Friday, 18 October 2013

"Land rents don't exist"

The strange thing is that it is not just the Homeys and Faux Libs who deny that land rents exist, the Commies do it as well.

From the comments in a leftie blog:

Marx is not so much deploying the Smith/Ricardo LVT as criticizing it: abstract average socially necessary labor time is not so much embodied in commodities as extracted/abstracted from them through the system of market exchanges.

But at the same time, surplus-value is generated from the hiring of commodity-labor at "fair" wages, as determined by reproduction costs, and it is the need to reproduce surplus-value to maintain the valorization of capital stocks that is the key dynamic driver of the whole system.

At the same time, neither natural resources lying in the ground, nor capital goods can accrue any value unless activated by labor processes. (Land rents don't exist except within some system of production that deploys labor and capital).

Splendid state of denial there!

Wages are a very high share of any business' total income, usually about four-fifths, the rest is return on capital used in the business, first-mover profits etc. For sure, you can argue that some people are underpaid, no doubt they are, but other people are overpaid, exploiting their own monopoly power etc. There is no such share with land rents - all land rents go to the owner.

It strikes me as pretty hard to envisage a "system of production" that doesn't "deploy labour and capital". That's what "production" is, it's the deployment of labour and capital, and with a bit of luck, the value of the outputs is more than the cost/value of the inputs.

(Even if it is value-detroying, it is still "production" i.e. British Leyland were "producing" cars right up to the bitter end.)

And as soon as you have a system of production, you have land rents.

Whether that system of production is hunter-gathering or sitting in a swanky city centre office making important sounding phone calls and shoving paper round, it all requires land, so that land has value and that value is rent.


DBC Reed said...

They exist for Marx and Engels in the well known shopping list of reforms in Communist Manifesto Chap2 .Top of list" 1. The abolition of private property in land and application of all rents of land to public purposes" Seems pretty unequivocal.

Mark Wadsworth said...

DBC, that's good to hear, so it's not all Commies who deny it exists, just most of them.

Bayard said...

Mark, doesn't that make Marx a supporter of LVT? (the "application of all rents of land to public purposes" sounds pretty like 100% LVT to me)

Mark Wadsworth said...

B, well yes and no.

There are loads of other things on the manifesto - like "high and progressive income taxes" and "nationalisation of loads of stuff" which most LVT-ers oppose.

If somebody is just a big state kind of person and happens to support LVT as well as other taxes, then that person has missed the point of LVT.

Lola said...

I thought Marx was nationalising land? LVT is not land nationalisation. It just captures the premium from location and leaves the 'profit' to the landowner. And nationalisation implies allocation by bureaucratic rationing- which just does not work, ever.

Pablo said...

MW: "If somebody is just a big state kind of person and happens to support LVT as well as other taxes, then that person has missed the point of LVT."

McEachran's "Freedom - the Only End" is big on this. It ought to be on the web.

Brian said...


McEachran writes a lot on Marx and George. Marx has a famous letter where, after reading Progress and Poverty, he dismissed Henry George as a "huckster of panaceas". He said George completely misunderstood surplus value, and therefore gives rent far too high an importance.

Todd Mei writes very thoroughly on economic history and where George and Marx part ways. The philosophical basis of their thought is radically different, thus their economic reasoning becomes very different in practice. Apparently however, some of Marx last economic writings, like the final edition of Capital start edging rather close to LVT as the most enlightened economic system.

Pablo said...

B: "McEachran writes a lot on Marx and George"

His paper at SCI - "Henry George and Karl Marx" is prophetic.

DBC Reed said...

@L although I am a land taxer ,I cannot see how the state leaves anything for the landowner after taking all the rental value, apart from the dubious distinction
of being the owner (of a monster tax liability.) Full monte Georgite LVT is pretty Marxist, the distinction being, as Mark says, that Marx was n't content with this one plank in his platform but reinforced it with ,for instance ,State creation of credit (hooray!) [Communist manifesto point 5] and things which contradicted each other.Do you really need point2 "heavy progressive or graduated income tax" when you were collecting all the land rent?