, our concern was to give a unitary explanation of the ecological crisis and to do so based on an understanding of capitalism not as an economic system, but as a social totality organized on the basis of the commodity. As a social totality, as a mode of production, capitalism constitutes a concrete and historically determined social metabolism that is embedded in the natural metabolism of the planet as a whole. The rent of land is an essential gear for understanding how the relationship between human beings and the biosphere of which they are a part, is organized in capitalism.

To explain what land rent is we have to go to two previous concepts, socially necessary work time and extraordinary surplus profit.

The value of a commodity is determined by the time socially necessary to produce it. As we have seen in previous meetings, this means that each capitalist can spend more or less time producing that commodity, but when he brings it to market and competes with other capitalists in the same industry, its value is determined by the time taken on average by most producers to produce it. Value is a social category – there are no individual values – and although it originates in production, it is not formed until private and independent producers are related to each other through the market. Thus, for example, in a situation where it takes most capitalists one hour to build a table, the commodity table will have the value of one hour’s labor. If a capitalist with a less competitive technology takes two hours to build it, however, his table will still have a value of one hour of abstract labor. Individually, he will have spent two hours of his time to make it, but the value of his commodity will only be one hour because that is the labor time socially necessary to produce it.

In the same way, if another of these capitalists manages to improve their technology and reduce production time by 50%, producing a table in half an hour, the value of their merchandise nevertheless continues to be one hour. He will continue to pay the same salary, but his capital gains will be 50% greater than before. This is the basis of extraordinary surplus profit.[1] That it is extraordinary is immediately understood: to avoid losing ground, most of its competitors will begin to introduce the same technology in their companies and sooner or later the socially necessary work time to produce a table will have been reduced to half an hour. Extraordinary surplus profit will have disappeared, average productivity will have increased, the organic composition will have increased and, as we discussed in the talk on the tendential fall of the rate of profit and the crisis of value, because of the need to increase their profits individually, capitalists will have reduced them collectively.

This same logic operates in the productive sectors that are based on the exploitation of the land, but with a fundamental difference. In the previous example, capitalists could buy or copy the new machinery of their advantaged competitor and, therefore, the strength of competition tended to equalize the productivity of the industry. But land and the natural characteristics that make it more or less productive, more or less profitable, cannot be produced at will. They cannot be copied. Of all the oil reserves that exist on the planet, some are more accessible (that is, they require less capital to exploit them), more abundant and of higher quality than others. The capitalist who extracts oil from Iraq will enjoy greater productivity than the one who extracts oil from, for example, the North Sea, and this will always be the case as long as the reserves last.

Since competition is not able to reproduce the conditions and means of production of the rest, it loses its equalizing force. Therefore, the value of these commodities is not determined by the socially necessary time required on average to produce the commodity, but by the time required to produce the commodity originating from the worst productivity and yet still sell it, i.e. to enter into the demand for it and realize its value. Consequently, the value of commodities originating from land – agriculture, energy, raw materials, etc. – is determined by the worst land. So the oil capitalist in Iraq will make a windfall profit which is no longer the difference between the average productivity and his own, but between his very high productivity and that of the worst land. What’s more, this profit will be permanent, because the competition will never be able to match it.

But the exploitative capitalist in Iraq, who has invested the same in constant capital and wages as his competitors, cannot expect to reap a permanent extraordinary surplus profit just because of his pretty face. The owner of that land will demand his share, a rent that captures all or part of that extraordinary surplus profit. He will not be able to ask you for more of that surplus profit, because then he would be putting the profits of that capitalist below the average profit and he would prefer to take his money elsewhere. But between that floor and the ceiling of the total surplus profit, there is room for negotiation.

This is more evident if it is done in the form of rent, because then the figures of the landowner, the capitalist and the proletarian as personifications of income, capital and labor-power are clearly distinguished. But it can also be done by selling the land. The price that the landowner sets will not be like the rest of the prices, which respond to a value with a specific abstract work. The land has no value, because it is not the product of human labor, but its ownership title, which allows demanding a participation in the value produced by whoever exploits that land, is marketable and therefore has a price, which is capitalized income: The capitalist who aspires to be a landowner will pay at once the rent that he would have paid over a series of years, obtaining from then on both the rent and the average profit. When he closes his business and wants to sell the land, he will do the same with whoever comes next.

Until now we have described a type of rent that is due to the difference in productivity between different lands, which competition cannot eliminate no matter how much technological innovation is introduced: it is differential rent. The same reasoning explained above is at the basis of the same land passing through different moments of productivity, which Marx calls form II of differential rent. In addition, absolute rent is added, the rent demanded by the owner of the worst land. And the fact is that, with the above explanation, one might think that if the rent comes from the extra profit that the capitalist gets from the mere fact of being on land that is more productive than the worst land, then the owner of the worst land should have no rent at all. But it is a contradiction in terms in this society: why would the owner of the worst land let someone else do business with it without making a profit? He would rather take it off the market and let it go to waste.

In this text we cannot dwell on either form II of differential income or absolute income. But it is very important to point out, even if we do not develop it, that absolute rent does not violate the law of value, it is not a monopoly rent, but is due to the lower organic composition that land products have traditionally had because of the barrier to the levelling out of the rate of profit imposed by private ownership of land. Although this may seem a technical subtlety, it has implications for the political approach. If absolute rent, or even differential rent, is understood to be monopoly rent, what is being argued is that landowners are a superfluous class in capitalism, that rent implies theft from both capitalists and proletarians and that, consequently, a national-popular project to end the rule of the landowners, nationalize the land and share between bourgeois and workers the economic welfare that these land parasites prevent would make sense. This is how Third Worldism makes monopoly its keystone to justify the subordination of the interests of the proletariat to the national bourgeoisie.

But land rent, although it is opposed to the profits of the capitalist, is a necessary product of the mercantile logic of this mode of production. It is the irreducible difference between land, irrespective of legal ownership, which causes value to be determined by the worst land, thus producing a differential rent. This would remain the case even if all land were nationalized by their respective states. In such a case, the situation could arise in which they decide to dispense with – i.e., to assume as losses in their accounts – the rent for the worst land, but they would still have to maintain the differential rent: both internally, vis-à-vis private capitalists who want to exploit it – otherwise, what would justify some capitalists making permanently higher profits than others with the same investment – and on the world market if the state itself exploited the nationalized land as a capitalist since the value of the commodities would still be determined by the worst land. In short, land rent is not theft, it does not violate the law of value but is the necessary product of the absurd rationality of capitalism. You cannot do away with it without doing away with value and thus doing away with the whole of the social classes.

In any case, land rent is undoubtedly a problem for capitalists. It is a problem for those who are specifically engaged in exploiting the land, because the sums of money they allocate to honor private property is a value which they cannot invest, which they cannot valorize, and which therefore weighs on the rate of profit. But it is also so for the capitalists of the other sectors, who see how the rent of land increases their costs of production on the part of constant capital – raw materials, energy and the very land on which they carry out their activity – as well as on the part of wages, which will have to rise relatively as the cost of reproduction of labor power rises because of the prices of food, clothing, heating, housing, etc.

Land rent weighs like a burden on the rate of profit of the capitalist class, and this burden increases with the development of the mode of production. Far from bringing progress, improved living conditions and an end to hunger, the advance of capitalism can only accentuate the very crisis of the system and increase the levels of misery of the proletariat. Since land rent is determined by the worst land of all that is exploited to satisfy demand, it does not matter that better land is found to be exploited or that productivity is increased by investment on some existing land: the worst will continue to set the price, and increases in productivity will simply have meant a greater mass of surplus-value absorbed by rent.

As Marx argues, only a generalized increase in productivity in all lands worldwide could reduce the rent-absorbing share of surplus value. This possibility, however, is opposed by the automatic tendency of capitalism to unlimited growth. On the one hand, the more the productive forces develop, the more commodities carry the same mass of value, and thus the more energy and raw materials have to be consumed in order to make the same profits as before. This implies a rise in demand and thus in prices, which attracts capital investment. This increases supply in two ways: by increasing the land under exploitation – deforestation, mega-mining, fracking, etc. – and/or by increasing the productivity of already exploited land through greater investment. If this is only achieved on some of these lands, it does not reduce the rent but increases it, specifically the type II differential rent. If he succeeds in all of them and for a moment the cost of raw materials and energy falls, the fall in production costs and the increase in profits will push him to invest again, increase production and subsequently increase the demand for those same raw materials and energy again. It is the fable of the scorpion. It is in its nature.

On the other hand, the globalization of the agricultural sector and the development of agro-industry have effectively made it possible to counteract the rising cost of food and, therefore, of variable capital. But the increased dependence on the use of fossil fuels – fertilizers, farm machinery, lengthening supply chains – and the exponential population growth characteristic of capitalism, not to mention the devastating effects of climate change, are a much stronger counter-tendency towards higher food prices.

Thus, land rent subtracts increasing masses of surplus value from the profits of the capitalist class as the productive forces in this social system develop. This has two major implications.

Firstly, a process of artificialization of life which the Italian communist left picked up within the concept of mineralization of the land. Capital has only two mechanisms to counteract the permanent rise of land rent: the substitution of natural products by manufactured products and the intensive exploitation of the soil. The first is seen in the expansion of plastics: clothing, packaging, building materials. The use of natural fibers, wood and metals has been reduced as much as possible. The second mechanism, however, is much more important. In order to prevent rent from absorbing the increase in profits, the capitalist tends to exploit the land much more intensively: fertilizers, pesticides, monocultures, genetically modified organisms, fish farms, overcrowding of livestock, hormonal stimulants, synthetic feed, etc. This is something we see not only in the agricultural sector, but also in construction. The development of capitalism implies a concentration of capital in urban centers and, with capital, labor is also concentrated. Thus, the exponential growth of cities leads to an equal growth of urban income, which makes the housing problem structural and increasingly pressing under capitalism. Once again, the intensification of urban land use is presented as the only mechanism available to capital: high-rise buildings, tiny dwellings, Le Corbusier-style functionalist architecture to overcrowd the proletariat more and better in the megalopolises of capital.

The second implication touches directly on the historical exhaustion of this mode of production. The tendency we have explained above to the growing consumption of raw materials and energy as the productive forces develop accelerates the tendential fall of the rate of profit. The more labor-power is expelled from the process of production, the more the demand for these commodities increases, and thus the more rent is absorbed from an already diminishing production of surplus-value. This pushes capital towards the even more voracious exploitation of natural resources, which involves the growing struggle of imperialist powers to take control, directly or indirectly, of the territories that harbor them, as well as the rapid destruction of ecosystems and the disappearance of biodiversity. Finally, this process puts the proletariat between a rock and a hard place: the more it is expelled from the labor market and turned into a superfluous population, fluctuating between unemployment and underemployment, the higher the cost of its means of subsistence, food, heating, housing, becomes. War, social misery, ecological devastation: this is the unstoppable tendency of capitalism to catastrophe. It is also, however, the tendency towards social polarization, class warfare, the revolutionary struggle of the proletariat to survive as a species. Reclus said that the human being is nature becoming aware of itself. Communism is precisely that: the affirmation of a social metabolism that is now fully conscious of itself, stripped of the irrational logic of the commodity, and the resumption of the human being’s link with his entire natural metabolism.

[1] It is what Rolando Astarita calls, based on Marx, enhanced work, which is the source of all extraordinary surplus profit. To understand it, it is essential to emphasize that value is a social category, not an individual one. Marx never thought in individual terms, that is, physiological and ahistorical, despite what Juan Íñigo Carrera and his followers try to pass off as Marxism. We recommend reading the two parts of Extravalía y agrarian income by Astarita in his debate with Juan Íñigo Carrera on land income