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Cooperativismo y Desarrollo

versión On-line ISSN 2310-340X

Coodes vol.10 no.3 Pinar del Río sept.-dic. 2022  Epub 25-Dic-2022

 

Original article

A new look at rent relations in socialism

Odalys Labrador Machín1  * 
http://orcid.org/0000-0002-9376-5728

1 Universidad de Pinar del Río "Hermanos Saíz Montes de Oca". Grupo de Preparación y Superación de Cuadros. Pinar del Río, Cuba.

Abstract

Land rent and the possibility of its use in the transition to socialism continues to be an insufficiently studied topic in the economic literature. This is fundamentally linked to multiple subjective reasons, so the State policy should be aimed at rescuing, through the mechanisms at its disposal, this possibility of raising the efficiency and effectiveness of production and increasing the income to its budget. The objective of this paper is to argue the need for the use of differential rent in our agriculture, from its theoretical-methodological references to connect theory and practice in terms of the solution of problems related to food sovereignty and the increase of exportable items. The methods used were observation, historical-logical, systemic and hypothetical-deductive. In correspondence with these, the procedures analysis and synthesis, scientific abstraction, induction-deduction and individual and group interview techniques were used, with a predominance of documentary analysis, as well as research and participative action. The importance of the theoretical systematization of the rent theory as a basis for radical changes in Cuban agricultural development is emphasized, and the mechanisms of its capture in the transition to socialism are examined.

Keywords: land rent; differential rent; differential income; prices; taxes

Introduction

Agriculture is one of the most important branches of the Cuban economy. There is a number of reasons, both general and specific, that support this statement. Agriculture occupies a prominent place in the implementation of economic policy in order to improve the welfare of the people, since it guarantees the food supply and therefore the real basis for advancing in the necessary socioeconomic transformation of the country. Ensuring rising rates of labor productivity in the agricultural sector is one of the main conditions for the transformation of the economy.

As Torres Paez et al. (2022) refer, in Cuba, food and nutritional security is one of the priorities in the updating of the economic and social development model in line with the Constitution of the Republic of Cuba, approved in 2019, when it states that all people have the right to healthy and adequate food. The State creates the conditions to strengthen the momentum of the economy and the confrontation of the global crisis caused by the Covid-19, it is recognized that the national food production constitutes a central aspect for the country.

In a context marked by essential transformations and with the objective of reaching higher levels of agricultural production, a topic still insufficiently dealt with in theory is of great importance: rent relations. In this sense, Labrador Machín et al. (1998) consider differential rent as one of the economic forms to dynamize agriculture, stressing that land rent and the possibility of its use in the transition are issues that have been little studied in the economic literature. This is fundamentally linked to multiple reasons of a subjective nature, so that State policy should be aimed at rescuing, through the mechanisms available to it, this hidden possibility of raising production efficiency and increasing income to its budget (Labrador Machín, 1998).

For his part, Hernández Brito (2016) studies different forms of manifestation of differential rent in Cuba, and more recently, García Ruiz (2022) assures that absolute rent relations are occurring in the conditions of the construction of Cuban socialism, where socialist social property dominates, under the forms of state and cooperative properties, and in its relationship with the forms of private agricultural property and/or land management existing in agriculture, in the same way that he states that differential rent is working and is a phenomenon present in the construction of socialism in Cuba.

This section stimulates reflection on the importance of the theory of income as one of the aspects to be taken into account in the resizing of production relations in agriculture, which could contribute to the improvement of the implementation of a planned agricultural policy, aimed primarily at achieving higher levels of efficiency, efficacy and effectiveness in the sector, in accordance with the precepts of the recently approved Law No. 148 of Food Sovereignty and Food and Nutritional Security, approved on July 2022, which establishes the general legal framework to achieve food sovereignty and food security, as well as to strengthen the protection of the right of all people to healthy and appropriate food, regulates the organization of sovereign and sustainable local food systems that articulate in an intersectoral and interinstitutional way the production, processing, marketing and consumption of food.

Therefore, the objective of this paper is to argue the need for the use of differential rent in our agriculture, from its theoretical-methodological references, to connect theory and practice in order to solve the problems related to food production and the increase of exportable items.

Materials and methods

This study used a fundamentally qualitative research approach, based on dialectical materialism as an essential philosophical method for approaching the categories related to the object of study.

Among the theoretical level methods, the following were used: the historical-logical method to analytically relate the thematic axes of different conceptions on land rent; the structural systemic method was also used for the harmonic articulation between the dissimilar points of view of several authors that confirm the validity of the postulates of the Marxist theory of rent and the importance of its deepening in the context of socialism in Cuba.

As empirical methods, it is started from scientific observation to assess the way in which the forms of land rent are conceived in practice.

The procedures used were analysis and synthesis, scientific abstraction, induction-deduction and individual and group interview techniques, with a predominance of documentary analysis, as well as participatory action research.

Results and discussion

Considerations on land rent theory

The theory of rent represents an effective instrument for understanding the economic and social reality of contemporary capitalism and, therefore, cannot be considered as a mere detail for perfecting the theory of distribution. It is a concept applicable to a range of spheres of economic activity, not only those related to agriculture, livestock or mining. It also refers to aspects that have to do with the extraction of hydrocarbons, real estate values, certain location not only for the sake of greater proximity to the market, etc. Understanding the essence of land rent theory is, therefore, important to be able to inquire about a series of phenomena that influence our current social reality (Klimovsky Baron, 1985).

The author herself emphasizes that the analysis of land rent has led throughout history to numerous debates on its determination, which makes it possible and necessary to talk about the particularities of the agrarian issue as a category of theoretical reflection and, in general, land rent is considered a major factor in the generation of surplus. It conditions the structure of social, economic and political relations, with respect to how it is generated and distributed.

For David Ricardo (Teubal, 2006), (land) rent is that part of the product of the land that is paid to the landowner for the use of the original and indestructible energies of the soil. It is often confused with the interest and profit of capital and, in popular parlance, the term is applied to any sum paid annually by the farmer to his landowner.

In this sense, Teubal (2006), referring to David Ricardo's rent analysis, emphasizes that it is basically a theory of differential rent. It arises when portions of land are cultivated with decreasing or differential fertility (or due to differential location). This process generates different degrees of productivity per unit of additional land incorporated into the productive process. The price of wheat is set at the last (marginal) unit of land (the least productive) and governs the economy as a whole. As a consequence, the owners of the most fertile land receive a rent (windfall profit) that grows as -due to a greater demand for food because of population increases- less and less fertile land is incorporated into the production process to increase production.

This author considers that this analysis leaves many unfinished questions, taken up by Marx and others are elaborated by various authors, which lead to other debates, such as, for example, those that have to do with the taxes that should be charged to landowners, by the mere fact of being owners of the indestructible forces of nature.

In other words, David Ricardo (Teubal, 2006) does not explain the divergences between value and price of production, he does not realize that value is transformed into surplus value, surplus value into profit and profit into average profit, since he fails to differentiate competition within and between branches. Competition within the branch manages to modify the structure of socially necessary labor time, it manages to influence the magnitude of value, the capitalists obtain extraordinary surplus value. Between the branches the magnitude of the value of the commodity is not modified, although it does determine the formation of the price of production and the average profit.

For this author, there is no difference between the value and the price of production, so there is no difference between the value of agricultural products and the price of industrial production (he does not recognize absolute rent).

In denying absolute rent, he cannot accept that rent is paid on the worst lands, and on the differential rent he states that it is the product of labor and is obtained due to the advantageous natural conditions of the land, passing into the hands of the landowners, explaining it on the basis of the differences between individual value and social or market value, arguments overcome by Marx in his analysis of the subject.

Marx formulates the most complete form of the theory of ground rent and defines it as the sum of money which the capitalist tenant pays to the landowner, the owner of the land exploited by him, at certain periods, for example, annually, a certain sum of money contractually established (just as the lender of money-capital pays the stipulated interest) in exchange for the authorization which the latter grants him in investing his capital in this special field of production. This sum of money receives the name of ground rent [...] It is paid for all the time during which the ground has been ceded, contractually leased to the capitalist by the landowner. Consequently, ground rent is the form in which landed property is economically realized and valorized (Marx, 1973, p. 630).

Marx (1973) defines the forms of rent: absolute rent and differential rent for the conditions of capitalism. The differential rent of land is not related to private property or any other form of property over land. According to Marx, the differential rent is nothing but the formal metamorphosis of super-profit into rent (Marx, 1973, p. 746), which premise lies in the monopoly of land as an object of exploitation and points out: the extraordinary profit obtained by the use of the waterfall does not arise from capital, but from the use by it of a monopolizable and monopolized natural force (Marx, 1973, p. 656).

For its part, absolute rent arises from the existence of the monopoly of private property and its source is the exploitation of agricultural labor, i.e., a part of the surplus value created by wage labor in agriculture, related to the fact that the organic composition is lower or smaller of agricultural capital than that of industry and does not participate in the process of leveling the profit share at the level of society.

The criterion of Caligaris and Pérez (2017) stand out, who assert that contemporary interpretations are presented and developed in a completely autonomous manner, as if there were no alternatives, or perhaps worse, reference to their original authors and the debates they have raised is omitted, presenting as novel arguments that have been in existence for several decades and have already been subjected to strong criticism. Deliberate omissions aside, the reason for this kind of theoretical autism is usually simply ignorance of the history of Marxist economic thought, i.e., of the evolution of the various interpretations and controversies that have arisen.

It should be noted, therefore, that it is necessary to study the arguments and criteria put forward by different authors on the validity and importance of rent theory for the study and practical use of the different forms of rent, manifested not only in current agriculture, but also in mining, urban rent, real estate, its role in the conditions of tourism, among others.

In this order, L'Huillier (2020) states that within primary rents, differential rent type 1, differential rent type 2 and urban absolute rent are found. The author states that differential primary rent type 1, has a certain equivalence with the differential rent captured by the most fertile rural lands in the rural environment, insofar as it corresponds to a form of rent that is received according to the physical characteristics of the land and the conditions of constructibility, urban equivalent to rural fertility, on which these attributes depend.

The relevance of the main thematic axes of contemporary authors on rent theory serves as an immediate reference to deepen the theoretical, methodological and practical bases of the use of rent in socialism.

Formation and use of differential rent in socialism

Academic studies clearly reveal that the basis in terms of space for the installation of economic assets is land, but it is in agriculture where it is presented as the main and irreplaceable factor.

In this sense, Labrador Machín et al. (2020) refer that the organization and development of agricultural production are subordinated to a set of particularities that, unlike other branches of the economy, establish certain requirements in the methods, means and organizational forms, namely:

Land is the fundamental means of production and differs essentially from the others in that it is not the product of human labor, but an attribute of nature; an irreproducible means of production that with proper treatment is constantly improving, increasing its yield and minimizing its deterioration; it can be improved, but it cannot be created.

  • Land cannot move in space and, therefore, can be used only where it is located, unlike other means of production that are gradually used up by its exploitation in the productive process. The land can lose its productive properties, but it possesses the capacity to increase its fertility with an adequate relationship with it. By virtue of this property, it is necessary to distinguish between natural fertility and economic fertility

  • The need to use technology different from that used in industry, which must be adapted to the particularities of agriculture

  • The land produces with living organisms and its results depend on biological and metabolic processes

  • Agriculture is climate and weather dependent, which influences production and yields

  • Agricultural production is seasonal in nature

  • In agriculture, there are different forms of ownership that are related to each other

All these characteristics make economic and natural processes closely interlinked, significantly influencing resource requirements and production results.

It should also be noted that land is quantitatively limited and a qualitatively heterogeneous resource; it is an irreplaceable means of production, which is why it will continue to be the main means of production in agriculture in the future.

The growth of product needs for food sovereignty and security requires the rational use of land and increasing the productivity of each unit of cultivated land.

When analyzing rent relations in socialism, it is necessary to do so taking as a starting point the ideas presented in the Marxist theory of rent.

In socialism, as a result of the radical socioeconomic transformations, a new type of relations is formed in agriculture based on social ownership of the means of production, thus eliminating the cause of the existence of absolute rent; however, the same does not occur with differential rent (Labrador Machín et al., 1998).

In relation to the above, García Ruiz (2022, p. 207) studies the two known forms of land rent: absolute rent and differential rent in Cuba and affirms that in the period of transition from capitalism to socialism, and possibly in the socialist phase, as the first of the communist mode of production, there objectively exist agrarian relations of capitalist type that are subordinated as a particular subsystem to the system of predominant socialist production relations, therefore, modified relations of land rent that must be studied and explained by means of Marxist theory.

In any case, it is worth going deeper into the importance, from the Marxist theory, of the foundation of the forms assumed by rent relations in our economy for a true articulation of the existing economic forms in agriculture with the whole entrepreneurial fabric, something which is not without novelty in the national context in view of the resizing of the economy, especially as regards the relations between the State and these economic actors, where there has been a call for reflection on the importance of differential income as one of the aspects to be taken into account in the resizing of State-cooperative relations and other entities in the sector (Labrador Machín, 1998), a pending issue in the Cuban reality.

It is necessary, however, to make some clarifications: rent is neither by its origin nor by its premises, exclusive of the capitalist regime of production. Capitalism imprints on rent features proper to this phase of development of social production, but it does not engender it in itself.

It is necessary to clarify that in the Marxist theory of rent it is necessary to distinguish the general from the particular, that which is linked to its origins (such as the characteristics of land as a means of production, the monopoly of land exploitation and territorial property) from that which is inherent because it exists within the framework of the capitalist mode of production.

In the socialist construction, the conditions are maintained for a group of enterprises to obtain an extraordinary profit, associated fundamentally to the better quality of the land used and the proximity to the consumer markets.

A group of economic actors in Cuban agriculture, which today have expanded to include enterprises, cooperatives, self-employed workers, contracted workers, by having a monopoly on the most fertile and best located land, have the possibility of obtaining a permanent extraordinary profit. If they did not monopolize the exploitation of the land, they would stop excluding the rest of the producers from the use of that land and, therefore, this extra income would be redistributed and this extraordinary profit would disappear.

One of the mechanisms for the realization of extraordinary profits is the price of agricultural products, which is associated with the high demand for such products.

Since in agriculture the price of the product is regulated by the work expenses of the cooperatives with the worst land, then those who work on the land of better and medium quality would obtain an extraordinary profit from the difference between their individual price and the social price at which they sell the product.

The above-mentioned causes of this income above those that would normally yield similar investments (fertility and different situation) "can act in the opposite direction. A land may be very well situated and very unfertile and vice versa" (Marx, 1973, p. 661).

The fact that it is precisely the exceptional conditions of the means of production they use that make it possible to make the work more productive and obtain extraordinary profit, together with the element that the land belongs to the cooperatives, usufructuaries and in a certain percentage to the State, conditions the possibility and necessity of rent relations in the socialist transition as relations between the State and the producers of the agricultural system with respect to the distribution of a part of the additional product, which is obtained as a result of the exploitation of relatively better lands.

It should be emphasized that social property in the transition to socialism does not eliminate rent relations or extraordinary profit. Extraordinary profit, Marx said, would exist even if the land on which the waterfall was located was used by the manufacturer as land without owner (Marx, 1973, p. 658).

Therefore, Labrador Machín (1998) emphasizes that in order to increase the efficiency of agricultural production, it is necessary to start from the recognition of differential income factors. In practice, differential rent I or II, depending on the way in which this additional extraordinary profit is obtained, is presented as the obtaining by some producers of higher income than others, despite equal investments or expenditures on machinery, inputs and technologies, so that there will be additional income, mainly associated with the natural factor and not with labor effort. The higher income would not come from the increase in yields or the reduction in the cost of production, but would be guaranteed a priori. This situation does not stimulate the use of the best solutions in land use, greater economic responsibility on the part of producers, or resource savings in management.

On the other hand, if we consider that the different producers achieve their expanded reproduction on the basis of their incomes, it would be clear that not all of them would have the same possibilities for self-sustainability. The leveling of the possibilities of reproduction is not an objective in itself, but is subordinated to the demand for a more effective use of land, material, labor and human resources in agriculture and at the level of the national economy. Leveling refers to the need to erase unsubstantiated economic differentiation that contradicts the above-mentioned requirement.

It is not a matter of achieving absolute equality of income levels in all entities, with different natural and economic conditions. This refutes the criterion of economic efficiency and is not real. It is an approach to the procedures required, taking into account the differences in specialization and other natural and economic particularities in the regions of the country.

The problem lies in the search for the most effective mechanism for redistributing income revenues, ensuring the leveling of management conditions and stimulating the search for better solutions to production problems, while at the same time increasing the economic responsibility of each production link.

In practice, the fundamental means of rent distribution are: the use of the price mechanism, i.e., the use of the price collection system, differentiated by zones to mobilize rent resources towards other branches of the national economy and to redistribute income revenues within agriculture.

The direct financing mechanism has been considered feasible, i.e., the use of fixed income tax payments and others for the same purposes as the tax system.

The objective realization of price differentiation, according to the zone, depends on the presence of a land cadastre that characterizes the natural and economic fertility in a more complete way. The non-existence of a land cadastre, until recently in Cuba, became an obstacle to propose the mechanism of differentiated prices; the objectivity of land valuation, based on the cadastre, is an aspect that must be solved urgently in the Cuban economy, even when such differentiation is not considered pertinent.

Another urgent task is the selection of mechanisms for the collection of rent, which would guarantee a well-founded leveling of income distribution and allow for a more efficient management and use of the land and its results. The determination of this extraordinary profit and its contribution to the budget by those organizations with better and medium conditions would contribute to measure, in a more effective way, the real contribution of each productive link and would stimulate the companies with relatively worse conditions to increase their efficiency.

The contribution to the budget by the differential income from the most advantageous conditions can be made by zones, by distances from the market, by varieties and quality of the productions, which would act in a stimulating way in those productions at the moment of using the land funds.

There is a criterion that in Cuba, being a small country and not having a marked disparity in soil fertility, the zonal price mechanism for the capture and redistribution of the differential rent is not feasible. However, this is an aspect that should be reflected upon. The proposal of four categories of soils according to their agroproductivity (Council of State of the Republic of Cuba, 2021), another classification is shown in Resolution 376/2018 of the Ministry of Agriculture: in soils of very good, good, medium and low fertility, could be the reference for a comprehensive assessment of the quality of the land for its proper use, this aspect deserves a deeper look in correspondence with the objectives expected from agriculture.

In the recently approved Law of Food and Nutritional Sovereignty and Security (National Assembly of People's Power, 2022), among the objectives to be fulfilled by the Ministry of Agriculture to implement, in the agricultural system, public policies related to food sovereignty and food and nutritional security, emphasis is placed on proposing, dictating, supervising and controlling the application of regulatory measures for the conservation and rational use of soil, water, flora and fauna, as well as for the prevention of pollution in general, in its link with agricultural and forestry activities, as well as food production.

In the effort to contribute to the solution of purposes and problems that arise at the organizational, local and national levels, in terms of improving enterprise management, implementing local agri-food systems, generating enough food, as well as items for national export, it is not enough to state that rent relations exist, as well as other levers that are not sufficiently used. The challenge is to design the tools that from theory demonstrate their viability and allow, with an innovative vision, to change the panorama of the economy, translated into the satisfaction of the resent needs of the population in function of the fulfillment of the supreme objective of our economic-social system; it is a pending task to which continuity must be given.

Referencias bibliográficas

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Received: October 21, 2022; Accepted: November 08, 2022

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