Trade, Land and Peace
[Reprinted from Land & Liberty, Winter,
PEOPLE WHO campaigned for Free Trade in the 19th Century saw it as a
device for achieving prosperity. Some of them perceived that it was
even more important as a great vehicle for promoting international
peace. In the 20th Century, and particularly in the inter-war period,
the dark obverse of the equation between trade and peace came to be
seen. If Free Trade was the best guarantee of peace, then trade
barriers provided an equally certain guarantee of war. As one of the
wisest aphorisms of the period put it, "if goods cannot cross
international frontiers, armies will."
Man is not very good at learning lessons from histony, but since 1915
that message al least has been widely received. The record of the past
half-century has been in many ways disappointing and discouraging: but
we have nevertheless avoided wars in which the Great Powers were
engaged on both sides. In the closing years of the 20th Century, one
may reflect with satisfaction that the principal states of the world
are - on the whole - more disposed to pull down commercial barriers
than to erect them.
The great trading organisations of the late 20th Century -- both
public and private have advanced Free Trade in some directions. but
impeded it in others. Thus, the European Union secured the removal of
customs barriers between member-states, but it also compelled
countries like Britain to impose new trade barriers which they did not
wish to erect towards non-European countries. Private multinational
corporations have often acted oppressively towards competitors and
others; yet by their very nature they have also acted as a powerful
battering-ram against trade barriers. Organisations like the World
Pank and GATT have also functioned in an ambivalent manner. But it is
important to remember that -- for all their faults -- traders and
financiers, unlike soldiers and nationalist politicians, usually
perceive a strong interest in peace. This fact has been of major
importance in averting major wars.
And yet wars on a lesser scale continue. What are people fighting
about, now that trade is gradually becoming free?
THE GULF WAR, whose reverberations are still being heard, brought
that point out with great clarity. If Kuwait had not happened to have
a lot of oil beneath the ground few people would have cared much who
controlled it. Yet a few years ago the Saudis, the Americans and the
British, found themselves fighting a difficult, bloody, very dangerous
and immensely costly war against Iraq over Kuwait.
The location of oil deposits has been an important factor in other
conflicts. It is very likely that the suspicion that such deposits
might be found in the South Atlantic played a substantial part in
embroiling the British and Argentinians in war over the bleak and
unproductive Falkland Islands.
The more technology ad\ances, the more places in the world will be
found to contain some vital mineral or other. It won't always be oil,
of course; and many of those mineral-rich places will probably be
unattractive spots like Kuwait or the Falkland Islands. It is not
unlikely that rival claims to possession of such places will spark off
serious international conflicts.
The main cause of contention remains to this day the same issue
which, no doubt, was the major cause of contention between tribes of
paleolithic man, and for essentially the same reasons. Some places are
more fertile, more pleasant to live in, more accessible, more rich in
minerals, or in some other way preferable, to others. If people living
in the less desirable spots find themselves disadvantaged by
comparison with other people, then tensions are certain to develop,
and in some circumstances these tensions will build up into civil
violence or international wars. Free Trade permits people access to
goods from any part of the world, and thereby reduces the risk of such
troubles to a large degree; but it certainly does not remove the risk
altogether, while the struggle for land continues.
A system has been devised for ensuring that the heat is taken out of
the 'land problem!' within a particular country. It is known as land
value taxation. Each individual who owns land would pay into the
national exchequer periodically (perhaps annually) a sum which is
close to the full value of that land over the operative period. The
money thereby collected would be used for national purposes, such as
education, welfare or defence, which are the normal recipients of
taxation revenue. At the same time, other taxes, like income tax or
VAT, would be reduced. People would continue to live on pieces of land
which are of unequal value; but those who find themselves at a
disadvantage in that respect would be compensated for the disadvantage
by paying less tax.
The effect which land value taxation would have in reducing
potentially violent tensions within a nation-state is demonstrable.
Thus, in Northern Ireland, Catholics live - on the whole -- on poorer
land than Protestants, and part of the 'Nationalist' complaint against
the existing state of affairs in the province is based on the relative
poverty which results. In the same way, many of the troubles which
have arisen between people living in places which until recently
fonned part of the Soviet Union, or part of Yugoslavia, turn on the
view that members of some ethnic groups have been disadvantaged in
relation to others because they live on less desirable land. Such
considerations are by no means the only cause of ill-feeling in
Northern Ireland, or the ex-Soviet Union or ex-Yugoslavia; but they
are certainly important among the causes. If land value taxation
prevailed in those areas, that particular irritant would be removed.
But land value taxation within nation-states will not, by itself,
remove the risk of international conflagrations. The background to the
Gulf War, however, suggests how the principle behind land value
taxation may be highly relevant to the cause of international peace.
Three quarters of a century ago, Kuwait was an unnoticed patch of
desert, whose principal export was dates, and whose people had a very
low standard of living. Then oil was found under the soil. Because of
this oil bonanza, and for no other reason, Kuwait eventually attained
a GNP which, when measured per head of the population, is vastly
higher than that of any major state in the world.
At the other end of the scale, some parts of Africa are currcntly
witnessing an extension of the Sahara which is turning fertile land
into desert, and is bringing massive poverty and actual starvation.
Nobody can blame the people living on the Sahara fringes for the
disasters they have sustained, any more than the great boom which the
Kuwaitis have experienced owes much to Kuwaiti efforts. When
disparities of this kind appear, it is hardly surprising that tensions
arise between people living in different places.
In the end, peace can only be guaranteed when an international system
is devised which draws on the essential principle behind the
'national' policy of land value taxation. This requires that nobody
should derive great benefit, or sustnin great loss, through the
accident that he, or the nation of which he is a member, happens to
sit on one piece of land rather than another. Equal access for all
peoples to the world's goods through Free Trade, and equal access for
all peoples to the benefits attaching to land worldwide, are two
aspectss of the same principle. In the last analysis, a policy which
is morally right is also expedient.