IICS Public Lecture Series / 46th Confucius PhD Forum
MARX’S THEORY OF ABSOLUTE RENT AND ITS ROLE IN EXPLAINING THE DIVERGENCE
OF PRICES FROM VALUES
Speaker: Professor Nathan Hill
Director of the Trinity Centre for Asian Studies
Time: 6-7pm, Thursday 10 March 2022
7.30pm, Complimentary Chinese Buffet

A landowner whose estate is very fertile commands a higher rent than the landowner who has only stony barren fields to let out. A cafe at a busy downtown corner pays higher rent than a cafe on a quiet country lane. Already David Ricardo (1772-1823) elaborated a theory of differential rent to
explain such cases and Marx took over this theory with some modifications. But what determines the rent on the least fertile farms and for the worst located cafes? The differential rent on such locations should be zero, but their tenants still do pay. To explain these cases Marx proposed a
theory of 'absolute rent'. The correct interpretation of this theory and its relationship to the theory of monopoly rents has remained controversial until our day.

0:00:00 Overview and motivation

MONOPOLY RENT

0:02:14 Monopoly rent in Adam Smith
0:04:45 Monopoly rent in David Ricardo
0:05:50 Monopoly rent in Karl Marx
0:07:03 Why does monopoly rent exit and what sets its level?

DIFFERENTIAL RENT

0:07:44 Differential rent in David Ricardo
0:10:28 Differential rent in Adam Smith
0:12:30 Differential rent in Karl Marx
0:15:38 Why does differential rent exit and what sets its level?

ABSOLUTE RENT

0:15:49 Absolute rent in Adam Smith
0:20:40 Absolute rent in David Ricardo
0:26:13 Marxist price theory
0:28:43 Absolute rent in Karl Marx
0:31:37 Differential versus absoute rent
0:33:08 Monopolgy versus absolute rent
0:34:53 Summary: 3 types of rent in Karl Marx
0:36:03 Drawing the line between absolute and monopology rent
0:38:31 Why does absolute rent exit and what sets its level?
0:40:41 Opportunity costs - rent of corn land and rent of coal mines
0:42:50 Process of commodification - sheep walks become deer parks
0:49:00 Conclusion - opportunity cost sets absolute rent

QUESTIONS

0:51:04 House rent
0:54:38 Recent empirical or theoretic developments
1:05:31 Achieving urban housing

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