Some Quotations On Rent

1.0 Introduction

This post presents some quotations about rent. I criticize most of these statements. I have great respect for the quoted scholars.

2.0 David Ricardo

Thomas Robert Malthus, David Ricardo, Robert Torrens and Edward West are credited with the first clear and comprehensive analysis of differential land rent and the associated economic relationships. Their pamphlets in February 1815 had a little known precursor at the time in the work of James Anderson. (I modified the Wikipedia entry for these sentences.)

Ricardo explains what the theory is about:

"Rent is that portion of the produce of the earth, which is paid to the landlord for the use of the original and indestructible powers of the soil." -- David Ricardo, Principles

Ricardo clearly distinguishes between rent paid for the services of land and, for example, house rent. The land, if properly cultivated leaves a production process in as good shape as in which it enters. And, by abstraction, the land was not the result of any investment or labor before initially being used for agriculture. Rent on the results of investment that must be periodically renewed is not under consideration.

Here Ricardo explains extensive rent:

"When land of 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 second, by the difference between the produce which they yield with a given quantity of capital and labour.” -- David Ricardo, Principles

Ricardo takes differences in fertility as a matter of nature. He does not recognize that, with heterogeneous inputs, at least, that the order in which lands are taken into cultivation, depends on the distribution between wages and profits. Typically, prices of production differ at different levels of, say, a given wage. And, thus, the order of fertility can vary too.

Furthermore, Ricardo does not recognize that the order of fertility can differ from the order of rentability.

Here Ricardo combines extensive and intensive rent in his analysis:

"It often, and, indeed, commonly happens, that before No. 2, 3, 4, or 5, or the inferior lands are cultivated, capital can be employed more productively on those lands which are already in cultivation. It may perhaps be found, that by doubling the original capital employed on No. 1, though the produce will not be doubled, will not be increased by 100 quarters, it may be increased by eighty-five quarters, and that this quantity exceeds what could be obtained by employing the same capital, on land No. 3.” – David Ricardo, Principles

I have been elaborating on a combination of extensive and intensive rent.

3.0 Piero Sraffa

"No changes in output and (at any rate in Parts I and II) no changes in the proportions in which different means of production are used by an industry are considered…” -- Piero Sraffa (1960)

Part II is on joint production. Part III is the single chapter on the choice of technique, and Sraffa seems to imply that changes in output are allowed in that analysis. Chapter XI, on land, is a six-page chapter in part II. I cannot read section 88 as not considering a change in output.

Here Sraffa points to the need for further analysis (really, the whole book presents exercises for the reader):

"More complex cases can generally be reduced to combinations of the two [extensive and intensive rent] that have been considered. The main type of complication arises from the multiplicity of agricultural products." -- Piero Sraffa (1960)

I am not the first to note that Sraffa is overoptomistic about the simpler cases.

3.0 Alberto Quadrio Curzio

I consider Quadrio Curzio as the scholar who has probed most deeply into the theory of rent in the tradition of post Sraffian price theory. Others include Christian Bidard, Guido Erreygers, Heinz Kurz & Neri Salvadori, and Betram Schefold.

Quadrio Curzio draws a conclusion:

"Rent greatly complicates the relations between wages and profits" – Alberto Quadrio Curzio (1980: 238)

This is a conclusion that I want to avoid. I want to say something more than that it is complicated. I think I may have achieved this by demonstrating, for example:

• That the orders of fertility and rentability can each exhibit a kind of reswitching independent of each other.
• The the orders of fertility and of rentability may be completely opposite of one another.
• That the order of fertility may depend on techniques in which intensive rent is obtained, even though the cost-minimizing technique at the given output only pays extensive rent.

Here Quadrio Curzio and Pellizzari say something more:

"Even when the intensive rent disappears, the effects of intensive cultivation persist in the different productive processes applied to the different lands, which affect the extensive differential rents" – Alberto Quadrio Curzio & Fausta Pellizzari (2010: 46).

I think my third bulleted point above explains this observation a bit more.

References

• Quadrio Curzio, Alberto. 1980. Rent, income distribution, and orders of efficiency and rentability, in Pasinetti, L. L. (ed.) Essays on the Theory of Joint Production.
• Quadrio Curzio, Alberto and Fausta Pellizzari. 2010. Rent, Resources, Technologies.
• Ricardo, David. 1951. On the Principles of Political Economy and Taxation.
• Sraffa, Piero. 1960. The Production of Commodities by Means of Commodities.