Sunday, February 27, 2011

Frederick Engels and Eugen Dühring on the Natural Laws of Economics and Ground Rent

Thomas Riggins  
Engels deals with Dühring's views on ground rent and the natural laws of economics in chapter nine of part two ("Political Economy") of his famous book "Anti-Dühring." Dühring claims that his theories on capitalism and socialism are the scientifically correct ones, not the overrated views of Herr Karl Marx, and that the worker's movement should follow his ideas not those of Marx and Engels. Engels proposes to look at Dühring's views on the "natural laws" of economics and of ground rent to see if there is anything to them. 
The FIRST NATURAL LAW of economics, somehow overlooked by Adam Smith and others, has been discovered by Herr Dühring and is thusly quoted by Engels: "The productivity of the economic instruments, natural resources and human energy is increased by INVENTIONS and DISCOVERIES." This is pretty vapid, according to Engels, as are the following four other "laws" discovered by Herr Dühring. Law Two: (the division of labour) "The cleaving of trades and the dissection of activities raises the productivity of labour." Law Three: "DISTANCE AND TRANSPORT are the chief causes which hinder or facilitate the co-operation of the productive forces." Law Four: "The industrial state has an incomparably greater population capacity than the agricultural state." And finally, Law Five: "In economics nothing takes place without a material interest." 
Engels says that Dühring's method in explicating economics is the same as in his discussions of philosophy: poorly expressed commonplaces and banal formulations of so-called natural laws. Dühring gives no proofs, just dogmatic assertions about the nature of wages, the earnings of capital and the nature of ground rent. In previous articles we have discussed Dühring's views on capital, wages, and surplus value, so now let us turn our attention to the meaning of "ground rent." 
In his own words, Dühring says ground-rent is "that income which the proprietor AS SUCH draws from the land." But this is a legal right of the proprietor, it doesn't tell us what the economic basis of ground-rent is, so Dühring must dig a little deeper. Engels says he then compares a farm lease to "the loan of capital to an entrepreneur" but come across a "hitch" in so doing. The "hitch" is that we are not dealing with natural laws but historically developed laws. Ground-rent, Engels points out "is a part of political economy which is specifically English."  

This is because England developed an economic system in which "rent had in fact been separated from profit and interest." Unlike Germany (Dühring's model) England developed large scale agricultural industries and the farmer (unlike the German peasant) hires workers to work his lands "on the lines of full-fledged capitalist entrepreneurs." 
In England we have the three main bourgeois classes and their incomes: landlords getting ground-rent, capitalists getting profits, and workers getting wages. In England it is quite clear, though Dühring doesn't see it, that the farmer's income is "profit on capital." This has been known at least since the time of Adam Smith. 
Smith (The Wealth of Nations) tells us labour revenue is called WAGES, that from stocks, etc., PROFIT, and from the land RENT. This is very clear when each type goes to different individuals, the worker, the capitalist, the landlord. However when the same individual gets two or more of these types of income "they are sometimes confounded with one another."  
This is exactly what Herr Dühring is guilty of, according to Engels. Dühring sees that the capitalist farmer exploits rural labour and this exploitation puts revenue in his pocket, thus it becomes unavailable to the landlord as rent. So, the capitalist farmer is living on "rent" (not the exploitation of surplus labour) which has been taken from that which would have been available to the landlord.  
In this amazing notion, that the landlord pays "rent" to his tenant farmer, we can see just how confused Dühring really is. Dühring thinks that ground-rent is "the whole surplus product obtained in farming by the exploitation of rural labour." Everyone  else who has seriously studied this subject divides the surplus product from agriculture into ground-rent AND profit on capital. 
But Dühring thinks there is NO real difference between the earnings of capital and ground rent; the one is revenue from industry and/or commerce the other from agriculture. This is the result of his view that all surplus wealth is the result of the subjugation and domination of man by man. The agricultural surplus is rent and the industrial surplus is profit on capital. 
Dühring's views pit him against the views of "all classical political economy" which divides agricultural surplus into both the profit of the farmer AND ground rent. 
Engels has accomplished what intended in this chapter of Anti-Dühring--i.e., that Dühring doesn't understand what ground rent is. Engels has not, however, explained just what it is himself. 
It is not my purpose here to give an exposition on ground rent and the distinctions between rent, profits of production and interest, all of which are derived from the surplus value created by labour power. For this I refer you to volume three of Das Kapital. 
I will note, however, that the notion of ground rent is a controversial subject as can be seen from a recent article by Benjamin Kunkel in THE LONDON REVIEW OF BOOKS of Feb. 3, 2011. In "How Much is too Much" Kunkel reviews two recent books by David Harvey, THE ENIGMA OF CAPITAL: AND THE CRISES OF CAPITALISM and A COMPANION TO MARX'S 'CAPITAL'.  
Kunkel points out that many Marxists are embarrassed by the concept of ground rent because it SEEMS difficult to reconcile the labour theory of value with the concept of rent since unimproved land doesn't incorporate human labour power. 
David Harvey suggests that ground rent is "fictitious capital" ["virtual" capital?] and writes that it is based on a "claim on future profits from the use of land or, more directly, a claim on future labour." 
These discussions, however, take us beyond the parameters of Engels' critique of Eugen Dühring and his misconceptions regarding ground rent.