Spencer Heath Archive

Item 1258

Typed copy of a letter to Clifford H. Kendal, Editor, Land and Freedom, 150 Nassau Street, New York NY

July 30, 1939

 

 

 

 

Dear Mr. Kendal:

Mr. Willcox excellently shows in his article in Land and Freedom, March-April, 1939, that land, including all the resources and transformations of nature, cannot be of any use or avail except by the process of labor and that it is only the processes of labor that can have any of the value that arises when men serve one another by the process of exchange.

     The processes of labor that men carry on in the preparation of the things of nature for exchange with other men are called production, and the actual transfer of those things is called by the transferor sales and by the transferee purchases. All such labor processes, including those incident to exchange, are services because they are those kinds of labor, and only those, that command a recompense — and a recompense that is measured by the voluntary democracy of contract in an open market. All such labor as becomes services by its incorporation in materials of the earth for the purposes of exchange gives such materials the character of capital wealth, and it is only by manipulation of this wealth that consumers’ goods and services are brought forth. The only durable and permanent wealth and the only considerable quantity of wealth in a society is the capital wealth — all the wealth that is not actually in process of being consumed and destroyed. And this capital is the only wealth of which economics as a science takes any account.

     Capital is of two kinds — public and private. All capital requires to be administered — that is, to be sold or to be so manipulated that the use and services of it can be sold. This brings a recompense (profit) for the administrative service and this income is what gives it value as capital — capital value.

         Mr. Willcox knows that when materials of nature are exchanged by labor for the use of others by sale and exchange, or to facilitate sales and exchanges, they cease to be land and become capital, or social-ized wealth, and that they remain capital so long as they are used either as objects or as instruments of exchange. He knows, doubtless, also that the instruments and facilities of exchange are of two great kinds or divisions, private and public, — that there is private capital which, in terms of its use or of itself, is administered and exchanged among private and particular individuals and that there is a public or community capital that is adapted to be used and engaged by the people of the community in common for their common purposes and needs. But he does not seem to make it very clear that neither of these great systems of capital can function without the intimate cooperation of the other by exchange of the use of the one for the use of the other, and that rent is that portion of the private capital, or its use, that is given up in exchange for the use and services of the public capital of a community.

     (It should hardly be necessary to state that the public capital consists in all those physical improvements that are in or upon such land of the community — as is set apart for the common use, including all the wealth that is applied to the maintenance and the operation of those improvements.)

     Now it happens that the only legitimate way to get any capital, or its services, from others is by the exchange for it of one’s own capital or services. This is clearly recognized as to private capital but, again, it is not so clear as to community capital. We cling to the thought that it is necessary and legitimate for the community servants to take their recompense by force (taxation) instead of by exchange. We feel that somehow the community itself and as such, confers public services and that this entitles the public servants who pretend to be or to represent the community, to take their recompense by force. This is the Roman and the Nazi conception (and practice) of the State. But the fact and reality is that the (land) owners of the community and the community political servants are such, not because they themselves are the community or represent it or render services to or for the community as such, but because, in common with each other, they render services to other occupants of the community which those occupants enjoy and partake of in common with one another.

     A civilized community then is, in reality, a place of common occupancy, where some but not all of the occupancy is in common, and affording some but not all services to be availed of in common. The owners and servants neither are nor do they represent the whole community (place) or any part of it; they are a part of the population occupying it; and those who are served by the community capital, directly or indirectly, and pay rent, directly or indirectly, are only another part of the population; and this is as true of the general community as it is of a hotel. If there be any who receive none of the common services and neither pay voluntary rent nor suffer compulsory taxes, directly or indirectly, they are not in the community nor of its population, nor are they in any social-ized (by exchange) or civilized condition.

     All of the community (place) values arise by practice of and because of the exchange relationship between the community (land) owners and those persons who partake of the common services. There is no such relationship between the community (political) servants and any part of the population. Their relation towards both land owners and land users being predacious and parasitical, thereby destroys values but cannot create them; only exchange can do that. Hence taxation; and thus community values do not arise but are destroyed. If an exchange relationship were to be established by the land owners with the land servants, by employing and paying them and supervising their activities upon the population, then there would appear in community (land) values — and to land users no less than to land owners — all the values that taxation now inhibits and all that it now destroys and all the new values that could be born and created by this new extension of the exchange relationship.

     Just as no private or consumers’ wealth can arise except by access to and labor upon the earth and its “increments,” so is it not possible for any private capital for the purposes of exchange to arise except under that security of ownership and possession of the private portions of a community that gives to its occupants access, by way of exchange, to the public portion and its capital — the necessary public facilities and freedom of exchange. This social sanction of property in land, so far as it is unimpaired by taxation, is the social guarantee of this security of possession and access.

     It is necessary to understand something about the constitution of society, the social structures and their functions, before we dogmatize upon the ethics of their operation.

     No social or economic community is ever formed except on the basis of property in land. If the land is not already owned, reducing it to private property is the very first thing upon which the settlers unanimously insist. By this means it becomes possible for them to get peaceable and legitimate possession and access to the public capital and services, for they can now obtain this possession and access by the process of exchange, whereas without land ownership they could hold no property or possession except by might. Without the acceptance of land ownership, no property could be respected, and the law of the jungle must prevail, but, having this institution, it becomes possible for the inhabitants to have security of possession of land to give them access to the indispensable public capital and services, and also security of possession in their private capital and personal goods. These two kinds of security make it possible for those who have private capital to obtain access to public capital and services by occupancy of the land. This occupancy must be obtained either securely by sale and purchase or precariously by arbitrary force, but the social sanction of ownership establishes the proprietors as the merchandising authority for the distribution of secure possession by the truly democratic process of the market which is by consent of all with coercion of none. This peaceable and economic social distribution of possession and of access to public services is all that eliminates force, either political or unauthorized force, as the arbiter of private possession, and of access to the common spaces and services. The high social utility of this function of peaceable distribution is measured by the recompense which the open market awards to land owners for performing it. It is only by closing our eyes to the importance of this prime requisite that we can suppose land owners to receive rent without performing equivalent services.

     It is to be deplored that land owners do not extend their social function and services, that they are not well organized for this purpose, and are so unaware of the possibilities, for themselves and for the whole society, of enlightened and more adequate administration of the public capital. They are misled in supposing that the use of their influence and authority over the public services and of their rent to finance them, could fail to bring profitable returns. To obtain greater rent, they must perform greater services. They must perform not only their present merely merchandising and sales function with respect to access to public capital, but they must extend to their tenants some measure of security, not only against the anarchy of unguaranteed and insecure possession, but against the violation of their personal property and liberties as well. The tenants must have not only the guarantees of possession that give them access to the public capital, but they must have also security of ownership and possession of their private capital and liberty to exchange and otherwise administer it in the business of serving each other. When land owners undertake to mitigate in any degree the rigors of taxation, as of any other violence, against the property of their tenants, this will be a service to them of enormous importance and value, and for which they will pay increments of rent vastly exceeding their merely direct relief by the mitigation of their taxes.

     Without at present fully demonstrating the principle here indicated, it may be seen that in the creation of rent by the mitigation of taxes lies a genuine technique for the profitable financing of public services. The service itself creates the rent. Just as in any other honest and profitable business, it is the services of the proprietors to the patrons that bring in the legitimate and profitable returns. This is highly observable in a hotel or other enterprise of a community character. Here the owners (landlords!) render services similar and very largely identical with those performed for the tenants of the outdoor communities, and these indoor landlords guard their guests against violence and theft on the part of their community servants, besides giving them security of possession and the positive services for which they are thereby made as able as they are willing to pay.

     It is the verdict of political science that for some thousands of years there have been no improvements at all in the methods of conducting public business, not to mention improvements comparable to those which have been made in the administrative technique of every other kind of business. The great projects of the Pyramids and other public works were built by forced labor. The Roman roads, aqueducts and reclamation projects were the work of slaves. The public works of today are built by the forced labor of those whom taxation compels to labor without recompense, and the same destructive enterprises of war and the largesses under the name of “social service and security” are engineered in the same destructive way. This is all because the public proprietors have abdicated to their irresponsible subordinates, the public servants, and relinquished their proper and profitable supervision over them in the interest of the population as a whole.

     Those persons who believe in the abolition of taxes and the “social-ization” of rent for the support of community capital and services should find their most powerful and potent ally in the landed interests. Land owners now, for failure to attend to the public interests of their land-using communities, are being penalized by falling rents and values, just as and because their tenants suffer falling production and income under the ravages of compulsive taxation. The public property and business, like any other business, can grow only by becoming more serviceable and, thereby, more profitable. Its proprietors dedicate their services and their revenues first in the service of the rent-paying patrons whom they serve. This is why rent, in an enlightened and practical sense, and under proprietary administration, is the authentic revenue for the financing of all community projects and affairs. When the community owners awake to their opportunities, they will finance and invest in no public projects or service but those which, through giving the greatest needed protection and profitable positive services to the occupants of their communities, will bring back to them in rent their highest recompense, profit and reward.

     There is much more to explain concerning this, many superficial questions to be raised and met. But no public question can ever be more important to an anxious world than to discover how the basic exchange function in the structure of civilized society can become profitable by enlargement of its scope and extension and in proportion to that extension; a business which by relieving all other business and production from the burdens of destructive taxation and having no burden of taxation itself, with none but its own proper expenses to defray, would become the most profitable, the most serviceable to mankind, and the most magnificent business in the world.

     The above are my comments suggested by Mr. Willcox’s article. I hope you will find them of interest and value.

                            Very truly yours,

                                 Spencer Heath