Libertarian Land Philosophy:
Man's Eternal Dilemma
Oscar B. Johannsen, Ph.D.
BOOK VIII: THE CRITERIA OF A JUST SOCIETY
Chapter 1 - The Principles
I have sworn upon the altar of God eternal
hostility against every form of tyranny over the mind of man.
[Thomas Jefferson -- Letter to Dr. Benjamin Rush September 23, 1800
]
Who can deny that it is the height of arrogance to presume that it is
possible to formulate the principles for the establishment of a just
society. Yet man must have the temerity to make the attempt though
present habits of thought and beliefs make it an idle hope that such
principles will be implemented in the near future.
But, would it not be well to have a target at which to aim? How often
have men laid waste to civilization after civilization in the wild
hope that somehow out of the ruins another society will rise like Saul
among his brethren, fairer by far than all. But to no avail. These
catastrophic actions are comparable to the hopeless efforts of a
physician who plies one medicine after another on his patient in a
vain effort to effect a cure when he has no knowledge of what ails the
patient.
If man will aspire to realize but a fraction of the dreams that
bestir him, he must strive to create a just society. And why is it any
more utopian than was Carnot's search in thermodynamics for the ideal
heat machine? His discovery of the ideal heat cycle, now known as the
Carnot cycle, is to mechanical engineers what the ideal society would
be to man. In the design of a heat engine, the engineers have a
target. The closer they approximate the Carnot cycle, the closer they
will come to having the perfect heat machine.
So it can be with man. If he knows, or at least is reasonably certain
that he knows, what are the conditions and principles of a just
society, he has a target. That it may be vastly different from any
existing today, or known to have existed in the past, should no more
deter him than does the Carnot cycle deter engineers. Perhaps ages
will elapse before he gets on the right track for man is slow to
change. But if he does see the light ahead and is convinced that it is
the dawning sun of the ideal society, he can strive to reach it. And
in the striving, possibly the very meaning of life itself may begin to
become a bit less elusive.
With modern forms of capital, the production of wealth is so
fabulously huge that patently there should be plenty for all, and yet
poverty is widespread. There may have been a time when men suffered
from want because he lacked sufficient knowledge to produce enough for
all, but such is not the case today. It follows, then, that the reason
for the shocking poverty throughout the world is some defect in the
distribution of the wealth produced.
But what is wrong? Before any viable reform can be recommended, the
error must be discovered. Many well meaning people have erred
grievously in their proposals for they have not made a careful
analysis of what is the error. They are appalled by ghastly poverty in
the midst of plenty. They recognize that somehow it involves the
mal-distribution of wealth, and jump to the conclusion that a
socialistic society would correct this mistake. They do not bother to
ascertain theoretically, or practically, what kind of a society a
socialistic one would be, nor why wealth would be distributed more
justly. Neither do they attempt to determine what effect the method of
distributing the wealth would have on its production. It could be that
even if the division of the wealth were a bit more equitable,
production might suffer such a drastic drop that everyone would be
worse off than before. The cure might be worse than the disease.
In 1901, Max Hirsch, an astute student of economic and social
philosophy, who had become alarmed by the drift toward socialism
published his masterpiece, "Democracy vs. Socialism". In an
unparalleled example of deductive reasoning, he described what a
socialistic society would be like. Today, we, who have the benefit of
hindsight, can compare his theoretical socialistic society with the
actual one in the Soviet Union, and the comparison is startlingly
close.
Many intellectuals have permitted themselves to be deluded into
believing there is nothing wrong with socialistic principles. When the
results in a nation which has adopted socialism are the opposite of
what they expected, they excuse it on the assumption that those
implementing the principles were incompetent. But Hirsch proves that
the mediocrity, the shoddiness, and the tyranny so evident in the
Soviet Union is what is to be expected. But few in this day and age
have read his book. And not too many in a country as America, who are
disturbed by the incongruity of poverty amidst plenty, make a
searching analysis of socialism. They have absorbed socialistic
concepts by what amounts to a process of osmosis, and assume that a
society based on socialism would be superior to one predicated on the
marketplace. They could not be more in error.
For men to evolve a just society, it would appear reasonable to
attempt to determine at least on a theoretical basis what its
principles are. Once some general understanding has been attained, it
should be possible to establish practical measures by which gradually
to approach the goal.
To a degree, in the preceding pages this writer's ideas have been
delineated. This chapter amounts to an attempt to tie together some of
the loose ends and to put them in some logical order.
This writer's ideas are predicated on certain assumptions:
1. Men are fundamentally good. They strive to be just and fair in
their dealing with their fellowmen.
2. Men are rational. If men were not, how could they possibly have
produced the marvelous inventions and works of art which have now
become part of man's heritage? Often, the actions of men, which
subsequently are recognized as being irrational, have been the result
of having accepted false premises. These premises appeared so
obviously correct that they were given merely cursory consideration.
Such a false premise is that land is the most sacred form of private
property.
3. Men are individuals. Just as all fingerprints are different, so
all men are different. No one else in the wide, wide world is like any
one man, or ever has been, or ever will be. Each is a king in his own
way. Each has an equal right with all other men to taste the sweet as
well as the bitter fruits of life; to grow in spirit and soul; to
expand and develop his personality as he wishes. The only
qualification is that he does not interfere with the equal rights of
other men to do the same.
4. All men seek happiness. As Aristotle said, that is the end beyond
which there is no end. But what may be perfect bliss for one may be
agonizing torment for another. It does appear, though, that for men to
be happy, they must exercise the faculties with which they have been
endowed. Those who are fortunate enough to be able to use their most
precious talents to the optimum possible degree probably tend to be
happiest. The artist, who, in his chosen medium, is free to express
the dreams and emotions that course through the fiber of his being is
happy as he attempts to realize them. And since man is fundamentally
good, he tends to be happiest when he satisfies his desires with due
consideration that they do not impinge on the rights of others.
5. Man lives in a world of order. Whether such is due to the universe
being ruled by some spirit beyond the comprehension of man, or whether
it is simply because that just happens to be the way the world is
made, are beliefs which each individual may hold as he pleases.
Regardless, the world is one of order, So, man, boldly or haltingly,
can use his reason to ascertain, as well as he can, the ordered
principles of Nature and adjust himself to them. Men can never truly
appreciate the world of order they inhabit any more than could the
five blind men in the famous fable ever really appreciate what an
elephant is like. But, in their analysis, though each differed from
the other, yet the blind men did detect some kind of orderly
arrangement. Similarly, through their sciences, men obtain varying
versions of the order they discover. The uncertainty which perplexes
man is probably not that Nature is random, but rather that man can
never be fully cognizant of the myriad factors involved.
6. There is not only order, there is justice. That which is unjust
cannot endure. The mightiest of civilizations will crash if it is not
based on principles of justice.
7. Two fundamental principles motivate men:
a. Men seek to satisfy their desires with the least
effort.
b. Men's desires are unlimited.
A fundamental dichotomy exists -- land and man. The union of the two
gives birth to wealth, which flows into two channels -- rent and
wages.
That wages belong to those who labor, subject to the qualification
that the equal rights of all to the land are recognized, is so basic
that it would be superfluous to indulge in any polemics to justify
labors returns.
But who is entitled to the rent? Obviously, the owners of the land.
But who, in justice, owns the land? No one, or rather everyone. As
Thomas Paine, the soul of the American Revolution, thundered in a
little known work entitled "Agrarian Justice", "It is a
position not to be controverted that the earth, in its natural,
uncultivated state, was, and ever would have continued to be, the
common property of the human race.. Man did not make the earth, and,
though he had a natural right to occupy it, he had no right to locate
as his property in perpetuity any part of it; neither did the Creator
of the earth open a land-office, from whence the first title deeds
should issue."[1]
And, also, as Herbert Spencer said in his original "Social
Statics", "The World is God's bequest to mankind. All men
are joint heirs to it."[2]
Since all the people of the world own the land, the rent belongs to
all the people. It does not belong to any person who has some trumpery
piece of paper given to him, or to his ancestors, by some brigand
king, emperor or czar. No human being, no matter how exalted his
status, ever had the right to give to another man a single square inch
of land. The basis for all these scribblings on paper granting land in
fee simple is force, and it is by force that land titles are upheld
today.
When a new bandit subjects a country to his will, he usually vacates
all previous deeds to the land and issues his own to his favorites and
sycophants. Arthur Bryant pointed out that after William the Conqueror
subdued England in 1066, within about a generation there had been a
substantial redistribution of the land. William "kept a fifth for
himself and his family, and a quarter for the Church. Of the
remainder, he redistributed all but an insignificant fraction -- the
property of small English and Danish freeholders -- among his one
hundred and seventy chief Norman and French followers on strictly
defined conditions of military service. Nearly half of this went to
ten men."[3]
Of course, it is one thing to recognize that in the abstract, land
and the economic rent belong to all the people. It is another thing to
allocate the land, collect the rent and distribute it so that the
principles of justice are maintained.
What practical plan might be adopted?
Henry George said: "We should satisfy the law of justice, we
should meet all economic requirements, by at one stroke abolishing all
private titles, declaring all land public property, and letting it out
to the highest bidders in lots to suit, under such conditions as would
sacredly guard the private right to improvements".[4]
Herbert Spencer also recommended that society lease the land. He
said, "Such a doctrine is consistent with the highest state of
civilization; may be carried out without involving a community of
goods; and need cause no very serious revolution in existing
arrangements. The change required would simply be a change of
landlords. Separate ownership would merge into the joint-stock
ownership of the public. Instead of being in the possession of
individuals, the country would be held by the great corporate body --
society. Instead of leasing his acres from an isolated proprietor, the
farmer would lease them from the nation. Instead of paying his rent to
the agents of Sir John or his Grace, he would pay it to an agent or
deputy agent of the community. Stewards would be public officials
instead of private ones, and tenancy the only land tenure. A state of
things so ordered would be in perfect harmony with the moral law.
Under it all men would be equally landlords, all men would be alike
free to become tenants. ...Clearly, therefore, on such a system, the
earth might be enclosed, occupied and cultivated, in entire
subordination to the law of equal freedom."[5]
However, George felt that this method might constitute too great a
shock to the customs and habits of thought of the people and would
result in a needless expansion of governmental machinery. He,
therefore, proposed an expedient.
He said, "Let the individuals who now hold it still retain, if
they want to, possession of what they are pleased to call their land.
Let them continue to call it their land. Let them buy and sell, and
bequeath and devise it. We may safely leave them the shell, if we take
the kernel. It is not necessary to confiscate land; it is only
necessary to confiscate rent."[6]
To do this, he suggested that the rent he collected by taxing land
values. This taxation was to be 100%, with a small percentage of it
kept by the landholders as compensation for services as rent
collectors. Under this taxation method, the ownership of land could
remain as it is. No landholder would be dispossessed, and no
restrictions placed on the quantity of land which a person could hold.
The tax would be on the value of the land, no matter how big or small.
It would not be on acreage. A tax on acreage could be passed along to
the consumer, the last thing in the world desired. The purpose of his
proposal was not to tax the consumer but to obtain the rent with as
little governmental machinery as possible.
In America, the local communities already collect some of the
economic rent for all real estate is taxed. Nothing new would thus be
added except that society would collect all the economic rent and not
merely a part, as it now does. It would mean that the assessment of
all real estate would have to be broken down into two parts. One part
would be the value of the land, the other part the value of the
improvements to the land.
To a great extent in America this is already done as most real estate
tax assessment bills are divided into these two parts. New York City
led the way, having broken down its real estate assessments into two
parts early in the 20th century.
Actually, the value of the improvements is not necessary for Henry
George coupled his proposal to take the full economic rent through the
taxation of land values with the suggestion that all other taxes be
abolished. Thus, since the improvements would not be taxed, there
would be no need to determine their value. This would be a tremendous
boon to assessors as it is easier to ascertain land values than the
value of improvements. Land values are determined by the sales of
vacant land in the area as well as other relatively simple factors.
What is difficult is to assess the value of improvements. Probably,
about 90% of an assessor's time is taken up trying to determine the
value of a home, or factory or business which is on a piece of land.
Since Henry George advocated taxing the value of the land and
removing all other taxes, his proposal became known as "The
Single Tax."
That the removal of all taxes except those on the value of the land
would be a tremendous boon to production is patent. Instead of
penalizing those who improve land by building a beautiful home, or a
fine factory or mighty steel mill they would all be encouraged to make
the finest improvements possible for no matter how great or valuable
they were, they would not be taxed.
At the same time, by taxing the value of the land 100%, there would
be every incentive to use it, and not hold it for speculative
purposes. There would be no point in gambling in land, hoping for a
rise in its value, for as its value rose, the tax on it would rise
equally.
The taxes could be levied annually, biennially, or for whatever
reasonable period the people desired. If the increase in population,
knowledge and inventions caused the land values to rise, then the
taxes would be raised to whatever extent was needed to assure the
collection of the full economic rent. This would mean that land would
have no selling price. The selling price of land is the capitalization
of the rent, all other things being equal. The price of land would be
zero for the rent which would be left in the landholders hand would be
zero. It would all have been taxed away from him, except, of course,
for the small fee already mentioned. Since nothing could be gained by
owing land, there would be no point in keeping it unless one actually
wished to use it.
So speculation in land values would disappear. As a matter of fact,
if it were discovered that land speculation persisted, that would be
evidence that the community was not collecting the full economic rent.
It would be a signal to raise the taxes for it would mean that,
possibly through error, the proper amount of taxes was not being
raised, or that the land values were rising.
Is this program of Henry George's a sound one? As an expedient, it
can be justified, but only if it is clearly recognized as such. It is
merely a step which may be required in view of the present state of
knowledge and prejudices of the people, and the present type of States
in existence.
To begin with, let us remember that the real purpose for collecting
the economic rent by the community is to create a condition of
justice. This requires that land be freely available to all men on
equal terms so they will have the opportunity to utilize their
abilities to the maximum. Henry George was not an economist. He was a
philosopher -- one of the most revolutionary of all time. There were
others, as Spinoza, who anticipated him to a degree, but none who had
so clearly stated the problem and offered a solution.[7]
Man's eternal problem is how to divide up the unequal opportunities
of the earth among the equal claimants to those opportunities with
justice to all. The hope is that if this can be accomplished, the
basis will have been laid for men to live in peace and harmony with
one another.
The assumption is that down through the ages there have been two
cancers afflicting man. The one cancer is to make men private property
(slavery). The other cancer is to make land private property. It is
assumed that if these two cancers are eliminated, the possibility
exists that men will be more likely, most of the time, to exhibit
their innate characteristic of being good.
Henry George's magnum opus, "Progress and Poverty",
contains some of the most beautiful and stirring passages on liberty
ever written. It set forth revolutionary tenets which, if adhered to,
gave great promise of enabling men to avoid the dread calamity of
involuntary poverty, and to live their lives in the manner in which
they chose in peace with their fellowmen.
And what is this revolutionary philosophy labeled? Is it known as a
Philosophy of Peace or a Philosophy of Freedom? Only to a few of his
devotees. To the world it is called a tax, "The Single Tax".
Because of the expedient which he advocated, people lost sight of the
philosophy he espoused.
Some have been led to assume that his expedient was a lasting cure.
They have forgotten that while an expedient may be accepted as valid
under emergency conditions, it can hardly be advanced as a permanent
solution. Crutches are a necessary expedient for a broken leg, but if
that is forgotten and no effort is made to rid oneself of them, one
will never walk unaided.
Expedients also tend to becloud principles. In abolishing human
slavery in America, it was denounced out of hand as a shocking
injustice. Rationalizations were given short shrift. If a solution
analogous to George's had been advanced, that is, if a program for
retaining the shell of slavery and confiscating the kernel of profit
in slavery had been proposed, it probably would have been as follows:
Tax the slave-owners for the full amount of the wages which they
legally stole from their slaves, less a small percentage to reward
them for the cost of collecting the wages. Had such a program been
advanced, the injustice of slavery might have been submerged in a
wearisome round of arguments based on economic considerations.
Questions night have been raised as to whether the tax on the
slave-owners for the amount of the slave's wages could he shifted from
the slave-owner to the slave. This is similar to the question often
advanced as to whether a tax on land values can be shifted from the
landlord to the tenant. Also, if only enough of the slave's wages was
taxed away from the slave-owners to take care of the government's
needs, it would still be profitable to own slaves. The fact that
slavery is one of the greatest injustices perpetrated upon men might
have received much less recognition than it did.
For the community to collect the economic rent of land through
leasing is strictly in accord with the tenets of justice. Everyone has
an opportunity to bid for the land. The result is a tendency for the
community to collect the full economic rent under the given conditions
of knowledge, ability and state of the arts. Whatever bureaucracy
would need to be organized would be far less than would be required
for collecting the rent through taxation. A tax program would require
appraisals, on continuing basis, of the value of the land. While this
is not too difficult when taxes are only a portion of the rent, when
they approach 100% problems arise. What is the value of the land on
which to levy the taxes since land values are determined by actual
sales. If there are no sales what are the land values? In particular,
if more than 100% of the economic rent were inadvertently collected by
levying too high a tax, it might be difficult to ascertain that fact
as there certainly would be no sales. Eventually, the tenant might
become aware that something was wrong as his rate of profit would
probably tend to be lower than prevalent and so he would protest. The
question of actually determining land values is probably not
insurmountable but it does give an indication of some of the
difficulties involved in utilizing taxation as a means of collecting
the economic rent. It also, incidentally, points up one of the
advantages of leasing the land.
If land is leased, no one would care what land values are, just as no
tenant today cares what the land assessment is --- only what is the
rent? An auctioneer and a few clerks would be all that would be
needed. Public bidding would insure justice in the long run.
In the case of valuable natural resources, as oil, if the community
wished to have a basis for determining what minimum bid would be
acceptable, it could hire private firms specializing in evaluations of
natural resources. However, even that might be unnecessary as public
bidding would tend to insure that the proper economic rent would be
obtained.
It should also be pointed out that under the tax proposal, no matter
how often one may explain that all men are merely tenants on the
earth, and that the land belongs to all, people cannot help feeling
that they own the land they are occupying. Under the lease method,
however, there is no question but that the land belongs to all the
people and the present occupants are merely leasing it. In addition,
the lessees recognize that they must pay higher rents for the more
desirable locations just as they know they must pay higher prices for
the better seats in a theater.
One of the most glaring defects of the tax proposal is the tendency
merely to collect sufficient of the economic rent to take care of the
government's budget. A number of cities in Australia tax the value of
the land, but few, if any, obtain the full economic rent.
The purpose of taxing land values is not to have a painless tax. It
is to collect the full economic rent so that land will be freely
available to all. One of the gravest problems which private property
in land creates is that it makes land a speculator's paradise, holding
land out of use and preventing the people from having access to the
land which is really theirs. This leads to involuntary poverty and
economic distortions, as the business cycle, and social unrest.
The purpose of collecting the rent by the community is to establish
conditions of freedom. It is not to get funds. All the rent could be
thrown into the ocean, as far as that is concerned. Its collection by
the community is to break the artificial bands which prevent men from
having access to the opportunities of the universe to which each and
everyone has an equal right.
Justice is the goal -- not revenue. This points up probably the most
serious criticism of George's expedient. It is that it constitutes an
unjust means to attain a just end. What is the unjust means? Taxation.
Taxes are unjust. The Encyclopedia Britannica states, "Taxation:
Governmental revenue derived from compulsory contributions made in
support of general public purposes and not in payment for direct
special benefits conferred upon the payer". (9) Regardless of how
noble or ignoble the purpose may be, that is merely a circumspect way
of saying that taxation is robbery. Robin Hood used the same tactics.
To use taxation as a means to collect rent is on a par with stealing
back your own property. As George himself points out, "That alone
is wise which is just. That alone is enduring which is right."[10]
But since taxation is not right, it is not enduring. Since it is not
just, it is not wise.
What shall we say, then, about taxing the value of the land? It is an
expedient, and should be recognized as such. It can be justified on
the basis that it is a step toward the correct solution -- the leasing
of the land by the community. Today, in all nations of the world,
taxation and inflation are the predominant means by which States
garner the wealth of their citizens. As people are still firmly
convinced that taxation is a legitimate function of the State, it
would be extremely unlikely that the just solution would be instituted
out of hand, except possibly as a result of a revolution. For an
orderly progression to just conditions, with as little violence done
to peoples customs and habits of thought, it appears sensible that
there should be a gradual approach.
Taxes of every description, as on incomes, goods and improvements,
should be gradually reduced. At the same time, taxes on land values
should be gradually raised until the full economic rent is taken.
This will take years to accomplish, possibly generations. But, if the
goal is clearly recognized and the people insist on the program being
carried through to completion, then a gigantic step forward will have
been taken.
There is always the danger that under a gradual approach, as economic
conditions improve, that some will propose that the process has gone
far enough and should be stopped. This would be a grave error for it
would only take a relatively short time for all the evils which
afflict mankind to become dominant again. People might lose sight of
the fact that the purpose of collecting the economic rent is to make
land free, and that the taxation of land values is merely one step
toward the proper solution, the leasing of the land. However, under
the present state of knowledge and understanding, it seems that this
risk , must be borne.
If land is rented by public auction, it is done in the citadel of
democracy -- the only true democracy -- the marketplace. Here all men,
regardless of race, creed, color, sex or age vote by offering to rent
at a certain figure or vote against by not offering any price. Men can
bid freely for the opportunities, that is, for the land they want. The
man who offers the highest amount of rent for a particular piece of
land wins that particular election, that is, wins access to the
opportunities he desires.
And here we begin to perceive, if but dimly, a measure of the
beautiful harmony and order which pervades this fascinating world in
which we find ourselves.
All men, while they have equal rights to life, liberty and access to
land, are born unequal in ability. But, those inequalities of ability
seem to be matched by inequalities of the land. Those with the
greatest talents tend to gravitate directly, or, in effect, to the
best land. Those with lesser capabilities tend to wend their way to
land which is less choice but within the range of their capacities.
Rent is a key which opens the door to opportunity. Where the greatest
opportunities exist, larger keys are required. Those with the
requisite abilities to turn these keys tend to do so, and in utilizing
the opportunities, not only they, but all benefit.
The fact that at the present time rent winds up so unwisely and
unjustly in the hands of some men (the landlords) who are no more
entitled to it than anyone else is not the most important aspect of
this injustice. Rather, it is that our present system of land tenure
restricts men in obtaining access to the opportunities to which they
are entitled. And when they cannot have access to these opportunities
because of unjust institutional arrangements, they become frustrated,
unhappy and social unrest rears its head.
For men to bid freely for the opportunities of the land, it is
essential that the medium used for bidding be an honest one. This
means, since the bidding will be done in terms of money, that it be a
sound medium of exchange. And, if governments had not intervened, the
money in use would have been the best possible. For exchange media to
be trustworthy, private enterprise must control it, for under its
aegis adulteration is difficult.
A step in the right direction is the return to the gold coin
standard. Under the present interpretation of the gold standard, it
amounts to tying the hands of States so they will not manipulate the
exchange media in use.
Private enterprise must also regain control over banking. There is
only one efficient, sound and just system of banking. That is one
which is composed of strictly independent private banks answerable
only to their stockholders, as all businesses are. Under such
conditions, the banks are actually under the control of the man in the
street, who by his patronage or lack of it, determines which banks
will exist and which will not.
Enough time has elapsed to demonstrate to those who sincerely thought
banking could operate efficiently as a socialized institution what a
ghastly failure it has been. As a result of the socialization of
banks, such a sound commercial procedure as a bank putting its
superior credit- worthiness (in the form of banknotes or demand
deposits) back of short-term self-liquidating commercial transactions
has been perverted into an extremely subtle device to create
irredeemable exchange media.
Even the most perfunctory study cannot help but make one aware that
the gradual evolution of a society's delicately precise monetary
mechanism was not the conscious creation of man, but rather the result
of Natural Law working through man. As such, money, banking and credit
are not mere mundane aspects of man's life, but rather contain within
themselves a beauty and grandeur which is the product of the same
Power which creates the indescribable beauty of a flaming sunset.
The delicacy with which money and credit fluctuates in response to
demand and supply, darting here and there to fit the needs of man, is
an exquisitely graceful example of the harmony pervading man's
universe.
Man interferes with such creations of a power superior to him at his
peril. To tinker with the spontaneous harmony which exists among
money, banking and credit, under the milieu of freedom, is as foolish
as it would be to tinker with the law of gravity, if such were
possible. A structure as the Federal Reserve System is a tribute to
the ignorance or arrogance of man; ignorant not to know that he has
been given a perfectly sound monetary mechanism if he will only let it
alone to develop naturally; arrogant to think that he could improve on
the workings of a power superior to man by invoking the aid of a
man-made institution as the State.
Money, credit and banking should be in the hands of private
individuals not merely because it is economically wise, but for the
far more important reason that it is a prerequisite for freedom in a
civilized society. A socialized banking system is the precursor of
socialism in all business. It was not for nothing that Karl Marx, in
the Communist: Manifesto, advocated the centralization of banking and
credit in the hands of the State. He knew this was the easiest way to
socialize all enterprise. By diluting money and credit --- the binder
which cements the entire structure of private enterprise together --
the whole structure can be made to fall of its own weight.
The monetary mechanism is far too easy a device by which the State
can gain control over its citizens, for the people to permit money,
banking and credit to remain in its hands. The State inflates the
exchange media so prices keep rising. Then it comes to the rescue (?)
of the people from the so-called "profit-gouging businessmen and
greedy laborers " who are blamed for the high prices.
The people believe the State is protecting them, and may willingly
give up their freedom for the illusionary economic security the State
promises them in the form of stable prices. So, the State's initial
interference by diluting the purchasing power of exchange media causes
the people to permit the State to impose controls over them.
This brings into existence a constantly mushrooming bureaucracy
designed to keep wages and prices down, as well as a police mechanism
to enforce the controls. Such powers which the State now possesses can
easily cause it to degenerate into a dictatorial state, with the loss
not only of economic freedom but such social freedoms as speech, press
and assembly.
No doubt, by this time the reader is wondering what should be done
with the rent which the community collects? To whom should it go?
Since it belongs to all the people, the simplest solution is that it
should go into a common kitty. This is then divided equally among the
people on a per capita basis. In this way, everyone is recompensed for
permitting some men actually to have control over the use of land for
a stated period of time.
It must not be assumed that many men will necessarily want to have
control of much land. There is a philosophical school of thought which
stresses the relationship of man to the land. It implies that a man is
not a man unless he has some portion of land which, in a sense, he
calls his own. This has come to be known as the "territorial
imperative ". It is believed to be a characteristic of the lower
animals. The male stakes out a portion of the land and only within
that area is able to give expression truly to his animal personality.
Whether this is a quixotic explanation of behavior which is puzzling
to men is something which will have to be left to the scientists. Even
if it is true of animals, it does not necessarily follow that it is
true of men. But it does seem that some men are happiest when they
feel they have undisputed control over a portion of the earth. On the
other hand, there are others who do not appear to be interested. They
seem to prefer to devote themselves to occupations which require
little or no direct control over land.
It is a difficult question to answer from observation for during most
of the historical past, the land has been "owned " by a
relatively small number of men. The masses have unwisely permitted
themselves to be considered tenants of these men who have been
literally the "lords of the earth ". It may well be that
even under a just system of land tenure, only a handful of men will
actually have direct control of the land for productive purposes. Most
other men might not wish to have such responsibility, merely making
certain that they are properly compensated for giving their permission
to those actually using the land. Probably, the only land they might
wish to be directly concerned with would be the land needed for their
homes.
The important point is that under a proper system, land would be
freely available to all. This would represent an irreducible minimum
to which anyone could resort, if necessary.
Parenthetically, it might be pointed out that it has been argued that
if all the land in a community were to be allocated among all the men
on some basis, that possibly within two or three generations most of
the land would again be in the hands of a few. The assertion is that
these men are more aggressive and resourceful.
That argument, however, is predicated on a system of land tenure in
which land is treated as private property. Under such conditions, it
is quite likely that after a passage of time, much of the land would
revert to a relatively small number of men. This would be due not only
to the vicissitudes of life, but also because some men are better able
to make use of their resources. Possibly it would also be true because
chicanery of one sort or another might be practiced.
Under a just system of land tenure, even if one man directly
controlled all the land in a particular area, it would not matter. He
would have to pay the full economic rent to the community. Since this
rent would be allocated per capita among the renters of that
community, they would all benefit. In addition, since no man by
himself, though he be the genius of geniuses, can produce very much
alone, he would have to employ many men to work the land.
The argument that dividing up the land will solve nothing in the long
run is true enough, if by that is meant the usual type of land reform.
This is where the land is distributed on the basis of acreage, with
private ownership of land continuing. Such a reform merely improves
conditions for a number of generations.
When the man-made barrier of private property in land is eliminated,
the primary industries, as agriculture and mining, will tend to
produce at the optimum point which men desire. This would cause
increased production in the secondary industries, as manufacturing and
transportation. It would also require increased services from the
financial and banking fields, as well as from the arts and sciences.
With production and services tending to a maximum, employment
opportunities would be so numerous that people would probably quite
readily find the type best suited to their capacities.
Possibly many of the problems of prejudice will die, or at least be
attenuated. When there are more jobs available than men, such
distinctions as the color of a man's skin, or the religion he
professes are as pointless as the color of a man's eyes. When a
surgeon's skill is needed, the patient wants the best one and is not
overly concerned with the physician's political or social views. When
entrepreneurs need men, they are not concerned with a man's religion,
color or ethnic background. What they want are competent men.
Also, when jobs are extremely numerous, it is quite likely the
swollen bureaucracies of all levels of government will disappear.
Under present conditions, the constant denunciation of the growing
number of governmental employees is well nigh hopeless. People need
jobs and they know that if they are dismissed they will have
difficulty finding new ones. Since they vote, they bring pressure on
the politicians to keep the bureaucracies in existence.
However, if job opportunities in private enterprise are numerous,
since bureaucratic work is usually quite boring, the likelihood is
great that the people will desert the bureaus and these agencies will
atrophy. At the same time, many of the reasons which seem to make such
bureaus necessary, as the unemployment agencies, would have vanished.
With so many opportunities available, millions of small or medium
sized businesses would grow up. At the present time, under the
pressure of our system of land tenure, the tendency is toward the
formation of ever larger corporations. But such outfits are
notoriously bureaucratic and inefficient. They are organized as an
army, with an elaborate organizational structure, on the directed
cooperation principle. Their size precludes efficiency, as it is
impossible to prevent the tentacles of bureaucracy enveloping them.
What keeps many of them in existence are the monopolies they control,
of which the most important is the ownership of land.
These huge companies are unable to utilize the capacities of their
employees to anything like an optimum point. There can only be one
chairman, one president, and only a few vice presidents. Often, bitter
internecine fighting develops for the choice executive positions.
If, instead, millions of small concerns exist, there will be the need
for millions of presidents, vice presidents and executives of all
kinds. True, the enterprises will not be the monolithic businesses
that some are in America, so possibly the prestige will not be so
great. But size does not lead to happiness. It is the feeling that
one's capacities are being exercised as one wishes that tends to help
one attain a happy state of mind.
With smaller companies, greater efficiency should be the result.
After all, it is more in consonance with the concept of the division
of labor. It is because man has divided up the tasks that he has been
able to produce so much. Smaller companies specializing will do a
better job than a large company attempting to perform the entire
production task from the raw material to the finished product. It may
be that there are some products which require complete integration. If
so, under a free market, they will be produced that way. However, the
suspicion lingers that if all monopolies are removed, it may well
prove out that production will be more efficient if performed by a
number of companies.
When men try to allocate the land among themselves, collect the
economic rent and distribute it, they stumble on the reason for that
collectivity we call government.
How can men allocate the land among the equal claimants to it with
justice to all? Since it belongs to all, the only way they can divide
it among themselves is by acting in concert. It is for this reason
that the philosophical anarchists, who claim that Government is
unnecessary, are in error. Their distrust of that corruption of
government called the State is sound. It is merely that their
knowledge of economics is weak. Men do not require government for the
protection of life and property, education or road building. These
tasks are just as much functions of private enterprise as is the
production of steel.
It is reasonably possible that people can be persuaded that education
and road building are functions of private enterprise and that
eventually the State should relinquish these duties. But as regards
protection of life and property, they may never be convinced. They may
feel that, despite any theoretical arguments to the contrary, they
would prefer that the State retain this function. Certainly, this
would probably be their attitude under present conditions. Only when
men's relationship with one another is on a much more peaceful and
harmonious basis would they seriously consider having the State give
up this function.
But, as pointed out previously, actually there is only one reason why
men need government. That is to divide up the land among the equal
claimants to it with justice to all. Who can say how long it will be
before men recognize that Government is actually founded on two laws
of Nature-- the one, physical, the other, ethical. The physical law is
that two things cannot occupy the same place at the same time. The
ethical law is that all men have equal rights to the land. To resolve
this contradiction, men must act in concert, that is, they must
establish Government.
But men cannot act together in concert and still be just when the
number of men involved is large or the extent of land is great.
Therefore, while men require Government, they cannot create a
centralized, world-wide all encompassing one.
As yet, no one knows what the natural limitations are. Probably the
only collective action possible with justice is that which is barely
above the level of the family -- something on the order of the New
England Town Hall Governments. It may be that some day principles will
be discovered as to the maximum number of people who can act
collectively without injustice creeping in, and also the maximum area
of land involved.
But how can men share equally in the rent fund as they are spread all
over the globe?
As long as men are free to migrate to any portion of the earth, the
people will tend to share equally in the rent fund. Each small
Government would administer the rent fund for its area. If, for one
reason or another, the fund was large in a particular area, the
tendency would be for the population to be large so that the per
capita breakdown of the rent fund would tend to be the same no matter
in which Government one settled. Just as the sea level throughout the
world tends to a level, so through migration men would tend to
participate in approximately the same per capita share of the rent
fund.
All of the above, of course, may be casually dismissed as airy
philosophical dreaming with little applicability to the world of
affairs as presently constituted and of little practical value. But if
the philosophy is sound, the practical measures to implement it will
fall into the proper pattern. Since man lives in a world of order, all
he needs to do is to discover the natural laws governing the order he
finds and then use these laws wisely.
Man by nature has free will. Therefore, he is prone to error. That
being the case, he has difficulty in determining which course of
action may be wisest. Even in the relatively simple world of physical
relationships, he piles one error upon another. He must perform
literally hundreds of experiments before he produces a machine which
is somewhat in harmony with the natural laws governing it.
That it is much more difficult for man to arrive at practical
solutions of problems involving his relationship with his fellowman is
evident by the continual disputes and arguments among men, even of the
greatest good will, in their attempts to arrive at correct answers. As
experiments are impossible, man faces almost insuperable difficulties
in determining solutions.
Possibly this chapter might be summed up quite simply as follows: Men
live in an ordered universe. For them to live in harmony with one
another freedom and justice are the great prerequisites. Men must be
free from those corruptions of Government called States. They must be
free to do as they please as long as they deal justly with each other;
free to have access to the earth on terms of justice for all; free to
establish small Governments responsible to the inhabitants.
Man --- laborer --- is the father. Land --- opportunity --- is the
mother. The union of the two under the milieu of justice enables man
to give birth to myriad creations of his individuality, and for those
creations to be the finest to which he dare aspire, both man himself
and the, land must be free.
Recapitulation
The essential elements of a just society are,
- Man must be free.
- The land must be free.
- States must be superseded by Governments.
Each individual must be free to utilize his capacities in any way
that he desires. The only qualification is that he must recognize the
equal right of other men to do as they please.
If men act in concert to lease the land to those desiring to use it,
and disburse the economic rent equally among themselves, they will
realize the condition of land which is freely available to all, taking
into account the fact that two things cannot occupy the same place at
the same time, and that land is of unequal opportunity. The individual
renting a portion of land compensates all other men for their claims
to it through his payment of the rent to the community. As all have an
equal opportunity to bid for it, and willingly forego their claims to
the highest bidder, justice is maintained.
Government is necessary to divide up the land among the equal
claimants to it. As men cannot act together in concert and still act
justly when the number of men involved is great and the extent of land
large, Government must necessarily be small. It must be small enough
so all the men in the area can participate directly in it.
For men to live in harmony with one another, there must be the
gradual displacement of States in favor of Governments.
Freedom and justice are the two great desiderata.
NOTES
- The Life and Works of Thomas
Paine, Vol. X, pp. 11. 13. (Thomas Paine National Historical
Association, New Rochelle, N 1925)
- Herbert Spencer, Social
Statics, Chapter 1X, Section 4, p. 136. (D. Appleton and Co.,
New York, 1865), Arthur Bryant, "Story of England", Vol.
I, p. 164
- Encylopedia Britannica,
1952 Edition, Vol. 21, p. 837
- Op cit., p. 333.
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