country, decay.  But if changes are ever to be contemplated, a simple quantitative measure is the only safeguard against utter chaos.  Thus rent, like interest, will be found indispensable as a measure under any efficient system of society, even if it might not always represent the payment of sums of money to private individuals.  And that is why the principles governing rent possess, as I indicated at the outset of this chapter, an importance more fundamental than our present system of ownership and tenure.

Sec.6. The Question of Real Costs.  But we must not forget the preliminary question that started us upon our analysis of the agents of production.  The rent which a manufacturer or farmer has to pay for his land he naturally includes in his cost of production.  But does this money cost to the individual correspond to, and measure, any real cost to the community as a whole?  Here let us note in the first place that if only we could disregard the variety of uses to which land is put, if we could suppose that all industry was agriculture, and that agriculture was a single industry with a single product, we could argue that rent does not enter into marginal costs at all.  For we could regard the marginal producer as the one working on a marginal farm, whereas we have seen there is no pure rent.  The rent which other producers have to pay would thus represent merely the destination of the surplus profits which arise wherever actual costs fall short of marginal costs.  This way of looking at the matter has proved attractive to some thinkers, not in the least because of a desire to palliate the effects of landlordism, but because it fits in so well with our general sense of rent as a “surplus,” and a surplus as something distinct from a necessary price.  But it is clearly illegitimate in an economic theory which professes “to describe the facts.”  The marginal land for many purposes fetches, as we have seen, a considerable rent; and this rent is certainly part of the marginal costs and of the necessary price of the products of the particular industry.  The answer to our question is, however, not now very difficult to see.  Land, greatly as it differs in many respects from the other agents of production, resembles them in the very important respect that, being used for one purpose, it is not available for other purposes, and that the productive powers of the community in other directions are thereby diminished.  This is the real cost to the community, which attaches to the products of any industry, in virtue of the land which it occupies; not any human labors or sacrifices required to produce the land itself, but the curtailment of the natural resources available for productive use elsewhere.  This is the real cost of which rent is the money measure, and generally speaking an accurate measure at the margin of transference between one occupation and another.  A somewhat fanciful use of the term cost, this may seem perhaps, one not quite in accordance with our instinctive sense of what real costs should be.  But possibly the real costs represented by wages and profits may turn out to be not so very different, and we had best leave the matter there, until we have examined the nature of these other costs.