Economics Department Working Paper Series

Working Paper Number

2020-13

Publication Date

2020

Abstract

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.

Creative Commons License

Creative Commons Attribution 4.0 License
This work is licensed under a Creative Commons Attribution 4.0 License.

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