It was a pleasant surprise to find the first title in our Ethical Economics list being praised in a newspaper article in Malaysia over thirty years after its publication. The article in the Malaysian Daily Express was reporting on a presentation in Kota Kinabalu by an estate agent on investing in Australian property. The speaker told his audience “I wish I had known about the book entitled, The Power in the Land by Fred Harrison 10 years ago”. He went on to relate that in the book Harrison had explained the workings of a remarkably regular 18-year property cycle. Knowing the timing of the cycle could make all the difference between successful or disastrous property investment.
Based on his understanding of the property cycle, Fred Harrison accurately predicted In The Power in the Land, published in 1983, the timing of the 1990s crash from which Japan has still not fully recovered.
Armed with this knowledge, Harrison warned the incoming Labour government under Tony Blair in 1997 of the danger of a property crash in 2007/08. No notice was taken of this and Gordon Brown boasted at every budget, even in April 2007, that “we will never return to the old boom and bust”.
In Boom Bust: House Prices, Banking and the Depression of 2010, published in April 2005, Harrison again warned of a looming crash unless a tax reform were introduced. No action was taken and the inevitable followed and we are still suffering the consequences.
A third book in our list, The Secret Life of Real Estate and Banking, looks at the link between banking crises and property cycles in America over the last 200 years.
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The Church Times in London have made a selection of the 100 Best Christian Books. The editor writes: ‘Human progress involves assimilating the wisdom of past generations, and building on it.’
One of Shepheard-Walwyn’s titles, Christianity and Social Order, has been ranked 35th. This classic, published as a Penguin Special in 1942 and republished by Shepheard-Walwyn in 1978 with a Foreword by Edward Heath, Prime Minister of the United Kingdom 1970-1974, gives lucid and forceful expression to the views of the Archbishop of Canterbury, known as the ‘People’s Archbishop’ for the radical but constructive way he challenged the established orders. Discussing how to achieve a proper balance between the profit motive and service to the community, and between the power of the state and of the individual, he wrote: ‘The art of government in fact is the art of so ordering life that self-interest prompts what justice demands’.
‘It brings home to everyone of us the continuing importance of being able to rely on a body of principle by which our plans and our actions can be both motivated and judged. ‘
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On 25th September 2014 the Financial Times carried a leader, entitled ‘A British property tax that is fit for purpose’, commenting on the proposal for a ‘mansion tax’ proposed at the party conferences of both the Liberal and Labour Parties. It suggests ‘a more comprehensive solution would be to replace all these taxes with a levy on the value of land, remitted to local authorities. This longstanding idea is the preferred reform of the Mirrlees Review, a root-and-branch analysis of the UK tax system.’ To see more, click here.
The same issue carried a full page article by Robin Harding ‘Land of opportunity’, describing recent ambivalent evidence from America, and quoting from Winston Churchill’s speech during the 1909 election campaign after the House of Lords had thrown out Lloyd George’s People’s Budget which was an early attempt to introduce such a tax in Britain:
“Roads are made, streets are made, services are improved, electric light turns night into day … and all the while the landlord sits still … He renders no service to the community, he contributes nothing to the general welfare, he contributes nothing to the process from which his own enrichment is derived.”
This tax reform is more than a tax reform. As Henry George explained in Progress and Poverty it is a means of tackling the mal-distribution of wealth and ending the property fueled booms and busts.
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On 4th August The Daily Telegraph carried an article by Andrew Sentance, a senior economic adviser to PwC and a former member of the Bank of England Monetary Policy Committee, arguing for a reform because ‘businesses and individuals are struggling to deal with an increasingly anachronistic and disjointed tax system’. The article concludes with a statement that ‘PwC is interested in the views of the public and business on the future of the tax system’.
In 1993 Shepheard-Walwyn published Public Revenue without Taxation which was written specifically to explore how a country could transition from the present outdated, unfair and inefficient tax system to one where energy and enterprise were rewarded.
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Over the weekend 28th-29th June a conference on ‘Rethinking Economics’ is being held at University College London. For programme and speakers see rethinkingeconomicslondon.org
Rethinking Economics is an international network of students campaigning for pluralism within economics, particularly the economics curriculum, which is, at present, heavily biased towards the methods of the neoclassical school. Rethinking Economics was launched with the 2013 conference, and brought together a number of smaller groups advocating changes to economics. Together, those groups, along with many others, produced the ISIPE open letter, calling for an overhaul of the way economics is taught.
Writing in the Real World Economics Association’s blog, Edward Fulbrook comments: ‘It is not only the world economy that is in crisis. The teaching of economics is in crisis too, and this crisis has consequences far beyond the university walls. What is taught shapes the minds of the next generation of policymakers, and therefore shapes the societies we live in.’
In 1994 Shepheard-Walwyn published The Corruption of Economics in which Professor Mason Gaffney charged his colleagues with using a theoretical apparatus that is fatally flawed. He accused the founders of neoclassical economics of acting in bad faith, bending the science of economics to protect vested interests. In this they succeeded, but in debasing their discipline, economists deprived themselves of the ability to diagnose problems, forecast trends and prescribe solutions.
The fact that ‘nobody saw it [2008 crash] coming’ suggests the accuracy of that charge. As long ago as 1983 Shepheard-Walwyn published The Power in the Land in which Fred Harrison, on the basis of a different economic model, warned of the 1990 crash and recession. Again in 2005 in Boom Bust: House Prices, Banking and the Depression of 2010, he warned of the 2008 crash which led to the ‘Great Recession’. The Depression was avoided by bank bailouts and quantitative easing, shifting the burden onto the taxpayer.
To avoid a repetition of these economic disasters, the students are to be congratulated for their initiative. We hope they will find food for thought in our Ethical Economics list.
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In 2010 international environment lawyer and activist Polly Higgins proposed to the United Nations Law Commission that Ecocide be made the fifth Crime Against Peace as a way of halting the degradation of the environment. In Eradicating Ecocide, she argues that our planet is fast being destroyed by the activities of corporations and governments, facilitated by ‘compromise’ laws that offer insufficient deterrence.
Under her proposal, a law of Ecocide would create a duty of care, a duty owed collectively by humanity to the Earth. She distinguishes between Trusteeship Law which is about putting the welfare of the beneficiary first, as distinct from Property Law which views the Earth as a tradable commodity. This requires a change in our values.
In her second book, Earth is our Business, she takes up the issue of a change in our values. The purpose of the Law of Ecocide is not to imprison those who offend against it, but to redirect economic activity from current practices towards a sustainable economy. To read more, click here.
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This was the headline of a report in the Guardian of a conference hosted by the Treasury in London ‘in answer to critics who argue that economists failed to spot the 2008 crash because they ignored the impact of financial markets and relied on outdated theories’.
Welcome as this is, the suggestion is that it is financial markets that undermine stability, but this overlooks an underlying cause of instability in financial market. This is the property market, more precisely the market in land. This was first noted in 1983 by Fred Harrison in The Power in the Land which revealed the cyclical nature of land markets in Australia, Japan, the United Kingdom and the United States, the pattern being so similar that it suggested the timing of the next crash was predictable. Having witnessed the repetition of the boom-bust pattern in 1989-92, Harrison felt emboldened in 1997 to predict the next peak in 2007 with the crash following in 2008. This prediction was reiterated in 2005 in Boom Bust: House Prices, Banking and the Depression of 2010. While a depression may have been avoided, this was at the cost of a massive taxpayer bailout and quantitative easing.
The Financial Times also commented on the need for a new economics in an editorial on 13th November. In a subsequent letter published in the FT, Brian Hodgkinson, the author of A New Model of the Economy pointed out that the failure to recognise land as a separate factor of production is a ‘key omission from current models of the economy’. As he spells out in his book, the ‘flat earth’ models economists employ are totally unrealistic because they ignore the huge influence of spatial location, which gives rise to economic or Ricardian, rent.
In Ricardo’s Law, Fred Harrison reveals how ignorance of the law of rent creates the perverse situation where low-income taxpayers fund infrastructure improvements that enrich the affluent. Whether the overhaul of the economic curriculum will take cognizance of this or not remains to be seen.
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In recognition of her work to create a new body of Earth Law, international environmental lawyer and activist, Polly Higgins, has been appointed to the Arne Naess Chair for Global Justice and the Environment at the Centre for Development and the Environment (SUM), an international research institution at the University of Oslo, which promotes scholarly work on the challenges and dilemmas posed by sustainable development. Previous holders of the Chair include James Lovelock and Stephan Harding.
In March 2010 Polly Higgins proposed to the United Nations that Ecocide be made the 5th Crime Against Peace.
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A reviewer of The Science of Economics in Network Review, the Journal of the Scientific and Medical Network, wrote ‘The editor of The Science of Economics, Raymond Makewell, has done a wonderful job of making MacLaren’s thinking relevant to our times … MacLaren has important ideas on economic justice that we also need to reflect on in the wake of banking scandals and growing economic inequality.
Although MacLaren made his thought independent of its original inspiration in the work of Henry George, there is no doubt that George’s influence runs right through this book … MacLaren, like George, insists that land is the basis of economic activity … George’s vision … is certainly the inspiration for the many groups today arguing for the LVT [land value tax], and, in MacLaren’s reworking of it, deeply thought-provoking.
Whether one agrees that MacLaren’s economics is more scientific than any other, or agrees with the arguments for the LVT, is not the point here. What matters is to engage with any thinker who is serious about economic justice. It matters because, although it may seem like a deeply refractory problem, not thinking about it is collectively the most likely cause of the economic mess we are in today. This book will be of great interest to anyone concerned with this problem.’
Two reviews of Re-solving the Economic Puzzle by different reviewers appeared in the same issue of the American Journal of Economics and Sociology stating: ‘[Rybeck] gives us a multifaceted and enlightening book combining public policy analysis and autobiography … Rybeck is probably best known for developing the concept that land value taxation is actually a “super user charge” (1983). First it constitutes payment for the “license” to exclusive use of a particular site and, second, it overcomes the difficulty of setting individual user charges for each public service because location values provide an excellent means of judging the value of the totality of public facilities and services available to users of any particular site.
‘Its major benefits would include abundant jobs at living wages, affordable housing for all, self-financing infrastructure, an end to sprawl and urban decay, and a rational tax system, to give only the first five of his list of 10. He concludes that land value taxation should appeal to reasonable people on both the left and the right, providing greater social justice while remaining within the framework of a free-market system.
‘A broader application of Henry George’s insight into the role of the community in creating value has the potential to make the Georgist tradition central to contemporary debates over how to turn the United States away from its increasing trend towards plutocracy and develop an ethical economy that is compatible with democracy.’ Stephan Barton
‘While the media, politicians, and even economists claim that we must choose among painful trade-off alternatives, Rybeck shows there is a way to solve the puzzle. The solution is a tax shift that replaces taxes that hamper the economy with public revenues that do not hurt and may even benefit the economy … This book is truly one of the best introductions to real-world economics that I have come across.
‘His book is an ethical as well as an economic inquiry. Rybeck provides an analogy with slavery: the main argument against slavery was moral, beyond any economic analysis. For land issues, [his] message is one of harmony, as the policy that provides the greatest justice is also the policy that promotes maximum prosperity.
‘Land is central to the economy and to history, yet modern economists ignore it. While growing inequality is much discussed, there is little mention of the concentration of land ownership … The concentration of land value in a few hands is a global phenomenon.
‘This is indeed a book that should be read by every economist, every student, and every person who has been puzzled and troubled by our economic woes. It would be wonderful if a policymaker happens to read this book and actually implements its solution, but otherwise, the people should know that there are economic solutions, and that it is politics, not economics, that blocks universal prosperity.’ Fred Foldvary
Click here for full review
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‘This analysis [The Traumatised Society] integrates many data and many explanations to attack private land ownership as the basis of current economics. Harrison argues that cultural genocide … has afflicted Western civilization … [He] relates this to the omission of land as a term from the U.N. Universal Declaration of Human Rights and to the evisceration of economic rent by neo-classical economics.
‘Harrison offers a general theory of cheating; all to do with the control of land … The dishonesty which appropriates the commons to the purposes of a minority has established a dishonest social order.
‘Harrison’s views on humanicide merge with those of Polly Higgins on ecocide, and with those of Marx, J.S. Mill, Adam Smith and Ricardo. Harrison is trying to establish again and again that the privatising of value in land underlies all rottenness in society.
‘Harrison’s analysis of capitalism’s flaws pervades the book, but the chapter [ch.11] on society’s automatic stabiliser begins with the question (p. 172) “why, despite more than 200 years of economic data, are economists still unable to offer a coherent explanation for the regularity of disturbing booms and economic busts?” … The overwhelming strength of this one chapter – indeed, the book – is that the knowledge exists to correct course, but there is a lack of ethical or political capacity to make wise decisions.
‘Harrison cites a US intelligence report which – at last, after ca. 40 years – acknowledges the prospect of converging and interacting problems which may exceed the capacity of man to devise good outcomes or avoid bad ones. Yet the appallingly ill educated generality of politicians – not only in the US – continue as if they were capable of looking ahead beneficially and justifying their decisions on sound evidence: a charades of government. Harrison calls for psychotherapists.
‘What would happen if Harrison were to give a series of Reith Lectures, or even a Dimbleby Lecture?’
To read the full review click here.
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