.

WE SAW IN Chapter Five how all attempts at land reform in Britain have, in the end, proved abortive. In other countries other methods have been tried. For example, land has been shared out among the peasants, a small lot for each family, who are then left to do their best with their share. This fragmentation of land, however, is usually inefficient and wasteful of resources. Any society advancing beyond the very primitive needs to be able, wherever necessary, to consolidate land into bigger areas to enable large-scale agricultural, industrial and commercial projects to be undertaken. Under pressure for this sort of development, the original plots inevitably get bought up and gradually the land returns to its former monopolised state. In any event, the grant of land to peasants does not take account of the position of the town dweller and others who do not own or work land but who are as truly contributing to land rent as their country brethren. Nor does it take account of the generations yet unborn -- the "population increases" of the future who, when they arrive, will have just as much right to land as those already here. The sacred trust under which land is held of Providence does not put one man before another. All have equal rights to the bounty of Nature.

We should, perhaps, pause here to note the common, but erroneous, tendency to regard "land" as associated exclusively with agriculture. The fact is that the houses, shops, factories, etc. of our towns and cities stand upon land which is materially no different from that on which the farmer grows his corn. Indeed, the vital attribute of urban land, for our present study, is that it is usually so much more valuable than rural land. The centre of a city may be derelict and regarded as poverty-stricken, yet such is its value that it could be paved with gold.

There is, and always has been, only one true and effective remedy. Simple justice demands that economic rent should be taken back by those who create it -- namely, by the people. This is the road back to freedom and social justice, the denial of which has brought us to our present sorry state. The question is -- how to do it?

The taxation of land values envisages a tax on the value of all land, used or unused, but not counting in its valuation any buildings or improvements upon it. There would be no compensation to those affected but the tax would be introduced gradually, increasing until nearly all the economic rent was taken for public purposes The owners would retain their titles to their holdings. There would be periodic revaluations.

The first consequence would be that land held out of use would tend to be brought back into use because vacant or under-used land would be taxed at its true value. The owner would be obtaining little or no income from it and the tax would be payable notwithstanding this. If; therefore, the holding was so great, or so valuable, that he could not afford to retain it for his own private use, he would have no alternative but to sell or let it to users.

The tax collected would go into the National Exchequer, enabling reductions to be made in other taxation especially, one would hope, in the kind which at present bears heavily on labour and industry. Ultimately, it would be hoped, the latter kind of taxation could be abolished. In short, idleness would be penalised and industry rewarded, not the contrary as happens now.

Why a Tax an Land Values Cannot be Passed on

One important fact about a land-value tax is that it has to be borne by the person receiving (or enjoying the benefit of) the land rent. It cannot be passed on to the tenant or the consumer in higher prices. On this, all economists are agreed.

The basic reason is that, although the tax would be at a rate common to all land, the values of sites upon which it would be levied would, naturally, vary. Imagine two business properties in a certain town, one in the suburbs on land of moderate value and another of the same size in a central position on land of higher value. A tax on land values is applied. Could the prices of the goods sold in the high land-value shop be increased to recoup the tax? If they were, then obviously the goods would become overpriced in competition with the shop in the suburbs whose tax is smaller and whose prices would need to be raised only by a smaller margin to pay the tax. Similarly, the owner of the suburban shop would be prevented, by competition from shops on even cheaper land, from putting up his prices, and soon down to the margin where no rent is paid. It is at this point that the economic price of goods is determined, against which all the others must compete.

Thus, the tax cannot be passed on. This is very different from, say, a tax on goods, which applies to all goods of the kind taxed, for every seller is in the same position and so adds the tax to the price.

Sometimes the suggestion is made that the tax would be disguised by the landowner as rent and that, even if it were not passed on in the prices of goods sold, it would be passed onto a tenant. This is not possible either. The rents paid by the users of premises (houses, shops, etc.) already vary between different locations, reflecting the advantages or attractions of one location over another. The land-value tax would vary in a similar way, falling more heavily on the more valuable land. And just as competition from shops on less valuable land prevents shops on more valuable land from raising their prices (as we have seen) so, in a similar fashion, will competition in respect of rents prevent landlords from charging more to their tenants.

So, although landowners would be compelled to pay the tax, it would give them no power to obtain more for the use of their land.

Progressively, the paternalism which governments tend to adopt would diminish, for this paternalism deals with effects, not causes. Again, idleness would be penalised and not, as now, subsidised by the effort of others, and so the road to economic freedom would be open.

Other methods designed to deal with the central land problem have been proposed. One proposal is to nationalise all building land. But what is building land? Is it only the land in the centre of a town, perhaps with a one storey building on it? Where is the line to be drawn? In any event, nationalisation would discriminate between owner and owner; it would involve compensation and generate bureaucracy. The remedy here proposed necessitates neither.

The taxation of land-values, as here described, would re-awaken the rundown centres of towns and cities, discourage urban sprawl and, because vacant and under-used land would be taxed according to its full value, ensure that all land was put to its optimum use. Further, the reform would at last restore to the common people their natural rights in land. And the breach oft rust would be brought to an end. The taxation mechanism which has grown up in developed society facilitates the process with the very great difference that collection is simplified. Think of the volume of form-filling, etc. that would be avoided if, say, income tax and value added tax were abolished and replaced by a tax on the value of land. The first two are measures of enormous complexity and, at times, controversy; the latter is comparatively simple, for it is not possible to hide a piece of land. Also sharing in the restored land rights would be those who do not and may never bold land, for they would no longer have to contribute to the expenses of the Government from which they benefit. Thus would the trust be fulfilled.

Despite all that I have said, there may be those who believe that a better solution is provided by communism. For them, I will now compare communism with the taxation of land values.

CHAPTER EIGHT Land Reform or Communism?

"FROM EACH ACCORDING to his ability, to each according to his needs" was the concept which inspired the communist cause. Not an unworthy concept, yet after sixty years of trial in Soviet Russia, the reality did not match the ideal of brotherhood behind the thought and the regime collapsed. Why should this be?

It seemed to the Russian revolutionaries that the enemies of the workers were the employers. Consequently they called for public ownership of the "means of production". This included not only land but also "capital" as we have defined it.

In fact, the cause of the economic ills of Tsarist Russia was the private monopoly of land, and the breaking of that monopoly was greatly beneficial to the common people; but the regimentation involved in the subsequent state control severely limited the benefits. The main error was in nationalising capital. As we have seen[7], capital competes with itself and cannot attain a monopoly position. The Soviet nationalisation of it was detrimental to standards of material life and, moreover, to the freedom of the Russian people. To nationalise capital is like trying to nationalise productive genius. The aids which labour brings to itself- which is simply another expression to indicate capital -- comes from personal not regimented endeavour. A comparison of life under communism with that of the Western democracies clearly demonstrates this. But let us not forget the other side of the coin. In non-communist countries people die of want and hunger. There is no comparable suffering among peoples living under communism. That is because, under communism, there is no private land monopoly to deny people access to natural resources. It is quite wrong, however, to attribute this effect to the nationalisation of capital which places everything in a straitjacket. It inhibits variety, stifles endeavour, removes all incentives to ascertain and supply the needs and wishes of the people in their material existence and destroys the cheapening process of competition.

There will be some who think that, especially in more primitive communities, the better course would be for the Government of the country concerned to take over all land and administer it publicly. This would mean boards of management and officials renting or leasing land to users. They could properly point to the benefits that this process has brought to Hong Kong, where, currently, the Government sublets land to users and, in the process, collects much economic rent. This has the effect of replacing or mitigating other kinds of taxation. But for the true valuation of land there has to be a market element.

The next question to face is what mode of takeover would be envisaged: confiscation or compensation. If the latter, the amount of money involved would be so large as to put the country in pawn for years to come; indeed the burden would be there after many generations; and for what? It would be the community paying for something which in justice already belonged to it. If confiscation were to be the method adopted, then complications would arise over land recently purchased with the assistance of a mortgage. Would a mortgage debt be extinguished when the land was taken over?

Other questions arise in connection with such methods of land reform and it is seldom easy to attain equality between one landowner and another.

In contrast with such nationalisation measures, the taxation of land values would be a simple process which would use the existing taxation machinery and retain the present land titles and registration arrangements. The tax would be applied gradually, giving ample time for adjustment, starting at a low rate of tax and increasing periodically, but immediately breaking the monopoly by the application of the tax. There would be regular re-assessments. Some would see it as just another tax but, in reality, it would be the giving back to the true beneficiaries the benefit of their inheritance. It should be noted that, at present, the economic rent is indeed collected, but it goes into private pockets. It is like a private tax on labour and capital. The measure proposed would at last correct the broken trust and lead on to justice and a new economic order.

Reference has been made several times to the pressure for land reform in pre-revolution Russia. A leading exponent was Leo Tolstoy (1828-1910). He is, of course, most renowned for his novels War and Peace and Anna Karenina. He was an enthusiastic supporter of land-value taxation as propounded by Henry George. In those days it was called "the single tax" because, at that time, the collection of the economic rent by way of taxation would have been sufficient to pay all the expenses of government. Ethel Wedgwood, in 1909, produced a booklet called Tolstoy on Land and Slavery, a collection of excerpts from Tolstoy's publications. Tolstoy, said Ethel Wedgwood, dealt with land-value taxation only in relation to agricultural land for particular reasons but, as we have seen, the remedy is equally relevant, and even more productive and beneficial, in urban areas.

One of the excerpts, although simple in form, indicates that Tolstoy thoroughly examined the alternatives and demonstrated why they should be rejected.

Here is the excerpt from his Resurrection II IX:

(Nekhludoff makes over his property to the commune, and, first, explains to the peasants his views on landed property).

The land according to my idea can neither be bought nor sold, because, if it could be, he who has got the money could buy it all, and exact anything he liked for the use of the land from those who have none... I have come here, because I no longer wish to possess any land; and now we must consider the best way of dividing it.

"Just give it to the peasants, that's all," said the cross, toothless old man. "I should be glad to give it them ... But to whom? And how? To which of the peasants? Why to your commune and not to the next?"

All were silent. "Now, then, tell me how you would divide the land among the peasants, if you had to do it?" ... "We should divide it up equally, so much for every man," said the oven-builder... "Of course, so much per man," said the good-natured, lame man... "Then are the servants attached to the house also to have a share?"... "Oh no," said the ex-soldier... But the tall, reasonable man would not agree with him. "If it is to be divided, all must share alike," he said… "It can't be done ... If all are to share alike, then those who do not work themselves... will sell their shares to the rich. The rich will again get at the land. Those who live by working the land will multiply, and the land will again be scarce. Then the rich will again get those who need land into their power." "Just so," quickly said the ex-soldier. "Forbid to sell the land; let only him who ploughs it have it," angrily interrupted the oven-builder.

Nekhludoff replied that it was impossible to know who was ploughing for himself and who for another.

The tall, reasonable man proposed... that they should all plough communally, and that those who ploughed should get the produce and those who did not get nothing ... Nekhludoff said that for such an arrangement it would be necessary that all should have ploughs, and that the horses should be all alike, ... and that ploughs and horses, and all the implements would have to be communal property; and that, in order to get that, all the people would have to agree. "Our people could not be made to agree in a lifetime," said the cross old man. "So that the thing is not so simple as it looks, ... and this is a thing that not only we, but many, have been considering. There is an American, Henry George, -- this is what he has thought out, and I agree with him."

'Why, you are the master, and you, give it as you like; what's it to you'? said the cross old man.

You said a bit, Uncle Simon; let him tell us about it," said the reasonable man. … This emboldened Nekhludoff, and he began to explain Henry George's single-tax system:

"The earth is no man's; it is God's," he began. "Just so; that it is!" several voices replied. "The land is common to all. All have the same right to it; but there is good land and bad land, and everyone would like to take the good land. How is one to do so in order to get it justly divided? -- In this way: He that will use the good land must pay those to have got no land the value of the land he uses… And, as it would be difficult to say who should pay to whom, and money is needed for communal use, it should be arranged that he who uses the good land should pay the amount of the value of his land to the commune for its needs. Then everyone would share equally. If yon want to use land, pay for it -- more for the good, less for the bad land. If you do not wish to use land, don't pay anything; and those who use the land will pay the taxes and the communal expenses for you."

"Well, he had a head, this George," said the oven-builder moving his brows.

From the excerpts given in Ethel Wedgwood's booklet, it is clear that the land question and Henry George's solution were vigorously propagated by Tolstoy in the period which preceded the revolution.

As we have commented previously, what a pity that the Russian people did not patiently pursue land reform and introduce effective arrangements to achieve it, rather than turning to bloodshed and terror.[8] CHAPTER NINE

CONCLUSION

RESEARCH HAS TAKEN us through the centuries only sketchily, but sufficient to demonstrate the message here propounded. We have seen how landed privilege has battened on working people and capitalists. We have seen, if only in outline, the misery and poverty it has caused and is causing. We have noted much the same situation in some other countries whose people in the main are as uneducated now as our people were in the past, and then and now we see the conflicts and revolts which stem from it.

Persuasive detail has been provided but there is no more complete conviction than that which stems from quiet contemplation in the light of personally acquired knowledge. There is nothing very complicated about the assertion that the first human right must, of necessity, be the right to life, nor about the second which, of necessity, must be the right of access to the means to sustain that life. Interpose someone or something between the two, and stark injustice appears. The results of the present unjust system are well known. Britain contains ample land to accommodate very comfortably the whole of its population, but the reader may reflect whether, if he wishes to build a house in his own community, land would be available for him to do so. If, in due course, he were to find such a plot, what would it cost? £20,000? £30,000? £40,000? Instances and figures will probably be within his own experience.

This is what comes of yielding to the power of privilege, a power which enables a favoured few of the community to milk the earnings of the rest. Some will say that this overstates the case but where, in the main, does the money come from which pays the £30,000 for a housing plot if not from the working occupier who probably has to mortgage his wages and the future of his family to provide it? The reader may be one of those very people. It is common knowledge that, in the centres of population, land values are counted in millions of pounds an acre. To this immense value, the owner has contributed nothing.

It is common knowledge, too, that land suitable only for its most basic use, i.e. agriculture, is worth between £1,000 and £4,000 an acre according to its proximity to markets and towns. It will also be known that land for building houses on the outskirts of towns in the south east of England can command as much as £250,000 an acre. What accounts for this difference? There is no mystery about that. Estate agents' particulars tell us -proximity to schools, to shops, to transport and modern roads, and similar environmental factors. Certainly, nothing that the landowner does on the land contributes to its value as land.

Indeed in some places they sell the sun -- advertising that the subject of the advertisement enjoys so many hours of sunshine.

Bernard Shaw once said that no one could regard himself as completely educated until he understood the law of rent. Certainly, understanding leads to the perception of the truth from given facts. For example, the European Community is basically a price-maintenance arrangement. One of its best known elements is the Common Agricultural Policy which fixes and guarantees prices for agricultural products. Its purpose was said to ensure a proper standard of living for those working in agriculture. We all know that prices of food have increased enormously as a consequence. The system has been working a fair time now, yet on 5th December 1980 it was announced that the Agricultural Workers Union was negotiating to amalgamate with the larger Transport and General Workers Union. The reason why this step was thought to be necessary was that agricultural workers were amongst the lowest paid of all working people. It was said that they had been unable to make any improvement because their union was small and that the amalganiation was to "give them muscle." Subsequently, in January 1981, as recorded in the Western Mail of 7th January 1981, a "bitter clash" between union leaders and employers resulted in a 10.3 per cent pay rise for 100,000 farm workers in England and Wales. The increase took the wage up to £64 which means that the pre-increase wage was £58. The Western Mail report ends by saying:

The low pay must have already urged an official enquiry into farm workers' pay, seeing that the 10.3 per cent award would make some farm workers' families 19p a week worse off; taking into account tax increases and reduction in State benefit.

The industry does not have the expense of factory premises or sophisticated technical machinery, so where has the income from the high prices gone? Over the same period, as agricultural wages have either stagnated or, through inflation, suffered reduction, the rent and price of land has accelerated at something like the same pace as the price of food. This demonstrates clearly the operation of the law of rent. Exactly the same would have happened if the yield of the land had been increased by higher production methods instead of by the artificial tariff protection and price maintenance arrangements of the European Community. For again, without lifting a finger, idle land monopolists would take from workpeople part of their earnings; and those workpeople are not only agricultural workers on low wages but all who anxiously find the money in their purses buying less and less until some essential foods become a luxury or disappear from the family table altogether.

The idle privileged will say that the tax is unfair and that it is proposed out of a spirit of envy, but at the same time they think it right that wages for work should be taxed in preference. However, it is quite wrong to personalise this issue. Many people who own land accept and commend the principles here outlined, but what are they to do? If any one of them, in obedience to morals or conscience, were to part with his land for little or nothing, the new owner would be able to exploit the position because he would be free to sell according to the market price. But, of course, it would be immoral for the landowner to resist the legislative reform and seek to deny the true beneficiaries their birthright. Insofar as resistance to reform may come, as it has done down the centuries (including some instances in this country), the reforming government must be firm and resolute in the performance of its trusteeship.

In this connection it perhaps should be pointed out that often the farmer is the owner as well as the cultivator of the land, whereas another farmer may be a tenant only. The principle of the law of rent, however, is the same in both cases. With the taxation of land values the owner-farmer would benefit as a farmer because the existing taxation on his earnings or on his equipment would be reduced or abolished. As a landowner, he would be required to pay the land-value tax but since, in the main, his land would be well out in the country, its value, and consequently the tax upon it, would be small compared with that of land in the towns. In common with the rest of the community, he would benefit from the tax on the economic rent of urban areas to which he had contributed by his presence and industry. In short, agriculture should benefit greatly under the new arrangements.

What has been said in relation to the farmer owner-occupier applies equally, of course, to the owner-occupier of urban land.

Now let us look again at the taxation of land values as a method of land reform. Dividing the land into plots and sharing it among the people is a direct and simple process which, at first glance, usually commends itself; but it turns out to be unworkable. The first reason for this is that land varies infinitely in value. Who is to decide who should receive the plot nearest to the market on the one hand and a plot at the margin of production on the other? A system of cash grants would be required to eliminate unfairness in the distribution and this would, inevitably, call for an administering bureaucracy, wide open to skulduggery and graft. How much better simply to collect the economic rent; to have the land valued, to have the valuations published for all to see, with an organisation for appeals, and a tax on the valuation at a rate applicable to all land.

Successive British governments have searched for the way to break the cycle of boom followed by depression through its management of the economy. In land-value taxation lies the ideal, for besides the other great benefits and the justice it achieves, the land-value tax does not increase prices it reduces them. Further, it is easy to collect for it is not possible to hide a piece of land; and it is collectable at once.

The responsibility of our trustee-Government becomes heavier when depressions deepen. Time is then short for it to demonstrate its fitness to be a trustee. If it does not do that, the result could one day be open conflict between the deprived beneficiaries and the unfairly privileged, and freedom may be lost to some absolute paternal regime.

And what of the fate of the deprived people in the Third World? Their fate seems to be the perpetual indignity of the beggar, to forgo and see his children forgo the benefit and refining influence of education, to be denied the joy of music and literature and the fulfilment of a spiritual life. Set as they usually are in countries where Nature gives abundantly, must they be forever excluded from its table and be grateful if they sometimes receive scraps that fall from it? Let us not delude ourselves that their condition is so very different fundamentally from that of our own people. For what would be the condition of our unemployed were it not for the social security payments made to them by a society whose conscience provides welfare state largesse to offset the absence of social justice?

The great difference is that the British people, out of their superior education and democratic processes, have the power to do something about the breach of trust in their own country while, because of national sovereignty, they can do nothing directly about the economic condition of people in other countries. Nevertheless, they can demonstrate the truth in our own case which applies to other countries as well and provide the example and precedent for other nations to adopt if they wish. Let us not minimise the value of that, for our people, not for the first time in their history, would provide a beacon to light the way to true liberty, and it would be there for all to see.

Our own society must remedy its economic ills by seeing to it that its government implements its fundamental natural trust, and the rulers of the developing countries must do the same. Let us then apply ourselves and campaign vigorously for economic justice until the day when mankind shall come into its rightful inheritance.

NOTES AND REFERENCES

[1] "Waste of the manors" was the description given to the areas of unappropriated arable land (but some was dense forest) between the vills (villages).
[2] "Copyhold" was a holding which was recorded in the Books of the Manor.
[3] At that time when the old Feudal System, as established by the early Normans, was breaking up, when ... employment famished by war and service was coming to an end, the opportunities for employment were enormously curtailed by enclosures." (Frank Geary, Land Tenure and Unemployment).
[4] See page 9.
[5] Ibid., page 124.
[6] The Wales Land Board may have been more effective. It claimed to have made a profit.
[7] See under "Distribution of Wealth", page 18.
[8] For an excellent treatise on this subject the reader is referred to Land Reform or Red Revolution by Fred Harrison, published by ESSRA, available from the Henry George Foundation.

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