Economic Rent.

Economic Rent.

[Liberty, November 5, 1892.]

To the Editor of Liberty:(114 ¶ 1)

I have often seen it claimed that under the Anarchistic organization of society economic rent would disappear, or be reduced to an insignificant amount. But I have never yet been satisfied with any explanation of the way in which this is to be brought about.(114 ¶ 2)

Some speak as if the abolition of rent were to be an immediate result of the abolition of interest, apparently taking the ground that rent is a product of the selling price of land and the interest of money. But according to the accepted theory of economists (the only one that I have learned to understand), rent is the independent factor, and the selling price is the product of rent and interest.(114 ¶ 3)

I have also seen it claimed that under liberty there will be no great cities, and therefore no city prices for land. I can understand that liberty will make the masses richer, os that they will be better able to choose the home which pleases them; and that it will make them saner, so that they will better appreciate the attractions of country life. But cities will still offer the greatest opportunities for making money, and many social and æsthetic advantages. I cannot believe, therefore, that great cities will disappear.(114 ¶ 4)

As to the freeing of vacant land, I do not remember to have heard that this would destroy any but speculative rent. There might perhaps be a greater relief at first, while the vacant land was being taken up. But certainly within a short time—within a year, I should say—all land which had any special advantage over ordinary farming land would be occupied, and these special advantages would be in the hands of the occupiers.(114 ¶ 5)

On the other hand, it must be remembered that, if any economic rent is left, every advance in prosperity will naturally tend to increase this rent. And liberty is to cause an advance in prosperity.(114 ¶ 6)

Again, when vacant land is free, cities can be settled more compactly. This will intensify the peculiar advantages of city life, and thereby increase the demand for city and suburban land. The effect of free vacant land would, I imagine, be closely analogous to that of rapid transit, which was expected to decrease rent, but has instead increased it.(114 ¶ 7)

How, then, is economic rent to be got out of the way?(114 ¶ 8)

Stephen T. Byington.

Liberty has never stood with those who profess to show on strictly economic grounds that economic rent must disappear or even decrease as a result of the application of the Anarchistic principle. It sees no chance for that factor in the human constitution which makes competition such a powerful influence—namely, the disposition to buy in the cheapest market—to act directly upon economic rent in a way to reduce it. This disposition to buy cheap, which in a free market is fatal to all other forms of usury, is on the contrary the mainstay of economic rent, whether the market be free or restricted. When, through freedom of banking, it shall become possible to furnish money at cost, no one will pay for money more than cost; and hence interest on money, as well as on all capital consisting of commodities which money will buy and to the production of which there is no natural limit, will necessarily disappear. But the occupant of land who is enabled, by its superiority, to undersell his neighbor and at the same time to reap, through his greater volume of business, more profit than his neighbor, enjoys this economic rent precisely because of his opportunity to exploit the consumer’s disposition to buy cheap. The effect of freedom is not felt here in the same way and with the same directness that it is felt elsewhere.(114 ¶ 9)

There are other grounds, however, some of them indirectly economic, some of them purely sentimental, which justify the belief of the Anarchist that a condition of freedom will gradually modify to a very appreciable extent the advantage enjoyed by the occupant of superior land. Take first one that is indirectly economic. I agree with my correspondent that great cities are not destined to disappear. But I believe also that they will be able to maintain their existence only by offering their advantages at a lower price than they now exact. When the laborer, in consequence of his increased wages and greater welfare resulting from the abolition of interest, shall enjoy a larger freedom of locomotion, shall be tied down less firmly to a particular employment, and shall be able to remove to the country with greater facility and in possession of more capital than he can now command, and when the country, partly because of this mobility of labor and partly because of the advances in science, shall continually offer a nearer approach to the undoubted privileges of city life, the representatives of commercial and other interests in the great cities will be able to hold their patrons about them only by lowering their prices and contenting themselves with smaller gains. In other words, economic rent will lessen. Here the disposition to buy cheap, not any special commodity, but an easy life, does exert an indirect and general influence upon economic rent. And, under this influence and yielding to it, the city may increase in prosperity simultaneously with the decline of economic rent. Nay, the increase in prosperity may accelerate this decline; for under liberty increased prosperity means also well-distributed prosperity, which means in turn a lowering of the barriers between classes and a consequent tendency to equalize the different localities of the city one with another.(114 ¶ 10)

Upon the sentimental grounds for believing in the evanescence of economic rent it is perhaps not worth while to dwell. I have an aversion to definite speculations based on hypothetical transformations in human nature. Yet I cannot doubt that the disappearance of interest will result in an attitude of hostility to usury in any form, which will ultimately cause any person who charges more than cost for any product to be regarded very much as we now regard a pickpocket. In this way, too, economic rent will suffer diminution.(114 ¶ 11)

I think my correspondent fails to understand what is meant by the freeing of vacant land. It does not mean simply the freeing of unoccupied land. It means the freeing of all land not occupied by the owner. In other words, it means land ownership limited by occupancy and use. This would destroy not only speculative but monopolistic rent, leaving no rent except the economic form, whihc will be received, while it lasts, not as a sum paid by occupant to owner, but as an extra and usurious reward for labor performed under special advantages.(114 ¶ 12)

But even if economic rent had to be considered a permanency; if the considerations which I have urged should prove of no avail against it,—it would be useless, tyrannical, and productive of further tyranny to confiscate it. In the first place, if I have a right to a share of the advantages that accrue from the possession of superior land, then that share is mine; it is my property; it is like any other property of mine; no man, no body of men, is entitled to decide how this property shall be used; and any man or body of men attempting so to decide deprives me of my property just as truly as the owner of the superior land deprives me of it if allowed to retain the economic rent. In fact, still assuming that this property is mine, I prefer, if I must be robbed of it, to be robbed by the land-owner, who is likely to spend it in some useful way, rather than by an institution called government, which probably will spend it for fireworks or something else which I equally disapprove. If the property is mine, I claim it, to do as I please with; if it is not mine, it is impertinent, dishonest, and tyrannical for anybody to forcibly take it from the land-occupant on the pretence that it is mine and to spend it in my name. It is precisely this, however, that the Single-Taxers propose, and it is this that makes the Single Tax a State Socialistic measure. There was never anything more absurd than the supposition of some Single-Taxers that this tax can be harmonized with Anarchism.(114 ¶ 13)

But I now and then meet a Single-Taxer who allows that the government, after confiscating his economic rent, has no right to devote it to any so-called public purposes, but should distribute it to the people. Supposing the people to be entitled to the economic rent, this certainly looks on its face like a much saner and more honest proposition than that of the ordinary Single-Taxer. But the question at once arises: Who is to pay the government officials for their services in confiscating the economic rent and handing me my share of it? And how much is to be paid them? And who is to decide these matters? When I reflect that under such a Single-Tax system the occupants of superior land are likely to become the politicians and to tax back from the people to pay their salaries what the people have taxed out of them as economic rent, again I say that, even if a part of the economic rent is rightly mine, I prefer to leave it in the pocket of the land-owner, since it is bound to ultimately get back there. As M. Schneider, the Carnegie of France, said in a recent interview with a Figaro reporter: Even if we were to have a collectivist system of society and my property should be confiscated, I believe that I am shrewd enough to find a way to feather my nest just the same. M. Schneider evidently understands State Socialism better than the State Socialists themselves. The Socialists and the Single-Taxers will have attained their paradise when they are robbed by officials instead of by landlords and capitalists.(114 ¶ 14)

In my view it is idle to discuss what shall be done with the economic rent after it has been confiscated, for I distinctly deny the propriety of confiscating it at all. There are two ways, and only two, of effecting the distribution of wealth. One is the natural operation of economic law; the other is to distribute it arbitrarily by authority in accordance with statute law. One is Anarchism; the other is State Socialism. The latter, in its worst and most probable form, is the exploitation of labor by officialdom, and at its best is a régime of spiritless equality secured at the expense of liberty and progress; the former is a régime of liberty and progress, with as close an approximation to equality as is compatible therewith. And this is all the equality that we ought to have. A greater equality than is compatible with liberty is undesirable. The moment we invade liberty to secure equality we enter upon a road which knows no stopping-place short of the annihilation of all that is best in the human race. If absolute equality is the ideal; if no man must have the slightest advantage over another,—then the man who achieves greater results through superiority of muscle or skill or brain must not be allowed to enjoy them. All that he produces in excess of that which the weakest and stupidest produce must be taken from him and distributed among his fellows. The economic rent, not of land only, but of strength and skill and intellect and superiority of every kind, must be confiscated. And a beautiful world it would be when absolute equality had been thus achieved! Who would live in it? Certainly no freeman.(114 ¶ 15)

Liberty will abolish interest; it will abolish profit; it will abolish monopolistic rent; it will abolish taxation; it will abolish the exploitation of labor; it will abolish all means whereby any laborer can be deprived of any of his product; but it will not abolish the limited inequality between one laborer’s product and another’s. Now, because it has not this power last named, there are people who say: We will have no liberty, for we must have absolute equality. I am not of them. If I can go through life free and rich, I shall not cry because my neighbor, equally free, is richer. Liberty will ultimately make all men rich; it will not make all men equally rich. Authority may (and may not) make all men equally rich in purse; it certainly will make them equally poor in all that makes life best worth living.(114 ¶ 16)