10 per cent., say, the margin of no-rent land would have to be fixed at a different point from what it would have been if profits stood at 5 per cent.; - and therefore it may be said the economists did see that Land varied in relation to Capital and Labour. This is quite true, but still the mere fact that Capital and Labour got precisely the same profits and wages when working on the hypothetical no-rent lands as on lands paying rent - inasmuch as any excess over the current rate, which would otherwise have gone to Capital and Labour, is skimmed off by the landlord as rent, - was sufficient of itself to create just so much illusion as to Rent being in some way different in its laws from Capital and Labour, as to prevent the economists from going any further at that time; the land that paid no rent being always figured as patches lying here and there in the midst of land that did yield rent; the good and bad being averaged together, as it were, and the no-rent patches only serving to lower the average rent of the farm.

But it was not long before it began to be seen that the same mode of measurement which was applied to Land, could be applied to Capital and Labour as well; and that if there was a no-rent land, so, too, there was a no-profit-earning machine, and a no-profit-earning labourer; the difference between a better class machine and a worse in turning out the same product, or between a superior and an inferior workman in the same class of work, being precisely the same in principle as the difference between a fertile and a barren corn field. I first came across this principle definitely stated in one of the early Fabian tracts, if I remember rightly; but the general conception of 'marginal units' had already been introduced by Jevons; and the general conception of the laws of Rent as being applicable to the differences in the products of Capital and Labour as well as of Land, flowing from this conception of 'marginal units,' had been utilized and brought definitely into prominence by Marshall. Then, again, Von Thunen's 'law of substitution' which dealt with the 'marginal units' of Capital and Labour, and by means of which he sought to show, as we have seen, that their products being interchangeable, neither Capital nor Labour could get any ultimate advantage over the other in the matter of profits and wages, had already appeared; while Henry George's general statement of the law, in his 'Progress and Poverty,' - introduced by him to prove, in opposition to the Socialists, that there could be no exploitation of Labour by Capital, inasmuch as the smallest capitalists and the best of the workmen were interchangeable, - had made the conception of 'margins' familiar to the general body of economic readers; Professor Clark making special acknowledgment of his debt to George in this particular.

And since then, again, Mr. Hobson with his usual wariness and penetration has, in his ' Economics of Distribution' given a more rigidly scientific statement of the whole question of these 'margins' than any of his predecessors had done. But at the earlier time of which I have been speaking, none of the economists ventured to regard the differences between the worst forms of Capital in use and the best, or between the worst labourers employed and the best, as being the same in principle as between the worst lands in use and the best, and so to try and assimilate the laws of Capital and Labour with the law of Rent. And, indeed, their hesitation need cause us no surprise, for it would have landed them at once on the horns of this dilemma; - namely that either Rent, as well as Profits and Wages, enters into the price of commodities; or if Rent does not, then neither do Profits nor Wages; - a frankly impossible situation! But the strangest circumstance of all, and one that shows how firmly the orthodox economists have been able to fasten their law that Rent does not enter into price on the necks of every school of Economists down to the present hour, is that no one has as yet had the boldness to affirm that all Rent, as well as Profits and Wages, enters into price.

And this is what I now venture to do, - with becoming deference, I trust, to the great array of authorities against me, for whose consensus of opinion on this important subject I have, in spite of my different point of view, the greatest respect. Even Mr. Hobson, who sees quite clearly the identity between the differential rent of Land and the differential rents of Capital and Labour, and openly asserts that land put to superior uses enters into price, still hesitates, if I read him aright, to assert definitively that all Rent, as well as Profits and Wages, enters into price. But I can myself see no logical escape from this conclusion; and it behoves me therefore to go into the matter somewhat more fully and carefully.

In the first place, then, the primal source of the error (as I regard it) into which the orthodox schools have fallen on this question of Rent, being, as I have said, their treating separately the factors of Land, Capital, and Labour, instead of keeping them all together as parts of a single complex whole; and this procedure having been prompted by their laudable desire to find out how much of the product would go to the landlords, capitalists, and labourers, respectively; they were led directly to the use, as we have seen, of no-rent and no-profit margins for purposes of measurement and calculation, and so (had they only followed their own argument to its logical conclusion), to the absurdity that neither Rent, Profit, nor Wages enter into price. Now had they kept the factors of Land, Capital, and Labour solidly together, instead of treating each separately, they would have seen at once that as they all enter into the product in definite positive amounts, and are each allowed for by the capitalist in estimating his costs, these zero or tail-end margins of each factor would have been whipped off at the start; and that some positive amount of each in definite proportion to the rest must always enter into price; the proportion of each which will thus enter being settled, like all other economic things, by all being put on the wheel and this proportion definitely fixed by the ordinary law of supply and demand: while the particular combination of the three which fixes the price of the product in the particular market to which it is sent, will be that one which gives the lowest yield and yet is necessary to meet the demand; all the other and better producers getting an advantage over the weaker, not in a rise of price but in an increased yield - unless, indeed, they choose to combine and, by the superior efficiency of their instruments of production, drive the weaker producers from the market by starting a fresh price on a lower level.