The rent paid for the extensive use of land of different quality is significantly different than the intensive case of marginalist (neoclassical) theory. Marx was critical of certain aspects of the Ricardian theory of rent. In particular, he argued that 'absolute rent' would arise even if there were no differences in the levels of land productivity, if owners had a monopoly power over the natural resource. In this sense, the nature of rent is highly dependent on the historical contingencies and institutional arrangements that make one social group or class able to obtain greater bargaining power.
One important conclusion from this approach is that ownership and taxation of natural resources is crucial to determine which groups win or loose with the continuous use of exhaustible resources. Nationalization of natural resources not only might provide a situation in which the benefits and costs of extraction are shared more equitably, but also furnish the funds for the investment needed to promote alternative technologies. Below some readings that might be useful.
Suggested readings:
Bidard and Erreygers (2001), The Corn-Guano model, Metroeconomica 52(3), 243-53.
Burkett (2006), Marxism and Ecological Economics, Leiden, Brill.
Parrinello (2001), The price of exhaustible resources, Metroeconomica 52(3), pp. 301-15 (subscription required).
Ravagnani (ND), Classical Theory and Exhaustible Natural Resources, processed.
"The so-called Ricardian theory of rent, discovered by West and Malthus, has important implications for income distribution as it is well known. Landlords benefited from protection, which forced the use of scarce land, and led to higher rents (and for a given output and a fixed wage at subsistence) lower profits. Thus, the existence of an exhaustible resource led to a transfer from the dynamic capitalists to the backward landlords."
ReplyDeletedidn't Malthus dispute the "original and indestructible powers of the soil" (that ricardo assumed) and argue that Landlords needed higher corn prices (ala the corn laws) to retain the funds needed for new investment and thus higher productivity? Or do i need to go back and read his writing again?
Hi Nathan. One thing is the origin of rent, which depends on the differential quality of land, another thing is whether rents are necessary (if they originate on the basis of the different quality of the land) to maintain the level of productivity of land. Ricardo always accepted, by the way, Malthus precedence in the development of rent theory.
ReplyDeleteI'll have to reread Malthus sometime. Ricardo's theory of rent and in particular his assumption about "indestructible powers of the soil" is one of the reasons I'm more attracted to mid 19th century rent and resource theory. Perhaps I judged to hastily. I may report back when I've done the requisite reading.
ReplyDelete* mid 19th century American Protectionist rent and resource theory
ReplyDeletePlease do. Not sure I know what was the contribution to rent theory in the US.
ReplyDeleteI'm thinking of Calvin Colton, Mathew Carey, his son Henry Carey and one of his closer associates Erasmus Peshine Smith among many others. E.P Smith (and other american protectionists) wrote in the New York tribune around the same times Marx did. I was introduced to the literature by Hudson's very good books on the subject, but have slowly started to read the major monographs and have very much enjoyed them.
ReplyDeleteIt's my understanding that one of the reasons Malthus considered land rents justified was that they allowed landowners to consume in excess, therefore helping to fill the gap between supply and demand.
ReplyDelete(Malthus was an early underconsumptionist)
Thanks for the references Nathan. Magpie, the differential rent depends on the different productivity of land, while the use of rent was certainly in Malthus associated to his view that consumption of luxury goods was necessary to avoid gluts.
ReplyDeleteAgreed.
ReplyDelete