8. Power in the Wasteland: Understanding
Many liberation theologists ignore the role of land ownership and do not even
include land in the indexes of their books. Yet none would deny that land hoarding
and land access are fundamental issues of
justice and economic development.
The following two passages by Henry George, the economist who made the most definitive
statements on land's role in political economy, illustrate the fundamental characteristics
of land that are missed or ignored by modern economic analysts of the left and
Does the passenger
who enters a railroad car obtain the right to scatter his baggage over all
the seats and compel the passengers who come in after him to stand up? ...
We arrive and we depart... passengers from station to station, on an orb
that whirls through space — our rights to take and possess cannot be
exclusive; they must be bounded everywhere by the equal rights of others.
Just as the passenger in a railroad car may spread himself and his baggage
over as many seats as he pleases, until other passengers come in, so may
a settler take as much land as he chooses, until it is needed by others — a
fact which is shown by the land acquiring a value....
On the land we are born, from it we live,
to it we return again — children of the soil as truly as is the blade
of grass or the flower of the field. Take away from man all that belongs
to the land, and he is but a disembodied spirit. Material progress cannot
rid us of our dependence upon land.
Beneath all ideologies, there are basic factors and relationships that underlie
economic behavior. To understand the (otherwise inexplicable) omission of attention
to land's economic importance, it is useful to go
back to these basics.
- The term "Land" refers to the whole material
universe, exclusive of people and their products. Not the creation
of human labor, yet essential to labor, it is the raw material from which
all wealth is fashioned. It includes not only soil and minerals, but water,
air, natural vegetation and wildlife, and all natural opportunities — even
those yet to be discovered. It is a passive factor of production,
yielding wealth only when labor is applied to it.
- Labor includes
all human powers, mental and physical, used directly or indirectly
to produce goods or to render service in exchange. Labor is often thought
of as work
that is done for hire, at fixed wages, mainly excluded from the risk-taking
and decision-making that is normally classed under the heading of "entrepreneurship".
Yet labor, properly understood, includes all human exertion in production — including
mental exertion. The payment to labor is called Wages. And it is important to remember
that the payment, or return, to labor does not include any returns
that are the result of monopoly.
- Capital is
the economic term that is most profoundly misunderstood and confused.
For the term to make sense in any systematic analysis of wealth distribution,
we must define capital in its classical sense as "wealth which is used to
aid in further production, instead of being directly consumed." Since production
is not completed until the product is in the hands of the consumer, products
on their way to market, or "wealth in the course of exchange," are
also considered capital.
Now, the objective of all economic behavior
is the satisfaction of human desires. Human beings always seek to satisfy their
desires with the least exertion: this self-evident proposition lies at
the heart of our concepts of economic value and
exchange. The primary thing needed for satisfaction is, of course,
the tangible things, made from natural resources, that satisfy human desires
have exchange value. Things that meet these four
fundamental criteria are termed "wealth". But money, bonds, and mortgages
are but claims upon and measures of this value; they are not
the wealth they symbolize.
9. Claiming the Promised Land: A New Jubilee for
a New World
A clear understanding of these basic definitions points immediately to the primacy
of land as an economic factor. Human beings have inescapable material needs of
food, clothing and shelter. Regardless of how long a chain of exchanges they
may pass through in a modern economy, these things ultimately have their source
in the land; they
can come from nowhere else. Human beings need
land in order to live. But if we must pay rent to a private
land "owner" for access to the gifts of nature, it amounts to being charged a
fee for our very right to live.
Land's value goes up when population increases
and technological and economic development make labor more productive. Those
who "own" land often withhold it from use, expecting to capture its increased
value in the future — thus, the possession of land enables people to take
income that they did nothing to produce.
Speculative withholding of land has disastrous
consequences. Peasants who seek land on which to survive are pushed out to poorer
and poorer lands. These "sub-marginal" lands become their alternative
place for self-employment. With such a poor alternative, they have no choice
but to accept very low wages. Rent — the payment to landowners — absorbs
of the wealth
produced on all sites.
Land speculation also prevents development near the center of cities, pushing
it to the outskirts while the center decays from neglect and slums increase.
The "sprawl" engulfs farms and forests,
even as it raises the price of land, making
use and development more costly.
Rapid destruction of the Amazon rain forest in Brazil dramatizes how the unnatural
phenomenon of sprawl has an ominous worldwide impact on the environment. In Brazil,
ten per cent of the landowners own 80 percent of the land, while one million
peasants are forced off the land each year. And a mere one per cent controls
48 percent of the cultivable land. The only place in Brazil where there is land
for the taking is in the Amazon rain forest. The destruction of the rain forest
is caused by a system that perpetuates artificial land shortages. Nearly four-fifths
of Brazil's arable land is covered by sprawling latifundios, most of which are
held by speculators who produce nothing.
Here is the root cause of poverty. When laborers
are faced with the choice of either bare subsistence wages or land that can barely
maintain life, labor itself is marginalized and cannot effectively bargain on
its own behalf. Wages, generally, on all land, are driven down toward the point
of bare subsistence. Returns to capital are also depressed for the same reason,
deterring investment. When this is carried to an extreme — when people
can no longer afford the goods being produced and when there is little profit
capital — the economy collapses. The inflated land market, on which the
frenzy has fed, collapses too.
Since the Great Depression, such total ruin has been minimized in more developed
nations through Keynesian measures: monetary expansion, massive public works
and welfare programs. In Third World countries, such Keynesian expedients, which
support high speculative rent levels, work only if demand for exports is strong.
When that demand weakens, the weight of external debt becomes so crushing as
to defy redemption.
The Third World debt crisis is taken by many as the clearest sign of the
correctness of dependency theory. It is asserted that Western moneylenders
loans to corrupt regimes, knowing that the nations' peoples would have to
sacrifice to bear ever-increasing burdens. But when we recognize the land
problem as the
basic cause of
the kind of economic collapse that has led to the "foreign debt
crisis", it becomes clear that Western financial interests did not create
those maladies but rather exploited the hapless economic policies of developing
for their own gain.
Some defenders of the status quo admit that
all land titles may be traced either to acts of force or fraud (or to the more
respectable-sounding "priority of occupation"). But, they add, we cannot start
over; society has for centuries given legal sanction to private landed property.
Innumerable contracts have been executed on the basis of this sanction, and these
include the good faith purchase of land. For society to withdraw this sanction,
claim, would be a breach of trust.
The passage of time,
however, cannot turn a wrong into a right. Kings and popes and governments never had
the moral right to vest in perpetual ownership what God intended for the benefit
of all. If the acquisition of a benefit under the law were to establish
such a vested right, no law could ever be amended, since it would invariably
work to someone's
Obviously, change that further rends the fabric of society is usually self-defeating.
And the vast majority of beneficiaries of unjust structures — the beleaguered
middle classes — are not intentional wrongdoers but passive recipients
of unearned wealth from a flawed system they did not create. The dismantling
of these structures, therefore, should, whenever possible, be done in ways
that avoid excessive hardship
for them. But it must be done.
In the book of Joshua, we find that although the Promised Land is a gift from
God, it is a gift that has to be claimed. Even before the actual conquest of
the Promised Land, the Mosaic Law prescribed a method whereby possession of land
was to be rendered pleasing in God's sight. The Canaanites' claim was forfeited
by their idolatry, with human sacrifice and temple prostitution, and by their
monopolistic social order. By contrast, Israel, to make good its claim, had to institute
a social order that would guard against the desecration, pollution, and injustices
of which its predecessors were guilty, and would secure to each family and to
every generation within the Hebrew commonwealth the equal right to the use of
the land, of
which the Lord was recognized as the sole absolute owner.
They began with a census of the tribes and families before the conquest (Num.
26:1-51). Every tribe, excepting Levi, and within each tribe every family, was
to receive its proportionate share, according to size (Num. 26:55-56), and ultimately,
to ensure fairness, by lot (Num. 34:16-29). The actual distribution, according
to these provisions, was
concluded at Shiloh (Josh. 19:51). According
to ancient historian Josephus, the territory was not divided into shares of equal
size but of equal agricultural value. The landmarks that protected these allotments
were protected by the public and solemn denunciation of a curse against anyone
who should dishonestly tamper
with them (Deut. 27:11-16; 19:14).
As discovered again in our own century, it is
easier to devise a one-time fair apportionment of land that it is to keep the
system from falling apart. This is why the ancient law established the Jubilee
year. At the end of every fifty years, any alienated lands — given away,
or lost from unpaid
debts — would be restored to the original families. Temporary possessors
were to be compensated for any unexhausted improvements they may have made on
the land. Concentrated landownership, and the division of society into landed
and landless classes, was thereby prevented from
creeping into the system. The Jubilee
effectively took the profit out of landholding as such, leaving no incentive
for speculation. When it was observed — and historical records indicate
it was observed for long periods — the Jubilee system successfully removed
root cause of poverty from the Jewish
The influence of the Jubilee idea upon early
Pennsylvania colonists is evidenced by the inscription on the Liberty
Bell of the biblical words enjoining the Jubilee year: "Proclaim Liberty throughout
all the land unto all the inhabitants
thereof." (Lev. 25:10) The founder of Pennsylvania, William Penn, advocated that
all men be "tenants to the public", and to defray public expenses instituted
a tax on land.
Environmental concern also goes back to biblical
land laws. To prevent the exhaustion of the soil, a periodic fallow was
ordered. "During one year in every seven, the soil, left to the influences of
sun and frost, wind and rain, was to be allowed to 're-create' itself after six
years' cropping, exactly as the tiller of the soil renewed his strength, after
six days' work, by his
Sabbath day's rest."
As noted, the tribe of Levi did not share in
the equal division of the land, since it was charged with carrying out religious
and public duties. Its members were entitled to an indemnity from the
eleven tribes who received the land
that otherwise would have gone to them. This indemnity was the tithe — one-tenth of
product from the land occupied by the eleven other tribes.
Here, in principle, is the formula for a just
land system in almost any time or place. The compensation to the Levites maintained
the substance of equal rights to land, alongside of and compatible with unequal
physical division of the land itself. As Frederick Verinder pointed out
in his book My Neighbour's
Landmark, joint heirs of
house may share it equally by occupying it equally or
unequally but "paying the rental into a common fund, from which each draws an
equal share; or they may let the whole house to someone else and divide the rent
equally." So it is with land.
Sharing equally in the economic rent or value of land through the application
of that value to common uses from which all benefit, renders private ownership
and unequal partition of land morally and
The modern equivalent of removing one's neighbor's
landmark is thus not the private ownership of land per se, but rather the private
appropriation of land value. "The
profit of the earth is for all" (Eccles. 5:9). The Old Testament ethic, to assure
everyone the same natural opportunity, asserts that all people have an equal
right to economic rent, and the Levite tithe demonstrates that the socialization
of rent offsets the ethical and practical harm resulting from private land ownership.
But there is
another basis for its advocacy: Rent should
be taken by society because it is a social product. Rent arises in large measure
from two societal phenomena: the mere presence of population, and community activity
in a particular area. More people means more demand for space on which
to live and work. Community activities such as roads, schools, protection, parks,
sewage, utilities and other public services, as well as the totality of private
commercial and cultural operations, all make land more productive or desirable.
It follows that a community which funds such improvements out of its rent fund
will be provided with a stable and growing fund with which to maintain and improve
them. And unlike conventional taxes, the collection of this fund will enhance,
not penalize, the production
Individuals, in their bare capacity as landowners,
do nothing to produce land value. By withholding sites from use, whether for
speculation or for other reasons, they may generate scarcity, artificially inflating
rent, but this does not reflect any positive contribution to production on the
part of landowners.
While land value is not the only type of unearned increment, unearned income
resulting from such advantages as talent, genes or luck is not at the expense
of others. Even Karl Marx admitted: "The monopoly of property in land is even
the basis of the monopoly of capital." Marx could have — but did not — champion
the abolition of land monopoly; instead he advocated its transfer from private
into state hands. It was left to Henry George to expound how the universal
principles of justice found in the Mosaic model could be applied to the modern
age in all its economic aspects — rural and urban, agricultural and industrial,
technologically undeveloped or
What George advocated was to leave land titles
in private hands but to appropriate land rent via the existing machinery of property
taxation. "I do not propose either to purchase or to confiscate private property
in land. The first would be unjust; the second, needless....It is not necessary
to confiscate land;
it is only necessary to confiscate rent." No owner or tenant would be expropriated
or evicted. No limit would be placed on the quantity of land one could hold,
as long as the annual rent were paid.
Coordinately with the capture of rent
as public revenue, taxes on products of human labor — improvements, personal
property, services, commodities, wages, etc. — would be reduced and ultimately
George considered his remedy no mere human contrivance. He saw the growth of
land value and the easy means of equitably distributing it as an expression of
benevolent supernatural design: "As civilization goes on... so do the common
wants increase and so does the necessity for public revenue arise. And so in
that value which attaches to land, not by reason of anything the individual does,
but by reason of the growth of the community, is a provision intended — we
safely say intended — to meet that social want."
George's remedy goes a long way to stop current
inequity and prevent future inequity. While past inequity, in the form of accumulations
of capital based on previous land speculation and monopoly cannot be accurately
redressed, these fortunes can be impelled to serve the needs of the public via
production, not by further investment in land speculation and monopoly.
Dependency theory, to the degree that it hits upon one of the causes of Third
World poverty in exploitation by foreign investors, can find in George's land
value tax the constructive practical approach it lacks. Neither erection of trade
barriers nor legal restriction of foreign ownership is called for. As one Australian
writer puts it:
from one country buy property in other countries they are seeking site
rent, which they hope to obtain directly from tenants, or indirectly
by selling land in the future when the price or capital value has increased....
The site rent that is so attractive to overseas investors can be kept in
the country quite easily — by shifting taxation from labor onto land."
Because George asserted, "We must make land
common property," he is sometimes erroneously regarded as an advocate of land
nationalization. But, as we have seen, he was nothing
of the sort. The expropriation of land makes it practically impossible
to fairly compensate people for the improvements to land, which are their legitimate
property. George's system renders
to the community what is due to the community, without doing any violence to
the wealth that has been fairly earned by productive
Common property in land is sometimes discredited by equation with what Garrett
Hardin calls "The Tragedy of
the Commons." Referring to the common lands that were a major English
institution until the mid-nineteenth century, Hardin describes the tendency of
individuals, each rationally pursuing self-interest, to overgraze, denude, and
use the commons as a cesspool. That which belongs to everybody in this sense
is, indeed, in danger of being
valued and maintained by nobody.
The enclosure movement ultimately brought
an end to this ecologically destructive process, but not without literally pushing
people off the land, exacting a baneful price in human misery that might well
be termed "The Tragedy of the Enclosures." George hit upon a way of securing the benefits of
both commons and enclosures, while at the same time avoiding their evils. Land
value taxation rectifies distribution so that all receive wealth in proportion
to their contribution to its production. This liberates the economic system from
contribute little or nothing. Apportioning the wealth pie fairly increases
the incentive to increase the size of the pie. The market becomes in practice
what capitalist theory alleges it to be — a profoundly cooperative process
voluntary exchange of goods and services. Paradoxical though it
may seem, the only way the individual may be assured what properly belongs to
him or her is for society to take what properly belongs to it: The ideal of Jeffersonian
individualism requires for its
actualization the socialization of rent.
Just as Marxists err in insisting that everything
be socialized, extreme capitalists err in insisting that everything (even public
parks and forests!) be privatized. The middle way is to recognize society's
claim to what nature and society create — the value of land and its rent — so
that working people, including entrepreneurs, may claim their full share of what
they create. In this balanced approach can be found the authentic verities
respectively inherent in
socialism and individualism.
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