Category: Steve

Page 171: “Human food seems to be the only produce of land which always and necessarily affords some rent to the landlord.”

Page 172: “Land in its original rude state can afford the materials of cloathing and lodging to a much greater number of people than it can feed.”  I wonder if this is true of, for example, desert land.  I am inclined to think it is.

“In the present commercial state of the known world, the most barbarous nations, I believe, among whom land property is established, have some ferign commerice of this kind [in animal hides], and find among their wealthier neighbors such a demand for all the materials of cloathing, which their land produces, and which can neither be wrought up nor consumed at home, as raises their price above what it costs to send them to those wealthier neighbors.  It affords, therefore, some rent to the landlord.”  I would love to see documentation on this.  I may be wrong, but it certainly seems to me that nations in such a state as to produce such hides did not have land property established, and hence there were no landlords and no rent.  Maybe someone with better knowledge of history can correct me on this.

Page 174: “Countries are populous, not in proportion to the number of people whom their produce can cloath and lodge, but in proportion to that of those whom it can feed.”  It should be added the question of how many people land can feed is not only geographical, but also a function of technology, as he hints at below:

“But when by the improvement and cultivation of land the labor one family can provide food for two, the labor of half the society becomes sufficient to provide food for the whole.  The other h alf, therefore, or at least the greater part of them, can be employed in providing other things, or in satisfying the other wants and fancies of mankind . . . The rich man consumes no more food than his poor neighbor.  In quality it may be very different, and to select and prepare it may require more labor and art; but in quantity it is very nearly the same.  But compare the spacious palace and great warderobe of the one, with the hovel and the few rags of the other, and you will be sensible that the difference between their cloathing, lodging, and household furniture, is almost as great in quantity as in quality.”

Page 175: “The number of workmen increases with the inreasing quantity of food, or with the growing improvement and cultivation of the lands and as the nature of the their business admits of the utmost subdivisions of labor, the quantity of materials which they can work up, increases in a much greater proportion than their numbers.”

He gets into the economics of mining, to show that the fertiiliy of the most fertile mine determines the price for all of them, such that some can provide no rent, but must be worked by their owners if they are to show a profit.

Later he discusses precious metals and stones, observing that because of their high value relative to their weight, the effective market is the entire commercial world.

Page 183: “With the greater part of rich people, the chief enjoyment of riches consists in the parade of riches, which in their eye is never so complete as when they appear to posess those decisive marks of opulance which nobody can posess but themselves.”

Page 185: “Whatever increases the fertility of land in producing food increases not only the value of the lands upon which the improvement is bestowed, but contributes likewise to increase that of many other lands, by creating a new demand for their produce.  That abundance of food, of which, in consequence of the improvement of land, many people have the disposal beyond what they themselves can consume, is the great cause of the demand both for precious metals and the precious stones, as well as for every other conveniency and ornament of dress, lodging, household furniture, and equipage.”

Continued in next post

This chapter has been brutal.  When Smith separated profit as a special part of value I could understand him, even if I didn’t agree; but separating rent out confused me; I had to read this chapter several times.  I think I may have finally gotten somewhere; we’ll see if the conclusions I’ve drawn make any sense.

NOTE: I lost my copy of the book and had to get a new one.  From now on, page numbers refer to the Prometheus trade paperback edition, published in 1991, ISBN 978-0-87975-705-2.

Page 153: Rent is the highest the tennant can afford.  “The smallest share with which the tenant can tonent himself without being a loser…Whatever part of the produce, or, what is the same thing, whatever part of its price, is over and above this share, [the landlord] naturally endeavors to reserve to himself.”

He speaks of the ignorance of the landlord sometimes being a factor in setting the price–the ignorance of the landlord is something he returns to very strongly at the end of the chapter.

He defines this amount as the “natural rent of land” in much the same way that he considers there to be a certain “natural profit.”

Page 154: “The rent of land…is not at all proportioned to what the landlord may have laid out upon improvement of the land, or to what he can afford to take; but to what the farmer can afford to give.”  And yet it is obvious that the farmer can afford to give more for improved land–Smith makes this observation later in the chapter.

Page 155: “High or low wages and profit, are the causes of high or low price; high or low rent is the effect of it.”  This is interesting indeed.  Does it hold up?  If we use Smith’s approach and consider the exchange value of a commodity to result from the labor necessary to produce it–and if we go further and accept his argument that rent is a special portion of that value, then it does make sense if a commodity is selling for a high price, the landlord will demand a high price for the land on which it is produced.  But that second “if” seems especially large to me.

Land, he says on page 156 (and I’m pretty sure he is limiting himself to agricultural land) “can always purchase such a quantity of labor as it can maintain” if not more.  In other words (I think) if you can grow enough corn on a given piece of land to support ten laborors, you can always exchange that corn for the wages to pay (at least) ten laborers.  If that is what he means, than I think it makes sense.  He says that it can usually produce more–providing something for profit, and something for rent.

His point here is that agricultural land can always bring in rent.

Further down he argues effectively that where agricultural land is placed (ie, how close to nearby markets) has a major effect on how much rent it can bring in.  This is obviously also a function of technology and infrastructure: “Good roads, canals, and navigable rivers, by diminishing the expense of carriage, put the remote parts of the country more nearly on a level with those in the neighborhood of the town.  They are upon that account the greatest of all improvements.”  He does not specifically mention this as being a function of technology, but it is obvious that improvement in engineering techniques play a major role in infrastructure.

A significant breakthrough in my own understanding came on page 162: “In a hop garden, a fruit garden, a kitchen garden, both the rent of the landlord, and profit of the farmer are generally greater than in a corn or grass field.  But to bring the ground into this condition requires more expense.  Hence a greater rent becomes due the landlord.”  This indicates strongly to me that in fact rent, like profit, has its source in surplus value, which in the end has its source in labor.

On page 165 he speaks of cases where the the quantity that can be produced is smaller than the demand, and that this will drive up the price; and then he adds, “the greater part of this excess naturally goes to the rent of the landlord.”  Here I’m confused: why?  It would seem that negotiation among farmer, landlord, and any labors, would determine where the excess goes.  What am I missing?

On page 166 he speaks of vinyards.  “For though such vinyards [that produce exceptionally valued wines] are in general more carefully cultivated than most others, the high price of the wine seems to be, not so much the effect, as the cause of this careful cultivation.”  To me, this seems over-simplified.  I would think it was both the cause and the effect–the one dialectically transforming into the other–as high price leads to better cultivation which leads to better wine which leads to higher price.

Continued in next post

The chapter I’m working on now is the one about rent.  Smith’s analysis of rent is, in fact, what first led me to read this book and try to understand it, and this stuff is murder.  I’m working on it.  I’ll do a post when I’ve finished this read-through, but as of right now, I expect to conclude that I’m just as confused as when I started.

Um, so it looks like I won’t be getting back to work on Adam Smith right away; I appear to have left the book in Missoula, so I’ll have to wait until either I get the hotel to send it to me, or I buy another copy.  Ooops.