Butthoughprofitsthusvary，theparityonthewhole，of
differentmodesofemployingcapital（intheabsenceofany
naturalorartificialmonopoly）is，inacertain，andavery
importantsense，maintained。Onanaverage（whatevermaybethe
occasionalfluctuation）thevariousemploymentsofcapitalareon
suchafootingastoholdoutnotequalprofits，butequal
expectationsofprofit，topersonsofaverageabilitiesand
advantages。Byequal，Imeanaftermakingcompensationforany
inferiorityintheagreeablenessorsafetyofanemployment。If
thecasewerenotso;iftherewere，evidently，andtocommon
experience，morefavourablechancesofpecuniarysuccessinone
businessthaninothers，morepersonswouldengagetheircapital
inthebusiness，orwouldbringuptheirsonstoit;whichin
factalwayshappenswhenabusiness，likethatofanengineerat
present，orlikeanynewlyestablishedandprosperous
manufacture，isseentobeagrowingandthrivingone。If，onthe
contrary，abusinessisnotconsideredthriving;ifthechances
ofprofitinitarethoughttobeinferiortothoseinother
employments;capitalgraduallyleavesit，oratleastnewcapital
isnotattractedtoit;andbythischangeinthedistributionof
capitalbetweenthelessprofitableandthemoreprofitable
employments，asortofbalanceisrestored。Theexpectationof
profit，therefore，indifferentemployments，cannotlongcontinue
verydifferent:theytendtoacommonaverage，thoughtheyare
generallyoscillatingfromonesidetotheothersideofthe
medium。
Thisequalizingprocess，commonlydescribedasthetransfer
ofcapitalfromoneemploymenttoanother，isnotnecessarilythe
onerous，slow，andalmostimpracticableoperationwhichitis
veryoftenrepresentedtobe。Inthefirstplace，itdoesnot
alwaysimplytheactualremovalofcapitalalreadyembarkedinan
employment。Inarapidlyprogressivestateofcapital，the
adjustmentoftentakesplacebymeansofthenewaccumulationsof
eachyear，whichdirectthemselvesinpreferencetowardsthemore
thrivingtrades。Evenwhenarealtransferofcapitalis
necessary，itisbynomeansimpliedthatanyofthosewhoare
engagedintheunprofitableemployment，relinquishbusinessand
breakuptheirestablishments。Thenumerousandmultifarious
channelsofcredit。throughwhich，incommercialnations，
unemployedcapitaldiffusesitselfoverthefieldofemployment，
flowingoveringreaterabundancetothelowerlevels，arethe
meansbywhichtheequalizationisaccomplished。Theprocess
consistsinalimitationbyoneclassofdealersorproducers，
andanextensionbytheother，ofthatportionoftheirbusiness
whichiscaRedonwithborrowedcapital。Thereisscarcelyany
dealerorproduceronaconsiderablescale，whoconfineshis
businesstowhatcanbecarriedonbyhisownfunds。Whentrade
isgood，henotonlyusestotheutmosthisowncapital，but
employs，inaddition，muchofthecreditwhichthatcapital
obtainsforhim。When，eitherfromover—supplyorfromsome
slackeninginthedemandforhiscommodity，hefindsthatit
sellsmoreslowlyorobtainsalowerprice，hecontractshis
operations，anddoesnotapplytobankersorothermoneydealers
forarenewaloftheiradvancestothesameextentasbefore。A
businesswhichisincreasingholdsout，onthecontrary，a
prospectofprofitableemploymentforalargeramountofthis
floatingcapitalthanpreviously，andthoseengagedinitbecome
applicantstothemoneydealersforlargeradvances，which，from
theirimprovingcircumstances，theyhavenodifficultyin
obtaining。Adifferentdistributionoffloatingcapitalbetween
twoemploymentshasasmucheffectinrestoringtheirprofitsto
anequilibrium，asiftheownersofanequalamountofcapital
weretoabandontheonetradeandcarrytheircapitalintothe
other。Thiseasy，andasitwerespontaneous，methodof
accommodatingproductiontodemand，isquitesufficientto
correctanyinequalitiesarisingfromthefluctuationsoftrade，
orothercausesofordinaryoccurrence。Inthecaseofan
altogetherdecliningtrade，inwhichitisnecessarythatthe
productionshouldbe，notoccasionallyvaried，butgreatlyand
permanentlydiminished，orperhapsstoppedaltogether，the
processofextricatingthecapitalis，nodoubt，tardyand
difficult，andalmostalwaysattendedwithconsiderableloss;
muchofthecapitalfixedinmachinery，buildings，permanent
works，&c。beingeithernotapplicabletoanyotherpurpose，or
onlyapplicableafterexpensivealterations;andtimebeing
seldomgivenforeffectingthechangeinthemodeinwhichit
wouldbeeffectedwithleastloss，namely，bynotreplacingthe
fixedcapitalasitwearsout。Thereisbesides，intotally
changingthedestinationofacapital，sogreatasacrificeof
establishedconnexion，andofacquiredskillandexperience，that
peoplearealwaysveryslowinresolvinguponit，andhardlyever
dosountillongafterachangeoffortunehasbecomehopeless。
These，however，aredistinctlyexceptionalcases，andevenin
thesetheequalizationisatlasteffected。Itmayalsohappen
thatthereturntoequilibriumisconsiderablyprotracted，when，
beforeoneinequalityhasbeencorrected，anothercauseof
inequalityarises;whichissaidtohavebeencontinuallythe
caseduringalongseriesofyears，withtheproductionofcotton
intheSouthernStatesofNorthAmerica;thecommodityhaving
beenupheldatwhatwasvirtuallyamonopolyprice，becausethe
increaseofdemand，fromsuccessiveimprovementsinthe
manufacture，wentonwitharapiditysomuchbeyondexpectation
thatformanyyearsthesupplynevercompletelyovertookit。But
itisnotoftenthatasuccessionofdisturbingcauses，all
actinginthesamedirection，areknowntofollowoneanother
withhardlyanyinterval。Wherethereisnomonopoly，theprofits
ofatradearelikelytorangesometimesaboveandsometimes
belowthegenerallevel，buttendingalwaystoreturntoit;like
theoscillationsofthependulum。
Ingeneral，then，althoughprofitsareverydifferentto
differentindividuals，andtothesameindividualindifferent
years，therecannotbemuchdiversityatthesametimeandplace
intheaverageprofitsofdifferentemployments，（otherthanthe
standingdifferencesnecessarytocompensatefordifferenceof
attractiveness，）exceptforshortperiods，orwhensomegreat
permanentrevulsionhasovertakenaparticulartrade。Ifany
popularimpressionexiststhatsometradesaremoreprofitable
thanothers，independentlyofmonopoly，orofsuchrareaccidents
ashavebeennoticedinregardtothecottontrade，the
impressionisinallprobabilityfallacious，sinceifitwere
sharedbythosewhohavegreatestmeansofknowledgeandmotives
toaccurateexamination，therewouldtakeplacesuchaninfluxof
capitalaswouldsoonlowertheprofitstothecommonlevel。It
istruethat，topersonswiththesameamountoforiginalmeans，
thereismorechanceofmakingalargefortuneinsome
employmentsthaninothers。Butitwouldbefoundthatinthose
sameemployments，bankruptciesalsoaremorefrequent，andthat
thechanceofgreatersuccessisbalancedbyagreater
probabilityofcompletefailure。Veryoftenitismorethan
balanced:for，aswasremarkedinanothercase，thechanceof
greatprizesoperateswithagreaterdegreeofstrengththan
arithmeticwillwarrant，inattractingcompetitors;andIdoubt
notthattheaveragegains，inatradeinwhichlargefortunes
maybemade，arelowerthaninthoseinwhichgainsareslow，
thoughcomparativelysure，andinwhichnothingistobe
ultimatelyhopedforbeyondacompetency。Thetimbertradeof
Canadaisoneexampleofanemploymentofcapitalpartakingso
muchofthenatureofalottery，astomakeitanaccredited
opinionthat，takingtheadventurersintheaggregate，thereis
moremoneylostbythetradethangainedbyit;inotherwords，
thattheaveragerateofprofitislessthannothing。Insuch
pointsasthis，muchdependsonthecharactersofnations，
accordingastheypartakemoreorlessoftheadventurous，or，as
itiscalledwhentheintentionistoblameit，thegambling
spirit。ThisspiritismuchstrongerintheUnitedStatesthanin
GreatBritain;andinGreatBritainthaninanycountryofthe
Continent。InsomeContinentalcountriesthetendencyissomuch
thereverse，thatsafeandquietemploymentsprobablyyielda
lessaverageprofittothecapitalengagedinthem，thanthose
whichoffergreatergainsatthepriceofgreaterhazards。
Itmustnothoweverbeforgotten，thateveninthecountries
ofmostactivecompetition，customalsohasaconsiderableshare
indeterminingtheprofitsoftrade。Thereissometimesanidea
afloatastowhattheprofitofanemploymentshouldbe，which
thoughnotadheredtobyallthedealers，norperhapsrigidlyby
any，stillexercisesacertaininfluenceovertheiroperations。
TherehasbeeninEnglandakindofnotion，howwidelyprevailing
Iknownot，thatfiftypercentisaproperandsuitablerateof
profitinretailtransactions:understand，notfiftypercenton
thewholecapital，butanadvanceoffiftypercentonthe
wholesaleprices;fromwhichhavetobedefrayedbaddebts，shop
rent，thepayofclerks，shopmen，andagentsofalldescriptions，
inshortalltheexpensesoftheretailbusiness。Ifthiscustom
wereuniversal，andstrictlyadheredto，competitionindeedwould
stilloperate，buttheconsumerwouldnotderiveanybenefitfrom
it，atleastastoprice;thewayinwhichitwoulddiminishthe
advantagesofthoseengagedintheretailtrade，wouldbebya
greatersubdivisionofthebusiness。Insomepartsofthe
Continentthestandardisashighasahundredpercent。The
increaseofcompetitionhowever，inEnglandatleast，israpidly
tendingtobreakdowncustomsofthisdescription。Inthe
majorityoftrades（atleastinthegreatemporiaoftrade），
therearenownumerousdealerswhosemottois，"smallgainsand
frequent"——agreatbusinessatlowprices，ratherthanhigh
pricesandfewtransactions;andbyturningovertheircapital
morerapidly，andaddingtoitbyborrowedcapitalwhenneeded，
thedealersoftenobtainindividuallyhigherprofits;thoughthey
necessarilylowertheprofitsofthoseamongtheircompetitors，
whodonotadoptthesameprinciple。Nevertheless，competition，
asremarked（2*）inapreviouschapter，has，asyet，butalimited
dominionoverretailprices;andconsequentlytheshareofthe
wholeproduceoflandandlabourwhichisabsorbedinthe
remunerationofmeredistributors，continuesexorbitant;and
thereisnofunctionintheeconomyofsocietywhichsupportsa
numberofpersonssodisproportionedtotheamountofworktobe
performed。
5。Theprecedingremarkshave，Ihope，sufficiently
elucidatedwhatismeantbythecommonphrase，"theordinaryrate
ofprofit;"andthesenseinwhich，andthelimitationsunder
which，thisordinaryratehasarealexistence。Itnowremainsto
consider，whatcausesdetermineitsamount。
Topopularapprehensionitseemsasiftheprofitsof
businessdependeduponprices。Aproducerordealerseemsto
obtainhisprofitsbysellinghiscommodityformorethanitcost
him。Profitaltogether，peopleareapttothink，isaconsequence
ofpurchaseandsale。Itisonly（theysuppose）becausethereare
purchasersforacommodity，thattheproducerofitisableto
makeanyprofit。Demand——customers——amarketforthe
commodity，arethecauseofthegainsofcapitalists。Itisby
thesaleoftheirgoods，thattheyreplacetheircapital，andadd
toitsamount。
This，however，islookingonlyattheoutsidesurfaceofthe
economicalmachineryofsociety。Innocase，wefind，isthemere
moneywhichpassesfromonepersontoanother，thefundamental
matterinanyeconomicalphenomenon。Ifwelookmorenarrowly
intotheoperationsoftheproducer，weshallperceivethatthe
moneyheobtainsforhiscommodityisnotthecauseofhishaving
aprofit，butonlythemodeinwhichhisprofitispaidtohim。
Thecauseofprofitis，thatlabourproducesmorethanis
requiredforitssupport。Thereasonwhyagriculturalcapital
yieldsaprofit，isbecausehumanbeingscangrowmorefood，than
isnecessarytofeedthemwhileitisbeinggrown，includingthe
timeoccupiedinconstructingthetools，andmakingallother
needfulpreparations:fromwhichitisaconsequence，thatifa
capitalistundertakestofeedthelabourersonconditionof
receivingtheproduce，hehassomeofitremainingforhimself
afterreplacinghisadvances。Tovarytheformofthetheorem:
thereasonwhycapitalyieldsaprofit，isbecausefood，
clothing，materials，andtools，lastlongerthanthetimewhich
wasrequiredtoproducethem;sothatifacapitalistsuppliesa
partyoflabourerswiththesethings，onconditionofreceiving
alltheyproduce，theywill，inadditiontoreproducingtheirown
necessariesandinstruments，haveaportionoftheirtime
remaining，toworkforthecapitalist。Wethusseethatprofit
arises，notfromtheincidentofexchange，butfromthe
productivepoweroflabour;andthegeneralprofitofthecountry
isalwayswhattheproductivepoweroflabourmakesit，whether
anyexchangetakesplaceornot。Iftherewerenodivisionof
employments，therewouldbenobuyingorselling，buttherewould
stillbeprofit。Ifthelabourersofthecountrycollectively
producetwentypercentmorethantheirwages，profitswillbe
twentypercent，whateverpricesmayormaynotbe。Theaccidents
ofpricemayforatimemakeonesetofproducersgetmorethan
thetwentypercent，andanotherless，theonecommoditybeing
ratedaboveitsnaturalvalueinrelationtoothercommodities，
andtheotherbelow，untilpriceshaveagainadjustedthemselves;
buttherewillalwaysbejusttwentypercentdividedamongthem
all。
Iproceed，inexpansionoftheconsiderationsthusbriefly
indicated，toexhibitmoreminutelythemodeinwhichtherateof
profitisdetermined。
6。Iassume，throughout，thestateofthings，which，where
thelabourersandcapitalistsareseparateclasses，prevails，
withfewexceptions，universally;namely，thatthecapitalist
advancesthewholeexpenses，includingtheentireremunerationof
thelabourer。Thatheshoulddoso，isnotamatterofinherent
necessity;thelabourermightwaituntiltheproductionis
complete，forallthatpartofhiswageswhichexceedsmere
necessaries;andevenforthewhole，ifhehasfundsinhand，
sufficientforhistemporarysupport。Butinthelattercase，the
laboureristothatextentreallyacapitalist，investingcapital
intheconcern，bysupplyingaportionofthefundsnecessaryfor
carryingiton;andevenintheformercasehemaybelookedupon
inthesamelight，since，contributinghislabouratlessthan
themarketprice，hemayberegardedaslendingthedifferenceto
hisemployer，andreceivingitbackwithinterest（onwhatever
principlecomputed）fromtheproceedsoftheenterprise。
Thecapitalist，then，maybeassumedtomakeallthe
advances，andreceivealltheproduce。Hisprofitconsistsofthe
excessoftheproduceabovetheadvances;hisrateofprofitis
theratiowhichthatexcessbearstotheamountadvanced。But
whatdotheadvancesconsistof？
Itis，forthepresent，necessarytosuppose，thatthe
capitalistdoesnotpayanyrent;hasnottopurchasetheuseof
anyappropriatednaturalagent。Thisindeedisscarcelyeverthe
exacttruth。Theagriculturalcapitalist，exceptwhenheisthe
ownerofthesoilhecultivates，always，oralmostalways，pays
rent:andeveninmanufactures，（nottomentionground—rent，）the
materialsofthemanufacturehavegenerallypaidrent，insome
stageoftheirproduction。Thenatureofrent，however，wehave
notyettakenintoconsideration;anditwillhereafterappear，
thatnopracticalerror，onthequestionwearenowexamining，is
producedbydisregardingit。
If，then，leavingrentoutofthequestion，weinquirein
whatitisthattheadvancesofthecapitalist，forpurposesof
production，consist，weshallfindthattheyconsistofwagesof
labour。
Alargeportionoftheexpenditureofeverycapitalist
consistsinthedirectpaymentofwages。Whatdoesnotconsistof
this，iscomposedofmaterialsandimplements，including
buildings。Butmaterialsandimplementsareproducedbylabour;
andasoursupposedcapitalistisnotmeanttorepresentasingle
employment，buttobeatypeoftheproductiveindustryofthe
wholecountry，wemaysupposethathemakeshisowntools，and
raiseshisownmaterials。Hedoesthisbymeansofprevious
advances，which，again，consistwhollyofwages。Ifwesuppose
himtobuythematerialsandtoolsinsteadofproducingthem，the
caseisnotaltered:hethenrepaystoapreviousproducerthe
wageswhichthatpreviousproducerhaspaid。Itistrue，he
repaysittohimwithaprofit;andifhehadproducedthethings
himself，hehimselfmusthavehadthatprofit，onthispartof
hisoutlay，aswellasoneveryotherpart。Thefact，however，
remains，thatinthewholeprocessofproduction，beginningwith
thematerialsandtools，andendingwiththefinishedproduct，
alltheadvanceshaveconsistedofnothingbutwages;exceptthat
certainofthecapitalistsconcernedhave，forthesakeof
generalconvenience，hadtheirshareofprofitpaidtothem
beforetheoperationwascompleted。Whatever，oftheultimate
product，isnotprofit，isrepaymentofwages。
7。Itthusappearsthatthetwoelementsonwhich，andwhich
alone，thegainsofthecapitalistsdepend，are，first，the
magnitudeoftheproduce，inotherwords，theproductivepowerof
labour;andsecondly，theproportionofthatproduceobtainedby
thelabourersthemselves;theratio，whichtheremunerationof
thelabourersbearstotheamounttheyproduce。Thesetwothings
formthedatafordeterminingthegrossamountdividedasprofit
amongallthecapitalistsofthecountry;buttherateofprofit，
thepercentageonthecapital，dependsonlyonthesecondofthe
twoelements，the1abourer’sproportionalshare，andnotonthe
amounttobeshared。Iftheproduceoflabourweredoubled，and
thelabourersobtainedthesameproportionalshareasbefore，
thatis，iftheirremunerationwasalsodoubled，thecapitalists，
itistrue，wouldgaintwiceasmuch;butastheywouldalsohave
hadtoadvancetwiceasmuch，therateoftheirprofitwouldbe
onlythesameasbefore。
WethusarriveattheconclusionofRicardoandothers，that
therateofprofitsdependsonwages;risingaswagesfall，and
fallingaswagesrise。Inadopting，however，thisdoctrine，I
mustinsistuponmakingamostnecessaryalterationinits
wording。Insteadofsayingthatprofitsdependonwages，letus
say（whatRicardoreallymeant）thattheydependonthecostof
labour。
Wages，andthecostoflabour;whatlabourbringsintothe
labourer，andwhatitcoststothecapitalist;areideasquite
distinct，andwhichitisoftheutmostimportancetokeepso。
Forthispurposeitisessentialnottodesignatethem，asis
almostalwaysdone，bythesamename。Wages，inpublic
discussions，bothoralandprinted，beinglookeduponfromthe
pointofviewofthepayers，muchoftenerthanfromthatofthe
receivers，nothingismorecommonthantosaythatwagesarehigh
orlow，meaningonlythatthecostoflabourishighorlow。The
reverseofthiswouldbeoftenerthetruth:thecostoflabouris
frequentlyatitshighestwherewagesarelowest。Thismayarise
fromtwocauses。Inthefirstplace，thelabour，thoughcheap，
maybeinefficient。InnoEuropeancountryarewagessolowas
theyare（oratleastwere）inIreland:theremunerationofan
agriculturallabourerinthewestofIrelandnotbeingmorethan
halfthewagesofeventhelowest—paidEnglishman，the
Dorsetshirelabourer。Butif，frominferiorskillandindustry，
twodays’labourofanIrishmanaccomplishednomoreworkthanan
Englishlabourerperformedinone，theIrishman’slabourcostas
muchastheEnglishman’s，thoughitbroughtinsomuchlessto
himself。Thecapitalist’sprofitisdeterminedbytheformerof
thesetwothings，notthelatter。Thatadifferencetothis
extentreallyexistedintheefficiencyofthelabour，isproved
notonlybyabundanttestimony，butbythefact，that
notwithstandingthelownessofwages，profitsofcapitalarenot
understoodtohavebeenhigherinIrelandthaninEngland。
Theothercausewhichrenderswages，andthecostoflabour，
norealcriteriaofoneanother，isthevaryingcostlinessofthe
articleswhichthelabourerconsumes。Ifthesearecheap，wages，
inthesensewhichisofimportancetothelabourer，maybehigh，
andyetthecostoflabourmaybelow;ifdear，thelabourermay
bewretchedlyoff，thoughhislabourmaycostmuchtothe
capitalist。Thislastistheconditionofacountryover—peopled
inrelationtoitsland;inwhich，foodbeingdear，thepoorness
ofthelabourer’srealrewarddoesnotpreventlabourfrom
costingmuchtothepurchaser，andlowwagesandlowprofits
co—exist。TheoppositecaseisexemplifiedintheUnitedStates
ofAmerica。Thelabourerthereenjoysagreaterabundanceof
comfortsthaninanyothercountryoftheworld，exceptsomeof
thenewestcolonies;butowingtothecheappriceatwhichthese
comfortscanbeobtained（combinedwiththegreatefficiencyof
thelabour），thecostoflabourtothecapitalistisatleastnot
higher，northerateofprofitlower，thaninEurope。
Thecostoflabour，then，is，inthelanguageofmathematics，
afunctionofthreevariables:theefficiencyoflabour;the
wagesoflabour（meaningtherebytherealrewardofthe
labourer）;andthegreaterorlesscostatwhichthearticles
composingthatrealrewardcanbeproducedorprocured。Itis
plainthatthecostoflabourtothecapitalistmustbe
influencedbyeachofthesethreecircumstances，andbyno
others。These，therefore，arealsothecircumstanceswhich
determinetherateofprofit;anditcannotbeinanyway
affectedexceptthroughoneorotherofthem。Iflabourgenerally
becamemoreefficient，withoutbeingmorehighlyrewarded;if，
withoutitsbecominglessefficient，itsremunerationfell，no
increasetakingplaceinthecostofthearticlescomposingthat
remuneration;orifthosearticlesbecamelesscostly，without
thelabourer’sobtainingmoreofthem;inanyoneofthesethree
cases，profitswouldrise。If，onthecontrary，labourbecame
lessefficient（asitmightdofromdiminishedbodilyvigourin
thepeople，destructionoffixedcapital，ordeteriorated
education）;orifthelabourerobtainedahigherremuneration，
withoutanyincreasedcheapnessinthethingscomposingit;or
if，withouthisobtainingmore，thatwhichhedidobtainbecame
morecostly;profits，inallthesecases，wouldsuffera
diminution。Andthereisnoothercombinationofcircumstances，
inwhichthegeneralrateofprofitofacountry，inall
employmentsindifferently，caneitherfallorrise。
Theevidenceofthesepropositionscanonlybestated
generally，though，itishoped，conclusively，inthisstageof
oursubject。Itwillcomeoutingreaterfulnessandforcewhen，
havingtakenintoconsiderationthetheoryofValueandPrice，we
shallbeenabledtoexhibitthelawofprofitsintheconcrete——
inthecomplexentanglementofcircumstancesinwhichitactually
works。ThiscanonlybedoneintheensuingBook。Onetopicstill
remainstobediscussedinthepresentone，sofarasitadmits
ofbeingtreatedindependentlyofconsiderationsofValue;the
subjectofRent;towhichwenowproceed。
NOTES:
1。Itistoberegrettedthatthisword，inthissense，isnot
familiartoanEnglishear。Frenchpoliticaleconomistsenjoya
greatadvantageinbeingabletospeakcurrentlyoflesprofits
del’entrpreneur。
2。Videsupra，bookii。ch。iv。sect。3。
ThePrinciplesofPoliticalEconomy
byJohnStuartMill
Book2，Chapter16
OfRent
1。Therequisitesofproductionbeinglabour，capital，and
naturalagents;theonlyperson，besidesthelabourerandthe
capitalist，whoseconsentisnecessarytoproduction，andwhocan
claimashareoftheproduceasthepriceofthatconsent，isthe
personwho，bythearrangementsofsociety，possessesexclusive
poweroversomenaturalagent。Thelandistheprincipalofthe
naturalagentswhicharecapableofbeingappropriated，andthe
considerationpaidforitsuseiscalledrent。Landedproprietors
aretheonlyclass，ofanynumberorimportance，whohaveaclaim
toashareinthedistributionoftheproduce，throughtheir
ownershipofsomethingwhichneithertheynoranyoneelsehave
produced。Iftherebeanyothercasesofasimilarnature，they
willbeeasilyunderstood，whenthenatureandlawsofrentare
comprehended。
Itisatonceevident，thatrentistheeffectofamonopoly;
thoughthemonopolyisanaturalone，whichmayberegulated，
whichmayevenbeheldasatrustforthecommunitygenerally，
butwhichcannotbepreventedfromexisting。Thereasonwhy
landownersareabletorequirerentfortheirland，isthatitis
acommoditywhichmanywant，andwhichnoonecanobtainbutfrom
them。Ifallthelandofthecountrybelongedtooneperson，he
couldfixtherentathispleasure。Thewholepeoplewouldbe
dependentonhiswillforthenecessariesoflife，andhemight
makewhatconditionshechose。Thisistheactualstateofthings
inthoseOrientalkingdomsinwhichthelandisconsideredthe
propertyofthestate。Rentisthenconfoundedwithtaxation，and
thedespotmayexacttheutmostwhichtheunfortunatecultivators
havetogive。Indeed，theexclusivepossessorofthelandofa
countrycouldnotwellbeotherthandespotofit。Theeffect
wouldbemuchthesameifthelandbelongedtosofewpeople，
thattheycould，anddid，acttogetherasoneman，andfixthe
rentbyagreementamongthemselves。Thiscase，however，is
nowhereknowntoexist:andtheonlyremainingsuppositionis
thatoffreecompetition;thelandownersbeingsupposedtobe，as
infacttheyare，toonumeroustocombine。
2。Athingwhichislimitedinquantity，eventhoughits
possessorsdonotactinconcert，isstillamonopolizedarticle。
Butevenwhenmonopolized，athingwhichisthegiftofnature，
andrequiresnolabouroroutlayastheconditionofits
existence，will，iftherebecompetitionamongtheholdersofit，
commandaprice，onlyifitexistsinlessquantitythanthe
demand。Ifthewholelandofacountrywererequiredfor
cultivation，allofitmightyieldarent。Butinnocountryof
anyextentdothewantsofthepopulationrequirethatallthe
land，whichiscapableofcultivation，shouldbecultivated。The
foodandotheragriculturalproducewhichthepeopleneed，and
whichtheyarewillingandabletopayforatapricewhich
remuneratesthegrower，mayalwaysbeobtainedwithout
cultivatingalltheland;sometimeswithoutcultivatingmorethan
asmallpartofit;thelandsmosteasilycultivatedbeing
preferredinaveryearlystageofsociety;themostfertile，or
thoseinthemostconvenientsituations，inamoreadvanced
state。Thereisalways，therefore，somelandwhichcannot，in
existingcircumstances，payanyrent;andnolandeverpaysrent，
unless，inpointoffertilityorsituation，itbelongstothose
superiorkindswhichexistinlessquantitythanthedemand—which
cannotbemadetoyieldalltheproducerequiredforthe
community，unlessontermsstilllessadvantageousthanthe
resorttolessfavouredsoils。
Thereisland，suchasthedesertsofArabia，whichwill
yieldnothingtoanyamountoflabour;andthereisland，like
someofourhardsandyheaths，whichwouldproducesomething，
but，inthepresentstateofthesoil，notenoughtodefraythe
expensesofproduction。Suchlands，unlessbysomeapplicationof
chemistrytoagriculturestillremainingtobeinvented，cannot
becultivatedforprofit，unlesssomeoneactuallycreatesa
soil，byspreadingnewingredientsoverthesurface，ormixing
themwiththeexistingmaterials。Ifingredientsfittedforthis
purposeexistinthesubsoil，orcloseathand，theimprovement
evenofthemostunpromisingspotsmayanswerasaspeculation:
butifthoseingredientsarecostly，andmustbebroughtfroma
distance，itwillseldomanswertodothisforthesakeof
profit，thoughthe"magicofproperty"willsometimeseffectit。
Landwhichcannotpossiblyyieldaprofit，issometimes
cultivatedataloss，thecultivatorshavingtheirwants
partiallysuppliedfromothersources;asinthecaseofpaupers，
andsomemonasteriesorcharitableinstitutions，amongwhichmay
bereckonedthePoorColoniesofBelgium。Theworstlandwhich
canbecultivatedasameansofsubsistence，isthatwhichwill
justreplacetheseed，andthefoodofthelabourersemployedon
it，togetherwithwhatDr。Chalmerscallstheirsecondaries;that
is，thelabourersrequiredforsupplyingthemwithtools，and
withtheremainingnecessariesoflife。Whetheranygivenlandis
capableofdoingmorethanthis，isnotaquestionofpolitical
economy，butofphysicalfact。Thesuppositionleavesnothingfor
profits，noranythingforthelabourersexceptnecessaries:the
land，therefore，canonlybecultivatedbythelabourers
themselves，orelseatapecuniaryloss:andafortiori，cannot
inanycontingencyaffordarent。Theworstlandwhichcanbe
cultivatedasaninvestmentforcapital，isthatwhich，after
replacingtheseed，notonlyfeedstheagriculturallabourersand
theirsecondaries，butaffordsthemthecurrentrateofwages，
whichmayextendtomuchmorethanmerenecessaries;andleaves
forthosewhohaveadvancedthewagesofthesetwoclassesof
labourers，asurplusequaltotheprofittheycouldhaveexpected
fromanyotheremploymentoftheircapital。Whetheranygiven
landcandomorethanthis，isnotmerelyaphysicalquestion，
butdependspartlyonthemarketvalueofagriculturalproduce。
Whatthelandcandoforthelabourersandforthecapitalist，
beyondfeedingallwhomitdirectlyorindirectlyemploys，of
coursedependsuponwhattheremainderoftheproducecanbesold
for。Thehigherthemarketvalueofproduce，thelowerarethe
soilstowhichcultivationcandescend，consistentlywith
affordingtothecapitalemployed，theordinaryrateofprofit。
As，however，differencesoffertilityslideintooneanother
byinsensiblegradations;anddifferencesofaccessibility，that
is，ofdistancefrommarkets，dothesame;andsincethereis
landsobarrenthatitcouldnotpayforitscultivationatany
price;itisevidentthat，whateverthepricemaybe，theremust
inanyextensiveregionbesomelandwhichatthatpricewill
justpaythewagesofthecultivators，andyieldtothecapital
employedtheordinaryprofit，andnomore。Until，therefore，the
priceriseshigher，oruntilsomeimprovementraisesthat
particularlandtoahigherplaceinthescaleoffertility，it
cannotpayanyrent。Itisevident，however，thatthecommunity
needstheproduceofthisqualityofland;sinceifthelands
morefertileorbettersituatedthanit，couldhavesufficedto
supplythewantsofsociety，thepricewouldnothaverisenso
highastorenderitscultivationprofitable。Thisland，
therefore，willbecultivated;andwemaylayitdownasa
principlethatsolongasanyofthelandofacountrywhichis
fitforcultivation，andnotwithheldfromitbylegalorother
factitiousobstacles，isnotcultivated，theworstlandinactual
cultivation（inpointoffertilityandsituationtogether）pays
norent。
3。If，then，ofthelandincultivation，thepartwhich
yieldsleastreturntothelabourandcapitalemployedonit
givesonlytheordinaryprofitofcapital，withoutleaving
anythingforrent;astandardisaffordedforestimatingthe
amountofrentwhichwillbeyieldedbyallotherland。Anyland
yieldsjustasmuchmorethantheordinaryprofitsofstock，as
ityieldsmorethanwhatisreturnedbytheworstlandin
cultivation。Thesurplusiswhatthefarmercanaffordtopayas
renttothelandlord;andsince，ifhedidnotsopayit，he
wouldreceivemorethantheordinaryrateofprofit，the
competitionofothercapitalists，thatcompetitionwhich
equalizestheprofitsofdifferentcapitals，willenablethe
landlordtoappropriateit。Therent，therefore，whichanyland
willyield，istheexcessofitsproduce，beyondwhatwouldbe
returnedtothesamecapitalifemployedontheworstlandin
cultivation。Thisisnot，andneverwaspretendedtobe，the
limitofmetayerrents，orofcottierrents;butitisthelimit
offarmers’rents。Nolandrentedtoacapitalistfarmerwill
permanentlyyieldmorethanthis;andwhenityieldsless，itis
becausethelandlordforegoesapartofwhat，ifhechose，he
couldobtain。
Thisisthetheoryofrent，firstpropoundedattheendof
thelastcenturybyDr。Anderson，andwhich，neglectedatthe
time，wasalmostsimultaneouslyrediscovered，twentyyearslater，
bySirEdwardWest，Mr。Malthus，andMr。Ricardo。Itisoneof
thecardinaldoctrinesofpoliticaleconomy;anduntilitwas
understood，noconsistentexplanationcouldbegivenofmanyof
themorecomplicatedindustrialphenomena。Theevidenceofits
truthwillbemanifestedwithagreatincreaseofclearness，when
wecometotracethelawsofthephenomenaofValueandPrice。
Untilthatisdone，itisnotpossibletofreethedoctrinefrom
everydifficultywhichmaypresentitself，norperhapstoconvey，
tothosepreviouslyunacquaintedwiththesubject，morethana
generalapprehensionofthereasoningbywhichthetheoremis
arrivedat。Some，however，oftheobjectionscommonlymadetoit，
admitofacompleteanswereveninthepresentstageofour
inquiries。
Ithasbeendeniedthattherecanbeanylandincultivation
whichpaysnorent;becauselandlords（itiscontended）wouldnot
allowtheirlandtobeoccupiedwithoutpayment。Thosewholay
anystressonthisasanobjection，mustthinkthatlandofthe
qualitywhichcanbutjustpayforitscultivation，liestogether
inlargemasses，detachedfromanylandofbetterquality。Ifan
estateconsistedwhollyofthisland，orofthisandstillworse，
itislikelyenoughthattheownerwouldnotgivetheuseofit
fornothing;hewouldprobably（ifarichman）preferkeepingit
forotherpurposes，asforexercise，orornament，orperhapsasa
gamepreserve。Nofarmercouldaffordtoofferhimanythingfor
it，forpurposesofculture;thoughsomethingwouldprobablybe
obtainedfortheuseofitsnaturalpasture，orotherspontaneous
produce。Evensuchland，however，wouldnotnecessarilyremain
uncultivated。Itmightbefarmedbytheproprietor;nounfrequent
caseeveninEngland。Portionsofitmightbegrantedas
temporaryallotmentstolabouringfamilies，eitherfrom
philanthropicmotives，ortosavethepoor—rate;oroccupation
mightbeallowedtosquatters，freeofrent，inthehopethat
theirlabourmightgiveitvalueatsomefutureperiod。Both
thesecasesareofquiteordinaryoccurrence。Sothatevenifan
estatewerewhollycomposedoftheworstlandcapableof
profitablecultivation，itwouldnotnecessarilylieuncultivated
becauseitcouldpaynorent。Inferiorland，however，doesnot
usuallyoccupy，withoutinterruption，manysquaremilesof
ground;itisdispersedhereandthere，withpatchesofbetter
landintermixed，andthesamepersonwhorentsthebetterland，
obtainsalongwithitinferiorsoilswhichalternatewithit。He
paysarent，nominallyforthewholefarm，butcalculatedonthe
produceofthesepartsalone（howeversmallaportionofthe
whole）whicharecapableofreturningmorethanthecommonrate
ofprofit。Itisthusscientificallytrue，thattheremaining
partspaynorent。
4。Letus，however，supposethattherewereavalidityin
thisobjection，whichcanbynomeansbeconcededtoit;that
whenthedemandofthecommunityhadforcedupfoodtosucha
priceaswouldremuneratetheexpenseofproducingitfroma
certainquantityofsoil，ithappenedneverthelessthatallthe
soilofthatqualitywaswithheldfromcultivation，bythe
obstinacyoftheownersindemandingarentforit，notnominal，
nortrifling，butsufficientlyoneroustobeamaterialitemin
thecalculationsofafarmer。Whatwouldthenhappen？Merelythat
theincreaseofproduce，whichthewantsofsocietyrequired，
wouldforthetimebeobtainedwholly（asitalwaysis
partially），notbyanextensionofcultivation，butbyan
increasedapplicationoflabourandcapitaltolandalready
cultivated。
Nowwehavealreadyseenthatthisincreasedapplicationof
capital，otherthingsbeingunaltered，isalwaysattendedwitha
smallerproportionalreturn。Wearenottosupposesomenew
agriculturalinventionmadepreciselyatthisjuncture;nora
suddenextensionofagriculturalskillandknowledge，bringing
intomoregeneralpractice，justthen，inventionsalreadyin
partialuse。Wearetosupposenochange，exceptademandfor
morecorn，andaconsequentriseofitsprice。Theriseofprice
enablesmeasurestobetakenforincreasingtheproduce，which
couldnothavebeentakenwithprofitatthepreviousprice。The
farmerusesmoreexpensivemanures;ormanureslandwhichhe
formerlylefttonature;orprocureslimeormarlfroma
distance，asadressingforthesoil;orpulverizesorweedsit
morethoroughly;ordrains，irrigates，orsubsoilsportionsof
it，whichatformerpriceswouldnothavepaidthecostofthe
operation;andsoforth。Thesethings，orsomeofthem，aredone，
when，morefoodbeingwanted，cultivationhasnomeansof
expandingitselfuponnewlands。Andwhentheimpulseisgivento
extractanincreasedamountofproducefromthesoil，thefarmer
orimproverwillonlyconsiderwhethertheoutlayhemakesfor
thepurposewillbereturnedtohimwiththeordinaryprofit，and
notwhetheranysurpluswillremainforrent。Even，therefore，if
itwerethefact，thatthereisneveranylandtakeninto
cultivation，forwhichrent，andthattooofanamountworth
takingintoconsideration，wasnotpaid;itwouldbetrue，
nevertheless，thatthereisalwayssomeagriculturalcapital
whichpaysnorent，becauseitreturnsnothingbeyondthe
ordinaryrateofprofit:thiscapitalbeingtheportionof
capitallastapplied—thattowhichthelastadditiontothe
producewasdue:or（toexpresstheessentialsofthecaseinone
phrase），thatwhichisappliedintheleastfavourable
circumstances。Butthesameamountofdemand，andthesameprice，
whichenablethisleastproductiveportionofcapitalbarelyto
replaceitselfwiththeordinaryprofit，enableeveryother
portiontoyieldasurplusproportionedtotheadvantageit
possesses。Andthissurplusitis，whichcompetitionenablesthe
landlordtoappropriate。Therentofalllandismeasuredbythe
excessofthereturntothewholecapitalemployedonit，above
whatisnecessarytoreplacethecapitalwiththeordinaryrate
ofprofit，orinotherwords，abovewhatthesamecapitalwould
yieldifitwereallemployedinasdisadvantageouscircumstances
astheleastproductiveportionofit;whetherthatleast
productiveportionofcapitalisrenderedsobybeingemployedon
theworstsoil，orbybeingexpendedinextortingmoreproduce
fromlandwhichalreadyyieldedasmuchasitcouldbemadeto
partwithoneasierterms。
Itisnotpretendedthatthefactsofanyconcretecase
conformwithabsoluteprecisiontothisoranyotherscientific
principle。Wemustneverforgetthatthetruthsofpolitical
economyaretruthsonlyintherough:theyhavethecertainty，
butnottheprecision，ofexactscience。Itisnot，forexample，
strictlytruethatafarmerwillcultivatenoland，andapplyno
capital，whichreturnslessthantheordinaryprofit。Hewill
expecttheordinaryprofitonthebulkofhiscapital。Butwhen
hehascastinhislotwithhisfarm，andbarteredhisskilland
exertions，onceforall，againstwhatthefarmwillyieldtohim，
hewillprobablybewillingtoexpendcapitalonit（foran
immediatereturn）inanymannerwhichwillaffordhimasurplus
profit，howeversmall，beyondthevalueoftherisk，andthe
interestwhichhemustpayforthecapitalifborrowed，orcan
getforitelsewhereifitishisown。Butanewfarmer，entering
ontheland，wouldmakehiscalculationsdifferently，andwould
notcommenceunlesshecouldexpectthefullrateofordinary
profitonallthecapitalwhichheintendedembarkinginthe
enterprise。Again，pricesmayrangehigherorlowerduringthe
currencyofalease，thanwasexpectedwhenthecontractwas
made，andtheland，therefore，maybeoverorunder—rented:and
evenwhentheleaseexpires，thelandlordmaybeunwillingto
grantanecessarydiminutionofrent，andthefarmer，ratherthan
relinquishhisoccupation，orseekafarmelsewherewhenallare
occupied，mayconsenttogoonpayingtoohigharent。
Irregularitieslikethesewemustalwaysexpect;itisimpossible
inpoliticaleconomytoobtaingeneraltheoremsembracingthe
complicationsofcircumstanceswhichmayaffecttheresultinan
individualcase。When，too，thefarmerclass，havingbutlittle
capital，cultivateforsubsistenceratherthanforprofit，anddo
notthinkofquittingtheirfarmwhiletheyareabletoliveby
it，theirrentsapproximatetothecharacterofcottierrents，
andmaybeforcedupbycompetition（ifthenumberofcompetitors
exceedsthenumberoffarms）beyondtheamountwhichwillleave
tothefarmertheordinaryrateofprofit。Thelawswhichweare
enabledtolaydownrespectingrents，profits，wages，prices，are
onlytrueinsofarasthepersonsconcernedarefreefromthe
influenceofanyothermotivesthanthosearisingfromthe
generalcircumstancesofthecase，andareguided，astothose，
bytheordinarymercantileestimateofprofitandloss。Applying
thistwofoldsuppositiontothecaseoffarmersandlandlords，it
willbetruethatthefarmerrequirestheordinaryrateofprofit
onthewholeofhiscapital;thatwhateveritreturnstohim
beyondthisheisobligedtopaytothelandlord，butwillnot
consenttopaymore;thatthereisaportionofcapitalapplied
toagricultureinsuchcircumstancesofproductivenessasto
yieldonlytheordinaryprofits;andthatthedifferencebetween
theproduceofthis，andanyothercapitalofsimilaramount，is
themeasureofthetributewhichthatothercapitalcanandwill
pay，underthenameofrent，tothelandlord。Thisconstitutesa
lawofrent，asnearthetruthassuchalawcanpossiblybe:
thoughofcoursemodifiedordisturbedinindividualcases，by
pendingcontracts，individualmiscalculations，theinfluenceof
habit，andeventheparticularfeelingsanddispositionsofthe
personsconcerned。
5。Aremarkisoftenmade，whichmustnotherebeomitted，
though，Ithink，moreimportancehasbeenattachedtoitthanit
merits。Underthenameofrent，manypaymentsarecommonly
included，whicharenotaremunerationfortheoriginalpowersof
thelanditself，butforcapitalexpendedonit。Theadditional
rentwhichlandyieldsinconsequenceofthisoutlayofcapital，
should，intheopinionofsomewriters，beregardedasprofit，
notrent。Butbeforethiscanbeadmitted，adistinctionmustbe
made。Theannualpaymentbyatenantalmostalwaysincludesa
considerationfortheuseofthebuildingsonthefarm;notonly
barns，stables，andotherouthouses，butahousetolivein，not
tospeakoffencesandthelike。Thelandlordwillask，andthe
tenantgive，forthese，whateverisconsideredsufficientto
yieldtheordinaryprofit，orrather（riskandtroublebeinghere
outofthequestion）theordinaryinterest，onthevalueofthe
buildings:thatis，notonwhatithascosttoerectthem，buton
whatitwouldnowcosttoerectothersasgood:thetenantbeing
bound，inaddition，toleavetheminasgoodrepairashefound
them，forotherwiseamuchlargerpaymentthansimpleinterest
wouldofcourseberequiredfromhim。Thesebuildingsareas
distinctathingfromthefarmasthestockorthetimberonit;
andwhatispaidforthemcannomorebecalledrentofland，
thanapaymentforcattlewouldbe，ifitwerethecustomthat
thelandlordshouldstockthefarmforthetenant。Thebuildings，
likethecattle，arenotland，butcapital，regularlyconsumed
andreproduced;andallpaymentsmadeinconsiderationforthem
areproperlyinterest。
Butwithregardtocapitalactuallysunkinimprovements，and
notrequiringperiodicalrenewal，butspentonceforallin
givingthelandapermanentincreaseofproductiveness，it
appearstomethatthereturnmadetosuchcapitalloses
altogetherthecharacterofprofits，andisgovernedbythe
principlesofrent。Itistruethatalandlordwillnotexpend
capitalinimprovinghisestate，unlessheexpectsfromthe
improvementanincreaseofincomesurpassingtheinterestofhis
outlay。Prospectively，thisincreaseofincomemayberegardedas
profit;butwhentheexpensehasbeenincurred，andthe
improvementmade，therentoftheimprovedlandisgovernedby
thesamerulesasthatoftheunimproved。Equallyfertileland
commandsanequalrent，whetheritsfertilityisnaturalor
acquired;andIcannotthinkthattheincomesofthosewhoown
theBedfordLevelortheLincolnshireWoldsoughttobecalled
profitandnotrentbecausethoselandswouldhavebeenworth
nexttonothingunlesscapitalhadbeenexpendedonthem。The
ownersarenotcapitalists，butlandlords;theyhavepartedwith
theircapital;itisconsumed，destroyed;andneitheris，noris
tobe，returnedtothem，likethecapitalofafarmeror
manufacturer，fromwhatitproduces。Inlieuofittheynowhave
landofacertainrichness，whichyieldsthesamerent，andby
theoperationofthesamecauses，asifithadpossessedfromthe
beginningthedegreeoffertilitywhichhasbeenartificially
giventoit。
Somewriters，inparticularMr。H。C。Carey，takeaway，still
morecompletelythanIhaveattemptedtodo，thedistinction
betweenthesetwosourcesofrent，byrejectingoneofthem
altogether，andconsideringallrentastheeffectofcapital
expended。Inproofofthis，Mr。Careycontendsthatthewhole
pecuniaryvalueofallthelandinanycountry，inEnglandfor
instance，orintheUnitedStates，doesnotamounttoanything
approachingtothesumwhichhasbeenlaidout，orwhichitwould
evennowbenecessarytolayout，inordertobringthecountry
toitspresentconditionfromastateofprimaevalforest。This
startlingstatementhasbeenseizedonbyM。Bastiatandothers，
asameansofmakingoutastrongercasethancouldotherwisebe
madeindefenceofpropertyinland。Mr。Carey’sproposition，in
itsmostobviousmeaning，isequivalenttosaying，thatifthere
weresuddenlyaddedtothelandsofEnglandanunreclaimed
territoryofequalnaturalfertility，itwouldnotbeworththe
whileoftheinhabitantsofEnglandtoreclaimit:becausethe
profitsoftheoperationwouldnotbeequaltotheordinary
interestonthecapitalexpended。Towhichassertionifany
answercouldbesupposedtoberequired，itwouldsufficeto
remark，thatlandnotofequalbutofgreatlyinferiorqualityto
thatpreviouslycultivated，iscontinuallyreclaimedinEngland，
atanexpensewhichthesubsequentlyaccruingrentissufficient
toreplacecompletelyinasmallnumberofyears。Thedoctrine，
moreover，istotallyopposedtoMr。Carey’sowneconomical
opinions。NoonemaintainsmorestrenuouslythanMr。Careythe
undoubtedtruth，thatassocietyadvancesinpopulation，wealth，
andcombinationoflabour，landconstantlyrisesinvalueand
price。This，however，couldnotpossiblybetrue，ifthepresent
valueoflandwerelessthantheexpenseofclearingitand
makingitfitforcultivation;foritmusthavebeenworththis
immediatelyafteritwascleared;andaccordingtoMr。Careyit
hasbeenrisinginvalueeversince。