ABSTRACT
The law of rent is perhaps only a law in the sense that it provides an exceedingly convenient rule of measurement for fluctuations in the value of land. It is strange that writers like General Walker and Mr. Gunton, who have rigidly applied this law to profits, should have failed to see that it is equally applicable to the other participants of the net product. In the case of General Walker, the failure is perhaps explained partly by the anomalous position which he assumes for labor as a residual claimant who comes in for all that is left of the product after the relatively fixed charges for rent, profit, and interest have been defrayed, and partly by his apparent belief that the validity of the law of rent requires that the margin of cultivation should be represented by a “zero” rent. Having found as regards the earnings of employers “a theoretical no-profits stage of production,” he felt himself able to apply the law of rent. He did not find a no-interest and 22a no-wage stage of production, and therefore concluded that the “law of rent” would not apply. If we look more closely at the subject, we shall see that the “law of rent” will, in its essential features, apply to interest and wages as clearly as it applies to profits. Such an application will, among other results, upset entirely the position of wages as a residual claimant.
