Natural Capital: Key to Economic Justice
Alfred F. Andersen
[2001]
The super-rich get their income from a near-monopoly of capital, not
from "a job." Therefore, if we are to have economic justice
we must have justice in the distribution of capital, and in the income
from it. In order to accomplish this, we must distinguish between (1)
natural capital (the income from which should be fairly equally shared
by all earthly residents) and (2) all capital generated by private
parties over and beyond our common heritage of natural capital. This
privately generated capital, and the income from it, should accrue to
those who generated it.
But this division has not taken place in Western civilization. The
result is that this civilization has not yet achieved economic
justice. What follows is an historical account of an opportunity lost
three hundred years ago, and again two hundred years ago, and of how
we might still achieve it.
John Locke, the influential 17th century British philosopher,
acknowledged that what economists now call "natural capital"
(all land and its resources) was rightly our common heritage. However,
he argued, it is not practical to require approval for any proposed
use of it from every co-owner-resident of the earth. There had to be a
fair and practical way for someone who wanted to use some part of it
to go ahead and do so without securing such an impossible universal
agreement.
Locke argued, first, that anyone had a natural right to take of the
earth's natural capital so long as there remained "enough and as
good left in common for others." He also argued that a person who
put personal effort and labor into what was thus taken thereby
transformed it from its previous status of common property into the
personal private property of the person who had, as we now say, "improved"
it.
As Tom Paine was later to point out (Agrarian Justice, 1797), we can
imagine that when land was plentiful and human population sparse such
a practice would indeed have been considered both practical and fair.
Since by putting labor into a part of natural capital the latter
became joined with the improvements, the product would, it would seem,
have had to have a single owner. Either that would have to be all
persons in common, as before, or the person who had improved it. There
being at the time an abundance of land, it is understandable that the
latter option was accepted, especially since no one could presume to
speak for all persons in common.
However, by Locke's time those initial conditions no longer
prevailed. In fact, it had been centuries since assuming private
ownership of a piece of natural capital still left "enough and as
good" in common for others. By Locke's time, most of the
common-heritage capital in the Western world had already been claimed
as private property. Yet Locke still advocated the continuance of the
original practice. He made a few weak comments about there still being
unclaimed land in the world, but he never did address his own
requirement that any further taking of it would have to leave "as
good" in common for others. In short, Locke didn't solve the
problem which he himself stated so clearly.
By the time Adam Smith came along a century later the enormous
momentum which established practice had given to free-enterprise
capitalism was accelerating rapidly. Within countries, wealth became
so rapidly concentrated in the hands of an elite few that they were
exploring outlets for their exploits outside national borders. The
result was European colonialism. Being basically a moral philosopher,
Adam Smith actually argued against colonialism and its corporate
operators by urging greater distribution of entrepreneurial
opportunities among the populous. But, since he gave no answer to
Locke's ownership dilemma, he did nothing to reverse the trend of
persons and corporate bodies claiming common- heritage as private
property by simply adding a bit of "improvement" to a piece
of it.
This problem was solved a century after Locke and about two decades
after Adam Smith published his The Wealth of Nations in 1776. Again,
it was solved by Thomas Paine, the American patriot, and the solution
spelled out in his 1797 pamphlet, Agrarian Justice. He took on the
challenge when he returned to Europe after the American Revolution and
was reminded of the dire poverty there amid great affluence.
Paine recognized that there should be a continuing separation between
(1) the natural capital itself (which should remain common property)
and (2) any improvements made on any part of it (which should be the
private property of persons making the improvements). His solution
called for holding all of our common heritage of natural capital in
some kind of trust. This would assure its being retained as common
heritage down through the centuries. Then, in order to permit
individual use of it, he suggested leasing it out for such use, while
still retaining common-heritage ownership. Finally, he suggested
distributing the income from such leasing among the residents of a
country (and, presumably, eventually the earth), thereby assuring each
of the joint owners of natural capital a fair share of income from it.
That income could then be used by farmers to lease farmland, by
artisans to buy tools and buildings or to finance operations, and by
everyone to cover living expenses. These common-heritage dividends
were to go to rich and poor alike, since they were not to be
considered charity, but payment on a right which was due to everyone.
Unfortunately, Paine's solution was ignored. Those who had benefited
from the centuries-old practice, and one which was legitimated a
century earlier by the highly respected John Locke, had by that time
become too powerful, having gained control of whatever political
process would have been necessary to implement Paine's proposal.
What we at Tom Paine have mostly added to Paine's proposal is the
following. We are suggesting that our common heritage of capital
should include, in addition to land and its resources, technology ("intellectual
property") inherited from previous generations Some of this
inherited technology is already incorporated into land values,
especially urban land values. Thus, income from that incorporated
technology would accrue to our common heritage in the course of users
paying to lease it. Additionally, we feel that the vast amount of
inherited intellectual property on which foundation all modern
technology is built should also be considered common heritage.
Therefore, high-tech industries presently reaping huge profits in
today's increasingly technological global marketplace should be paying
to a common-heritage trust for use of whatever common-heritage
technology they depend on for their operations. That trust would then
distribute that income along with income from leasing common-heritage
land.
Income from selling non-renewable resources should not be
distributed, however, but used to provide to future generations
technology which they can use to substitute for those non-renewable
resources which will not be passed on because they will have been used
up or rendered unusable.
As for future technological developments, at present, royalties are
paid to those who first discovered it for a limited period of time (in
the United States, for about 17 years), after which the it is
available free to anyone who has the resources to exploit it, which is
usually the already rich. We suggest that, after the initial period
granted the inventor, royalties should be paid to a common-heritage
trust. In our day the concept of natural capital must be expanded to
include the entire biosphere, including not only land and its
resources, but the waters of the earth, the atmosphere surrounding it,
and beyond that into our solar system. For the foreseeable future it
seems unnecessary to be concerned about galactic travel and its
impact.
Including the entire biosphere within our common heritage, brings up
pollution considerations. The biosphere can adapt to a certain amounts
of pollution and other impacts. These amounts should be identified and
permitted; but not beyond these. Thus, industries should be permitted
to lease degrees of impact much as they would lease land and
technology. Since there is a limit on the amount available for lease,
the market would determine the value of it. And just as getting the
optimum income from leasing land would result in some land always
being available for lease by newcomers, thus optimum income from
leasing impact on the biosphere would result in some allowable impact
at all times remaining in an unleased state. If at any time all of
either became leased out, then that would be an indication that the
trust was charging something short of market value, and the charges
should be raised. The trustees of the trust would have the
responsibility for obtaining the maximum income for general
distribution, except that many parts of our common heritage would
remain available for the general public without charge: public parks,
fresh air, water fountains, etc.
The impact of economic enterprises on individual and social life
presents more complex problems. In some areas there would be allowable
impact here also, such as regards pure economic interests. A certain
amount of generalized discomfort might be considered the price to be
paid for a system which generally benefited everyone. These are more
complex issues, beyond the scope of this essay.
The various problems associated with this plan, such as how
governments would be financed if income from land was no longer
available to them, and how to get "from here to there," etc.
require book-length treatment.
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