Absolute Rent

The following article is from The Great Soviet Encyclopedia (1979). It might be outdated or ideologically biased.

Absolute Rent


a form of capitalist land rent, representing the part of the surplus value created by agricultural wage laborers and appropriated by landowners because of the monopoly on private property in land. As distinguished from differential rent, absolute rent does not depend on differences in fertility, in the locations of various plots of land, or in the productivity of additional capital investments in a given plot. Private landowners who legally own the land allow their land to be used only in return for compensation, which they receive in the form of rent. The landowner collects rent from any plot, even the least productive one, if a demand to utilize it arises. The lessee, the capitalist entrepreneur who rents the land, must provide not only the average profit but also the superprofit, which is transmitted in the form of absolute rent to the landowner and constitutes part of the rent. It is possible to obtain this superprofit in agriculture because its organic composition of capital is lower than industry’s, and, consequently, the proportion of human labor creating the surplus value and the aggregate of surplus value in agriculture are larger than in industry. Thus, agriculture’s rate of surplus value is higher than industry’s. The cost of the agricultural produce is higher than the social price of production, which includes production expenses and the average profit.

In various branches of industry, different rates of profit also arise depending on differences in the organic structure of capital. Competition between various branches leads to the equalization of profit and the formation of average rates of profit. The superprofit created in agriculture is not involved in the free process of profit equalization; this is prevented by private property in land. The excess of surplus value over average profit in agriculture remains in the same economic sphere. Thus, the proportion of surplus value created in agriculture goes to the lessee in the form of average profit determined by the amounts of profit in industry. He gives the excess over the average profit to the landowner in the form of land rent. Absolute rent represents the difference between the social value of the agricultural produce, which is determined by the conditions of production on the least productive lands, and the social price of production.

As an economic category of the capitalist mode of production, absolute rent expresses the production relations of three basic classes of capitalist society: the landowners, the capitalist agricultural entrepreneurs, and the agricultural wage laborers. Since absolute rent is collected from even the least productive land and the market price is determined by the value established on the least productive land, it causes increased prices on agricultural products used by society. Thus, absolute rent is a contribution made by society to private ownership of land. The parasitic class of landowners exists at the expense of society. Since it raises the prices of agricultural produce, absolute rent is first and foremost a heavy burden on the working people.

The difference between the organic composition of capital in agriculture and that in industry has gradually decreased because of technical progress; in certain branches of agriculture the organic structure of capital has outstripped that of industry. This has helped create a tendency in developed capitalist countries toward decreasing the rate and amount of absolute rent. But under contemporary conditions, the role of the monopoly on private property in land is still extremely great; it has not lost its economic importance.

With the victory of socialism, absolute rent is eliminated, since the monopoly on large-scale private property in land is abolished.


The Great Soviet Encyclopedia, 3rd Edition (1970-1979). © 2010 The Gale Group, Inc. All rights reserved.
References in periodicals archive ?
Marx's notes, collated and published by Engels as the third volume of Capital, explore the relations between land and capital; and in particular, the distinction between and significance of differential and absolute rent in capitalism.
In capitalism, landed property uses two social processes to capture a portion of the wealth of society, the surplus value created by workers working for capital: differential rent and absolute rent. Differential Rent I (DR I) arises from competition within industry sectors that rely on access to land (including the agriculture, forestry, fishing, mining, manufacturing, transport and construction sectors).
Absolute rent (AR) on the other hand, arises, not from competition within an industry sector, but from competition between industry sectors.
Absolute rent is central to his theory of the interconnections between the agricultural and the industrial revolutions.
Marx argued that increases in absolute rent and not differential rent underlay the rapid rise of rents in the later 18th century because, although the productivity of agriculture was increasing, it was growing at a much slower rate than in manufacturing.
But unlike the earlier classical economists he distinguishes three types of rent--differential rent, absolute rent, and monopoly rent (see Harvey 1973, 179-82).
(Marx, [1894] 1981, 910) Here Marx distinguishes monopoly rent (which flows from an independent monopoly price for the products or the land itself) from absolute rent, to which the last sentence of the quotation refers.
In particular, Marx introduced the concept of absolute rent, along with differential rent.
Suffice it to say for readers unfamiliar with Marx's rent theory that differential rent is somewhat similar to Ricardo's intensive margin,(3) while absolute rent is a rent appropriated on all agricultural land (even at the "margin"), associated with the (assumed) lower organic composition of capital in agriculture compared with industry proper.