Currently the growth model of economics, as measured by GDP, is on a collision course with environmental limits. The idea of endless growth is incompatible with what Nature can provide. So what is the alternative? Reporting on the 1988 Conservative Party conference The Economist, in an article entitled ‘The Greening of Mrs Thatcher’, quoted her as stating: ‘No generation has a freehold on the earth. All we have is a life tenancy with a full repairing lease.’
The ‘full repairing lease’ implies a duty of care for the environment required of the landowner as argued by Polly Higgins in her Earth is our Business. A ‘life tenancy with a full repairing lease.’ implies a responsible attitude towards the earth rather than something to be plundered for its resources, leaving future generations bereft.
There is no evidence to suggest Mrs Thatcher was hinting at the economic reform advocated by Henry George when she said that ‘No generation has a freehold on the earth’, but if all we have is ‘a life tenancy’, it begs the question: who gets the rent? As the earth has not been made by landowners, giving them a claim of ownership in their product, why should the rent go to them? We are pleased when the value of our house goes up, but in fact it is not the value of the bricks and mortar that has risen but the land on which it stands – any homeowner knows that the house itself requires constant maintenance to keep its value. The value of the site on the other hand is the result of the efforts of society collectively. What could be more reasonable and just than that society should receive the rent? If it were paid to the government, not as owner of the land but as the caretaker of the nation, there would be no need to fund government out of taxation.
The first United Nations Sustainable Development Goal is to ‘End poverty in all its forms everywhere’, and yet regardless of whether there is a left wing, right wing or centrist government in power, the gap between rich and poor continues to increase, suggesting some common cause that is being overlooked.
So often, the debate about public ownership is based on a narrative that sets the public interest against the private interest. In this debate in western democracies, one can characterise the period since the Second World War as having been a game of two halves. In Britain during the war, a social democratic narrative emerged, where the interests of society would be put first, in part to reward the collective effort to defeat the Nazi dictatorship, but also perhaps, to defuse the attraction of the alternative collective ownership experiment in the Soviet Union. This social welfare model was presented in the UK with the publication of the Beveridge Report in 1944, and its main recommendations were introduced during the following three decades. Living standards rose dramatically, and public service provision of housing, healthcare, and education among others became the normal expectation. We had ‘never had it so good’.
Economists have long asserted that three factors of production, land, labour and capital, lie at the root of their subject. Yet in the development of the subject into theories and practical applications there has been a thorough analysis of labour and capital but a grievous omission of the factor of land. This is reflected in the minimal place it holds in modern textbooks, in popular discussion and political debate. Much of the argument about major issues, like industrial policy, the distribution of wealth and income and government policy reverts to a polarised struggle between two antagonists, labour and capital. The third factor, land, hides in the background unacknowledged yet exerting a major influence on the outcome of the whole economic process.
A legal duty of care for the Earth Fifteen years ago Polly Higgins abandoned her career as a barrister to campaign for an international crime of ecocide. Sadly she died of cancer on Easter Sunday at the early age of 50.
“You can become wealthy by creating wealth or by appropriating the wealth created by other people. When the appropriation of the wealth is illegal it is called theft or fraud. When it is legal economists call it rent-seeking”
John Kay, Financial Times 27th Dec 2009
“If a free society cannot help the many who are poor, they cannot save the few who are rich.”
John F Kennedy, Inaugural Speech, Jan 1961
“If science is defined by its ability to forecast the future, the failure of much of the economics profession to see the crisis coming should be a cause for great concern”
“Today we live in a world that is divided. A world in which we have made great progress and advances in science and technology. But it is also a world where millions of children die because they have no access to medicines… It is a world of great promise and hope. It is also a world of despair, disease and hunger”
How Our Economy Really Works
– Why are so many trapped in poverty, when others are grossly well-off?
– Why are house prices continuously rising faster than inflation?
– Why do people so often find themselves in jobs that give them little sense of fulfilment?
– Why is a multi-national coffee shop franchise not actually making its money from coffee?
These questions have confronted the UK economy for decades without resolution by governments of the right or left. It is the failure of economics, the author argues.
ISBN 9780856835292 | Price: £9.95