Differential Rent under Capitalism, part of the surplus value appropriated by landowners on the basis of their monopoly of the land as an economic object. The source of differential rent is the excess of the surplus value over the average profit, which is created because of the higher productivity of labour of agricultural workers on better land and the higher productivity of additionally invested capital. In agriculture, land is a major means of production. The area of arable land is limited, so less fertile areas are used as well as highand medium-fertility and well-located lands. The fact that the land area is limited leads to the creation of monopolies of the land as an economic object. One characteristic of capitalism is separation of land ownership and farming. Capitalists rent land from landowners and run enterprises there. Landowners let their land for exploitation for a certain payment, ground (land) rent, of which differential rent is one kind. It takes shape as follows. The social price of making farm produce is regulated by production costs under the worst social conditions, or by the cost of obtaining products from the worst land both in respect of its fertility and location rather than by production costs under average social conditions, because the population and industries cannot be provided with consumer goods and raw materials from the best and average land areas alone. This price is equal to the production costs on the worst (cultivated) land, plus the average profit. But the individual production costs of each hundredweight of the product vary from one plot to another because of the different productivities of labour. The capitalist who rents the worst land can have average profit, while better land produces additional (surplus) profit. This additional profit is created by the higher productivity of the agricultural workers. It is appropriated by the landowner on the basis of his private ownership of the land and constitutes differential rent. There are two forms of differential rent. Differential rent I is the difference between the production costs on the worst land and the individual production costs on the best and average land. It is formed thanks to the higher fertility of the best and average land, differences in the proximity of markets, transportation lines, etc. Differential rent II is the difference between the social and individual production costs that takes shape with successive additional capital investments on the same plots of land. When a new rent agreement is signed, this additional profit is appropriated by the landowners, who raise the rent.