From the land rent of the physiocrats to political rent in sustainable agriculture

Abstract

The statistical data presented here show that land prices in Poland discount a significantly greater quantity of utilities than would result from the agricultural functions of land. A similar situation exists in other EU countries. The question is where the excess value of land comes from. It is undoubtedly created by expectations of political rents and by speculative motives, but also by the non-agricultural utilities of the land. It is nonetheless difficult to determine the proportional contributions of these factors. A new theory of land rent should take account of the fact that in sustainable agriculture many new utilities of the land factor are created intrinsically, that is, without additional inputs of capital and labour. These have the status of public goods, and are paid for chiefly through agricultural policy (that is, through taxes). In this way the intrinsic utility of land takes the form of an economic rent, but we believe that this process may also take place through market channels. In this way history has come full circle, and the pure product of land as described by the physiocrats has been reactivated.