The Vital Importance of Property in Land: Part 1 – Arguments for Land as Property – Article by G. Stolyarov II

The Vital Importance of Property in Land: Part 1 – Arguments for Land as Property – Article by G. Stolyarov II

The New Renaissance Hat
G. Stolyarov II
October 14, 2012

In this small series on land and private property, I hope to counter the claims of Henry George and his contemporary followers, who generally support a libertarian view with respect to all property except land – which they do not consider to be legitimate property. I, on the contrary, see the ability to own property in land (based on a true Lockean understanding of “mixing one’s labor” with rightfully owned land, or legitimately acquiring it from those who did) as indispensable to the existence of other property rights – as well as, more generally, to the expression of human individuality and the improvement of the human condition.

Why is property in land essential for the exercise of all other property rights? In this first installment, I provide six arguments.

Argument 1: Use of Personal Property: If there is no property in land, one cannot be guaranteed the ability to set one’s personal property in any location for its use and enjoyment. This means, ultimately, the use and enjoyment of one’s personal property is always at the discretion – and with the permission – of whichever governing authority or collective decision-making would supplant the right of private property in land. This is not liberty; the best that it can be is a kind of benign neglect from the persons or committees who have the power to dispose of the land and what is on it.

Argument 2: Complete Ownership: If there is no property in land, then there is never an ability – even in theory – to enjoy the use of land “free and clear” – without paying some sort of rent or “usage fee” to someone. Ignoring property taxes (whose absence is wholly conceivable and would be tremendously beneficial – even if other types of taxes are kept in place), it is possible today for people to pay off any mortgages and liens on their property and to enjoy it outright, without fear of losing the property if they do not pay a continuous stream of money to a third party.  The greatest value of private property comes about precisely when the ownership of that property is absolute – not contingent upon future services or payments rendered to other people.

Argument 3: Opportunity to Choose Leisure or Work: If there is no property in land, and one must continuously and inescapably pay a stream of money to a third party in order to avoid losing the property, then this means that one must continuously earn a sizable income to support that stream of payments. The ability to lead a life of leisure (after having made adequate provision for one’s other needs) is forever closed off to most people (unless they are beneficiaries of trust funds or a fortuitous investment strategy). Whatever the relative merits of work versus leisure might be in any particular situation, a libertarian would hold that the choice to pursue either (or any combination of each) should be up to the individual. Restrictive institutions should not permanently foreclose individuals (in multiple senses of that word) from pursuing one of these alternatives or the other. My own ambition, for instance, is to pay off the mortgage on my house while I am still relatively young. I would continue to engage in paid employment (and hopefully earn decent money) for many decades thereafter, but a lot of the economic pressure would be removed by getting rid of the largest recurring expense, and the same amount of earnings could achieve a much higher standard of living in other respects.

 Argument 4: Incentives for Improvement: If there is no property in land, then there is little incentive (other than sheer benevolence) for the occupant to improve the land by the addition of permanent fixtures, for someone else (or “the community at large”) would capture the values of the improvements, while the occupant would spend his personal resources on the improvements. This is the classic case of a “positive externality” not being realized – or, alternatively, a “tragedy of the commons” situation arising from the community laying claim to a resource that becomes over-exploited and insufficiently maintained. If one wishes for private residential lots to begin to resemble the public roads of a large city in appearance, then doing away with land ownership is an excellent means to that dubious goal.

Argument 5: Individuality: Only through the exercise of the right of private property can a person truly actualize his individual aspirations and distinctive esthetic. True private property enables an individual to act within his own realm as he pleases, as long as he does not infringe on the identical prerogatives of all others with their property. Only private property in land can give an individual the unfettered ability to paint a house with the colors and patterns of one’s choice, to determine the surrounding landscaping, to select the appliances and amenities therein, and to decorate it (which is a right that should not be undervalued, lest we lose it in the age of draconian busybody “homeowners’ associations”). An individual who owns land can truly turn the land and the improvements on it into reflections of himself, rather than just another barren, drab, or cookie-cutter plot (though any of those are within his prerogative as well, if he wishes to be unimaginative). True innovators are always in the minority and always unconventional. If they do not have a sphere where they can act unfettered, then many of their creations may never come to be.

Argument 6: Owned Land versus Land in the State of Nature: While I do not support arbitrary claims of ownership to undeveloped land, I do hold to the Lockean view that a person comes to own land by mixing his labor with it as the first occupant – and only to the extent that he does so. Locke himself argued that a person’s legitimate claim to land extends only to whatever land this person (or others acting on his behalf, through the voluntary exchange or offering of their services) was able to transform with his labor and put to use. Any other (undeveloped) land remains in the state of nature, free for others to claim. This is why Locke opposed arbitrary claims of the King of England to all of the prime forests of that country as the King’s “hunting grounds”. Likewise, one might question whether a Lockean view of property rights would allow national governments today to lay claim to vast undeveloped territories and to preclude development thereon (or sell “development rights” or “resource rights” to those territories). A fully libertarian system of property law would recognize the right of the first occupant and user of a property to be its owner, but only with respect to the land which is truly inextricably involved with such occupancy or use – i.e., land that has been improved and transformed. This is a consistent and universalizable standard for legitimate ownership, and it is a standard that follows directly from the desire to use and transform objects in nature for the improvement of human well-being. Such improvement and transformation are precisely what differentiates owned land from land in the state of nature. Owned land is much more usable and often dedicated to specific purposes, whereas land in the state of nature remains to be adapted to human needs. In practice, the two would look quite different and would enable natural demarcations of private land holdings.

2 thoughts on “The Vital Importance of Property in Land: Part 1 – Arguments for Land as Property – Article by G. Stolyarov II

  1. The most popular theory with regard to both, taxation and rent, is that everything is well where they are low, and amiss where they are high. Misleading comparisons are drawn between the proportions of the total produce that go to rent and wages in new and old countries. In new countries wages are high and rent is low. If a man is a hermit, if he is completely shut off from society, his wages will be 100 per cent, of the total produce in his hands. If he lives and works in a settled and well-governed district, where he has the daily use of public roads, railways, post office, telephones, water and drainage, in turning out his produce, his wages may be 55 per cent, of the total produce, while rent and taxes may be 45 per cent. This increase in the proportion of rent to wages is not an evil, if 45 per cent, of the produce is the fair value of the work done by the community in its production.

    There are two methods of using land imposed on men by necessity. In one case they take particular portions of land, detach them from the places where they are fixed, and make them into houses, furniture, clothes, and food, which may be moved about at will. In the other case men must use land as a site for their various activities. It must remain in its actual situation in space, and, in order that men may use it for their satisfaction in this form, they must join together and bring certain services to the land to assist them in production, such services as roads, water-supply, sewers, gas, electric light and trams.

    Labour and capital are thus divided into two kinds, private or individual, and public or common, and these two kinds of labour produce on the basis of land two forms of wealth – wages and interest, the return to private enterprise, and rent and taxes, the product of public enterprise. If there are no roads, no common services in the backwoods, and no market accessible for the settler’s produce, there ought to be no rent, as no one helps him to produce.

    The distribution of wealth is not a matter of chance ; it is determined in the conflict among the landowners and the Government, the capitalists and labourers, for their respective shares. The capitalist, as the occupier of land and organizer of production, receives and holds the total produce first of all. If he does not own the land he occupies, the landlord as well as the Government comes to him from one side, and both demand the part of the wealth which they claim to have been produced by common services. From the other side come the labourers for payment of their services. There is little sentiment in the struggle which each party makes to secure as much as possible for itself. Bargaining and argument come first; then evictions and forced sales by the landowners and Governments, lock-outs by the capitalists, and strikes or emigration by the labourers. Everything about this apparatus through which wealth is distributed is clear, certain and firm. The measures and scales used to serve out economic rent, interest and wages to their different recipients are not cast from pewter, or any other metal, in a mould, and stamped with the Government mark, but they are exact measures all the same. When the landlord and Government cut into the existing shares of capital and labour, the dullest and most degenerate capitalists and labourers wince and kick as if a bodily wound were inflicted on them.

    While the occupiers of land, the producers of wealth, know in a negative way what taxation and rent are, and protest as soon as their payment exceeds the proper limit, they have not been able to state positive reasons, or adopt positive means, for securing the strict observance this limit. The economic rent or gross value any piece of land, taken now partly by governments in the form of taxes, and partly by landowners in the form of rent, is the value of public services which assist the occupier to produce wealth, plus the value of public services which provide him with a market for his produce. Or, to express this in a more general form, economic rent is that part of wealth which has been produced by the expenditure of private capital and labour in common services, as distinguished from interest and wages, those parts which have been produced by the expenditure of private capital and labor.

    This definition of rent is not to be taken as a statement of the laws of rent, a subject which has generally received much more attention. It differs in substance as well as in form from that of Ricardo, which has been most widely accepted. “Rent,” says Ricardo, “is that portion of the produce of the earth which is paid to the landlord for the use of the original and indestructible powers of the soil.”

    Ricardo’s capital mistake is that he offers a definition which is not economic at all. The error is not due to a casual lapse in expression; it is a defect in a chain of thought. Ricardo, and other economists before and since his time, have treated political economy, not as a purely mental, but as a physical or chemical science. Instead of confining themselves to man’s activities in producing wealth as the subject-matter of their study – and it is a sufficiently wide field – they concern themselves with activities in the soil which are properly the groundwork of chemical science.

    The essential error, therefore, is that we are given a definition of rent with reference to chemical activities instead of with reference to economic activities. There may also be definitions with physiological and moral references, but they are not economic definitions at all. The phenomena which they are intended to represent must be translated into their economic character and terminology before they are treated in the science, before they can be of the slightest use. They cannot otherwise serve as the basis for reasoning, or for the formulation of laws.

    The precedent set by Ricardo in adulterating the basis of political economy has been largely followed. Mill and Marshall have gone beyond the scope of their own definitions of the science. Instead of finding the cause of rent in the economic phenomenon of the division of labour and capital for increasing the value of those portions and kinds of land which seem best to them, a phenomenon whose existence is indisputable, they find it in the alleged chemical phenomenon of a falling off in the supply of chemical powers available for man’s use. They see the explanation of a surplus in a deficit.

Leave a Reply

Your email address will not be published.