In a socialist state, private ownership in land will end, but a socialist state cannot do away with the concept of rent. Change of economic order from capitalism to socialism will. not turn scarce land into an unlimited quantity. Rent as an index of productivity wr.l help in the best allocation of the available land among its various uses. An accounting price tag will have to be put on the various types of land, the good land being put a higher tag. As Samuelson puts it, “ putting a price upon’ inert sweat less land arc we using it, and sweating breathing labour, most productively! The price or rent of land rises so as to Iation its limited supply among the best uses.” Thus, rent makes for  the most efficient use of the land resources of the community. In this way. it solves the problems of  of the society. In countries . like India. where land is scarce and rcnts arc high, farmers wi II take to cheaper labour-intensive  production. On the other hand, as in the U.S.A., where labour is relatively more ex pen. ive, the farmers will use land-intensive methods. It is rent which indicates the relative scarcity and signals the best factor substitutions.  Under socialism too, the community must make the most efficient use of its resources.

Even a socialist state will have to direct land from one use to another so as to make it marginal productivity in all uses the same. The marginal productivity will hc indicated hy rent Thus, the existence of rent ensures a correct allocation of valuable human or non-human resources.

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