Spencer Heath Archive

Item 2919

Eight typed pages stapled together with many corrections, mostly draft of a letter to Dr. Roman

No date

 

 

Dear Dr. Roman:

 

In your March issue our good friend, C. H. Kendal, of Summit, New Jersey, makes some interesting suggestions and inquiries concerning the na­ture of the services for which Rent is paid.

 

 For benefit of Mr. Kendal and others similarly inquiring, please let me remind them that the term Rent, under all practical and actual usage and apart from metaphysical, traditional and literary wool-gatherings, is not applied to the recompense paid for the use of any one kind or any par­ticular kind of property. In all actual and practical exchange transactions rent is paid for the the use of specific property of any kind, provided only that it be a limited use, a use limited as to time. Whenever property is transferred “for keeps” without any time limitation upon its use, the recompense paid or received for such unlimited use is always called price — by the transferor, sales-price; by the transferee, purchase-price. But whenever there is any time limitation, whatever or however remote, upon the use of any specific property, then the recompense paid or received for such limited use is always called Rent — and there is no alternative or equivalent term or other significance of this term in any actual or practical use.

 

 Property, of course, is anything with respect to which contracts and exchanges of services can be made. Property does not depend on or result from physical labor or even from phys­ical possession, but upon the social conventions of a community (of a place affording mutual services) providing a market in which services can be exchanged, either as such or as stored up in the form of property, wealth or goods. Property does not result from any or all labor or exercise of body or mind but only from such as commands a voluntary recompense. All such exercise of body or mind, and not any other, is, properly speaking, services.

 

 Economics means the keeping of a house, a city, or a state as a place of service — as a com-munity. A population occupying such a place and engaged in the interchange of services is a society. A society is organic because its parts are differentiated and their separate functions integrated. A society is an organism because in addition to the interfunctioning of its parts it has an over-all function. The first function of an organism is to acquire a structure. Its sec­ond function is to replace or reproduce itself. The social organism has a third function, namely, to create and re-create its environing world.. The over-all and final function of a society is to create or re-create its environment. This is commonly called production. The over-all and final function of every other organism is only to replace or re-produce itself. This is commonly called reproduction.

 

 Economic terms such as rent, interest, wages, profit, value etc., have no specific significance except as they refer to the functioning of a social organism in and upon its environment as a community or place of services. They designate specifically different kinds of services or the recompenses for different kinds of services in an exchange system and in the course of exchange.

 

The economic term for a system of service by exchange is market, usual­ly referred to as the market.

 

 Strictly speaking, nothing but services, in one form or another, can be exchanged.

 

 Services may be either current or accumulated. That in which, or in respect to which, services have been accumulated is called property, improve­ments, capital, wealth, goods, merchandise. Any or all of these can be the subject matter of contracts and exchanges, hence of ownership. Property is the most general term; it applies to anything that can be exchanged. Wealth is less general because it refers principally to arti­ficial things — natural things into which services have been incorporated. It usually excludes natural things. Capital is still more limited, for it refers only to that property or wealth that is directly in the course of exchange or being used in some manner to facilitate exchange. However, cap­ital includes all tangible things having to do with exchange and excludes all that do not. As an economic term, capital is all in­clusive, for it embraces all property of whatever kind that is engaged in or in connection with any social or economic process. Land, improvements, wealth, goods, merchandise — these may or may not be capital, ac­cording to whether they are used as the objects or instruments of exchange or to aid in exchange. When not so used, then they are property only in the primitive and pre-social sense of being owned for the use of the owner only and not for the use of others by exchange. Capital is socialized property, being all the property and the only property that is owned for the use and benefit of others by the social and non-coercive process of free contract and exchange.

 Currency and bank credit as money are not property or wealth. Money is a claim or demand-charge against any property or services that the general markets do or shall afford.

 Services are exchanged either as such or by giving the use of property incorporating them. Their exchange equivalence is determined by the democratic voting — bids and offers — of the market. The exchange recompense is taken first symbolically in currency or credits. These are only representative of the actual exchange recompense to be received when these symbols are liquidated into other services or property. The services finally received back are the actual values of the services given. The currency or interim credits employed are the representative or symbolic values of the services given.

 The accumulation of services in property is called production.

 

 The performance of services in respect to property is called exchange or distribution. Stand-by services (frequently very important) are included in these.

 

 The use of property carries with it the use of the services

accumulated in it or performed with respect to it, either or both, and including stand-by services.

 Services in or in respect to property are transferred by giving the use of the property.

 

 Where the use of specific property is given without any limitation, the market-measured recompense is called price — sales price and purchase price, by the respective parties.

 

 Where the use given is limited, as to time, the market measured recompense is called rent. There is no other name for this.

 Where a limited use of money or credit — generalized or representative property or services, instead of any specific property is given — the recompense received for the time-limited use of this generalized property is called interest.

 Where services are given as such and with the use of property the recompense received is called wages, salaries, fees etc.

 

 When services are gauged or waged on the basis of the time consumed in performing them the recompense is called wages. When not so gauged, the recompense is usually called salary.

 

 The assembling of various kinds of properties and services into a single or united ownership and redistributing them in modified form — all assembling and redistribution being by the social process of free contract and exchange — is the conduct or administration of a business or free enterprise. All administration of free enterprise is carried on either directly by or under authority of those who are or who by purchase become the owners of the properties and services engaged in the enterprise.

 

 The owning authority of an enterprise purchases and recompenses the use of three kinds of services and in turn sells and is recompensed for the use of four kinds: For the use of current services it pays wages (including salaries etc.). For the limited use of credit or currency as generalized property or services wherewith to obtain the use of specific property it pays interest. For a limited use, simultaneously or successively with others, of property in common with others it pays rent. If in either case the use obtained is unlimited as to time, it pays price or capital value. To do this it must forego the receipt of and thus indirectly pay interest or rent.

 

 To the three services for which it pays wages, interest and rent, the owning authority contributes its own administrative and supervisory services, both productive and distributive, and sells the combined four services in the form of services or of property or of its use for a combined recompense called gross receipts. The net recompense, if any, above that part of the gross receipts required for the payment of wages, interest and rent is the contingent recompense for proprietary administrative or ownership services. This contingent recompense is called profit. Profit is distinguished

from wages, interest and rent in that its rate or amount (if any) is not determined by the terms of any contract in advance, but is contingent upon the social serviceableness and efficiency with which the administrat­ive services are performed.

 

 The foregoing explanations of economic terms are simply descriptions of the particular kinds of phenomena to which the respective terms are, in the conduct of actual business, attached. Such knowledge of the actual phenomena should dispel much of the idle theorizing in support of pathological pre-judgments concerning the nature and payment of rent.

 

 It is, as Mr. Beckwith himself says, “characteristic of some forms of insanity that the victim is governed by some fixed idea which he in­jects into every situation.” Dr. Oppenheimer says they are “prisoners of their own premises.” Such persons never cease trying to twist words out of their perfectly definite practical significance in their persistent efforts to rationalize their particular and usually pathological theories and obsessions. This not only precludes then from getting in touch with any reality of the matter in hand but tends also to confuse and even to infect the minds of many other persons.

 

 /The/ social distribution of sites and resources by contract and consent instead of by either anarchical or governmental, unorganized or politically organized, force is the original and primary public service of the community.

It is original and primary because the community, as a place of service, originates in the fact of this service being performed.

It is public because it appertains to adults generally and without discrimination as to the terms of distribution.

 It is service because it commands a voluntary recompense.

 

 The voluntary recompense for this social, peaceable, non-coercive distribution of sites and resources, together with all public advantages of every kind (less disadvantages) appertaining to its use, is called land value or ground rent.

 

 Ground rent, then, is payment not for the production of any kind of property but for its distribution — the distribution of its use into the possession of those who can use it most productively, namely, those who can pay the highest rents. This insures the highest productive use of the community advantages and resources and thereby the maximum flow of wealth and services into the common markets of the community — the highest production and distribution that is possible under all the depredations and re­strictions that the political authority itself imposes as government or fails to punish or prevent as crimes.

 When the owners of sites and resources (or of any other property used and inhabited as a community, such as, for example, a hotel) give additional services such as protection from force, security of person and property, or any needed facilities of common advantage, enjoyment and participation, beyond the mere distribution of locations with only such natural or other advantages as may chance to appertain to them, then such additional community services, not resting on taxation or other public depredation, become services of production and they are automatically recompensed by the increased rents and higher property values created by them. Such proprietary services performed by community owners, self-financed, and not based on any force or depredations, either public or private — the original Anglo-Saxon type of public administration before the Norman influence and subjugation — is destined to become the future means of redeeming modern civilization from the tragedies of power politics based on depredations and force, both foreign and domestic, and inherited through Rome from the classical and earlier ancient slave states.

 

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 Contracts are engagements to exchange services

 Many services are incorporated in properties and exchanged in that form

 Property and services are most frequently exchanged for money or credit.

 Money or credit is generalized property; it is a ticket entitling the holder to have any kind of property or services the markets afford.

 Giving the use of property is a service,

 When the use of property is given outright — an unlimited use — the exchange recompense (usually in money) is always called the price — sales price or purchase price.

 When the use of property is not given outright but is limited as to time the exchange recompense (usually in money) is always called RENT.

 Whether the property be real or personal, fixed or movable, the recompense for its time-limited use is always called rent. The term rent is not re­lated to the nature of the property but to the nature of its use — the lim­itation as to time.

 

 Rent, therefore, is the recompense paid for the limited use of any kind of property.

 Property is anything that, under the prevailing social custom, is the subject of ownership.

 The ownership of property, in its social significance, is the administra­tion of property not for one’s own use but for the use and benefit of others.

 Things can be owned for one’s own use and to the exclu­sion of others. Such property can exist (but only to a very limited extent and never productively)where there are no social relationships — as a monkey owns a banana.

 

 The administration of property by ownership — proprietary or social administration — is the putting of it to the use of others by means of contractual engage­ments, sale or  lease — unlimited or limited use – and thereby conveying ser­vices.

 

 Only that which can be owned can be the subject of contract — of social administration.

 Any sale or lease of property is a social or contractual distribution of it, that is, of its use, of the services performed in the physical produc­tion of it and in the social distribution of it.

 Price or rent, therefore, is paid for two kinds of services: production and distribution.

 

 When property is easily or efficiently produced it is not unusual for the services of distribution to command a greater recompense than that received for all the services involved in its production.

 But not all kinds of property are produced. Those portions of a community (land) that are not used by the inhabitants in common   The sites and re­sources of a community (except such portions as are used by the inhabitants in common)

 The sites and resources of a community do not require any services of pro­duction

 No other property can be produced from land until the land itself is distributed by some process that gives security of possession

 No services of production are required. But all parts of a community that are not in the common and public use do require the services of distribu­tion by a social or contractual process. This makes ownership necessary. Until they become property they cannot be the subject of any contractual or social administration. Possession and dispossession until then must be determined