Page:Popular Science Monthly Volume 16.djvu/763

 too many hands to enable the owners to get whatever share of the produce they please. Competition determines the rate at which different lands will rent. The law, which in a condition of free competition determines this share of the landholder, is known as the law of rent. Though not first stated, it was first prominently brought forward by Ricardo. As formulated by him, it has been accepted by every economist of position since his time, and is one of the few doctrines of current economics that in the conflict of opinion have remained unshaken. Mr. George regards it as axiomatic, the terms having only to be correctly apprehended in order to meet with acceptance. This law is that the rent of land is determined by the excess of produce over that amount which the same application of labor and capital will obtain from the least productive land in use. The returns to capital and labor do not depend solely upon the amount and effectiveness of each, but they also depend upon the productiveness of the land upon which they are applied. When lands of different degrees of productiveness are open to them, they will apply themselves to the most productive, and their return will be the entire produce resulting. As land less and less productive remains open to them, the amount that they can produce on it decreases. Hence, on account of the competition for the more productive lands, land-owners are able to appropriate to themselves all of the produce obtained above that which the same labor and capital can obtain from the least productive land in use—the most productive free to them. The law, of course, applies to all lands used for any purpose whatever, though in the current statement of it too exclusive attention is generally paid to its relation to agriculture.

The relations of the shares of the three factors in production may be shown more clearly in the form of an equation: Produce $$=$$ rent $$$$ wages $$$$ interest, or produce—rent $$=$$ wages $$+$$ interest. How rent affects industry is now evident. The laws of both interest and wages appear as corollaries of this law of rent. For this law states that, no matter what the productive power of labor and capital, these two agents can only receive in wages and interest that part of the produce that they could have obtained on land free to them. The reward of labor and capital does not depend upon what they have produced, but upon what is left after rent is taken out. "The moment," says Mr. George, "this simple relation is recognized, a flood of light streams in upon what was before inexplicable, and seemingly discordant facts range themselves under an obvious law. The increase of rent which goes on in progressive countries is at once seen to be the key which explains why wages and interest fail to increase with increase of productive power. . . . When production increases, as it is increasing in all progressive countries, wages and interest will be affected, not by the increase, but by the manner in which rent is affected. If the value of land increases proportionally, all the increased production will be swallowed up by