Absolute Rent Research Articles

Marxist Rent Theory and Its Applications in Developing Countries

The conceptual tools of Marxist rent theory, such as absolute and monopoly rent, need clarification. The institution of landed property, alone, is not responsible for absolute rent. The Marxist theory of land rent continues to apply under two contemporary conditions: (1) the agrarian stagnation in developing countries such as India and (2) the urban rents and property prices. Most owner-cultivators in developing countries could be earning negative rents. Furthermore, differential rents and monopoly rents — fueled by speculation and state policies — explain movements in urban rent and property prices if the organic composition of capital is similar across sectors.

How to differentiate peasant classes in capital‐intensive agriculture?

AbstractThis paper highlights the relevance of Marxian class analysis to understand the changing nature of agrarian classes under capital‐intensive agriculture. It is a methodological exercise that builds on Patnaik's labour exploitation index (E‐criterion) in three major respects to construct a new index, namely, the Modified Labour Exploitation Index (MEI), to differentiate peasant classes. First and most important, it incorporates the role of mechanisation, which, so far, has been ignored in the methodological attempts to differentiate within the peasantry. Second, it underscores the importance of non‐agricultural (and non‐rural) bases of simple reproduction in the countryside by incorporating hired‐out labour by agricultural households to the non‐agricultural sector into the classification criteria. Finally, it makes surplus labour exploited through land leasing empirically testable by using Marx's differential and absolute rent to differentiate between subsistence and commercial leasing. The new index is then empirically tested using primary data collected from rural Haryana, India. The paper argues that MEI is an effective criterion for understanding changing class dynamics, the shifting modes of the livelihood of the poor peasantry and the largely hidden accumulation processes in agrarian societies.

Analysis of Internet Rent from the Perspective of Marx's Rent Theory: A Case Study of Mobile Internet Applications

People are now tightly connected through mobile Internet applications, whether they are platform owners, renters, business professionals, or users. The presence of Internet Rent is concealed between platform owners and renters of mobile Internet applications, according to Marx's rent theory. Owners of platforms lease out data land and charge Internet Rent to renters. Similar to land rent, Internet Rent demonstrates differential rent. However, due to the instantaneous replicability of data flow activities and the impact of network externalities, the former still differs from the latter in terms of social relationships, the existence of Absolute Rent, and the form of Differential Rent II.

Artificial Scarcity in Housebuilding and the Impact on Affordability: The Return of Absolute Rent

AbstractThe slow response of volume housebuilders to changes in demand has been cited as a contributing cause of a global crisis of housing affordability and allegations of land banking have persistently dogged the industry. This article reviews the supply responsiveness of speculative housebuilders in the United Kingdom and Australia through the neglected Marxian analytic category of absolute rent. Absolute rent directs attention to the relationship between the value of land and the cost of housing and models a market in which landowners may withdraw land from supply to inflate prices. Through the lens of absolute rent, the real estate practices of the housebuilding industry can be understood as a strategy of artificial scarcity straddling land and housing markets. The findings of this investigation demonstrate the insights to be gained by a return to absolute rent that valuably expand the current debate on the supply and cost of housing.

Reconstructing Marxian Theory of Ground Rent: Based on Japanese Development of Marxian Political Economy

ABSTRACT The aim of this paper is to reconstruct Marxian theory of ground rent in order to refurbish it as a fundamental theoretical framework of ecological Marxism. We make this attempt by the close examination of longstanding Japanese discussions on the rent theory among the Koza school, Rono school, and the Uno school, which have never been made available in English so far. By critically integrating Japanese preceding studies, Marxian theory of rent would be reinforced more effectively in analysing the class relation between the capitalist and the landowner, which is reflected in the formation of absolute rent. In addition, we use the price equations to formulate the rent formation and theoretically examine how the landowner performs as the third class. It is noteworthy that there is a case in which the conflict between the capitalist and the landowner takes the form of a confrontation about rent-seeking activities. In our two-sector model analysis, an intellectual property right in one sector can undermine the economic position of the landowners in the other sector, thereby fostering further destructive development of nature. Capitalist IP rent-seeking harms the environment not only directly but also through indirect causalities in the globally interrelated economy.

A Reformulated Version of Marx’s Theory of Ground Rent Shows That There Cannot Be Any Absolute Rent

This article develops a simple theoretical model to analyze Marx’s theory of ground rent. Using the model, I demonstrate two important results. First, if we take capital outlay as exogenously given, then total ground rent can be decomposed into the three components: differential rent of the first variety (DRI), differential rent of the second variety (DRII), and absolute rent (AR). Second, if we let the amount of capital outlay on each plot of land be determined by the profit-maximizing behavior of capitalist farmers, then absolute rent becomes zero. Neither the low organic composition of capital nor the monopoly power of the class of landlords can generate any absolute rent. I conclude that under reasonable behavioral assumptions about landlords and capitalist farmers, there will be no absolute rent in a capitalist economy. JEL Classification: B51

Учет природных условий добычи как основа оценки эффективности деятельности предприятия

The tax mechanism in the extractive industries should provide all enterprises with relatively equal terms of business, the differentiation of which is largely due to the influence of natural mineral mining conditions, to the number of the production conditions of mining mining factors of the Reno formation and the quality of minerals. However, the tools of the tax mechanism used, including the differentiation of tax rates for mining, are not able to ensure the necessary equality in mining enterprises’ profitability after taxation. Some economists offer a certain averaging of payments for deposits, which, in fact, is a refusal from the principles of rental taxation of mining enterprises. The differentiation of natural mineral mining conditions is expressed in the differential mining render of the deposit. The withdrawal of the differential mountain rent in the income of the state, the owner of the subsoil, can be ensured by further strengthening the differentiation of tax rates for mining, adding conditions for the development of specific deposits or the use of various forms of non-tax seizures of differential mining. In our opinion, the withdrawal of differential mining rents should be provided with a non-tax method. This is due to the fact that this rental income is fully owned by the state as the owner of the subsoil, for which the tax seizure is inefficient. Another part of the rental deposits of the field is a quasirent, a rent of machines or production capital. The quasirent, fully or partially, but at a rate reduced compared with the level of profit taxation, should be left at the disposal of the mining enterprise to stimulate an increase in the technological and innovative level of production. The last part of rental incomes is an absolute meager, which is formed from the excess of the existing demand for this natural resource. Taxation of absolute rent, as part of the entrepreneurial profit, should be made using the established taxation rates of profits on the general basis. Thus, the taxation of each part of the revenge income of the extractive enterprise should be carried out separately, in accordance with the specified principles, which will ensure the rental nature of the tax mechanism of mining enterprises and will strengthen its stimulating effect on improving the technological and innovative mining level. Contribution of the authors: the authors contributed equally to this article. The authors declare no conflicts of interests.

Методичні підходи до визначення грошової оцінки земель

The purpose of the article is to reveal the main methodological and methodical principles of the monetary valuation of agricultural land, which is widely used in the agricultural sector of the economy and needs to be improved, given the current changes. Research methods. The study is based on theoretical, methodological and methodical provisions for determining the criteria for land valuation as the main means of agricultural production, the formation of rental income on different quality soils and their location. Achieving this goal is ensured by the usage of modern general scientific methods and research techniques. Research results. Various methodological approaches to determine an indicator of normative monetary valuation of land were developed. The solution to this problem is seen in the application of an indicator of economic effect obtained from the usage of land plots of better quality, as well as their favourable location. The economic effect indicator is a differential rental income obtained in the production of grain (excluding corn). The assessment of the worst lands with no differential rental income is carried out on basis of an absolute rental income (absolute rent). Scientific novelty. Theoretical and methodological basics and methodical definition of the monetary valuation of agricultural lands were developed, according to which their monetary valuation in Ukraine was carried out. Practical significance. The study results are used in the regulation of land relations in agriculture through the improvement of tax, price, financial and credit mechanisms. They become especially important with the introduction of the land market. Tabl.: 1. Refs.: 16.

Еволюція удосконалення нормативної грошової оцінки земель сільськогосподарського призначення

Мета. Мета статті – поглиблення концептуальних положень нормативної грошової оцінки земель сільськогосподарського призначення на основі аналізу методології економіки землекористування, закладеної в основу Методик нормативної грошової оцінки земель сільськогосподарського призначення (1995 р., 2016 р.), для більшої відповідності сучасному етапу агрогосподарювання в умовах формування ринкового обігу земель сільськогосподарського призначення.
 Методологія / методика / підхід. У статті на основі діалектичного методу пізнання використано методи: абстрактно-логічний – при систематизації публікацій, присвячених питанню використання та оцінки земель сільськогосподарського призначення; аналізу, синтезу, порівняння – при аналізі та порівнянні теоретико-методичних положень, покладених в основу офіційних Методик нормативної грошової оцінки земель сільськогосподарського призначення 1995 та 2016 років; метод узагальнення – при формуванні висновків; графічний метод – для візуалізації характеристик землі як триєдиного засобу виробництва; розрахунково-конструктивний – при розробці методичних підходів до визначення диференційного рентного доходу та нормативної грошової оцінки землі та розрахунку значення нормативної грошової оцінки орних земель кращої та гіршої якості для природно-кліматичної зони Лісостеп Сумської області. При написанні статті використовували наукові праці вітчизняних і закордонних вчених за період 1995–2020 рр., а також дані офіційних сайтів Державної служби України з питань геодезії, картографії та кадастру та Державної служби статистики України.
 Результати. Обґрунтовано концептуальні положення удосконалення методичних основ нормативної грошової оцінки земель сільськогосподарського призначення, що дають можливість системно та комплексно врахувати у вартісній оцінці землі її характеристики як засобу праці, предмету праці та просторового базису, зокрема запропоновано методичні підходи до визначення диференційного рентного доходу та нормативної грошової оцінки землі, які базуються на використанні набору культур і терміну ротації сівозміни. Розрахована в статті грошова оцінка земель орних земель кращої та гіршої якості для природно-кліматичної зони Лісостеп Сумської області з урахуванням запропонованих положень, значення якої більш повною мірою відповідає сучасному етапу агрогосподарювання в умовах формування ринкового обігу земель сільськогосподарського призначення.
 Оригінальність / наукова новизна. Запропоновано концептуальні положення удосконалення методичних основ нормативної грошової оцінки земель сільськогосподарського призначення, зокрема: використовувати набір культур науково обґрунтованої сівозміни для оцінки земель; здійснювати повторні оцінки земель після закінчення терміну ротації сівозміни й на підставі результатів оцінки застосовувати компенсаційні виплати за підвищення родючості або штрафи за погіршення родючості; запропоновано методичний підхід до визначення диференційного рентного доходу на основі порівняння нормативної урожайності та доходу від виробництва культур сівозміни на кращих і гірших за родючістю землях; запропоновано при визначенні абсолютної ренти враховувати не лише дані про витрати на орендну плату та підтримку державою сільського господарства, а й дані про потребу в коштах на фінансування землевпорядкувальних і землеохоронних робіт; окремою статтею виокремити кошти на підтримку галузі тваринництва, що сприятиме дотриманню сівозмін і збереженню родючості ґрунту.
 Практична цінність / значущість. На основі пропозицій щодо удосконалення нормативної грошової оцінки землі розраховано нормативну грошову оцінку орних земель для природно-кліматичної зони Лісостеп Сумської області, яка більш точно відповідає цінам на землю в західних країнах і може бути застосована в умовах функціонування ринкового обігу земель сільськогосподарського призначення.

Elements For a Coherent Theory of Rent

The question of rent in economic theory is rather complicated, even at the level of its definition. This article attempts to get back to basics in order to clear things up and present a complete and correct theory of rent. Starting with the classical definition of rent, as an income earned by the owner of non-produced inputs, it clarifies first the definitions of the different kinds of rent: differential rent, absolute rent. It then uses a step-by-step approach to show the effect of these various kinds of rents on a price system. The article also addresses the issue of type II differential rent, corresponding to the use of different techniques with a homogeneous input. This helps to explain the effect of rent on the distribution of the product. The question of urban land rent is also clarified: it is shown that it obeys mechanisms that are clearly different from those governing agricultural land rent.

The Impact of Rent from Unequal Exchange on Shaikh’s Classical-Keynesian Political Economic Analysis: The Example of Facebook

In this paper, Shaikh’s 1949–2011 classical Phillips curve (CPC) is replicated and extended to 2016. This updated CPC does not follow the pattern anticipated by Shaikh for the years 2012 to 2016. This paper hypothesizes that this divergence is a result of an increasingly “rentier” economy based on surplus extraction through unequal exchange (UE). Andrea Ricci’s methodology is then applied to the 2014 US advertising and market research (A&MR) sector as a sample test of this hypothesis. This analysis shows that UE accounts for $64 billion, or almost a half (45.3 percent), of total US A&MR value added ($141.3 billion) in 2014. A modification of Ricci’s methodology for a firm-level UE estimation finds that in 2014 Facebook alone was able to extract a within-industry, within-country, between-firm absolute rent of $3.8 billion. The paper concludes that Shaikh’s analysis needs to be extended with non-classical political economy UE, or “rentier economy,” analysis.

Absolutna renta gruntowa – ujęcie retrospektywne i współczesne

W artykule Autorzy nawiązują do teorii renty gruntowej ze szczególnym uwzględnieniem renty absolutnej, co do istnienia, której w ekonomii nie ma zgodności. Celem rozważań jest ocena, jak współcześnie kształtuje się renta z tytułu rzadkości ziemi rolniczej w warunkach aktualnych tendencji na rynku ziemi w Unii Europejskiej i dylematów w tym zakresie. Podjęto się przy tym weryfikacji tezy, że konieczne jest odmienne podejście do absolutnej renty z ziemi, uzależniając ją od struktury obszarowej i własnościowej czy celów produkcyjnych gospodarstw rolnych. Obserwowane prawidłowości mogą jednak ulegać zmianom w wyniku wprowadzania lub zwiększania ograniczeń obrotu nieruchomościami rolnymi unormowanych prawem europejskim lub poszczególnych państw członkowskich UE, jak i postulowanych instrumentów wspólnej polityki rolnej.

Die Grenze der Werttheorie

Not only Marx found the “theory of the ground rent” a hard nut to crack. The political- economic and urban sociological debates also find it a challenge - or simply assume that the ground rent is a monopoly price without giving an account of what this means for Marx’s project of critique of political economy. The so-called differential pension is still unproblematic and goes back to David Ricardo. On the other hand, the so-called absolute rent, with which Marx wanted to theoretically distance himself from Ricardo, is problematic and untenable. The article discusses three essential points of criticism of the concept and what it means conceptually and politically for Marxian value theory when it reaches its limits on the topic of the absolute rent.

Is Marx's absolute rent due to a monopoly price?

ABSTRACTAbsolute rent, in Marx's view, has an upper limit represented by the difference between the value and the price of production of agricultural commodities. The relevance of this limit was questioned by Bortkiewicz because of the difficulties concerning the argument which Marx based it on. The lack of this upper limit prompted some scholars to claim that there is no difference between absolute rent and a rent paid by a monopoly price. Referring to the classical/Marxian theory of monopoly price, we shall argue that it is still possible to distinguish absolute rent from a rent due to a monopoly price.

Methodical Approach to the Rent Considering in the Mineral Resources Evaluation

Movement to the multisectoral economy strengthens the tendencies of development and improvement of rental relations and ways of accounting rent as the assessed value of natural resources. At the same time, objective ecological and economical assessment should provide an adequate share of profit to every participant of development and processing of minerals: to the state and to the region – the administrative unit of RF, as the proprietor of the subsoil and minerals (obviously, this is the absolute rent and differential rent I), to the shareholder or the leaseholder, to the production worker (differential rent II), to the financier (the state, the bank or other legal entity), which have pretensions of the interest.

Социализация земельной ренты как способ реконструкции социальной структуры в интересах обеспечения экономической эффективности

The revolution proclaimed, inter alia, to transfer the ownership of land to those who worked on it for their own benefit. Still, even in theory, it was yet to be defined what kind of ownership was needed to meet its primary objective. It is always troublesome, when a capitalizable object is transformed into a public asset because in the context of the surplus product situation, no mechanism of such transformation has ever been developed. Nevertheless, soviet socialism achieved some progress in a more specific issue of transforming land into a public asset via socialized land rent, in particular, via a differential land rent. In the socialist time, an absolute land rent was challenged by the non-match between socialist monopoly and monopoly in terms of classical political economy as a source of absolute rent; lack of clear distinction between rent and profit on capital where there are no restrictions on capital overflow between economy sectors thus, rendering absolute rent literally non-existent in Pareto terms. Since the end of socialism, the egalitarian process has lost its gain of a socialized differential land rent and had to look for other options, this time in the new situation of private land ownership. This brings us to the works of Henry Georges where he suggests replacing taxes by land rent. Thereby socialization of a land rent from the instrument of elimination of social inequality will be transformed to the tool of economic efficiency.

Taxing Resource Rents in Australia - What a Capital Idea

In this paper I use Marx’s analysis of rent to try to understand the complexities associated with the attempts to tax resource rents in Australia. My aim is to dissect ground rent (what the landlord expropriates in capitalist society by virtue of being the owner of land) into its constituent parts – absolute rent for the use of the land and what Marx calls Differential Rent I and Differential Rent II, rents which arise from different qualities in land and different levels of capital investment in land. I will also discuss monopoly rent. Economic rent in the mining industry in Australia arises in some circumstances because of the barrier to capital that is land and land ownership and the monopoly of ownership that the States and Territories have of minerals and resources. In other circumstances rent arises because of demand which pushes the price (or did before the mining boom in Australia ended in mid-2012) above its price of production and hence gives a greater than average rate of return compared to other industries. Barriers to entry (Marx’s alien forces) prevent new investment that would equalise that above average profit back towards the average. The various rent taxes of the Commonwealth and States and Territories then are attempts by the State to claw back some of the rent (surplus or above normal surplus value) flowing to mining capital. They do this either through levies independent of the production of surplus value, in the case of State and Territory royalties, or as income taxes imposed by the Commonwealth on profits arising after surplus value has been created in the process of production. The Commonwealth could take on the role of minerals landlord and demand rent from mining companies by imposing royalties on them across Australia.

Marxist Theory of Land Rent. Original Exposure and Contemporary Reformulations

Here is presented an English version of the first two chapters of the book of Samuel Jaramillo Hacia una teoria de la renta del suelo urbano (2009) (Towards a theory of Urban Land Rent) that is only published in Spanish. This is justified because the theme developed in these two chapters have greater thematic scope than the book, since it refers to the general category of rent, which has a crucial role in the Marxist interpretation of value and price formation in capitalism, and these days it is the subject of several debates. Therefore, it may be interesting not only to those involved in real estate and urban phenomena. The two chapters have autonomy and great consistency as text. Its approach is original and challenging, as shown by the discussions awakened by the Spanish version. With this publication we want to broaden the spectrum of these theses and introduce them to those who do not speak Spanish and are interested in the topic of land property.The text has three core themes. In the first chapter a scheme of the original exposure of Marx, which is relatively sparse in his work, is presented. Initially we outline his general notions, and then, the different forms of manifestation of this category: Differential Rent Type I and Type II, Absolute Rent and Monopoly Rent. In the second chapter the main notes and objections that have been made to the original presentation, mainly in Latin American and French literature, are discussed. These objections are examined, their scope is evaluated, and is analyzed what could be the origin of the mismatches identified, when judged that they are justified. A reformulation of the original approach to absorb or overcome these difficulties is proposed. Three cores of discussion are analyzed: the Marx notion of Absolute Rent and its connection to an organic composition of capital in agriculture abnormally low; the presentation of Differential Rent Type II and the relationship with an unequal distribution of agricultural capital; the difference in nature that Marx proposes between Differential and Absolute Rent and the relationships established between the latter category with the private ownership of land. The chapter concludes with an outline of a general reformulation of the Marxist category of Rent, in order to overcome these criticisms and enhance its potential to interpret the dynamics of price formation and the distribution of value in capitalism. The latter is developed in the light of contemporary discussion of the Marxist theory of value, roughly following the perspective known as "New Approach."

Subprime Crisis and Marx's Theory on Ground Rent

Most studies of the subprime crisis have taken into account the significance of the banks in general but not the specifically important role of mortgage loans including the crucial factor of private landed property. Marx's theory on ground rent serves as a key in a deeper understanding of the subprime crisis and in differentiating the class interests. Referring to Marx's theory on ground rent especially the topics of landed property, differential and absolute rent, price of land, mortgage, and fictitious capital, an analysis is given of the consequences of ground rent under monopolist capitalism, in particular on the recent subprime crisis, which has its winners and losers. The article concludes with the bourgeois and the proletarian solution of private landed property.

Politics of Urban Development and Wildfires in California and Turkey

While Turkey and California suffer similar wildfire risks, they have developed diametrically opposed fire-suppression strategies: the former adopted an increasingly centralized strategy, while the latter depends upon a highly decentralized system. This paper is a comparative analysis that relates the politics of land use in wildland–urban interfaces (WUIs) to this divergence in firefighting strategies. Our argument is that the evolution of the divergent fire-suppression strategies in California and Turkey are linked to two different types of rent-seeking behavior. Developers and landed interest seek absolute rent in Turkey and differential rent in California. The decentralized strategy in California allows property prices to be distinguished between areas of low and high protection, and commodifies safety as a form of investment regulating the market prices of land. In Turkey, the tendency toward centralization of firefighting is a part of the composite political strategy to open new land for development by completing the hitherto unfinished cadastral records of the WUIs. Thus, the centralized firefighting strategy leads indirectly to extensive commodification of the WUIs in Turkey and expands the national land market.