Page:The Economic Journal Volume 1.djvu/161

Rh the produce of the earth which is paid to the landlord for the use of the original and indestructible powers of the soil;' and he drew a distinction between this 'strict sense' of the term and the 'popular sense,' which confounded the 'interest and profit of capital' with it, by applying the name to 'whatever is annually paid by a farmer to his landlord.' The unearned character of a payment for the 'original and indestructible powers of the soil' can hardly be denied; but the whole difficulty turns on the identification of rent in this 'strict sense,' and the distinction established by Ricardo appears to be rather one of those niceties, which are allowable and useful in theory, and may be expected in the characteristic theory of so abstract a writer, but are nevertheless by no means easy to discover or determine in practice. Ricardo himself traced the rise of rent chiefly by differences in 'natural' fertility, but the difficulty of distinguishing the earned from the unearned increment is not diminished by introducing the element of situation; and in a later chapter he admitted that 'part' of the capital applied to the 'improvement' of land, 'when once expended,' 'is inseparably amalgamated with the land, and tends to increase its productive powers,' and that 'the remuneration paid to the landlord for its use is strictly of the nature of rent, and is subject to all the laws of rent.' This may indeed be the case, regarded from the standpoint of the existing differential advantages of land; but, viewed from a historical standpoint, such a payment is earned. Some writers have gone so far as to urge that in modern times in old countries 'economic rent,' or rent in the 'strict sense,' has, broadly speaking, disappeared; and, at any rate, a succession of economists has recognised the incorporation of the results of expenditure with the 'original and indestructible powers of the soil.' It is for this reason that it has been recently contended that the order in which land may be withdrawn from cultivation may differ from that in which it was first brought into it, because the 'non-recurrent expenditure' sunk in improvements will be considered in the first instance, and disregarded in the second.

The conception of rent as a payment for differential advantages has also been extended by a succession of writers to other forms of wealth; and Professor Marshall, while strongly insisting that the 'rent of land' has important 'peculiarities of its own,' argues that, from the point of view of Ricardo's doctrine that 'rent does not enter into the cost of production,' it is a 'leading species of a