Section 4 The Theory of Land Rent
Main content of this section].
1. The meaning of ground rent
2. Marx's theory of land rent.
1) Differential rent
b) Absolute rent
3) Monopoly rent
3. The theory of neoclassical urban rent.
Fourth, the relationship between land rent and land price
5. The application of land rent theory in land valuation
The meaning of ground rent
Marx's theory of land rent: land rent is realized by land ownership, and it is the part of the product that is occupied by the landowner.
Western Economics: Ground rent is a kind of economic surplus, which is the surplus on the basis of total income after deducting the costs of other factors.
Ground rent is divided into broad rent and narrow rent, where narrow rent refers to the excess profits obtained from the use of land.
The Rent Theory of Classical Economics.
Marx's Theory of Land Rent
On the essence of capitalist rent.
According to Marx, capitalist rent is the part of surplus value paid by the tenant farmer to the landowner in excess of the average profit in order to obtain the right to use the land, and the monopoly of land ownership is the premise of the capitalist mode of production.
According to Marx, there is a difference between real rent and the interest on fixed capital invested in land.
There is a difference between ground rent and interest on borrowed capital. Ground rent is expressed as a certain amount of money that the landowner receives each year for renting a piece of land, and any certain monetary income can be capitalized, which can be regarded as the interest of an imaginary capital, so that the capitalization of land rent forms the purchase of land**. But (natural) land is not a product of labour, and therefore has no (labour) value, and the so-called purchase ** is not the purchase of land**, but the purchase of rent provided by the land**.
t) According to Marx's theory of rent, absolute rent is the surplus value created by agricultural workers.
1) Differential rent
Excess profits, though equal to the excess of the market over individual production, do not arise from capital, but from the use of a limited number of natural forces which can be monopolized and have been monopolized.
According to the different conditions for the formation of differential rent, it can be divided into two forms: differential rent and differential rent.
Differential rent is caused by the different fertility of the land and the difference in location.
Differential rent is the rent formed by the continuous investment of the same amount of capital in the same land, and the excess profits generated by the difference in productivity between the same amount of capital.
Differential rent and differential rent are different but essentially the same.
b) Absolute rent
According to Marx, absolute rent is the rent obtained by the landowner by virtue of the monopoly of private ownership of land, and the difference between the market for land products and social production.
In the process of grading rent, the differential rent is based on the surplus value created by agricultural workers.
In the process of generating absolute rent, land ownership is the cause of the market. Pure legal land ownership will not create any rent for the land owner, but the monopoly of land ownership is the fundamental reason for the formation of absolute land rent.
3) Monopoly rent
Monopoly rent is the rent formed by the transformation of excess profits brought about by the real monopoly of products. A true monopoly is neither based on production nor on value, but is determined by the buyer's desire to buy and ability to pay. This excess profit comes from the transfer of the producer's profits of other products in exchange with this monopoly** product, i.e., a part of the surplus value of other products.
Neoclassical Theory of Urban Rent
The theory of land rent, which was popular in the neoclassical economic period, was the theory of marginal productivity of land rent. It is generally believed that von Duenen was the pioneer of this theory, and in his book "The Isolated State", he applied the concept of marginal productivity to analyze the theory of land rent, and established the theory of location rent.
This theory rejects the method of dividing the factors of production into land, labor, and capital in classical economics, and believes that the value of each factor of production is determined by its marginal productivity, thus denying that land rent is a kind of surplus.
Marshall believed that urban land rent is equal to location rent + agricultural land rent.
The relationship between land rent and land price
The understanding of land rent in modern Western economics is based on land income, and it is believed that land ** is the capitalization of land income, that is, land rent, in which ground rent refers to economic rent, that is, the balance of total land income after deducting the total cost, and the founder of this theory is the American economist Erie.
The yield of the land is the basis for determining its value. If the total income from the land is just enough to cover the cost of labour and other expenses, the land is not profitable.
Land income determines land **, not land ** determines land income.
The economic model of the relationship between land capital value and land income, if expressed by an arithmetic, is our common one:
v= a/r
Wherein: a is the net income of the land, which includes three basic requirements: under normal production conditions, the land is in the best use direction, and the production cost and all taxes are deducted.
Capitalize the expected annual income of land into a value**, which is called the capital value of land in economics and the selling price of land in practice, and it is concluded that land** is the capitalization of land income, which is expressed by the formula v=r-c r
where: v is the land**;
r is the expected total return;
c Represents the expected total cost;
r is the rate of land reduction.
Application of land rent theory to land valuation
When assessing land price, we should be guided by the theory of land rent, and understand that absolute rent is the root cause of the existence of land, the existence of differential rent is the main factor determining the level of land, and monopoly rent is the main reason for the high level of land in special areas. According to the characteristics of differential rent and monopoly rent, etc., the location of the assessee and the specific material and economic conditions of the assessee are analyzed, and the land is accurately evaluated.