Progress and Poverty

[01] In identifying rent as the receiver of the increased production which material progress gives, but which labor fails to obtain; in seeing that the antagonism of interests is not between labor and capital, as is popularly believed, but is in reality between labor and capital on the one side and landownership on the other, we have reached a conclusion that has most important practical bearings. But it is not worth while to dwell on them now, for we have not yet fully solved the problem which was at the outset proposed. To say that wages remain low because rent advances is like saying that a steamboat moves because its wheels turn around. The further question is, what causes rent to advance? What is the force or necessity that, as productive power increases, distributes a greater and greater proportion of the produce as rent?

[02] The only cause pointed out by Ricardo as advancing rent is the increase of population, which by requiring larger supplies of food necessitates the extension of cultivation to inferior lands, or to points of inferior production on the same lands, and in current works of other authors attention is so exclusively directed to the extension of production from superior to inferior lands as the cause of advancing rents that Mr. Carey (followed by Professor Perry and others) has imagined that he has overthrown the Ricardian theory of rent by denying that the progress of agriculture is from better to worse lands.¹

[03] Now, while it is unquestionably true that the increasing pressure of population which compels a resort to inferior points of production will raise rents, and does raise rents, I do not think that all the deductions commonly made from this principle are valid, nor yet that it fully accounts for the increase of rent as material progress goes on. There are evidently other causes which conspire to raise rent, but which seem to have been wholly or partially bidden by the erroneous views as to the functions of capital and genesis of wages which have been current. To see what these are, and how they operate, let us trace the effect of material progress upon the distribution of wealth.

[04] The changes which constitute or contribute to material progress are three: (1) increase in population; (2) improvements in the arts of production and exchange; and (3) improvements in knowledge, education, government, police, manners, and morals, so far as they increase the power of producing wealth. Material progress, as commonly understood, consists of these three elements or directions of progression, in all of which the progressive nations have for some time past been advancing, though in different degrees. As, considered in the light of material forces or economies, the increase of knowledge, the betterment of government, etc., have the same effect as improvements in the arts, it will not be necessary in this view to consider them separately. What bearing intellectual or moral progress, merely as such, has upon our problem we may hereafter consider. We are at present dealing with material progress, to which these things contribute only as they increase wealth-producing power, and shall see their effects when we see the effect of improvements in the arts.

[05] To ascertain the effects of material progress upon the distribution of wealth, let us, therefore, consider the effects of increase of population apart from improvement in the arts, and then the effect of improvement in the arts apart from increase of population.

¹ As to this, it may be worth while to say: (1) That the general fact, as shown by the progress of agriculture in the newer states of the Union and by the character of the land left out of cultivation in the older, is that the course of cultivation is from the better to the worse qualities of land. (2) That, whether the course of production be from the absolutely better to the absolutely worse lands or the reverse (and there is much to indicate that better or worse in this connection merely relates to our knowledge, and that future advances may discover compensating qualities in portions of the earth now esteemed most sterile), it is always, and from the nature of the human mind, must always tend to be, from land under existing conditions deemed better, to land under existing conditions deemed worse. (3) That Ricardo's law of rent does not depend upon the direction of the extension of cultivation, but upon the proposition that if land of a certain quality will yield something, land of a better quality will yield more.