In my course this semester at the Graduate Center, “The Political Theory of Capitalism,” we’ve been exploring how some of the classics of modern political economy translate, traduce, transmit, efface, revise, and/or sublimate traditional categories of and concepts in Western political theory: consent, obedience, rule, law, and so forth.
Through economic thinkers like Smith, Ricardo, Keynes, Schumpeter, Jevons, and the like, we try and read political economy as the distinctively modern idiom of political theory. In the same way that religion provided a distinctive language and vocabulary for political thought after Rome and before the Renaissance, might not economics provide modern political theory with its own distinctive idiom and form? In other words, our interest in the political moment of economic discourse is not when the state intervenes or intrudes; it’s when economic discourse seems to be most innocent of politics. That’s when we find the most resonant and pregnant political possibilities.
I’ll give you an example.
For the last several weeks we’ve been reading and talking about Ricardo’s On the Principles of Political Economy and Taxation, which I have to admit, damn near killed me. Turns out it’s really hard to teach a text you don’t understand.
But one of the more interesting—and, at least to me, semi-intelligible—arguments in Ricardo is his account of rent. (I don’t think the problem is Ricardo; it’s me.) For it’s there, in his chapter on rent, that he introduces the idea of the margin. I could be wrong, but I don’t see anything like a notion of the margin in other parts of the book. It’s all in his chapter on rent. (Ricardo experts or intellectual historians: is that right? Are there other places in Ricardo’s texts where he talks about the margin? Were there other theorists prior to Ricardo who talked about it?)
Now that in and of itself is interesting: Is there something to be gleaned from or learned about the idea of the margin from the fact that it arose, for Ricardo, in the context of a discourse on rent?
Anyway, here are three places in his chapter on rent where he talks about the idea of the margin:
The reason then, why raw produce rises in comparative value, is because more labour is employed in the production of the last portion obtained, and not because a rent is paid to the landlord.
Raw material enters into the composition of most commodities, but the value of that raw material, as well as corn, is regulated by the productiveness of the portion of capital last employed on the land, and paying no rent; and therefore rent is not a component part of the price of commodities.
It follows from the same principles, that any circumstances in the society which should make it unnecessary to employ the same amount of capital on the land, and which should therefore make the portion last employed more productive, would lower rent.
Ricardo’s basic idea of rent is that it arises from the differential in the quality of two tracts of land. So we start with land that is lush and fertile and easily farmed. At some point the population will require more food and more land will have to be put into play. So we move to the next piece of land, which is slightly less fertile and lush. At that point, the first piece of land generates a rent: the farmer and/or capitalist who use it will be willing to pay slightly extra in order not to have to use the slightly less fertile lend. And then we move to the third piece of land. And so on.
Ricardo’s basic intuition is that rent arises from difference:
If all land had the same properties, if it were unlimited in quantity, and uniform in quality, no charge could be made for its use, unless where it possessed peculiar advantages of situation. It is only, then, because land is not unlimited in quantity and uniform in quality, and because in the progress of population, land of an inferior quality, or less advantageously situated, is called into cultivation, that rent is ever paid for the use of it. When in the progress of society, land of the second degree of fertility is taken into cultivation, rent immediately commences on that of the first quality, and the amount of that rent will depend on the difference in the quality of these two portions of land.
At some point, we reach a final piece of land, beyond which it simply does not pay to work it at all. That final piece of land generates no rent; all it can afford is a wage to the laborer and a profit to labor’s employer. The tract of land just before that one generates a very little bit of rent. The one before that a little bit more. And so on back to the best land.
That last piece of really crappy land—with its concomitant last exertion of labor or last expenditure of capital—sets the value for the class of commodities that are produced on all the lands. For it is there, on that worst land, that the most labor will have to be expended in order to generate the commodity (the amount of labor required to produce the commodity determines the value of the commodity).
The exchangeable value of all commodities, whether they be manufactured, or the produce of the mines, or the produce of land, is always regulated, not by the less quantity of labour that will suffice for their production under circumstances highly favorable, and exclusively enjoyed by those who have peculiar facilities of production; but by the greater quantity of labour necessarily bestowed on their production by those who have no such facilities; by those who continue to produce them under the most unfavorable circumstances; meaning—by the most unfavorable circumstances, the most unfavorable under which the quantity of produce required, renders it necessary to carry on the production.
And while that last bit of land generates no rent—for all the value of the commodities sold is devoted to the wages of labor and the profit of the capitalist—every infinitesimal differential above that last bit of land will generate a rent. And though that last bit of land doesn’t generate a rent, the value of the rents on the better lands will be set by the value of the commodities produced on that last bit of land. The value of the commodities on that last bit will be high—”with every worse quality [of land] employed, the value of the commodities in the manufacture of which they were used, would rise, because equal quantities of labour would be less productive”—so the more productive labor working the better land will produce more commodities, so that better land will fetch a high rent.
Anyway, that’s the little bit of economics I could figure out (and I probably didn’t even get that right.)
But here’s the interesting part for me, as a political theorist.
In political theory, the great political moment, the highest mode of political action, is the founding of a new polity. Read Machiavelli, Montesquieu, Rousseau, Tocqueville, Nietzsche, Arendt: the founding moment is when all the basic laws, institutions, customs and mores of the polity are set out. It’s a moment of great drama and great art (that’s why Aeschylus mined it to such tremendous effect in the last play of the trilogy The Oresteia).
For political theorists of this vein, the further away you move from the founding moment—the further in time and place—the more loss, decay, corruption you will see. There is simply a fact of entropy that sets in, once the fervor and fever of that founding moment is lost. Machiavelli’s great obsession with Rome has much to do with the distance in time and space that the republic/empire travels from its founding as a small city.
The art of politics, then, is to steal back from time (and space) what it takes from the polity as it was founded, to deprive age of its ravages, to find a way to repeat the intensity, the engagement, the connection and commitment, of that founding moment. Whether through education, laws, festivals, rites, wars, what have you.
It struck me in reading Ricardo just how much the marginal theory of rent turns that idea of a founding moment on its head. Where the western theoretical tradition begins with a moment in time and place, and sees a threat in any movement away from that time and place, Ricardo’s theory of the margin begins at the opposite end of that process, with the last tract of land, which is furthest removed from the original tract in both time and space. And where the founding tradition of political theory sees the founding as the source of value from which all politics and morals emanate and decay—the founding is the pacesetter of values—the marginal theory of rent sees the outer limits of decay and decadence as the source of value: of the labor on that outer tract of land that is required for the production of the commodity, of the value of the commodity itself, and of the rent that commodity will generate on the inner tracts of land.
Ricardo himself seems to have had some intuition of how strange this all is. Not from a political theory perspective (though his comments are quite generative on that score) but from a more general cultural and sociological perspective:
Nothing is more common than to hear of the advantages which the land possesses over every other source of useful produce, on account of the surplus which it yields in the form of rent. Yet when land is most abundant, when most productive, and most fertile, it yields no rent; and it is only when its powers decay, and less is yielded in return for labour, that a share of the original produce of the more fertile portions is set apart for rent. It is singular that this quality in the land, which should have been noticed as an imperfection, compared with the natural agents by which manufacturers are assisted, should have been pointed out as constituting its peculiar pre-eminence.
Rent arises from decay, from the distance traveled from that founding tract of land.
And here’s where the fact that the marginal theory arises in the context of an account of rent, of money paid to a semi-aristocratic landlord, might matter. For in classical political theory of the kind we’ve been examining here, the supreme political actor is often assumed to be some sort of propertied worthy, a member of the landed gentry (that was part of the Country tradition of Bolingbroke’s circle in 18th century England) or such. His landed independence frees from him the imperatives of fear and favor, makes him a creature of civic virtue. It is a precondition of his agency.
But in Ricardo’s hands, the landlord is completely without agency. He’s more than a parasite; he’s utterly passive. Not only do his rents derive from the activities of others, but they go up in response to the imperatives of population growth that compel the harvesting of new and less fertile lands. He doesn’t act at all; he merely presides over and profits from the expansions and exertions of others.
And where the landed gentry of the political tradition are expected to attend to the maintenance and the upkeep of the polity, the preservation of its founding fervor, the landlords of Ricardo have a vested interest in the decay and demise of the lands and labors surrounding them. For that decay and demise provide the raw ingredients of difference that serve as the source of their rents.
Without multiplying instances, I hope enough has been said to show, that whatever diminishes the inequality in the produce obtained from successive portions of capital employed on the same or on new land, tends to lower rent; and that whatever increases that inequality, necessarily produces an opposite effect, and tends to raise it.
…it is obvious that the landlord is doubly benefited by difficulty of production. First, he obtains a greater share, and secondly the commodity in which he is paid is of greater value.
If what I’m saying about Ricardo’s theory of rent (and the significance of the margin for that theory) is true, the question becomes: to what extent can we read the entire tradition of marginal economics, which comes later and moves significantly beyond the category of rent, in a similar light, as standing the basic categories and concepts of political foundings on their head?
Update (November 13, 11:45 pm)
Several folks have asked me to post a copy of the syllabus. Which I thought I had a while back, but turns out the link is dead. So here it is now.