Rents as determined by Competition.
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and the farmer should also estimate his own labour of superintendence at a certain pecuniary amount. All these deductions may be regarded as forming in the aggregate the cost of cultivation; and when such deductions have been made, the produce which remains is the net produce; or, in other words, the net produce is obtained by deducting the cost of raising the produce from the pecuniary value of this produce. If, therefore, it were ascertained that the net produce of A's farm exceeded by 1,000l. the net produce of B's farm, it is manifest that A would be able to pay 1,000l. more rent than B. If B's farm was so poor that he obtained it at a merely nominal rent, the amount of its net produce would be also nominal. But it may be said. If such were the case, B would not continue to cultivate the farm; this, however, need not be so, because it has been supposed that the net produce is that which remains, after every expense connected with the farm has been paid, and after an adequate remuneration has been given to the farmer for his own labour and for the use of his capital; therefore, it would answer B's purpose to cultivate his farm, although the net produce was merely nominal, if he could obtain the farm at a nominal rent. But, since we have supposed that the net produce of A's farm exceeds by 1,000l. the net produce of B's farm, A would be able to pay this 1,000l. as rent, and, therefore, the rent of any land is the difference between its net produce and the net produce of land which pays a merely nominal rent. The theoretical result coincides with the practical result, assuming freedom of competition.Moreover, we shall proceed to show that this amount of rent, namely 1,000l., which from theoretical considerations we have proved that A is able to pay, will be approximately the rent which is actually paid if land is let by open competition. Experience proves that men are satisfied to continue in business if they can realise the current rate of profit upon their capital, and also obtain a certain remuneration for their own risk and trouble. Let it be supposed that when A's landlord demands from him a rent of 1,000l.—this sum representing in value the net produce of the farm—the profits he obtained upon his farm would still be sufficient to induce him to continue his business. If, however, he were called upon to pay a greater rent than this, say,
