“Land was the first privatisation”Tony Benn, speaking at the Labour Land Campaign’s book launch, Who Owns Britain, 2000.
Dave Wetzel, vice-Chair of the Coalition for Economic Justice and former leader of Hounslow Council, calls for land wealth to be used to benefit society.
Humans have lived on this planet for 6 million years. For most of this time, the natural resources of the planet have been held in common. No stone-age hunter paid another rent for the right to hunt in a forest, build a home or collect firewood – because nobody claimed to ‘own’ the planet.
We only discovered agriculture 10,000 years ago. The person who sowed a field wanted the security to reap the harvest but even this did not require private ownership. In early times the rent for land gave security of tenure but the rent was not paid to an individual but to the community for the provision of communal services such as clean water and roads.
Unfortunately, personal greed replaced public beneficence and powerful people in society began to claim ownership of the planet and gained an unearned income from rent whilst others toiled on the landowners’ soil.
This corruption of a natural state of affairs has led to many of the failures in today’s society. Rent, like gravity, is a natural phenomenon. If only one person wants to occupy a piece of land, then no rent arises but as soon as two or more people want to occupy the same space then ‘economic rent’ arises. The rent of land and natural resources exists irrespective of whether it is paid or not.
In The Communist Manifesto (1848), Marx suggested that to create a socialist society the rent of land should be used to pay for public services. It was not until Volume III of Capital (1894; published after Marx’s death) that he developed the theory of differential rent – ideas very akin to Adam Smith, David Ricardo and Henry George. So, our early socialists did not have the benefit of Marx’s thoughts on land.
When society grows, the demand for land grows. A community improving public services, a town growing its population or a country enjoying economic prosperity will all increase land values. New railways dramatically increase land rents. Should this unearned income be given to private individuals who claim ownership of land or should it be shared by all citizens?
If governments collected this natural income, we would not need to tax employment or trade, except where we wish to change behaviour, eg. taxes on alcohol, tobacco, fossil fuels. Imagine a socialist chancellor abolishing Income Tax, National Insurance and VAT. Citizens would have more cash in their pockets and most goods and services would become more affordable.
However, do you imagine any millionaire would hire a Rolls Royce from Hertz for a year and only keep it in their garage? Similarly, any landowner paying an annual rent to the government would, if they had no use for the site, release their land for other uses. As landowners seek tenants for their idle land, new job opportunities will arise. With rent to pay on the land they owned, house builders would not keep their land banks, empty premises would be fully occupied, no need for urban sprawl and farmers would see their land as a requirement for agriculture, not tax-free investments.
So, the effect of the government collecting land wealth on our behalf will be to allow people to own buildings (including homes) but the land on which they stand would be rented from the government. This will create more well-paid jobs, affordable homes to buy and rent, cheaper business premises and easier access for young farmers.
If the government instructed every council to build more council homes for truly affordable rents, the first thing these councils would need to do is purchase the land on which to build the homes. This increased demand for land would immediately increase the price. So, with no effort at all on their part, landowners would be the first big financial beneficiaries of the council house building programme. However, if the government collects the full annual rental value of land, the land would be cheaper to buy and the landowners would be unable to capitalise on the new council house building programme.
The answer to many of our problems, housing, low wages, unemployment, tax avoidance etc. lies under our feet – all we have to do – is Reclaim our Natural Inheritance!
- Dave Wetzel, vice-Chair of the Coalition for Economic Justice and former leader of Hounslow Council.
- This article originally appeared in Labour Briefing (Co-operative) magazine and is reproduced with permission. Subscribe by sending a £20 cheque with your address to ‘Labour Briefing Co-operative Ltd’, 7 Malam Gardens, London, E14 OTR.