The Principles of Political Economy
by John Stuart Mill


Book 1, Chapter 12

Of the Law of the Increase of Production from Land

    1. Land differs from the other elements of production, labour
and capital, in not being susceptible of indefinite increase. Its
extent is limited, and the extent of the more productive kinds of
it more limited still. It is also evident that the quantity of
produce capable of being raised on any given piece of land is not
indefinite. This limited quantity of land, and limited
productiveness of it, are the real limits to the increase of
production.
    That they are the ultimate limits, must always have been
clearly seen. But since the final barrier has never in any
instance been reached; since there is no country in which all the
land, capable of yielding food, is so highly cultivated that a
larger produce could not (even without supposing any fresh
advance in agricultural knowledge) be obtained from it, and since
a large portion of the earth's surface still remains entirely
uncultivated; it is commonly thought, and is very natural at
first to suppose, that for the present all limitation of
production or population from this source is at an indefinite
distance, and that ages must elapse before any practical
necessity arises for taking the limiting principle into serious
consideration.
    I apprehend this to be not only an error, but the most
serious one, to be found in the whole field of political economy.
The question is more important and fundamental than any other; it
involves the whole subject of the causes of poverty, in a rich
and industrious community: and unless this one matter be
thoroughly understood, it is to no purpose proceeding any further
in our inquiry.

    2. The limitation to production from the properties of the
soil, is not like the obstacle opposed by a wall, which stands
immovable in one particular spot, and offers no hindrance to
motion short of stopping it entirely. We may rather compare it to
a highly elastic and extensible band, which is hardy ever so
violently stretched that it could not possibly be stretched any
more, yet the pressure of which is felt long before the final
limit is reached, and felt more severely the nearer that limit is
approached.
    After a certain, and not very advanced, stage in the progress
of agriculture, it is the law of production from the land, that
in any given state of agricultural skill and knowledge, by
increasing the labour, the produce is not increased in an equal
degree; doubling the labour does not double the produce; or, to
express the same thing in other words, every increase of produce
is obtained by a more than proportional increase in the
application of labour to the land.
    This general law of agricultural industry is the most
important proposition in political economy. Were the law
different, nearly all the phenomena of the production and
distribution of wealth would be other than they are. The most
fundamental errors which still prevail on our subject, result
from not perceiving this law at work underneath the more
superficial agencies on which attention fixes itself; but
mistaking those agencies for the ultimate causes of effects of
which they may influence the form and mode, but of which it alone
determines the essence.
    When, for the purpose of raising an increase of produce,
recourse is had to inferior land, it is evident that, so far, the
produce does not increase in the same proportion with the labour.
The very meaning of inferior land, is land which with equal
labour returns a smaller amount of produce. Land may be inferior
either in fertility or in situation. The one requires a greater
proportional amount of labour for growing the produce, the other
for carrying it to market. If the land A yields a thousand
quarters of wheat, to a given outlay in wages, manure, &c., and
in order to raise another thousand recourse must be had to the
land B, which is either less fertile or more distant from the
market, the two thousand quarters will cost more than twice as
much labour as the original thousand, and the produce of
agriculture will be increased in a less ratio than the labour
employed in procuring it.
    Instead of cultivating the land B, it would be possible, by
higher cultivation, to make the land A produce more. It might be
ploughed or harrowed twice instead of once, or three times
instead of twice; it might be dug instead of being ploughed;
after ploughing, it might be gone over with a hoe instead of a
harrow, and the soil more completely pulverized; it might be
oftener or more thoroughly weeded; the implements used might be
of higher finish, or more elaborate construction; a greater
quantity or more expensive kinds of manure might be applied, or
when applied, they might be more carefully mixed and incorporated
with the soil. These are some of the modes by which the same land
may be made to yield a greater produce; and when a greater
produce must be had, some of these are among the means usually
employed for obtaining it. But, that it is obtained at a more
than proportional increase of expense, is evident from the fact
that inferior lands are cultivated. Inferior lands, or lands at a
greater distance from the market, of course yield an inferior
return, and an increasing demand cannot be supplied from them
unless at an augmentation of cost, and therefore of price. If the
additional demand could continue to be supplied from the superior
lands, by applying additional labour and capital, at no greater
proportional cost than that at which they yield the quantity
first demanded of them, the owners or farmers of those lands
could undersell all others, and engross the whole market. Lands
of a lower degree of fertility or in a more remote situation,
might indeed be cultivated by their proprietors, for the sake of
subsistence or independence; but it never could be the interest
of any one to farm them for profit. That a profit can be made
from them, sufficient to attract capital to such an investment,
is a proof that cultivation on the more eligible lands has
reached a point, beyond which any greater application of labour
and capital would yield, at the best, no greater return than can
be obtained at the same expense from less fertile or less
favourably situated lands.
    The careful cultivation of a well-farmed district of England
or Scotland is a symptom and an effect of the more unfavourable
terms which the land has begun to exact for any increase of its
fruits. Such elaborate cultivation costs much more in proportion,
and requires a higher price to render it profitable, than farming
on a more superficial system; and would not be adopted if access
could be had to land of equal fertility, previously unoccupied.
Where there is the choice of raising the increasing supply which
society requires, from fresh land of as good quality as that
already cultivated, no attempt is made to extract from land
anything approaching to what it will yield on what are esteemed
the best European modes of cultivating. The land is tasked up to
the point at which the greatest return is obtained in proportion
to the labour employed, but no further: any additional labour is
carried elsewhere. "It is long," says an intelligent traveller in
the United States,(1*) "before an English eye becomes reconciled
to the lightness of the crops and the careless farming (as we
should call it) which is apparent. One forgets that where land is
so plentiful and labour so dear as it is here, a totally
different principle must be pursued to that which prevails in
populous countries, and that the consequence will of course be a
want of tidiness, as it were, and finish, about everything which
requires labour." Of the two causes mentioned, the plentifulness
of land seems to me the true explanation, rather than the
dearness of labour; for, however dear labour may be, when food is
wanted, labour will always be applied to producing it in
preference to anything else. But this labour is more effective
for its end by being applied to fresh soil, than if it were
employed in bringing the soil already occupied into higher
cultivation. Only when no soils remain to be broken up but such
as either from distance or inferior quality require a
considerable rise of price to render their cultivation
profitable, can it become advantageous to apply the high farming
of Europe to any American lands; except, perhaps, in the
immediate vicinity of towns, where saving in cost of carriage may
compensate for great inferiority in the return from the soil
itself. As American farming is to English, so is the ordinary
English to that of Flanders, Tuscany, or the Terra di Lavoro;
where by the application of a far greater quantity of labour
there is obtained a considerably larger gross produce, but on
such terms as would never be advantageous to a mere speculator
for profit, unless made so by much higher prices of agricultural
produce.
    The principle which has now been stated must be received, no
doubt, with certain explanations and limitations. Even after the
land is so highly cultivated that the mere application of
additional labour, or of an additional amount of ordinary
dressing, would yield no return proportioned to the expense, it
may still happen that the application of a much greater
additional labour and capital to improving the soil itself, by
draining or permanent manures, would be as liberally remunerated
by the produce, as any portion of the labour and capital already
employed. It would sometimes be much more amply remunerated. This
could not be, if capital always sought and found the most
advantageous employment; but if the most advantageous employment
has to wait longest for its remuneration, it is only in a rather
advanced stage of industrial development that the preference will
be given to it; and even in that advanced stage, the laws or
usages connected with property in land and the tenure of farms,
are often such as to prevent the disposable capital of the
country from flowing freely into the channel of agricultural
improvement: and hence the increased supply, required by
increasing population, is sometimes raised at an augmenting cost
by higher cultivation, when the means of producing it without
increase of cost are known and accessible. There can be no doubt,
that if capital were forthcoming to execute, within the next
year, all known and recognised improvements in the land of the
United Kingdom which would pay at the existing prices, that is,
which would increase the produce in as great or a greater ratio
than the expense; the result would be such (especially if we
include Ireland in the supposition) that inferior land would not
for a long time require to be brought under tillage: probably a
considerable part of the less productive lands now cultivated,
which are not particularly favoured by situation, would go out of
culture; or (as the improvements in question are not so much
applicable to good land, but operate rather by converting bad
land into good) the contraction of cultivation might principally
take place by a less high dressing and less elaborate tilling of
land generally; a falling back to something nearer the character
of American farming; such only of the poor lands being altogether
abandoned as were not found susceptible of improvement. And thus
the aggregate produce of the whole cultivated land would bear a
larger proportion than before to the labour expended on it; and
the general law of diminishing return from land would have
undergone, to that extent, a temporary supersession. No one,
however, can suppose that even in these circumstances, the whole
produce required for the country could be raised exclusively from
the best lands, together with those possessing advantages of
situation to place them on a par with the best. Much would
undoubtedly continue to be produced under less advantageous
conditions, and with a smaller proportional return, than that
obtained from the best soils and situations. And in proportion as
the further increase of population required a still greater
addition to the supply, the general law would resume its course,
and the further augmentation would be obtained at a more than
proportionate expense of labour and capital.

    3. That the produce of land increases, caeteris paribus, in a
diminishing ratio to the increase in the labour employed, is a
truth more often ignored or disregarded than actually denied. It
has, however, met with a direct impugner in the well-known
American political economist, Mr. H.C. Carey, who maintains that
the real law of agricultural industry is the very reverse; the
produce increasing in a greater ratio than the labour, or in
other words affording to labour a perpetually increasing return.
To substantiate this assertion, he argues that cultivation does
not begin with the better soils, and extend from them, as the
demand increases, to the poorer, but begins with the poorer, and
does not, till long after, extend itself to the more fertile.
Settlers in a new country invariably commence on the high and
thin lands; the rich but swampy soils of the river bottoms cannot
at first be brought into cultivation, by reason of their
unhealthiness, and of the great and prolonged labour required for
clearing and draining them. As population and wealth increase,
cultivation travels down the hill sides, clearing them as it
goes, and the most fertile soils, those of the low grounds, are
generally (he even says universally) the latest cultivated. These
propositions, with the inferences which Mr. Carey draws from
them, are set forth at much length in his latest and most
elaborate treatise, "Principles of Social Science;" and he
considers them as subverting the very foundation of what he calls
the English political economy, with all its practical
consequences, especially the doctrine of free trade.
    As far as words go, Mr. Carey has a good case against several
of the highest authorities in political economy, who certainly
did enunciate in too universal a manner the law which they laid
down, not remarking that it is not true of the first cultivation
in a newly settled country. Where population is thin and capital
scanty, land which requires a large outlay to render it fit for
tillage must remain untilled; though such lands, when their time
has come, often yield a greater produce than those earlier
cultivated, not only absolutely, but proportionally to the labour
employed, even if we include that which had been expended in
originally fitting them for culture. But it is not pretended that
the law of diminishing return waS operative from the very
beginning of society: and though some political economists may
have believed it to come into operation earlier than it does, it
begins quite early enough to support the conclusions they founded
on it. Mr. Carey will hardly assert that in any old country -- in
England or France, for example -- the lands left waste are, or
have for centuries been, more naturally fertile than those under
tillage. Judging even by his own imperfect test, that of local
situation -- how imperfect I need not stop to point out -- is it
true that in England or France at the present day the
uncultivated part of the soil consists of the plains and valleys,
and the cultivated, of the hills? Every one knows, on the
contrary, that it is the high lands and thin soils which are left
to nature, and when the progress of population demands an
increase of cultivation, the extension is from the plains to the
hills. Once in a century, perhaps, a Bedford Level may be
drained, or a Lake of Harlem pumped out: but these are slight and
transient exceptions to the normal progress of things; and in old
countries which are at all advanced in civilization, little of
this sort remains to be done.(2*)
    Mr. Carey himself unconsciously bears the strongest testimony
to the reality of the law he contends against: for one of the
propositions most strenuously maintained by him is, that the raw
products of the soil, in an advancing community, steadily tend to
rise in price. Now, the most elementary truths of political
economy show that this could not happen, unless the cost of
production, measured in labour, of those products, tended to
rise. If the application of additional labour to the land was, as
a general rule, attended with an increase in the proportional
return, the price of produce, instead of rising, must necessity
fall as society advances, unless the cost of production of gold
and silver fell still more: a case so rare, that there are only
two periods in all history when it is known to have taken place;
the one, that which followed the opening of the Mexican and
Peruvian mines; the other, that in which we now live. At all
known periods, except these two, the cost of production of the
precious metals has been either stationary or rising. If,
therefore, it be true that the tendency of agricultural produce
is to rise in money price as wealth and population increase,
there needs no other evidence that the labour required for rising
it from the soil tends to augment when a greater quantity is
demanded.
    I do not go so far as Mr. Carey: I do not assert that the
cost of production, and consequently the price, of agricultural
produce, always and necessity rises as population increases. It
tends to do so; but the tendency may be, and sometimes is, even
during long periods, held in check. The effect does not depend on
a single principle, but on two antagonizing principles. There is
another agency, in habitual antagonism to the law of diminishing
return from land; and to the consideration of this we shall now
proceed. It is no other than the progress of civilization. I use
this general and somewhat vague expression, because the things to
be included are so various, that hardly any term of a more
restricted signification would comprehend them all.
    Of these, the most obvious is the progress of agricultural
knowledge, skill, and invention. Improved processes of
agriculture are of two kinds: some enable the land to yield a
greater absolute produce, without an equivalent increase of
labour; others have not the power of increasing the produce, but
have that of diminishing the labour and expense by which it is
obtained. Among the first are to be reckoned the disuse of
fallows, by means of the rotation of crops; and the introduction
of new articles of cultivation capable of entering advantageously
into the rotation. The change made in British agriculture towards
the close of the last century, by the introduction of turnip
husbandry, is spoken of as amounting to a revolution. These
improvements operate not only by enabling the land to produce a
crop every year, instead of remaining idle one year in every two
or three to renovate its powers, but also by direct increase of
its productiveness; since the great addition made to the number
of cattle by the increase of their food, affords more abundant
manure to fertilize the corn lands. Next in order comes the
introduction of new articles of food, containing a greater amount
of sustenance, like the potato, or more productive species or
varieties of the same plant, such as the Swedish turnip. In the
same class of improvements must be placed a better knowledge of
the properties of manures, and of the most effectual modes of
applying them; the introduction of new and more powerful
fertilizing agents, such as guano, and the conversion to the same
purpose, of substances previously wasted; inventions like
subsoil-ploughing or tile-draining; improvements in the bree or
feeding of labouring  cattle; augmented stock or the animals
which consume and convert into human food what would otherwise be
wasted; and the like. The other sorts of improvements, those
which diminish labour, but without increasing the capacity of the
land to produce, are such as the improved construction of tools;
the introduction of new instruments which spare manual labour, as
the winnowing and threshing machines; a more skilful and
economical application of muscular exertion, such as the
introduction, so slowly accomplished in England, of Scotch
ploughing, with two horses abreast and one man, instead of three
or four horses in a team and two men, &c. These improvements do
not add to the productiveness of the land, but they are equally
calculated with the former to counteract the tendency in the cost
of production of agricultural produce, to rise with the progress
of population and demand.
    Analogous in effect to this second class of agricultural
improvements, are improved means of communication. Good roads are
equivalent to good tools. It is of no consequence whether the
economy of labour takes place in extracting the produce from the
soil, or in conveying it to the place where it is to be consumed.
Not to say in addition, that the labour of cultivation itself is
diminished by whatever lessens the cost of bringing manure from a
distance, or facilitates the many operations of transport from
place to place which occur within the bounds of the farm.
Railways and canals are virtually a diminution of the cost of
production of all things sent to market by them; and literally so
of all those, the appliances and aids for producing which, they
serve to transmit. By their means land can be cultivated, which
could not otherwise have remunerated the cultivators without a
rise of price. improvements in navigation have, with respect to
food or materials brought from beyond sea, a corresponding
effect.
    From similar considerations, it appears that many purely
mechanical improvements, which have, apparently at least, no
peculiar connexion with agriculture, nevertheless enable a given
amount of food to be obtained with a smaller expenditure of
labour. A great improvement in the process of smelting iron,
would tend to cheapen agricultural implements, diminish the cost
of railroads, of waggons and carts, ships, and perhaps buildings,
and many other things to which iron is not at present applied,
because it is, too costly. and would thence diminish the cost of
production of food. The same effect would follow from an
improvement in those processes of what may be termed manufacture,
to which the material of food is subjected after it is separated
from the ground. The first application of wind or water power to
grind corn, tended to cheapen bread as much as a very important
discovery in agriculture would have done; and any great
improvement in the construction of corn-mills, would have, in
proportion, a similar influence. The effects of cheapening
locomotion have been already considered. There are also
engineering inventions which facilitate all great operations on
the earth's surface. An improvement in the art of taking levels
is of importance to draining, not to mention canal and railway
making. The fens of Holland, and of some parts of England, are
drained by pumps worked by the wind or by steam. Where canals of
irrigation, or where tanks or embankments are necessary,
mechanical skill is a great resource for cheapening production.
    Those manufacturing improvements which cannot be made
instrumental to facilitate, in any of its stages, the actual
production of food, and therefore do not help to counteract or
retard the diminution of the proportional return to labour from
the soil, have, however, another effect, which is practically
equivalent. What they do not prevent, they yet, in some degree,
compensate for.
    The materials of manufacture being all drawn from the land,
and many of them from agriculture, which supplies in particular
the entire material of clothing; the general law of production
from the land, the law of diminishing return, must in the last
resort be applicable to manufacturing as well as to agricultural
history. As population increases, and the power of the land to
yield increased produce is strained harder and harder, any
additional supply of material, as well as of food, must be
obtained by a more than proportionally increasing expenditure of
labour. But the cost of the material forming generally a very
small portion of the entire cost of the manufacture, the
agricultural labour concerned in the production of manufactured
goods is but a small fraction of the whole labour worked up in
the commodity. All the rest of the labour tends constantly and
strongly towards diminution, as the amount of production
increases. Manufactures are vastly more susceptible than
agriculture, of mechanical improvements, and contrivances for
saving labour; and it has already been seen how greatly the
skilful and economical distribution, depend on the extent of the
market, and on the possibility of production in large masses. In
manufactures, accordingly, the causes tending to increase the
productiveness of industry, preponderate greatly over the one
cause which tends to diminish it: and the increase of production,
called forth by the progress of society, takes place, not at an
increasing, but at a continually diminishing proportional cost.
This fact has manifested itself in the progressive fall of the
prices and values of almost every kind of manufactured goods
during two centuries past; a fall accelerated by the mechanical
inventions of the last seventy or eighty years, and susceptible
of being prolonged and extended beyond any limit which it would
be safe to specify.
    Now it is quite conceivable that the efficiency of
agricultural labour might be undergoing, with the increase of
produce, a gradual diminution; that the price of food, in
consequence, might be progressively rising, and an ever growing
proportion of the population might be needed to raise food for
the whole; while yet the productive power of labour in all other
branches of industry might be so rapidly augmenting, that the
required amount of labour could be spared from manufactures, and
nevertheless a greater produce be obtained, and the aggregate
wants of the community be on the whole better supplied, than
before. The benefit might even extend to the poorest class. The
increased cheapness of clothing and lodging might make up to them
for the augmented cost of their food.
    There is, thus, no possible improvement in the arts of
production which does not in one or another mode exercise an
antagonist influence to the law of diminishing return to
agricultural labour. Nor is it only industrial improvements which
have this effect. Improvements in government, and almost every
kind of moral and social advancement, operate in the same manner.
Suppose a country in the condition of France before the
Revolution: taxation imposed almost exclusively on the industrial
classes, and on such a principle as to be an actual penalty on
production; and no redress obtainable for any injury to property
or person, when inflicted by people of rank, or court influence.
Was not the hurricane which swept away this system of things,
even if we look no further than to its effect in augmenting the
productiveness of labour, equivalent to many industrial
inventions? The removal of a fiscal burthen on agriculture, such
as,. tithe, has the same effect as if the labour necessary for
obtaining the existing produce were suddenly reduced one-tenth.
The abolition of corn laws, or of any other restrictions which
prevent commodities from being produced where the cost of their
production is lowest, amounts to a vast improvement in
production. When fertile land, previously reserved as hunting
ground, or for any other purpose of amusement, is set free for
culture, the aggregate productiveness of agricultural industry is
increased. It is well known what has been the effect in England
of badly administered poor laws, and the still worse effect in
Ireland of a bad system of tenancy, in rendering agricultural
labour slack and ineffective. No improvements operate more
directly upon the productiveness of labour, than those in the
tenure of farms, and in the laws relating to landed property. The
breaking up of entails, the cheapening of the transfer of
property, and whatever else promotes the natural tendency of land
in a system of freedom, to pass out of hands which can make
little of it into those which can make more; the substitution of
long leases for tenancy at will, and of any tolerable system of
tenancy whatever for the wretched cottier system; above all, the
acquisition of a permanent interest in the soil by the
cultivators of it; all these things are as real, and some of them
as great, improvements in production, as the invention of the
spinning jenny or the steam-engine.
    We may say the same of improvements in education. The
intelligence of the workman is a most important element in the
productiveness of labour. So low, in some of the most civilized
countries, is the present standard of intelligence, that there is
hardly any source from which a more indefinite amount of
improvement may be looked for in productive power, than by
endowing with brains those who now have only hands. The
carefulness, economy, and general trustworthiness of labourers
are as important as their intelligence. Friendly relations, and a
community of interest and feeling between labourers and
employers, are eminently so: I should rather say, would be: for I
know not where any such sentiment of friendly alliance now
exists. Nor is it only in the labouring class that improvement of
mind and character operates with beneficial effect even on
industry. In the rich and idle classes, increased mental energy,
more solid instruction, and stronger feelings of conscience,
public spirit, or philanthropy, would qualify them to originate
and promote the most valuable improvements, both in the
economical resources of their country, and in its institutions
and customs. To look no further than the most obvious phenomena;
the backwardness of French agriculture in the precise points in
which benefit might be expected from the influence of an educated
class, is partly accounted for by the exclusive devotion of the
richer landed proprietors to town interests and town pleasures.
There is scarcely any possible amelioration of human affairs
which would not, among its other benefits, have a favourable
operation, direct or indirect, upon the productiveness of
industry. The intensity of devotion to industrial occupations
would indeed in many cases be moderated by a more liberal and
genial mental culture, but the labour actually bestowed on those
occupations would almost always be rendered more effective.
    Before pointing out the principal inferences to be drawn from
the nature of the two antagonist forces by which the
productiveness of agricultural industry is determined, we must
observe that what we have said of agriculture, is true with
little variation, of the other occupations which it represents;
of all the arts which extract materials from the globe. Mining
industry, for example, usually yields an increase of produce at a
more than proportional increase of expense. It does worse, for
even its customary annual produce requires to be extracted by a
greater and greater expenditure of labour and capital. As a mine
does not reproduce the coal or ore taken from it, not only are
all mines at last exhausted, but even when they as yet show no
signs of exhaustion, they must be worked at a continually
increasing cost; shafts must be sunk deeper, galleries driven
farther, greater power applied to keep them clear of water; the
produce must be lifted from a greater depth, or conveyed a
greater distance. The law of diminishing return applies therefore
to mining, in a still more unqualified sense than to agriculture:
but the antagonizing agency, that of improvements in production,
also applies in a still greater degree. Mining operations are
more susceptible of mechanical improvements than agricultural :
the first great application of the steam-engine was to mining;
and there are unlimited possibilities of improvement in the
chemical processes by which the metals are extracted. There is
another contingency, of no unfrequent occurrence, which avails to
counterbalance the progress of all existing mines towards
exhaustion: this is, the discovery of new ones, equal or superior
in richness.
    To resume; all natural agents which are limited in quantity,
are not only limited in their ultimate productive power, but,
long before that power is stretched to the utmost, they yield to
any additional demands on progressively harder terms. This law
may however be suspended, or temporarily controlled, by whatever
adds to the general power of mankind over nature; and especially
by any extension of their knowledge, and their consequent
command, of the properties and powers of natural agents.

NOTES:

1. Letters from America, by John Robert Godley, vol i. p. 42. See
also Lyell's Travels in America, vol. ii. p. 83.

2. Ireland may be alleged as an exception; a large fraction of
the entire soil of that country being still incapable of
cultivation for want of drainage. But though Ireland is an old
country, unfortunate social and political circumstances have kept
it a poor and backward one. Neither is it at all certain that the
bogs of Ireland, if drained and brought under tillage, would take
their place along with Mr Carey's fertile river bottoms, or among
any but the poorer soils.