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Land Defined

As a society, we tend to take land for granted, and treat it like dirt. We're encouraged in this by the way economics is taught in our colleges and universities. Real estate interests would just as soon have us think of buildings as being the lion's share of the the value of real estate, and even some academic economists preach that land value is largely a function of zoning rather than our dependence on land. But there are many other things that fit into the category of "Land" besides the sites under our feet. What do these things have in common? One thing is the fact that none of us created them, and no one can create more of them.

This is true of "small-l" land. Other than perhaps "reclaiming" some wetlands as dry land (which we permit at our peril, as we've begun to widely recognize since hurricanes have been so destructive to reclaimed coastal land), we know we can't create even a few square feet of land, much less an entire building lot in the central business district of any town. What we've got is what we will have, and we all depend on it.

But "large-l" Land is also important, and we need to be conscious of it.

All sorts of things that don't make a great deal of sense when we ignore land as a separate factor start to become logical when we bring land into focus. It is our society's willingness to ignore land or treat it as if it were no different from that which is manmade (also known as "capital") that has created some of our society's largest problems. When we acknowledge that land is different, and are willing to consider the huge range of ramifications of that distinction, we are on our way to solving them. Can you see the cat? Are you willing to have it pointed out to you? Or is our society just fine, from your point of view.

Land includes many important things: non-renewable natural resources, the broadcast spectrum (as in, "the airwaves belong to the American people!"), many kinds of water rights, the right to pollute water and air. (Oh, you pollute air with your car, and therefore wonder whether your interests might really lie with those who monopolize our natural resources or do large-scale pollution to make a profit? No, they don't. Particularly if you have any emotional investment in future generations, or equality, or peace.)

If you are looking for solutions, look to Land, in its larger definition. When we reclaim Land as common property, we will find many of our biggest problems being solved, and life improving for the vast majority of Americans.

Henry George: The Common Sense of Taxation (1881 article)

To consider the nature of property of this kind is again to see a clear distinction. That distinction is not, as the lawyers have it, between movables and immovables, between personal property and real estate. The true distinction is between property which is, and property which is not, the result of human labor; or, to use the terms of political economy, between land and wealth. For, in any precise use of the term, land is not wealth, any more than labor is wealth. Land and labor are the factors of production. Wealth is such result of their union as retains the capacity of ministering to human desire. A lot and the house which stands upon it are alike property, alike have a tangible value, and are alike classed as real estate. But there are between them the most essential differences. The one is the free gift of Nature, the other the result of human exertion; the one exists from generation to generation, while men come and go; the other is constantly tending to decay, and can only be preserved by continual exertion. To the one, the right of exclusive possession, which makes it individual property, can, like the right of property in slaves, be traced to nothing but municipal law; to the other, the right of exclusive property springs clearly from those natural relations which are among the primary perceptions of the human mind. Nor are these mere abstract distinctions. They are distinctions of the first importance in determining what should and what should not be taxed. ... read the whole article

Henry George: Progress & Poverty: Wages & Capital: The Meaning of the Terms (Book I, Chapter 2)

Land, labor, and capital are the three factors of production. If we remember that capital is thus a term used in contradistinction to land and labor, we at once see that nothing properly included under either one of these terms can be properly classed as capital. The term land necessarily includes, not merely the surface of the earth as distinguished from the water and the air, but the whole material universe outside of man himself, for it is only by having access to land, from which his very body is drawn, that man can come in contact with or use nature. The term land embraces, in short, all natural materials, forces, and opportunities, and, therefore, nothing that is freely supplied by nature can be properly classed as capital. A fertile field, a rich vein of ore, a falling stream which supplies power, may give to the possessor advantages equivalent to the possession of capital, but to class such things as capital would be to put an end to the distinction between land and capital, and, so far as they relate to each other, to make the two terms meaningless. The term labor, in like manner, includes all human exertion, and hence human powers whether natural or acquired can never properly be classed as capital. In common parlance we often speak of a man's knowledge, skill, or industry as constituting his capital; but this is evidently a metaphorical use of language that must be eschewed in reasoning that aims at exactness. Superiority in such qualities may augment the income of an individual just as capital would, and an increase in the knowledge, skill, or industry of a community may have the same effect in increasing its production as would an increase of capital; but this effect is due to the increased power of labor and not to capital. Increased velocity may give to the impact of a cannon ball the same effect as increased weight, yet, nevertheless, weight is one thing and velocity another.

[26] Thus we must exclude from the category of capital everything that may be included either as land or labor. Doing so, there remain only things which are neither land nor labor, but which have resulted from the union of these two original factors of production. Nothing can be properly capital that does not consist of these that is to say, nothing can be capital that is not wealth. ... read the entire chapter

Rev. A. C. Auchmuty: Gems from George, a themed collection of excerpts from the writings of Henry George (with links to sources)

HE term Land in political economy means the natural or passive element in production, and includes the whole external world accessible to man, with all its powers, qualities, and products, except perhaps those portions of it which are for the time included in man's body or in his products, and which therefore temporarily belong to the categories, man and wealth, passing again in their reabsorption by nature into the category, land. — The Science of Political Economy — unabridged: Book III, Chapter 14: The Production of Wealth, Order of the Three Factors of Production abridged: Part III, Chapter 10: Order of the Three Factors of Production

THAT land is only a passive factor in production must be carefully kept in mind. . . . Land cannot act, it can only be acted upon. . . . Nor is this principle changed or avoided when we use the word land as expressive of the people who own land. . . .

That the persons whom we call landowners may contribute their labor or their capital to production is of course true, but that they should contribute to production as landowners, and by virtue of that ownership, is as ridiculously impossible as that the belief of a lunatic in his ownership of the moon should be the cause of her brilliancy. — The Science of Political Economy unabridged: Book III, Chapter 15, The Production of Wealth: The First Factor of Production — Landabridged: Part III, Chapter 10: Order of the Three Factors of Production

I AM writing these pages on the shore of Long Island, where the Bay of New York contracts to what is called the Narrows, nearly opposite the point where our legalized robbers, the Custom-House officers, board incoming steamers to ask strangers to take their first American swear, and where, if false oaths really colored the atmosphere the air would be bluer than is the sky on this gracious day. I turn from my writing-machine to the window, and drink in, with a pleasure that never seems to pall, the glorious panorama.

"What do you see?"  If in ordinary talk I were asked this, I should of course say, "I see land and water and sky, ships and houses, and light clouds, and the sun drawing to its setting over the low green hills of Staten Island and illuminating all."

But if the question refer to the terms of political economy, I should say, "I see land and wealth." Land, which is the natural factor of production; and wealth, which is the natural factor so changed by the exertion of the human factor, labor, as to fit it for the satisfaction of human desires. For water and clouds, sky and sun, and the stars that will appear when the sun is sunk, are, in the terminology of political economy, as much land as is the dry surface of the earth to which we narrow the meaning of the word in ordinary talk. And the window through which I look; the flowers in the garden; the planted trees of the orchard; the cow that is browsing beneath them; the Shore Road under the window; the vessels that lie at anchor near the bank, and the little pier that juts out from it; the trans-Atlantic liner steaming through the channel; the crowded pleasure-steamers passing by; the puffing tug with its line of mud-scows; the fort and dwellings on the opposite side of the Narrows; the lighthouse that will soon begin to cast its far-gleaming eye from Sandy Hook; the big wooden elephant of Coney Island; and the graceful sweep of the Brooklyn Bridge, that may be discovered from a little higher up; all alike fall into the economic term wealth — land modified by labor so as to afford satisfaction to human desires. All in this panorama that was before man came here, and would remain were he to go, belongs to the economic category land; while all that has been produced by labor belongs to the economic category wealth, so long as it retains its quality of ministering to human desire.

But on the hither shore, in view from the window, is a little rectangular piece of dry surface, evidently reclaimed from the line of water by filling in with rocks and earth. What is that? In ordinary speech it is land, as distinguished from water, and I should intelligibly indicate its origin by speaking of it as "made land." But in the categories of political economy there is no place for such a term as "made land." For the term land refers only and exclusively to productive powers derived wholly from nature and not at all from industry, and whatever is, and in so far as it is, derived from land by the exertion of  labor, is wealth. This bit of dry surface raised above the level of the water by filling in stones and soil, is, in the economic category, not land but wealth. It has land below it and around it, and the material of which it is composed has been drawn from land; but in itself it is, in the proper speech of political economy, wealth; just as truly as the ships I behold are not land but wealth, though they too have land below them and around them and are composed of material drawn from land. — The Science of Political Economy unabridged: Book IV, Chapter 6, The Distribution of Wealth: Cause of Confusion as to Propertyabridged

... go to "Gems from George"

Bill Batt: The Compatibility of Georgist Economics and Ecological Economics

The starting point of the Georgist framework is rigorous definition of the three factors of production — land, labor, and capital, as in classical economics. It should be further pointed out that these factors are mutually exclusive and jointly exhaustive of all things of economic value. Something must necessarily be in one category or another; there is nothing outside this total classification. Understanding of what constitutes labor differs little from definitions given elsewhere, regardless of which theory is used. But definitions of land and capital differ somewhat from common practice as well as sometimes in theory. Therefore, it is helpful to spend time explicating the definitions of each as they are used in Georgism, and to point out where these definitions diverge from those most often employed in neoclassical economics applications. Many contemporary economics texts begin by taking note of the land-labor-capital distinction, but then make little use of it later. These distinctions will make apparent why Georgist economics leads to very different explanations of economic phenomena as well as to different policy solutions.

Critical to an understanding of Georgist economics is its recognition of land as a special and unique factor of production. “Land,” to Georgists, as true for classical economists throughout the 19th century, is taken to mean not just the surface of the earth and locational space; it means also any and all those natural resources and non-human works that today can exact a market price. It includes the wealth of the earth in all its natural forms, the air and water as well as material elements. It includes phenomena of value like the electromagnetic spectrum used to transmit communications signals, and landing time slots such as have value at airports. As the world economies enter a new age of high technology, these radio spectrums and time allotments have gained ever increasing value. So also with geosychronous satellite orbits and most recently the genetic codes of all the biota on earth.10 ...

It is equally important to distinguish those factors that are not land in the classical sense of its economic use. Natural resources such as coal, oil, and minerals, once removed from their natural state are no longer regarded as land. A diamond lodged in the deep earth is land; that same diamond discovered by a prospector and then cut and polished by a jeweler, is no longer land but capital. Likewise, fish in the ocean are land, but fish once caught and in a boat are capital. This is why, in any courses taught on Georgist economics, considerable time is devoted to basic definitions. To carry the distinction just one step further, land in the Georgist lexicon, is not wealth, whereas in neoclassical economics it is. In the course of later discussion of the Georgist view relative to the ecological economics approach, this will emerge as a critical distinction, as it helps to demarcate the boundaries of what activities fall within the realm of economic behavior and what activities remain marginal.
This separate and identifiable recognition of land has significant importance for the definition of capital too, because capital, then, cannot be land. Capital, rather, is the product of labor and land (and perhaps other past capital) to add to the increased store of capital of individuals or of the community. Capital can be of many types, ranging from monetary wealth to technical knowledge. The store of capital applied to land and labor results in the further production of capital wealth. Capital allows labor to be employed with greater efficiency and productivity, through the use of technology and instruments and with increased human skill and knowledge.

The next important step in understanding Georgist economics is recognition that each factor of production has its economic price: the price of labor is wages, the price of capital is interest, and the price of land is rent. When any of these prices are unpaid, distortions result in the economic equilibrium and problems become manifest in other realms of nature and society. In neoclassical economics compensation for the use of labor and capital continue to be important in the formulas and calculations employed to explain the economy. But for neoclassical economics, David Ricardo’s “law of rent” is essentially ignored and has be come for all practical purposes an artifact in the history of economics. Rent continues to exist of course; it is simply uncollected, left in the hands of those who maintain monopoly control of certain services of nature, adding to their market value in ways that distort the balance of markets. Failure to recognize the importance of land rent (sometimes called economic rent) is for Georgists critical to an understanding of the problems of contemporary economies and economic analysis.14 ...

Rent becomes critically important in Georgist economics, because rent is the increment of market gain that accrues to choice land parcels. This insight arose originally in the context of agricultural societies, where differential qualities of land were recognized by varied payment in rent. An individual’s return on investment was represented by his labor — that was his and his alone to keep. So also were whatever capital goods he acquired through the efforts of his past labor. On the other hand, whenever land offered a higher yield separate from whatever the individual’s labor investment might represent, this constituted a windfall gain above and beyond what might be minimally expected. This is land rent, and it exists even if it isn’t collected. Today, as earlier noted, the greatest land rents derive from their location, grown out of nearby social investment.

The concept of rent needs further explication precisely because it is so foreign to 20th century students, even those who have been schooled in economics at it is currently taught. Land rent has no relationship to the word rent as it is used in contemporary vernacular, that is, when one rents a car or an apartment. Rather, rent is a surplus, defined as the return on investment above and beyond what is minimally required to bring a service into production. To take just an elementary example, consider that there are three parcels of land available for farming and three farmers of equal ability and enterprise. But suppose the parcels differ in their productive capacity, due perhaps to their fertility, access to water, and so on. If planted with similar quality seed, the three parcels will yield different quantities of harvest, the one with the highest quality land having the best return. The one with the lowest quality land would in like fashion have the lowest return. Economic rent is defined as the amount of surplus harvest qualitatively measured by the difference between the parcel with the highest return and that with the lowest return.

Even though its originator, David Ricardo, had in mind the differential return from agricultural lands, the concept of rent applies to other natural services as well. Consider what happens in the case of urban communities, using the simplest comparison with a tic-tac-toe board. When the lattice is completely undeveloped and consists only of vacant land squares, the locational sites have inconsequential value. But let us suppose that each square is then settled — the first by a hotel, the second by a department store, the third by a restaurant and so on — and supposing that the owner of the center square is reticent to build at all. Reserving his prerogative as titleholder he may intend ultimately to sell. Given the rules of economics as they apply today he may be wise to do so, keeping his money for other uses, as his square will have increased in market value more than all the others despite his having done nothing to improve it. It was this that prompted John Stuart Mill to observe that “Landlords grow richer in their sleep without working, risking or economizing. The increase in the value of land, aris[es] from the efforts of an entire community.. . .” 27 As will be discussed later below, the single greatest factor in determining the economic rental value of land today results not from nutrients or access to water but rather due to site value determined by location. And that can be priced and collected easily.
27John Stuart Mill, Principles of Political Economy, Book 5, ch 2, Sec.5.

Lastly, one must appreciate that the market value of “land” of every sort is entirely rent, as there is no human factor of labor that accounts for its origination. Services of nature have no prior cost to bring them into production existence — the electromagnetic spectrum, for example, exists regardless of human presence on earth and so presumably does time. Ocean fish, fossil fuels, and heavy metals are all found in nature, not the result of human creation. They are, in 19th century classical economics, the fruits not of man’s labor but of God’s. And it is to God, or at least to God’s representative on earth — the lords and kings — that rent was owed, just as much as it was their role to provide reciprocal services to the tenants of the land. That bargain, so well refined in feudal economic arrangements, was an equilibrium balance, disrupted, one might say, by the annulment of rent collection and the exploitation of land without recognition of its price. The practice effectively ended with what in Britain is known as the “enclosure movement” of the early Tudor reign, driving the peasants off the land into cities to provide cheap labor for the early English industrialists.28 But the theory continued long afterwards. Georgists today argue that land rent should be collected from titleholders so that it is not left to render economic distortions. This in turn affects the price of labor and the price of money. Government’s role, whatever else it does, is at the very least responsible for defending the commons, to ascertain titles and to collect rent. Although there are many differences about the proper role, scope and domain of government among Georgist adherents, the collection of rent and the supervision of open markets is central to its tenets.

Despite assiduous efforts to make clear the extent and the limits of the economic rent as a concept — known as well as land rent, Ricardian rent, and ground rent, even the best of contemporary neoclassical economists disagree. Some texts argue that certain athletes or other star performers with great natural ability reap returns for their efforts far above what is in fact necessary to “bring them into productive use.” The difference between what it would minimally take to entice them to perform and the price they are actually paid is all economic rent. Babe Ruth, Michael Jordan, Britney Spears, and the Beatles have all been compensated with impressive amounts of economic rent.29 Georgists and classical economists are of mixed minds, arguing sometimes that such payments are either wages or else are simply transfers that in no way reflect productivity.30 ...

The Georgist approach to taxation had many names: his contemporary Thomas Shearman wrote two books calling it the “natural tax,” 41 and more recently it has been referred to as the “incentive tax” 42 and ground rent.43 It should be noted once more that, by whatever name, the “land tax,” “site value tax,” or “single tax” to George covered a far wider scope than simply locational sites, even though today this is the base that is given the most attention. It covered any natural factor element that humanity chose to put into service. Today, some of these parts of nature which have come to be “owned” by private corporations (at least insofar as their license to such use have become entitlements) are worth millions. The electromagnetic spectrum that has been parceled out to the communications industry has sometimes been “auctioned” for one-shot revenue gains, is now for all practical purposes a freehold title in the hands of those industries.44 Were those spectrum bands retained by governments and “rented,” the revenue would likely be far greater. Whatever increased value now results accrues to these private owners instead of to society.

So also in the case of the auctioning of “pollution credits” or tradeable permits, what in fact constitute the right of power industries to treat the air as a dump to the full extent which environmental tolerances allow.45 These “credits” are now “owned” by the private sector and traded back and forth among corporations, even though all people experience the consequences of its treatment. Airport landing slots, “prime time” broadcasting, and many other time-sensitive dimensions have all been handed over to the private sector with nominal benefit to the public. London Mayor Ken Livingstone has been a strong supporter of renting the landing slots at Heathrow and Gatwick Airports, and is at this very time exploring a rent recovery scheme to pay for the upgrade of components of the Jubilee tube line. 46 ...

A Georgist agenda also calls for the regular auctioning of mineral extraction rights, fishing rights, and other access to natural resources in a way that their rent is returned fully and fairly to the public weal. Competitively assessed royalties especially on the extraction of mineral capital could yield billions of dollars. Alanna Hartzok has offered compelling arguments why rent from locational sites should be reserved to finance the services of local governments, rent from natural resources identifiable within a nation’s boundaries should be captured to finance national governments, and rents of those resources beyond national borders should be used to finance world governments....  read the whole article

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land includes

land excludes

land different from capital

land different from labor



land share of real estate value

urban land share of real estate value

land earning more than work

land concentration

wealth concentration

natural resources


rent-seeking behavior


warping of economics

economics textbooks

special interests



sources of rent

land as God's provisioning

wealth from land appreciation

God's eldest sons

equal opportunity

natural opportunities


two-factor economics

three-factor economics

all benefits...

absentee ownership

land monopoly

land monopoly capitalism

the land problem

the land question


land progression

land value

land prices

lowering the price of land

barriers to entry

created equal

land appreciates, buildings depreciate

to the creator...

quaint agrarian idea?

ecosystem services


the remedy

about Henry George

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Wealth and Want
... because democracy alone hasn't yet led to a society in which all can prosper