 Without further ado, please let me welcome professor here. Okay, so I'm just a sort of overview of the talk altogether. First motivation why talk about Marxist theory of absolute rent. Then a discussion of the three kinds of rent where let's say I think absolute rent is the trickiest of the three kinds so so I'll go through the three kinds as a way of sort of building up to absolute rent. I had been planning to discuss the interaction of rent theory with value theory, but actually it took me 45 minutes just to get through rent theory so maybe I'm doing too slowly you can tell me what you think. I gave a talk on value theory in court. So, you know, if you're interested, you can look at my YouTube channel. And maybe talk about how value theory and rent theory relate in the in the question and answer period. So, in terms of the motivation, when Professor Wong invited me I thought well he's an economist, and I've been thinking about economics. So it would be a good opportunity to, you know, learn from him and have his ideas he unfortunately can't make it tonight. He's I think here online. And then also, I have, you know, moved to Dublin, about six months ago, and I found that the rent here is extremely high. So, I have been thinking why is, you know, what is it that decides the level of rent in an economy why is Dublin, why is the rental high yeah. And then last so now we know, you know, why I'm thinking about a theory of rent, and then maybe why call Marx as my theorist. Well I was the director of a Confucius Institute and I'm speaking at a Confucius Institute so I thought you know we should keep it within the the family of Marxist Linus thought yeah. So, so now turning to the three kinds of rent. The three kinds of rent are monopoly rent differential rent and absolute rent. So I will just head straight in talking about monopoly rent. So, the question with monopoly rent is basically something along the lines of, why is shut down the feet of Rothschild so expensive. Yeah. And throughout presentation I'm going to contextualize Marxist theory within the sort of greats of classical political economy. So, in this case monopoly rent monopoly rent in Adam Smith monopoly rent in David Ricardo monopoly in Karl Marx, and then sum up, why does monopoly rent exist. And what is it that determines the level of monopoly rent. So first monopoly rent in Adam Smith and I'll read these I know it's kind of bad practice in PowerPoint but there you go. As Smith says it sometimes happens indeed that the quantity of land which can be fitted for some particular produce is too small to supply the effectual demand. The surplus part of the price which remains after the frame, the whole expense of improvement and cultivation may commonly in this case and in this case only bear no regular proportion to the like surplus in corn or pasture. It may exceed it in almost any degree, and the greater part the excess naturally goes to the rent of the landlord so that's him explaining monopoly rent in principle. And then here's a discussion of wine as a concrete example of monopoly. So he says, the vine is most affected by the differences of soils than any other fruit tree. In some it derives a flavor which no culture or management can equal it is supposed upon any other. The whole quantity of such wines that is brought to market fall short of the effectual demand, or the demand of those who would be willing to pay according to the rate at which they are paid in common vineyards. The whole quantity therefore can be disposed of to those who are willing to pay more, which necessarily raises the price above that of common wine. The difference is greater or less according as the fashionableness and scarcity of the wine render the competition of the buyers more or less eager, whatever it be the greater part of it goes to the rent of the landlord. So, according to David Ricardo, David Ricardo doesn't very explicitly have a theory of monopoly rent but he does discuss monopoly prices, and then he includes wine in among those so he says, there are some commodities the value of which is determined by their scarcity alone. No labor can increase the quantity of such goods, and therefore their value cannot be lowered by an increased supply, some rare statues and pictures scarce books and coins, of particular quality, which can be only, sorry, which can be made only from grapes grown on a particular soil, of which there is a very limited quantity are all of this description so you know he includes wine among those things that command a monopoly price. And then we have to work it out for ourselves maybe that that would mean you would get a monopoly rent as well. So now, moving on to our friend Karl Marx, he said, when we refer to a monopoly price we mean in general, a price determined only by the purchasers eagerness to buy and ability to pay a vineyard producing wine a very extraordinary quality, which can be produced only in relatively small quantities yields a monopoly price. The wine grower would realize a considerable surplus profit from this monopoly price, whose excess over the value of the product would be wholly determined by the means and fondness of discriminating wine drinker. This surplus profit, which accrues from a monopoly price is converted into rent, and in this form falls into the lap of the landlord, thanks to his title to this piece of the globe endowed with singular properties. Here then the monopoly price creates the rent. Okay, I'll just point out that it's clear that that marks was more of a wine aficionado than Adam Smith was yeah, because he because Adam Smith, you know says, maybe these wines aren't so great, but Mark says no problem. Okay. So why does monopoly rent exist, because bits of the globe with sui generis productive properties in terms of their use values like being able to make really nice mine are privately owned. And why does what what what sets the level of monopoly rent. And so there is the consumers willingness and ability to pay for the commodities uniquely produced on the relevant lands. So, I think you'll agree that monopoly rent is not conceptually very difficult but I think it's a it's a nice way to to to warm us up. Okay, so now I want to differential rent. This time, and I'll explain why in a moment, I'm going to start with David Ricardo, then move backwards to Adam Smith, then go forward marks, and then explain why this differential rent exists, and what sets the level of differential rent. So differential rent is, is at the core of Ricardo's principles of political comment taxation is really Ricardo's big idea, but there are, there are some hints of it in Adam Smith, the wealth of nation so I think it's just kind of much tidier to to start with a clear presentation of the theory and then find the hints of it in Smith then, then, then the other way around. Okay, so here's Ricardo on differential rent. In the progress of society land of the second degree of fertility is taken into cultivation rent immediately commences on the first quality, and the amount of that rent will depend on the difference in the quality of these two portions of land. The third quality is taken into cultivation rent immediately commences on the second, and it is regulated as before by the difference in their productive powers at the same time, the rent of the first quality will rise for that must always be above the rent of the land by difference between the produce, which they yield with a given quantity of capital and late, I'll just summarize that for you, we're imagining that in a country there's, there's, there's different kinds of land, and some of them are better and some of Well, if there's a, if there's a certain demand for corn, for example, that requires that you use inferior land, then let's say that inferior land has no range. It's determining the price because without it you wouldn't be getting enough of the product. And then, if I own really good land, that means I'm, I'm basically able to produce for cheaper, even though I'm getting the same high price. So that difference, because let's say maybe we can imagine in the first instance it goes to the farmer. But when he goes to renew his lease the land will say, ah, it seems like you got a lot of money there. Maybe you can pay more for this nice land on rent. So that's differential rent. And now we see. Okay, sorry. Yeah, so now back to Adam Smith. Yeah, so he doesn't distinct, you know, Smith never says, oh now I'm at this kind of rent now this kind of rent is sort of all mixed together, but we can kind of pull these things apart. So he says rent, it is to be observed therefore enters into the composition of the price of commodities in a different way from wages and profits higher low wages and profits are the causes of higher low price. So rent is its effect is or is is the effect of it. So that just observe that he's speaking very generally but is, it has to mean what Ricardo was talking about that the price is determined by the poor quality land. And then if you can produce cheaply because you have good land, you can charge a high rent on for that land. So, so the price is setting what the rent is it's not the other way around. And he gives one example of coal mines where he talks about it in this way. And the point of this quote is that on coal mines that need to be mined in order to meet the effect demand. No rent is charged. So he says, some coal mines cannot be raw on account of their bareness, the products do not pay the expense. They can afford neither profit nor rent. There are some on which is this up there yeah okay. There are some on which the produce is barely sufficient to pay the labor and replace together with its ordinary profits the stock employed in working them. There are some rent to the undertaker of the work, but no rent to the landlord, they can be rocked advantageously by nobody but the landlord. So the idea there is at the margin, the, the, you know, the marginally productive land has no rent. Okay, so now we turn to differential rent in marks. And I think this is a very clear description. So I'm going to, so it's a little long but I decided it's worth, it's worth doing. So he says, let us assume that most of the factories of a certain country derive their power from steam engines, while a smaller number derive it from natural waterfalls. The surplus profit of the producers who use a natural waterfall as motive power is to begin with the same in the same class with all other surplus profit maybe I'll just mention why is why is, why are you doing surplus profit if you have a waterfall because you don't have to pay for the coal to heat the steam right. So the surplus profit then is likewise equal to the difference between the individual price of production of these favorite producers, and the general social price of production regulating the market in this entire production production production sphere. So the question that arises, does the industrial capitalist in the present case, oh, his surplus price. It arises from the greater natural productiveness of labor bound up with the application of a force of nature, but not a force of nature that is at the command of all capital in the same sphere of production, as for example, the elasticity of steam. Just a natural, you know, the component of the of the world. Yes. On the contrary, it is a monopolizable force of nature which like the waterfall is only at the command of those who have at their disposal particular per portions of the Earth and its appurtenances. Now let us assume that the waterfall, along with the land to which they belong are held by individuals who are regarded as owners of these portions of the earth, ie, who are landlords. Under these circumstances, the surplus profit is transformed into ground rent. That is, it falls into possession of the owner of a waterfall. It is evidence that this rent is always a differential for it does not enter as a determining factor into the general production price of commodities, but rather it is based on it. It invariably arises from the difference between the individual production prices of a particular capital having command over the monopolized natural force on the one hand. And the general production price of the total capital invested in the sphere of production concern on the other. It is due to the greater relative fruitfulness of specific separate capitals invested in a certain productive production sphere, as compared with investments of capital, which are excluded from these exceptional and natural conditions favoring productiveness. So that's marks on differential rent. So I've presented. Let's say for both monopoly rent and differential rent are three classical political economists as if they have basically the same ideas and I think for monopoly rent that's true. But is it true for differential rent. I think it's not true. But, but this top. Yeah, and I'll just say there's a very nice paper by Ben fine from 1979, where he discussed contrasts the theory of differential rent in Karl Marx and the theory of differential rent in in Ricardo. But I'm not giving you talk tonight about differential rent so I'm not going to go into these details. Instead I'm going to press ahead. Yeah. And just to finish up with differential rent, why does differential rent exist, because bits of the globe with greater or lesser productive properties are privately owned, and those with the lesser productive properties are the ones that regulate the price. In other words, because in agriculture, the generally reproducible circumstances of production tends to be among the most expensive, not among the cheapest, as is the, as is typically the case in industry right in industry if I have a really great new technique, you know that if they can lower my price of production. Well that's then then bully for me, but you know either I have to patent it or have to keep it secret. At some point it leaks out and other people start using it but that doesn't happen with land you own land, you can keep people from using by just by just by owning it. Okay, and then what sets the, what sets the level of differential rent. Well it's the difference between the individual and social price of production of the produce of a particular piece of land, if I have good land, I can charge higher rent. Okay, so that's it for differential rent so we've done, we've done monopoly rent, and we've done differential rent and now you know what you've all been waiting for absolute rent. Now, you know you've gotten used to the routine. We're going to have absolute rent in out of Smith, absolute rent in David Ricardo absolute rent in Karl Marx, then why does absolute right exist. And what sets the level of absolute rent. You're wondering what what is this absolute rent where we're talking about well. You know without. You know, once again, Smith doesn't distinguish these things he sort of mixes them all up. He's, he's quite I mean he's quite a clear writer buddy but he, he's, he's, he's always talking at the level of the concrete basically you have to sort of abstract to the theory yourself. Okay, so here's what he says. The land of any country has all become private property the landlords like other men love to reap where they never sowed and demand a rent. Even for its natural produce, the wood of the forest, the grass of the field and all the natural fruits of the earth, which when land was in common cost the labor only the trouble of gathering them come even to him to have an additional price fixed upon them. They must then pay for the license to gather them, and must give up to the landlord a portion of what his labor either collects or produces. So this is, this is a, let's say I think, think of it as a fee to access land in principle. It doesn't have to do with the, you know, this is special land that makes, you know, particularly good wine or is more, more productive than the neighboring field for for wheat. It's just in order to access land, you have to buy off landlords as a class. Okay. And then, here is another relevant passage from Adam Smith he says rent, considered as the price paid for the use of land is naturally the highest, which the tenant can afford to pay in the actual circumstances of the land yet landlords are not in the business of charity. The rent of the land therefore considered as the price paid for the use of the land is naturally a monopoly price now you're confused because Smith is saying that rent is a man, you know that rent in general is a monopoly price whereas earlier I had distinguished you know monopoly is one kind of rent so I should want one thing I would like to explore is what's the relationship between absolute rent and monopoly rent as you'll see Karl Marx also uses the term monopoly in relationship to absolute rent. Okay, so moving on to David Ricardo. It's really easy, because Ricardo just doesn't believe in absolute rent he explicitly, but let's say he explicitly denies it, except that the term wasn't around yet it's Karl Marx who actually terminologically distinguishes these three quite clearly. But Ricardo doesn't believe in an absolute rent. So, I just want to have one caveat there that I'm not going to go into. But there's one passage where Ricardo quotes Smith discussing how the price of barley land regulates the price of corn land, and, and it's possible to understand this as a kind of implicit endorsement of some kind of theory of absolute rent, and this is discussed very nicely in this article by a Buchanan from 1929. But once again I'm going to just sort of leave that one side and say, Well he says he doesn't believe in absolute rent so we're going to take his, take his word for it. And, and here is a passage from Ricardo. Ricardo says, as I've already kind of mentioned before that there, there will be no rent on the least fertile cultivated land. So he says, on the first settling of a country in which there is abundance of rich and fertile land, a very small population of which is required to be cultivated for the support of the actual actual population, or indeed can be cultivated with the capital, which the population can command, there will be no rent. 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. The principles of supply and demand, no rent could be paid for such land, for the reason stated, why nothing is given for the use of air and water, or for any other of the gifts of nature, which exists in boundless quantity. Marx is not very impressed with this article this this argument. And he says in capital volume three about Ricardo, he says, it is highly absurd to speak of free bourgeois colonies where in agriculture, neither the capitalist mode of production exists, nor the form of landed property corresponding to it, which in does not exist at all. Ricardo, for example, does so in his chapter on ground rent. In the preface he states that he intends to investigate the effect of the appropriation of land upon the value of the products of the soil, and directly thereafter he takes the colonies as an illustration, whereby he assumes that land exists in a relatively military form that its exploitation is not limited by the monopoly of landed property so he's saying this is a, you know, he basically said I'm going to explain something and the, and then he assumes it's, it's not an issue. And then in another passage. Ricardo sort of says that well and even if there were such a thing as absolute rent, it wouldn't matter. So this is what he says. Suppose there were no land, which did not afford a rent. Then the amount of rent on the worst land would be in proportion to the excess of the value of the produce over the expenditure of capital and ordinary profits of stock. The same principle would govern the rent of land of a somewhat better quality, or more favorably situated and therefore, this land would exceed the rent of that inferior to it by the superior advantages which is possessed. The same might be said of that the third quality, and so on to the very best so he's saying here that like okay so maybe the worst land does have some rent on it, but then all lands will have that amount of rent so conceptually absolute and differential rent are are orthogonal to each other. They have no relationship. So, in order to explain rent, you know, theoretically, it suffices to assume that the worst land has no rent. Now, again, Marx this time in theories of surplus value says, Ricardo solves the difficulty by assuming that in principle, it is not existent. So now, I will move to Marxist theory of absolute rent but in order to do that, I have to take a little excursus just a tiny one into price theory. So, there are three kinds of price in in Marx labor values, prices of production and market prices. So labor values are how much labor is socially necessary to create a commodity in the given circumstances of the economy. And then and then that explains relative price, sort of, in very broad brushstrokes, where something that costs more labor to produce is going to command a higher price. This is, you know, the labor theory value. So in order to have labor values make sense theoretically, you have to have an economy in which there's relatively free market in commodities. So no price fixing if you like, and relatively free market in labor. If you add in a relatively free market in in capital investment, then you move from labor values to prices of production, and a price of production is all of the cost that the capitalist experiences in in producing something, plus the prevailing level of profit in society and you can think of that as the price that the capitalist is aiming for. So, so it's the cost price. So that's just the cost to the capitalist, including wages materials depreciation fixed capital, and then, and then the profit on top of that and the idea is, if a capitalist doesn't get this on their capital, then they will withdraw capital from that sector that will reduce the supply, and that will up the price. So those capitalists who are remaining will get this price production. And then similarly, if there's a really great profit rate in a certain sector that will attract capital investments, which will increase the supply, lower the price. So, so, and this is what Ricardo and Smith called the natural price. Now of course, in the actual price and individual pays on a particular occasion is determined by short term conditions of supply and demand. And in Marxist theory, each of these three or let's say they come in this order, where, where labor value sort of determines everything else in the sense that labor values. The question is, how does the society allocate labor time in different sectors to the production different commodities. And then, that is sort of transformed is the word we use into prices production through capitalist competition, and then those prices production sort of manifest in the marketplace as as market prices. So, so this is just basically the question of definitions, and this is value theory so so you know I'm not going to defend it or explain it any more detail you just have to sort of know this these are what these terms need. And then we will see how he uses them to explain absolute rent. Okay, so, Mark says the fact that the tenant farmer could realize the usual profit on his capital, did he not have to pay any rent is by no means a basis, the landlord to lend him land gratis. Sorry, to lend his land gratis to the farmer and to become so philanthropic as to grant credit gratuit for the sake of a business friendship. Such an assumption would mean the abstraction of landed property, the elimination of land ownership, and it is precisely the existence of the ladder that constitutes a limitation to the investment of capital, and the free investment of capital in the land, or must the market price rise to the point where even the worst soil a yields a rent that that's a rhetorical question he's saying, yeah, the market price has to rise high enough to to get even the worst land rented. In other words, does the landlord's monopoly, hinder the investment of capital, which would not be the case for the purely capitalist from the purely capitalist standpoint in the absence of this monopoly. Thus, assuming the demand requires the new lands to be taken under cultivation whose soil let us say is less fertile than that hitherto cultivated, will the landlord lease it for nothing. The market price of the product of the land has risen sufficiently to return to the farmer the price of production and thereby the usual profit on his investment in this land by no means. The investment of capital must yield him rent, he does not lease his land until he can be paid lease money for it. Therefore, the market price must rise to a point above the price of production. The rent can be paid to the landlord. Since, according to our assumption, landed property does not yield anything until it is leased is economically valueless until then, a small rise in the price in the market price above the price of production suffices to bring the new land, of course, quality on the market. Now, I want to emphasize this where he's saying it can be a very small amount absolute rent, but the landlord needs something, or he's not going to let you have his land. And then you might say okay he's splitting hairs because when Ricardo says there's no like there's no rent on the worst land he doesn't really need no rent he just means, you know, a theoretically insignificant amount of rent. So maybe this is hair splitting on Marx's part. The question then really becomes what sets the level of absolute rent. Once we admit that it's a theoretical possibility, and I will get to that in a moment. But first, I think it's useful to see how Marx distinguishes absolute from differential rent and absolute rent from monopoly rent. So here he is distinguishing differential and absolute rent. So differential rent has the peculiarity that landed property here merely intersects the surplus profit which would otherwise flow into the pocket of the farmer. Landlady is a fixed property of landlady as opposed to landlord right landed property is here merely the cause for transform or transferring a portion of the commodity price, which arises without the property having anything to do with it. And which resolves itself into surplus profit. The cause for transferring this portion of the price from one person to another from the capitalist to the landlord. property is not the cause which creates this portion of the price or the rise in price upon which this portion of the price is premised so differential rent doesn't change market prices whereas on the other hand if the worst soil a cannot be cultivated although its cultivation would yield the price of production until it produces something in excess of the price of production rent the land of proper then landed property is the creative cause of the rise in price landed property itself has created rent so that's the major you know conceptual difference that he draws between differential and absolute rent and now how does he distinguish monopoly rent from absolute rent in particular because we've seen he actually uses the word monopoly when describing absolute rent okay he says does it follow from the fact that the worst soil yield ground rent that the price of the product of the land is necessarily a monopoly price in the usual sense this by no means necessarily follows and the contention that it does has been made only because the distinction between the value of commodities and their price production has here to for not been understood just in passing a lot of commentators in the Marxist economic literature see absolute rent as a kind of monopoly rent and you know here Marx is saying if you think that it's because you haven't understood the difference between price of production and value and it's that this passage doesn't seem to have been much discussed by those people who see absolute rent as a form of monopoly rent anyhow the fact that products of the land are sold above their price of production does not at all prove that they are sold above their value it is possible for agricultural products to be sold above their price of production and below their value the rent would create a monopoly price if grain were sold not merely above its price of production but above its value so there you have a clear distinction absolute rent is when something is sold above its price of production but below its value and it becomes monopoly rent when it's when when the rent requires that the price go above the value of the product okay so just to to sum up the differences between the different kinds of rent we have first monopoly rent is caused by private monopoly over particular pieces of land it raises the price of particular highly differentiated luxury commodities you know you get things like fancy wine and it raises prices above labor values it raises market prices above labor values absolute rent is caused by a class monopoly over land per se it doesn't have to do with individual landlords owning individual vineyards it has to do with the institution of land ownership as such it raises the price of generic basic commodities and it raises market prices above price of production but not above labor values and then just to you know complete the picture what about differential rent well differential rate rent doesn't affect prices at all okay so when I first read all of this in theories of surplus value this line in the sand between absolute rent and differential rent seemed quite arbitrary to me and I'm not alone in that so uh for kivitz says in 1919 marks claims that in a state in which all spheres of production are subject to competition and accordingly the industrial products are sold at their prices of production uh the agricultural products will be sold at a price under certain conditions concerning the organic composition of capital which is above their price of production but not above their value but why should landed property if it has the power to oppose the laws of capitalist price formation be bounded by the limit of value and so what what's so special about this particular amount so I want to discuss that a little bit drawing the line between absolute rent and monopoly rent well both monopoly rent and absolute rent are the results of a balance of class power between capitalists and renties um and I will admit that in part it's a conceptual difference like you know if we think of it from the subjectivity of the participants you know uh you can't tell whether you're paying an absolute rent or a monopoly rent no bell goes off when market prices raise above values but I will argue that the social circumstances in which they happen are different so a sector wide monopoly in order to raise uh things above value would require conscious class solidarity which is perfectly possible for example the corn walks where where where the landlord class just said we're arbitrarily going to keep uh uh prices high uh but absolute rent requires only unconscious class solidarity right so what I mean by that is is is absolute rent requires that landlords think of themselves as landlords and they think of their their property as you know something they can expect money for whereas monopoly rent um if if it were to affect basic commodities would actually require uh you know cartels kind of some kind of class-wide conspiracies okay so why does uh absolute rent exist it exists because bits of the globe irrespective of their productive powers are privately owned and now last but it's a little complicated what sets the level of absolute rent and I'm going to argue that it's opportunity cost this is not something that well and I'm going to argue that Marx thinks it's opportunity cost although this is not something he makes very clear okay so um the first thing to say is that Buchanan in his 1929 article argues that this is Smith's view it's also not very clear in Smith um but he argues that Smith thinks absolute rent is set by opportunity cost and even more clearly John Stuart Mill he thinks thinks this and uh and I'm going to argue that it's uh it's Marx's view uh and I'll just mention passing that Buchanan weirdly just seems totally unaware of the existence of Karl Marx or the term absolute rent so he sees himself as for the first time distinguishing in 1929 uh these are two traditions of thought about rent in um in classical political economy okay so um yeah so just you know classic Aristotelian syllogism if Smith thinks opportunity cost uh determines the level of absolute rent and Marx agrees with Smith then Marx also thinks opportunity cost uh is what determines uh the level of absolute rent and uh in order to show this sort of philologically if you like I'm going to go through both author's discussion of the rent of corn land versus the rent of coal mines and then I also think there's a positive argument to make that Marx thinks it's uh opportunity cost it sets uh the level of absolute rent absolute rent and that is that he has this nice discussion about sheep locks being turned into deer parks so turning first to the rent of corn land and the rent of coal mines Smith proposes that mines have only differential rent whereas corn land has both absolute and differential rent and uh Ricardo you know you won't be surprised to hear at this point disagrees saying that the case of mines also holds for agricultural land and then Marx agrees with Smith and then uh Marx and Smith don't say so explicitly but uh I think it's clear that why is it that corn has absolute rent and mines don't it's because there are more opportunities there there are more alternative uses available for corn land than for mines the only coal mines is used for is mine coal right so here's um Smith on the rent of mines you've seen this quote before so I won't uh I won't read it out uh but it's it's this argument that there are some coal mines that don't uh attract any rent and what Ricardo says about this is the whole principle of rent is here admirably and perspec- perspicaciously explained but every word is applicable to land as it is to mines yet he that is Smith affirms that quote it is otherwise in a state's above ground okay and then here's uh what Marx says and and I well it was quite hard to kind of know where to start this quote so so forgive me for that but he says but in all of this Adam Smith does not offer any explanation for absolute rent which he proposes which he presupposes to exist for land that produces food he is correct when he observes that it does not necessarily exist for other lands mines for instance so you see that you know and and that's as much as there's evidence for I'm just appealing to you what is their intuition about the difference is Smith and Marx that the corn land gets absolute rent and mines don't I think it's that that corn land you could use for other things you could use for sheep pasture you could use for building houses whereas uh coal mines you can only use as coal mines okay now the discussion of sheep walks being turned into deer parks so in um in theories of surplus value Marx draws attention to a passage uh in in Smith that I would like to call uh the progress of commodification this is describing how uh as as capitalism hangs around more and more aspects of nature and of human life are subject to commodification and it's I'm just going to read it as if Marx wrote it but the stuffing quotes is from Adam Smith right so in every farm the offals of the barn and stable will maintain a certain number of poultry these as they are fed with what would otherwise be lost are a mere save all and as they cost the farmer scarce anything so he can afford to sell them for very little well this supply is sufficient poultry is as cheap as butcher's meat with the growth of wealth the demand grows and consequently the price of poultry rises above that of butcher's meat until it becomes profitable to cultivate land for the sake of feeding them that's poultry as cattle are among the the first so perhaps venison is among the last parts of this sort of rude produce which will bring this price so if you like this is like almost a sort of economic indicator for Adam Smith you have you have this this strict order of things that are subject to commodification first corn then butcher's meat and poultry then hogs and and in his own day he sort of foresaw that one day venison will come under capitalist cultivation uh so this is what Mark says according to Adam Smith the gradual rise in the price of these raw products only proves that little by little they are becoming products of human industry while previously they were practically only products of nature their transformation from products of nature into products of industry is itself the result of the advance of cultivation which is increasingly limiting the scope of the spontaneous production of nature I think you see a little bit of Mark's the environmentalist here but I would also just point out that I think a lot of the economic development that we see in in the meantime since Karl Marx time fits this pattern you know so recently we've seen friendship and romance commodified yeah so you start with you start with land then you do you get to poultry at some point you venison and then you know at some point love is also commodified you know we'll all find out in the next few decades what things entrepreneurs decide that they can commodify but the point is it's not very explicit in either discussion there's some kind of opportunity cost going on there right that's that there's land and you're deciding do I leave it fallow do I use it for agriculture or do I grow poultry on it now I'll just point out that by the time we get to Karl Marx's life the venison stage of capitalist development had already been reached so in capital volume one this is a section the famous section on primitive accumulation after discussing the dramatic example of the Duchess of Sunderland evicting 15,000 of her clansmen tenants to create pastures from for 131,000 sheep Marx quotes summers as follows and I'll just tell you this is an amazing passage but that includes you know this this this woman there's there's you know she she she has all these tenants that that have been you know she's the she's from the chieftain she's from the yeah from the clans chief family and then at some point the relationship of of chieftains to members of the clan is sort of reinterpreted as landlord versus tennis and she just kicks everyone off the land and and even sets fire to a hut that has an old woman in it so it's a very dramatic passage but we don't want to get distracted by even though I have um here's what summer says sheep were introduced into glens which had been the seats of communities of small farmers and the latter were driven to seek subsistence on coarser and more sterile tracks of soil now deer are supplanting sheep and these are once more dispossessing the small tenants who will necessarily be driven down upon still coarser land into more grinding penury for it is a fact that a mountain range laid out in forest is in many cases more profitable to the proprietor than when let as a sheep walk so what I want to emphasize so this is summer is talking but it's quoted by marks and capital and the point is the landlords are constantly thinking do I get more money by running to farmers or do renting my land as pasture to sheep or for deer parks so that people can come and hunt for fun yeah so there is this um you know just to kind of return to my argument this is evidence that marks things opportunity cost is what's setting the level of absolute rent and then just one passage where he explicitly talks about the choice faced by landlords uh to to uh make their land available to industrial versus agricultural production he says and this is in the discussion of absolute rent he says the mere legal ownership of land does not create any ground rent for the owner but it does indeed give him the power to withdraw his land from exploitation until economic conditions permits him to utilize it in such a manner as to yield him a surplus be it used for for actual agriculture or other production purposes such as buildings etc so there he's saying you know it's opportunity cost that determines the level of absolute rent and that is going to be my conclusion which is that absolute rent is set by the highest differential rent that the land could possibly command if allocated to another use so if you like um if I have the worst corn land it's maybe not the worst sheep land so the differential rent the kind of potential differential rent that I would get by allocating it to sheep is what sets the the floor for you know rent in corn uh across the sector so that's my argument as to uh you know we we well let's just say now trip down memory road now we covered monopoly uh rent in the three classical economists then differential rent uh skipping over the differences between Ricardo and Marx then we covered absolute rent which is very merculely presented in Smith is explicitly denied by Ricardo uh is is clearly elaborated by Marx but maybe not as clearly as one would have liked in particular uh it's clear that absolute rent exists because of the the the existence of land ownership as an institution but he doesn't say very much about what sets the level of absolute rent and I'm arguing that it's uh it's the differential rent of other possible allocations that sets the level of absolute rent and so that's the whole talk and I'd like to thank you for your patience in listening to it you want to thank you for this wonderful talk and we'd be happy to take comments and questions we have roughly ten minutes so maybe someone from the audience or someone who's following online let's see yes um so this is all like in terms of production manufacturing but I guess one that you see on market they kind of rent that we'd be paying not as farmers not as uh factory owners or whatever I don't really understand how this connects to sort of like the reason that I don't know rents uh in south double to so high you know because we're not using that land to cultivate corn we're not mining and we're not building a factory in there so is it more just sort of social cloud that determines it um so there's so um Smith has a has a discussion of house rent marks doesn't as far as I know but I think it's clear that this is the theory that's available to us and then the question is how do we apply that to house rent and I think that uh it's that it's clear how that or yeah parts of that are clear to me and parts of it aren't so absolute rent totally clear basically the absolute rent uh the existence of absolute rent or or if you like um no let me put this way the institution of planted property explains both absolute rent and the institution of homelessness uh because you know we have loads of empty apartments and we also have homeless people why don't we just let the homeless people live in the empty apartments it's because someone owns those apartments and they would rather keep them empty than have homeless people in them right and uh so I think that is absolute rent that's that's the the work that absolute rent is doing for us now the question is why are some flats more expensive than others and they're personally uh I have trouble this thing I think that the difference between monopoly rent and differential rent is not as clear for house rent than it is for agriculture where um let's say you have an amazing view from your apartment I think it's pretty clear that um if if that's a kind of unreproducible view uh then the extra amount you pay for that view is monopoly rent but to the extent that you know other people can build uh apartments in the same uh you know neighborhoods with kind of analogous views then it would be correct to see that it's differential so um so that's how I would make a first pass applying this theory to to house rent there has been some work done on it in um in marxian economics and I am not terribly familiar with that literature that's sort of where I'm going to go next among other things but I will just mention you know in terms of public policy recommendations right because economics economics is always about public policy recommendations uh if you want to fall short of something like worldwide proletarian revolution um both no I would actually say all three theorists agree that differential rent is an excellent thing to tax because it doesn't affect price right if you if you introduce a tax that affects absolute rent then it's not the landlords will pay it they'll just pass it on to their tenants but if you can somehow design policy to to attack differential rent then that is a tax that will that will a not raise prices and b not alter the behavior of anyone in the economy so so even if you're some kind of right wing austrian you should be fine with with high tax on differential rent yeah hi professor hillan thank you for your presentation it's very interesting so carmarks is kind of one of my favorite uh philosophy or sociology sociologies but uh I assume a theory for rent is kind of the least known theory for other people so like it's very it's very famous for it's probably theory or theory of alienation but as for as uh economics uh it's more inspired it seems like that adam's maze so his work is more focused on the highly division of labor in more than societies and it's more focused on as you just talked about uh productive labor in agricultural but my query is that it seems most of marked theories have have been proved to to fail like to to explain the social changes in the past decades especially after the 1990s so uh what i'm interesting in that for the theory of rent it seems very hard to apply the theories which focus on the productive power of the land to the urban rent anyway like the like the uh a gentleman just said like we don't call it corns or uh you know like farming in our urban cities but however I think they can is any like symbolic values attached to the to the land nowadays like so let's say like for the rent price in the north w and south w I would you all know that the north part is less expensive than the southern part because the north part is more perceived as like the ways occupies lower social classes they're more dangerous whereas like the southern part is more safer like if you have a place like around like ucd that's the embassy area it's it's more like prestige so it's a kind of a symbol of your social clubs so it seems like that people paying for their rent or property is no longer determined by the absolute values as to say okay there's great scenarios here or is uh very convenient amenities or was very complex but rather is same stuff that's involved values attached to the to the physical property so I like to hear your views on that yeah so there's I'm going to actually distinguish there being three things in your sort of common question one is sort of like marks it like like let's say what kind of intellectual was marks if you like that's one question is like uh you know theory of rent theory of alienation theory value uh one has to do with sort of the the subsequent trajectory of uh political economy and then one has to do with what determines rent in a you know modern economy or you know contemporary economy so on the first one I'll just I'll just point out I mean I think there's there it is the case that let's say in terms of the institutionalization of Marxism at least in the West that it's been just kind of barely hanging on as a thread in in economics and then has had a very big impact in literary studies and in certain in certain in Marxist humanism and that happened well I don't want to go into you know a lot of detail about that as information is also available elsewhere but I just want to point out that that work comes from books like the the German ideology and the theses on Thorin Bach and the kind of earlier works and it Marx's own you know trajectory was you know he did PhD in philosophy and then Engels introduced into economics and then he saw his work in political economy as his important work yeah so and in fact you know Engels and Marx thought that the German ideology was so important that they they when they tried to publish it and no one wanted to publish it they said okay fine we won't publish it um and and years later they said ah it's something we did when we were kids it doesn't matter so I think you know that's something that's important to me is that let's say if you're interested in Marx as an intellectual one question you might ask yourself is you know what is the relationship between things like the communist manifesto and the German ideology this sort of early stuff and capital you know volumes one two three and four if you like which is what theories of surplus value is it's the intended capital volume four so that's on the first point on the second point I think that there's at least let's say I was able to see a lot of lectures kind of coincidental to the right of neoliberalism in the sort of early 80s and whatnot where people try to set up a perspective of sort of right to left where where where Smith is on the right Keynes is in the middle and Marx is on the left something like that and I think that is just a grotesque uh misuse of intellectual history and uh I will just point out that that uh some facts from from Smith so so Smith says tax the landlords he says uh he says the interests of society coincide with those of workers and landlords but never trusts the capitalists uh he he also says that the institution of private property is there to protect the rich from the poor so you know I I don't like like like I just don't think people are reading the book you know I think basically the the the throwaway comment about the invisible hand and the thing about the the benevolence of the butcher and the baker is just the only thing that people read from from the book so so you know I I want to really push against this idea of of Adam Smith as as a right-winger and also just mentioned because I lived in the UK for 10 years he opposed colonialism he thought slavery was immoral and um and it's it's not very clear but it's clear to me that he was a republican because because he bit it when he's talking about taxation he he basically has this comment where he says um chief magistrates what by wishing means like presidents and kings are the same except kings are more expensive because they're where fans are closed so so he clearly also opposed the monarchist institution so I think he's pretty left-wing even by today's standards in in the UK um so that's on the second point and on the third one I just want to point out this is not special about rent also now you know you buy a Gucci handbag it's not any better as a handbag than any other handbag but you pay more because it says Gucci so there is this sense that that uh dialectical materialism as a sort of approach to understanding the world is very bad at this kind of spectacle and prestige stuff I don't think there's any reason to think that and I actually think that this is handled very well by monopoly rent uh even in Adam Smith's comment where he says real or imagined where like the the in the Marxist jargon uh commodity has sorry uh yeah commodity is has two spaces right the use value and the exchange value and uh the exchange value is determined by the socially necessary labor time uh but the use value is is socially determined so there's there is no problem with like the use value of this handbag is having a handbag that says Gucci on and then the question is but the labor theory of value would tell you it would cost just the same well if commodities traded at their values but they don't because of competition between capitalists that's the that's the transformation from from uh from labor values to uh price production that happens in volume three so I would understand and this is actually I kind of sorry I'm excited but this is actually where I think rent theory has some real work to do for value theory where you can understand uh let's say Gucci as that trademark is they have created a monopolizable use value and that monopolizable use value allows uh the charging of a monopoly price so I think that the the apparatus is totally there to handle a contemporary economy and I would actually say uh when you look at something like high tech companies intellectual property rights a big deal nowadays you know we're worried about the Chinese stealing all our intellectual property but intellectual property is just something that's made up as an institution in order to command monopoly prices on things like it's a way of keeping prices above the price of production and it's bad for for development right so I think you know capitalists shouldn't like intellectual property right let alone socialists but yeah that's my attempt to to sort of sort of use uh Marxist rent theory to apply to some of these kind of more let's call them idealist use values that are are typical of contemporary capitalism and I think you know that the fact that the economy is getting less and less real in some sense is that trajectory that Smith traces you know we've we've already commodified the venison you know now we need to look for these more sort of mystical things like uh siege yeah I think yeah yeah one last question I lost it we're wrong okay please I have a question like if land and hence housing is treated as a form of duty do you think that right of housing can be achieved in time consequence so I didn't I understood the if but not the then so if like land and hence houses are treated as form of duty do you think the right of housing could be achieved in the urban cities in urban cities um can think of the right of housing well uh they could under socialism otherwise I do think that like I said before that that if you want to keep under capitalism you if you if you designed a tax to uh to fall on differential rent that would give you money that you could use you know I don't know to subsidize housing for for you know for you know for any social purpose yeah well let's say professor again once again and thank you