Note 230 — Chapter XI · THE ULTIMATE RELATION OF COST TO VALUE

When a single-use production good is short-lived instead of durable, so that it receives its value from its product in one payment, instead of a series of payments in time, we do not call its value return a “rent.” Its value is nevertheless “price-determined” in the same sense as the rents just discussed and belongs to the same category as these rents.

The term “price-determined rent” has, among professed followers of Ricardo (such as Professor Marshall who holds to Ricardo’s theory in the main), come to mean the income to a durable single-use production good. In the most unfortunate terminology of the Ricardian school—which the writer believes can be traced back to their ultimately false philosophy of value—a “price-determined rent” is one which “does not enter into price.” But the leading exponents of present-day Ricardian doctrine are now agreed, it seems, that when a production good is capable of more than one application—as land to wheat or fruit or pasture—its rent does enter into the price of its product. Therefore they mean by a price-determined rent, not the rent of such a good, but the rent of a single-use production good.