Note 1186 — Chapter II · : THE THEORY OF RENT AND ITS APPLICATIONS

Did space permit, this would be the place to refer to the latest glorification of the doctrine of rent, which is to be found in Clark’s Distribution of Wealth, published in 1899. In that work, upon the strength of which the author enjoys a well-deserved reputation, revenues of various kinds are successively treated as rents. Imagine a fixed amount of capital applied along with successive doses of labour: each new dose of labour will produce less than the preceding one, while the production of the last dose regulates the remuneration of all the rest. But the product of the preceding doses is greater than that of the last, and a surplus value will be produced which will represent the product of capital and which will be exactly analogous to rent. Or suppose, on the other hand, that the quantity of labour is fixed and applied along with successive doses of capital; the productivity of the latter will in this case go on decreasing, and since the revenue of each dose will be proportionate to its productivity, any surplus left over will be of the nature of rent due to labour. There are other ingenious discussions which cannot be referred to in a note of this kind. But in our opinion the theory of economic equilibrium affords a simpler explanation of distribution, and the kind of optimism to which Clark’s theory gives rise seems hardly justified. His attempt to combine the idea of marginal productivity with the law of diminishing returns is a further proof of the persistent influence exerted by Ricardian ideas upon English-speaking economists.