Functional socialism

CAPITAL E20

From the formative period of the Industrial Revolution, represented by Adam Smith, we must travel with all speed to the middle period, represented by Karl Marx. Only Ricardo intervenes; and we cannot ignore him. Over the general range of economic subjects he does not greatly differ from Smith, and those differences, however important, need not detain us; but Ricardo’s law of rent has had far-reaching consequences and they clearly affect our conception of capital. We all know the powerful influence which the Physiocratic doctrine exercised upon Smith—an influence which he found rather disturbing. Upon land and agriculture he was really at one with Quesnay and his followers. Through all his work there is that reverence for land, the very base of the Physiocratic teaching. The land, we may remember, is alleged to possess a quality denied to industry: it brings with it the co-operation of nature. It had become an article of faith, if not of superstition. The idea was certainly comforting to the landlord class, who found in it further proof that they belonged to a superior order. That special touch of Nature’s regard made them slightly uppish. Ricardo, an intellectual and financial magnate, with a shrewd eye for reality, shattered the whole fond illusion with savage power. Is rent the consequence of the cooperation, the prodigality, of nature? Nonsense, he replied, rent implies the avarice and not the liberality of nature. The fertility of the earth has nothing to do with rent. In a newly-founded colony, for example, land yields no rent, however fertile, if the quantity of