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 original 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. One of the prime causes of poverty began with the original acts 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 has been 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. In his book The Possibility of Progress, Mark Braund sets it out clearly: ‘Those who own land are best placed; those who own capital are well placed, but those who only have their labour to sell can only expect minimal reward.’ 1
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 on the working people that there was power in numbers––if properly organised; this gave rise to the early trade union movement. But even the revolutions that took place in France and Russia did not change the basic dispensation, where those who held the land also held the reins of economic power. As was observed by Andrew MacLaren, the independent Labour MP for Burslem in the 1930s and a strong LVT advocate, ‘ Revolutions take place in the mind, not in the streets.’ 2
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. Even now, after more than a hundred years of the existence of the welfare state, 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. In his book Silent Theft, David Bollier comments: ‘We know at some level that nature cannot really be owned.’ 3 Also in the book Land Value Taxation Around the World, Robert Keall adds. ‘ Private enterprise must not include private ownership of the natural elements of life.’ 4 But when the possibility of material gain is at stake it is not always convenient for land to be seen as part of nature.
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. But as Andy Wightman points out in his aptly titled book The Poor Had No Lawyers, ‘at a certain level all land tenure systems are made up––fictions that are true only for as long as people believe in them.’ 5
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. Kings would also lease or sell off land to finance their frequent wars. In Shakespeare’s play, Richard II, scene one of act two is about a visit by the king to his uncle, the dying John of Gaunt, who laments the selling off of leases by the king to finance his campaign in Ireland; he makes the telling accusation, ‘Landlord of England thou art now, not king.’ Most people are familiar, in the same scene, with the famous ‘sceptre’d isle’ speech, that stirs the hearts of all English patriots, but less familiar with the ending, that tells a very different story:
This land of such dear souls, this dear dear land,
Dear for her reputation through the world,
Is now leased out––I die pronouncing it.
Like to a tenement or pelting farm:
England, bound in with the triumphant sea,
Whose rocky shore beats back the envious siege of wat’ry Neptune.
Is now bound in with shame,
With inky blots and rotten parchment bonds;
That England, that was wont to conquer others,
Hath made a shameful conquest of itself.
Ah, would the scandal vanish with my life,
How happy then were my ensuing death!
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. These were passed down through the generations––gaining in validity simply through the veneration bestowed by antiquity. Wightman notes, ‘The role of the law has historically been to serve the interest of those in power.’ 6 He also notes that the purpose of the Law of Prescription introduced in Scotland in 1617 was ‘to legitimise in the eyes of the law the theft of Church lands.’ 7 The benefit to be gained was of course the economic rent, which accrued as a matter of course to the landowner and which Henry George later described as continuous robbery:
This robbery is not like the robbery of a horse or a sum of money, that ceases with the act. It is a fresh and continuous robbery, that goes on every day and every hour. 8
It is a sad fact that there has always been a minority within the legal profession that have colluded for centuries in perpetuating an injustice that, apart from times of war, has arguably brought more misery and hardship to a great many ordinary people than any other single cause, and continues to do so to the present day. Certainly the majority of lawyers remain true to the ideal of justice through good laws, but there are others who have used their skills, for no little reward, in the interests of wealthy and powerful clients. 9
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, the two could be treated separately. The ownership of the land could continue, but not the ownership of the economic rent.
Let the landholders have, if you please, all that the possession of the land would give them in the absence of the rest of the community. But rent, the creation of the whole community, necessarily belongs to the whole community.10
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.11
The notion of landownership has a very powerful hold in the US. One reason for this is the influence of the English political philosopher John Locke (1632–1704). He had a particular view of private property in land, and strongly influenced the American Founding Fathers in drawing up the constitution. In his Second Treatise of Government, published in 1689, he proposed that work applied to land was a qualification for ownership. This view coloured a great deal of thinking on the issue of private property, in particular that of land, and gave rise to much debate, which continues to this day. The critical paragraph in his treatise is reproduced here in full:
‘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.’ 12
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, or even a part of it. 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. Quite possibly it influenced the American Homestead Act of 1862, which granted the early settlers not only ownership but also the security they wanted and deserved due to their hard work.
In a paper published in 1968, ‘The Tragedy of the Commons’, the biologist Garret Hardin consolidated the belief that land had to be owned–– either privately or by the state. His theory became very influential amongst economists, especially with the neo-liberals, who embraced the idea of private ownership. It provided them with a further moral justification. Hardin’s theory was later debunked by the Nobel economics laureate Elinor Ostrom, but not before it had gained widespread popularity.13
In Britain the notion of the ownership of land ––public or private––is now virtual holy writ with most people, and the idea is naturally reinforced by the increase in 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 pointed out, 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 arrangement of land ownership, providing the economic rent is duly surrendered. This separation of land ownership from land rent must be understood and accepted by the general population, but therein lies the difficulty. A great deal of this book is about 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 rightfully belongs to whoever has carried out the work––physical or mental. 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.
In July of 2013, in a High Court ruling over a dispute on fish quotas, Justice Cranston ruled that ‘No-one can own the fish of the sea.’ 14 There is the ring of truth about this statement, but if we were to extend this idea to the ownership of all natural resources, then they could only be owned collectively by the whole human race. Everyone on the planet would in effect become a shareholder in whatever wealth resulted from the exploitation of these resources. They would therefore be entitled to a dividend from any surplus after the return to labour had been deducted. Although this would be impractical to administer under current circumstances, it would be fair in principle.
As an illustration of this: in January 2019, $3.1 million was paid for a 278 kg bluefin tuna in the Tokyo fish market.15 Disregarding for the moment the deductions due to wastage and labour, the total value of this one fish divided between the 7.8 billion humans on the planet would be about 0.04 US cents each. This might not sound very much, but in 2018 the world catch of tuna amounted to about 5 million tonnes.16 At an average dockside price of say $2 per kg the total sale value would be $10 billion. Deducting say 50% for labour and processing costs this would still leave $5 billion which, divided by 7.8, would provide an annual dividend of 64 US cents to everyone on the planet. This return is for tuna only. Add to this amount the returns for whales and the other sea fish and the total would result in an amount very beneficial to those in the developing 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. One could extend the above 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 item 3, Resource Rents).
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. There is no justification for any claim to ownership of land through any natural law. The land title documents drawn up over the centuries, are no more than legalisations of original acts of appropriation or theft. It could be argued that we who are proud owners of the site upon which our houses stand are receivers of stolen property, at least where the site is concerned. We are of course able to deflect this accusation by producing our ‘legal’ documents. We can also take some comfort in numbers: some 60% of all homes in the UK at present are owner-occupied. Additionally it is reassuring to know that Winston Churchill, that great LVT advocate, said: ‘We do not want to punish the landlord, we want to alter the law’.17
And so the situation will no doubt continue for the foreseeable future, but, as has 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, both 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.18 A similar system operates in Singapore, and whatever deficiencies there may be in those two states with civil freedoms and wealth distribution, Hong Kong and Singapore are recognised as highly successful and prosperous city states; they came first and second respectively in the World Economic Freedom Index in 2019.19 They are both countries which show how even a modified form of LVT is effective in raising revenue. Various partial forms of LVT are practised beneficially in many other countries including Denmark, Estonia, 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.
* It should be added that the government of Hong Kong, as the freeholder, derives more revenue from the sale of the leases by auction at regular intervals.
(1) Mark Braund, The Possibility of Progress, Shepheard Walwyn Ltd., 2005, p.222
(2) Andew MacLaren (1883-1975): Independent Labour MP for Burslem (1922-45), LVT advocate and educator
(3) David Bollier, Silent Theft, Routledge, New York, 2003, p.60
(4) Keall / Andelson, LVT Ariund the World, p.436.
(5) Andy Wightman, The Poor Had no Lawyers, Birlinn Ltd, Edinburgh, 2013, p.95.
(6) ibid. p.2
(7) Ibid. p.340
(8) Henry George, Progress and Poverty (1879), Cosimo Inc. New York p.259.
(9) Collier, The Future of Capitalism, p.186
(10) George. Progress and Poverty, p.260
(11). Ibid. pp. 287-8.
(12). Para. 27, Chapter 5, Second Treatise of Civil Government, 1689, by John Locke.
Refer to essay by George H Smith: ‘John Locke, The Justification of Private Property’ https://www.libertarianism.org/columns/john-locke-justification-private-property
(13) The Ostrom rebuttal of Hardin is well described in an article by the environmentalist and science journalist Michelle Nijhuis: https://aeon.co/essays/the-tragedy-of-the-commons-is-a-false-and-dangerous-myth
(14). Guardian article by Fiona Harvey, 10.7.13. ‘Fishing quotas can be re-distributed to favour smaller vessels’.
(15). 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
(16). United Nations FAO fisheries technical paper 467: Rome, 2004: http://www.fao.org/3/y5428e/y5428e03.htm
(17) Winston churchill, The People’s Rights (1909), Jonathan Cape, London. p.125.
(18). ‘No Debt, High Growth, Low tax: Hong Kong’s Economic Miracle Explained’, by Andrew Purves, Shepheard -Walwyn Ltd. London. 2015.