Ideas are windows through which a mind sees. But an idea can be obscured. We easily confuse the finger marks on the misted pane with the reality beyond. So it is with the idea of “the value of land”. Clearly understood, it reveals a remarkable world. While there are those who would like us not to see that world, it is mostly lost because of a habit of thinking and speaking that has been insufficiently challenged. There is also a horror that for thousands of years has run around the world causing mayhem and suffering. It began with the first pre-neolithic claims by the powerful to personal dominion over the greatest resource, primary for all living things – land. It has run through the endless violent conquests every people experienced, through to the modern Enclosures, the planting of the American flag on the moon, and on to the present time, of miners, loggers, and landless poor driving to death the last tribes in the Amazon rain forest.
Dominion – as a slave owner has over a slave – to maximise returns from the ownership of land. Because of this, without our seeing it, there is a level of deprivation suffered by almost every class either absolutely with great severity or, even amongst the better off, relative to the opportunities that might be.
Not only have the ideas of land, its value, and the earnings from it, called rent, lost to politics – because they have been mistakenly subsumed within the idea of capital – but their meaning has been further obscured by a huge trick played by that little word: “of” – “the value of land”. The 63 (OED) variant uses of the word “of” is a big enough labyrinth in which to lose civilisation itself.
The value is not “of” land as in a feature of land itself. Land is merely the means to approach that value. Over the centuries the powerful – aided by this slight of words – made us believe that the value of land pertains to something they claim to own, that therefore it too belongs to them. Like a street magic trickster calling for bets over his sleight of hand, it is a fine piece of misdirection that robs labourers and savers of their earnings in a blink of the mind’s eye. Because we misunderstand “the value of land”, the trick is practiced on us all, and by the majority of us, every day without any sense that the misdirection is inappropriate. We are both trickster and dupe.
Rent is no longer widely understood.
In the 19th century “rent” was not so purely an academic concept. It was much better understood in a society still both heavily rural with big landlords and their great estates, and where even in towns most people rented their homes. In the country there was probably even memory of those payments being in kind, real wealth won from the earth and passed to someone who took no part in that work. The payment of rent as money or produce was a regular occurrence for the majority. It was paid to a powerful person, visibly a member of the idle rich, who could kick you off your land, as in the clearances still continuing in the time of the American political activist and writer, Henry George, who first looked fully through the window pane. The battle then was more obviously between landlords and the rest. Now that has faded, it is capital versus the rest, or the natural world versus predatory capital, or the secret state and the rest, if anything.
Instead of a visibly powerful individual, the rent seeker (one who maximises the returns from rent) is the bank, the mortgage company, the corporate accountancy or legal firm. A complex class of professionals who cream the rental flow and which, it seems to us, we could join, which many of us do as home owners, whose homes rise in value without a finger lifted. But we still talk about rent!
In earlier days there was also a marked contrast between land that was enclosed for private use and substantial amounts of land used in common. Use in common is the ancient way of sharing the given. But since then common land has been enclosed and whittled away till it is a tiny part of what it was. The causes of this are as rampant today as ever. These are the anti-democratic forces of corporate and large private wealth that seek to tip, through inordinate influence, the advantages of possession toward their short term private gain. This is at the expense of not only poorer elements of society but the quality of the civilisation that, in the first place, gives rise to corporate and large private wealth.
So few of us understand rent experientially. Yet we are nearly all rent seekers now, people who maximise their returns from the ownership of land, but we do not see it: rent seeking is woven deep across all the boundaries and battle lines. As an idea ‘rent’ needs too much explaining. As my late mother-in-law observed when I tried to explain the goal of the International Union for the Taxation of Land Values and the UK’s Labour Land Campaign and the Liberal Party’s ALTER: “I know what ‘Save the Children’ are about immediately, Nick. But with you I need a lecture just to understand your names!” Today many who pay rent are young people who see themselves as on the way to a better future, bound to a mortgage for half their lives, or council tenants paying the local authority, a bulwark for the unhoused. The landlord wears the mask of an enabling friend.
Rent is now a confusing term with conflicting meanings. It denotes the increase in production on better-located sites. There is rent in the sense of money paid for land in competitive bidding for sites. There is rent as increases in price paid for the use of land as a result of the growth of effective demand in an economy over decades or centuries from technological and social advances. Finally, there is the real wealth that people pay to access the mysterious “value of land”, a value distinct from buildings or activities at any place. The term is like four policemen, they all look alike and seem to lurk in the same territory, but they are trailing four different conceptual suspects who are having a fight. The result of this complexity is furrowed brows.
So what is the “Value of Land”?
It is real assets generated neither by the owner’s nor the occupier’s activity on the site. It is what persuades individuals and enterprises to pay for access to a site, even if bare ground. It is the ‘local’ assets that may be accessed from there. But what is local is very different in today’s technologically connected world. Social or financial services in Hong Kong that can be accessed over the Internet can be more proximate than the fish and chip shop down the street. A region with full internet services has more assets accessible from its location than one that does not.
Value is in the eye of the beholder. We are all different and interested in different local assets. The value perceived by each individual, whether personal or corporate, is unique. This valuation is a composite of what actually exists and what may be: a partly imaginative vision of how local assets will enable us to engage with a place when we live or work there. But while we are all different, we are united by the shared experiences of being members of the same species. We all need food a place to sleep. We need to work, to engage in transactions with others, to experience the myriad features of culture, to be entertained and to live amongst beauty or convenience, and so on. But despite this variety of evaluations, it is possible to make predictable assessments of how much people will pay for particular sites, by drawing on the evidence of past transactions.
The formal pricing of location value merely follows the optimum prices obtained in an open market for comparable sites. It is the assessment by a surveyor of the record of actual transactions. Once a bureaucrat, or errant surveyor, asserts what a site ought to be worth or what money-rent should be paid for it, they don’t just get it wrong. One individual’s view of location price is substituted for the real pricing derived from an entire community’s vision of value. No one person or committee can presume to divine the vast mixture of experience and imaginative assessment of thousands of people competing for land in a great city.
The value of land pre-exists and remains independent of any production at any place by occupiers. The price of that value measures the benefits accrued from living in a community. Location enhances life and productivity in many ways, as Henry George eloquently explained in his account of an emerging society in his Unbounded Savannah chapter in Progress & Poverty (1879). But the value of that land has little to do with the ground – with the mud, concrete rubble, and drifting cola cans of a brownfield site in the centre of a thriving city. It has everything to do with what is not on the land: the civilisation accessible from the land. Being well located to take best advantage of civilisation and the proximity of other people brings huge benefits. Some people talk of land value as if it were something mysterious and God given in the earth beneath our feet. This is the reification of mud.
Henry George gave us ideas with which to see the value of community and our environment for personal or business creativity, not just now for our own short lives but permanently for future generations – and not just in the broad sense but in concrete practical financial detail, down to the value of the last square foot of logged rainforest, or pavement frontage in a city slum. If we talk about money-rent, real-rent, economic rent and tax we miss that. Talk about location, location, location and everyone and a hundred TV programmes around the world know the core idea we are talking about.
But that idea is vastly bigger than the popular view. The value of land represents the social and physical assets of civilisation accumulated over centuries. Not just recently constructed hospitals nearby but the knowledge of medicine; not just today’s law courts but the hard-won culture of fairness and the ancient practice of legal precedent and jurisprudence; not just schools but the evolution of education over hundreds of years; the road network, some driven on since Roman times. And language. Language? Can it contribute to a price? Yes. Language has evolved to serve the complex needs of the community that speaks it, whether for professional or scientific operations or the needs of a hunter gatherer community. Language, and culture in all its rich variety, occasions differences in valuations of “land” that enable people to live and work more fully. Which place will suit wealth and enjoyment better, a location where your whole sensibility can be engaged by the arts, where you can use, for living and working, one of the most sophisticated tongues for that life, or one of the least? We are talking about the footprint of civilisation itself as it falls varyingly around place after place in our shared world.
The tiny site that each of us occupies does not contain this wonderful value within itself. It is not a value of the land but the value of everything accessible from any particular piece of land. The World comes to our door – shambling down the Old Kent Road or in all its finery through Mayfair, the West End and the City of London. It is not the new Waitrose opening nearby or the good school which raise property prices. It is the possibility in a certain place of the new Waitrose or school that enables them to make the decision to set up their trades. Those businesses are just getting people to shift their seats at the feast by providing slightly better ‘food’ on their table. For his part the corporate, financial or human landlord is no more responsible for the civilisation we access from his site, than a ticket inspector on the train to London is responsible for the miraculous civilisation of the great city that becomes available to us when we pay his fare. The landlord caste, with implicit power of economic and social exclusion, and even death, has commandeered all the routes to town and charges not the competitive minimum but the monopolistic maximum. As a consequence, that “city” is impoverished below what it might have been. Nation states, by enforcing privileges for land, must maintain themselves by taxing labour and capital. The deployment of these is diminished, creating blighted areas in cities and regions where productivity ceases altogether.
More dramatically, as seen in the long crisis since 2008, privatising the sums paid, within property ownership, for this immense communal wealth allows its buying and selling and enables speculation in property that periodically brings down the global economy. If we destroy our environment, the last inventive human eye will close. What, then, will be the value of land? We are imaginative valuers. Each generation changes civilisation. That is why it is essential that the price we pay for location is returned to the community to fund the enhancement of location assets. This would be a charge for the benefit of location assets enjoyed. The value is consentingly priced by the successful occupier. Such payments would enable us to remove the depressive taxes on labour and capital, permanently freeing the creativity in work of us all.
The Language of Location
So that we can talk of the power of community we should, therefore, talk about location values and prices, not land values and rent. People can understand why the attributes of each location, generated over the centuries by the community, must be preserved and enhanced by the payment of location charges to the community. We can explain even to them, who are often ourselves, why the caste of landlords should not receive a penny of a value they do not create. We don’t need to talk about rent. It becomes possible to explain the social justice of paying a charge to the community for a beneficial location that the community must sustain and recreate from generation to generation; to explain why we have a duty of care toward location and the environment. Environment is a word which means “surroundings”. Our land-use planners would have a social remit to foster the value of location in all its detail, and explain the need for its measured caring. They could cost the real human impact on environment, and sharpen the blade of barrister Polly Higgins’ Law of Ecocide.
Location value is born from the long-fought struggle for the human miracle of civilisation, which in its variety and surprising existence is very like the miracle of life wrung from the planet’s bare rock, spinning in vulnerable nothingness. We are one with that, and won from that, and must care for it.
The term Land Value Tax is used by those who would democratise power, because it is hallowed by time. But it is obsolete. The value is not a value of the earth beneath our feet. It has to do with everything made by our species and the natural forces and creatures of this world, which vary with every location. These attributes are merely accessed from land. We should call for a “Location Value Charge”. It would be a payment entered into by individuals or companies during occupancy. In return the community protects us in our exclusive use of that place so we may access local and international civilisation undisturbed. Unlike taxes, which are imposed without any calibration against value received, a Location Value Charge allows the individual to agree, or not, to accept the liability on the basis of personal valuation. The very real location assets provided explain the link between the payment and why it ought to be paid to the community – the ethics. Such language helps us explain that we must pay to sustain our civilisation, local and national, and to protect the natural environment – the politics. The preservation and enhancement of location value should be seen, and can more easily be justified, as the true primary task of government.