Wednesday, March 27, 2013

How Everyone Can Own Land Directly


Let’s take a brief break from the series on Poland.  Not that Poland is unimportant, but we noted in yesterday’s posting that there is a way in which all Poles can own — and own directly — the land and natural resources of Poland.

The assumption of many people, of course, is based on a gross misunderstanding of the economic principle of scarcity, which they automatically assume means insufficiency.  For example, they assume that the only way to finance new capital is by cutting consumption and accumulating money savings.  This, while incorrect, leads to the conclusion that only the rich can own, or that the State must own or control the rich so they do what’s right.

It’s worse with land.  The belief that new, non-land capital can only be financed out of existing accumulations of savings (i.e., cuts in consumption) is not even an issue with land, because there can be no such thing as new land.  “They” aren’t making any more.

In 1879 agrarian socialist Henry George tried to address the problem of limited land.  He published Progress and Poverty.  In this book George developed a proposal that would presumably allow everybody to share in the benefits of owning land and natural resources.  Because land is a limited form of capital (so he reasoned) not everyone can own some directly.  There's only so much to go around.

That being the case, it made sense (to George) that the State should own on behalf of all the citizens.  He even thought of a way that would allow socialism and capitalism to co-exist peacefully.  People could retain legal title to land and natural resources, but the State would make that title meaningless by taxing away all profits attributable to land.

This "single tax" would allegedly allow the State to meet all expenditures without any other tax being imposed.  People could directly own all other forms of capital, e.g., machinery, systems, computers (Babbage invented what many regard as the first computer early in the 19th century), and so on, but everyone would indirectly own land through the State.

Two problems.  One, having abolished the most "traditional" form of private property in capital — land ownership — George's proposal would have made all ownership tenuous and subject to the will of the State.

This is, in fact, what Monsignor John A. Ryan did in 1916 in his book, Distributive Justice, when he reformed George's proposal by applying it to all capital, land and non-land.  Ryan's argument was that the single tax is not unjust per se, but it becomes unjust if the State takes all profits instead of most profits, and limits it to one form of capital, i.e., land.

At about the same time, Major C. H. Douglas took the same concept and reformed it yet again.  Where George said that the State should control (effectively own) only land by taking all profits from land, and Ryan said that the State should control all forms of capital by taking most profits from both land and technology, Douglas said that the State should control only technology, distributing all profits except for what is needed to finance new capital to everybody in the form of a national dividend.

Two, just as some people can make the argument that all production is due to human labor, others can (and have) made the argument that all capital is ultimately a form of land.  Those machines are made of resources coming from the land, aren't they?  That means that, just as all capital is simply "accumulated" (or "congealed") human labor, all capital is ultimately just land in another form.

If you're getting a headache, don't worry.  Consistency is not the strong suit of those whom Pope Pius XI referred to (in quotes) as "intellectuals" (Quadragesimo Anno, § 55).  All will presumably be well if you just allow the "intellectuals" to twist your mind sufficiently so that you can make the most arrant nonsense at least sound reasonable by citing an authority . . . whether or not the authority said any such thing or even exists.

Anyway, there's an easy cure for your headache.  It's to realize that the corporate form of ownership is a way for ordinary people to own directly even the scarcest and most limited forms of capital: the Citizens Land Bank.  It’s a way of gaining the objective Henry George sought, but without destroying private property in the process.

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