Part Six — The Transformation of Surplus Profit into Ground-Rent Chapters 37–47. Differential rent in its two forms, absolute ground-rent, and the genesis of capitalist ground-rent.

Ground-rent is the third great form into which surplus-value is transformed and distributed, and the most extensive Part of the volume. Its problem is set by the results of Part Two. Competition equalizes the rate of profit by letting capital flow freely between branches; but landed property is a monopoly that bars free entry to the land, and this monopoly allows the landowner to intercept, as rent, a surplus profit that would otherwise be competed away. Marx's task is to explain ground-rent strictly within the law of value — to show that rent is not a payment out of nothing, nor a mysterious productivity of the soil, but a portion of surplus-value produced by agricultural labour and appropriated by the landowner by virtue of a monopoly. He distinguishes two great forms. Differential rent arises from differences between plots — in fertility (Form I) or in the productivity of successive capital investments on the same plot (Form II) — which let the better-placed capitals produce below the regulating price of production and pocket a surplus profit that the landlord takes as rent. Absolute rent arises from landed property as such: because the monopoly prevents capital from flowing into agriculture freely, and because agriculture has historically a lower organic composition than industry (so its products contain more surplus-value than their price of production would allow), agricultural products can sell above their price of production, and the excess is absolute rent. Chapter 37 sets up the framework; Chapters 38–44 develop differential rent in exhaustive arithmetical detail; Chapter 45 derives absolute rent; Chapters 46–47 treat the rent of buildings and mines, the price of land, and — closing the whole analysis of rent — the genesis of capitalist ground-rent out of its pre-capitalist forms of labour-rent, rent in kind, and money-rent. The brief holds the essential concepts and movements and reconstructs the long quantitative demonstrations rather than reproducing them.

Marx sets the framework by insisting that capitalist ground-rent presupposes capitalist agriculture: three classes confront one another on the land — the landowner, the capitalist farmer who rents the land and employs wage-labourers, and the agricultural workers. Rent is what the farmer pays the landowner for the use of the soil, over and above the average profit on his capital. The whole analysis therefore concerns not any payment for land but the specific economic form in which a surplus above the average profit is claimed by the owner of a natural monopoly. Marx is emphatic that rent must be explained as a transformed portion of surplus-value, never as a gift of nature: the soil adds use-value, but only labour adds value, and rent is a share of the surplus labour of the agricultural workers, intercepted by landed property. The governing category is surplus profit — profit above the average — which under the monopoly of land is fixed and appropriated as rent.

Differential rent is the form Marx develops most fully, refining Ricardo's theory while removing its errors. Its principle: because agricultural products from land of different quality must all sell at one market price, and because that regulating price is governed by production on the worst land in cultivation (the land that must be worked to meet demand, and which must yield the average profit or it would not be farmed), the better lands produce their output below the regulating price. The difference between the individual price of production on the superior land and the general regulating price is a surplus profit, and the landowner appropriates it as differential rent.

this surplus profit is transformed into ground-rent.

Marx, Capital III, page 780. The clause is Marx's statement of the general form differential rent takes; the wording is confirmed against the EPUB.

Marx distinguishes two forms of this surplus profit. Differential Rent I (Chapters 39–40) arises from differences between separate plots of land — differences of natural fertility and of location relative to markets — cultivated with equal capitals. Differential Rent II (Chapters 41–43) arises from the differing productivity of successive doses of capital applied to the same plot: as more capital is invested intensively, each dose may yield differently, and the surplus profit generated by the more productive doses again becomes rent. The long chapters work through the two forms in exhaustive tables, tracing what happens under constant, rising, and falling regulating prices, and how the two forms interact — the arithmetic that so many readers have found forbidding but which is Marx's demonstration that the whole phenomenon is generated by the value relations, not by any special power of the soil. The decisive theoretical point recurs throughout: differential rent does not raise the price of agricultural produce; it is a consequence of the price being regulated by the worst land, and it distributes to the landowners a surplus profit that would exist even if no rent were paid.

Differential rent explains why better land pays more than worse, but not why the worst land — which yields only the average profit and no surplus over it — pays any rent at all. Yet in reality the landowner will not let even the poorest land be farmed for nothing. To explain this rent on the marginal land, independent of any difference in fertility, Marx introduces absolute rent, and grounds it in the monopoly of landed property combined with the low organic composition of agriculture.

whether this absolute rent is equal to the whole excess of value over and above the price of production, or only to a part of this, agricultural products are always sold at a monopoly price, not because their price stands above their value, but rather because it is equal to their value, or because their price stands below their value but above their price of production.

Marx, Capital III, page 889.

The argument runs: because agriculture is (historically) a sphere of lower-than-average organic composition, the value of its products stands above their price of production — it contains more surplus-value than the average rate of profit would return. In manufacturing, competition would redistribute that excess into the general profit rate; but landed property blocks the free inflow of capital into agriculture, preventing the equalization, so the excess of value over price of production is not competed away and can be retained. Landed property intercepts it as absolute rent — a rent that exists purely because the monopoly of land withholds agricultural surplus-value from the equalization process. Absolute rent is therefore not a payment above value but a portion of the surplus-value produced in agriculture itself, kept from flowing into the general pool by the barrier of landed property. Marx notes that the argument depends on agriculture's below-average composition, a historical rather than eternal condition — a qualification his later readers have pressed hard, and which the brief flags without adjudicating.

Chapter 46 extends the analysis to rents that are not agricultural in the strict sense — the rent of building land (governed largely by location and by differential rent, and swollen by the monopoly of urban sites), the rent of mines (differential rent on the richness and accessibility of deposits), and monopoly rent proper (as with a vineyard producing a wine of unique quality that sells at a price fixed only by the buyers' ability to pay). Marx also treats here the price of land, which is nothing but capitalized rent: land, having no value (no labour produced it), nonetheless has a price, obtained by capitalizing its rent at the going rate of interest — one more instance of the fictitious-capital form from Part Five, and a demonstration that the price of land is a derivative of rent and the interest rate, not a source of value.

Chapter 47, on the genesis of capitalist ground-rent, closes the Part and reaches back into history. Marx traces the forms of rent through which surplus labour has been pumped from the direct producer on the land: labour rent, where the peasant works part of the week on his own plot and part on the lord's demesne, and the surplus labour is visibly separate in time and space; rent in kind, where the surplus is delivered as a portion of the product; money rent, where it is delivered as money, which begins to dissolve the old relation and to turn the peasant into something closer to a tenant; and finally capitalist ground-rent proper, which presupposes the capitalist farmer and wage-labour, and in which rent is the surplus above the average profit. The sequence shows ground-rent to be a historically specific form of the same underlying relation — the extraction of surplus labour from the direct producer — and confirms the volume's method: the categories of the capitalist surface (profit, interest, rent) are transformed forms of surplus-value, each with a history, and none of them an original source of the wealth they distribute.