Absolute Rent

A form of rent that must be paid regardless of the quality of the land. Under the capitalist system, the landowner, by virtue of his monopoly of the right to private ownership of land, receives a rent from the agricultural capitalist who rents any piece of land, and the rent must also be paid for renting inferior soil. This portion of the ground-rent is the absolute rent. It is also a part of the surplus-value created by agricultural laborers.

Absolute rent refers to a form of rent that must be paid by the agricultural capitalist who rents any land due to the monopoly of the right to private ownership and management of land, regardless of the productivity of labor. Absolute rent differs from differential rent in that it is the excess of the value of agricultural products over the price of production. When the organic composition of capital in the agricultural sector is lower than that in the industrial sector, capitals of equal size invested in agriculture can employ more workers and create more surplus-value, which eventually makes the value of agricultural products exceed the price of production. Since land is limited, capital cannot be freely transferred into agriculture to expand the scope of agricultural operations, so that the part of the value of agricultural products exceeding the price of production does not participate in the process of equalization of social profit, but remains in the agricultural sector and is passed to the landowner, forming absolute rent. In contemporary developed capitalist countries, due to the modernization of agriculture, the organic composition of agricultural capital has approached or even exceeded that of industrial capital, and the conditions for the formation of absolute rent have changed. However, as long as there is a monopoly of the right to private ownership of land, absolute rent will still exist. But its source is no longer the excess of the value of agricultural products over the price of production. The academic community differs in its understanding of what its source is. Some believe that it originates only from the monopoly price of agricultural products; others believe that it originates from the deduction of profits and wages, based on the relevant statement in Capital.

The formation of absolute rent raises the price of agricultural products and increases the capitalist cost of production, and is not conducive to the sustainable development of capitalist economy. In contemporary developed capitalist countries, more and more people engaged in agriculture have become landowners themselves, and there is no longer the problem of paying absolute rent.