EXAMPLE 1. We imagine that two equally diligent and skilled settlers - Mr. A and Mr. B - arrive at uncultivated land. They find a parcel of land ready for cultivation and draw lots, each for his half. Mr. A is the lucky one - his land provides him with a yield of 500 h kilos grain. Mr. B is less lucky - his land leaves him with just 300 h kilos grain. As their contribution of work and production capital (seed corn and machinery) were the same, Mr. A's extra profit of 200 h kilos grain is something nature gave him due to better soil. We say that the 200 h kilos is a nature given land rent, while the 300 h kilos (i.e. the rest profit of Mr. A and the total profit of Mr. B) are called the producers' profit (created by the labour of the producers themselves).

In a modern society the problem is far from as clear and simple as in the small society of Mr. A and Mr. B, but the basic economic mechanisms are the same.

EXAMPLE 2. The second example deals with the difference of running a news stand at the center of BigCity or a news stand by the village pond in SmallTown. Obviously, the owner of the news stand at the center of BigCity has better prospects of selling newspapers and ice than his colleague by the village pond - not necessarily because he is more diligent nor skilled, but because his news stand has a better location. In this case the extra profit is a socially created land rent.

The value of production consists in the producer's profit and in the naturally or socially created extra profit - the land rent. Nearly all land rent in a modern society is socially created in the sense that it is caused by the development of society. It is not particularly an agricultural phenonomenon.

Land rent is the labour free extra profit besides the producer's profit. i.e. it is an extra prize of production, totally independent on the efforts of the producer. The more developed, society is, the larger the "extra prize". In big urban societies the extra prize has long since turned out to be the big first prize!

Such harmful development has worsened further as the land-value has been wrongfully transferred to private individuals. Since the beginning of time this has established the social unbalance perpetually tormenting mankind.

When you add growing public and private administration and the increase in regencies of unions and finance companies, you will end up with the image of an economic madhouse, surviving only - because science increasingly invents new products and increases in productivity, because industry due to severe competition is compelled not to worry about neither employees, nor animals nor environment, and because we ruthlessly have exploited man and resources of the so-called developing countries!

 

The justice-liberal solution

The damaging capitalisation of all progress can only be eliminated by introducing what we call a "full land-value tax".

A land-value tax is simply an annual excise tax payable to the community for the right to use a piece of land. Full land-value tax means that the tax for the land exactly matches the land rent. Thus, the naturally and socially created advantages will benefit all citizens. As illustrated by the above examples, land value is not created by the individual. Therefore, the individual has no moral right to retain the value. On the other hand, we all have the moral right to retain the total value of our own efforts (the producer's profit).

The land-value tax provide the society with a fair income. However, it is equally important that the land-value tax is redistributed fairly. Therefore it shall not be used to cultivate special interests but only for ethically based community purposes. The remainder shall be distributed fairly among all citizens as citizens' benefits.

The superiority of justice-liberalism will not be perfect, unless we stress that full land-value tax will be the precondition for the functioning of the market.

While the full land-value tax as a "tool" will manage the economic relations between nature and man, the law of the market will handle the economic relations from man to man in various buying and selling situations of products and services - hand and spirit. The "tool" of the market, is free pricing through supply and demand.

This price mechanism works fine on the small market. When politicians find it so hard to make it work at society level, it is because they do not start by separating the value of land from other values, but mixes everything into a hotchpotch. The price on land cannot be subject to supply and demand in the same way as strawberries or products or services - because you cannot produce more land.

Therefore: First, ensure that all people have equal right to the rent of land - then create a free market.

"Free" competition will be relieved by justice-demarcated competition, leaving room for everybody - everybody with "a will", and, however, peacefully and quietly, without pompous words or seducing battle songs leaving room, too, for those with less will or ability!

Many a crisis imputed to defects of market economy, are actually nothing but the direct result of land speculation, especially in urban areas, where the price on land is gigantic. When enterprises no longer can manage the exorbitant rent, they have to close with subsequent unemployment. Especially young and unestablished people are thus excluded.

The enormous amounts of resources now abused by an unfair system, are not only a strain on social economy but constitute a strain on nature, too.

In the justice-liberal society, you may maintain a high standard of living with far less contributions than today - not only of work, but also of the polluting and energy and resource consuming technology.

An economy without speculation will simply make a stop to the burst of consumption, lamentable only to the commercial industry and the lobbyists! The capital of speculation is insatiable. Speculators - not consumers - are the ones incessantly pushing consumption.

Environment will recover, and we shall have a stressless production process leaving more time for the only consumption with which we may unlimited gorge ourselves - without damage to the weak people of our own society, the poor people in the developing countries and nature in its widest sense - i.e. creativity!

When justice-liberalism has become commonly accepted, we shall have the best conditions for preventing the globally economic, social, ecologic, and military threats. As we technically live in the "atom age", it is dangerous that we politically live in the stone age.

 

QUOTES

William Blackstone: "The land, and everything in the ground is the property of all Mankind, provided by God."

Adam Smith: "Land-value is an income received by the proprietor without any effort from his part. Land-value may be the income best suited for special tax."

Thomas Jefferson: "Land has been given man, for them to work and live on."

Richard Cobden: "You, who shall liberate land, will do more to your country than we, who liberated trade."

John Stuart Mill: "The land possessors are getting richer, while they sleep, without work, without risk without savings. Thus, the rise of land value, resulting from the work of a whole society, shall belong to society and not to the deed proprietor."

Henry George: "The foundation for our social "order of justice" is a denial of justice. By allowing one man to own the land, on which other people must live, we have made them his serfs to a degree rising with material progress. That is what has made the blessings of material progress a curse."

Leo Tolstoy: "A solution to the issue of land will mean the solution of the social issue."

Sun Yat-Sen: "Land-value tax as the only means of paying state expenses, is a just, sensible and fair way of distributing taxes, on which we shall base our new system."

Winston Churchill: "The monopoly of land is not the only monopoly, however, it is the largest. It is an everlasting monopoly and the mother of all other monopolies."