Open Access. Powered by Scholars. Published by Universities.®
Articles 1 - 1 of 1
Full-Text Articles in Political Economy
Marx's Theory Of Ground-Rent: A Suggested Reformulation, Deepankar Basu
Marx's Theory Of Ground-Rent: A Suggested Reformulation, Deepankar Basu
Economics Department Working Paper Series
This paper develops a simple theoretical model to analyze Marx's
theory of ground rent. Using the model, I demonstrate two important
results. First, if we take capital as exogenous, then total ground-rent
can be decomposed into the three components: differential rent of the
first variety (DRI), differential rent of the second variety (DRII), and
absolute rent (AR). Second, if we endogenize capital outlays using
profit-maximizing behaviour of capitalist farmers, then absolute rent
becomes zero. Thus, under reasonable behavioural assumptions about
landlords and capitalist farmers, there will be no absolute rent in a
capitalist economy.