Pulling together the threads of 'Georgist Economics' and 'Green Economics'
I had a recent online discussion on 'economic rent' and it s role in 'Green economics'. Sparked by an interest in Ernst Friedrich "Fritz" Schumacher, he was a ‘devote’ of Henry George and the same economic thought adopted by Joseph Stiglitz and many modern ‘green economists’.
This has come into the news this week with a dream team of modern economists (Stiglitz, Krugman & Durlauf) debating the launch of ‘Capital in the Twenty-First Century’, by Thomas Piketty, who has captured the zeitgeist with his modern interpretation of the classical ideas of what constitutes capital and the role of inherited wealth suppressing economic freedom and equality and highlighting the role of 'economic rent' which has been so fastidiously 'airbrushed' from modern economic texts and political debate.
The economic thought is the same
as that adopted by a host of our leading thinkers; Sun Yat Sen, Abraham Lincoln, John Locke, John Stuart Mill, Adam Smith, Milton Friedman and a list of luminaries too long
to mention. But they were all powerless in the face of vested interests and a
population unknowing of the workings of our economic system.
The issue of 'Rent Seeking' Stiglitz highlighted is not new knowledge, but suppressed knowledge. He was interviewed in the documentaries below. History's greatest economic thinkers have all said the same thing, but this is ignored or obfuscated, often deliberately, by powerful vested interests, institutions and politicians.
Some commentators have talked about this for millennia but the Physiocrats in France first put this into the prose of modern economics. If you care to read the book idolised by modern free-market economics 'The Wealth of Nations' by Adam Smith the book is riddled with examples and references to 'rent seekers', he branded those who pocketed the nation's rents as "The Public Enemy".
Dramatic Documentary covering these issues:
Treason Part 1: Casino Capitalism:
Adam Smith branded those who pocketed the nation's rents as "The Public Enemy". But today, governments celebrate the privatisation of the income that we all help to create. The result, reports Fred Harrison in Part 1 of The Treason Trilogy, is a house of cards built on debt. He forecasts the next property boom/bust, and accuses politicians of betraying their duty of care to their people
Treason Part 2: The Crucible of Terror:
Capitalism is built on a Royal Act of sacrilege. The historic injustice created a statecraft of greed and the financial model on which modern nations are built. This legitimised the violent streak in capitalism. In Part 2 of The Treason Trilogy, Harrison explains that current policies will not defeat the War on Terror.
Treason Part 3: The Temple of Doom:
The green agenda has been hijacked. To inflate corporate profits, the last of the commons (oceans and heaven) are being privatised in a financial scam that will create the Land Barons of the 21st century. Planet Earth is being converted into a Temple of Doom. It will take a new social contract with nature to prevent the looming ecological disaster.
The problem is that so few
people understand the implications of the private capture of monopoly, 'Economic Rent' and the
harm land & natural resource monopoly does to society and that it locks in
the inefficient use of natural resources and relative poverty into our economic
system.
I have been banging
on about this for some time myself. Unfortunately until people truly grasp
these economic principles they will never understand the problems and thus the
solution. Hence why many fellow conservationists think I am a raving loony.
Until they grasp these ideas I might as well be speaking a different language.
This is something I discover
about 10 years ago and read the works of Henry George. Although it took me
years of learning to pull all the threads together, and the brilliance of some
gifted teachers.
I discovered this through my own
experience in buying land and getting land for nature reserves in my time with
the Wildlife Trusts. As I delved into land economics to understand its
principles I realised just how we have been hoodwinked and how stupid most of
the policies of Nature Conservationist organisation have been; on the micro
scale raising money to buy land and getting agri-environment subsidies to
landowners, but this is counterproductive and creates massive perverse effects
when you consider the consequences of these policies in ‘aggregate’. So on the
‘Macro’ scale this just increases the rent and value of land so less and less
of it falls below the ‘margin of economic productivity’ and is therefore
unavailable for wildlife use. ‘We’, by our own actions, are actively working
against our best interests because we do not understand the ‘law of rent’ and
how it affects land use and the protection of biodiversity. As many
‘conservationists ’especially the big landowning ones get this benefit they
actively campaign for ever more subsidies and will not challenge the interests
of landowners in general. But they create a monopoly of nature conservation and help destroy nature elsewhere' due to the unintended consequences of increasing the economic reasons for farming land. If we stop farming
subsidies and introduce LVT, all of us ‘professional’ conservationists could
just lock up our offices and go home in the knowledge that there will be far
more biodiversity.
These principles also are the
basis of many ‘green economists’ such as Molly Scott-Catto who is the Green
Parties Economic Advisor. Who approach this from the use of natural resources
and the ‘free ride’ owners of natural resource have in profiting from that
ownership and the ‘free ride’ polluters get from their activities. Simply
changing our taxation system to the collection of ‘economic rent’ would be half
the battle; supplement this with ‘pigovian taxes’ on the economic externalities
of natural resource use and this would transform our economy to one that
protects us all, naturally pushing every human to use land and natural
resources more efficiently.
After Reading Henry George –
Progress & Poverty I also added these to my reading list:
The Corruption of Economics by
Mason Gaffney , probably the world’s leading Land Economist (now in his 90’s)
Any book by Fred Harrison – his
latest work, ‘the traumatised society’ is absolutely brilliant. http://www.amazon.co.uk/Traumatised-Society-Outlaw-Cheating-Civilisation/dp/0856832871/ref=sr_1_sc_1?s=books&ie=UTF8&qid=1397640786&sr=1-1-spell&keywords=truamatised+society
Dr Duncan Pickard: ‘The Lie of
the Land’ for a farmers view of the idiocy of our economic & subsidy system
in relations to Economic rent and monopoly. http://www.amazon.co.uk/Lie-Land-Duncan-Pickard/dp/0856832278
After I met Fred Harrison we
became firm friends and made the ‘Killing Fields’ documentary with our mutual
Friend Carlo Nero.
We have then made some documentaries you can watch on
the ‘Geophilos’ YouTube channel. https://www.youtube.com/user/geophilos
to help explain some of these economic concepts, as well as Fred’s own
site : Share the Rents: http://www.sharetherents.org/
This is a lovey article by Jim
Tarbell which helps encapsulate the issues:
Creating a New Economic
Story, By Jim Tarbell
It is time to turn around
centuries of human behaviour. Our economic story must be rewritten before the
final chapter ends it all. We must have a new vision for a restoration economy
of the future, if there is going to be a future for our children, grandchildren
and all the world we know.
Wise thinkers have been working
on this "great turning" for over a century. But it was not until the
1980s that sustainable economics became defined as "development that meets
the needs of the present without compromising the ability of future generations
to meet their own needs and environmental needs of present and future
generations."
But a sustainable economy will
only leave the planet and our culture at the level of degradation caused by
thousands of years of the extraction economy. We need to create a restoration
economy that restores our ecology, human community and economic vitality to
levels of maximum potential.
Many visionaries have wrestled
with this problem over the past 130 years. The ideas of three economists, Henry
George, E. F. Schumacher and Herman Daly, have helped lay the groundwork for a
Restoration Economy.
In the 1870s Henry George
dedicated his first book "to those who, seeing the vice and misery that
spring from the unequal distribution of wealth and privilege, feel the
possibility of a higher social state and would strive for its attainment."
He challenged the assumptions of the classical economists in the late 1800s. He
saw land and natural systems as a birthright for all of humanity. He made
economic justice a focal point of his concerns.
In reorienting economics to
concentrate on the value of land and natural systems, he created a firestorm of
dissent among established economists who worked feverishly to discredit his
views. These mathematically-based professors, working in the finest academies
of the British Empire, created a neo-classical economics that re-emphasized
their self-centered economic man, the virtue of free trade and posited that
natural capital could simply be replaced by manufactured capital.
In the mid-twentieth century E.
F. Schumacher began to develop what has become known as humanistic or Buddhist
economics, which puts human needs ahead of financial gain. He laid out his
vision in his seminal book Small is Beautiful. He challenged the
neo-classical paradigm with thoughts like:
·
“The aim should be
to obtain the maximum of well-being with the minimum of consumption. The less
toil there is, the more time and strength is left for artistic creativity.”
·
“Ever bigger
machines, entailing ever bigger concentrations of economic power and exerting
ever greater violence against the environment, do not represent progress: they
are a denial of wisdom. Wisdom demands a new orientation of science and
technology towards the organic, the gentle, the non- violent, the elegant and
beautiful."
Herman Daly, beginning in the
latter decades of the twentieth century, helped create a new economic vision
called ecological economics. This growing field of academicians challenges the
neo-classical claim that land and natural systems can be replaced by
manufactured capital. They concentrate on the finite scale of our planet and
the inevitable depletion of our fossil fuel energy resources. They emphasize
that quality is far more important than quantity. A restoration economy
recognizes that economic activity exists within a larger sphere of natural
systems, Natural systems are not just a component of the economic system. The
restoration economy will be a partner with community, creativity and that which
brings contentment to maximize a high quality of life. This new economic vision
will nurture and strengthen both natural capital and human capital. It will
utilize social capital to create economic institutions that promote economic
democracy and fairness. It will invest our economic capital in an appropriate
and efficient manner. In this framework nature is valued, community is
strengthened and people are secure, comfortable and happy.
