Land Is Not Capital

Joseph Thompson

[Reprinted from an undated pamphlet, Simple Talks on Taxation, published by the author]

... Some of your fellers say that land isn't capital.
They're right and they're wrong.
How the hell can that be?
They're right if they begin by saying "in justice," and they're wrong if they don't continue by saying "under present conditions."
How about repeating that with the full sentence?
All right. They should say: In justice, land is not capital, but under present conditions, land is capital.
How do you work it out?
Well, in justice, no one would have to pay out any capital for land.
You mean, he'd get it free?
Hell no! He'd pay the rental value to its creators.
Who'd they be?
You and me and the rest of the people. But there'd be no capital outlay.
No capital outlay!!!
No. You see, land's value is measured in the rent it would bring.
Well, you've got to buy it.
You've got to now, yes. But if the people who create the rent value also collected it, there'd be nothing to sell - -
How do you mean, nothing to sell?
I mean, if the public collected all the land rent, which is the only basis of land value, there'd be no value left to sell.
So what would happen?
Well, take someone who has been using a piece of land. He doesn't need it any more. It's a good location so the land tent is high. So he gets out.
Couldn't he sell the title?
What would he be selling? A title is only a permit to collect land rent If all the rent was already governmentally collected, what good would the permit be?
What would he do then?
He'd move out, and someone who had use for the land, would move in.
And no money would change hands?
If I finished with a metered parking place and you followed me into it, would any money change hands between us?
You mean, it's the same thing?
Sure. The whole world is one great parking place. The right to exclusive ownership or occupation, should only last as long as the owner pays the public for that right; that is, in all justice.
I was going to ask you about your "in justice," "injustice" you've been saying. What do you mean by "in justice"?
I'll answer you by asking you: Is it just for a few favored people to collect what you-and I and the rest of the people create? And is it just, after we let them reap our harvest, for us to arbitrarily take away part of everyone's earnings? And a "cut" on everything he buys? And a big chunk out of what he has saved, when he dies?
The way you describe it, it seems like the answer is: No.
All right, then. All profit and income from land is unjust. That's why I speak of "in justice." And that's why I say that, in justice, land is not capital.
You put up a good argument.
Yes, and there's another reason why land is not capital: Of land, the yield (which is rent) creates the value. Of capital, the value creates the yield (which is interest and profit).
I never thought of it that way.
And one more thing to ponder over. Capital creates more capital. Land never creates more land!
Gee! I'll miss the Sports Newscast if I stay here any longer!