DISTRIBUTION OF WEALTH 



do not correspond to the variations in their pro- 

 ductivity. In just the same way as in the case of 

 land, the qualitatively more efficient farmers are 

 in a position to pay more for the more productive 

 grades of capital-goods than the qualitatively inef- 

 ficient can afford, to pay; and the value of the 

 capital-goods, as is the case in the value of land, 

 tends to vary with the amount which is paid for 

 its use. 



This may be illustrated by Fig. 6, by simply 

 replacing the term land by the term capital-goods. 

 In fact it seems clear that, in considering the situ- 

 ation at a given time, land and capital-goods 

 might well be considered together in the illustra- 

 tion given in Fig. 6 when it is the farmer's sur- 

 plus due to superior efficiency that is under con- 

 sideration. It seems that the land and capital- 

 goods employed in agricultural production, are 

 alike in that a differential is paid for the better 

 grades, and that the qualitatively more efficient 

 farmers can well afford to pay more for the use 

 of these better grades of the material instruments 

 of production than the qualitatively less efficient 

 farmers. Indeed, it would seem that this princi- 

 ple may be applied quite generally, and that it 

 explains why the more efficient men in all lines of 

 economic activity are able to outbid the less effi- 

 cient for the better facilities for production. 



With perfect competition the differential rent 

 of any grade of land or of any grade of capital- 



179 



