Review and Commentary of the Book
Owning The Earth: The Transforming History of Land Ownership
by Andro Linklater
Edward J. Dodson
[December 2014]
The story of how our planet has come to be claimed by groups of
individuals and how some of those individuals gained control over the
land within claimed territory is detailed in this well-written but
fundamentally flawed narrative. The author, Andro Linklater,
challenges readers to think objectively about the way land is owned
and do so without the passion associated with one's position in
society. By his retelling of history, existing socio-political
arrangements and institutions in every society are exposed to the
light of common sense and moral principle. And yet, upon completion of
this book one is left with no clear strategy for changing the course
of history.
As one who has studied and taught history for nearly forty years,
this book reminds me that the story of every society follows a similar
path, at least until the people of any society endure a devastating
invasion by a more advanced people. Even natural disasters
merely interrupt for a time the learning processes that accompany
population increases and the challenges of extracting resources from
nature. Migration always eventually ends. With settlement comes the
need for rules governing access to the natural environment and its
resources. At the same time, there is need for the protection of one's
person and one's property in goods we produce. A communitarian
approach may exist for some length of time; however, inevitably every
society succumbs to the appearance of hierarchy and the introduction
of entrenched privileges, privileges almost always justified by
communication with the gods (or one all-knowing god). The final result
is a dramatic change in the relations between individuals. As Andro
Linklater puts it:
"The revolutionary idea that transformed the way
they thought about themselves now seems simple: that one person
could own part of the earth exclusively." (p.11)
Thus begins the story of how our ancestors came to embrace and
justify the granting of rights of property in nature to individuals.
This change, the author argues, has contained the seeds of destruction
and progress:
"The idea of individual, exclusive ownership, not
just of what can be carried or occupied, but of the immovable,
near-eternal earth, has proved to be the most destructive and
creative cultural force in written history. It has eliminated
ancient civilizations wherever it has encountered them, and
displaced entire peoples from their homelands, but it has also
spread an undreamed-of-degree of personal freedom and protected it
with democratic institutions where it has taken hold." (pp.5-6)
With the establishment of private property rights in nature, progress
is accelerated, but at the very real risk of eventual societal
destruction. First, societies had to go through several earlier stages
of societal organization and technological innovation. The author
takes us through the periods during which "mutual obligation"
governed the relations in post-communitarian societies between the
lords of the land and those who actually worked the land and how these
relations broke down. Feudalism, characterized by principles of mutual
obligation, required a large labor force to produce even a small
surplus above subsistence for everyone. The dismantling of these
feudal arrangements was triggered by the introduction of many
seemingly small innovations over many centuries. As we know, the
process began on the European continent and slowly spread to Eurasia
and, finally, to Asia.
What Feudalism offered more than anything else was what might be
thought of as the steady-state economy:
"Dismissed today as old-fashioned and exploitative,
the feudal relationship not only persisted throughout most of
European history, but could be found across most of the world in the
form of a contractual understanding between the owner and the work
of the soil." (p.16)
Absent from this book is a recognition that an important catalyst for
dismantling of Feudalism on the European continent was the sending of
armies to liberate the Holy Land from non-Christian
domination. Returning princes needed hard money with which to acquire
the goods they encountered during their years in the eastern
Mediterranean. Rather than conveying a portion of their crop to the
feudal lord, peasants were increasingly required to sell their crops
in the new market towns and pay rent (and taxes) in cash. The
financial risks of crop failure or a decline in commodity prices from
this point on fell on the peasant farmer. When failure inevitably
occurred, land was transferred to others who had sufficient financial
reserves to farm the land themselves, or, offer the land under lease
to tenant farmers.
In an effort to demonstrate the efficacy of the communal ownership of
land, Karl Marx and Frederich Engels examined the history of land
ownership in ancient Ireland. Andro Linklater summarizes what they
learned:
"Through customary law, village councils, or group
pressure, these societies felt able to impose rules for use of the
land on the families or individuals who worked the soil. Some rules,
such as limiting the number of animals that could graze common
pastures, were designed to prevent its despoliation, but the most
important had another purpose. The strips of land
were to be
redistributed every few years so that each family got a fair chance
to enjoy the best and worst land."(p.100)
Over the course of time, all such rules "were undermined to
benefit the more powerful members of society."(p.100) History
reveals how the warriors of ancient societies separated themselves
from the larger group by the adoption of distinctive rituals that
required demonstrations of courage and strength. Warriors assumed
leadership roles by success in combat, and then over time with the
support of the society's shaman priests, by right of inheritance
sanctioned by the gods. Hierarchy had arrived; aristocracy was
established forever more as a societal norm, not to be challenged
without risking the wrath of the gods (and the violent response to any
expression of dissent).
Readers are reminded of the attempt by ancient Jews to prevent the
concentrated control over land and distinctions based on wealth by
turning back the clock every half century. "All debts and sales
of land were to be canceled and the right to work the ground returned
to the original owners."(p.101) This they described as the jubilee.
However, with permanent settlement, land owners resisted the jubilee
as a violation of their property rights and the practice disappeared
from the societal norms known to future generations of the Jewish
people. The longer-term implications for the Jews and for other
societies that embraced private over communal land ownership was "an
uneasy equilibrium that occurred in a variety of forms in different
countries, sometimes lasting for centuries."(p.103) Aristocratic
privilege was reinforced, almost always by a compliant and corrupted
religious orthodoxy.
Dissent based on everyday experience eventually gained momentum after
one technological advance arrived: moveable type. This led to a
dramatic expansion of literacy beyond the confines of scribes,
intellectuals and keepers of religious doctrine. Andro Linklater comes
to this observation on indirectly. He describes the impact of written
documents that stated in specific terms the extent of and limits to
ownership claims. With the written document came the enclosure of
territory into plots or tracts of land. Land was from this point on
treated as just another commodity to be purchased, sold, financed and
mortgaged. Equally important were the tools that allowed for the
accurate surveying of land areas, thereafter described specifically in
leases or deeds of conveyance. Although the author spends most of the
early chapters describing the processes by which these changes were
introduced in England, he gives the ancients appropriate credit for
understanding how human nature acted as a trigger for such
innovations:
"Plato demonstrated that unless kept in check by
law the greedy part of the soul
will 'enslave and rule over
the classes it is not fitted to rule'. On the other side of the
world, the central theme of
Confucius was the belief that
social harmony could be achieved if all people, governors and
governed, subscribed to firm rules of conduct that inhibited selfish
behavior." (p.31)
Over the centuries, philosophers added their insights and reflections
on the human condition, and on the question of whether access to land
ought to be accepted as a natural right or as a civil right determined
by those who held power. Gradually, there evolved what became accepted
as scientific methods of investigation, the means by which natural
philosophers sought to discover fundamental truths and natural
laws. The scientific method was employed as well in the emerging
science of political economy.
By the last half of the seventeen century in Europe, one figure above
all others - William Petty - "came close to genius" in his
study of political economy. Andro Linklater, inadvertently I surmise,
incorrectly describes Petty as "an economist" because of
Petty's detailed analysis of markets and how markets are positively or
negatively affected by externalities such as law, taxation and
monetary creation. As physician-general to Oliver Cromwell's army sent
to subdue the Irish in 1652, Petty "would survey all of Ireland,
acquire huge estates, and make his fortune." (p.57) As a
political economist, he understood better than most the fundamental
relationship between people and nature, writing:
"Labour is the father and active principle of
wealth, as lands are the mother." (p.58)
When I read these words, what immediately comes to mind is the
perspective Henry George brought to the science of political economy
near the end of its scientific reign. George argued that the discovery
of truth requires acceptance that nature is the source of individual
wealth, but is the equal property of all, our common heritage that
enables us to live and produce what we need for our survival. Petty's
statement above anticipates Henry George's labor and capital goods
theory of private property. Petty wisely added that "there
can be no incouragement to Industry, where there is no assurance of
what shall be gotten by it." (p.58) Societies must ensure by
enforceable law that what we produce is protected as our legitimate
private property.
Unfortunately, Petty failed to see the full societal implications of
his own observations. To address the problem of high prices for goods
and services, he urged the introduction of paper currency well above
whatever gold or silver was held by the issuing entity (which became
the Bank of England), and he embraced the idea that credit should be
extended with the value of land accepted as collateral. He failed to
see how credit could fuel a speculation-driven market for land
independent of the acquisition of land for development (i.e., for the
production of goods or as locations from which services are provided).
What Petty did leave for others to ponder was a recognition that the
exchange value of land was a direct result of population increase and
the need for land upon which to live and work. Andro Linklater
actually describes this as Petty's "most important ingredient in
[his] restless reckoning of the value of privately owned land."(p.61)
As Petty wrote in Political Arithmetick:
"
the Rent of Land is advanced by reason of
Multitude of People."(p.61)
Inexplicably, our author inserts the term "profit' in brackets
after the term Rent in the above quoted observation. He reveals he has
not studied closely the fundamental axioms presented by the political
economists where rent is recognized not as profit but as that portion
of production resulting from the advantages - natural and
societally-created - locations enjoy one against another. Profit, on
the other hand, is an accounting term that reveals nothing about the
source of revenue.
The connection Petty made between population density and the societal
rent fund brought him to conclude that the interests of the British
state would be best served by bringing all those who had migrated
elsewhere back to the British Isles.(p.61) That Petty's perspective
was shared by few in a position of authority to initiate such a policy
(or restrict further out-migration of people) is appropriately
captured by our author in this reference to one of North America's
most successful early speculators in land:
"
the seventeen-year-old George Washington
solemnly noted in 1748 that the wealthiest Virginians made their
money 'by taking up & purchasing at very low rates the rich back
Lands which were thought nothing of in those days, but are now the
most valuable Lands we possess."(p.62)
How these once free lands became so valuable was because of the
growth in population combined with the size of the estates controlled
by the heirs to those first received huge land grants from the
sovereign claiming such authority (and enforced by whatever means was
required).
Speculation aside, the major outcome of the move to private ownership
of land, from Andro Linklater's perspective, is the security of
ownership of production and the accompanying innovations in methods of
production that were introduced. Those who lived on the land in
England enjoyed better diets, grew taller and lived longer than their
counterparts on the European continent. England's governing class also
seemed to grasp an important economic principle associated with
commerce:
"And almost uniquely among European nations,
England charged no internal taxes on the movement of agricultural
produce from the country to the town." (p.63)
And yet, during this same period, the most successful economic system
in the world was run not by the English but by the Dutch, whose
innovations included the consolidation of global commerce, creation of
joint stock companies and a stock exchange. The "land revolution"
that occurred in England did not take hold in the Netherlands on in
Dutch overseas possessions, where companies with monopolistic
privileges collected ground rents. Had the Dutch come to terms with
the land question, the story of European territorial and
colonial expansion might have been quite different.
New insights and observations were now beginning to come from a
younger generation of practical philosophers in France, who were to be
known as physiocrates. Their leader was the physician Francois
Quesnay, who took his basic understanding of political economy from
the "Irish-born, Paris-based economist Richard Cantillon."
(p.70) Cantillon echoed the earlier insights of William Perry
regarding nature's unique role:
"Land is the source or material from whence all
wealth is produced. Human labor is the form which produces it."
(p.70)
Andro Linklater summarizes what Quesnay learned from Cantillon and
the campaign of the physiocrates as an effort to "replace the
myriad of charges and fees on the transport of produce with a single
tax on the profits of landowners." (p.72) This interpretation is
not really what Quesnay called for. As I say above, profit is
an accounting term, the result of revenue exceeding expenses incurred.
One who tills the soil, plants and harvests crops and takes them to
market may, if all goes well, enjoy profits. This tells us
nothing about the extent to which profits are derived from rent, wages
or returns to the use of capital goods. The ownership of land is a
static activity. Nothing is produced. No labor is expended. Thus, to
the individual, income derived from rent is unearned. Quesnay would
require that the full rental value of land privately held be passed
through to society.
That is the extent of the story our author devotes to the influence
of Quesnay and the school of physiocrates, other than to tell
us of the debt owed to them by Adam Smith. What, then, did Adam Smith
mean when he wrote in The Wealth of Nations that government
must serve society by ensuring:
"that equal and impartial administration of justice
which renders the rights of the meanest subject respectable to the
greatest, and which, by securing to every man the fruits of his own
industry, gives the greatest and most effectual encouragement to
every sort of industry."(p.73)
Common sense tells us that what we produce is and ought to be ours to
consume or dispose of as we see fit. What about the question of
whether the laws of society must also secure for us the equal
opportunity to employ our labor in the production of wealth? Our
author does not attempt to answer on behalf of Adam Smith or at this
point in the story offer his own perspective. What he does do is go on
to explain how slaves became a major source of labor in the
semi-tropical and tropic regions of the Americas.
In some respects, the circumstances faced by immigrants who more or
less voluntarily accepted the risk of travel across the Atlantic Ocean
to any one of Britain's North American colonies different some legal
slavery only by degree of deprivation. Access to land was frequently
granted under conditions that kept them in poverty and disgruntled "by
the dues they were forced to pay on their land, such as the annual
quit-rent to the proprietors."(p.80) Considering the land they
occupied and worked as their land was instinctive and natural to the
settlers, who received nothing in the way of support from absentee
landlords living on their estates in the colonies or in England. Andro
Linklater points to John Locke as the authority to whom they might
have looked in their struggles against the rentier class of
landowners. Locke added his voice to those who presented the case for
a labor and capital goods theory of property:
"Whatsoever then [every-man] removes out of the
state that nature hath provided, and left it in, he hath mixed his
labour with, and joined to it something that is his own, and thereby
makes it his property."(p.81)
The individual is entitled to secure ownership of what is produced
from the land. But, where the land itself is concerned, such ownership
comes with obligations. This is today generally referred to as Locke's
proviso,/i>, the intent of which our author erroneously includes
land as a thing we make:
"Quite explicitly Locke sets out to show that
democracy grows out of a sense of fairness common to all
individuals. This is 'the law of nature' that exists when people
live in a state of total freedom. Reason reveals to each of them
that 'no one ought to harm another in his Life, Health, Liberty of
Possessions'. As self-conscious individuals, people cannot help
making things that belong to them, but these things, land included,
can only become exclusive property 'where there is enough, and as
good left in common for others'."(p.84)
Justice, Locke tells us, requires that some accommodation is made
when the best land is fully claimed and newcomers must take up land
that is less advantageous - in fertility, in other natural qualities,
or in proximity to the center of population and commercial activity.
The basis for such an accommodation is moral, and for Locke essential
to the establishment of justice through fairness.
Only a few centuries passed before, even in North America, Locke's
proviso required direct societal intervention to mitigate the societal
conflicts caused by entrenched landed privilege. "In the early
twentieth century," writes Andro Linklater, "the economic
historian Charles Beard produced an influential thesis based on
exhaustive, though flawed, research on the financial wealth and real
estate holdings of delegates that helped flesh out [the] charge"
that the United States Constitution was "the product of a narrow
class intent on protecting their own interests."(pp. 192-193)
Despite the uproar against Beard's charge that the leading figures of
the founding generation were not above protection of their own
financial and property interests, the truth is that they did not purge
the American System of the laws and methods by which landed
privilege expanded to threaten the republic they fought so hard to
create.
Andro Linklater seems not to see the connection between the direct
theft of wealth when people are enslaved and the direct theft of
wealth when producers must pay rent to the owners of land. Although he
is familiar with Henry George's basic proposal for the public
collection of rent, I cannot believe he has taken the time to study
the basis for this proposal. What is clear to those of us who embrace
Henry George's analysis is that whether by design or by a failure of
vision, the system of law established by the framers of the
American System fell far short of justice based on equality of
opportunity.
By the end of the nineteenth century the number of landless exceeded
those who held deeded land, almost everywhere. Industrial technologies
had advanced to such an extent that fewer and fewer workers were
required, even in the production of food and the extraction of
minerals. And, in the United States racial prejudice and legalized
exclusion prevented a large majority of the African-American
population from rising above a subsistence level existence. Andro
Linklater does not indicate he understands that these new innovations
did nothing to reduce the power of landed privilege. Rent-seeking,
always present, was extended to industrial agribusiness, urban real
estate, resource extraction, manufacturing and finance. Locally and
regionally, the rent of land rose and fell in response to changing
land uses and abuses, but the aggregate rent of land kept climbing. At
one point, the author writes:
"The era of land as the prime source of wealth and
income was ending, but the way the earth was owned had not only
brought the industrial age into being, it had left an indeliable
mark on the way it would develop."(p.182)
And, of course, this mark includes the ongoing destruction of plant
diversity and animal habitat, on dry land as well as in our streams,
rivers, lakes and the oceans.
Wherever population increased, the rent of land climbed and the price
of land skyrocketed. Cities are centers of population and commerce
where ground rents are measured by the square foot. Suburban
residential lots are priced most often by the quarter acre. Rural land
is sold in multiples of acres or by the section. Then, there is the
ground rent associated with land rich in natural resources (e.g.,
forests, fish, coal, oil, iron ore, gold, silver, diamonds, and all
useful minerals). Yet, when rents charged by land owners climb too
high, when the price of land can no longer be absorbed by businesses
or by households seeking a place to live, a local or regional or even
national economy can implode from the stress. This happens even when
resources are extracted by owners of land who have no obligation to
pay rents to an absentee landlord. The reason is that the revenue
required to pay for societal infrastructure and other public goods and
services, when not paid for by the public collection of rent, must
come from the taxation of earned income, capital goods and commerce.
Absent the will to raise this revenue, services must be cut,
government bonds issued, or additional money issued.
Andro Linklater tells us that the "first coordinated crash came
in 1873"(p.276), although he repeats the conventional wisdom that
the downturn was triggered by financial markets and currency
manipulations. And yet, this is when he finally introduces the reader
to Henry George:
"Those with land grew wealthier from its rising
price, the poorest no longer found it possible to buy what had once
been available to everyone. Wealth became concentrated in fewer
hands, and the inequality inherent in private property rights made
itself apparent. No one perceived this more clearly than the most
influential critic of rural capitalism, the journalist and
self-taught economist Henry George."(p.277)
What Henry George actually called attention to was not rural
capitalism but the system of landlordism pervasive everywhere.
"To eliminate poverty and revive the egalitarian nature of
American society, writes Andro Linklater, "George argued, it was
necessary to redistribute land more fairly. The method was taxation."(p.278)
More accurately, Henry George called for the public collection of the
full potential rental value of land in all its forms. To George this
was not really taxation; rent belonged to the whole community and was,
therefore, the legitimate fund to be utilized to pay for public goods
and services. As Andro Linklater adds:
"George estimated that the money raised would be
enough to abolish all other taxes."(p.278)
Further research would have resulted in a somewhat different
assessment of Henry George's contribution to the problems caused by
land rent monopoly, land speculation and the confiscation by taxation
of earned income flows and the value of capital goods. The reason that
"[n]owhere has society been transformed in the way he [George]
predicted" has nothing to do with a difficulty "to arrive at
a valuation system that can clearly separate earned from unearned
capital appreciation." In every instance, landed interests have
done all they could to undermine efforts to capture a significant
portion of the rent fund for public purposes. The technical challenges
were and are nonexistent. The value of any capital good, including a
building, is its replacement cost, less the amount of depreciation
that has occurred. The difference between this value and the total
market value of the improved property is the location value. Private
owners of land having a highest use for commercial or industrial
development have always been able to find others willing to bid
against one another for control of land under a long-term lease.
Andro Linklater asks the reader to accept his conclusion that
something fundamental had occurred, something that lessened the
dominating position of those who controlled nature:
"Landed values were gradually being displaced as
the most powerful force shaping private property economies. The new
engine was neither egalitarian nor subject to the sort of
competitive pressure that determined price and profit in the
marketplace described by Adam Smith."(pp. 278-279)
What changed the rules of the game, he suggests, was the emergence of
business entities "invested with such economic powers that none
of them can be easily pushed to the wall."(p.279) And, this
required, "a different sort of finance" system. A new form
of cartel had arrived, its market power no longer based on the closed
system of mercantilism. The new cartels were directed by "such
industrial titans as Cornelius Vanderbilt, Andrew Carnegie, and John
D. Rockefeller."(p.281) The lesson seemed to be that even during
a recession, the few survivors could experience "spectacular
results" as they attracted the bulk of available financial
capital. Andro Linklater does not stop to list all of the huge
financial and industrial cartels that were supplanted by new entries
offering superior products and innovative technology solutions.
Gaining control over large tracts of agricultural land was, if
anything, becoming more important for the survival of the family
farmer. With every increase in the world's population, farmers brought
more land into cultivation and intensified their efforts to increase
yields. One result has been the introduction of production methods
akin to "the factory system."(p.282) Growth in output for
many decades overrode any concerns for collateral damage to the
environment or even to the nutritional value of the food produced.
Even before the end of the nineteenth century the production of food
became big business. Mechanization, refrigerated shipping, expanded
rail transport and international financing all contributed to a shift
in market share from the small, family farmer to large-scale
agribusiness. In the United States and other food exporting countries,
farmland prices skyrocketed, as did the mortgage debt incurred by
farmers faced with the choice of expansion or selling out.
Publicly-funded irrigation projects brought heavily-subsidized water
to arid land, delivering huge unearned increases in rent to the owners
of land.
As the global output of agricultural commodities increased in the
1890s, prices fell and (not for the last time) one country after
another increased tariffs on imports from foreign producers. Britain
resisted the temptation to move away from its long-standing defense of
free trade, and its agricultural sector suffered. At the same time,
London had grown into "the center of international finance."(p.285)
By this time, the Germans felt sufficiently confident in their ability
to compete with the British that they began to dismantle the
protective tariffs established earlier by Bismarck. Germany was moving
along the path advocated by Friederich List, of "using the
government's financial power to develop a managed industrial economy."(p.298)
Ironically, this shift in economic policy later opened the door to
fascism in Germany, which was supported by the Junkers who had become
politically marginalized.
The details of what occurred country-by-country during the early
twentieth century are there to read and contemplate, but I cannot
devote space here to summarize the details. Our lives today are most
directly affected by the decisions and events that followed the defeat
of Germany, Japan and their allies in 1945.
At this point, we are introduced to an obscure economist named Wolf
Ladejinsky, who studied at Columbia University after escaping from the
Ukraine in 1922. In 1945 he was brought to Japan to assist in the
creation of a plan for the "redistribution of feudal land in
Japan."(p.312) Elimination of absentee ownership of land in Japan
was thought to be a key means of generating support for liberal
democracy. "By 1950, 90 percent of Japan's farmland was owned by
the people who cultivated it."(p.312) There were, however,
unanticipated consequences because of the failure of this plan to
include the socialization of land rent. Andro Linklater explains what
occurred but does not see this cause and effect relationship:
"[T]he change from tenancy to ownership brought an
accompanying need to maximize profits rather than rents, leading to
an exodus of rural inhabitants ... who left the countryside to find
work in the cities."(p.313)
What this does not explain is that farmers now enjoyed imputed
rent. They no longer handed over either a portion of their crop or
the cash income from selling the crop to an absentee landlord. Nor
were they subjected to an annual tax on the rental value of the land
they worked. Behind this policy was the government's commitment to
become self-sufficient in the capacity to feed the Japanese people.
The same misdirected tax policies and public subsidies would
eventually bring down a Japanese economy no longer able to absorb
skyrocketing urban land prices. But, in the late 1940s and early 1950s
none of this was anticipated. Land prices were not yet imposing heavy
dead weight losses on Japanese producers:
"Finally, although this was not Ladejinsky's
intention, an urban land market was created. Prominent in the
balance sheets of postwar conglomerates and those of construction
companies, banks, and other financial institutions, was a portfolio
of office blocks and building land whose rising value helped boost
their borrowing power."(p.313)
Andro Linklater also credits Wolf Ladejinky with changes in land
policy introduced in Taiwan and South Korea. No mention is made of the
plan developed by Sun Yat-sen to bring an end to absentee landlordism
by adopting Henry George's approach of imposing an annual charge equal
to the potential annual rental value of land held. Yet, one of the
significant differences between the Japanese program and that adopted
in Taiwan was the payment of ground rents to the government, a source
of revenue that helped to fund Taiwan's infrastructure.
Although these programs of land redistribution addressed the problems
associated with feudal absentee landlordism, they did nothing to
create land markets that responded to price signals in the way price
influences the other two factors of production - labor and capital
goods. With population increases came the pressure for conversion of
agricultural land to a new highest, best use, such as commercial and
residential development. Absent a sufficiently high annual tax on land
rent, owners could continue to grow rice or fruit trees on plots of
land that should have grown high rise buildings. And, without public
collection of the increasing rent of land, other sources of revenue
had to be found that eventually made the Japanese economy less and
less competitive in global markets.
The reason why land reform programs almost always fail, and fail most
miserably under systems of central planning and state-socialism is
captured in this quote provided from Ernesto Che Guevara:
"The peasants fought because they wanted land for
themselves and their children, to manage and sell it and to enrich
themselves through their labor."(pp.320-321)
And, once peasants gained ownership of the land they worked, they,
too, embraced the idea that land could be sold at a profit, even
though the increased value of land resulted from aggregate, societal
forces beyond their influence as a land owner. Somehow, those who
purchased land at higher prices had to find ways to reduce other costs
if they were to earn a profit. More often than not, the decision
involved a shift to automation and a reduction in the number of people
employed. State-socialism may have eliminated the rentier elite in
Cuba, but the elimination of private property in capital goods doomed
the Cuban people to decades of subsistence lifestyles that even then
depended on heavy financial support from the Soviet Union.
The Cuban hero not mentioned by Andro Linklater is Jose Marti, whose
plan for solving the land question for Cubans was the same as that
embraced by Leo Tolstoy for Russia, Sun Yat-sen for China, and Winston
Churchill for Britain: the societal collection of the potential rental
value of land as proposed by Henry George.
Andro Linklater fittingly closes his story by focusing on the
destructive influence of those mainstream economists who advanced
policy recommendations based on the theory of development
economics. The leading proponent of these ideas was Walt W.
Rostrow, and at a time when U.S. foreign policy was dictated by
opposition to communism, the cause of landless peasants living under
oppressive regimes was pragmatically ignored. The fact that a
successful communist take-over would result in financial losses to
U.S. corporate interests in those countries also put U.S. military
forces in the field on the side of very oppressive but anti-communist
regimes. The longer-term consequences of U.S. (and Western foreign
policy, generally) are succinctly captured by Linklater:
"[T]he West's Cold War legacy had left no
democratic institutions and no entitlements, only a Hobbesian
capitalism whose inevitable corruption rendered it morally bankrupt.
Nor could the Islamic movements that took up the call for justice
and freedom offer any secular guarantees of human or property
rights."(p.345)
This is true not only of the societies in the Middle East but
elsewhere around the globe where monopolistic corporate interests have
prevailed.
In the West, and in particular, in the United States, the story of
the post-Second World War decades has been one of reliance on home
ownership to drive ever-expanding consumption. Andro Linklater quotes
Bill Clinton on the fundamental link between home ownership and the
stability of the American System:
"When we boost the number of homeowners in our
country, we strengthen our economy, create jobs, build up the middle
class, and build better citizens."(p.350)
However, there is a darker side to this expanded consumption. Within
this darker side are consequences not referred to by Linklater, the
most important of which is the harm caused to the natural environment
and to the health of people exposed to high levels of pollutants on a
daily basis. There is, of course, also the mountain of debt so many
individuals take on:
"Purchased with a mortgage, and equipped with
labor-saving machinery paid for through bank loans and credit
agencies, the new version came with a scale of debt that required
most of a forty-year working life to pay off. Until it was,
ownership was shared with the mortgage lender and credit issuer."(p.350)
As Andro Linklater describes the increasing economic power this gave
to the finance industry and to Wall Street, he is silent on the
increased power this gave to landed interests.
The 1920s was a period of intense land speculation with devastating
consequences. The New Deal provided strategies to soften the hardship
experienced by those most vulnerable to the loss of employment and
income, but nothing was done to tame the nation's credit-fueled,
speculation-driven land markets. Eventually, the land market cycle
returned, experiencing stresses followed by downturns, again and
again. The response to the 2008 crash was, "according to Ben
Bernanke,
for government to generate its own credit -
quantitative easing
that could be channeled through the banks
and finance houses restoring their readiness to lend once more,
especially to the industrial home owner."(pp.351-352) This was a
strategy with short-run merit at a cost of long-run stability.
For those households with stable employment, income and a high credit
score, many were afforded the opportunity to refinance and thereby
significantly lower their monthly mortgage payments. Very low rates of
interest also made it possible to restart property markets and keep
property (i.e., land) prices from falling any further. Yet, market
analysts had to realize that these measures would have a limited
stimulus effect without a significant recovery of job-creation at
wages high enough for people to enter a residential property market
artificially stimulated by low mortgage interest rates.
Moreover, recession put pressure on local governments and school
districts to increase the tax rates on real estate. The effect on
millions of retirees was to threaten their ability to continue to stay
in their homes. This problem is only getting worse because of the
dramatic decline in interest income on government securities and
rising costs of food, utilities, medical care, automobile ownership
and insurance.
Now, near the end of the book, Andro Linklater offers his ideas on "undoing
the damage." He raises the very legitimate challenge to the "belief
that industrial development [leads] to democracy,"(p.368) noting
that in the cases of Taiwan, South Korea and Costa Rica, the "redistribution
of land as private property" was the catalyst. How the case of
Hong Kong escaped his attention is hard to understand. Hong Kong under
British rule relied and continues to rely on ground rent charges to
fund public goods and services. He correctly focuses attention on the
damage done to Democracy by the combined effects of financial
deregulation, the lowering of marginal tax rates on high incomes and
on gains from the sale of financial assets (gains which are not, in
fact, capital gains, but for the most part gains from
speculation). The same process of dismantling the basic programs
associated with social democracy has occurred in Britain and other
countries. And, with the dramatic increase in the personal incomes and
wealth held by the world's privileged elite has come a dramatic
increase in foreign absentee ownership of land. For most people in
positions of political authority, Locke's proviso no longer carries
any moral weight in creating the laws of the land. Our author is
certainly correct about one thing:
"As domestic demand for land and its scarcity
increase in the years ahead, foreign ownership will come under
increasing pressure and ever closer scrutiny. From primarily selfish
motives, most corporate investors will sooner or later realize that
property based on state-enforced law looks less secure then the kind
based on natural right. The basic Lockeian premise is that such a
right arises out of an innate sense of justice. On that basis a
corporate owner's claim to property in land must ultimately depend
on finding a way to make good the loss to those deprived of its use."(p.397)
This is Andro Linklater's hope for the future, an expectation that
eventually the evils of the current system will bring about its
downfall. The establishment and promotion of private property in land
creates as many problems as it solves. In the next edition of this
book, the author is advised to revisit the analysis and insights of
Henry George.
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