Law of Diminishing Returns

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 It might be outdated or ideologically biased.

Law of Diminishing Returns


(in Russian, law of diminishing soil fertility), a reactionary bourgeois theory, according to which each successive investment of capital and labor in land has less effect than the preceding investment, and after a certain limit has been reached, any additional effect becomes impossible.

The “law” of diminishing returns was first formulated by the French economist A. R. J. Turgot in the 18th century and somewhat later by the English economist E. West. West and D. Ricardo tried to use it to explain the tendency for the profit norm to drop and relied on it in substantiating the theory of differential rent. T. R. Malthus also used it to support his theory of population. In the late 19th and early 20th centuries some of the most prominent advocates of the law of diminishing returns were L. Brentano and M. Sering in Germany and S. N. Bulgakov, M. I. Turgan-Baranovskii, P. B. Struve, and P. P. Maslov in Russia. In the first half of the 20th century A. Marshall, J. M. Keynes, J. B. Clark, and others interpreted the law of diminishing returns as a supposedly universal law of diminishing productivity that operates in industry as well as agriculture.

Relying on the law of diminishing returns, bourgeois political economists tried to show that it was impossible to satisfy the food needs of the earth’s growing population or to curtail the increasingly high cost of living, rising unemployment, and spreading poverty in capitalist societies. The scarcity of food products in particular countries was explained by natural biological laws. Advocates of the law of diminishing returns also linked it with the growth in land rent.

K. Marx and V. I. Lenin proved the antiscientific nature of the law of diminishing returns, which others used in an attempt to cover up the socioeconomic factors hindering progress in capitalist agriculture—the monopoly of private land ownership and predatory land management by capitalists in pursuit of maximum profit. Marx called the theory a “superficial notion” (see K. Marx and F. Engels, Soch., 2nd ed., vol. 25, part 2, p. 342), because soil fertility is determined not only by natural conditions but also by the development of science and technology (ibid., p. 330). An invariant state of technology places comparatively narrow limits on additional investments of labor and capital. Lenin emphasized that the argument used by defenders of the law of diminishing returns was “an empty abstraction, which ignores the most important thing—the level of technological development, the state of the productive forces” (Poln. sobr. soch., 5th ed., vol. 5, p. 101).

Scientific and technological progress in agricultural production and the ever greater intensification of agriculture, even with a decrease in agricultural land and population, are accompanied by an increase in production volume, a decrease in expenditures per unit of output produced, a rise in yield (as a result of improved soil tillage, the use of chemicals, and the like), and increased livestock productivity, which proves the groundlessness of the law of diminishing returns. After World War II, with the accelerating scientific and technological revolution and the transition to the machine stage of agricultural production in many countries, the law of diminishing returns has continued to be important in bourgeois political economy as part of the marginal utility theory.


Lenin, V. I. “Agrarnyi vopros i ’kritiki’ Marksa.” Poln. sobr. soch., 5th ed., vol. 5.
Lenin, V. I. “Marksistskie vzgliady na agrarnyi vopros v Evrope i v Rossii.” Ibid., vol. 7.
Lenin, V. I. “Agrarnaia programma sotsial-demokratii v pervoi russkoi revoliutsii 1905–1907 godov.” Ibid., vol. 16.
O zakone ubyvaiushchei dokhodnosti. Compiled and translated by Ia. A. Mirokhshin. Moscow, 1927.
Ekonomika i organizatsiia sel’skokhoziaistvennogo proizvodstva, 3rd ed. Moscow, 1975. Chapter 6.


The Great Soviet Encyclopedia, 3rd Edition (1970-1979). © 2010 The Gale Group, Inc. All rights reserved.