The Natural Economic Order/Part I/Chapter 8
Let us suppose that, with the usual extensive farming methods of the district, 12 men are needed to cultivate 100 acres of land, and that the harvest amounts to 600 tons, that is, 50 tons for every man and 6 tons per acre.
Let us further suppose that with intensive farming the same area requires 50 men to cultivate and yields 2000 tons, or 40 tons instead of 50 for each worker, and 20 instead of 6 tons per acre.
Thus the produce of intensive cultivation is augmented as compared to the area, but diminished as compared to the work.
With extensive cultivation: Twelve men produce 50 tons each, that is 600 tons. With intensive cultivation: Twelve men produce 40 tons each, that is 480 tons.
So the difference of 120 tons is to be attributed to the larger area of 100 acres, which enabled these 12 men to adopt this extensive cultivation, that is, cultivation requiring less labour. They will of course prefer this method as long as the land necessary for it is at their disposal. But if the land is not at their disposal they are forced to have recourse to intensive cultivation and to be satisfied with the smaller product of labour. The disadvantage is so great that if anybody places the area necessary for extensive cultivation at their disposal they will consent to pay for the advantage resulting for them, or, in other words, the owner of this area will be able to levy an additional rent corresponding to the difference between the product of labour in extensive and intensive cultivation, the former being larger, as is proved by experience. In our example, then, the rent of 100 acres of land will be 120 tons.
Agriculture tends to extensive cultivation to save labour, but to intensive cultivation to save land. Out of the tension thus arising rent is born, and the degree of this tension (a matter of experience) determines the distribution of the farm produce between rent and wages.
We need not stop here to explain why extensive cultivation yields more produce for a given amount of labour and less produce for a given amount of land. That is a question of agricultural technique. For us it suffices to know that such is the case in agriculture, that it is founded in the nature of things. If it were otherwise, if extensive cultivation yielded 40 tons while intensive cultivation yielded 50 tons a head, the whole of agriculture would tend towards intensive cultivation. All the land that could not he stocked with labour would be left fallow, simply because any workers still available would reap larger harvests by a still more intensive tillage of the land already under cultivation than by cultivating fallow land.
(The theory of population which asserts that population corresponds to the food supply, is not inconsistent with the above proposition. Population grows with the augmentation of the food supply; it follows in the wake of intensive cultivation, it does not precede it.)
By extensive cultivation we mean that form of agriculture in which all the labour offering itself must be employed in order to cultivate the whole of the area available, no matter what the method of cultivation may be, hunting, cattle grazing, three-field system, marsh culture, or present-day comparatively well-developed farming.
By intensive cultivation we mean that form of agriculture which, if carried on on a large scale, must result in a general shortage of labour.
Intensive and extensive cultivation are therefore relative terms. The herdsman is an intensive worker as compared to the huntsman. Hence pastoral tribes must generally pay rent for the use of their land (hunting-grounds), and are able to do so.
Extensive cultivation yields the larger product of labour (wages and rent), whereas intensive cultivation yields the larger crop. The landowner would like to combine the two, and of course endeavours to practice intensive cultivation. He cannot, however, do so without withdrawing labour from among the extensive cultivators and so causing land to be left fallow (freeland of the third class). Now it stands to reason that the owners of this land are unwilling to let it lie fallow. They therefore try to attract labour to it by raising wages; and in doing so they are prepared to go close to the limit of profitableness (absorption of rent in wages), since a landowner will prefer to receive a dollar an acre rent rather than to receive nothing at all.
Freeland of the third class has thus the function of levelling wages and rent. Freeland of the third class makes arbitrary fixation of wages impossible. The landowner does not fix wages as low as he pleases, neither does the labourer demand as much as he chooses; the amount that falls to each is determined by economic laws.