Anyone familiar with the Communist Manifesto will remember that one of its demands is for the nationalisation of land and the allocation of land-rent to fund public purposes. The objective was spelt out in more detail in the Demands of the Communist Party In Germany of the same year1.

These Communist aims were echoed a few years later by the Chartist Convention in England in 18512. The English Chartist’s objectives were very similar to those put forward by the German Communists.

Some socialists argue that whilst Marx supported nationalisation back in the 1840s, he had by the 1870s dropped his support for it. But we find him writing in 1872 even more vehemently in favour of land nationalisation.

The property in the soil is the original source of all wealth, and has become the great problem upon the solution of which depends the future of the working class. … The nationalisation of land will work a complete change in the relations between labour and capital, and finally, do away with the capitalist form of production, whether industrial or rural. Then class distinctions and privileges will disappear together with the economical basis upon which they rest. To live on other people’s labour will become a thing of the past. There will be no longer any government or state power, distinct from society itself! Agriculture, mining, manufacture, in one word, all branches of production, will gradually be organised in the most adequate manner. National centralisation of the means of production will become the national basis of a society composed of associations of free and equal producers, carrying on the social business on a common and rational plan. Such is the humanitarian goal to which the great economic movement of the 19th century is tending.( Land Nationalisation, Marx, 1872)

The general aim of land nationalisation had widespread support in the 19th century labour movement. The 1886 TUC adopted it, the ILP had it as defining goal. Kier Hardie and the early Labour Party also had this as an objective.

But whilst the idea of nationalising the land is generally accepted by socialists, the point about land rents being devoted to public purposes is less well understood. Why would there be any rent if land was nationalised?

Would it not be better to allow the rent free use of land?

It helps if we look at the question in terms of three possible degrees of development of socialism:

State land whilst private farms still exist. A system of cooperative farms with state ownership of the soil. A fully socialist agriculture and a fully planned economy.

1 Private farming and state land

The first situation is what was forseen in the 1848 German demands. It is also what now obtains, post Deng, in China. Why should the state charge rent in this circumstance?

Well private farming presumes commodity production, in which case the farmers on good soil will be selling much more for their effort than farmers on poor soil. If there is no rent, then there will be differentiation of income. There will be poor and rich farmers. In effect rent will exist, but will be appropriated by the tennants.

Marx s theory distinguishes two forms of rent: differential rent and absolute rent. The first springs from the limited nature of land, its occupation by capitalist economies, quite irrespective of whether private ownership of land exists, or what the form of landownership is. Between the individual farms there are inevitable differences arising out of differences in soil fertility, location in regard to markets, and the productivity of additional investments of capital in the land. Briefly, those differences may be summed up (without, however, forgetting that they spring from different causes) as the differences between better and worse soils. To proceed. The price of production of the agricultural product is determined by the conditions of production not on the average soil, but on the worst soil, because the, produce from the best soil alone is insufficient to meet the demand. The difference between the individual price of production and the highest price of production is differential rent. (We remind the reader that by price of production Marx means the capital expended on the production of the product, plus average profit on capital.) Differential rent inevitably arises in capitalist agriculture even if the private ownership of land is completely abolished. Under the private ownership of land, this rent is appropriated by the landowner, for competition between capitals compels the tenant farmer to be satisfied with the average profit on capital. When the private ownership of land is abolished, that rent will go to the state. That rent cannot be abolished as long as the capitalist mode of production exists. (Lenin, 1907,The Agrarian Programme of Social-Democracy in the First Russian Revolution)

If land is nationalised but no rent is charged then the actual state land ownership becomes questionable. What does state ownership consist in when farmers hold the land rent free?

How is this different from simply distributing land ownership to those who till it?

It would come down to whether state tennants had the right to sell their leases or pass them down to offspring. If that is allowed, the state ownership becomes reduced to what in Britain is called FreeHold property. Although in theory all ownership of land in Britain is vested with the Crown, the Crown exercises no effective rights over it, and the freeholder is able to sell the freehold or sublet it.

We can see in China a movement towards this with the granting of Land Use Rights under which the state assigns a person or firm the right to use the land for a number of years – 50 is a common number. In contrast to this, during the period of the NEP in the USSR the state land code of 1922 did enforce the collection of rent on land used by private peasants3.

So in the absence of the state charging a rent the danger is that a system of nominal state ownership rapidly degenerates into private landholding very similar to that which issued from the Great Revolution in France. Of this Marx wrote:

In France, it is true, the soil is accessible to all who can buy it, but this very facility has brought about a division into small plots cultivated by men with small means and mainly relying upon the land by exertions of themselves and their families. This form of landed property and the piecemeal cultivation it necessitates, while excluding all appliances of modern agricultural improvements, converts the tiller himself into the most decided enemy to social progress and, above all, the nationalisation of land. Enchained to the soil upon which he has to spend all his vital energies in order to get a relatively small return, having to give away the greater part of his produce to the state, in the form of taxes, to the law tribe in the form of judiciary costs, and to the usurer in the form of interest, utterly ignorant of the social movements outside his petty field of employment; still he clings with fanatic fondness to his bit of land and his merely nominal proprietorship in the same. In this way the French peasant has been thrown into a most fatal antagonism to the industrial working class.(Land Nationalisation, Marx, 1872)

2 Cooperative Farming and State Land

In the USSR from the 1930s private farming gave way to cooperative farms. Unlike under the 1922 Land Law, the practice of levying rent was now dropped. But the cooperatives still operated as sellers of commodities. It could be argued that since a portion of the crop had to be sold to state marketing boards, and since the price offered by these boards was below value, there was in effect, something like a rent charged.

But if this was a rent it had more in common with an absolute rent than the differential rent discussed by Lenin, since the portion of the crop that had to be sold to the state was fixed. If it had been a differential rent, then more productive farms would have been obliged to sell a higher portion of their product. Again in the absence of differential rent, state ownership of land was more honoured in breach than observance. This situation had been explicitly polemicised against by Marx in 1872:

At the International Congress of Brussels, in 1868, one of our friends [César De Paepe, in his report on land property: meeting of the Brussels Congress of the International Working Men’s Association of Sept. 11 1868] said: I say on the contrary; the social movement will lead to this decision that the land can but be owned by the nation itself. To give up the soil to the hands of associated rural labourers, would be to surrender society to one exclusive class of producers.

3 State Farms and State Land

Suppose instead a system of public ownership of land and planned agriculture on national farms. The workers in these farms would be paid in the same way as those in towns – initially in money but later in labour tokens. In the absence of money would rent still exist?

Not in the sense of the national farms paying rent, no. It makes no sense for the nation to pay the nation rent. But in an indirect sense yes. Suppose that the public retail sector sells food in the shops at a price ( in money or labour tokens ) equal to the marginal labour required to grow the crop. Then in effect, since the average labour required is lower than the marginal labour cost, then there is a rent being collected. Less is being paid out in labour tokens to agricultural workers than is being charged for the product of agriculture.

The difference can then be used, as the Communist Manifesto proposed, to pay for free public services: health, education etc.

So in a hidden way differential rent would be funding public services even in a fully socialist economy.

Backup video on Differential Rent

Footnotes:

1

6. All feudal obligations, dues, corvées, tithes etc., which have hitherto weighed upon the rural population, shall be abolished without compensation. 7. Princely and other feudal estates, together with mines, pits, and so forth, shall become the property of the state. The estates shall be cultivated on a large scale and with the most up-to-date scientific devices in the interests of the whole of society. 8. Mortgages on peasant lands shall be declared the property of the state. Interest on such mortgages shall be paid by the peasants to the state. 9. In localities where the tenant system is developed, the land rent or the quit-rent shall be paid to the state as a tax. The measures specified in Nos. 6, 7, 8 and 9 are to be adopted in order to reduce the communal and other burdens hitherto imposed upon the peasants and small tenant farmers without curtailing the means available for defraying state expenses and without imperilling production. The landowner in the strict sense, who is neither a peasant nor a tenant farmer, has no share in production. Consumption on his part is, therefore, nothing but abuse.

2

1. -THE LAND. This Convention believes that the land is the inalienable inheritance of all mankind, and that therefore its present monopoly is repugnant to the laws of God and nature. The nationalization of the land is the only true basis of national prosperity. With a view of arriving in this ultimatum it is resolved that the following measures be so successively urged upon the public :- 1. The establishment of a Board of Agriculture. 2. The restoration of poor, common, church, and Crown lands to the people. Such lands to be divided in suitable proportions. All persons located upon them to be tenants of the State, paying a proportionate rentcharge for their holdings. 3. Compensation to out-going tenants for improvements. Tenants not to be tied down to any old covenants or rotation of crops. The repeal of the game laws. All rents to be commuted into corn-rents. 4. The state be empowered to purchase land, for the purpose of locating thereon the population, as tenants, individually or in association, paying a rentcharge to the state. The funds for that purpose to arise from the rentcharge payable on the common, church, poor, and Crown lands above-mentioned, and such other sources as may hearafter be determined. 5. Government purchasing land as above not to be permitted to sell again, but to hold such lands as national property for ever, letting them to tenants in such quantities, and under such conditions, as may secure freedom to the tenant, and safety to the State. 6. The Suite to have priority of purchase, at fair current prices. 7th. To provide for the final and complete nationalization of land, the State to resume possession of the soil as rapidly as the existing interests can be extinguished by process of law, by death, by surrender, or by any means accordant with Justice and a generous treatment of all classes,

3John N. Hazard, Soviet Property Law , 30 Cornell L. Rev. 466 (1945) Available at: http://scholarship.law.cornell.edu/clr/vol30/iss4/5

File translated from T E X by T T H, version 4.12.