Okay, so I said a few weeks ago that I would start using the blog for notes and jottings about things I’m thinking/working on. There’s a chance that in a few weeks I may be called on to give a talk to some Oxford students about Land Value Tax. And I’ve been working up this idea for some time now but been unable to crystalise it into some words on paper. It may even become the seeds of my PhD!

Most will know that I call myself an anarchist. I do not want a coercive state ruling over us. I do not believe there is anything in the human imagination that might need doing that requires an institution of coercive violence and expropriation to achieve. Not roads, not policing, not law and arbitration. Nothing. I often quote this from Kevin Carson (preface to Studies in Mutualist Political Economy) as the best formulation I have come across of my view:

…coercive state policies are not necessary to remedy the evils of present-day capitalism. All these evils–exploitation of labor, monopoly and concentration, the energy crisis, pollution, waste–result from government intervention in the market on behalf of capitalists. The solution is not more government intervention, but to eliminate the existing government intervention from which the problems derive. A genuine free market society, in which all transactions are voluntary and all costs are internalized in price, would be a decentralized society of human-scale production, in which all of labor’s product went to labor, instead of to capitalists, landlords and government bureaucrats.

In fact, as that quote suggests, I believe that the political, coercive state always has been, and in spite of progress to universal suffrage democracy and the like, is actually inimical to social co-operation. With Nock I believe the state saps social energy to deal with issues ourselves, by outsourcing so much to bureaucrats, by expecting the state to deliver when really it would be more human to take responsibility for ourselves and our own.

The last “step” I had to make to being a full on anarchist was to be satisfied that a private law society could have a market mechanism for the just and equitable distribution of economic resources – wealth. For a few years I’ve taken the idea that since it is the state that protects entrenched interests and privileges one group over others at different times, and that this explains the enormous disparities of wealth we see in the world. I particularly like the idea that because the state props these things up, removing the state from the picture would make these distributive issues disappear. One of my favourite pieces in this vein has been Jeremy Weiland’s “Let the Free Market Eat The Rich“. And, like many before me, from Benjamin Tucker, via the Mutualists, to people such as David Friedman and Murray Rothbard that rent was such a small part of an economy as to not justify the creation of a coercive institution to collect it even if it were legitimate to collect it.

Rothbard, for instance, whilst believing that Georgists are a sort of libertarian fellow traveler, felt they also believe in what amounts to “communism” by “nationalising” land. On the other hand, there have been a fair smattering of main stream libertarians who support the idea of collecting land rents for communal use in some form or another. Again, immediately Albert Jay Nock springs to mind, but also someone whom some regard as a libertarian, J S Mill, and more recently conservatives like William F Buckley and contemporary libertarians like Dominic Frisby, Dan Sullivan and Fred Foldvary.

But I’m changing my mind. I have, finally, read David Ricardo’s “Principles of Political Economy and Taxation”, in which he explains his “Law of Rent”. I should note that this was after my economics degree. That not once during those three years was land or rent mentioned as a factor of production or to explore and explain just how prevalent rent is. If it’s the two or three per cent of an economy that David Friedman suggests, then yes, it doesn’t seem like a huge burden. But actually, it’s a huge part of an economy.

If Ricardo is right, and people don’t seem to dispute it, they simply don’t talk about it (though Tim Harford writes extensively about it in the first chapter of “The Undercover Economist” in the context of operating costs of coffee shops and kiosks), then all other taxes come out of rent, and all surpluses go to rent. So if we reduced the size of the state by reducing other taxes, landlords/landowners would simply get more disproportionately wealthy as what used to be taxed would be collected as rent and if we give people more money (such as Labour’s policy of living wage) it will just feed through into higher rents, housing costs, anyway.

So anyway, without going tonight into details of my “new” hypothesis, it is that the state artificially protects ownership and the accumulation and concentration of rent-wealth by several means. One mechanism is by having a more or less free system of title insurance – register something once with the Land Registry and that’s definitive evidence of your ownership should someone challenge it. Another is by taxing things other than rent, such as income, capital investment and sales of goods and services, then spending that on facilities that make locations more valuable, to be collected by the landowners. Such taxes go nowhere toward addressing issues of apparently unjust disparity of wealth. They exacerbate them – a tenant pays income tax, and then also has to pay the rent inflated by those taxes being spent on making their location more valuable.

Some people say that “taxes are the price we pay for a civilised society”. I say “taxes on anything other than land are the price we pay for a massively distorted society” and that it is actually rent itself, that is the price we pay, whether in a state system or a private law system, for other people to recognise our right to own and occupy a particular location. Take away all of these – state spending on things that make locations valuable, “free” protection of title rights, and so on, and we’d still have rent. We’d still, likely, want to protect our property. And rent, once we have got rid of all the state spending that inflates it (people would pay for their own services in a private system of course), represents the value the market demands for protecting any particular property. 

Given this, it would be simple to envisage a private law system in which rent was collected for protection services and distributed as a dividend to members of “with profits” title insurance schemes. You wouldn’t be obliged to pay someone to protect your property like that – by negotiating with firms representing other potential claimants – you could opt to protect it yourself – by mainforce sort of thing. But conflict is more expensive than co-operation in most situations, so it would likely be the most efficient way of protecting it. Equally, going back to Weiland’s article, people who hold land for vanity purposes (“my family has owned this since we came over with the Norman Bastard”), would likely not bother to pay to protect something from which they couldn’t get much more income than the cost of protection, so much land would be released for homesteading anew.

Anyway, more on this later. I just wanted to get an introduction down while it’s eating away at me.

Notes on Rent as Free Market Welfare: 1
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