It doesn’t seem too complicated to me: a planet under the care of human power. Maybe even a planet under the care of human kindness.

It doesn’t seem too complicated to me: To see a view in my mind or your mind of this planet’s dimensions drawn out like a 3D anatomy lesson. Fields, cities, plains, mountains, airways, seaways, roads, rivers, rails, bi-ways and highways of all sorts, nervous or bold, venous or arterial, bony or hairy; All the planet’s measurable dimensions visible in a mind’s eye. There are edges to the planet’s dimensions everywhere we look. Edges to the fields, edges in and around and between the cities. There are edges everywhere. Perhaps a mind’s eye can even catch the movement of it all. A 3D physiology lesson can come on top, as the corpse shows that these structures are parts of a moving, alive being. It doesn’t seem too complicated to me…

You and me, and all our heritage, have fought each other over possession and control of the parts of the body of this planet for so long.

The dimensions of the planet are becoming clearer.  You and me are occupiers of these dimensions. You and me see to the parts we care for. We see off the parts we don’t care for.

When we see to the cells, the organs and the flows along the arteries we can, at last, see the value you, me and they are to the whole.  As occupiers of parts of these dimensions we can see the value we are to the health of the whole.

Perhaps at last we may see the value to you and me of being linked to a healthy whole. The identification and exchange of this value seems to me to be the link between the health and fitness of our intimate family communities and the health and fitness of this alive, colourful planet under our care.

It doesn’t seem too complicated to me.

Some comments on Wendell Berry’s ‘The Art of Loading Brush’:

On birthdays in my family, on the blowing out of the candles after singing ‘happy birthday to you’, we are requested to make a wish. Always after the wish we are reminded to ‘be careful what you wish ‘cos as it might come true’.

“I wish we had an economy wisely kind to the land and the people.” He says. I believe Wendell Berry is a careful wisher.

“The thing of greatest importance is to think about the land with the land’s people in the presence of the land. Every theory, calculation, graph, diagram, idea, study, model, method, scheme, plan and hope, must be caught firmly by the ear and led out into the weather, onto the ground.” He also says.

“So far as I can see, and I have been looking hard for a long time, the only defense of land and people against a predatory economy, which has been global really for as long as humans have travelled the globe, is a reasonably coherent, reasonably self sufficient and self-determining local economy. This would have to be consciously and conscientiously a counter-economy.”, says Mr berry, in full flow.

Thomas Jefferson writes to James Madison: “The small land holders are the most precious part of a state.”

And Wendell’s character Andy Catlett thinks “the time is coming when this faltering civilisation, like many others, will have to decide: Are the few surviving of Jefferson’s “small land holders,” in their ancient lineage of need and knowledge, a romantic fiction, as most of us now think, or a “saving remnant” necessary to renew the human life of the earth?”

These observations come from a kind old man whose life is devoted to the loving care of places and people. They also come from a mind “which has become clear to him slowly and at the cost of much labor.”

My mind, like the mind of Wendell Berry’s fictional character, the old one-handed Andy Catlett, has also become clear only slowly and at the cost of much labour, both mine and my loved ones around me.

However, it is now clear.

This clarity now sees the manner of the holding of land to be the key to growing an economy that is “wisely kind to the land and the people”.

Instead of owning our places under the security of the law, the state and all the predatory violence that this type of protection is dependent upon, we must begin to hold them from others directly. We must clearly show the edges of the places we hold. And we must begin to hold our places with a payment of respect as well as a payment of coin. This payment of respect and coin goes from us small land holders, across our edges, to all that we hold the land from. The amount of that payment of respect and coin matches the value to us and to others of the places we hold. These are the limits of husbandry.

By making this direct pact between us as self-determining people, holding our places, and the wide world, we can right now begin to build a counter economy, that will replace the current, predatory economy as it fails. This I now see clearly. This counter-economy will be composed of as many counter-economies and counter-cultures as there are places that make up this world.

What this approach to defending territory does is declare and measure the hospitality to the world that is due by my holding of my place. It invites you to measure and declare the hospitality that is due to the world by your holding of your place.

This approach, when you think through a tiny bit of the consequences, aligns my home economy with local and global economies that take care of other places of the world. Economic motivation, both of my actions on my place and the actions of all others on their places will, at long last, be aligned with a proper kind and affectionate care of all that constitutes the ecologies of the places of this world.

So, my wish, as the candles are blown out on birthdays everywhere, is that together you and I may be brave enough to join the immense power of human effort with the looking after of the places and their edges that link us all together.

A review by HGSD’s Julian Pratt of Gavin Kerr’s new book The property-owning democracy: freedom and capitalism in the twenty-first century 

Gavin Kerr has written the most important book to set out the philosophical basis of Land Value Taxation that has been published from within the liberal tradition during the last century. There are some socialists and some libertarians who will not be swayed by its arguments, but for anybody with sympathy for liberalism in any of its guises this book provides a convincing basis for a truly liberal society that provides both economic freedom and fairness. It is a book of academic philosophy that all supporters of Land Value Taxation will want to be aware of, some will want to dip in to and a few will want to read from cover to cover (or the ebook equivalent).

Liberals share the desire for a society in which all individuals can be truly free. The nature of this freedom, or liberty, is what divides them. ‘Classical (19 th century) liberals’ like Adam Smith, David Ricardo and their followers such as Friedrich Hayek and Milton Freidman stressed that liberty is rooted in economic freedom, in particular private property and the freedom from government intervention.

This version of liberty was described by Isaiah Berlin in his famous lecture Two concepts of liberty as ‘negative liberty’, which he contrasted with ‘positive liberty’. For ‘social liberals’ from John Stuart Mill onwards, most famously John Rawls, freedom is not just the negative liberty of ‘freedom from’ but the positive liberty of ‘freedom to’. They, too, favoured economic freedom, though as a means to a wider freedom that maximises the opportunities of the least advantaged members of society to pursue a reasonable conception of the good. Social liberals advocate positive liberty, with the reduction in inequalities this requires, and view negative liberty as little more than the freedom to
starve in the gutter.

Gavin Kerr rehearses the positions of the ‘classical’ and ‘social’ liberals and makes clear the limitations of each approach. Classical liberals cannot in practice do entirely without government, and therefore without the taxes on which government relies, and so have to accept some level of taxation with the loss of economic liberty this entails. Social liberals either have to accept the additional inefficiencies which result from excessive redistributive taxation, or are forced to accept meagre levels of redistributive taxation by their desire to avoid these inefficiencies.

His central argument is that liberals can find a substantial area of common ground that would enable both classical and social liberals to achieve their aims. He draws on the geo-classical insights of Adam Smith, David Ricardo and Henry George that contrast the need for unconditional property rights to the things we make, artefacts, with the need for property rights to land that are conditional on the duty to pay rent for that land to the community. He suggests that inequalities can be reduced not by restricting market freedoms but by re-defining them to create a new conception of market freedom that strengthens both the unconditional right to artefacts and the conditional right to land.

He points out that economic liberty is damaged in two major ways by the current property system that legalises outright and perpetual ownership of the natural world. Ownership means that, once all land is in ownership, there can be no equality of opportunity as the population is divided into the rent-exempt class and the class of rent-payers. And if land is treated as the same sort of property as artefacts then taxes, which for most of human history have fallen on the land, can be shifted on to the things that people should be free to keep for themselves – income, sales, profits, value added and so on.

Gavin Kerr proposes that property rights to the natural world should take a form that is different from conventional ownership. He calls this use-right ‘quasi-private property rights’, conditional on the payment of rent to the community. Nobody made the natural world and its value is the result of the activity of the community, so this value should be returned to the community in the form of a Land Value Tax.

He argues that land is an essential input to economic activity, and that rent is distributed prior to production. In an economy that is grounded in ownership, rent is regressively pre-distributed to landowners; while in an economy that is grounded in quasi-private property, rent is progressively pre-distributed to all. This pre-distribution provides a fairer distribution of opportunities, economic power and rewards for the operation of the free market. Only once it is in place can we know whether there is a need for other forms of taxation.

The property-owning democracy has left me with many questions. Does this justification for Land Value Taxation from a position of geo-liberalism reinforce and develop Hillel Steiner’s left-libertarian justification or does it undermine it – particularly in the light of Steiner’s positive review of the book? How does it dovetail with and how does it differ from Henry George’s justification from natural rights? I can imagine the book provoking many interesting conversations. But perhaps its most important legacy is the establishment in the 21 st century of an academic argument from within liberalism for the need to rethink our ideas of the ownership of the natural world.

The property-owning democracy has also left me wanting more. I would certainly appreciate a short summary for the general reader, self-published by Gavin Kerr to avoid the eye-watering price of even the ebook option – not even the British Library receives a hard copy. For many of us his article in Land and Liberty (issue 1240, Summer 2017) will have to serve as a taster.

But the book also provides a challenge to those who identify themselves as lying outside the liberal tradition. Can they achieve a similar synthesis between apparent extremes within their own tradition? The task for a socialist is to perhaps to transcend Marx’s early rejection of the ‘trinity formula’ of land, labour and capital and recognise that the root of class struggle lies in the difference of power between the owner of monopoly rights granted by the state, in particular land ownership, and those deprived of such rights (including both capital and labour). The task for a conservative is perhaps to
recognise that the freedom from oppression by the state sought by right-libertarians can only be achieved by providing the equal opportunity for all advocated by One Nation conservatives; and that this requires an equal opportunity of access to land as well as freedom from taxation. For socialists and conservatives as well as liberals, these aims can only be achieved by the same reform – to move from ownership of land that is unconditional and perpetual to the use-right of quasi-private property that is conditional on paying dues to the community.

Julian Pratt
January 2018

The Science of Political Economy was Henry George’s final book and it was unfinished at the time of his death in 1897. In Part II Chapter 6 titled “The Breakdown of Scholastic Political Economy” George set out his views on the changing nature of economic teaching at the university institutions of his day. He was in fact observing the rapid descent of the subject of economics into a dysfunctional and malignant pseudo-science that has stood in the way of progress towards a just economic system ever since. The passage in question is worth revisiting so is set out here in full:

“Progress and Poverty [1879] has been the most successful economic work ever published. Its reasoning has never been successfully assailed, and on three continents it is given birth to movements whose practical success is only a question of time. Yet though the scholastic political economy has been broken, it has not been, as I at the time anticipated, by some of its professors taking up what I had pointed out; but by a new and utterly incoherent political economy which has taken its place in the schools.

Among the adherents of the scholastic political economy, who had been claiming it as a science, there had been from the time of Smith no attempt to determine what wealth was; no attempt to say what constituted property, and no attempt to make the laws of production or distribution correlate and agree, until there thus burst on them from a fresh man, without either the education or the sanction of the schools, on the remotest verge of civilization, a reconstruction of the science, that began to make its way and command attention. What were their training and laborious study worth if it could be thus ignored, and if one who had never seen the inside of a college should be admitted to prove the inconsistency of what they had been teaching as a science? It was not to be thought of. And so while a few of these professional economists, driven to say something about Progress and Poverty, resorted to misrepresentation, the majority preferred to rely upon their official positions in which they were secured by the interests of the dominant class, and to treat as beneath contempt a book circulating by thousands in the three great English-speaking countries and translated into all the important modern languages. Thus the professors of political economy seemingly rejected the simple teachings of Progress and Poverty, refrained from meeting with disproof or argument what it had laid down, and treated it with contemptuous silence.

Thus the professors of political economy, having the sanction and support of the schools, preferred to unite their differences, by giving up what had been insisted on as essential, and to teach an incomprehensible jargon, an occult science, which required a great study of what had been written by numerous learned professors all over the world, and a knowledge of foreign languages. So the scholastic political economy, as it had been taught, utterly broke down, and, as taught in the schools, tended to protectionism and the Germans, and to the assumption that it was the recondite science on which no one not having the endorsement of the colleges was competent to speak.

The new science speaks of the “science of economics” and not of “political economy.” It teaches that there are no eternally valid natural laws; and, asked if free trade or protection be beneficial or if the trusts be good or bad, declines to give a categorical answer, but replies that this can be decided only as to the particular time and place, and by a historical investigation of all that has been written about it. As such inquiry must, of course, be left to professors and learned men, it leaves the professors of “economics,” who have almost universally taken the places founded for professors of “political economy,” to dictate as they please, without any semblance of embarrassing axioms or rules.

Such inquiry as I have been able to make of the recently published works and writings of the authoritative professors of the science has convinced me that this change has been general, in all the colleges, both of England and the United States. So general is this scholastic utterance that it may now be said that the science of political economy, as founded by Adam Smith and taught authoritatively in 1880, has now been utterly abandoned, its teachings being referred to as the teachings of “the classical school” of political economy, now obsolete.

What has succeeded is usually denominated the Austrian school, for no other reason that I can discover than that “far kine have long horns.” If it has any principles, I have been utterly unable to find them. The inquirer is usually referred to the incomprehensible works of Professor Alfred Marshall of Cambridge in England, whose first 764-page volume of his Principles of Economics, out in 1891, has not yet given place to a second, and to the ponderous works of Eugen V. Böhm-Bawerk, Professor of Political Economy, first at Innsbruck and then at Vienna.

This pseudo-science is admirably calculated to serve the purpose of those powerful interests dominant in the colleges under our organization, that must fear a simple and understandable political economy, and who vaguely wish to have the poor boys who are subjected to it by their professors rendered incapable of thought on economic subjects. There is nothing that suggests so much what Schopenhauer (Parerga and Paralipomena) said of the works of the German philosopher Hegel than what the professors have written, and the volumes for mutual admiration which they publish as serials:

If one should wish to make a bright young man so stupid as to become incapable of all real thinking, the best way would be to command to him a diligent study of these works. For these monstrous piecings together of words which really destroy and contradict one another so causes the mind to vainly torment itself in the effort to discover their meaning that at last it collapses exhausted, with its capacity for thinking so completely destroyed that from that time on meaningless phrases count with it for thoughts.

It is to this state that political economy in the teachings of the schools, which profess to know all about it, has now come.”

The abridged version of The Science of Political Economy can be accessed for free online here.

Last month a very special TED Talk took place in Totnes. Laurie  Macfarlane, co-author of the book “Rethinking the Economics if Housing and Land”, presented the core Georgist message to a packed Civic Hall. This is the first time the Georgist paradigm has been presented in a TED Talk so its a great honour for Totnes and an absolute coup for the Henry George Society of Devon.  This truly is an idea worth sharing!

A letter to the editor of the London Review of Books by Julian Pratt 18/05/17

Adrian Bowyer is to be congratulated on his invention of the self-replicating 3D printer RepRap, and also for the generosity of its open-source licensing, which tackles one of the chief blocks to universal access to production: the monopoly over intellectual property rights.

He is, though, too sanguine about the capacity of this technology to bring about a situation in which all a producer will have to pay is ‘the cost of access to an allotment’. As the current housing crisis shows, if all the land is owned by just some of the people, they will be in a position to charge as much rent as its users can pay. Ownership of land in perpetuity, without concomitant responsibilities and duties, is a state-created right. If inequality is to be reduced, this property-right must be transformed into a use-right, for which the steward of the land would pay rent to the community. Unless landowners were suddenly to start behaving with the same generosity as the open source movement, this would require political action not technological change.

Why are house prices in many advanced economies rising faster than incomes? Why isn’t land and location taught or seen as important in modern economics? What is the relationship between the financial system and land? These are the questions addressed in an excellent and highly accessible new book by Josh Ryan-Collins, Toby Lloyd and Laurie Macfarlane. Rethinking the Economics of Land and Housing explains clearly that the key challenges facing modern economies – including housing crises, financial instability and growing inequalities – are intimately tied to the land economy.

These ideas are at the heart of the Georgist paradigm. Watch an excellent discussion about the book between Ross Ashcroft, Josh Ryan-Collins and Laurie Macfarlane on RT here:

https://www.rt.com/shows/renegade-inc/384176-land-economy-human-existence/video/

There is a finite supply of inventors, engineers, and so on. Each of them is generally going to apply their skills only to the areas in which they can achieve the highest return. Doing anything else would incur an opportunity cost. So why don’t we have robot arms like in the Jetsons that wipe our faces for us, and so on? Well, if you are a roboticist, are you going to work on a robot that wipes your face, or a robot that builds cars? Which is more likely to make you rich?

This is a simple deductive truth that can be figured out with basic arithmetic. Thus, even if we make the ridiculous assumption that humans can’t beat robots in any respect, in terms of quality or efficiency, in any industry at all, then it would still be in the best interests of everyone for robots to focus on their comparative advantage, and for humans to focus on ours.

4) The Law of Rent shows that rents are set based on the differential between the productivity available at that location compared to the productivity achievable on the best available rent-free land.
Thus, as productivity per laborer increases, nominal wages may go up, but real wages will stay the same because rents will rise. Wages are set primarily by the standard of living that can be achieved without paying rent. Even the wages of high-skilled labor, because everyone’s wages are set based on their next best alternative. When people can live well off the land, and by their own wits, then for employers to get unskilled workers they need to entice them with a better offer. And for them to get highly skilled workers, they can’t simply pay them the same wage… they need to offer something even better. And real wages are what matter, not some number on your check. Real wages are the standard of living that you can acquire after you’ve paid off all your rent, taxes, and other mandatory payments.

Basically, landlords are given a government license to sell access to the location, not just the improvements that they are responsible for. Even vacant land has a price, and clearly that can’t be attributable to the efforts of the landlord. Most of the rental price in urban locations is merely locational value. They don’t ask what their costs were when determining what to charge, they ask what their tenants can afford. Thus, as productivity rises, so do rents. But the reverse is also true. If workers aren’t in as much demand, then rents will begin to decline. This will assist workers in their race to the bottom. This process of land rents taking a larger and larger share of production, as economic progress occurs, is a key cause of wealth inequality.

5) If we suppose that there’s an inevitable race to the bottom in wages, we must remember that neither side is static in this race. Both capital and labor can become more expensive or less. The changes within the race are not unidirectional.

Sure, robots can make amazing gains in efficiency. What is the result of that? The price of goods decreases. If the prices of goods decrease, that means humans can achieve the same standard of living, while accepting a lower nominal wage, and underbid robots. And as artificial intelligence grows, this can enhance the productivity of human beings. Computers make humans more efficient, not just robots. We can become more like cyborgs ourselves, and some would say we already are. If efficiency rises, demand can shoot up to such a degree that resource usage rises higher than before. This is counter-intuitive because one generally associates efficiency with reduced resource consumption, but it is a well-documented fact, and high resource usage in turn raises prices. Right now there’s a scramble to mine enough lithium for all the batteries being produced for phones, electric cars, solar, etc. Rare earth elements, helium, and all sorts of scarce resources are in high demand for similar reasons. Shortages in any of these can quickly cause prices to spike, and for capital to be replaced with labor. Feeding humans with renewable resources can be cheaper than feeding robots with non-renewable resources.

6) The assumption that this race to the bottom is inevitable in a market economy is incorrect. Even though living standards are still rising, I don’t dispute that we are currently in a race to the bottom in much of the world.

However, certain insights from political economy show us how to make reforms that get us out of this race to the bottom. Most notably, a land value tax. …want a vision of the future? Imagine a child working in a sweatshop, forever. Unless we consciously choose another path. Automation is good. It is more or less synonymous with economic progress. Trying to halt automation would be like shooting ourselves in the foot, and would solve nothing. We just need to figure out how to achieve a fairer distribution of wealth, by understanding the fundamental power relationships that were revealed by classical political economists, such as Adam Smith and David Ricardo. Prime locations are one thing robots can never create more of.

We all need land, and to live where jobs are. If we share the rents that accrue from access rights to that which everyone needs, but nobody creates, then real wages can finally rise. At that point it could be financially viable for robots to actually start replacing labor. Using our higher wages and Citizen’s Dividend, laborers could stop working so hard, but only if we want to.

In the face of a deep and ever worsening housing crisis there is widespread frustration at the failure to increase the rate of house building to address the imbalance of supply and demand. A large part of the problem is that the profits of the development industry are intrinsically linked to inflated land values which are boosted by artificial scarcity. It is not in the interests of developers to flood the market with new builds as this would have a price supressing effect and hit their bottom line.

At present it is all too common for land owners to sit on development sites and demand an unrealistically high price from others who want to bring them forward, or otherwise demand that local authorities lift the obligation to build sub-market affordable homes in order to make schemes more profitable. The viability discussion, a circular argument over the relationship between site value and planning obligations, can be typified as a stand-off between the developer and the planning authority with the latter commonly lowering its affordable housing requirement in the hope that this will result in stalled sites being taken forward.

Land value based fiscal reform would strike at the root of the problem by fundamentally shifting the balance in favour of productive land use, rewarding the industrious and penalising the speculator. It would do this by introducing a modest annual cost on the land owner regardless of whether land is used productively or not. In return, one-off costs that developers currently face such as Community Infrastructure Levy and Stamp Duty Land Tax on development land could be eliminated in a revenue neutral way. These existing taxes are not paid by those holding land idle but are only levied once the decision is made to sell or develop the site. The revenue neutral fiscal shift could be extended further to the elimination of other taxes on house building companies and construction workers including VAT, corporation tax, income tax and national insurance. Reducing these harmful taxes would lower the cost of development.

The net result would be a saving for those who proceed quickly with development and mounting costs for those that do not. The reform would prove to be an effective antidote to unproductive land banking and speculative behaviour which drives up the cost of land. Stalled sites, previously developed, underused and derelict land in both the public and private sectors would be unlocked and the build-out of development schemes would be accelerated. The surge of available land would have the effect of lowering its price, enabling new developers, including smaller house builders, self-builders and housing associations to join established volume house builders in providing a plentiful supply of affordable housing as well as creating additional jobs in the construction industry.

The fiscal shift would also result in a more efficient use of the existing housing stock. Bringing empty homes back into use would be rewarded and an incentive would be created for existing households to downsize where possible. Not only would this mean a greater number of larger homes coming onto the market but it would also reduce the requirement for greenfield land to facilitate urban expansion.

Thousands of hectares of land would be freed up and millions of new homes would be delivered across the country. Housing supply would increase to meet demand causing a fall in house prices as well as lower rents. At the same time the fiscal shift would mean higher after tax incomes and greater spending power for the majority of people which would make homes more affordable to the population at large. Furthermore, the end to scarcity that increased supply would bring would result in better quality housing and a more equal relationship between landlords and tenants, reducing the insecurity of tenure and poor conditions currently experienced by many in the private rented sector. In essence, a land value based fiscal reform would tackle the monopolisation of land which lies at the heart of our current housing crisis.