Where there is an absolute ground-rent, that constitutes an independent component of the price of production, then the price of production of the capitalist tenants on the worst land is composed as: wages + constant capital + average profit + absolute ground-rent.

This price of production is then the basis of the differential ground-rent. If supply and demand coincide, this price of production is the price of all commodities on the market, at which the capitalist producers on the better land also sell. The price of their commodities is then composed as follows: wages + constant capital + average profit + extra profit + absolute ground-rent.

This extra profit turns into differential ground-rent for the landowners sooner (at the beginning of the lease) or later (at the expiry and renewal of the lease); absolute ground-rent also goes to them.

The regulating price of commodities from the worst land cannot simply be expenses + average profit, for otherwise the soil is not leased, or if a rent is paid after all, the tenant cannot draw an average profit and production is abandoned in this case.

889:1 Differential rent has the peculiarity that here landed property seizes only the surplus profit that the farmer himself would otherwise pocket, and under certain circumstances does pocket for the duration of his tenancy. Here landed property simply causes the transfer of a portion of the commodity price that arises without any effort on its part (rather as a result of the determination by competition of the production price governing the market), a portion reducible to surplus profit, from one person to the other, from the capitalist to the landowner. Landed property is not in this case a cause that creates this component of price or the rise in price that it presupposes. But if the worst type-A land cannot be cultivated – even though its cultivation would yield the price of production – until it yields a surplus over and above this production price, a rent, then landed property is the creative basis of this rise in price. Landed property has produced this rent itself.

At least in the beginnings of capitalist production, the organic composition of agriculture is comparatively low.¹ For example, grain production thus first pushes more masses of value into society than it draws in masses of value when it yields average profit.

Landed property draws its absolute ground-rent from this difference. Because of its exclusive disposal over a condition of production that cannot be reproduced by labour (and thus by capital), it prevents the mediation of the masses of value among the capitalists according to the principle of the average rate of profit. Landed property grabs a part of the created mass of value before it enters into this equalisation.

This way the contradiction is resolved: The landed property gets an absolute rent. The capitalist tenant can still draw average profit.

This means that the societal pot of surplus value, from which all spheres get their average profit, is reduced by the amount that flows into the absolute ground-rent. Again, presumed here is a low organic composition in agriculture. Should organic composition in agriculture reach the average level or even become higher then the absolute ground-rent is the result of a monopoly price.

898:1 In any case, this absolute rent, arising from the excess value over and above the price of production, is simply a part of the agricultural surplus-value, the transformation of this surplus-value into rent, its seizure by the landowner; just as differential rent arises from the transformation of surplus profit into rent, its seizure by landed property, at the general governing price of production. These two forms of rent are the only normal ones. Apart from this, rent can derive only from a genuine monopoly price, which is determined neither by the price of production of the commodities nor by their value, but rather by the demand of the purchasers and their ability to pay, consideration of which therefore belongs to the theory of competition, where the actual movement of market prices is investigated.

There is an absolute ground-rent which results from the surplus of the value of the commodities put into society relatively to what is taken out of society in exchange according to prices of production. But if this difference does not exist then the ground-rent on the worst land is a pure monopoly price.

This is perhaps a bit of an underwhelming result. Put differently, why should we care much? Marx answer seems to be “because people got it wrong in the past”:

892:1 The question now arises whether it follows from ground-rent on the poorest land, which cannot be derived from any difference in fertility, that the price of its product is necessarily a monopoly price in the customary sense, or a price that includes rent in the form of a tax, levied in this case by the landowner rather than the state? […] The question is whether the rent that is paid by the poorest land goes into the price of its product, which by our assumption is what governs the general market price, in the same way as a tax goes into the price of the commodity on which it is levied, i.e. as an element independent of its value.

This in no way necessarily follows, and is maintained only because the distinction between the value of commodities and their price of production has as yet not been understood.

Still, the question remains how it would even make a difference. The case where it does matter is discussed by Marx throughout: New land is needed to cover demand, but this new land is of a worse quality than previous land. In that situation we may ask if taking that additional land into use, does that represent a net loss in value terms for society? Does adding new fields reduce the wealth available to society because this land’s landowners and agricultural captialists producing on this land withdraw more value from society than the capitalists put into it?

That would indeed be the case if the price that comes about thanks to absolute rent is more than the value of the product: more is taken out of society than is put in, even though additional land is cultivated. But Marx here points out: No, it does not have to be like that, it can still be that this is a real contribution if the price is higher than the production price but lower than the value.

Put differently:

• Assumption 1 price of production + rent is more than value: then the newly cultivated land extracts more wealth from society than it puts in.

• Assumption 2 price of production + rent is less than value: the additional cultivation of the land has not made society poorer, the landowners are extracting, but what happens on their land is not purely negative in value terms.