It was recognised that, where land was required for any productive purpose, its owners would receive in payment for its use any portion of the product, or its selling value, which remained over after the competitively determined 'costs' of capital and labour had been defrayed.The payment was economically necessary because suitable land for most industrial uses was scarce, and the amount of the payment would depend upon how much was left when capital and labour had received their share.For the landlord would take all the surplus.There are those who still insist that the owners of land are everywhere in this position of residuary legatees.Land, they think, is always relatively scarce, capital and labour always and everywhere relatively abundant.Free competition then between the owners of the relatively abundant factors will keep down the price for them to bare 'costs', leaving a maximum amount of surplus which the so-called land 'monopolists' will receive as rent.
This surplus evokes no productivity from the soil or its owners; its payment does nothing to stimulate any art of industry.But, if the landowner did not take it, and it was kept by farmers as profits, or by labourers as wages, it would be just as wasteful from the productive standpoint, as if it passed as rent, for, upon the hypothesis of such economists, the full competitive wages and profits are the only payment entitled to count as cost, and no addition to such payments would increase the productivity of capital or labour.
§12.Now though there have been times and countries in which rent of land was the only considerable surplus, this is not the case in any developed industrial community to day.Other factors of production, capital, ability, or even in some instances labour, share with land the power to extort scarcity prices.
The hypothetical abundance, mobility and ******* of competition, which should prevail among all owners of capital, ability and labour, keeping down all their remuneration to a common minimum, are everywhere falsified by industrial facts.At various points in industry capital or managerial ability is found strongly entrenched against the competition of outsiders, and able to set limits upon internal competition.Wherever this condition is found, the owners of the capital or the ability so advantageously placed are able to obtain a 'surplus', which, in its origin and its economic nature and effects, nowise differs from the economic rents of land.The fluidity and complete ******* which appear to attach to the term capital, so long as we treat it in its abstract financial character, disappear as soon as for capital we substitute certain skilfully made machinery constructed under patent rights and operated by more or less secret processes, turning out, with the assistance of carefully trained.and organised labour, goods which enjoy a half-superstitious fame and special facilities of market.
An examination of the capitalist system will disclose in every field of industry numerous instances of businesses or groups of businesses, sometimes constituting whole trades, which by reason of some advantage in obtaining raw materials, transport or marketing facilities, public contracts, legal privilege or protection, by using some superior process of manufacture, skill in advertising, established reputation, financial backing, or by sheer magnitude of operations, are screened from the full force of free competition, and are earning interest and profits far exceeding the minimum.
