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• Preface to the First Edition (1871)
• Preface to the Second Edition (1879)
• Preface to the Third Edition By Harriet Jevons
• Errata
• Chapter I: Introduction
• Mathematical Character of the Science.
• Confusion Between Mathematical and Exact Sciences.
• Capability of Exact Measurement.
• Measurement of Feeling and Motives.
• Logical Method of Economics.
• Relation of Economics to Ethics.
• Chapter II: Theory of Pleasure and Pain
• Pleasure and Pain As Quantities.
• Pain the Negative of Pleasure.
• Anticipated Feeling.
• Uncertainty of Future Events.
• Chapter III: Theory of Utility
• Definition of Terms.
• The Laws of Human Want.
• Utility Is Not an Intrinsic Quality.
• Law of the Variation of Utility.
• Total Utility and Degree of Utility.
• Variation of the Final Degree of Utility.
• Disutility and Discommodity.
• Distribution of Commodity In Different Uses.
• Theory of Dimensions of Economic Quantities.
• Actual, Prospective, and Potential Utility.
• Distribution of a Commodity In Time.
• Chapter IV: Theory of Exchange
• Importance of Exchange In Economics.
• Ambiguity of the Term Value.
• Value Expresses Ratio of Exchange.
• Popular Use of the Term Value.
• Dimension of Value.
• Definition of Market.
• Definition of Trading Body.
• The Law of Indifference.
• The Theory of Exchange.
• Symbolic Statement of the Theory.
• Analogy to the Theory of the Lever.
• Impediments to Exchange.
• Illustrations of the Theory of Exchange.
• Problems In the Theory of Exchange.
• Complex Cases of the Theory.
• Competition In Exchange.
• Failure of the Equations of Exchange.
• Negative and Zero Value.
• Equivalence of Commodities.
• Acquired Utility of Commodities.
• The Gain By Exchange.
• Numerical Determination of the Laws of Utility.
• Opinions As to the Variation of Price.
• Variation of the Price of Corn.
• The Origin of Value.
• Chapter V: Theory of Labour
• Definition of Labour.
• Quantitative Notions of Labour.
• Symbolic Statement of the Theory.
• Dimensions of Labour.
• Balance Between Need and Labour.
• Distribution of Labour.
• Relation of the Theories of Labour and Exchange.
• Relations of Economic Quantities.
• Various Cases of the Theory.
• Joint Production.
• Over-production.
• Limits to the Intensity of Labour.
• Chapter VI: Theory of Rent
• Accepted Opinions Concerning Rent.
• Symbolic Statement of the Theory.
• Illustrations of the Theory.
• Chapter VII: Theory of Capital
• The Function of Capital.
• Capital Is Concerned With Time.
• Quantitative Notions Concerning Capital.
• Expression For Amount of Investment.
• Dimensions of Capital, Credit and Debit.
• Effect of the Duration of Work.
• Illustrations of the Investment of Capital.
• Fixed and Circulating Capital.
• Free and Invested Capital.
• Uniformity of the Rate of Interest.
• General Expression For the Rate of Interest.
• Dimension of Interest.
• Peacock On the Dimensions of Interest.
• Tendency of Profits to a Minimum.
• Advantage of Capital to Industry.
• Are Articles In the Consumers' Hands Capital?
• Chapter VIII: Concluding Remarks
• The Doctrine of Population.
• Relation of Wages and Profit.
• Professor Hearn's Views.
• The Noxious Influence of Authority.
• Appendix I
• Appendix Ii

Accepted Opinions concerning Rent.

THE general correctness of the views put forth in preceding chapters derives great probability from their close resemblance to the Theory of Rent, as it has been accepted by English writers for nearly a century. It has not been usual to state this theory in mathematical symbols, and clumsy arithmetical illustrations have been employed instead; but it is easy to show that the fluxional calculus is the branch of mathematics which most correctly applies to the subject.

The Theory of Rent was first discovered and clearly stated by James Anderson in a tract published in 1777, and called An Inquiry into the Nature of the Corn Laws, with a view to the Corn Bill proposed for Scotland. An extract from this work may be found in MacCulloch's edition of the Wealth of Nations, p. 453, giving a most clear explanation of the effect of the various fertility of land, and showing that it is not the rent of land which determines the price of its produce, but the price of the produce which determines the rent of the land. The following passage must be given in Anderson's own words:—1

"... In every country there is a variety of soils, differing considerably from one another in point of fertility. These we shall at present suppose arranged into different classes, which we shall denote by the letters A, B, C, D, E, F, etc., the class A comprehending the soils of the greatest fertility, and the other letters expressing different classes of soils, gradually decreasing in fertility as you recede from the first. Now, as the expense of cultivating the least fertile soil is as great or greater than that of the most fertile field, it necessarily follows that if an equal quantity of corn, the produce of each field, can be sold at the same price, the profit on cultivating the most fertile soil must be much greater than that of cultivating the others; and as this continues to decrease as the sterility increases, it must at length happen that the expense of cultivating some of the inferior soils will equal the value of the whole produce."

The theory really rests upon the principle, which I have called the Law of Indifference, that for the same commodity in the same market there can only be one price or ratio of exchange. Hence, if different qualities of land yield different amounts of produce to the same labour, there must be an excess of profit in some over others. There will be some land which will not yield the ordinary wages of labour, and which will, therefore, not be taken into cultivation, or if, by mistake, it is cultivated, will be abandoned. Some land will just pay the ordinary wages; better land will yield an excess, so that the possession of such land will become a matter of competition, and the owner will be able to exact as rent from the cultivators the whole excess above what is sufficient to pay the ordinary wages of labour.

There is a secondary origin for rent in the fact, that if more or less labour and capital be applied to the same portion of land, the produce will not increase proportionally to the amount of labour. It is quite impossible that we could go on constantly increasing the yield of one farm without limit, otherwise we might feed the whole country upon a single farm. Yet there is no definite limit; for, by better and better culture, we may always seem able to raise a little more. But the last increment of produce will come to bear a smaller and smaller ratio to the labour required to produce it, so that it soon becomes, in the case of all land, undesirable to apply more labour.

MacCulloch has given, in his edition of the Wealth of Nations,1 a supplementary note, in which he explains, with the utmost clearness and scientific accuracy, the nature of the theory. This note contains by far the best statement of the theory, as it seems to me, and I will therefore quote his recapitulation of the principles which he establishes.

"1. That if the produce of land could always be increased in proportion to the outlay on it, there would be no such thing as rent.

"2. That the produce of land cannot, at an average, be increased in proportion to the outlay, but may be indefinitely increased in a less proportion.

"3. That the least productive portion of the outlay, which, speaking generally, is the last, must yield the ordinary profits of stock. And

"4. That all which the other portions yield more than this, being above ordinary profits, is rent."

A most satisfactory account of the theory is also given in James Mill's Elements of Political Economy, a work which I never read without admiring its brief, clear, and powerful style. James Mill constantly uses the expression dose of capital. "The time comes," he says, "at which it is necessary either to have recourse to land of the second quality, or to apply a second dose of capital less productively upon land of the first quality." He evidently means by a dose of capital a little more capital, and though the name is peculiar, the meaning is simply that of an increment of capital. The number of doses or increments mentioned is only three, but this is clearly to avoid prolixity of explanation. There is no reason why we should not consider the whole capital divided into many more doses. The same general law which makes the second dose less productive than the first, will make a hundredth dose, speaking generally, less productive than the preceding ninety-ninth dose. Theoretically speaking, there is no need or possibility of stopping at any limit. A mathematical law is in theory always continuous, so that the doses considered are indefinitely small and indefinitely numerous. I consider, then, that James Mill's mode of expression is exactly equivalent to that which I have adopted in earlier parts of this book. As mathematicians have invented a precise and fully recognised mode of expressing doses or increments, I know not why we should exclude language from Economics which is found convenient in all other sciences. It is mere pedantry to insist upon calling that a dose in Economics, which in all the other sciences is called by the perfectly established and expressive term increment.

The following are James Mill's general conclusions as to the nature of Rent.1 "In applying capital, either to lands of various degrees of fertility, or in successive doses to the same land, some portions of the capital so employed are attended with a greater produce, some with a less. That which yields the least yields all that is necessary for reimbursing and rewarding the capitalist. The capitalist will receive no more than this remuneration for any portion of the capital which he employs, because the competition of others will prevent him. All that is yielded above this remuneration the landlord will be able to appropriate. Rent, therefore, is the difference between the return yielded to that portion of the capital which is employed upon the land with the least effect, and that which is yielded to all the other portions employed upon it with a greater effect."

[[1]]Inquiry, etc., p. 45, note.

[[1]]New edition, 1839, p. 444.

[[1]]Elements, p. 17.