Economic Monitor Summer 2002 Issue 76 One World, One We a l t h £ 2 . 0 0

Standing for Justice ecent months have seen a sudden seeing most of the benefits disappear that governed land ownership and land Rburgeoning in interest in the into the hands of absentee landowners. value the key to economic justice and to collection of land values for public civilisation itself. For A n d r e, civilisationw purposes. In London, the land value o add fuel to the fire, a new book, was a matter of understanding and gains from the completion of the T(reviewed on page 11), shows that living by a few simple principles. T h e underground railway’s Jubilee Line some 90% of the United Kingdom is in principles were essentially Christian, extension are estimated to be worth, at fact owned by only 189,000 families, drawn from the Old and New capital values, some three times the leaving the remaining 59 million of the Testaments, but there was room for the cost of building the extension. But population to share the rest. great philosophers and a place even for private landowners are the largest Karl Marx with whose writings he was beneficiaries of the public investment. familiar by the time he was eighteen.

This has led to serious questioning ut it was the American economist, about the potential for harnessing land BHenry George, who gave him the value gains to fund the proposed philosophic but practical outlook which London Crossrail development which guided his adult life. George’s writings will eventually link Heathrow in the We s t showed him how it was possible for the with the expanding Stratford rail centre fullness of civilised life to be available to in East London and through there to the everyone, and filled him with a noble Channel Tunnel and Europe. vision of the possibilities that civilisation holds for every human being. At the same time, the East London Borough of Hackney has seen sudden Andrew MacLaren was born of Irish rises in property values with the descent in one of the poorer parts of announcement of the proposed East Glasgow in 1883, the year that Karl London railway line. More gains are Marx died and John Maynard Keynes expected as far away as Croydon in the was born. His upbringing was hard, south and Wimbledon in the south west though not desperate. At fourteen he as the full implications of the project are C o - i n c i d e n t a l l y, November became an apprentice engineer, but r e a l i s e d . 2001 saw the publication of Standing even by then his father and grandfather For Justice, the autobiography of had ensured that he was familiar with Meanwhile, in Liverpool, the Liberal Andrew MacLaren one time Labour MP the teachings of Newman, the Democrat city council has endorsed a for Burslem and a life-long advocate of speeches of Gladstone and the music plan for a pilot scheme to examine the the collection of land values for public of Mozart and Haydn. By then too, he potential for re-assessing the uniform purposes. Andrew MacLaren was one had developed a love of art which business rate according to land values. of the founding fathers of the School of stayed with him all his life. He saw Economic Science, whose early these things as the proper inheritance n Edinburgh a plan by local meetings took place in rooms booked of all mankind. Ibusinessmen to re-open the derelict by him at the Palace of South Suburban Line is to be funded We s t m i n s t e r e took practical guidance from mainly by developing land and buildings This publication is particularly HMoses Maimonides: ‘(The adjacent to the line itself. Elsewhere in appropriate at a time when the meaning w o r k m as) n wages’ should be paid Scotland serious questions are being and values of western civilisation are without delay, and they must not be raised as to how local populations can under such close examination and so wronged in any of their rights; they must benefit from the use of the estates on open to doubt, because A n d r e w receive their pay according to their which they live and work instead of MacLaren saw in the economic laws work’. He adopted and lived by the

Autumn 2002 courses and events – see back page School of Economic Science principle ‘… it is the function of the to the exclusion of others to return to intellect to discriminate between true the community through the tax system and false – a distinction which is the benefit they derived from their Standing for Justice applicable to all objects of intellectual exclusive use of the common resource. p e r c e p t i o n ’ . They were fully entitled to benefit from their own work and from any e drew from his religious and improvements they made to the land – Hphilosophic studies a deep and and even to benefit from the work of abiding love of mankind. He saw in others if they could organise and direct every fumbling instrumentalist a it eff i c i e n t l y. potential concert musician; in every stuttering infant a future Shakespeare; There was no need to disturb existing in every artisan a struggling artist; and property rights. It could be done by in every human being a core of simple assessing the annual rental value of goodness. land and levying the tax accordingly.

He saw all this in the meanest streets hat such a simple and elegant of Glasgow. But he also saw it stifled by Tsolution to injustice and exploitation p o v e ,r t byy want of education and should be the source of generations of A Biography of above all by injustice. It was to the roots controversy and hostility is a testament Andrew McLaren MP of this injustice that his attention was to the strength of the vested interests it by John Stewart drawn by the work of Henry George. challenged. That in the face of such controversy and hostility, a man could As a young man in the United States, hold to his ideal and fight for it with Shepheard-Walwyn Henry George witnessed the huge eloquence and passion, and without ISBN 0 85683194 8 technological advances which made regard for his own political or personal £18.95 hard back industry far more productive than ever advancement, is a testament to the before. He looked forward to a calibre of the man himself. It is also an Available from: manhood in which it would not be example which, if followed, would Shepheard Walwyn LTD necessary to work so hard to earn a transform modern political life. Suite 604, The Chandlery, living, where there would be time and leisure for even the poorest citizen to But economics interested him, not for 50 Westminster Bridge Rd, cultivate his mind and improve his life. its own sake but because he saw, as London SE1 7QY When it did not happen, he wanted to John Maynard Keynes put it, that Tel: 020 7721 7666 know why, and he found the answer in ‘economists are not the custodians of Fax: 020 7721 7667 a simple observation. civilisation, but of the possibility of e-mail: books@shepheard- civilisation’. He would have welcomed walwyn.co.uk Every human being draws life from the the renewed debate, and would have or from the School bookshop : Wholesale Bookshop land surface of the planet. Our food regarded the financing of infrastructure School of Economic Science comes from it, all the materials we use projects as a perfectly valid application Sarum Chase for clothing and shelter come from it. of the economic principles he 23 West Heath Rd We are dependent on it for a place to a d v o c a t e d . NW3 7UU [email protected] stand, a place to stay and a place to work. Henry George saw that the land But he would also have seen it as a surface of the planet was being distraction from the real point, which is carefully parceled up and sold, usually to replace an unjust economic system to the owners of businesses who used with a just one. He once said: The Economic Monitor their monopoly position as landowners apologises for the recent to exploit the working population and "The wonderful discoveries and interruption in publication reduce wages to a minimum. inventions of our century have not really increased wages nor removed occasioned mainly by his was the supreme injustice – to the shadowing hand of poverty. T h e the still incomplete move Tdispossess the large portion of e fectf has simply been to make the few from Queensgate to mankind from their birthright of a place richer and the many more helpless. But Mandeville Place. to live and work and a share in the if, while there is time, we turn to Justice bounty of nature. Andrew MacLaren, and obey her, if we trust Liberty and Normal service will be like Henry George, fought against this follow her, the danger that now injustice with consistent determination threatens must disappear, and the resumed with the throughout his entire adult life and forces that now menace will turn to Autumn edition due at political career. agencies of elevation." the end of September.

Their solution was simple. All that was He would have had no hesitation in necessary was for those who held land saying the same now. Opposition in Zimbabwe Eddie Cross writes from Bulawayo

or those of us accustomed to in the Binga District near Kariba. playing field or nothing. We are not Forderly democratic political Ordinary people are being denied food being unreasonable or irrational - this processes and life under the rule of if they cannot prove membership of is the only way forward and no l a w, this account of life in Zanu or are identified by local Zanu alternative will be acceptable. A Zimbabwe's Opposition party, the leaders as being MDC supporters. T h e government of national unity? We have Movement for Democratic Change President has promised a purge of the consulted our structures and almost (MDC) will be illuminating, to say the entire civil service and thousands of without exception they have said "no le a s t . civil servants anxiously await their fate. deals" - even if we have to suffer the c o n s e q u e n c e s . "The recent presidential elections have been found "not free and not fair" and A nationwide .S. President Bill Clinton said in a the outcome declared illegitimate by Uspeech in Georgetown University people who matter in the world programme of in December 1991, "The defence of c o m m u n. i t y The economy of freedom and the promotion of Zimbabwe is in a tailspin with all violence and democracy are not merely a reflection indicators negative - GDP expected to of our deepest values, they are vital to fall 12 per cent, exports to decline by intimidation. our national interests. Global another 15 per cent, employment democracy means nations at peace falling to less than 850,000 adults, the with each other, open to one another's deficit in the budget spinning out of he impact on the region will be no ideas and to commerce. The stakes control. The country is on the edge of Tless dramatic - South Africa has are high: it is part of a worldwide march massive starvation - we need two already lost at least half its growth in towards democracy whose outcome million tons of maize, 150,000 tonnes G D Pin the past three years, seen will shape the next century. If individual of wheat, 60,000 tonnes of soybean direct foreign investment plunge and l i b e r, t politicaly pluralism and free and 50,000 tonnes of crude vegetable capital flight accelerate. To u r i s menterprise take root we can look oil to avoid starvation. A third of our arrivals in the whole region are down forward to a grand new era of reduced total population will be on welfare by by half and the service infrastructure conflict, mutual understanding and the year-end. Business confidence is that is essential to any future recovery economic growth". negative and capital flight endemic. is now in jeopardy. f that was true for the USA in 1991, it n addition to these issues Zanu PF In the wider sphere, the whole future of Iis certainly true for Zimbabwe in 2002 I(President Mugabe's ruling party) has the much vaunted New Economic and we are not going to accept less." unleashed on the MDC and its Programme for African Development structures a nation-wide programme of ( N E AD)P is now under threat. T h e violence and intimidation. People are international community, tired of being being killed, sexual torture is being led by the nose by corrupt leaders, who THE ECONOMIC widely used in Zanu camps and abuse their privileges to plunder their MONITOR WELCOMES centres and beatings are so national coffers and impoverish their commonplace that they are no longer people, is saying to the continent's LETTERS AND being reported. In one instance that leadership that Zimbabwe is a test CONTRIBUTIONS FROM came to my attention this past week case. Handle this and we will see what READERS. four young MDC activists simply we can do to help those states in A f r i c a campaigning for the MDC were that can get their act together. For abducted and held in a hole in the Mbeki and Obasanjo this is very Letters for publication should ground for six weeks with limited water important - too important to allow not exceed 350 words and and food. One of their number died. Robert Gabriel Mugabe to get in the articles should be limited to Another was taken out and left to die in w a y. the bush but was rescued by local 1000 words. farmers. The other two dug their way There is no way out of this economic out and escaped. One has his eyesight and political crisis if we do not find a Please send them to: permanently damaged. solution soon. This is clearly evidenced The Editor, in the speed with which the leaders of The ruling party and its activists are Africa are putting the process in train. Economic Monitor, using food as a weapon. Whole For us in the MDC the issues are quite 13 Addiscombe Grove, districts are being denied food because clear and the way forward very simple Croydon CRO 5LR they are perceived as being MDC - we want fresh presidential elections or e-mail areas. This includes some of the as soon as possible under international poorest people in the country such as supervision and on a reasonable [email protected] Wealth or Illth Herman E Daly offers the World Bank a new vision of sustainability

n an invitation address to the Wo r l d mechanism of the free market is dimensions is made of up of things – IBank on the 2nd April, 2002 Herman supposed to make this possible. populations of human bodies, D a l, yof the School of Public A ff a i r s , livestock, machines, buildings, and University of Maryland, drawing on the But there is mounting evidence that artifacts. All these things are what work of Henry George, offered new this is not what happens in practice. A s physicists call ‘dissipative structures’ insights into the measurement of Daly points out, the problem is that that are maintained against the forces economic success and into the "economists define GDP as the sum of of entropy by a throughput from the concept of sustainable development. the value added by labour and capital environment. An animal can only Taking account of nature’s resources in the process of production. Exactly maintain its life and organisational and considering an economy as a what it is that value is being added to is structure by means of a metabolic flow transformative metabolism rather than a question to which little attention is through a digestive tract that connects as a productive process has profound g i v e n " . with the environment at both ends. So implications for how economic too with all dissipative structures and development is understood. their aggregates, the human Ecological limits e c o n o m y. " The usual measure of economic success is economic growth. are rapidly "Bringing the concept of throughput Economic growth is the year on year into the foundations of economic increase in the Gross Domestic converting t h e o," r y he adds, "does not reduce Product (GDP) or output of a national economics to physics, but it does force e c o n o .m In y theory, so long as output economic growth the recognition of the constraints of is increasing, people are becoming physical law on economics. A m o n g increasingly well off and as the into uneconomic other things, it forces the recognition economy grows, so the beneficial that ‘sustainable’ cannot mean e fectsf of growth can be expected to ‘ f o r e v’… e Sustainabilityr in the sense ‘trickle down’ to even the poorest parts growth. of longevity requires increasing of the community. reliance on the renewable part of the he solution is to consider not output throughput, and a willingness to share In the same way, many economists Tbut ‘throughput’, that is "the the nonrenewable part over many assume that the continued sustained entropic physical flow from nature’s g e n e r a t i o n s . " growth of already rich and relatively resources through the economy and successful national economies will, back to nature’s sinks". "What is going aly then proceeds to reject the idea through global trade and the globalised on," he says, "is transformation, a fact Dof ‘development’ as simply growth e c o n o ,m passy on benefits to the which is hard to recognize if throughput in GDP and offers an alternative: poorer economies. This should enable is absent… Language misleads us into "Development might more fruitfully be them to achieve similar levels of thinking of the production process as defined as more utility (i.e more human economic growth and development multiplicative, since we habitually happiness or satisfaction) per unit of and to trade their way out of relative speak of output as ‘product’ and of throughput, and growth defined as p o v e r t y. inputs as ‘factors’. What could be more more throughput." When development natural than to think that we multiply is thus understood, severe doubt is his is certainly the view of the the factors to get the product! T h a t ,cast on the notion of ‘development as Testablished global institutions, the h o w e v, e r is mathematics, not global growth’ for two reasons, "one International Monetary Fund, the Wo r l d production! If we recognized the having to do with environmental Trade Organisation and the Wo r l d concept of throughput we would speak s u s t a i n a ,b thei l i t y other with social Bank. But even they have been unable of ‘transformation functions’ n o t e q u i t y. " to ignore the effects of continued, production functions." apparently unlimited, economic "Ecological limits are rapidly converting growth: ill-effects that show In that light, sustainability means that ‘economic growth’ into ‘uneconomic themselves as pollution, depletion of "the capacity of the ecosystem to g r o w t hthus ’ making us poorer not resources, exhaustion of soils, debt sustain these flows is not to be run r i c h. eThe r macroeconomy is not the and impoverished peoples. down. Natural capital is to be kept Whole – when macroeconomy grows intact. The future will be at least as well in its physical dimensions (throughput), This has given rise to the concept of o f in terms of its access to biophysical it does not grow into the infinite Void. It sustainable growth by which most resources and services applied by the grows into and encroaches upon the economists mean a level of output e c o s y s t e m " . finite ecosystem, thereby incurring an growth which can be maintained from opportunity cost of pre-empted natural year to year ad infinitum without "Moreover this throughput is the capital and services. These opportunity distorting the economy by inflation, metabolic flow by which we live and costs (depletion, pollution, sacrificed unemployment or over-production. T h e produce. The economy in its physical ecosystem services) can be, and often are, worth more than the extra and has led to the problem of obfuscated this simple insight by their production benefits of the throughput ecological unsustainability." refusal to recognise the productive growth that caused them." contribution of nature in providing ‘that There are several effects of ignoring to which value is added’… Value he question then is whether growth throughput. One is to consider GDPas added belongs to whoever added it. Tactually increases net wealth when a sort of ‘pie’ to be shared out. Daly But the original value of that to which the opportunity cost is set against the points out: "There is a real and further value is added by labour and increased throughput. "How do we important sense in which the original capital should belong to everyone. know that throughput growth, or even Scarcity rents to natural services, G D Pgrowth, is not at the margin nature’s value added, should be the increasing illth faster than wealth, The focus focus of redistributive efforts. Rent is making us poorer, not richer". by definition a payment in excess of ...should be on necessary supply price, and from the "Illth accumulates as pollution at the point of view of market efficiency is the output end of the throughput, and as the value of the least distorting source of public depletion at the input end. Ignoring revenue". throughput in economic theory leads contribution of to treating depletion and pollution as he conclusions from this reasoning ‘ s u r p r i s i n externalg ’ costs, if nature. Tare: "Reducing poverty is indeed recognized at all. Building the the basic goal of development, as the throughput into economic theory as a World Bank now commendably basic concept allows us to see that illth contribution of nature is indeed a ‘pie’, proclaims. But it cannot be attained by is necessarily generated along with a pre-existing, systemic totality that we growth for two reasons. First, because wealth. When a growing throughput all share as an inheritance. It is not an growth in GDP has begun to increase generates illth faster than wealth then aggregation of little tarts that we each environmental and social costs faster its growth has become uneconomic. baked ourselves. Rather it is the seed, than it increases production benefits. Since macroeconomics lacks the soil, sunlight, and rain from which the Such uneconomic growth makes us concept of throughput it is to be wheat and apples grew that we p o o r, enot r richer. expected that the concept of converted into tarts by our labour and ‘uneconomic growth’ will make no capital. The claim for equal access to "Second, because even truly economic sense to macroeconomists." nature’s bequest is not the invidious growth cannot increase welfare once coveting of what our neighbour we are, at the margin, producing goods aly goes on to point out that "the produced by her own labour and and services that satisfy mainly relative Dcardinal rule in microeconomics abstinence. The focus of our efforts to rather than absolute wants. If welfare is (the economics of firms and redistribute to the poor, therefore, mainly a function of relative income then aggregate growth is self- individuals working within the should be on the value of the cancelling in its effect on welfare. T h e economy) is to grow only to the point contribution of nature, the original obvious solution of restraining at which marginal cost equals value of the throughput to which uneconomic growth for rich countries marginal benefit. That has been aptly further value is added by labour and to give opportunity for further economic called the ‘when to stop rule’. GDP is capital…" growth, at least temporarily, in poor supposed to grow forever. The reason countries, is ruled out by the ideology is that the growth of the There is a fundamental diff e r e n c eof globalisation, which can only macroeconomy is not thought to between this view and the view that advocate global growth. We need to encroach on anything and thereby nature is a free, infinite resource. Once promote national and international incur any growth-limiting opportunity it is seen that economic activity takes policies that charge adequately for cost. By contrast the microeconomic place within the constraints placed resource rents, in order to limit the parts grow into the rest of the upon it by nature, a whole new series scale of the macroeconomy relative to macroeconomy by competing away of considerations arises. To begin with, the ecosystem and to provide a resources from other microeconomic the demands of humanity on nature revenue for public purposes. T h e s e activities thereby incurring an create what economists call ‘scarcity’. policies must be grounded in an opportunity cost. The fact that no two places are the economic theory that includes same makes each of them ‘scarce’ throughput among its most basic "The macroeconomy, however, is because they are unique. This gives concepts. These efficient national thought to grow into the infinite void, rise to ‘scarcity rent’, that is, a policies need protection from the cost- never encroaching on or displacing willingness to pay more than the externalising, standards-lowering anything of value. The point to be necessary supply price for access to competition that is driving emphasized is that the macroeconomy the place that is most advantageous globalisation. Protecting eff i c i e n t too is part of a larger finite whole, for the activity in question, known to national policies is not the same as namely the ecosystem. The optimal many as the economic rent of land. protecting inefficient national scale of the macroeconomy relative to i n d u s t r i e s . " its containing ecosystem is the critical aly says: "The above reasoning issue to which macroeconomics has Dreflects the basic insight of Henry Herman Daly is former Chief been blind. This blindness to the costs George, extending it from land to Environmental Economist of the World of growth in scale is largely a natural resources in general. Bank and Senior Research Scholar at consequence of ignoring throughput, Neoclassical economists have greatly the University of Maryland. Privatising Climate Change Hidden dangers in the Kyoto Protocol

he rest of the world hardly knows gave John Prescott, Britain’s deputy can put money into forestry or soil Twhat to think about President Bush. prime minister his finest hour in conservation. Or they can invest in We applaud him for fighting terrorism government. Then the A m e r i c a n‘ sc l e a n’energy e r technology abroad. So and for accepting Russia as an ally. spoiled it all. Mr Bush proclaimed that if Japan finds that cutting its emissions Then he spoils it all by slapping tariff s he would do nothing that imposed an by the required percentage is too on steel and beefing up subsidies to extra burden on US motorists. d ificult f or expensive, it will be able to US farmers - in utter contradiction of Notwithstanding that petrol is cheaper buy cheap emission permits from a n y o ns enotions ’ of free trade. How far in the US than bottled water. elsewhere to fill the gap. Or if Germany does Mr Bush’s vision extend? overshoots its target it will have what ithout the US, the Kyoto Protocol The Corner House calls an Non-Americans see a regrettable lack Wwould be no more than symbolic. ‘atmospheric dump’ which it doesn’t of global public spirit in ratifying treaties The more environmentally-minded need and can sell elsewhere. If I don’t to control chemical weapons or ban need to fill up both my dustbins I can let landmines, in supporting the UN or in my more wasteful neighbour rent one protecting the planet from environ- Kyoto: the largest from me. mental harm. As the European Director of the World Bank told an audience in invention of The Protocol is, as The Corner House L o n d os nChatham ’ House, there are a observes, a technocratic fix. It sees score of problems that now confront monetary global warming as a physical the world as a whole but are not phenomenon. It does not concern itself capable of solution by governments assets by with the deeper causes of the unequal acting on their own. The world needs use and the overuse of the better ways to collaborate, and the US voluntary atmosphere. It averts its gaze from the can’t sit on the sidelines. politics of industry, the explosion in international trade-related transport, the subsidies To do something effective about the for fossil fuel exploitation and use, or w o r ls d disappearing’ fish stocks, for treaty in history. indeed from any notion of greed as a example, needs international co- cause of climate change. operation. The same is true of global governments and campaigning terrorism, the use of land mines, or organisations like Greenpeace were uch of the analysis in The Corner chemical and biological weapons. T h e annoyed. As they saw it, the US was MHouse briefing is taken up with the worldwide problem of refugees and the jeopardising the future of the planet for imprecise science that underpins the armies of stateless people on the move the sake of its gas guzzling habits. A Protocol and the Alice in Wo n d e r l a n d in so many countries clearly needs a new pressure group, Families against accounting and verification system that collaborative approach. So does the B u s h started, a boycott campaign is supposed to regulate it. But the truly international trade in narcotics. And it is against the corporations that had controversial part of the Protocol is the obvious that global warming in contributed to Bush’s election fund. carbon emission trading regime it will particular and environmental deg- They hoped to force companies like set up. radation in general require countries to Coca Cola to influence the President act together if they are to be checked. to change his mind. Off e n d i n gThe Protocol will in effect be creating a Pollution does not respect boundaries c o m p a n inames e s ’ were posted on the whole new category of property rights: any more than fish do. Families against Bush website. rights, that is, to the planet’s atmosphere. Once distributed, they will ence the outcry at one of George But how good is the Kyoto Protocol? tend to become assets that, like other HB u s sh first’ pronouncements after Will it really slow down and eventually property rights, owners will fight to he became President, that the US stop global warming? Well, no, comes protect. On one calculation, pricing would not ratify the Kyoto Protocol on the answer from a thorough and carbon dioxide emission at $14 per climate change. This exhaustively provocative briefing by an independent tonne – the mid range price expected if negotiated agreement is supposed to research group, The Corner House. global climate trading schemes are set stop climate change by getting the up - the new carbon commodities industrialised nations to reduce the When ratified, the Protocol will bind 38 created by Kyoto would represent the amount of carbon dioxide they emit industrialised nations to reducing their largest invention of monetary assets by through burning fossil fuels. Britain and fossil fuel emissions by an average of voluntary international treaty in history. its allies on climate change spent 5% by 2008-2012. Countries unable to For those who can comprehend months delicately pressing Japan, a achieve these modest targets are trillions, the estimated sum is $2.3 backslider on the environment, that it allowed to compensate in three ways. trillion. Who will be awarded these should overcome its reservations and They may buy credits from countries assets? Why, the industrialised sign up to Kyoto. The resulting Protocol that have exceeded their targets. T h e y countries, because developing coun- tries ‘under-use’ fossil fuels and the plantation areas in its own carbon growing and selling their traditional climate in comparison to the developed dioxide budgets when, as is likely, the c r o p s . world. The third world will have fewer Kyoto Protocol is expanded to include chips when the game starts. restrictions on developing country The proponents of the original land emissions. As The Corner House enclosures of the 18th and 19th onsider the provision in the notes, using technical fixes to remedy centuries in Britain justified them on the CProtocol which allows ‘dirty’ political problems piles inequality on grounds of economic eff i c i e n c y. countries to offset their pollution by i n e q u a l i t y. Modern agriculture, they said, investing in forestry. This is part of the demanded that villagers’rights to graze Clean Development Mechanism This is land enclosure, 21st century their animals on the commons should (CDM). It allows industrial countries to style. As readers of Economic Monitor make way for big fields, proper hedges finance projects in developing are well aware, there is a dynamic that and better drainage. Much the same countries that aim to mitigate climate helps perpetuate economic injustice. excuses are being made for the 21st change; in return they get credits which You could describe it as the endless century forms of privatising the earth’s are banked and may be used to license activity by individuals and groups to resources – whether they are what continued pollution at home. In eff e c t ,i d e n t, i f y create and control for ActionAid calls biopiracy, or what the the well-off are enabled to buy the right The Corner House calls Carbocracy. to operate air conditioning, sports utility vehicles or jet fleets. They encourage limate change needs to be companies who already use more of Caddressed, and it will take their share of the world’s carbon sinks Land will multilateral resolve to do it. T h o s e to buy still more of them. governments that take it seriously be taken from deserve support, and the efforts to find Under the CDM, the industrialised binding global solutions should not be countries get the right to emit extra poorer people in derided. But encouraging people to be greenhouse gases in exchange for not more frugal in their use of fossil fuels only maintaining trees or soil in their developing should surely not entail the creation of own rural areas but also for planting individual rights to ownership of the air trees in Africa, Asia or Latin America. If countries. we breathe. Ironically, the solution to Japan uses 24 times more per capita getting people out of their cars and of the atmosphere for carbon-dumping onto public transport – a priority for than India, then it will need 24 times beating global warming as well as for more plantation land and 24 times themselves the resource rent. It e ficiencyf – lies in the self same law of more trees in order to compensate. amounts to holding to ransom the free rent. At present we are in a catch 22: Experience suggests that the land will gift of nature, whether it is land, natural we urge people to commute by train be taken disproportionately from resources, or in the present case, the and leave their cars at home, yet the poorer people in developing countries. e a r ts h atmosphere. ’ The activity puts a railways are in a state of collapse with brake on the naturally distributive no money to improve them. As Don According to Friends of the Earth, the action of the market system, and Riley has pointed out in Taken for a Norwegian companies Tree Farms A S because no government in modern Ride, the funding of public transport is and Norwegian A fforestation Group times seems to have identified the best done from the enhanced location have already leased land from Uganda problem, or has felt able to tackle it values that the transport system to use to soak up Norwegian carbon d i r e c, t wel y have instead the whole creates. dioxide. This takeover threatens the complex and unsustainable apparatus livelihoods of thousands of farmers and of government intervention to off s e t o what will save the planet from fishermen, many of whom supposed economic injustice. Sdestructive climate change? It will that they were the owners of the land. be the sum of countless unselfish The carbon revenues will far exceed n an earlier issue of Economic actions by people, organisations, the rent paid to the Ugandan IMonitor this author described another companies and communities, g o v e r n m e n t . 21st century attempt to privatise the encouraged or cajoled by intelligent free gift of nature. This is the patenting government. There are already n neighbouring Tanzania, Tree Farms by life science companies of an array examples to follow. One is the Ianticipates selling carbon credits from of plants and crops whose genetic extraordinary city of Curitiba in Brazil, pine and eucalyptus plantations worth structures look promising and which has the world’s best transport $27 million to Industrikraft Midt-Norge profitable as sources of drugs and system and clever policies to promote on a land-rent payment of just f o o d sfs. t u The f neem tree in India, and responsibility for the planet. In the $565,000. The people hired as casual Basmati rice have both been the meantime, perhaps we should be plantation workers were paid less than subject of patent applications by grateful if Mr Bush’s own anti- the government’s minimum wage. T h e companies. As the British campaigning environmentalism has helped derail agreement requires that local people charity ActionAid has pointed out, if the worst aspects of the Kyoto give up rights to the future use of land. these patents are upheld they will P r o t o c o l . It also demands that Ta n z a n i adeprive third world farmers of their relinquish the option of using the livelihoods by preventing them from Hugh Ve n a b l e s Economic Culture How can economics be guided by human values?

conomic activity is simply an develop them. conditions for a new economic culture Eexpression of human cooperation based on equity (a fair playing field for and exchange but economic laws, Simple family values such as caring for everyone). policies and trade rules rarely one another and our environment form harmonise with human values. A new the basis of family life. Matters related A New Economic Culture: economic culture, guided and to raising children need particular The challenge for a new economic regulated by natural laws and by attention since so many mothers come culture is to provide the ideology and ethical and social values could be the under financial pressure to earn a policies which will lead to the provision answer. living and motherhood is often of the basic needs for human life for all. considered not to be a worthwhile The new culture would provide the The first need is to identify what human vocation. If we want secure and happy conditions for nurture and human values and natural laws apply. communities where our children can be development, which would lead to both Religious traditions, based as they are nurtured and develop fully, whilst the individual fulfilment and to on knowledge and understanding of natural environment is respected and communities living in harmony with truth can help. cared for, these values need to be each other and with nature. This will included. require global understanding and Awareness and morality: participation. For example, the Dalai Lama of Tibet Government and law: says: In the UK our laws are provided by We need to recognise our common common law, as well as statute laws. inheritance of the Earth and share her "The reason why we seek to behave in The British constitution offers everyone gifts justly. We need to understand the a good manner is that it’s from good the right to the quiet enjoyment of their e ffect of our economic laws and behaviour that good fruits are derived. own lives, provided that they do not policies as they currently exist. W e So, the basic reason is that one wants infringe upon the same right of others. need to discuss many questions: What happiness and doesn’t want suffering, The great English common lawyer, Sir kind of security do we require? What is and on the basis of that one enters into William Blackstone, put it like this: the effect of property rights? What is good actions and avoids bad actions. the effect of taxation and how it is Goodness and badness of actions are ‘The Creator has so intimately levied? Is there a natural source for determined on the basis of the connected, so inseparably interwoven taxation? What is the effect of world goodness and badness of their fruits." the laws of eternal justice with the trade rules? Why are so many in debt happiness of each individual, that the and what is the effect of this? What is The development of individual latter cannot be attained but by the proper function of money and of awareness gives rise to moral scruples observing the former; and, if the former credit? How can we ensure our and provides one useful starting place be punctually obeyed, it cannot but activities have a benign effect on the for a new economic culture based on induce the latter.…this is the environment? truth and moral values. foundation of what we call ethics or natural law.’ We need to understand that our Human development and fulfilment: economic laws and policies work at a Another aspect of our human nature Hence the function of law is to provide causal level. In other words the effect which can be developed is our the rules, based on ethics and natural of the economic policies and laws we potential to develop an understanding law, that we must all live and work use can be either devastating or life and knowledge of spirituality upon under, so that justice, and by inference enhancing, both for humanity and the which human fulfillment and happiness human happiness, prevails. natural world. depend. Taxation, or rather provision for the Hence, reform of economic laws and It is a spiritual understanding that tells combined needs of civilised societies, policies (including taxation, us that one of the the natural ways to is also the function of governments. environmental regulations and trade fulfilment is the development and use We need law and order, roads and rules in particular), needs to be given of our skills and talents, not only for our other transport infrastructures, health the highest priority in order to ensure own benefit, but for the benefit of care, education, and other services that society’s laws and policies are others also. The social and economic and provisions at the level of local and based on ethical and social values; conditions we live under need to allow national communities. But we need to and therefore provide the conditions for such development for everyone. understand the effect of how taxes are human development, fulfilment and levied and choose methods which are real happiness for everyone. Social, religious & cultural traditions in harmony with our value systems. are the substratum of the laws which Leonie Humphreys guide to our behaviour. But we need to We need to identify how our laws and examine how we can preserve and governments could provide the LVT IN LIVERPOOL LESSONS FROM A M E R I C A NOW ON SALE The City of Liverpool has many trial valuation of a part of the inner city problems, but they are being met with that has a wide range of uses. vigour and invention. Strong and Researchers will then present the radical political leadership is the order results in graphical (map-based) form to of the day in this Liberal Democrat interest groups for debate. JUSTICE stronghold and the city is regenerating at a rate not seen for a hundred years. Perhaps the hardest part will be to The transcript of a lecture estimate what it will cost to value the delivered in December 1951 Added to this good fortune, the city is whole city and to establish exactly what by proposing to pilot an innovative tax changes to property and tax law will be system that could see a reduction in n e e d e d . existing local taxes for ordinary people Leon MacLaren and small businesses. Liverpool City To conclude the second stage of the Council is set to request central Fellowship and launch the third, an government approval soon. international conference was held in February at Liverpool’s Tate Gallery on The failure to observe Liverpool has teamed up with the Henry the scenic Albert Dock, on Liverpool’s justice in economic George Foundation of the UK (HGF) t o Merseyside waterfront. affairs accounts for conduct research in an effort to prove much of the poverty that a land value based tax is workable Three speakers from the USA g a v e in this country. The idea of Land Va l u e enthusiastic accounts of how modified and many of the Taxation (LV T )is as old as human forms of LV T were being used to problems of modern s o c i e. tIt y is a system that ensures that regenerate their cities. Ted Gwartney economic life. wealth created by society and not by described how land values were individual effort is returned to the assessed during his thirteen years as c o m m u .n Taxation i t y of labour and profit Chief Valuer for the state of Columbia in is a disincentive to work and it is an C a n a d a . In this newly unpopular method of raising revenue. published lecture, Speakers from the UK addressed the Leon MacLaren, Former Chief Executive of HGF, To n y d ificulties f involved in introducing the Vickers, has been awarded a third system here. One major difficulty is the describes the Fellowship in LV T by the Lincoln completely different status enjoyed by principles of economic Institute of Land Policy, this time to local government in the U.S., where justice in a way that is focus on how to introduce LV T i n local authorities have considerable as fresh today as it Liverpool. Previous Fellowships were autonomy including their own revenue to look at the barriers to LV Tin Britain raising powers. was when the lecture and to see what lessons could be was delivered. learned from cities in Pennsylvania In the U.K. local authorities are U S Athat have had a form of LV T f o r completely circumscribed by central y e a r s . government and have no independent powers to raise revenue. Any initiative Order from: The Bookshop Taxing land values whether the land is therefore requires central government Wholesale Bookshop in use or not will act as a disincentive to a p p r o v a l . School of Economic Science land speculators who regularly hold Sarum Chase onto derelict land and keep it out of use Another problem to be overcome is the 23 West Heath Rd and use its value simply as collateral to identification of taxable land parcels in NW3 7UU [email protected] invest funds elsewhere. A n o t h e ther absence of a properly completed advantage is that any land based tax is land register, and there are no signs of £ 2.50 + p & p impossible to avoid. Land cannot be government enthusiasm for that. Also available: shifted to an offshore bank account or The Function of Economics hidden in an electronic database. The conference, chaired by Louise by Leon MacLaren Ellman M.P. and Sir Joe Dwyer, £2.50 + p & p Before taxing land values it is Chairman of Liverpool Vision brought necessary to value each site as though the prospect of LV T in Britain a it was developed at ‘highest and best significant step closer. u s e ’in accordance with the local development plan. The main activity in Councillor Chris Newby this year’s research will be to conduct a Liverpool City Council books books books Exorcising the ghost of Malthus: The Sceptical Environmentalist: Measuring the Real State of the World by Bjorn Lomborg. Published by Cambridge University Press Malthus was certainly not the first to and on any measure the situation is India where sober analysis shows a conclude that human life, at least for better than we have been led to believe hopeless imbalance between food the vast majority, was necessarily and that we are not about to expire in production and population…Our miserable but he was possibly the first an orgy of self destruction and waste. inadequate aid ought to be reserved for to assert that it was naturally and those which can survive" inevitably so. His uniqueness also lies The argument is carefully structured in in the fact that he sought the proof for a series of sections and chapters, This was written in 1967 when the this dismal judgement in the facts of which deal in turn with each of the average Indian consumed 1,875 economics and everyday life. His major problems that are likely to aff e c t calories per day but before the Green method was based upon Human Welfare; resource depletion, Revolution that transformed commonsense assumptions and food production, pollution, energy, agricultural productivity in the decade mathematical logic and not the water and the rest. Each subject is that followed. In 1998 the average abstractions of moral philosophy. He tackled on its own and in combination Indian, and there are very many more knew that the world was a bad place with the others to produce a well of them now, gets 2,466 calories per and he proved it. researched and convincing argument; d a .y The resemblance of Ehrlich’s that, although we are not there yet, policy proposal to that of the Habitual Thinking there is evidence for renewed optimism Malthusians of the 19th Century should In this he told us what we always knew. and hope and not for the despair and strike even the most casual observer. Malthus, following in a tradition that guilt so favoured by the opponents of Professor Limborg says goes back to Machiavelli, advised us g r o w t h . simply to wise up and accept the facts " I believe it is important to emphasise of life. Life is unfair and we should Errors of the Green Lobby that being overly optimistic is not expect no more. Nemesis is waiting to Unusually in this era of anti without costs, but that being too strike us down even in the moment of globalisation, this book lays a charge pessimistic also carries a hefty price our triumph. against the environmental lobby which tag. If we do not believe in the future we is fully substantiated. Whether will become more apathetic, indiff e r e n t Those that came after Malthus, whilst prompted by the need to justify and and scared – hiding within ourselves. rejecting his idea of the irredeemability secure funding for their activities or And even if we choose to fight for the of the human being, were never the justified by a genuine desire to arrest planet it will, very probably, be as part less so taken by the commonsense and redirect attention, significant of a project that is born not of and the logic of his economics that, sections of the environmental lobby reasonable analysis but of increasing rather than rejecting them as have preferred to scare the world into f e a r. " nonsense, they conspired to keep the taking notice, exaggerating problems, horrid vision alive. This they did by fabricating evidence where it did not The real reason that we continue to adopting almost without exception exist and where it does, drawing believe in Malthus is fear, nothing more every one of the fallacies and half- unwarranted conclusions rather than and nothing less; the fear that says, truths that together make up the engaging in sober debate. "there might not be enough"," it might Malthusian doctrine. not last". In stark contrast to this is the This has prevented the collection of real state of the world and the real Why do we prefer to believe in the proper evidence and proper debate nature of the human being. The real inevitability of poverty and despair leading to a workable understanding of world in which we live is one of rather than abundance and hope? If the problems which we undoubtedly do increasing prosperity and in a few you read this book you will see that the face and a consensus on what can be places, abundance. The reason for Malthusian doctrine, in all of its done to solve them. According to this, spelt out so clearly in this book, is varieties, is utterly refuted by the facts. Limborg, a lot already has been done the human genius that can turn less and more remains to be done that is into more and still leave some over. The Sceptical Environmentalist well within our capacity to achieve. There is nothing to be afraid of! Ye s , challenges widely held beliefs that the there is still much to do, but the environmental situation is getting Example: Food Production in India problem is not one that afflicts the worse and that our world is about to He quotes extensively from the works production of wealth, but relates wholly come crashing down about our ears of the environmentalists such as Paul to the distribution of wealth. On that either because of pollution or inability to Ehrlich, a renowned writer on food subject Lomberg is sympathetic but feed an ever growing population or the matters and propagator of the idea of silent, trusting to growth itself to solve exhaustion of oil and other natural imminent global starvation, who the problems of distribution. But his resources etc. Bjorn Lomberg, thought India was bound to fall victim to trust in growth is, at the same time, a Associate Professor of Statistics in the food shortage and who said we should: trust in the creativity and genius of Department of Political Science, human beings and that is no counsel o f University of Aarhus, Denmark, "..announce that we will no longer send d e s p a i r. establishes the fact that in every area emergency aid to countries such as Joseph Hyde books books books Exposing Britain’s Land Scandal Who Owns Britain? by Kevin Cahill. Published by Canongate Books, £25 hb, ISBN 086241 912 3 "News", said Lord Thompson, "is what society when their position as holders £38,000. The average value of the someone didn’t want printed. All else is of the stranglehold on the nation’ s 157,000 non-domestic family holdings advertising." So writes Kevin Cahill at most precious resource is threatened is £1.8 million. the outset of this epic work, an with exposure. account of the history and hidden ahill puts this in perspective. facts behind land ownership in the UK. Their technique has always been to C"… there can have been few more On that basis, this book is news. use their overwhelming influence in specific examples of the brutality of the Lords to obstruct measures of land power in relation to land and its ne of the unsung effects of the reform that do not suit them. In ownership than the period 1990 to Oremoval of the hereditary peerage particular, they ensured that the Land 1997, when a total of over 500,000 from the House of Lords has been to Registry, the only official record of land families had their homes repossessed. remove entirely the greatest single ownership in Britain, only registers The probable cost of keeping these obstacle to land reform in the United land when it changes hands through people housed in the homes they had Kingdom. The landowners, who have sale or inheritance. The operation of bought was a maximum of £5 billion used Parliament over the centuries to trust laws ensures that their lands over those seven years, about £700 seize and retain control of the vast never change hands in this way with million a year, and might have been as bulk of Britain’s land, are a spent force the result that their holdings have low as £2.4 billion. During that same (at least in Parliament). Their power to never been registered. period the 157,000 wealthiest families block or amend legislation which in the UK received up to £21 billion in affects their interests is removed. ahill claims that this scandal is (agricultural) subsidies." Chere exposed for the first time. No- "Our country," writes Cahill, " the one who has read the Hammonds, The book is not without its flaws – United Kingdom, is 60 million acres in Prebble’s Highland Clearances, or any which may partly be excused by the size. Some 59 million of us live on of the more recent work of Mason d i ff i c u, l t yamounting to near those 60 million acres. The areas Gaffney or Fred Harrison, (none of impossibility, of obtaining any accurate taken up by the homes of these 59 whom are mentioned in the extensive information about land-ownership in million people takes up less than 10% bibliography) could agree with that. Britain. It’s author distinguishes of the land, a maximum of 6 million But nowhere has the scandal been between housing and agricultural land acres, but more probably just 4.4 more completely or more thoroughly (exposing en route the myth of the million acres. It is impossible to settle documented. Sixteen short chapters shortage of housing land in the UK), on a more accurate figure as the set out the history, significance and but makes no real attempt to consider stastistics for most of the UK are methods of the great confidence trick the importance of location in estimates, drawn from samples … that has been perpetrated on the determining land values or the power while the government of Northern British people. They are followed by a of individual land owners. Similarly , Ireland has no figure available for its county by county analysis of the there is no evidence of any real residential acreage." figures he has been able to unearth. understanding of the economic importance of land as the source of all There follows a brief summary of land Perhaps most telling is the fact that his material wealth production. The reality distribution, concluding: figures have to be based as much on is that landowners have a passport a survey conducted in 1872 as on the into everyone’s pocket, a prior claim "(This) leaves some 40 million acres of official land registry figures, which are on everyone’s productive labour, often beautiful, sometimes productive not available on any comprehensive simply by being able to demand a rent. countryside. This is owned by just basis. The 1872 survey was itself 189,000 families". supressed almost as soon as it was he real importance of this work is published although the author found Tthat it exposes how a few people ahill’s thesis is that it is these that by determined application it is over many generations have C189,000 families who do not want possible to obtain it from public enhanced and consolidated their this information to be published. libraries who often begin by denying its power over the wealth creating efforts B r i t as i n landowners ’ form a small, existence. of a whole population. It is not just their inter-related clique which has obtained capacity to attract formal subsidies and maintained its hold in political and The figures show that in 1872 upwards that matters. It is the continuous financial power in Britain for at least of 95% of the population owned no subsidy from every working member of 800 years. Its members swell the land at all. With the 20th century the population that is the real injustice. hereditary peerage while directorships development of a property owning For those with an interest in ending the of all the major banks and financial d e m o c r ,a c thisy figure is much deepest injustices of the modern institutions are shared amongst them. improved. But the average value of world, this book is essential reading Quietly affable, tolerant and mostly the 36.2 million domestic holdings and an invaluable tool. benign and apparently civilised, they (allowing 2.2 stakeholders per unite as a single, ruthless, secret household) in the UK in 2001 is put at Ian Mason ECONOMICS WITH A HUMAN FACE

Foundation Economics The School of Eonomic Science offers a challenging perspective on Economics for anyone who has wondered why economic affairs are organised in the way they are - and whether there might be a better way. Most economic systems are built on assumptions. What are they? Whose are they? Whom do they benefit? To see different possibilities requires a different way of looking. Foundation economics examines such questions as: can everyone be wealthy? Why are there so many poor people in rich countries and why are there very rich people in poor countries? So few countries in the world produce and consume so much of its wealth. So many people in the world fail to reach their economic potential. The course asks: Is this situation inevitable? How could it improve?

Foundation Economics is a ten week course that introduces a radical and fresh understanding to economic affairs based on the view that economic forces are the product of human nature and the nature of the universe in which we live.

The course is complete in itself, but students wishing to ocntinue their studies are encouraged to go on to Parts 2 and 3.

All courses run as ten weekly sessions of mixed lecture and discussion. Active participation and questioning by students is encouraged throughout. Students may vary their night of attendance from week to week.

Autumn term courses will begin on Tuesday Wednesday and Thursday the 8th, 9th and 10th October 2002.

Economics Part 2 - Theory and Practice Economics Part 3 - One World, One Wealth

This ten week course builds on the principles discussed in Foundation In this age of globalisation the economic disparities, inequalities Economics. Many students ask for an account of the basic economic and injustices are all too easy to see. This course looks at the systems- classical, neo-classical, Marxist, Keynesian, monetarist etc. causes and effects of globalisation and economic centralisation This course gives brief descriptions of all of these and asseses the and challenges the explanations and justifications offered by extent to which they demonstrate the workings of natural laws and the conventional economics. effects they have had. Why are international corporations apparently so powerful while Study of the great economists and their ideas is used to focus many governments appear to be powerless? Why is growth so attention on some of the hidden assumptions of economic life – the important and to whom? Why is it that market economies can be idea of property; the place of land, labour and capital as factors of so destructive? production; the importance of natural resources and the incomes derived from them and the role of government in managing modern Starting from the most basic principles this course shows how economies. Understanding these enables students to see the causes economic affairs can be arranged so as to offer freedom, justice of many of the injustices and difficulties experienced in modern and equity to humanity on both local and global scales. economies and how they might be avoided or resolved.

Ten weekly sessions on Tuesdays beginning 8th October. 2002

TO ENROL for any of the School’s courses and for details of lectures and other events please telephone the School of Economic Science. 0208 688 2642 All courses and lectures in London will be held at 7:00pm at 11 Mandeville Place, London W1M 6AQ Economics courses are also available in Brighton, Cambridge, Croydon, and Oxford. Visit our website on www.schooleconomicscience.org

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