Rent as a Social Product
in Relation to Productivity

Walter R.B. Willcox

[Reprinted from Land and Freedom, May-June 1940]

In his rejoinder to the writer's discussion of Rent in the September-October, 1939, LAND AND FREEDOM, Mr. C. J. Smith rather chided the writer (with entire justification, be it said,) for not replying to his own argument that "Rent is a social product," and for failure to make "a more faithful restatement of George's position." Frankly, the writer had confined his remarks to the conceptions of Rent held by Ricardo and Henry George, and had left the points mentioned for later comment, as follows:

"Is Rent a social product?" In the sense that a social product is an outgrowth of human association (that which always appears with, and never without, human association), Rent certainly is a social product. But this fact does not warrant the deduction frequently made, that Rent belongs to, or is the property of, society. Proof of this lies elsewhere.

In the sense mentioned, many things are social products which are not, consequently, the property of society; for example, hotels, hospitals, railroads, etc. Granting that Rent is a social product, there must be some reason, some special characteristic of Rent which, differentiating it from all other social products, justifies the claim that it belongs to, or is the property of, society.

The failure of certain expressions to bring to any considerable number of people a consciousness, or conviction, of a basis for a stable social order suggests that something must be wrong with the logic of these expressions, or with the ideas they are intended to convey; expressions such as, land is a gift of nature, land costs mankind nothing, land cannot be the property of individuals; Rent is payment for the use of land, Rent is an unearned increment, Rent belongs to the people, Rent is a social product.

The following are some of the inconsistencies which characterize arguments associated with these expressions. People generally agree that land is a "gift of nature" and costs mankind nothing; but seldom are they impressed by the incongruity that some people are required to pay other people for the use of the land. It freely is admitted that, in some instances, Rent is an unearned increment, but the propriety of those who have "bought land," privately appropriating the Rent, is denied only by a few.

Many people believe that it would be an act of "confiscation" for the government to take over the land in order to get the Rent, but little objection is made to the government's getting some of the Rent by taxing the land. This happens, apparently, from the mistaken notion that land is wealth, and that it should be taxed as are other forms of wealth. At the same time annoyance is displayed with those who want to increase the tax on land; especially, it seems, if the latter are known as Georgeists or Single Taxers. Furthermore, it seems to be impossible for the average person to conceive of land being used unless it is "owned." If it be suggested that land, properly, is not subject to individual ownership, some one is sure to ask : "Who, then, would own the land; would the government own it?"

Now it seems obvious that mankind in no way has been responsible for the existence of the provisions, or processes, of nature. So it seems reasonable to conclude that, naturally, one man is equally possessed with every other man of the privilege to use the land; that authority does not repose in any man or group of men (even though they be organized as a government) to charge or receive from other men anything for the use of the land. Rent, therefore, which commonly is said to be payment for the use of the land, must be payment for something else. What may this be?

On the ground that no payments are to be made for the provisions of nature, and since the latter cannot be obtained or used without labor, the only payments to be associated with the provisions of nature are those which attach to the labor, or the product of labor, used in obtaining and using them. Therefore, the only thing in connection with land (a provision of nature) for which men are obligated to compensate other men, is for the labor, or the products of labor, which the latter furnish in making use of the land. These compensations consist of Wages for labor, and Interest for the use of the products of labor, and cannot be effected with that which is not wealth; that is, they cannot be made with land, or with the privilege of using the land. Hence, Rent cannot be compensation for the use of the land, but must be compensation for labor, or for the use of the products of labor.

However, Rent is not payment for all labor, or for the use of all of the products of labor. Some labor is performed by certain individuals for other individuals; in which case, compensations can definitely be adjusted and made directly, in Wages. Some products of labor (the wealth of certain individuals) are used by other individuals; in which case, compensations can definitely be adjusted and made directly, in Interest. These compensations are not social, but individual products.

But there is certain labor, and certain products of labor (or wealth), which are at the service of society, for which compensations cannot definitely be adjusted nor directly made, between individuals furnishing these services and the individual members of society who are served by them; hence, must be made to society in proportion to the use and availability of these services to individual members of society. These compensations combined constitute what is known as Rent, which, due to the impossibility of its apportionment among individuals, properly is a social product.

But the proof that Rent belongs to, or is the property of, society lies in the fact that it consists of Wages and Interest (Wealth), that is paid for the labor and the use of capital invested in social and governmental services; not that it is paid for the use of that which is not wealth, land. It should be said, that while government itself is a social service, some part of this labor and capital is furnished directly by government, while the balance is furnished indirectly by individuals, to whom payments cannot accurately be allocated.

"A more faithful restatement of George's position." If the foregoing reasoning is sound, that Rent is compensation for services and not for the "gifts of nature" and with no idea of falsifying George an analysis of the question whether the presence of population and social activities "affect," or as George said, "are affected by," the desirabilities of particular sites, seems to show that the statement that "Rent depends upon and varies with the different degrees of productivity" confuses two wholly unlike kinds of productivity; namely, that which is of Nature (fertility, etc.), and that which is of Man (labor).

The first kind of productivity (as it occurs in nature) is entirely independent of human labor; the second kind (from which comes all Wealth) on the other hand, is entirely dependent upon human labor. The first directs the steps of men to points of greater natural productivity; the second, to points of greater artificial productivity. Therefore, while the presence of population and social activities "are affected by" the intrinsic, natural desirabilities of particular sites, they "affect" the extrinsic, artificial desirabilities of particular sites.

But, since to benefit from the natural desirabilities of sites (even to reach them) men must labor, and since men strive to get what they want with the least labor possible, they are more alive to the advantages of the presence of population and social activities as these "affect" the artificial desirabilities of sites, than they are to these advantages as the latter "are affected by" the natural desirabilities of sites. This appears from the fact that it is the humanly provided facilities that make life easier (as these "affect" sites, rather than as sites "are affected by" natural advantages), which causes concentration of populations in cities. The lonely pioneer it is who seeks the frontier; the mass of the population will have none of it. It is not for the richness of nature, but for the abundance of social services, including governmental protection, for which men pay Rent. In the nature of the case, this Rent should be paid to society which furnishes these services.

[The "productivity" mentioned in the September-October 1939 rejoinder, to which Mr. Willcox refers, pertained to the natural capacity of the land. The idea was summarized in a "food for thought" appendance, as follows: Rent of land is payment for social services social services are in greatest demand where presence and activities of population are great- est presence and activities of population are greatest on lands having highest capacity for production, i. e., on lands of highest productivity or greatest fertility therefore, rent of land depends upon and varies with the different degrees of productivity. ED.]