Rent

Benjamin R. Tucker

[Excerpted from the book Individual Liberty: Selections From the Writings of Benjamin R. Tucker, Vanguard Press, New York, 1926. Kraus Reprint Co., Millwood, NY, 1973]

"Edgeworth," a frequent contributor to Liberty, had read a couple of Proudhon's books, treating of the rent question, which Mr. Tucker had recommended to him, and he seemed to be muddled about the "fiction of the productivity of capital," and some other things. And so the editor enlightened him:

The two works which I recommended to Edgeworth are among Proudhon's best; but they are very far from all that he has written, and it is very natural for the reader of a very small portion of his writings to draw inferences which he will find unwarranted when he reads more. This is due principally to Proudhon's habit of using words in different senses at different times, which I regard as unfortunate. Now, in the article which gave rise to this discussion, Edgeworth inferred (or seemed to infer), from the fact that some of Proudhon's transitional proposals allowed, a share to capital for a time, that he contemplated as a permanent arrangement a division of labor's earnings between labor and capital as two distinct things. Lest this might mislead, I took the liberty to correct it, and to state that Proudhon thought labor the only legitimate title to wealth.

Now comes Edgeworth, and says that he meant by capital only the result of preparatory labor, which is as much entitled to reward as any other. Very good, say I; no one denies that. But this is not what is ordinarily meant by the "productivity of capital"; and Edgeworth, by his own rule, is bound to use words in their usual sense. The usual sense of this phrase, and the sense in which the economists use it, is that capital has such an independent share in all production that the owner of it may rightfully farm out the privilege of using it, receive a steady income from it, have it restored to him intact at the expiration of the lease, farm it out again to somebody else, and go on in this way, he and his heirs forever, living in a permanent state of idleness and luxury simply from having performed a certain amount of "preparatory labor." That is what Proudhon denounced as "the fiction of the productivity of capital"; and Edgeworth, in interpreting the phrase otherwise, gives it a very unusual sense, in violation of his own rule.

Moreover, what Edgeworth goes on to say about the proportional profits of landlord and tenant indicates that he has very loose ideas about the proper reward of labor, whether present or preparatory. The scientific reward (and under absolutely free competition the actual reward is, in the long run, almost identical with it) of labor is the product of an equal amount of equally arduous labor. The product of an hour of Edgeworth's labor in preparing a field for cotton culture, and the product of an hour of his tenant's labor in sowing and harvesting the crop, ought each to exchange for the product of an hour's labor of their neighbor the shoemaker, or their neighbor the tailor, or their neighbor the grower, or their neighbor the doctor, provided the labor of all these parties is equally exhausting and implies equal amounts of acquired, skill and equal outlays for tools and facilities. Now, supposing the cases of Edgeworth and his tenant to be representative and not isolated; and supposing them to produce, not for their own consumption, but for the purpose of sale, which is the purpose of practically all production, it then makes no difference to either of them whether their hour's labor yields five pounds of cotton or fifteen. In the one case they can get no more shoes or clothes or groceries or medical services for the fifteen pounds than they can in the other for the five. The great body of landlords and tenants, like the great body of producers in any other industry, does not profit by an increased productivity in its special field of work, except to the extent that it consumes or repurchases its own product. The profit of this increase goes to the people at large, the consumers. So it is not true (assuming always a regime of free competition) that Edgeworth's tenant "profits three times as much" as Edgeworth because of the latter's preparatory labors. Neither of them profit thereby, but each gets an hour of some other man's labor for an hour of his own.

So much for the reward of labor in general. Now to get back to the question of rent.

If Edgeworth performs preparatory labor on a cotton field, the result of which would remain intact if the field lay idle, and that result is damaged by a tenant, the tenant ought to pay him for it on the basis of reward above defined. This does not bring a right of ownership to the tenant, to be sure, for the property has been destroyed and cannot be purchased. But the transaction, nevertheless, is in the nature of a sale. and not a payment for a loan. Every sale is an exchange of labor, and the tenant simply pays money representing his own labor for the result of Edgeworth's labor which he (the tenant) has destroyed in appropriating it to his own use. If the tenant does not damage the result of Edgeworth's preparatory labor, then, as Edgeworth admits, whatever money the tenant pays justly entitles him to that amount of ownership in the cotton field. Now, this money, paid over and above all damage, if it does not bring equivalent ownership, is payment for use, usury, and, in my terminology, rent. If Edgeworth prefers to use the word rent to signify all money paid to landlords as such by tenants as such for whatever reason, I shall think his use of the word inaccurate; but I shall not quarrel with him, and shall only protest when he interprets other men's thought by his own definitions, as he seemed to me to have done in Proudhon's case. If he will be similarly peaceful towards me in my use of the word, there will be no logomachy.

The difference between us is just this. Edgeworth says that from tenant to landlord there is payment for damage, and this is just rent; and there is payment for use, and that is unjust rent. I say there is payment for damage, and this is indemnification or sale, and is just; and there is payment for use, and that is rent, and is unjust. My use of the word is in accordance with the dictionary, and is more definite and discriminating than the other; moreover, I find it more effective in argument. Many a time has some small proprietor, troubled with qualms of conscience and anxious to justify the source of his income, exclaimed, on learning that I believe in payment for wear and tear: "Oh! well, you believe in rent, after all; it's only a question of how much rent;" after which he would settle back, satisfied. I have always found that the only way to give such a man's conscience a chance to get a hold upon his thought and conduct was to insist on the narrower use of the word rent. It calls the attention much more vividly to the distinction between justice and injustice.

More from "Edgeworth" about "unearned increment," "judgment and skill," "employer the appraiser of work," etc. Then a few more remarks from Mr. Tucker:

This smacks of Henry George. If the municipality is an organization to which every person residing within a given territory must belong and pay tribute, it is not a bit more defensible than the State itself, - in fact, is nothing but a small State; and to vest in it a title to any part of the value of real estate is simply land nationalization on a small scale, which no Anarchist can look upon with favor. If the municipality is a voluntary organization, it can have no titles except what it gets from the individuals composing it. If they choose to transfer their "unearned increments" to the municipality, well and good; but any individual not choosing to do so ought to be able to hold his "unearned increment" against the world. If, it is unearned, certainly his neighbors did not earn it. The advent of Liberty will reduce all unearned increments to a harmless minimum.

I have never maintained that judgment and skill are less important than labor; I have only maintained that neither judgment nor skill can be charged for in equity except so far as they have been acquired. Even then the payment is not for the judgment or skill, but for the labor of acquiring; and, in estimating the price, one hour of labor in acquiring judgement is to be considered equal, - not, as now, to one day, or week, or perhaps year of manual toil, - but to one hour of manual toil. The claim for judgment and skill is usually a mere pretext made to deceive the people into paying exorbitant prices, and will not bear analysis for a moment.

On the contrary, the employee, the one who does the work, is naturally and ethically the appraiser of work, and all that the employer has to say is whether he will pay the price or not. Into his answer enters the estimate of the value of the result. Under the present system he offers less than cost, and the employee is forced to accept. But Liberty and competition will create such an enormous market for labor that no workman will be forced by his incompetency to work for less than cost, as he will always be in a position to resort to some simpler work for which he is competent and can obtain adequate pay.