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.
- Jake If you only spend 20 minutes of the rest of your life on economics, go spend them here.
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
