RENT AND SOCIETY, a Course; Giles, Campton _RENT AND SOCIETY, a Course

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Prepared by the Australian School of Social Science
P.O. Box 443, Enfield, NSW, 2136
Tel. (02) 9744 8815, (02) 9746 5154; Fax (02) 9744 3804

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Let us talk first about the creation of land value. When passing by a typical suburban home have we considered that the positional value of the land in fact has a greater monetary value in all likelihood than the structure built upon it? Yet, strangely, we never acknowledge this. We talk instead about the price of a home as if land were not involved at all.

Paying for the traditional quarter acre block will be the single biggest purchase most people make. The essential point about this is that they are not paying for a product of human labour but for their right to live in a good position in their local community.

If the surrounding community were to suddenly disappear what effect would this have on the value of their land? How is this land value created?

It is peculiar that whereas we know that a piece of urban land is valuable, not one person in a thousand acknowledges this land value to be the creation of community which surrounds it. Yet those who professionally value land know this. When land is valued it is presumed to be vacant. Now, if the land is presumed to be vacant, where does its value come from? Surely not from itself or from the person who owns it.

Do we remember these words of Henry George "With the growth of population land grows in value and the men who work upon it must pay more for the privilege"? (p 4-5)?

What do we think is the cause of the arising of miserable poverty amidst great wealth? Do we accept the "poverty is God's will" explanation?

"The rich man in his castle
The poor man at his gate
God made them high or lowly
And ordered their estate. "

Let me tell a short anecdote about this idea that "poverty is God's will". After years of pushing this explanation, an Irish abbot expressed his inner doubt that God would do such a thing this way. "It's a little like being married to Jack the Ripper - one never knows what he's doing". Some irreverent Australians know this doctrine as, not God's will, but as "God's swill". They believe it is all a matter of whose snout first gets to the trough.

To better answer this question whether poverty is in the nature of things, let us look at the position of land in the study of economic science.

RENT AND SOCIETY, a Course; Giles, Campton_ RENT AND SOCIETY, a Course

Land is ignored by most economists and, except for land for indigenous peoples, land is not considered by politicians. Yet land has a central position in the study of economic science. Have we considered that all wealth arises from. the application of labour to land or the product of land? Hence the vital point in our study is the point of interaction between labour and land.

How they come together will determine the type of society man will exist in. Causal conditions are imposed at this point of interaction between the two prime factors in all production. Here will be established justice or the lack of it.

Let us see this diagrammatically and observe how different societies can arise from the same prime factors of production meeting in different conditions....

Diagram 5, comparing economies, orig 150 x 50 mm

In the second and third examples what has changed from the just system of collecting the rent are ideas; ideas in the mind of man about how land should be used and tenured, and ideas about making private property of the earth that is common to all.

Production comes from the Latin 'producere', ' to lead forth'. Have you ever noticed how often in the media it is implied that the first requisite for production is 'investment'? This would give us the impression that capital is the first factor in production. Yet, is this true? And, if it is not true, what is capital? ...

Capital is wealth set aside for the production of further wealth. With capital misapprehended as the first cause of production, labour, you may have noticed, is often spoken of as a cost of production - almost as an incidental and certainly secondary in importance. But is not labour a primary factor in production? ...

These false impressions or illusions about production are imposed at the point of interaction between land and labour when land is privately owned and monopolised. In these circumstances, labourers must be hired to live. They depend for life upon employment by others. Their bargaining position is poor and their wages are depressed to the least they will accept.

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Being somewhat aware of this, organisers called 'entrepreneurs', tenant land [i.e., let land on lease to others] and hire labourers who are given access to land and tools to produce for their employer. This entrepreneur is himself a labourer but he appreciates that economic rent grows swiftly in a progressive society. Thus, he tenants land in a good position and employs skilled labourers - even paying them a little more than others - in the hope of profit.

Though he may not analyse this so-called 'profit' himself, any 'profit' will be either his own wages, unpaid wages to his employees and, most substantial of all, unpaid rent. Naturally most profit is associated with long leases at constant rents but, unfortunately for the entrepreneur, this is not a common occurrence nowadays....

Diagram 5 shows that the same law works differently in different conditions. With free land it works in one way; with enclosed land it works quite differently. And the society that is the result is correspondingly different....

What is a society? Here is a well-known description (Henry V Act I Sc. II).

"Therefore doth heaven divide
The State of man in divers functions
Setting endeavours in continual motion
To which is fixed as an aim or butt
Obedience: for so work the honeybees
Creatures that by a rule of nature teach
The act of order to a people's kingdom.
They have a king and officers of sorts
Where some like magistrates correct at home.
Others like merchants venture trade abroad
Others like soldiers armed in their stings
Make boot upon the summer's velvet buds,
Which pillage they with merry march bring home
To the tent royal of their emperor
Who busied in his majesty surveys
The singing masons building roofs of gold,
The civil citizens kneading up the honey,
The poor mechanic porters crowding in
Their heavy burdens at his narrow gate,
The sad-eyed justice with his surly hum
Delivering o'er to executors pale
The lazy yawning drone. I this infer
That many things having full reference
To one consent may work contrariously.
So many arrows loosed several ways
Come to one mark; as many ways meet in one town,
As many fresh streams meet in one salt sea,
As many lines close in the dial's centre.
So many a thousand sections once afoot
End in one purpose and be all well borne
Without defeat."


The point of society is that, through the operation of what we called the "Greater Leviathan" (that organisation of man greater than the State) individuals can satisfy their desires with the greatest economy of elfort. What do you think is meant in the above quotation by "the act of order to a peopled kingdom"? What do we feel about this description of order and cooperation? ...

Let us now take a contrasting picture, a picture of the endeavour to build a society upon unjust principles; of making some men the property of others; and of the quest for material gain without considering what others will get. It was written by an American President when his nation was enduring the misery of the greatest catastrophe of all, civil war, and when land was increasingly falling into private ownership.

"Insomuch as we know by divine law nations, like individuals, are subjected to punishments and chastisements in this world, may we not justly fear that the awful calamity of Civil War that now desolates the land may be but a punishment inflicted upon us for our presumptuous sins and to the need of our national reformation as a whole people?

"We have been the recipients of the choicest bounties of heaven; we have been preserved these many years in peace and prosperity; we have grown in wealth and power and in numbers as no other nation has grown but we have forgotten our God. "

Lincoln continues by pointing out that Americans have hitherto arrogantly believed that their blessings have come from their own superior wisdom and virtue. At another time Lincoln said:

"The land, the earth God gave to man for his home, sustenance and support, should never be possessed by any man, corporation, society or unfriendly government, any more than the air or water if as much. . . "

The lack of liberty which we are experiencing in Australia and may experience more of in time, flows inevitably from land monopoly, which both Australia and America inherited from England. Without assistance the poor fall victim to the economically stronger. To escape this dependency the landless have formed parties and trades union, and fallen victim to the trades union and Governments.

This has happened rather in the same way as ordinary people fell under the power of feudal lords to escape marauding bands of hostile barbarians. The Government has intervened to put a safety net of welfare under those who could not provide for themselves when they were sick, injured, or old aged.

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They have provided a 'social wage' to workers in superannuation and in family allowances, and in so-called free education and free medicine. In doing this Government has tried to see that this aid was well spent and, in doing that, it has interfered often and sometimes severely with personal privacy and liberty. Without revenue of its own, it has con fis cated pers onal wealth in the form of taxation . This has naturally led to large scale avoidance of taxation, and to 'tax cheating'. This in turn has led to conferring large and arbitrary powers upon the tax office - a further and even more serious interference with personal liberty.

Overall, the State has believed that there was no justice excepting what it could manufacture and then impose upon the community by force. And this has subtly led to Government giving to various commissions, boards and authorities extreme powers to coerce society into ways which it considers are just. This malign tendency is yet in its infancy....

These interferences with natural freedom have their origin in the conditions which have come between land and labour. At any time society can emerge from this web of false ideas and false institutions by correcting the primary relationship man has: his relationship to land.

Q1. What is it that makes land valuable? (p 21)

Q2. Obviously, the main point in this part is that made by the diagrams on page twenty-two. In your own words, explain what these diagrams say.

Q3. What false impressions are given about 'Labour' in a capitalist society? (You may be able to add one false idea about the economy given by capitalism in your answer) (p 22)

Q4. The effect of not collecting rent as revenue is that we lose our rightful civil freedoms. What three things occur to do this? (p 24, 25)

To be continued

AUTHOR, AUTHOR!!! Care to contact the Sydney people who run this course? Write to the ASSOCIATION FOR GOOD GOVERNMENT, PO Box 443, Enfield, NSW, 2136, Australia.

Australian School of Social Science..Australian School of Social Science, Sydney, New South Wales

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RENT AND SOCIETY, a Course; Giles, Campton_RENT AND SOCIETY, a Course

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