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| The Land:
theRent Concept -- the Property Concept |
Mr. George, in his brief chapter on "Rent and the Law of Rent,[1]
often repeats the agricultural definition of rent, mostly in
confirmation but sometimes in expansion of Ricardo. Certain features of
this definition, namely, "the original and indestructible
properties of the soil," "the share in the wealth produced to
which the exclusive right to the use both natural capabilities gives to
the owner," and "the reduction to individual ownership of
natural elements which human exercise can either produce nor increase,"
which have been assigned by Ricardo, George, and many others as the
cause of rent, are now discarded as errors by most economists, if, and
indeed, they were ever held by them.
THE RENT CONCEPT
The following quotation from Sir John McDonnell[2]
suffuses this economic position as to the original and indestructible
properties of the soil with a convincing Oriental light:
If rent be such, then in no old country of the
world.... Is there much of such a thing as rent, for the natural and
inherent properties of the soil have while ago been destroyed, or, if
they have not been destroyed, they are not economically useful. Except
in the most rudimentary form, agriculture cannot long subsist without
a careful renewal of the properties of the soil..... Why has Sicily,
once the granary of Rome, with its meadows producing unexampled
returns, sunk into a miserable country, one-third of it barren, or
exporting a little olive oil? Why is Palestine, once a land flowing
with milk and honey, barren and thinly peopled, the veritable
antithesis of that which it is painted by the prophets? Why, to take a
still more striking instance of decadence in wealth, have the banks of
the Euphrates, which once may have been as fertile as the banks of the
Thames, been transformed into baked and parched plains? One agency
alone did not accomplish all these changes;.... though conquest and
misgovernment may have exercised a blighting influence, the present
barrenness is principally attributable to the so-called original and
indestructible properties of the soil being peculiarly transient, to
agriculture being long possible only if the properties of the soil are
perpetually renewed..... The Sicilian at last drained the fertility of
his milch cow, as Michelet calls the island. When the cisterns that
crowded, or the terrace walls that girdled the hills of Palestine fell
into ruins, vegetation was parched by the heat of summer, and the soil
swept away by the unfertilizing rains of winter. The canals that
intersected and watered the banks of the Euphrates were suffered to
dry up and a goodly region became "a wilderness, a dryland, and
the desert." These are the consequences of trusting to the "original
and indestructible powers of the soil."
Mr. Shearman's definition was:
Ground rent is the tribute which natural laws levy
upon every occupant of land as the market price of all the social as
well as natural advantages appertaining to that land, including,
necessarily, and his just share of the cost of government.[3]
Is it not a little curious to note that a law of rent plainly stated by
Anderson, West, Malthus and Ricardo nearly a century and a half ago
should continue to be defined in the agricultural terms of no rent a
land, rather than in the urban terms of manufacture and commerce.
Perhaps not even all economists realize how modern a matter is the
cumulative growth of urban rent, which increases almost in geometric
ratio. It was seem as though the classical economists were more
excusable then their successors in overlooking the importance of this
factor. Would it not be an improvement to let the definition stand
naturally and squarely like a pyramid upon the ever broadening base of
urban rent, rather than try to balance it upon its toppling apex, as it
were, of agricultural rent?
The general economic conception of the land tax is largely a compound
one, to wit, that it is on the one hand a tax on the fertility value of
agricultural land, and on the other, a tax on the site value of urban
land. It would seem to need no argument to show a great simplification
for both teacher and learner if "site" might here be
substituted for "fertility," making a rent-tax applicable to
the single attribute of site value only.
The following conclusion is presented for consideration:
On the surface of the globe are countless varieties of exhaustible
fertility, i.e., chemical constituency, differing in-kind in combination
from the nitrogen, hydrogen, oxygen, and carbon of the soil to the
carbon of the coal and the diamond. Fertility as an attribute need not
be predicated of agricultural land alone. Economic fertility belongs
equally to any other land which yields to labor its product weather in
food, mineral, or metal. Lender may be fertile in wheat, corn, and
potatoes. It may be fertile in cotton, in tobacco, or in rice. It may be
fertile in diamonds, in gold, silver, copper, lead, or iron. It may be
fertile in oil, coal, or natural gas, in a water power or water front.
The value of artificial fertility is an improvement value. The value of
natural fertility of any kind is the site value.
Henry George said:
Rent or land value does not arise from the
productiveness or utility of land. It in no wise represents any help
or advantage given to production, but simply the power of securing a
part of the results of production. No matter what are its
capabilities, land can yield no rent and have no value until someone
is willing to give labor or the results of labor for the privilege of
using it; and what anyone will thus give depends not upon the
capacity of the land, but upon its capacity as compared with that of
land that can be had for nothing. I may have very rich land, but it
will yield no rent and have no value so long as there is other land as
good to be had without cost. But when this other land is appropriated,
and the best land to be had for nothing is inferior, either in
fertility, situation, or other quality, my land will begin to have a
value and yield a rent. And though the productiveness of my land may
decrease, yet if the productiveness of the land to be had without
charge decreases in greater proportion, the rent I can get, and
consequently the value of my land, will steadily increase. Rent, in
short, is the price of monopoly, arising from the reduction to
individual ownership of natural elements which human exertion can
neither produce nor increase.[4]
That natural fertility is a source of rent has become almost axiomatic,
so deeply is the thought embedded in the economic, as well as in the
popular mind; but the latter tendency is to question the accuracy of
this view and to subject it afresh to a searching and logical analysis.
In the light of such analysis it seems clear that it is only location
or site that gives fertility any value it may possess. In many places,
soil of any kind (fertile or barren) is of no value. It is only when
soil is located in the right place, i.e., when there are people about to
use it, that it becomes valuable. Fertile soil in one place is less
valuable than barren soil in another. A gravel-bank situated within city
limits may be much more valuable than soil suitable for market
gardening. The problem, in each case, is not one of comparative or
differential value. It is a problem of positive or independent value, of
which proximity appears to be the sole cause. Natural fertility is the
constant factor in any comparison; that is to say, whenever element of
natural fertility is present in the land today has been there from
creation, but the element of proximity is the differential factor that
changes with the advance of civilization. Instead of fertility giving
value to site, is not the truth to be found in the very reverse
statement that it is site that gives value to fertility?
The following is submitted, not as a "consensus" but in
perfect confidence that there is no other ground upon which the economic
foot can finally rest and be at peace.
If, as economists, we postulate LAND and MAN as the two primary
contributors to production, then we are compelled to assume fertility as
unnecessary and presupposed quality in land, without which land would
not be LAND; just as when we speak of MAN we assume intelligence,
without which that unfettered biped would not be MAN. The first factor,
LAND, has been the passive factor -- what Emerson called the "raw
bullion of nature" -- present from the foundation of the world, not
a square foot having any value until the advance of the active factor,
MAN. Varying fertility is an attribute, a part of land itself; as
varying intelligence is an attribute, a part of man himself. In short,
in economic thought land is fertility and man is intelligence. That the
fertility in the one case, and the intelligence in the other, are
unequally distributed does not affect the contention that it is only
when the intelligence approaches the fertility that the value of the
latter comes into existence.
This issue is presented upon the reader in the conviction that it is
not merely an academic one, but is charged with deep scientific
consequence. It affects the very foundation of a theory of natural
taxation. The claim if substantiated that ground rent is a social
product leaves no room for the hypothesis that any part of land value is
due to natural fertility.
Perhaps the shortest definition of economic rent yet suggested is one
already quoted and that is applicable equally to agricultural and to
urban land, one approved by the decision of one hundred thirty-five
economist judges without a dissenting opinion. The definition is: ground
rent is thought land is worth for use.
THE PROPERTY CONCEPT. One of the serious maladjustments of the
situation today is the conflicting opinions as to Mr. George's views
upon the question of private property in land, these having operated as
a serious impediment to the progress of the single tax. Believing that
this is the proper place and time, I submit the conclusion at which I
have arrived.
In chapter after chapter of Progress and Poverty as well as
thirteen years later in a Perplexed Philosopher, Henry George reiterates
his own and Spencer's error (which both had recanted), viz., that
private property in land is unjust and should be abolished.
Notwithstanding his apparent contradiction of expression, it is
manifestly due to Mr. George's intellectual honesty to credit him with
the same clear conception with which he in turn credited Spencer when he
summarized in A Perplexed Philosopher the latter's Social
Statics chapter, viz., "Private property in land, as at present
existing, can show no original title valid injustice," etc.
In assuming to suggest his students of Henry George, perhaps at a
critical. In his change of base from an old dispensation to a new, what
seems to me are rational interpretation of his language, it is ventured
to paraphrase the form of argument used by himself in A Perplexed
Philosopher, chap II, entitled "An Incongruous Passage."
Here he interpolates into the lines of Herbert Spencer what he believed
to be their intended meaning. A few moments of careful attention may be
time well spent.
In connection with his own misinterpretation of Spencer's passage
regarding compensation to existing proprietors, he says:
Taken by itself, this passage seems to admit that
existing landowners should be compensated for the land they hold
whenever society shell resume land for the benefit off all. Though
this is diametrically opposed to all that is gone before and all that
follows after, it is a sense in which it has been generally
understood.[5]
This recommendation of Mr. George's that Spencer's specific views on
one plank of his platform should be interpreted in the light of his
generally known attitude on all other planks, suggests between the
treatment which he accords to Spencer and the treatment which he, by
inference, would have accorded to himself.
By a similar process of interpolation Henry George, in turn, may be
made to appear as his own interpreter. For instance, in Progress and
Poverty, Book VII, . chap I, "The Injustice of Private Property in
Land," Mr. George would have said: if private property in [the
economic rent of] land the just, then it is the remedy I propose a false
one; if, on the contrary, private property in [the economic rent] of
land the unjust, then is this remedy the true one." Also, on page
366:"Whatever may be said for the institution of private property
in land [as it exists today], it is therefore playing that it cannot be
defended on the score of justice." Linking the above expository
innovation to Book VIII, chap. II, we find the following illuminating
lines (p. 402):
I do not propose you to purchase or to confiscate
private property in land..... It is not necessary to confiscate land;
it is only necessary to confiscate rent..... By leaving to landowners
a percentage of rent which would probably be much less than the cost
and loss involved in attempting to read lands through state agency,
and by making use of this existing machinery, we made, without jar or
shock, assert the common right to [the site value] land of by taking
rent for public uses..... What I therefore propose, as the simple yet
sovereign remedy, .... -- to appropriate rent by taxation.
Thus was to be accomplished the object of his heart's desire --
security of improvements without disturbance of land titles.
The broad basis, and keynote, and inspiration of Progress and
Poverty Mr. George found in the doctrine of natural rights -- the
equal right of all men to land. Taking for his main premise the right of
all men to the soil in its original state, he deduced from this premise
the right of all men to economic rent. The soundness of this deduction
has been in these latter days seriously questioned.
In proof of the wrongfulness of private property in land, as it lies in
the private appropriation of ground rent, he puts forward the doctrine
of natural rights to land as the premise and basis for the joint right
rent, a form of proposition which he and most of his predecessors in
land reform accepted as axiomatic, viz., the equal right of all men to
the soil in its original state, from which he deep used the equal right
of all men to the rent of land. Since, as Mr. George himself has said, "the
primary error of the advocates of land nationalization is in their
confusion of equal rights with joint rights..... In truth the right to
the use of land is not a joint or common right, but in equal right; the
joint or common right is to rent, in the economic sense of the term,
this whole line of argument from natural rights is unnecessary.
In the light of the foregoing question whether or not Mr. George men to
assert that the taking of any part or all of ground rent in taxation
would destroy individual ownership in severalty of the land itself does
not appear to be debatable. In any event, his assertion cannot make a
right out of a wrong. None of his confreres in the company assembled in
this volume advanced such a proposition. Smith, Mill, Dove, gave no hint
akin to it. Burgess, McDonnell, McGlynn, Shearman made it no part of
their proposed system; indeed no economist can be recalled who has
hazarded this view, thus leaving such a position unique by Mr. Georges
sole occupancy. This fact makes us the more strenuous for an
interpretation that shall harmonize with his generally accepted tenets.
In 1872, and he wrote in Our Land and Land Policy:
It by no means follows that there should be no such
thing as property in land, but merely that there should be no
monopolization -- no standing between the man was willing to work and
the field which nature offers for his labor. For while it is true that
the land of a country is the free gift of the Creator to all the
people of that country, to the enjoyment of which each has an equal
natural right, it is also true that the recognition of private
ownership of land is necessary to its proper use -- is, in fact, a
condition of civilization.
The ethical justification of the single tax can be derived much more
simply. A careful study of the nature of economic rent will show that
arises from the growth and efforts of the community and not from the
labor of the landowner. The taking of rent by the community can
therefore be put on the simple basis that property rights in any
commodity should be vested in the person or persons who produced that
commodity. Indeed it is somewhat curious that after devoting so much
space to the argument based on natural rights to the land, Henry George
himself finally rested his case on this very line of reasoning. At the
end of this chapter on "Canons of Taxation" he says that --
a tax upon land values is the taking by the
community, for the use of the community, of that value which is the
creation of the community. It is the application of the common
property to common uses. When all rent is taken by taxation for the
needs of the community, then will the equality ordained by nature be
attained. No citizen will have an advantage over any other citizen
save as is given by his industry, skill, and intelligence; and each
will obtain what he fairly earns. Then, but not till then, will labor
get its full reward and capital its natural return.[6]
What better can Henry George's followers do than to make his ultimate
their own? Here is a flat contradiction to whenever error is in the "equal
rights" argument and "the common property in land"
argument. The above is, as it were, a repealing clause. Is it not as
though he had said, whatever acts or parts of acts of mine either before
or since are in conflict with this act are hereby repealed?
A score of years ago it was my privilege, under criticism, to make a
public the avowal that in the long run I would prove myself Henry
George's most friendly critic and vindicator. Thus I have frequently
found myself standing between him and many false and harmful impressions
that have operated to his prejudice and to that of his cherished reform.
Among these, the insistence upon a full 100 per cent rate, and the
abolition of private property in land as Henry George's standard
measures for sound doctorate, have been painfully wasteful and
enervating, besides being a standard upon which neither Canada nor
Australia nor Germany, nor indeed any other country except the United
States, has laid misleading emphasis.
Henry George himself was a persuasive writer and speaker, little given
to denunciation. The followers of his teachings who have done him great
honor have been those who have talked over his principles at their own
hearthstones and in their own council chambers, and voted for them at
their own hustings, rather than those who by militant intrusion into
foreign bailiwicks have aroused and fostered a wholly gratuitous
prejudice.
If those devout followers of Henry George who still insist he should go
down to posterity as advocating the destruction of private property in
land would exercise his care to avoid misinterpretation, they would
thereby better serve him and the reform he so wonderfully expounded.
FOOTNOTES:
[1] Progress and Poverty, Book III, Chap. II.
[2] A Survey of Political Economy, chap. XXIV, P. 327,
Edmonston & Douglas, Edinburgh, 1871.
[3] Natural Taxation, p. 116.
[4] Progress and Poverty, p. 166.
[5] A Perplexed Philosopher, chap. XI, p. 242.
[6] The italics are the author's.
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