◆2 But his argument is answered, and is refuted both by practical life and by his own writings.
◆¹ “Some writers,” he says, “have raised the question whether Nature (or, in the language of economics, Land) gives more assistance to Labour in one kind of industry or another, and have said that in some occupations Labour does most; in others, Nature most. In this, however, there seems much confusion of ideas. The part which Nature has in any work of man is indefinite and immeasurable. It is impossible to decide that in any one thing Nature does more than in any other. One cannot even say that Labour does less. Less Labour may be required; but if that which is required is absolutely indispensable, the result is just as much the product of Labour as of Nature. When two conditions are equally necessary for producing the effect at all, it is unmeaning to say that so much of it is produced by one and so much by the other. It is like attempting to decide which half of a pair of scissors has most to do with the act of cutting; or, which of the factors—five or six—has most to do with the production of thirty.” So writes Mill in the first chapter of his Principles of Political Economy; and if what he says is true with regard to Land and Labour (or, as we are calling it, Human Exertion), it is equally true with regard to Human Exertion and Capital; for without Human Exertion, Capital could produce nothing, and without Capital modern industry would be impossible: and thus, according to Mill’s argument, we cannot assign to either of them a specific portion of the product. ◆² But Mill’s argument is altogether unsound; and the actual facts of life, and a large part of Mill’s own book, little as he perceived that it was so, are virtually a complete refutation of it.
To understand this, the reader need only reflect on those three principal and familiar parts into which the annual income of every civilised nation is divided, not only in actual practice, but theoretically by Mill himself—namely Rent, Interest, and Wages.[26] For these—what are they? The answer is very simple. They are portions of the income which correspond, at all events in theory, to the amounts produced respectively by Land, Capital, and Human Exertion; and which are on that account distributed amongst three sets of men—those who own the Land, those who own the Capital, and those who have contributed the Exertion. There are many causes which in practice may prevent the correspondence being complete; but that the general way in which the income is actually distributed is based on the amount produced by these three things respectively,—Land, Capital, and Human Exertion,—is a fact which no one can doubt who has once taken the trouble to consider it. It is thus perfectly clear that, contrary to what Mill says, though two or more agencies may be equally indispensable to the production of any wealth at all, it is not only not “unmeaning to say that so much is produced by one and so much by the other,” but it is possible to make the calculation with practical certainty and precision; and I will now proceed to explain the principles on which it is made.
CHAPTER II
How the Product of Land is to be distinguished from the Product of Human Exertion.
The question before us will be most easily understood if we begin with once again waiving any consideration of Capital, and if we deal only with what Mill, in the passage just quoted, calls “Nature and Labour”—or, in other words, with Land and Human Exertion. We will also, for simplicity’s sake, confine ourselves to one use of land—its primary and most important use, namely its use in agriculture or food-production.
◆1 Rent is the proportion of the produce produced not by Human Exertion, but by the Land itself;
◆¹ Now a British tenant-farmer who lives solely by his farming obviously derives his whole income from the produce of the soil he occupies; but the whole of this produce does not go to himself. Part is paid away in the form of rent to his landlord, and part in the form of wages to his labourers. We may however suppose, without altering the situation, that he has no labourers under him—that he is his own labourer as well as his own manager, and that the whole of the produce that is not set aside as rent goes to himself as the wages of his own exertion. The point on which I am going to insist is this—that whilst the exertion has produced the product that is taken as wages, the soil—or to speak more accurately—a certain quality in the soil has just as truly produced the produce that goes in rent—in fact that “Nature and Labour, though equally necessary for producing the effect at all,” each produce respectively a certain definite part of it.
◆1 As will be shown in this chapter by reference to the universally accepted theory of Rent.
◆¹ In order to prove this it will be enough to make really clear to the reader the explanation of rent which is given by all economists—an explanation in which men of the most opposite schools agree—men like Ricardo, and men like Mr. Henry George; and of which Mill himself is one of the most illustrious exponents. I shall myself attempt to add nothing new to it, except a greater simplicity of statement and illustration, and a special stress on a certain part of its meaning, the importance of which has been hitherto disregarded.