Two things should be noted.First,in this quotation Mill presup-posed that no prevailing wage rate or alternative earning exists for the metayer tenant,and it is not even clear whether the popu-lar"subsistence"income is implied as a limit to the subdivision of land.Indeed,without explicitly stating the law of diminishing returns,it would be difficult to arrive at any kind of equilibrium.[31] Second,in regard to"improvements,"Mill did not allow them to be made through adjusting the rental percentage-even though he was well aware of differing rental percentages.[32]
The lack of any definite conclusion by Mill stems from the fact that he did not claim to perform any economic analysis of the subject.He began by stating that the metayage system in Europe was regulated by custom and not by competition,[33] so that"when the partition of the produce is a matter of fixed usage,not of varying convention,political economy has no laws of distribution to investigate."[34] From whom did Mill get this"custom"idea?From Sismondi:
This connexion[of input commitments]is often the subject of a contract,to define certain services and certain occasional payments to which the metayer binds himself:nevertheless the differences in the obligations of one such contract and another are inconsiderable;usage governs alike all these engagements,and supplies the stipulations which have not been expressed:and the landlord who attempted to depart from usage,who exacted more than his neighbor,who took for the basis of the agreement anything but the equal division of the crops,would render himself so odious,he would be so sure of not obtaining a metayer who was an honest man,that the contract of all the metayers may be considered as identical,at least in each province,and never gives rise to any competition among peasants in search of employment,or any offer to cultivate the soil on cheaper terms than one another.[35]
The contractual stipulations as described are implied by the theory of share tenancy,and as we shall see in greater detail,they are similar to those in China.But the statement that the metayage system"never gives rise to competition"is wrong.Indeed,the restraints on the contracting parties as visualized by Sismondi are restraints imposed by competition itself.
We may well ask:Why were the terms of a share contract viewed as"customary"and not determined by competition?The answer,I believe,is that factor prices are not explicitly stated in a share contract.[36] Under fixed rent or a wage contract,not only is the rental price of land or the wage rate explicitly stated,but also one party to the contract can buy freely any quantity of a resource by paying a high enough price.Under a share contract,where the pricing mechanism operates by adjusting the rental percentage and the ratio of nonland inputs to land,it not only yields an impression that market prices do not exist,but the mutually stipulated input intensity also yields an impression of"fixity."Sismondi and Mill were unable to see that,ceteris paribus,a reduction in farm size represents either a fall in the wage rate（or in the cost of nonland inputs）or a rise in the rental price of land;or that a fall in the rental percentage represents either a rise in the wage rate or a fall in the rental price of land.Furthermore,a change in relative factor prices in the market can be flexibly adjusted in a share contract through several dimensions,so flexibly that it may yeild an impression of inflexibility.For example,a 50 percent increase in the wage rate would appear significant in a wage contract;but,under a share contract,the same increase may be accounted for by lowering the rental percentage a trifle,reducing labor input a trifle,and expanding land size a trifle.
Thus,Mill was not able to settle the issue on theoretical grounds.But one must admit that,in light of the diversified arguments confronting him,the following judgment he made is of considerable wisdom:
If the[metayer]system in Tuscany[Italy]works as well in practice as it is represented to do,with every appearance of minute knowledge,by so competent an authority as Sismondi;if the mode of living of the people,and the size of farms,have for ages maintained and still maintain themselves such as they are said to be by him,it were to be regretted that a state of rural well-being so much beyond what is realized in most European countries,should be put to hazard by an attempt to introduce,under the guise of agricultural improvement,a system of money-rents and capitalist farmers.[37]
[1].It is interesting that oriental writers generally share the same view.See sources cited in chapter 1.
[2].When the first draft of this study was written,I was unaware that share tenancy had been frequently analyzed.A subsequent survey of the literature convinced me that tracing the development of economic thinking on the subject would be worthwhile.The following section on the classical view is an expansion of a summary by D.Gale Johnson.See his"Resource Allocation under Share Contracts,"Journal of Political Economy（April,1950）,pp.112-14.
[3].Adam Smith,Wealth of Nations（1776；New York:Modern Library edition,1937）,p.366.
[4].Ibid.,p.367
[5].Ibid.,Book 3,chap.2.
[6].Ibid.,p.365.
[7].Ibid.,p.368.As D.Gale Johnson points out:"Not only did Smith object to share renting,but he proposed that taxes be used to induce landlords to use other leasing arrangement."See Johnson,"Resource Allocation,"p.112；and Smith,Wealth of Nations,pp.779-88,esp.p.783.
[8].Smith,Wealth of Nations,p.368.
[9].Ibid.,p.369.
[10].Ibid.,pp.368-72.
[11].Young's Travels was first published in 1792,and it has since gone through a number of editions.I have at hand a Dublin reprint dated 1793,vol.2；an abridged version edited by Constantia Maxwell（Cambridge:At the University Press,1929）；and Miss Betham-Edwards,edArthur Young's Travels in France during the Years 1787,1788,1789（London:George Bell and Sons,1892）.