A history of economic doctrines : $b from the time of the physiocrats to the present dayGide, Charles
History
A history of economic doctrines : $b from the time of the physiocrats to the present day
Gide, Charles
Economics -- History
The proof that the earth’s fertility, taken by itself, can never be the
cause of rent is easily seen in the case of a new country. In a newly
founded colony, for example, land yields no rent, however fertile, if
the quantity of land is in excess of the people’s demand. “For no one
would pay for the use of land when there was an abundant quantity not yet
appropriated, and therefore at the disposal of whosoever might choose to
cultivate it.”[319] Rent only appears “when the progress of population
calls into cultivation land of an inferior quality or less advantageously
situated.” Here we have the very kernel of Ricardo’s theory. Instead of
being an indication of nature’s generosity, rent is the result of the
grievous necessity of having recourse to relatively poor land under the
pressure of population and want.[320] “Rent is a creation of value, not
of wealth,” says Ricardo—a profound saying, and one that has illuminated
many a mystery attaching to the theory of rent. In that sentence he
draws a distinction between wealth born of abundance and satisfaction and
value begotten of difficulty and effort, and he declares that rent is of
the second category and not of the first.
Still, this cannot be accepted as the final explanation. It is difficult
to understand how a purely negative condition such as the absence of
fertile land could ever create a revenue. It were better to say that the
want of suitable land supplies the occasion for the appearance of rent,
although it is not its cause. The cause is the high price of agricultural
products—say corn—due to the increased difficulty of cultivating the less
fertile lands.[321] In short, the cause and the measure of the rent of
corn-land are determined by the quantity of labour necessary to produce
corn under the most unfavourable circumstances, “meaning by the most
unfavourable circumstances the most unfavourable under which the quantity
of produce required renders it necessary to carry on production.”[322]
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