02. Ownership of Land

The exercise of power in economic affairs invariably derives from ownership; whoever owns an enterprise or organisation will decide on the laws and procedures that govern it. Whoever owns the elements of production will set the conditions that lead to that production. This applies particularly to land, which is one of the two elements of wealth creation, the other being labour.           
Except in slave states it has always been accepted that we own our own bodies and our own labour, but we do not all own our own land, or perhaps what is more pertinent, the access to land. Poverty began with the original act of dispossession, the separation of labour from access to the land, by those who claimed exclusive possession – usually by force of arms. This original expropriation was the cause of much subsequent poverty, making men beholden to the owners of one of the two components of wealth creation, with only their labour to bargain with. The landholders held the whip hand and drove a hard bargain, resulting in the return to labour, in the form of wages, being forced down to subsistence levels. The great advantage to the landlords was that by default they had control over large numbers of dispossessed labourers, whereas the labourers were disorganised individuals, set in competition with each other for the choice of either working for a pittance or starvation. Despite peasants revolts and Luddite retaliations, this unbalanced master/worker relationship did not change until the realisation dawned that there was power in numbers, which gave rise to the early Trade Union movement (and no doubt to Marxism)

‘Revolutions take place in the mind, not in the streets’ (1)

The improvement in workers conditions was hard won over many years, and as with all transfers of power, it was never surrendered, it always had to be wrested. In-work poverty was the norm for the lower classes for many centuries and was only remedied slowly through extending the voting franchise and with the advent of organised labour. Eventually the State welfare system became the main source of remediation, but throughout its existence the welfare system has struggled to measure up to the demands made upon it and even now, after more than a hundred years of its existence, in-work poverty is returning. Alleviation of poverty is of course a necessary measure, but it is never a substitute for the elimination of the original cause, the expropriation of the land and the channelling of the economic rent into private pockets.

The idea that land may be owned is very well entrenched with most people in the developed world. Even those who do not own land and have very little prospect of doing so subscribe to the idea. To question this belief would seem perverse to say the least. Indeed the even stronger assertion that land must be owned is almost equally accepted, especially of course amongst landowners.  In England land ownership has a long history. After the Norman Conquest the nobles who had supported the King were rewarded with estates of land for their loyal service. The fact that the King had no right to gift this land carried no weight; no one argued with the King. The later enclosures were no more than blatant acts of theft of the land from the peasants, and throughout these times there were always lawyers willing to legitimise these acts of theft with ‘legal’ documents granting titles, passed down through the generations and gaining in validity simply through the veneration bestowed by antiquity. In his book about the history of land ownership in Scotland, aptly titled ‘The Poor had no Lawyers’, Andy Wightman notes:

‘The role of the law has historically been to serve the interest of those in power’. (2).

Also:

‘Landowners today are the beneficiaries of the nefarious deeds of their ancestors, thanks to the legitimacy afforded by a land law system that their ancestors themselves constructed’. (3)

It is a sad fact that the legal profession has colluded for centuries in propagating an injustice that, apart from times of war, has arguably brought more misery and hardship for a great many ordinary people than any other single cause, and continues to do so in the present day.

But from the point of view of view of those who advocate LVT, the ownership of land is not the main point; it is the ownership of the economic rent of land that matters. Of course these two aspects are connected but in his wisdom Henry George recognised that to avoid conflict with the great landowners they could be treated separately; the ownership of the land could continue but not the ownership of the economic rent, which should be surrendered to the community through a land value tax. However George also recognised that with a 100% LVT landowners would have no financial interest in continued ownership, so to avoid the land being neglected or abandoned he allowed that a proportion should be left to the landlord as a payment for good stewardship. (4)

Probably one of the most influential justifications for private property in land, published in 1689, was written by the political philosopher John Locke: In his second treatise of government he proposed that work applied to land was a qualification for ownership of the land. The critical paragraph is reproduced here:

‘Though the Earth, and all inferior Creatures be common to all Men, yet every Man has a Property in his own Person. This no Body has any Right to but himself. The Labour of his Body, and the Work of his Hands, we may say are properly his. Whatsoever then he removes out of the State that Nature hath provided, and left it in, he hath mixed his Labour with, and joined to it something that is his own, and thereby makes it his Property. It being by him removed from the common state nature placed it, it hath by his labour something annexed to it that excludes the common right of other Men. For this Labour being the unquestionable Property of the Labourer, no Man but he can have a right to what that is once joined to, at least where there is enough, and as good left in common for others’ (5).

Although Locke was right in making the connection between ownership and work, or more precisely the ownership of the wealth created through work, he was wrong to extend that ownership to the basic resource from which the wealth was created. (Most would accept that no matter for how long or how hard our fishermen have worked, though they are entitled to ownership of their catch, they are not entitled to ownership of the ocean). However Locke qualified his view with a proviso in the very last line:

‘ – – – where there is enough and as good left in common for others’.

And it is this proviso that has thrown doubt on the theory and left room for much debate ever since. However his writings carried great weight thereafter and became a primary justification for land ownership – no doubt influencing the American Homestead Act of 1862, which granted the early settlers not only ownership, but the security they wanted, and undoubtedly deserved due to their hard work.

In a paper published in 1968, ‘the Tragedy of the Commons’, the American ecologist Garrett Hardin consolidated the belief in private land ownership in saying:

‘Private property is the only effective way to prevent finite resources from being ruined or depleted’.

A great many people already believed this to be self evident, and it provided a further moral justification for land ownership. (Hardin’s theory was later debunked by the Nobel Laureate Elsor Ostrom but not before it had gained widespread popularity). (6).

In Britain the notion of the ownership of land is now virtual holy writ with most people and the idea is naturally reinforced by the increase of the number of homeowners, especially in the last 50 years. One might say that land ownership has become democratised with the increase of homeownership. The land is seen as an integral part of one’s home, one’s property, and any attempt to alter that status is strongly resisted as an attack on one’s private property. But at the same time the same people can be more amenable to the idea of the non-ownership of other natural resources such as minerals in the ground, fish in the sea, water resources and so on – these are perhaps less personal than one’s own back garden. It is highly unlikely that this view about land will change, and as Henry George observed, it does not need to, for the collection of the economic rent. It is from this point of view that LVT becomes practicable; there is no need to alter the existing situation of land ownership providing the economic rent is duly surrendered; and that this separation from land ownership is understood and accepted by the general population. But therein lies the difficulty. A great deal of this book is about pointing out and explaining this distinction, and thereby providing a justification for LVT, but in this process it is worth considering the notion of ownership in general, apart from that concerning land.

If we accept that all (physical) wealth arises from work carried out on land (all natural resources), the wealth so produced belongs rightfully to whoever has carried out the work, which may be physical or mental; then It is the work element not the land element that provides the claim to ownership. The land element is provided by nature and is fixed, the work element is provided through human effort and is variable. One may say that the individual ownership of wealth due to work is legitimate but the individual ownership of land or any other natural resource is not. However if we are to accept the idea of the ownership of natural resources then they could only be owned collectively by the whole human race, who would in effect become shareholders in whatever wealth may result from the exploitation of these resources, and therefore due a dividend from any surplus after the return to labour has been deducted. Although this would of course be impractical to administer under current circumstances it would be fair in principle.

Pursuing this idea of global sharing: In July of 2013, in a High Court ruling over a dispute on fish quotas, Mr justice Cranston ruled that:

‘ No-one can own the fish of the sea’ (7)

In January 2019 $3.1m. was paid for a 278kg. blue-fin tuna in the Tokyo fish market (8). Disregarding for the moment the deductions due to wastage and labour, the total value of this one fish divided between the 6 billion humans on the planet would be about $ 0.5 cents each. This might not sound very much, but in 1999 the world catch of tuna amounted to 4 million tonnes (9). At an average price of $88/kilo the total sale value would be $352 billion. Allowing say a 60% deduction for labour and wastage this would still provide a dividend of about $23 annually for everyone on the planet. This return is for tuna only; multiply this amount for the returns for whales and all the other sea fish, and the total would result in an amount very beneficial to those in the third world living on $2 a day. This dividend is the equivalent of a rent due to ownership. It is similar to the rent paid to a private landlord for the use of a property, except that in this latter case the land element of the property was acquired through illegitimate means. One could extend this example to include the returns arising from all the world’s other natural resources, where no one is the owner but everyone is a shareholder – a concept that is the basis for resource rents. (See chap. 3.02).

Land is considered to be the primary resource.   Other than those who depend for their livelihood and sustenance from the sea, we can live without eating fish or burning coal, but we cannot live without land, and the collection of the resource rent of land, the economic rent, goes to whoever controls the land, the private owner or the government representing the people, but it hinges very much on our view of ownership. The actual ownership of land has no valid basis in law, despite all the impressive legal documents that have been meticulously drawn up over the centuries, the simple truth is that the original ownership of the land can only have been acquired through theft (10). We who are proud owners of the site upon which our houses stand are receivers of stolen property. We are of course able to deflect this accusation by producing our ‘legal’ documents. And so the situation will no doubt continue for the foreseeable future, but as has already been said the critical issue is not the ownership of the land but the ownership of the economic rent.

In a stable society people require security, security for their legitimate property and also for the continuing use of the land they occupy; the security of tenure. Security of tenure can always be provided through a leasehold system which sets out the terms and conditions of occupation, and where the freeholder is the government. Such a system has operated successfully for many years in Hong Kong, where one of the conditions for leaseholders is the surrender of an annual ground rent (a quasi LVT) to the government. However imperfect, it works well for Hong Kong and enables other taxes to be kept low. The system is described very well in Andrew Purves’ book ‘ No Debt, High Growth, Low Tax’ (11).

Various partial forms of LVT are practised beneficially in many countries including Denmark, Estonia, Hong Kong, Singapore, Taiwan, Australia and the USA. In these countries it makes little difference whether the land is owned privately or by the government. As long as the land rent is collected by the government, the system can work effectively.

References:

(1)  Andew MacLaren (1883-1975):   Independent Labour MP for Burslem (1922-45), LVT advocate and educator

(2). Chap.1, p.2, ‘The Poor Had No Lawyers’ by Andy Wightman. Published in 2013 by Birlinn Ltd.

(3). Ibid: Chap.1,p.5

(4). Henry George, Progress and Poverty, Chapter 2, pp. 287-8.

(5). Refer to para. 27, Chapter 5, Second Treatise of Civil Government, 1690, by John Locke.

https://www.marxists.org/reference/subject/politics/locke/ch05.htm

Also

Refer to essay by George H Smith: ‘John Locke, The Justification of Private Property’ https://www.libertarianism.org/columns/john-locke-justification-private-property

(6). There is a good account on the Commons page of the Global Arts Collective website: http://globalartscollective.org/commons.htm

(7). Guardian article by Fiona Harvey, 10.7.13. ‘Fishing quotas can be re-distributed to favour smaller vessels’. https://www.theguardian.com/environment/2013/jul/10/fishing-quotas-smaller-vessels-court

(8). Guardian Agencies article, 5.1.19.   https://www.theguardian.com/world/2019/jan/05/sushi-king-pays-record-31m-for-endangered-bluefin-tuna-in-japan

(9). United Nations FAO fisheries technical paper 467: Rome, 2004: http://www.fao.org/3/y5428e/y5428e03.htm

(10). ‘To prove legal title to land, one must trace it back to the man who stole it’. David Lloyd George (1863-1945), British Prime Minister from 1916 to 1922.

(11). ‘No Debt, High Growth, Low tax: Hong Kong’s Economic Miracle Explained’, by Andrew Purves, published 2015 by Shepheard -Walwyn Ltd. London.