The Meaning of 'Commonwealth'

Edward J. Dodson

[Excerpts from a Simple Society internet forum on Commonwealth, April 2004]

Ed Dodson

Opening Statement

In every generation, thoughtful people have examined their own and other societies and come to the conclusion that significant changes were needed if justice was to be secured and protected. Philosophers from Socrates to Mortimer Adler have asked the tough questions and challenged the status quo. Over more than two thousand years in virtually every society, social organization moved from non-hierarchical (i.e., communitarian) to hierarchical, where the priestcraft joined forces with the warrior class to form an elitist and heavily oppressive aristocracy. Then, beginning in the 19th century, the oppressed majority began to exert itself more effectively -- forming labor unions and cooperatives, and migrating to parts of the earth where privilege was not yet established -- to places such as North America, Australia and New Zealand. Socialism in all its many forms arose first to challenge the status quo, followed by Progressivism (and the era of change directed by an educated, professional elite), and then by Liberalism in the United States and (after two world wars and the rise and fall of state socialism under the Soviet Union) Social Democracy in Europe.

Along the way, there have been many reforms adopted and implemented. Laws exist in many countries designed to prevent and/or penalize criminal behaviors and reduce privilege. In the United States, for example, hereditary titles were cast-off from Old World structure (but continue to linger in much of the Old World). Primogeniture and entail were also removed from the U.S. law relating to property. Unfortunately, the deepest form of privilege in the realm of property -- the private appropriation of what the political economists called "rent" -- remained intact. This has allowed the few who have gained control over natural resource-laden lands, over high-demand areas in cities and towns, over the broadcast spectrum and other assets provided freely by nature to claim a large and growing portion of what others produce without themselves producing anything. The "rent fund" is our Common Wealth, but has been monopolized -- permitted to be stolen from us because unjust laws have permitted this to occur.

Not only is rent privately appropriated, the most powerful recipients of rent in every country have managed to ensure that government raises revenue by taxation of producers of goods and providers of services. And, when this revenue is not sufficient to cover expenses, governments borrow from the wealthy (most of whom live primarily off of rent, or rent invested in shares of stock, office buildings and corporate bonds).

The end result of this ongoing historical trend is that wealth and income are becoming increasingly concentrated into a smaller and smaller number of people. There are no longer any frontiers to which the landless can migrate, begin farming and become self-supporting. A growing world population must compete for space that is everywhere monopolized. The Common Wealth that is the birthright of all persons equally is today held unjustly by the few. The consequences include widespread poverty in every society, institutional corruption, environmental degradation, disrespect for the law and continued conflict between groups over territory.

Ed Dodson

(Responding to Fred Foldvary)

With all the people sharing that portion of wealth that comes from The land, labor can be tax free. A true Commonwealth shares nature's wealth and lets people keep their individually produced wealth.

I fully concur with Fred. I raise a question about remedy. In the U.S. some African-Americans have argued the case for reparations from the larger society for the lingering harm of slavery and racism. Those of us who call for structural change know with certainty that the concentration of wealth and income is due not to individual abilities or contributions but to privilege. We must work to eliminate privilege, of course. Is this enough? Does justice require as well the confiscation and redistribution of some significant portion of the unearned wealth that is enjoyed by he most successful rent-recipients and their heirs?

Ed Dodson

(Responding to Jan Narveson)

Jan Narveson: For the scholarly inclined, I might add that the correct theory of economic value was formulated (and perhaps discovered) by Frederick Bastiat - who has also been erroneously accused of holding a "labor" theory of value, even though it is to Bastiat that we owe the definitive refutation of that theory.

We know that markets do not work based on how much labor or the quality of labor that contributes to production. If, as a producer, we fail to understand what consumers desire and how much of their own labor (or accumulated assets) they are willing to exchange, the return for our own labor may be zero.

Henry George held to a "labor theory of property" and a demand theory of exchange value. The first is a moral principle. The second is an observation as to how markets actually function.

Ed Dodson

(Responding to Jan Narveson)

Jan Narveson: Since owning natural resources simply isn't where it's at, the question of what is each person's "fair share of them" is a sterile one. Fairness in human affairs is respecting each other's persons and personal activities, not divvying something up so that each gets a certain amount.

One perspective is fundamentally moral: Is access to the earth the birthright of all persons equally, or are some people more entitled than others? As Winston Churchill observed long ago, land monopoly may not be the only monopoly but it is the mother of all monopolies. There are dozens of violent conflicts going on at this very moment over the control of some portion of the earth (and whatever resources are contained therein).

We must face the terrible reality that human relations still have a long way to come before there is an acceptance of transnational values. Moral relativism reigns supreme in much of the world. The source of power for moral relativism is the system of international law that sanctions and protects the sovereignty claims of nation-states. Under the circumstances, the only way to reduce the number of wars might be to force the negotiated division of existing nation-states into smaller sovereign states and move people in conflict with one another out of harms way. This is not justice; it is expediency. Justice requires that all persons have equal access to the earth, which requires freedom of migration. As I am sure you have already heard from others, carving up the earth into parcels for everyone is unworkable and foolish. However, "rent" is real and has a monetary equivalent that can be calculated, collected by government and distributed in a fair and equitable manner.

Ed Dodson

(Responding to John Watkins)

John Watkins: Herbert Barry: State governments and the federal government need revenue, which should also be obtained from the value of land and other natural resources and no longer from detrimental taxes. Any surplus should preferably be used to improve community facilities, which in turn will increase the value of the land and therefore the wealth of the community and its residents.

John Watkins: My problem with this is that using the land rent to pay for the cost of government does not meet my test of fairness. Everyone would share equally in paying the costs of services from which they do not benefit equally. So, therefore I think it essential to pay everyone their fair share and then charge everyone user fees according to the services received--and furthermore to give them some choice as to whether they wish to buy the services from government, another supplier, or not at all.

John, each person does not contribute equally to aggregate demand, which is what causes the value of locations in cities and towns, or natural resource-laden lands, or the broadcast spectrum to rise and fall. The "law of rent" as developed by the political economists very effectively describes what happens in markets. In cities, for example, the rental value of a location is directly related to the quality of services brought to the site -- both public and private -- and its proximity to those services. User fees are practical for some services (e.g., tolls charged for use of bridges and restricted-use highways) but not others (e.g., pedestrian use of sidewalks or building elevators. Economists, generally, view user fees as a way to ration scarce resources and to avoid inefficiencies, such as traffic back-ups. In some cases, regulation may work better than user fees to accomplish the wise use of resources. Where pollution is concerned, for example, I believe that prevention is a better social policy than remediation. The costs of adhering to regulation where land use are concerned will be cause the rental value of a location to be less than if no regulations were imposed (all other things being equal). The community receives less rent via taxation but does not incur the cost of having to clean up the air, the water or the soil; and, there is the benefit of alternative competing uses of the environment operating in parallel, as opposed to today, where cities are expending billions of dollars to reclaim brownfields and remove poisons from waterways now that the polluting industries have shut down and/or moved on (to the third world).

Ed Dodson

(Responding to John Watkins)

John Watkins: ... in the case of land, we need to recognize what I previously called the chain of ownership. Somewhere in the chain, the initial aggression occurred and every subsequent transaction has been a continuation of that aggression regardless of the fact that law and custom did not treat it as such.

So, the current "owner" truly believes they own it and it would be wrong to simply confiscate their right without some just compensation. To do less would, in my opinion, be an aggression. But, to extend the original aggression is also morally wrong, in my opinion.

One could probably make a case that many of the true owners, denied their rights by the original aggression, deserve reparations but, again in my opinion, our present citizens would be perfectly happy to accept a change in attitude toward ownership of the commons and forgo any claim to reparations. At least, that would make a transition easier to pull off.

If communities announce a long-term (say, 10-year) program to exempt earned incomes and material assets (e.g., homes, other buildings, equipment, automobiles, etc.) from taxation and gradually increase the annual taxation of land rent, by the end of that 10th year, owners of valuable locations will have brought the land they hold to its highest and best use as determined by market forces or will have sold the deed to someone who will. It is possible that enough land rent will have been taxed away that the selling price for the deed will have fallen, but this is not a certainty. The aggregate demand for locations is likely to increase as investment in capital goods is stimulated by the increased financial reward. As for "reparations" I have already expressed my view that a redistribution of wealth from those in the top 1 percent or so is certainly morally justified, even if not politically achievable.

What would go far toward this objective (and add simplicity) is to replace the current complex Federal income tax with a graduated flat tax. How would this work? First, individual incomes up to the national median would be exempt from taxation. There would be no deductions or exemptions. Say the national median is $50,000. Incomes greater than $50,000 up to $100,000 would be taxed at 5%; incomes greater than $100,000 up to $200,000, 10%; incomes greater than $200,000 up to $500,000, 15%; incomes greater than $500,000 up to $1 million, 20%; and greater than $1 million, 25%. The tax rates and ranges can be debated and negotiated, but the idea is to combine simplicity with progressivity without being overly confiscatory. Periodically, as poverty statistics are reviewed and fewer and fewer people are found wanting of what Mortimer Adler described as "the basic goods of a decent human existence" the rates can be reduced. The other variable is that the national median will continue to increase, exempting higher and higher incomes from taxation.

Ed Dodson

(Responding to Julan Edney)

Julan Edney: In my online theory, I explain that social inequalities, created by this unfair economic system, have become so large, they will eventually threaten democracy itself. Greed is not a rational force (as some economists insist). And those inequalities are not for the common good.

Greed is not new, of course. Nor is monopoly privilege. Henry George wrote that if there was any generalization possible about how people behave it is that we seek to satisfy our desires with the least exertion, and, therefore, are prone to attempt to monopolize natural opportunities. And, yes, these are behaviors that benefit the individual in the short-run but have serious long-run consequences. Which is why those of us committed to justice continue to struggle to make our laws just.

Is our social democracy in the U.S. threatened? Yes. Are there reasons to be hopeful? Yes, I think so. My professional work is in the area of community rebuilding, and here I can tell you that many dedicated people -- activists -- are working hard and achieving good things. Some may have joined marches in the 1960s; today, they are focused on working within the existing institutional framework on behalf of "community." It is possible to make a profit by doing good. Even for-profit institutions such as banks have found this to be the case. Even multinational corporations are beginning to realize they cannot continue to extract resources and exploit the world's pool of poor labor with impunity.

Mitigation is a reality. Hopefully, we have enough time to build consensus around real solutions before we experience a devastating implosion.

Fred Foldvary

(Responding to Ed Dodson)

Ed Dodson: In the U.S. some African-Americans have argued the case for reparations from the larger society for the lingering harm of slavery and racism. Those of us who call for structural change know with certainty that the concentration of wealth and income is due not to individual abilities or contributions but to privilege. We must work to eliminate privilege, of course. Is this enough? Does justice require as well the confiscation and redistribution of some significant portion of the unearned wealth that is enjoyed by he most successful rent-recipients and their heirs?

The problem is that the slave owners were acting within the law, so the voters were also at fault for allowing slavery. It would be too complicated and too contentious to try to assess the wealth taken unjustly. The harm done by the attempt might be greater than the harms committed in the past. In my judgement, once the right policy is achieved, let sleeping dogs lie, along with their buried bones.

If we switch from taxing wages to taxing rent, should wages taxed in the past be restored, and rents obtained in the past be taken away? Much of this rent has been spent in consumption. Again, don't disturb the dogs.

John Watkins

(Responding to Ed Dodson)

Ed Dodson: As I wrote earlier, I do not propose wholesale confiscation of assets from the wealthiest in our midst. The changes in the Federal income tax structure I outlined provide a mechanism for achieving a good degree of reallocation of responsibility for public goods and services that is progressive without being overly confiscatory. At the same time, the societal goal needs to be to move toward the collection of the full rent fund. The more of the rent fund collected, the more earned income can be exempted from the Federal income tax.

The problem of restoration and restitution for past harms related to misappropriation of the commons or misappropriation of individual rights is nearly impossible to solve because it involves examination of, and decisions about, interactions that affected every individual differently. Some are more, some less culpable. Each did some good service and some bad and the two, to be fair, would have to be balanced.

So, the best we can do, unless we want to waste an enormous amount and talent, is to set about making the future more fair.

Ed's transitional ideas are simpler than re-examination but takes too much from some and too little from others--and gives too much to some, too little to others.

Let's exam one aspect of reparations for the consequences of slavery. If you look at every individual who might logically make a claim for reparations, the goal would be to make them whole. Start then with the question about how well off that individual would be had their ancestors not been brought to this country. Would they even have been born? What would their relative economic status be were they still a citizen of the country of origin?

Giving everyone a share of the common wealth would be a good start to evening the playing field.

Fred Foldvary

(Responding to Ed Dodson)

Ed Dodson: In the U.S. some African-Americans have argued the case for reparations from the larger society for the lingering harm of slavery and racism. Those of us who call for structural change know with certainty that the concentration of wealth and income is due not to individual abilities or contributions but to privilege. We must work to eliminate privilege, of course. Is this enough? Does justice require as well the confiscation and redistribution of some significant portion of the unearned wealth that is enjoyed by he most successful rent-recipients and their heirs?

The problem is that the slave owners were acting within the law, so The voters were also at fault for allowing slavery. It would be too complicated and too contentious to try to assess the wealth taken unjustly. The harm done by the attempt might be greater than the harms committed in the past. In my judgment, once the right policy is achieved, let sleeping dogs lie, along with their buried bones.

If we switch from taxing wages to taxing rent, should wages taxed in The past be restored, and rents obtained in the past be taken away? Much of this rent has been spent in consumption. Again, don't disturb the dogs.

Ed Dodson

To accept the consequences of unjust law without the application of remedy may be politically expedient but it is morally unacceptable. To follow your example of slave owners acting within the law, one must ask what law? The unjust law put into place by those who had acquired power over others and wielded that power to their advantage? Certainly not law based on moral behavior. The end of slavery did not bring about an end to widespread poverty of the former slaves and their children and children's children. Millions of people have died of starvation and disease and work under very cruel conditions because of unjust law and application of the police powers of the state to enforce unjust law. The laws of many societies have repeatedly permitted genocide of some minority populations, forcing largescale migrations and loss of legitimately-earned private property.

We also know that there has never been a war fought in which those with the most to lose were required to proportionately cover the financial burdens of the war. Governments repeatedly refuse to tax the wealthy and instead issue war bonds at interest. The wealthy have the means to purchase the bonds, then the government taxes those of far lesser means to cover the debt service. George Bush has taken this to new heights in the U.S.

As I wrote earlier, I do not propose wholesale confiscation of assets from the wealthiest in our midst. The changes in the Federal income tax structure I outlined provide a mechanism for achieving a good degree of reallocation of responsibility for public goods and services that is progressive without being overly confiscatory. At the same time, the societal goal needs to be to move toward the collection of the full rent fund. The more of the rent fund collected, the more earned income can be exempted from the Federal income tax.