Land value is mostly human made. The value as shelter, is entirely human made. Look what a piece of wood somewhere costs and what a piece of land in a city costs. The land is valueable, because there are buildings around. Without human interference the land value is spectacular little. In the area where I lived for most of my live, before humans urbanised the land, it was just a swamp. Only through hard work it was made useable at all.
Propertisation [In German I would use the word Vereigentümerung; in German there is the word Eigentum and Besitz, the latter, litteraly something you sit on, meaning the physical possession of something. The latter meaning a legal title to own something. In this case I'm talking about the legal title, when I say propertisation] is the only meaningful invention in the profession of economics in thousands of years. The age of industrialisation would never have happened, without propertisation, including the propertisation of land. The very high recent Chinese growth is the effect of propertisation. Money is mostly backed by land property, and some time ago money was backed by metals - a natural resource as well. Credit hardly works without collateral - and access to natural resources is a vastly better collateral than work, especially, when even slavery is illegal.
You may read a book, the best if you can read German is "Eigentum, Zins und Geld" from Heinsohn and Steiger. Peter Sloterdijk called it the equivalent of Marx' 'Das Kapital' for the 21. century in his 'Weltinnenraum des Kapitalismus'. While not all economists follow all ideas of debitism, the basic idea, that property is the basis for credit is hardly controversial. If you don't read German, I can only recommend the inferior 'The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else' from de Soto. Actually capitalism doesn't fail everywhere else totally, but especially in Africa, where propertisation sometimes is in conflict with traditions, it often fails pretty much.
So the society, that has created the institution of legal titles to natural resources within its boarders (as well of course not a 'natural right', but something created by relatively modern societies) have greatly profitted from it - and just by the way, the people that today own valuable land are usually not the original owners, that 'just got' the land. They have paid for the right to own the land to others, that ultimatively paid to the state.
Now some people may not like the modern society and don't feel to be part of it or profit from its wealth. They may disagree with the idea, that the state can create such an instution as legal title to own. But that small minority is essentially denying the other people on the planet the right to live, as without the productivity gains, enabled by propertisation, many people simply would die. Der Amerikaner ist die Orchidee unter den MenschenVolker Pispers
That's not counting the regular wars which are a side-effect of oligarchical land and property ownership.
It's not really land ownership that's the problem so much as the concept of ownership in general. I don't think we can do away with property rights altogether. But more shared ownership, more participatory ownership, and less ownership for exploitation and appropriation - all of those might not be bad things.
Land value is mostly human made.
Indeed it is. The value of a location in large part derives from public/ collective investment.
The "money's worth" of (say) fertiliser, effort, bricks and mortar (I think of this as "Capital") invested in a location, is another issue.
The increase in the rental value of a location which is derived from (say) a new Metro, constitutes an unearned windfall gain for lucky land owners living near the stations. Henry George's case was that those who have exclusive rights of use of the Commons of land/location should compensate those they exclude. This tax on the privilege of exclusive use of the Commons of land was his "Single Tax", and it enables the capture by Society of publicly funded unearned or windfall increases in land values.
Martin:
Agreed, with the caveat that it is exclusive physical possession.
Unfortunately there is a conflict of interest between the absolute owner of land, and the provider of temporary finance capital (credit) who secures a temporary claim over the land with a mortgage agreement. Similarly there may be a similar conflict between an absolute owner, and a temporary user or tenant.
We take these conflicts for granted, and they are inherent in the very nature of finance capital.
I am pointing out that there is now emerging a new third possibility based upon the use of an "Open" Corporate - such as the UK Limited Liability Partnership (LLP), or its close cousin the US LLC - where the governing agreement may take any form the members agree.
We may encapsulate all of the rights of use and usufruct which actually constitute the property relationship (it is not actually an Object) within such an "Open" Corporate as a framework.
We may then issue Units (not unlike a Redeemable Preference Share in a conventional Corporation) which are redeemable in rental value, and sell these to Investors in order to fund development or otherwise.
The outcome is that it possible using what I call a "Land Partnership" to create what is in fact a new property right of indefinite duration ie for as long as I use the Capital invested in the land I pay a "Capital Rental" to those who provided it. And for as long as I have exclusive use of the location, I should pay a "Location Rental" or "Location Benefit Levy" to the local community whom I exclude.
Everywhere Else' from de Soto. Actually capitalism doesn't fail everywhere else totally, but especially in Africa, where propertisation sometimes is in conflict with traditions, it often fails pretty much.
In places like Africa, land is perceived as a Commons belonging to the tribe, rather than to individuals. In other societies eg genuinely Islamic societies, the position is that absolute ownership of land is God's alone, and it is expected that a payment will be made to society for the use of it.
Now some people may not like the modern society and don't feel to be part of it or profit from its wealth. They may disagree with the idea, that the state can create such an instution as legal title to own. But that small minority is essentially denying the other people on the planet the right to live, as without the productivity gains, enabled by propertisation, many people simply would die.
I disagree. I believe that no man has the absolute right of ownership of a Commons such as land, non-renewable resources, water, or knowledge.
ie there is no Divine Right of Capital.
However, I believe that it is essential that there be a right of exclusive use of such Commons in certain respects, and that those who are granted such privileges for an indefinite period should compensate those they exclude for as long as they do so.
The innovation I am proposing and developing consists of the novel use of new partnership-based (as opposed to statutory or judge-made)legal protocols for the sharing of production/ revenues on the one hand, and the sharing of risk on the other.
So I agree that propertisation is necessary. But it should be a form of propertisation benefiting the many, rather than - through the mathematics of compound interest, coupled with the enclosure of Commons - concentrating wealth inexorably in fewer and fewer hands - as we have seen, and which is asystem even now melting down. "Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
Many countries to have some taxes on land ownership. Some even quite significant. Usually they are adjusted, when the land is sold. A problem I have with the idea to adjust them regularly for valuation is, that it can happen that way, that you are taxed out of your home without a change in your income, e.g. you have a house and have calculated, that with your income in a relative save position, e.g. in the public service, are able to pay for it. Now a new Metro is build. This can double the value of your house in the market (e.g. in Munich suburbs this a realistic scenario). If the tax is adjusted for the valuation gain, the tax will double, and you might not be able anymore to pay it. Maybe your partnership based approach has a solution for that. But the 'old economy' model doesn't provide such possibilities easily. [Not to mention that in villages the local land owners are often the ones, that are politically active and shove windfall gains on to each other; e.g. real world politics is corrupt]
I don't think that such a tax should be the single tax. Land ownership is important but it isn't the only thing that determines the capacity to contribute to the public budget. Why should a family with a chronically ill parent pay the same for the public budget as childless people earning lots of money by work, just because they occupy the same amount of space? Income and consumption are as well approximate measures for capacity to contribute.
Yes. So they can't mortgage their land e.g. to buy fertiliser. Somebody who has access to fertiliser will have to form a partnership with them... Der Amerikaner ist die Orchidee unter den MenschenVolker Pispers
A problem I have with the idea to adjust them regularly for valuation is, that it can happen that way, that you are taxed out of your home without a change in your income, e.g. you have a house and have calculated, that with your income in a relative save position, e.g. in the public service, are able to pay for it.
So you're for strict rent control with vacancy resets? In other words, landlords shouldn't be able to raise rents except when the tenant moves out and is replaced by someone else? After all, it's an even worse problem for renters since rent tends to be rather more than property tax.
Many countries to have some taxes on land ownership. Some even quite significant. Usually they are adjusted, when the land is sold. A problem I have with the idea to adjust them regularly for valuation is, that it can happen that way, that you are taxed out of your home without a change in your income, e.g. you have a house and have calculated, that with your income in a relative save position, e.g. in the public service, are able to pay for it. Now a new Metro is build. This can double the value of your house in the market (e.g. in Munich suburbs this a realistic scenario). If the tax is adjusted for the valuation gain, the tax will double, and you might not be able anymore to pay it. Maybe your partnership based approach has a solution for that.
You identify valid issues, and yes, I do have a solution.
The occupier of the land will have the option of paying taxes by joining the Community Partnership and transferring Units of land rental value to the community via the location levy.
ie he may pay in kind.
One of the outcomes of the model I am describing is of the gradual introduction/evolution of a Rental Pool.
The key mechanisms for introduction of unitised rentals as what is essentially a new geographically bounded currency are:
(a) a solution for "distressed" property owners. So anyone wishing to refinance their mortgage may do so;
(b) an optimal and non-toxic, means of equity release (which is what is happening, above to pay the taxes).
I don't think that such a tax should be the single tax. Land ownership is important but it isn't the only thing that determines the capacity to contribute to the public budget.
I agree totally with you. Henry George lived in simpler times, when land value constituted a much greater proportion of value in circulation than it does today.
There are other privileges available upon which to make a levy.
First, I would make a carbon levy on the use of carbon-based fuels (ie the privilege of use of non-renewables) and also on other mined resources. This would be used to fund the transition to renewable energy.
Second, I would replace all corporate taxes, taxation on dividends, and VAT with a simple levy on the gross revenues of any entity where investors benefit from the untaxed (or inadequately/imperfectly taxed) privilege of limitation of liability.
Simple, unavoidable, easily collectable (via networked clearing), and getting rid of a massive burden of cost and overheads (ie government tax bureaucracy, and the private sector accountancy/avoidance/minimisation industry) to society. "Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
[...] Actually capitalism doesn't fail everywhere else totally, but especially in Africa, where propertisation sometimes is in conflict with traditions, it often fails pretty much. In places like Africa, land is perceived as a Commons belonging to the tribe, rather than to individuals. In other societies eg genuinely Islamic societies, the position is that absolute ownership of land is God's alone, and it is expected that a payment will be made to society for the use of it.
[...] Actually capitalism doesn't fail everywhere else totally, but especially in Africa, where propertisation sometimes is in conflict with traditions, it often fails pretty much.
If you want to help Africa, forgive the debts. Give them a chance to build economies without a Tchengis Khan-lite levy of compounded debt repayments.
- Jake If you only spend 20 minutes of the rest of your life on economics, go spend them here.
While external debt may be a problem in some cases, I strongly doubt, that it is regularly the case. When you say, the best people can do is working for the gov't this is not exactly a sign of too little funds for the gov't. Working for multinational corporations isn't bad - if the corporations have business in Africa.
One effect of questionable protection of property, is people in Africa, that somehow gathered funds, don't invest them in Africa, but (so far) in Switzerland. If not even the local people trust in the legal safety of business, foreigeners have even less reason to do so. Of course in recent years some countries have made progress, e.g. google 'gapminder' to see a tool to get access to UN statistics. Unfortunately there are countries like Zimbabwe, that have made steps backwards. Der Amerikaner ist die Orchidee unter den MenschenVolker Pispers
Another issue for Africa is that on most of the continent, the infrastructure really isn't anything to write home about, except in the sense that you'll have plenty of time to write home if you try to use it to get from A to B. And of course, there's the whole rainforest belt, where it's pretty limited how much European-style industrialisation you can do at all, due to the climate. Property protection really comes rather far down the list of Things To Do.
To illustrate, recall that Yeltsin's Russia had very good de jure property protection (considering the lack of popular legitimacy of the Yeltsin regime, de facto is another story...). This did not prevent a massive capital flight to flag-of-convenience countries.
It is very clear, that Russian oligarchs tried to get their money out of Russia to get it out of reach of politics. Der Amerikaner ist die Orchidee unter den MenschenVolker Pispers
Actually regime changes are good opportunities to simply default on debt.
That did not happen even in the "heroic" examples of South Africa or, say, Poland. They had to "honour" debts of their oppressing predecessors. Nothing was forgiven with "good" regime changes is Latin America either.
As the external debt acts as a tax or a tribute, it is a persistent problem in the developing countries. It is as if the West ended overt colonization, but succeeded in keeping a financial yoke.
African local economies were bulldozed long ago - we hardly knew them. Only blocks close to the corrupt governments can usually "gather some funds" - and they often seem to be more in friendship with neo-collonist "business partners" than own citizen. Corruption in those governments is not exactly a trouble for Western elites, still.
Countries can just refuse to honour debt obligations, like Argentina did. The question is usually, if they remain credible to attract new credits afterwards. In case of Argentina, it seems yes.
If you wait for the creditor to say, hey, I don't want your money any longer, you can wait a long time. Why is the creditor a creditor in the first place?
Where is this a problem? I looked at wikipedia List of countries by external debt.
This is gross debt, not net debt. Bit for most poor countries, even if they would have zero assets elsewhere, the external debt to GDP ration isn't problematic. The net external debt is ~20% for the US, which can't have catch up, high growth development. Zimbabwe seems to be seriously overdebted, but that is probably more due to the shrinking GDP than due to the high debt before Mugabe.
Debts that really keep them from going would be something like net external debt several times the GDP, if all other stuff would be fine. There isn't a fraction of that.
African local economies were bulldozed long ago - we hardly knew them.
When were these African local economies there? Today in most African economies the HDI should be higher than at the time when the first colonial efforts were undertaken.
Only blocks close to the corrupt governments can usually "gather some funds"
Right, that is where the money is, e.g. due to development aid. What they need is a functioning private sector.
and they often seem to be more in friendship with neo-collonist "business partners" than own citizen
There partners aren't neo-colonist. They may be business partners or just criminals or both in a sense. The existence of criminals isn't shocking at all. Of course you will find someone to transfer your wealth out of the country, if you want, if you pay him. Should I complain about Italians colonising Germany, because their Mafia makes great deals, here? Those business people don't have a mandate by our people. And actually I trust my gov't to make decisions according to their best knowledge and usually sufficient integer. Corruption of course exists here, too.
Corruption in those governments is not exactly a trouble for Western elites, still.
'Western elites' mostly simply ignore Africa. So why should it be a big trouble? If you never set foot on that continent, never buy or sell anything there, from where should the big trouble come? Nevertheless most Western gov'ts have now laws, that make corruption in foreign countries a crime at home. It is not self evident, that one has to have such a law, because it hinders your own business people to make deals, when competitors from other countries engage in bribing. One can as well say, this is a sovereign country, and if the officer demands a fee so be it. That is the opposite of colonialism. You accept the rules, the locals make. Colonialism would be, when we make their rules. We don't and actually we can't. Do you want more Bush wars in countries to bring them democracy and freedom? Der Amerikaner ist die Orchidee unter den MenschenVolker Pispers
Countries can just refuse to honour debt obligations, like Argentina did. The question is usually, if they remain credible to attract new credits afterwards. In case of Argentina, it seems yes. If you wait for the creditor to say, hey, I don't want your money any longer, you can wait a long time. Why is the creditor a creditor in the first place?
I see the role of investors as overvalued. They provided just money - other aspects should be valued as well. As this crisis is settling down in East European countries (for example), reliance on external capital flows only increasingly looks like a doubtful strategy, especially when own industry is "gone" and trade balance perspectives are pure.
As the external debt acts as a tax or a tribute, it is a persistent problem in the developing countries. It is as if the West ended overt colonization, but succeeded in keeping a financial yoke. Where is this a problem? .... Debts that really keep them from going would be something like net external debt several times the GDP, if all other stuff would be fine .... ... What they need is a functioning private sector.
Where is this a problem? ....
Debts that really keep them from going would be something like net external debt several times the GDP, if all other stuff would be fine ....
... What they need is a functioning private sector.
If the global crisis is going to deepen, many countries may see their debts jump over total GDP, just as Zimbabwe. This is akin to going "underwater" with your mortgage.
African local economies were bulldozed long ago - we hardly knew them. When were these African local economies there? Today in most African economies the HDI should be higher than at the time when the first colonial efforts were undertaken.
I don't know how exactly you can measure Human Development Index (HDI) of past non-Western societies. But I guess that biological indications (thus excluding education, in particular) were less behind the West than they are now. And the tribes could possibly have social-economic tricks that, although not fitting into our general ideologies, were very useful in making the people happy.
and they often seem to be more in friendship with neo-collonist "business partners" than own citizen There partners aren't neo-colonist. They may be business partners or just criminals or both in a sense .... .... 'Western elites' mostly simply ignore Africa.
There partners aren't neo-colonist. They may be business partners or just criminals or both in a sense ....
.... 'Western elites' mostly simply ignore Africa.
Valued by whom? I don't think that gov'ts anywhere in the world see investors as more than money providers.
As this crisis is settling down in East European countries (for example), reliance on external capital flows only increasingly looks like a doubtful strategy, especially when own industry is "gone" and trade balance perspectives are pure.
But their industry isn't gone. The problems in Eastern Europe seem to me to be the result of a credit crunch. I can't see big underlying problems.
Africa isn't hard hit by the crisis. The low international dependency of Africa is this one time a good thing. Nevertheless, yes, in can happen. It can happen as well to rich nations as Iceland or Ireland. But it is not the reason for slow improvements on the last decades.
But I guess that biological indications (thus excluding education, in particular) were less behind the West than they are now.
I'm pretty sure, that child mortality is now much lower than in precolonial times, or what do you mean with biological conditions. In linear terms the difference to the West should be as well smaller. On logarithmic scale, the difference may not be smaller, because the West had gains there as well.
And the tribes could possibly have social-economic tricks that, although not fitting into our general ideologies, were very useful in making the people happy.
Quite possible. I doubt there is any way back, though; or at least 'conventional' development will be as doable as going back.
Some circle is still lazily profiting from dirty deals and debt collections. How much do we know, which 'Western elites' are not included?
From sheer volume, we know, that probably not much are included. Most banks etc. simply don't have business in Africa.
While there is so much disparity between human suffering and exported wealth, the term "colonist" applies.
The bulk of denied wealth is denied by people, that have come to power in genuinely African movements. Westerners [individuals] stand by as bankers, dealers, advisors; (usually) not making African law with military invasions. The term colonist doesn't apply. Real colonialism probably would be better for Africans today than their own sovereignty. Despite all problems French oversea territories are better off than their independent neighbours. But who wants to do colonialism today, when pillage and robbery isn't accepted any more? Not so long ago in the West aristocrats sold their subjects as soldiers [so no volunteering as mercenary, but mandatory military service] for foreign wars to finance opulent live styles. Seems to me to be similar to what African leaders do now. This is simply normal feudal ruling. Nothing unusual. Der Amerikaner ist die Orchidee unter den MenschenVolker Pispers
I see the role of investors as overvalued. They provided just money - other aspects should be valued as well. Valued by whom? I don't think that gov'ts anywhere in the world see investors as more than money providers.
Secondly, all policy decisions are made for the sake of pleasing the investor class. We may debate, whether those policy decisions are really improving economy in some or other sense, but one thing is clear: each new reform ir policy decision "somehow" is making money providers happier compared to other people. This is especially clear in "developing" economies like Eastern Europe, where everything is rationalized and done for the sake of investors.
As this crisis is settling down in East European countries (for example), reliance on external capital flows only increasingly looks like a doubtful strategy, especially when own industry is "gone" and trade balance perspectives are pure. But their industry isn't gone. The problems in Eastern Europe seem to me to be the result of a credit crunch. I can't see big underlying problems.
The underlying problem is: macro-economically East Europeans cannot offer anything significant to the world markets. Their dreadful trade balances were concealed by a credit bubble for some time. And it is not only the global credit crunch and trade imbalances made naked. Now their people have a big post-bubble debt burden to pay-off. In the contracting economy that looms very large.
While there is so much disparity between human suffering and exported wealth, the term "colonist" applies. The bulk of denied wealth is denied by people, that have come to power in genuinely African movements. Westerners [individuals] stand by as bankers, dealers, advisors; (usually) not making African law with military invasions. The term colonist doesn't apply. Real colonialism probably would be better for Africans today than their own sovereignty. Despite all problems French oversea territories are better off than their independent neighbours. But who wants to do colonialism today, when pillage and robbery isn't accepted any more?
The bulk of denied wealth is denied by people, that have come to power in genuinely African movements. Westerners [individuals] stand by as bankers, dealers, advisors; (usually) not making African law with military invasions. The term colonist doesn't apply. Real colonialism probably would be better for Africans today than their own sovereignty. Despite all problems French oversea territories are better off than their independent neighbours. But who wants to do colonialism today, when pillage and robbery isn't accepted any more?
'Western elites' mostly simply ignore Africa
Apart from the massively lucrative diamond, gold, oil and more prosaic mineral rights, and certain kinds of agriculture.
Africa is potentially a ridiculously rich continent, made poor by some very traditional colonial pillage.
Apartheid was always as much about diamonds and gold as it was about simple racism.
And that market exists in The West(TM).
Clamp down on all the diamond smuggling, dirty oil deals and so on and so forth, and you might actually create an incentive structure that isn't quite so badly skewed towards looting.
Kinda the same way that a British effort at prosecuting Russian oligarchs in London for tax evasions might have stopped the looting of Russia.
Yes, it is. It is a value, that community produces. Without community, it would not have a value.
"The age of industrialisation would never have happened, without propertisation, including the propertisation of land."
Propertisation of one's labour and capital, not land. Just license to use land. Absolute monarchies owned most of the land in Europe in the 15th century. There started technological/scientific progress that never happened in latifundised Rome. Industrialisation started mostly in England in the late 18th centrury. Landlords in England just practically destroyed british textile industry. Germany was much more competitive by the late 19th century thanks to worker's much lower rents. (According to Fred Harrison in "Power In the Land")
"You may read a book, the best if you can read German is "Eigentum, Zins und Geld" from Heinsohn and Steiger."
Henry George is so impressive in "Progress and Poverty", that i have swallow that first..
"So the society, that has created the institution of legal titles to natural resources within its boarders (as well of course not a 'natural right', but something created by relatively modern societies) have greatly profitted from it - and just by the way, the people that today own valuable land are usually not the original owners, that 'just got' the land. They have paid for the right to own the land to others, tat ultimatively paid to the state."
Russia turned into useless oligarchy by selling to a few people world's richest natural resources. Just poverty and no industrial development and no real economy followed. Now they have started to tax oil incomes with 90% tax. Only now they are starting to get funds to the development of the real economy. Thank's to getting the value of natural resources to the real economy. Real economy has a chance to grow only, when the owners of the land and natural resources are not able to tax away (collect rent) the results of the production (use) of land and natural resources.
No. I should have explained the mechanism. Simple case: There is no use in licensing the use of land, when you are the one, who wants to use it. But for using it, you need seed, fertiliser, perhaps a tractor. As well you have to survive until your first harvest. So you take a credit. But the bank, that gives you credit - especially in Germany industrialisation was to a good part financed by banks, that got their funds from many small savers; e.g. Raiffeisenbanken und Sparkassen, will give you credit only for horrendous interest rates, UNLESS you collaterise the credit. You can collaterise with your work, but that is a pretty unsave thing. If you collaterise with your land, the bank will be pretty happy.
Another case: You start a software enterprise. You need money for the development of the program, the hardware and some funding for marketing. The banks don't believe you will be successfull. You think you will be. Therefore you collaterise your loan, with your home.
Both examples aren't totally fictional, but pretty much real world. Just landuse licensing will probably not build up a lot of capital. The person that works on the land, will probably not earn enough to become ever really rich, and the land owner has no real investment opportunity and probably is anyhow happy with the status quo.
technological/scientific progress
Scientific progress starts usually financed by the gov't. Utilisation, especially for non-military purposes often by private people.
Russia turned into useless oligarchy by selling to a few people world's richest natural resources.
Yes, that was pretty dumb.
Just poverty and no industrial development and no real economy followed. Now they have started to tax oil incomes with 90% tax. Only now they are starting to get funds to the development of the real economy.
To extract the wealth of oil doesn't need that much sophistication. And oil is sold. It is rarely used as collaterisation for credit. Just selling the stuff further doesn't help a lot.
Thank's to getting the value of natural resources to the real economy. Real economy has a chance to grow only, when the owners of the land and natural resources are not able to tax away (collect rent) the results of the production (use) of land and natural resources.
Yes, if the land is just used for further renting it out, there is no use at all. Der Amerikaner ist die Orchidee unter den MenschenVolker Pispers
You can collaterise your land, but not your mortgage. And you will not own land, if the land owner rents out your labour. You have to own land first, then it works.
"Just landuse licensing will probably not build up a lot of capital."
It will, because then you will keep your own labour and capital. Anyway "licensing" is not a good word. Let's use "ownership" without licence to sell or something like that..
"The person that works on the land, will probably not earn enough to become ever really rich, and the land owner has no real investment opportunity and probably is anyhow happy with the status quo."
If the worker pays two taxes: rent to the land owner and income tax to the state (to provide services, infrstructure etc.) He will most likely not earn much.
Let's take the feudal system the diary writer, i believe, misrepresents. In feudal system, i believe, the monarch owned all land. He then gave this land to rule to different "government" institutions: The church, military, university (perhaps monarch ruled directly some land) etc. These institutions collected rent (taxes) from peasants and this way the peasants supported these institutions. The development that lead to renaissance (science, art, military) etc. happened in these institutions. Rents provided the "taxes" and the peasants could keep more of their labour. Perhaps even then peasants had savings and this because there was no other "taxer", the landowner.
It was not my purpose to talk specifically about the feudal system. Rather, I loosely divided governments into two types, and labeled one of it as "feudal".
Your remark shows that my distinction is quite valid. In the feudal system, there is not much difference between taxes and rent. I extended this coincidence to the case when taxes and rent (and debt) are formally different, but weight on economic productivity in the same way.
If I mortgage, the bank owns my house until the tithe has been paid in full. If I rent, the landlord owns the house and the tithe is a straight tribute.
My employer owns such time as I'm able to persuade him (usually it's a him) will increase his relative social standing through surplus value.
The obligations are entirely assymetric. I'm obliged - forced, in fact - to tithe a substantial part of my social productivity to people and organisations in the ownership class.
There's some mobility so it's possible for canny players to become owners themselves. But for most people freedom of action and interest is very tightly proscribed.
The only difference between feudalism and capitalism is that capitalism adds a second tier of tithing through consumerism. I'm allowed to create some surplus value of my own, in the form of disposable income, but I'm then encouraged to dispose of it in very tightly proscribed ways.
This looks like freedom, but in fact it's a closed market. It's difficult - sometimes unimaginably difficult - for most people to spend disposable income in ways which don't feed straight back to profit for the owners.
This wouldn't be a huge problem if mobility was fluid, so everyone could become an owner and trade equally with other owners.
But in practice the largest owners - specifically the banks and the largest corporations - act as oligarchies and monopolies which makes equal trading impossible.
In feudal system, i believe, the monarch owned all land. He then gave this land to rule to different "government" institutions: The church, military, university (perhaps monarch ruled directly some land) etc. These institutions collected rent (taxes) from peasants and this way the peasants supported these institutions. The development that lead to renaissance (science, art, military) etc. happened in these institutions. Rents provided the "taxes" and the peasants could keep more of their labour. Perhaps even then peasants had savings and this because there was no other "taxer", the landowner.
It's been a while since I read about feudal economics and political structures, but IIRC, nobody 'owned' the land. Rather everybody had a set of rights and obligations relating to specific areas of land. What exactly those were depended on whether you were a noble or a peasant, and in the specific time and place you were operating. Furthermore, the nobility was organized in a hierarchical pattern with a set of rights and obligations relative to each other (and to the serfs and others on a given territory). Land could not be bought or sold. The king, or whatever the local top dog was called, had the allegiance of a set of nobles, plus direct control and rights on his own royal lands where he simply functioned as a noble. There were also royal courts which provided the opportunity for people to sue each other over violating their legal obligations. The Church had similar noble style rights on certain lands, plus tithes. Among the duties of a feudal lord was military service and provision of a certain set number of men, plus administration and justice. The territory of a 'country' was simply the collected fiefdoms of the various nobles who owed allegiance to a given suzerain.
The one place where the king did own all the lands was Tsarist Russia. Though even there in practice he tended to give feudal style hereditary rights to various nobles.
In fact property is not an object it is a relationship.
As Bentham pointed out we should in fact refer to eg land as "the object of a man's property" ie an object which is "proper" to the man.
Property is that bundle of rights and obligations which go with land. In England & Wales (Scotland is a bit different) the Queen technically owns all the land, and a fair chunk of it she owns in practice.
Since a simplification in 1925 we peasants now have two alternative types of tenure (there used to be all sorts of feudal complexities).
Freehold - an absolute, permanent - well,as long as you live and then it passes to your heirs if you have any, but if you have none, and do not have a will, it goes to the Crown....
Leasehold - for a temporary or defined period.
Beyond these statutory rights there are complexities in relation to rights of use involving Trust law ( a goldmine for lawyers) or contractual rights of occupation based on other statutes, eg through membership of a housing Coop which has a freehold or leasehold.
I am identifying a new option, which is keep land permanently in the stewardship of a "Custodian" and to encapsulate the property relationship in an "Open" corporate.
It is then possible to share the rights, benefits and obligations between stakeholders in new ways - particularly "Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
The following review excerpt clarifies the feudal/patrimonial distinctions.
[In Pipes' view], Russia differed from all other European countries because, even after the monumental attempt of Peter the Great to transform it in conformity with the Western model, its rulers clung stubbornly and immutably to their own autocratic privileges instead of evolving along representative and democratic lines. In an influential book, Russia Under the Old Regime, which appeared in 1974, Pipes expounded a wide-ranging theory that endeavored to explain this anomaly. Briefly stated, it was a view of Russian society as being "patrimonial," a term initially used by Hobbes and then taken over and amplified by Weber. What it means is that when "the prince organizes his political power ... in the same essential manner as he does his authority over his household, there we speak of a patrimonial state structure." The czar thus "owned" everything within the state, which was simply considered his own property. No one individual or group had any right to counteract his power, nor was any distinction made between society and the state. Such a regime is different from despotism because "a despot violates his subjects' property rights; a patrimonial ruler does not even acknowledge their existence." In his new book Pipes cites Machiavelli, who in the sixteenth century contrasted the sultan of Turkey with the king of France by pointing out that the former was "a ruler who treated his subjects like slaves"; and Russia was much closer to Turkey in this respect than to any European country. This "patrimonial" mentality continued to dominate Russian politics up through the collapse of the Soviet Union, and seems to have found a new lease on life under Vladimir Putin. Other factors also enter, such as the submissive habits inculcated by the Mongol conquest of Russia for two centuries (and, by contrast, the influence of Roman law on European monarchies). Even feudalism in the West played a part, because it involved a contract between lord and vassal, with mutual obligations on both sides that theoretically placed restraints on the power of the lord -- something totally unknown in Russia. But it was the control of the purse strings that made the most crucial difference. A whole host of authorities, beginning in the thirteenth century, are cited by Pipes to illustrate "the sanctity of private property [as] an axiom of European political thought and practice."
Briefly stated, it was a view of Russian society as being "patrimonial," a term initially used by Hobbes and then taken over and amplified by Weber. What it means is that when "the prince organizes his political power ... in the same essential manner as he does his authority over his household, there we speak of a patrimonial state structure." The czar thus "owned" everything within the state, which was simply considered his own property. No one individual or group had any right to counteract his power, nor was any distinction made between society and the state. Such a regime is different from despotism because "a despot violates his subjects' property rights; a patrimonial ruler does not even acknowledge their existence." In his new book Pipes cites Machiavelli, who in the sixteenth century contrasted the sultan of Turkey with the king of France by pointing out that the former was "a ruler who treated his subjects like slaves"; and Russia was much closer to Turkey in this respect than to any European country. This "patrimonial" mentality continued to dominate Russian politics up through the collapse of the Soviet Union, and seems to have found a new lease on life under Vladimir Putin.
Other factors also enter, such as the submissive habits inculcated by the Mongol conquest of Russia for two centuries (and, by contrast, the influence of Roman law on European monarchies). Even feudalism in the West played a part, because it involved a contract between lord and vassal, with mutual obligations on both sides that theoretically placed restraints on the power of the lord -- something totally unknown in Russia. But it was the control of the purse strings that made the most crucial difference. A whole host of authorities, beginning in the thirteenth century, are cited by Pipes to illustrate "the sanctity of private property [as] an axiom of European political thought and practice."
You seem to bring him up a lot. Which is fine. So long as you read him with a critical eye and an understanding of his glorious past and and life-long crusade regarding Russia. :) That man is a piece or work...
(Totally OT: given all this discussion of the patrimonial system in Russia, I thought I'd throw in the fact that in Tsarist Russia, property was passed down through women, and Russian women had remarkable property ownership rights compared to much of the western world. I know that isn't how you are using "patrimonial," exactly. But worth mentioning in all this talk of "patrimony.") "Talking nonsense is the sole privilege mankind possesses over the other organisms." -Dostoevsky
I thought I'd throw in the fact that in Tsarist Russia, property was passed down through women, and Russian women had remarkable property ownership rights compared to much of the western world.
How much did the educated class of small nobles help the Bolshevik revolution?
The Russians found an effective way to concentrate wealth anyway. When you think about it, a "side" effect of most libertarian policies is always concentration of wealth, no matter how randomly.
It's been a while since I read about feudal economics and political structures, but IIRC, nobody 'owned' the land.
In a pure feudal system. The king owned the land absolutely, usually by right of implied violence.
The king would gift or un-gift favourites and un-favourites with estates and titles to indicate preferment or disfavour. Although most nobles had one or more home estates, it was possible to have tens of different land grants. So many estates were run in absentia by estate managers who collected tithes and dealt with the finance and accounting, but rarely met the owner directly.
If nobles could threaten enough coordinated violence they could threaten or replace the king to improve their own position.
Once the merchant class started to prosper, the threat of violence became more legal and mercenary. Merchants and bankers rarely had their own war bands, but they regularly hired mercenaries to do their enforcement for them.
The aim was the same though - concessions, further land grabs, or occasionally the complete overthrow of the local top dog and replacement with someone more amenable. But merchants could also use money in less direct ways, which often outflanked the noble classes who weren't used to that kind of abstract financial engineering.
The Medici famously funded a criminal and made it possible for him to become pope. He repaid them with a monopoly on management of church tithes across all of Europe, which made them insanely wealthy almost overnight.
Either way, estates and land were very definitely owned explicitly. Although there was a tradition of common land, it was likely to be common land on an estate - i.e. common in a very local sense, in that everyone in a village was allowed right of pasture. There was no question of it being un-owned.
The UK still has the tradition of crown ownership with grants through the land registry. Even if land is owned freehold it still nominally belongs to the crown and is granted as a freehold. The giveaway is that if land stops being part of anyone's estate it reverts back to crown ownership rather than becoming government or common land.
Depending on which part of the world, Common land (a common), is a piece of land owned by one person, but over which other people can exercise certain traditional rights, such as allowing their livestock to graze upon it. The older texts use the word "common" to denote any such right, but more modern usage is to refer to particular rights of common, and to reserve the name "common" for the land over which the rights are exercised. By extension, the term "commons" has come to be applied to other resources which a community has rights or access to. Common land, an English development, was used extensively in England and Wales and in many former British colonies, for example in Ireland and the USA. Today commons still exist in England, Wales, Scotland and USA, although their extent is much reduced from the millions of acres that existed prior to the 17th century
Is a reasonable explanation Any idiot can face a crisis - it's day to day living that wears you out.
If he can use the land for free, he will most likely not earn much, neither. Subsistence farming doesn't make you really rich.
Perhaps even then peasants had savings and this because there was no other "taxer", the landowner.
What are they doing with their savings? Der Amerikaner ist die Orchidee unter den MenschenVolker Pispers
Of course he will, because he gets to keep all his labour and capital.
"What are they doing with their savings?"
Buy a new horse?
There is no use in licensing the use of land, when you are the one, who wants to use it. But for using it, you need seed, fertiliser, perhaps a tractor. As well you have to survive until your first harvest. So you take a credit. But the bank, that gives you credit - especially in Germany industrialisation was to a good part financed by banks, that got their funds from many small savers; e.g. Raiffeisenbanken und Sparkassen, will give you credit only for horrendous interest rates, UNLESS you collaterise the credit. You can collaterise with your work, but that is a pretty unsave thing. If you collaterise with your land, the bank will be pretty happy.
There is no reason that you have to own the land in order to be able to take out a mortgage on it. You can have the land in trust, subject to specific conditions, and mortgage this trust instead. Yes, this increases the risk premium that the bank will charge - because there are more ways you can lose control of the land, and thus lose your collateral. But that's not quite the same thing as saying that it cannot happen.
Can you make an example for conditions you would like to apply. Something that the bank can reasonably accept? Der Amerikaner ist die Orchidee unter den MenschenVolker Pispers
The municipality says "OK, you can build a factory on the bit of land, subject to these or those criteria for construction, and provided that you're not a nuisance to the neighbours. As long as you stay within the limits laid down here, the owner of the factory has the right to use the land."
Now you go to your local, friendly loan shark an investment banker and take out a mortgage on the factory that you are going to build. Note that since you don't have to buy the land (presumably, you're paying some kind of rent to the municipality instead of a one-off sales price), you don't have to borrow as much.
After a couple of years, the factory becomes unprofitable, and you decide to close down the factory. If you had owned the land, you could have bulldozed the factory and sold the land to some other dude, who could (subject to local planning restrictions) have built something else on it. But instead, the use right just goes back to the municipality (and you cease to pay rent).
What has happened in this example is that access to a piece of land has been separated from the stuff that's built upon the piece of land. Of course, there will have to be a very transparent and easy to understand way to award those use rights, because otherwise you'll get a thriving shadow market in gaming the access rules, and that would work pretty much like an actual property market for real estate, except completely out of reach of the regulators. But it should be possible.
Suppose that all land is owned by the municipality instead of by private individuals. You want to build a factory on a bit of land, so you go to the municipality for permission (you have to do this anyway, because they have to approve emissions levels, noise levels and so on and so forth and etc.). The municipality says "OK, you can build a factory on the bit of land, subject to these or those criteria for construction, and provided that you're not a nuisance to the neighbours. As long as you stay within the limits laid down here, the owner of the factory has the right to use the land."
The municipality (the Custodian) maybe gets a rental for the exclusive use of the location aka land. For a commercial or agricultural use this could be some sort of proportional share of production. (there are precedents for tithes....)
For individuals one could be a bit more imaginative. There are several options open, but a Georgist tax on Land Rental Value is the effective result.
JakeS:
Now you go to your local, friendly loan shark an investment banker and take out a mortgage on the factory that you are going to build.
No mortgage.
You go to the contractor and get a quote, broken down into costs and profit margin. You offer him the chance to invest his costs, but he probably needs cash. His profit margin he must invest, or there's no deal.
What he does invest gets him an agreed proportional equity share in your gross revenues as a Capital Partner.
Having minimised your cash requirement you find a punter/ venture capitalist to put up the money, in return for which he gets x% of your gross revenues, if there are any.
Once it's built, the contractor and the VC can sell their Units in your (now existing) gross revenues at any time at a market price, and you really don't care, because your interests are aligned with the investors, whoever they are, and they have no say in the management of your factory.
And note here that it's a damn site easier to get a handle on gross revenues than net profits, which is why Income Trusts became so popular in Canada, and Australia before that.....
If the factory closes for whatever reason, then a new Occupier can come in once he's made his peace with the municipality, found investors yada yada.
What has happened in this example is that access to a piece of land has been separated from the stuff that's built upon the piece of land.
Close, but maybe not quite. We are separating the use of the value of the location (the Commons), from the use of the Capital invested in that location. We are sharing risks and rewards and aligning the interests of stakeholders in a new way, and in fact created a new "co-ownership" property right, which is a sort of "evergreen" leasing arrangement of indefinite duration.
I reckon such a Capital Partnership is probably an optimal enterprise model. But it's not magic. It can't make a silk purse out of a sow's ear.
There are some enterprises that won't stack up using any enterprise model. "Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
Land value is mostly human made. The value as shelter, is entirely human made. Look what a piece of wood somewhere costs and what a piece of land in a city costs. The land is valueable, because there are buildings around.
There are a couple of remarks that one can make to that. The first is that this is not the value of the work that has been put into cultivating the land in question - it is the value of the work that has been put into cultivating the surrounding land. Or more specifically, it is the value of the positive externalities of the work that has been put into the surrounding land.
The second is that there is a scarcity premium on top of the value of the externalities of the surrounding development, because land is limited.
Which was done by other members of the same society. My argument is, that every normal person has profited. When somebody argues, that propertisation of land is immoral, I ask, immoral against whom? For sure not the people that form the state.
That is a very small premium. A piece of forest somewhere is pretty cheap. Der Amerikaner ist die Orchidee unter den MenschenVolker Pispers
My argument is, that every normal person has profited.
Um, no. Not the people who don't own land. Or rather, they have profited, but they have profited less, and they have profited less solely because they didn't own land - not because they were less productive, but because they didn't take on the speculative risk of purchasing land.
Now, making money by taking on speculative risk is a legitimate enough business... as long as the risk you take on is transferred from hedgers (witness insurance companies, for instance). But that's not the case here. Risk is transferred from other speculators, which makes it substantially a matter of gambling.
Further, there is a barrier to entry into land ownership, in that you have to be able to get credit, which is only available to (lower) middle incomes and up. The only time that this is waived is in the terminal stage of a bubble, ensuring that if the less well-to-do get their hands on land, it's almost always at or near the top of the market.
So essentially, land price increases (whether due to increasing value of the surrounding society or due to price inflation) makes the (lower) middle incomes and up gain.
If the price increase is purely inflation, this is a direct transfer from the poorest members of society to everyone else (because the actual value of the land does not go up because of inflation - so society does not get richer overall. And when society does not get richer overall, any benefit to some members must come out of someone else's pocket).
If the price increase is due to increased value, the distributionary effects depend on how that increased value was financed.
That is a very small premium. A piece of forest somewhere is pretty cheap.
But land in cities is very limited.
I suppose that it's hard in practise to distinguish between scarcity rent and the value of the positive externalities of the city, though. So it's mostly a question of semantics.
The only time that this is waived is in the terminal stage of a bubble, ensuring that if the less well-to-do get their hands on land, it's almost always at or near the top of the market
Important point. "Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
I think we talk about different things. I talk about what has initiated the industrial revolution in the second half of the 18th century and you talk about land speculation. Of the increase in productivity in the last 250 years for sure everybody who participates in the society has profited.
Further, there is a barrier to entry into land ownership, in that you have to be able to get credit, which is only available to (lower) middle incomes and up.
Or somebody donates [e.g. via a land reform] it to you or there is a rule, that somebody who urbanises a piece of land can own up to certain amount [USA, 18th century or so] or it is anyhow 'your' land in the sense, that your family has a subsistence farm on the land for centuries, and now you get legal codification. Or you have worked in the past and saved enough to acquire a piece.
Why the hell do you want land in cities, if not for the other people there? How is the increased value of a piece of land in a city NOT made by humans? Der Amerikaner ist die Orchidee unter den MenschenVolker Pispers
That's all well and fine, but unless you can show a causal relationship between individual ownership of land and industrialisation, you still haven't made the case that everybody benefits from individual land ownership.
Otherwise, the wealth created by the industrial production economy is really beside the point.
Or somebody donates [e.g. via a land reform] it to you
Which has not happened in any Western(TM) society since the 19th century, AFAIK. And back then, land was "reformed" from the poor to the rich, by the way.
or there is a rule, that somebody who urbanises a piece of land can own up to certain amount [USA, 18th century or so]
That involves chasing the existing occupant out of said land.
or it is anyhow 'your' land in the sense, that your family has a subsistence farm on the land for centuries, and now you get legal codification.
Again, this does not apply to mature industrial economies.
Or you have worked in the past and saved enough to acquire a piece.
And how many land purchases were cleared in cash in the Bundesrepublik last year?
Why the hell do you want land in cities, if not for the other people there? How is the increased value of a piece of land in a city NOT made by humans?
It is made by humans, but that is beside the point. It's not made by the owner of the land. It's made by society as a whole - in other words, the owner of the land cashes in on value that has virtually nothing to do with his own endeavours. I call that either a speculative gain or a rent.
The link is, that propertisation has allowed to make a lot more credit. Independent of any possible gold standard, the commercial banks collaterise(d) there loans with the land. That is not to say, that it is impossible to invent different models for collaterisation. But it is a very good one, because land value is so stable. Mohammed Yunus with his Grameen bank takes good will and shame as collateral. This is already quite sophisticated. Still he demands 20-30% interest rate on loans, and the loans have a very low volume.
Yes, that was a collection of measures that happened in the past. We can invent new measures, but this is a measure that happened really in the past.
It has once applied to economies that are today industrial. It has initiated capitalism. To undo it, would undo capitalism (unless you have a smart replacement).
Most purchases of blank land that happend. Not many overall, as we are in a rather stable situation. But even in the remaining cases it is a portion of every deal. The rest you borrow by collaterising what you just bought. But then over time the debt is repaid. Land ownership isn't something to which only 0.1% of the population have access to and it isn't entirely by heritage. Der Amerikaner ist die Orchidee unter den MenschenVolker Pispers
To undo it, would undo capitalism (unless you have a smart replacement).
Exactly.
The land is held by a Custodian, so it is never sold again. Co-owner Occupiers may change and Co-owner Investors may change but the land is never sold again.
For as long as he has use of the land (ie an indefinite term) the Occupier pays a rental for the use of the location (to the community) and to Investors (for the use of the capital invested in the location).
Anything an Occupier pays more than the rental due buys him Units. And if he maintains the property himself he gets Sweat Equity.
No borrowing. Just Units created within a partnership framework redeemable in rental value.
There we go. Reinvented Capitalism. "Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
To every one whose access to land is denied. Why should people pay for a place? For water or air?
"For sure not the people that form the state."
There is phenomenon called "homelessness". Why are people homeless? Because they can't pay an apartement maintenance costs? They are only 50e/month. They can't pay the land, but do they form a state?
There is sufficient public space. You just can't do there everything. Most land in most countries is accessible.
Why should people pay for a place? For water or air?
Because it helps to allocate limited resources in an efficient way.
Actually homeless people are pretty much a border case. As the society requires obedience to the law, one can require it to give something in exchange especially, when the grab is on nearly all available land - and we give: Usually the cause for homelessness is a mental illness. If you are able to ask for help. It will be granted to you. If you pledge to work within your ability, our society will grant you a home. At least in Germany, but I guess in all of western Europe nobody becomes homeless, because his ability to earn money in the market doesn't earn him enough to pay for a home. Der Amerikaner ist die Orchidee unter den MenschenVolker Pispers
Yes, but not with the expense of the real economy.
I'm 100% confident in my position. I'm annoyed that I have to explain over and over again things, that are either not related to my original point, or are already completely clear from what I have written before. Der Amerikaner ist die Orchidee unter den MenschenVolker Pispers
