12 February: comments specified to this week/topic
Land Markets, Rent and Finance Capital
Reading: David Harvey, “Class-Monopoly Rent, Finance Capital and the Urban Revolution,” Regional Studies, 1974, vol.8, pp238-251; Harvey, The Limits to Capital (Verso, 1999 ed.), “The Land Market and Fictitious Capital,” pp367-372; and Harvey, A Companion to Marx’s Capital Volume 2 (Verso, 2013), “Introduction,” pp1-35
We have added some downloads on the Programme page. I fear we’ll all have to find the other stuff ourselves. Michael. NB if anyone is looking for an alternative to Amazon, I do recommend Housman’s bookshop at King’s Cross (bottom of Caledonian Road, almost on Pentonville). They have an online order service for things they don’t have in stock and you can select whether the item is delivered to you or to the shop where you can pick it up – and that’s a great pleasure to visit.
Slide showing the path of Harvey’s argument in Limits to Capital which Andy showed during his talk: AM arguments of Limits
Comment added by Michael Edwards 12 Feb after the seminar. (Anyone please tell me if you want rights to post on this site – anyone in the seminar can join. Otherwise use the comments box below.)
1. I consider “class monopoly rent” to be a bad concept which we should not use. Briefly (I’m tired) for the following reason. The phrase captures and emphasises that, as a class of people, landowners own the land. But to operate monopolistically they would have to conspire / collude. Perhaps in specific conjunctures they do or did but they may equally compete with each other – and there is plenty of evidence from over-production booms that they often fail abysmally. I would keep the word ‘monopoly’ for the specific and special cases where a plot of land has unique properties enabling a unique product or service to be produced. [ My very inspiring PhD student Joon Park – whom some will remember – introduced a valuable idea that it can be common for a land owner or developer to create something unique enabling the capture of an abnormally high (monopoly) rent but this will typically be a temporary scoop, soon eroded by imitators who undermine the monopoly so that the rent surface absorbs and normalises the innovation. It’s a bit like the idea of ‘founder rent’ which floats around somewhere in the literature. ]
2. There is always the danger of confusion when the word ‘value’ is used interchangeably between its 2 meanings: (i) a conventional bourgeois usage where it means much the same as market price / exchange value. Clearly (common sense) my house has a value in that I cold sell it for £600,000. (ii) Marx’s usage as the core term in a quest for understanding about where value comes from, how human labour can create more value than is required for its reproduction – thus generating surplus value. In class societies this SV tends to be appropriated by proprietors through profits or rents.
Getting to the bottom of these issues is the main quest in Capital and one outcome of the analysis is to show how the 2 kinds of value are connected. But it’s not simple which is why it doesn’t lend itself to a 2-minute interjection in a seminar and I flunked it last night.
Briefly, the analysis is the problem of the transformation of values into prices (the ‘transformation problem’) through a whole series of social processes when tend to equalise the rate of profit on different capitals. Without these adjustments, investors would pull out of sectors where the rate of SV is low and all pile in to the sectors where it is high.
Land can play a role in this, and that is where the idea of absolute rent comes from. It can arise where capital which would tend to bring down prices accross the whole market (e.g. by building 500,000 houses a year in England) is prevented from entering the market by difficulties in gaining access to land. This is good news for those who own the land and buildings which are already developed as they can thus appropriate (demand and get) absolute rents in addition to whatever differential rents their properties command. [ The barrier to investment required to maintain these conditions can come from various sources – topography, landowners’ reluctant release of land (aristocratic owners, corporate land-banking, green belts, conservation areas etc). Interesting. ] This is another thing which Joon Park tried to crack in his PhD.
All of the above would be more authoritatively written by a proper scholar of Marx. We have some in our seminar and I hope they will comment, or add links to where (in Harvey or elsewhere) it is best explained.
That’s all for now. M.E. 13/02/14 0950h
Comment from David Harvey 13/02/14 (copied from the general comments page because it really belongs here).
|I would defend the category of class monopoly rent. All spatial competition is, as Chamberlain long ago pointed out (cf Losch) monopolistic competition and all locations are unique though, as with branding, some are more unique than others (see my Art of Rent paper). You cannot say landlords do not collude and then suppose later on there is some mysterious “barrier” that allows the extraction of absolute rent. Land and property owners have a reserve price before they release the asset they control. many stores in my neighborhood were forced to close by a rapid rise in rent extractions 2007-12 but many have stayed empty ever since. landlords don’t compete in the same way as in other markets (cf the payments for access to scientific articles in the case of intellectual property rights). The concept of absolute rent does not work. leaving aside the question of transformation etc., the extraction of absolute rent would depend on very low productivity in landed activities and we know that in Marx time agriculture was not industrialized (though Marx hoped it would be one day) and with a low value composition landlords could extract some of the transfer that Marx saw as necessary to equalize rate of profit but much of agriculture is now very high composition (capital intensive) and in urban situations the whole idea does not work which is why marx held that in the urban case monopoly rent would be the appropriate category.david harvey|