Spencer Heath Archive

Item 2184

Pencil by Heath on notepad

1930s

 

 

 

The evils in society are not due to methods or processes of doing things that society has developed; they are due to the continuation of methods and relationships that Society has carried over from the previous barbaric condition and that it can only slowly outgrow as there comes enlightenment as to what the social processes are and how they are unconsciously carried out.

 

     Barbarism is compulsive; there are no widespread contractual relations, no system of exchange.

 

     Society is based on freedom by the abrogation of force, compulsion and war and acceptance of negotiation, contract, consent and exchange with respect to the holding and the distributing first of natural (land) and then of artificial things (capital).

 

     The primary contractual relationship has reference to land — to the holding and transfer of land — sites and resources. Until land can be held contractually and by consent (however much violence and insecurity prevailed before) it cannot be held or distributed peaceably, nor therefore can it be used productively. It has to be owned before it can be either held securely or used securely. Except as far as it is owned, and that ownership remains inviolate, it cannot be the subject-matter of any contract; there can be no social but only sovereign relationships concerning it.

 

     The social function of ownership — of land or of capital — is distribution — that it may be transferred or let out — that it may be held inclusively of others though contract and consent (freedom) and not by exclusion of others. Primitive ownership is individual, exclusive of others, a physical relationship between man and thing. But social ownership is inclusive, a free relationship by contract and consent between man and men with respect to a thing (natural or artifact, land or capital).

 

     Under the social dispensation that ownership makes possible the things of nature (land) can be utilized peaceably and productively as the necessary means for preparing and performing services for others and to afford materials for the incorporation of services in them to form commodities for the use of others or to facilitate the flow of commodities and services to others in the course of trade and exchange. All such transformed materials of the earth are properly called capital goods. (They are really capital services incorporated in goods.) They are called capital because they are not owned primitively for the benefit of the owner but are socialized, being administered for the use and benefit of others. Thus administered in the course of or in aid of exchange, a revenue arises and flows back to the owner. The production of revenue through them is what causes them to be called capital goods. For the purposes of transfer to another owner they are rated on the market according to the market estimate of their certainty and potentiality of producing revenue. This heading up of the annual revenue into a lump sum for the purpose of transferring unlimited use or ownership of the property is called its capitalization. It is by such transfers that capital goods tend to gravitate into the ownership of such persons as are able to administer them most productively and thus to the best social effect.

 

     The formation of capital goods out of land is a physical process not necessarily involving any social relationship between men. This is called physical or technological production, and it can be carried on, at least primitively, without involving in the process itself any social or exchange relationship between men. Such would be the case of a primitive farmer working alone and with implements and facilities of his own fabrication. His physical production in itself involves no social relationship, if any, beyond that under which he has security of possession and use of land. But once physical production, including any necessary transportation, is completed, then he must administer his capital goods by a social process of distribution which consists of making and performing contracts with other men in respect to these capital goods. The goods themselves are not moved or in any way affected by the making and performing of such distributive or merchandizing contracts. Only the relationship between the men themselves is changed. Henceforth they treat each other in a different manner so far as the particular goods are concerned. A new owner is designated and in common speech the goods are said to be assigned or sold. This distinction is a purely social process — carried on by contract and consent of the parties. Moreover it is a social (contractual) service without the performance of which no men could ever serve or exchange with each other at all. The value (recompense) assigned by the consensus (“haggling”) of the market for this distributive service is included in the general value or recompense that the goods command and, because of the importance of this service, the value or recompense given for it is often high. Not infrequently, for many kinds of manufactured goods, the cost of selling (recompense for distribution) exceeds all the costs of physical production combined.

 

     Emphasis has been laid on the importance and value of social (exchange) distribution of capital goods for the purpose of making more apparent and clear the corresponding process of social distribution that takes place in the social allocation of bare land by sale or lease. Here there is no such thing as its physical production. The market therefore fixes the price or rent as the social recompense for the important social service of contractual (as opposed to compulsive) distribution and allocation of sites and resources. This obviates alike both the anarchy of no system and the tyranny of governmental distribution of sites and resources.

 

     It is often supposed that the presence and practice of a contractual technique for the distribution of land, namely, private ownership, is inimical to its being distributed at all; that the freedom to buy and sell land takes it out of the market, makes it a monopoly and causes it to be unused. Those who incline to this “monopoly” view overlook the important and obvious truth that land owners in general and habitually occupy more land than they can adequately or efficiently use. Seldom does anyone in business find himself able to utilize the land that he already has to its full productivity. Except in boom times there is almost always a large reserve capacity or productivity not only in the occupied land but also in the capital equipment and also in the labor, both ordinary and managerial, that is employed. Under these conditions it would be folly to try to press more land into use; to do so would make it still less productive and thus cut down the existing demand for it, causing more land to go out of use for lack of demand.

 

     The true technique for bringing more land (or anything else) into use is to cause it to come more in demand. This can only be done by increasing the profits and productivity (real or apparent) of the land already in use, and this is precisely what the system of taxation and governmental restrictions forbids.

 

     The remedy for idle land, then, as for idle capital and idle men, is to be sought not in any further restrictions upon its contractual distribution or limitation on appropriation of the recompense that is awarded and received for such services. The remedy, on the contrary, is to be found in a policy of liberation into greater freedom of the entire contractual and exchange system from its present penalization and threatened suppression under the compulsive policies imposed by the state or political power. Those political philosophers whose minds look in this direction are baffled by the impracticability of petitioning the political power and authority to scale down its own expenditures and pay off its debts. Throughout history neither kings nor the lesser politicians have ever failed to pluck bare the public goose and at last crush out the system of free exchanges — the only life that yields the golden eggs of tribute and taxation.

 

 Who, then, shall protect the users of land, capital and men from the benignant tyranny that crushes, inhibits, and makes profitless the use of all the facilities of production and especially of land? A suggestion only will be made: Let organized land owners discover the obvious fact, obvious when considered, that when production lags, rents and values . . .

 

   /Discontinued or pages missing/