The Law of Rent

Walter R.B. Willcox

[Reprinted from Land and Freedom, September-October 1939]

In the July-August LAND AND FREEDOM, Mr. C. J. Smith argues in disparagement of the writer's attempted demonstration of the fallacy of Ricardo's "Law of Rent," which appeared in the March-April issue. He contrasts the definition there given with this law, and generously concludes that it is an effective, though probably an unwitting, paraphrase; but that between the two, the difference is only that between tweedledee and tweedledum. Due, possibly, to brevity of statement or lack of emphasis, the prime purport of that writing seems not to have been grasped, or at least to have been dismissed as unimportant. This should justify another attempt; to reveal it.

In the statement (literally true) that "nothing essentially new has been added to Henry George's treatment of Ricardo's law of rent," the fact of difference may, as unwittingly, have been overlooked. What is new is not an addition. It is an essential subtraction. This, possibly, may compel revision of "the accepted dictum of the cur- rent political economy" that "authority here coincides with common sense," "that it has the self-evident character of a geometric axiom" and "the force of a self-evident proposition." The statement that "the fundamental character of Ricardo's principle he (George) deemed unchallengeable" cannot properly constitute proof to the contrary.

The point at issue appears, happily, in the critic's own words, as follows: "George himself pointed out the error of Ricardo in limiting the application of the law to the extractive mode of production. He showed that it held a5 well in the case of industrial, commercial and residential sites as in the case of farming and mining lands." In other words, as this reveals, Ricardo regarded rent as payment, solely, for benefits which were supposed to accrue only from the provisions of nature independent of human exertion; and George subscribed to the idea that rent included payments for these benefits, but expanded it to include payments for benefits which result from the presence of population and social activities as these conditions affect the desirabilities of particular sites. The subtraction consists of that part of the rent which is attributed to the provisions of nature.

George explained that "in the economic meaning of rent, payments for the use of any of the products of human exertion are excluded." While here noting the fact that nothing done in or on the site at the expense of human exertion is included in rent payments, he explicitly states that "only that part is rent which constitutes the consideration for the use of the land." Since the word land is here used in a technical sense as embracing all of the provisions of nature save man himself (a sense of which few people are constantly cognizant), the quotation, to convey its true meaning, should be amended to read: "only that part is rent which constitutes the consideration for the use of the provisions of nature." This seems to prove the conclusion that George accepted as fact, that rent, in part, included payments for the provisions of nature for that which exists independent of man's thought or effort, or at no cost of human exertion. This view is here held to be in error.

It was no mere inadvertence that in the definition to which exception is taken, namely: "Rent is payment for the advantages of social and governmental contributions to the utility of provisions of nature," that payments to any one for the use of any of the provisions of nature whatsoever are excluded. Their exclusion is of the very essence of the issue; something quite other than a mere "restatement of the Ricardian version" of the law of rent. To regard discussion of the question at issue, "Is rent a gift of nature?" as "a matter of words," as merely an "unhappy expression," exposes that lack of complete analysis which characterizes the ignorance of the public; and which also perpetuates confusion in the minds of many who sense the wonder of the remarkable intuition, and marvel at the sublimity of the inspiration, of Henry George, that the rent should be collected and be devoted to financing governments.

"Is rent unearned?" If any part of the rent is a "gift of nature" and "has cost nothing" of human exertion, this much at least has not to be earned. This much is not a "social product," even in an "allegorical sense"; it is not a human product. Is there "no purpose in laboring this trivial point," when (as real estate advertisements and the unintelligent jargon of the populace would seem to indicate) the whole world is possessed of the delusion that rent pays for views and climate and the presence of mountains, rivers and lakes, for the bounty of stands of timber, minerals in the earth, and fish in the sea? If authority "has failed to add that society earns its rent" all of it, because rent is not paid for the provisions of nature is it enough that "we can cheerfully supply the omission"? Is it not time we ourselves should understand rent, its exact meaning and full significance? How else are we blind leaders of the blind! to rescue humanity from degradation and civilization from progressive decay?

Recognition, and acceptance, of the soundness of the logic which excludes from rent payments (in any amounts) for the use of any of the provisions of nature, would lead probably to conclusions which many seem unable, or are loath, to imagine. Would it not bring clear the baleful inconsistencies involved in the use of the blunderous term "land value"; the iniquity of the fraudulent deceit of the "land value tax"? Would it not show that payment of rent for the use of the streets as an aid to business, as payments of interest for the use of machines, must affect the prices of commodities, and in the same way? Would it not remove doubt of the fact that the rent can be collected now without change of laws, even though laws governing taxation remain on the statute books, and are enforced/ Collection of rent, and taxation, are two entirely different kinds of transaction, and laws governing the latter do not act to prevent collection of debts, private or public. Would it not hasten the day of release for mankind from the thrall of taxation of any and every description?

But, so long as the implications of the Ricardian law of rent remain in the consciousness of men that rent even in part arises out of thin air the presence of an incalculable factor in the problem of securing economic justice will make its solution continuously more difficult, if not impossible. On the other hand, to understand what it means that the provisions of nature are "free" only in the sense that they are free to be obtained, and that to obtain them requires human exertion; and to understand that all for which any man, or any group of men, is morally obligated to pay, or to compensate, others is for their labor or the products of their labor, is to dispel uncertainty as to the exact meaning and the true significance of rent. Would this, in turn, not make obvious the monstrous absurdity that those who obtain titles- of-possession to that provision of nature which is called land, have justification for the belief that they act in conformity with the moral law when they receive rent from others, for the right of the latter to obtain any of the provisions of nature for themselves? Would not all this "expedite the acceptance of our philosophy" and "the cure of the problem we are most interested in, the abolition of poverty?"