Spencer Heath Archive

Item 2232

Citadel, Market and Altar, Chapters 17-19, with some slight revisions of punctuation

 

 

 

 

PART II

The Application

We may say that the movement of the progressive societies hither­to has been a movement from Status to Contract.

SIR HENRY S. MAINE

CHAPTER 20

General Observations on Reduction to Practice

In knowledge there are always horizons beyond. Every true science is but an incomplete, a finite description of finite and particu­lar reality in terms of phenomena as events and as experience. Science examines the three aspects of reality as manifested in specific ex­periences and measures them by reference to and by repetitions of its standard units, to which these aspects are objectively and quanti­tatively referred. It thus describes the particular existent reality by analyzing it into the particular magnitudes of its fundamental as­pects. By a reverse process, applied science re-synthesizes the three­fold manifestation of reality — mass, motion, duration — into objects and events that are desired and aspired to, planned and dreamed. Thus, science, while wholly quantitative in its descriptive or analytic technique, is also qualitative, positively or negatively so, throughout all its applications, in its effects and results, whether for good or for ill. Science describes things and events in terms of their magnitudes and ratios or relationships. It is thus an abstraction from but still a part of the cosmic reality. It differs from ordinary knowledge in that it is generalized over a wide range. Scientific knowledge is thus realizable forward; it can be projected into particular objects and experiences in ways that realize desired ends and dreams.

 

 The science of society is no exception. Its discoveries, its descriptions, are motivated by intimations and apprehensions of the beauty it reveals; its application resolves beauty into use and, where the application is high, creates beauty anew.

 

 In Chapter 21 immediately following, the purpose is to bring the social-ized service energy of free contract and exchange distinctly under the same generalizations that reduce to one conception all those variant forms of energy which the natural sciences have brought so far into the technological service of mankind. This basic identification of social energy with energy in other forms and the delineation of its modes of measurement and flow in the transactions of contract and exchange, is to make clear the relevancy of the energy concept in the ensuing chapters, especially in Chapters 24 and 25, dealing with property in land and real estate administration. For in these chapters the language of practical business is employed, at some sacrifice of technical precision, for the sake of a greater practical appeal.

 

 Chapter 23, on community economics, re-emphasizes the dy­namic and functional character of community organization and particularly of its basic institution, property in land. Here the energy concept is clearly implicit, although its specific terms are not directly employed.

 

 Chapters 24 and 25, on real estate administration, are very specifically addressed to the interest of land owners and others concerned with the administration of real estate. Its vital importance to the whole of society justifies the extended treatment given to real estate administration, with special reference to and emphasis upon the need and opportunity for responsible administration of the lateral improvements to the private holdings that lie adjacent to, between and around them and constitute the public capital of the community.

 

 Chapter 26, the final chapter, on the hypothetical distribution of national income under proprietary administration, is a forecast of the more or less ideal and Utopian form into which the now existing system of voluntary service exchanges will certainly grow as it becomes liberated from governmental obstructions and restraints through the public capital being responsibly administered for profit and public services thus coming to be socially and non-coercively performed.

 

 The immediate prescription, the one clear path to freedom and profit, plenty and peace, is that the owners of communities unite in corporate or similar form for relief and protection of their popula­tions in exchange for the new ground rent sure to arise out of the mighty productivity such public services will of a certainty release. The responsible owners of a community are thus to extend the service technique of the Market into the field now dominated by the Citadel at so great cost and loss. Though on behalf of all, the appeal is still frankly to the same “profit motive” that has actuated all great and widely applied transformations of human energy into the service, without servitude, of civilized mankind. At the same time, it shows the utter dependence of profit upon Service; how great new services may with safety be performed; and how their recompense and values, and yet more their honors, are certain to be high. In the realm of free business, of mutual service by exchange, the basic and justifiable desire is still profit or gain. But successful practice dictates a high regard for giving; hence this motivation may in time take the lead. So obvious and high are the intellectual and the artistic and spiritual implications of its free technique, no apology is required for the profit motive as the practical and profitable, the purely business basis of social advance.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CHAPTER 21

Value and Exchange, A System of Social-ized Energy Flow

Earlier pages have disclosed that the social organization, like any other organic integration, is a particular manifestation of the cosmic and universal energy. We have considered this energy as manifesting itself at the social level in a mode that, while basically identical with that operating at all levels and in all other things, has a peculiar and specific kind, a higher analogue, in the living structures, the social integrations of mankind. We have to deal with living energy in a new form, with a metabolism, not between biological cells, but between those complex integrations of biological cells, the indi­viduals, who are in their turn the basic units of the social structure.

 

 We cannot measure the social metabolism by the amount of carbon oxidized or its dioxide respired. To attempt it would be like trying to employ a mechanical dynamometer to measure thermal, chemical or electrical energy, or a yardstick to measure temperature. The several modes of energy have their separate unit-standards and appropriate instruments for their measurement — dynamometer, calo­rimeter, electrometer, etc. — and while some of these forms of energy are known to have quantitative inter-equivalences, the separate em­ployment of them within their respective fields is not at all dependent on this.

 

 Similarly, in the observation and discovery of how social energy is measured and the equivalence of its exchanges maintained, it is not necessary to take into account what quantitative equivalences it may and doubtless does have with measured energy in other forms. We do know that in each field a quantitative balance is maintained throughout all its energy exchange transactions, all inequalities being liquidated by conversion or degradation of the otherwise unbalanced portions into heat or some other energy form. In the processes and transformations of electrical and mechanical energy that constitute the practical applications of energy flow in those fields, the otherwise unbalanced portions are converted or degraded into another form of energy the amount of which is called the “heat loss.” This means, of course, not that the unbalanced portions of energy are lost in any absolute sense but only out of that particular system of mechanical or electrical energy conversion or exchange. In fact, when it is desired to convert these other forms of energy into heat, it is the otherwise unbalanced portions of mechanical or electrical energy and not the heat that is considered as lost. The efficiencies of all energy exchange systems are expressed in the quotients obtained by dividing the total energy put out into the quantity of energy that is converted into the particular form desired.

 

 Now, in the social organism, a portion of the energy of environment that it derives from the plant and animal world and incor­porates into its individual units is transformed by them somewhat differently from the transformation that takes place in an individual who is not incorporated into the structure of a social organism.

 

 In his pre-social, non-social or anti-social state, the individual puts out his energies with sole view to his own satisfactions, including those of his own blood-bonded or emotion-bound, restricted group, the energy not yet coming under the broader and more universalized bonds of a general society. But in the social organization, while these more primitive bonds still in large measure remain, a portion of the energy that flows through the individual undergoes, in addition, a higher flow — measured, impersonal, more general and wider in its scope. He socializes a portion of his energy; that is, he devotes it to the interest and places it at the disposal not merely of himself or his narrow tribal or blood-bonded group but of the membership in general of an organization not thus restricted — a social organization, a societal group. He devotes this portion of his energies either directly or indirectly (as by taking employment with others) to the perform­ing of services or production of goods (called capital goods) so as to satisfy the needs and desires of others. And he does this regardless of blood relationships, thus inducing to him from many directions a voluntary counter-flow of satisfactions in the form of highly specialized services and goods.

 

 Basically essential to the system of exchange are the services of negotiating the manifold exchanges that the preparation of goods and performing of services for others necessarily involves. To distinguish these last from the physical process of producing goods and, also, from other forms of intangible services, these services of nego­tiation are very properly called the services of distribution. They ap­pertain to the distribution of land no less than to the distribution of those things to which physical energy or “labor” has been applied.

 

 All the energy thus social-ized by being extended outwardly towards the satisfaction of others is a special development of energy having the same order of difference above other human energy that electrical energy has above the mechanical energy that generates it in the physical world; or that the energy of vital metabolism has above the cruder forms of energy, chemical and electrical, out of which it proceeds; or that the energy of thought has above the merely physiological energy upon which it depends. This social or social-ized energy, this social metabolism, is properly called the energy of exchange. It lies at the base of the social physiology just as basic metabo­lism is fundamental to the physiology of animal structures. And just as this basic animal energy flowing through differentiated physiologi­cal structures gives rise to all the coordinated activities and higher powers of the animal (or human) organism, so does this social-ized energy of exchange take the place of un-social-ized, merely self-serv­ing energy. Just as the physiological metabolism, by converting chemical into vital energy, is the basis of all merely bodily function­ing, both physiological and mechanical, so does the social metabolism of exchange transform the crude individual energy of self-service into vastly efficient social energy. In this it liberates distinctively human and unique creative powers out of the bonds of necessity and limitations that beset the whole animal world — and the merely ani­mal in man — into the spontaneous arts and recreations, the seeking after beauty, the pursuit and expression of ideals and dreams.

 

 We shall now take account of the manner in which exchanges of social-ized energy take place in the physiology of society; how the multitudinous diverse contributions of individuals, as such and through their membership in business organizations, are measured against one another in the process of their interchange, and how their accounts and balances are maintained.

 

 All goods and services placed at the disposal of or performed for others in a society constitute the subject-matters upon which operate the great and unique social structure called the Market. This institu­tion, as a social structure, consists of all those persons who prepare and contribute the services and goods of the Market and so admin­ister them, by the voluntary and spontaneous processes of exchange, as to bring about a general unanimity of mind and harmony of will concerning their disposition or use.

 

 These social energies, including those incorporated in commodities, are subjected to the operation of an automatic measuring process called competition which ascertains, in terms of value-units, the relative equivalence of things in exchange. This measuring instrument of social energy is to the Market what a watt-meter or other form of dynamometer is in a field where physical energy is being measured and its equivalences ascertained.

 

 As in the case of physical measurements, it is indifferent what units be employed, so that the same or interconvertible units be used throughout. It is therefore immaterial what unit of measure the Market employs as its standard of value, so it be the same throughout all the exchanges that take place. Let the unit be what it will — a given weight of metal or what not — as soon as it is adopted as the unit of the exchange or value scale and all the things being exchanged take, by common consent, their respective positions on this value or exchange scale, then the equivalences among themselves of all things proposed for exchange are ascertained and determined by reference to their positions on this common scale.

 

 What is being measured is, of course, not the commodities or properties themselves, but their social-ized energy content. Their physical properties must be measured by physical instruments and tests, and these, of course, are employed. But when it comes to measuring the energy of exchange, competition is the social instrument employed. It is the means by which social-ized energy is balanced and exchanged creatively in accordance with the social will.

 

 The customary term for a measure of social-ized energy is value. All accountancy is but the balancing of values in terms of the units employed in the measurements of services as social-ized energy. For example, a physically distinguishable quantity of human energy, either as a service or as conveyed in a commodity, is social-ized and, by the contractual process, contributed to the general Market. Under the prevailing custom or common law of the Market, its instrument of competition automatically measures this social-ized energy in terms of the prevailing measuring unit and indicates it to be of a certain quantity of those units, say ten dollars. This then becomes numerically and symbolically its value, for it means that the service or commodity in question has a one-to-one or similarly proportionate exchange equivalence with all other services or commodities equally or similarly measured. It thus enters into the balanced inter­flow of energy by which the societal structure and organization grows and is maintained.

 

 A customary general term in designating social energy is service, and the specific term for its measurement is value. A service may, in fact, be defined as a quantity of energy that is social-ized and therefore has value, that is, an equivalence in terms of other social-­ized energy — as evidenced by the two being interchanged — either as a present fact or symbolically for a future consummation on the one or the other side. This measurement of energy continuously in terms of some value unit is what keeps up the interflow that consti­tutes the basic metabolism of the social body. So far as this process is carried on, the social organism has the power to grow and to main­tain itself through the interfunctioning of its specialized individuals, organized business groups, institutions, etc., and also to direct its higher energies to the reorganization of its environing world.

 

 The energy of exchange, however, does not flow without resist­ance. It is retarded by restrictive “regulations,” usually approved by popular sentiment and chiefly applied by political authorities, that take it out of the system of free exchange and reduce it to the sub-social level of manifestation in a compulsive or coercive form. But as the social system of men matures, its collisions will be averted, its frictions overcome, by the growth of the voluntary and truly social mode into that realm now occupied by force.

 

 

The social-ized human energy is that part of the whole that flows in accordance with the common will of all concerned. Such energy is called service, and the characteristic that distinguishes it from all other human energy is that it induces a value or equivalent counter-flow by way of free and voluntary exchange. The social relationship — that of common will and consent — under which this occurs is called contract. The energy that is not social-ized is that which flows in opposition to the will of others, thereby involving collision and the weakening or dissolution of social bonds. There does not exist among men any relationship or process, society-wide in its scope, other than these two. All the general and interrelated activities of a population are either contractual and social or they are coercive and compulsive — antisocial.[1] The life and growth of a society depends upon the extension of its contractual processes and relationships.

 

 The practical application of the science of society must consist in the conscious and rational extension of the contractual or service process into those areas of association where opposite and contrary relationships generally prevail, which is to say, the field of public services, so called. This is made possible by the discovery herein variously set out that the social institution of property in land has in modern times evolved a purely contractual technique with respect to certain public services which it performs and for which it is recompensed on the basis of contract and consent as is normal to all Market transactions. This means that the ordinary transactions of this institution are, fundamentally, exchanges of social-ized energy as services. And the services performed by this institution of property in land, not only are they public and general; they are the basic and primary public services. These services, and only these, bring the inhabitants of a community into peaceable, non-violent relationships with respect to their occupancies or changes of occupancy of the community sites and resources, or lands. These contractual services provide the physical security of possession the inhabitants must have before they can produce commodities and perform services for others, and thus constitute themselves into a society.

 

 Only in recent history has this institution of property in land been differentiated out of the realm of government as force. In its present state of development, it performs only rudimentary — yet funda­mental — services. It leaves public affairs for the most part under political and compulsive instead of proprietary and contractual administration, both as to what the inhabitants shall yield up to the political authority (however established) and as to what they shall accept from or endure under it. This large field of compulsive, anti­social activity necessarily infringes that of the free contractual or social-ized energy exchange and thus accounts for the collisions and friction that retard and inhibit the free interflow of energies among men. This causes them to be dissipated at lower levels in the stagna­tion and decay of economic depressions and in the violences of crimes and wars. These harsh hindrances and even reversals of social progress are patently to be obviated by extending the proprietary contractual technique of public services more fully into the field of common and public affairs. The institution of property in land, once it becomes conscious of its function, will afford the adequate ad­ministrative and exchange mechanism for this.

 

 For it is the potential function of property in land, when rightly understood as the contractual distribution of a community’s sites and resources and of access to its public advantages, not only to distribute these things peaceably and impartially to the most productive occupiers and users but also to provide the sites, and those who shall physically occupy them, with such protection and security and other services as will induce the voluntary recompense or value called land value or ground rent. This affords a purely contractual, non-political and non-compulsive process — a purely business and voluntary exchange method — of providing public services and of being abun­dantly recompensed for them without infringing the liberties or seizing the properties of those being served, even in the slightest degree. On the contrary, it is the prime responsibility of the community owners (once they discover it) to protect and defend the occupiers of their properties against such taxation and “regulation” as is already known to be unnecessary and therefore wholly harmful. Such alleviatory public services, to whatever extent carried on, would be a flow of social-ized energy automatically recompensed by a counter-flow of the community rent otherwise pent up by friction and collisions and repressions by governmental force.

 

 By such extension of responsible services, as a function of owner­ship, into the field of the supposed public services that are so pre­cariously based upon political depredations, the friction and collisions of the social system of energy exchange can be diminished and finally removed. Such development by the institution of property in land of its now dormant powers, in addition to the basic distributive function that it already performs, can quietly and without resistance gradually dissolve the deadly relationship that now exists between productive industry and the unproductive political state that depends parasitically upon it and that must itself always perish when its de­structive work is done. Not only will proprietary protection and amelioration check the actual or imminent decline; its extension into the positive administration of the public and common capital and lands will resolve the frictions and collisions of unsocial-ized energy and thus liberate the social organization to grow into an enduring system of balanced and harmonious energy exchange. Such con­summation will raise the social system of mankind to that level of majestic beauty possessed by the vastly older organizations of mass, motion and time — of balanced energy exchange — that constitute the enduring systems of the planets, suns and stars.

CHAPTER 22

Private Property in Land Explained

Its Public Administrative Function

Throughout the nineteenth century, no great social institution was so widely or so inconclusively mooted as that of private property in land. The great rise in private capital and the steady advance of political domination and restriction upon its ownership and adminis­tration has tended in the twentieth century to draw interest and at­tention away from the fundamental, the far broader question of property in land. But in the preceding century, this great institution of civilized mankind came under the severest scrutiny. Minds of great influence and authority were arrayed against it, and its pro­found modification or its outright abolition was powerfully urged.

 

 In most controversies, both attack and defense rest on premises questioned or disputed by the other side. But the attacks on property in land were based on assumptions that its apologists did not deny; and its defense rested rather upon its existence as a fact than upon any sound justification or any reasoned refutation of the arguments with which it was assailed. Thus a kind of stalemate ensued, little ground being given or taken by either side. In fact, such conspicuous assailants as Herbert Spencer, John Stuart Mill and Henry George came either to withdraw their more drastic proposals and insist that existing values and titles be not disturbed or at least that the structure and framework, “the shell,” of the institution be retained in the in­terest of practical convenience and a stable social order. And so, while the closing of the nineteenth and the opening of the twentieth century witnessed persistent attack on most forms of property, no other great social institution has been so little overtly challenged or openly condemned.

 

 Yet the ownership of land, property in land, undoubtedly went into decline. With the multiplying political assaults on other prop­erty, and the mounting penalizations of the processes of its creation

and use, the income to land and locations not only ceased to advance but in depressed periods so far went down that even urban locations were no sound security for loans, and country land had little or no sales value, if indeed any value, as land, apart from the improvements or such other property as its owner might possess. With its useful employment — and thus the income to land — so inhibited, its owner­ship so widely became a burden and a liability that through wide and populous regions it was forced out of the amenities of private use and ownership into the arbitrary administration of political authority, with its necessary implications of corruption, incompe­tence and political discrimination. In this country, the taxing policies of the states destroyed title to vast properties in rural and even in city and suburban lands. And the Federal Government has now ex­tended its arbitrary and increasingly burdensome jurisdiction over more than a third of the entire nation’s lands.[2]

 

 Thus land ownership, in its practical aspect, is defensive and in retreat. With no known theory to justify it, no recognition of its essential function in the social order, and therefore without any con­structive program or policy of organized defense, property in land continues, far and wide, to crumble away. Its decline in all lands is hailed, high and low, as “social gains,” and its continual erosion by so-called “liberal” measures today is the subtly hidden process that leads to full “land communism“ without which no totalitarian power can be final or complete.

 

 The present purpose is to show how this institution distributes, without political discrimination, the productive occupancy of land and is thus society’s first and last and its only automatic resistance to enslavement by a totalitarian state.

 

 Any social institution, until its rationale is disclosed, is empirical, subject to subversion, ignorant and blind. Men habitually accept unthinkingly the blessings of the institution of property, its security and peace, although their traditional and emotional concept of prop­erty in general and of property in land in particular, is as a privilege or personal indulgence from which mankind in general are disinherited and none but the fortunate owner can enjoy. It is as though all property and wealth were personal goods owned only to be con­sumed or destroyed in self-gratification or sinister and anti-social designs. This is the persistent heritage of the modern mentality from its ancient and totalitarian past, when there was no free exchange economy and few if any free men. The minds of men are yet but little adjusted to the modern fact that the great community of wealth, apart from government, is nearly all of it capital goods and facilities in the course of flow by exchange towards their consummation as satisfactions in consumers’ hands where they rapidly dissolve. These flowing goods, together with the fixed and the moving facilities that transform them and accelerate their flow, this capital wealth, is the only substantial wealth there is. None of it can be owned as mere gratification or indulgence but only administratively, for the bring­ing of fully finished services and goods to the condition, place and possession where they can be used or last exchanged and consumed. This administrative ownership is the only dominion that an owner can exercise over his capital wealth, whether in land or in goods, and its value not flee.[3]

 

 Thus it is with land. Primitive ownership consists in getting satisfactions directly from it, as the ox gets the grass. But in an exchange society, with its highly specialized services, land, like other property, comes to be owned more and more for the benefits and satisfactions of others. Except when it is used for the owner’s personal subsistence, private recreation or place of residence, it is only as a social agency, as a means of giving secure possession and of supplying community services and satisfactions to users, and in no other way, that an owner can practice any dominion over his land. Thus land ownership, except as noted, is not a personal indulgence or enjoyment but a social responsibility, an opportunity of giving services in exchange for recompense in ground rent — in such measure as that responsi­bility is met and those services are performed.

 

 Land, then, may be, and the most valuable land generally is, owned by one interest and occupied or used by other interests, as tenants,

for the performance of services or the production of goods or services destined for others by their sale or exchange. An exchange economy, where most highly developed, tends to discover the advantages of private capital administration dissociated from the ownership of land. This is seen in the great metropolitan centers and in the practice of nation-wide sales and service organizations so efficient in their own special fields they cannot without loss invest any part of their working capital and specialized skills in the ad­ministration of land, even of the land and often the buildings that they themselves use. For the owner cannot be also the occupant or user of his own land except he act in two capacities: — once as the owner whose concern it is that the occupant shall receive valuable services through his location and, again, as his own tenant receiving these services, which he of course takes directly instead of their equivalent in ground rent. Here are very unlike functions devolving on the same person. As owner he is responsible, in common with other owners, for those public and general benefits that give the land its desirability to the tenant and hence its location value. But as a tenant, he is administratively responsible only for the specific and particular services he provides for the patrons of his own enterprise; and this is true even if his enterprise or his employment be elsewhere and even though he may use the public and general services available at the site only for their residential advantages or similar self-ad­vantages to him. As owner, he is a provider and merchandiser of public services; as tenant, he is the purchaser and user or consumer of them.

 

The combination in one of both owner and user is not found in early societies. It does not characterize ancient society in the Old World fertile valleys of the south; for here the holders of the soil are sharply defined from the users whom in that climate they have from old time by compulsive tribute or taxation enslaved. Nor is it found in early social integrations of the rugged north, where un­taxed free men rendered rents to their land lords by custom of con­sent, under measure of the market, in exchange for possession and protection and such other common services as the lords supplied. In the south, the proprietor owns both land and man; in the north, until taxation and politics is introduced, he owns only the land. But in either case, the original public authority is in the proprietary hands. The ambiguous combination of owner and user makes its appearance in the later slave-supported and tax-based democracies and republics in which the proprietors have yielded their public authority into political and thus irresponsible hands.

 

 When the proprietary authority of northern lands or of northern origins, corrupted by contact with slavery and taxation in the south, fails of its obligation to protect its free men and assumes a coercive power over them, then its members war upon each other until at last they surrender all their power to a king by “divine right” of conquest over them and eventually to transitory elective sovereign­ties called popular governments. Then the condition of the land lords under political “public servants” is but little if any better than that of their once free men. They, too, come under constantly in­creasing deceits and depredations at the hands of the elected or other­wise accepted political authority. New discoveries and productive technologies delay the fall, but, as the burdens of taxation, “social services” and deficit financing and inflation continue to grow, enterprise at last becomes unprofitable and unsafe, employment shrinks, production falls and the income and value of land neces­sarily declines. And then the totalitarian state is at hand.

 

 This failure of owners to function as such, publicly and separately from the mere use of land, gives semblance of truth to the wholly fallacious ideas that taxation instead of rent is the normal and honest public revenue of a community; that private use instead of public administration over land is the true function of its ownership; and that tenancy, but not taxation, somehow beguiles free men into a servile state. It is forgotten that with no institution of slavery or taxation, as in Saxon England, land lord and free man are correlative and reciprocal terms, and that serfdom — servile feudalism — in Eng­land was a consequence of Roman taxation re-imposed, after five free centuries, under Norman arms and rule.

 

 Just as do all private free enterprises, to be effective, require direct or, at the least, supervisory administration by their private owners, so must the public proprietors organize themselves and administer, if they would be secure, the public enterprises through which the private ones must be served instead of being ruled and thereby de­stroyed. In both kinds of enterprise, public and private, and whether they function little or much, the owners are sharply marked off, and success depends upon actual or at least supervisory administration by them. Looking at the owners of the community lands exclusively in their capacity as such, it is clear that their function in the exchange system has to do with the common services of the community, for these are what they purvey to their tenants to the value and amount measured by the ground rent they receive in exchange.

 

 This ownership of land or sites, apart from the ownership of capital improvements on them, does not involve the administration of any property or enterprise directly on the sites themselves. It does, however, place the owners in an administrative relationship to the community capital and services. Their ownership, in the functional sense of obtaining revenue by serving others and thus creating value, has to do only with the public capital and enterprises the services and products of which they sell to their tenants or lessees. But only so far as these public services or improvements are profitable or useful to the lessees will they enhance value and demand. The land owner performs a sales service with regard to all the net balance of com­munity benefits, above detriments, that come to the locations occu­pied by his tenants. Likewise, the land owners taken together, in any community, however small or large, perform this important sales function with regard to all the public services for which there is any actual need and demand — this demand depending on and being limited by the amount of business that can be done and wealth produced under the existing burdens of taxation and the restrictions on business and employment that taxes on business are spent to enforce.

 

 All wealth that is used to prepare and provide any products or services for others is capital wealth. So also are all the materials and commodities that in the course of exchange are being prepared for and moved towards and into consumers’ hands. All properties being so used or being so prepared and distributed are social-ized prop­erties or capital. Capital, then, is any wealth or property that is owned and used for the benefit of others, and all capital, from the very nature of its administrative ownership and use, is, of necessity, social­-ized property or wealth. Such wealth is not to be confounded with those negligible properties privately produced and consumed that never come into the exchange system, nor with those relatively small amounts of goods that have passed out of that system into individual use and are in process of being consumed or otherwise destroyed. Anything that does not come into the exchange system but is other­wise disposed of or remains in the hand of its producer or appropriator is not social-ized and therefore not capital, for it does not become the instrument of any societal relationship through exchange of services. The same is true of goods that have passed by trade through all the processes of measured exchange and into consumers’ hands. These have ceased to be capital or social-ized goods; for their present owners do not engage them in the performance of any social or administrative function. They are not owned as capital is owned. So only that they come to their possessors through the legiti­mate processes of voluntary exchange, without force or fraud, and that they are then not used for any injury to others, they are not of any public or general concern. Before they enter or after they pass out of the exchange system, they move under no law of social de­mand; they accumulate no social utility or value and their lapse back into the substance of the earth whence they came is, in the absence of criminal or political coercion, only a matter of individual and not of social control or concern.

 

 It is the same with land. So far as its ownership and its enjoyment or use are by the same person or interest, it is not social-ized; for either it has not entered into or it has passed out of the exchange system. An owner-user is his own land lord and his own tenant, standing in two different relationships to two kinds of property. As owner, his interest is in the public capital and services that give de­sirability to his location; as user, he is interested in those private properties and improvements that are requisite to his enjoyment or use of the services his location affords. He is like the lawyer who is his own client, the doctor who is his own patient; he is the merchant who is his own customer; he does not, in virtue of his land ownership, give any services to others, and so he foregoes all the advan­tages of such division of labor and exchange.

 

 Land ownership therefore, as a social function, is a very special division of labor that must be considered with reference to the public properties and services upon which its values depend. This implies a special administration of these community properties by the community owners, separate and apart from any private administration that the user of the land may give to his private properties and improvements. This field of public administration, belonging histori­cally and most fitly, as Adam Smith so strongly suggested,[4] to the land owners collectively is very wide; but, as property in land has modernly developed, this administrative field is far from being fully occupied by them. Nevertheless, one part of this public administra­tion, and that its fundamental and most essential part, they do faith­fully, albeit unknowingly, perform. This is the distributive, the mer­chandising and sales function — that wherein all administration of capital, be it public or private, culminates and fulfills its end.

 

 Merchandising — making sales — is the only manner in which goods or services can be transferred for value received. It is, therefore, the only equitable mode of distribution, the only true exchange. More­over, it is an administrative process that none but owners themselves can perform, for they alone can convey the ownership of a thing or service sold. Others may arrange sales, but only the acts of owners can give them force and effect. Transfers without owner consent, such as by taxation or other violence or by crimes, cannot be sales, for such transfers can be accomplished only by force or fraud. Social peace and stability require, therefore, not only that the common services and goods come into being, but also that they be adminis­tered and sold by their owners and thus distributed equitably to the community inhabitants on the basis of value received.

 

 This is the final and wholly indispensable feature of owner-administration over any property or services. It applies no less to the distribution of public services than to any other; and this is where the service of merchan­dising of these services by the community owners plays its supremely important role. Most properties, including those of a community character such as hotels, are definitely administered by their owners so that salable goods or services are brought forth. The owners then consummate all their prior administrative functions by making sales. But in the public enterprises of political communities, this mer­chandising function is just about the only administrative activity that the owners worthily perform. The community services other than the service of selling them, come into being under haphazard political arrangements in which all the property employed in them is the result of seizures, more or less systematized, on the part of ‘public servants’ and employees, who, being non-owners, can give no responsible administration to this “public capital” nor make any sales or exchanges of public products or services.

 

 Indeed, the un­doubted owners (title holders) of the political communities so far neglect all supervision of and responsibility for the common services supplied to their properties, other than the sale of them to their tenants, that the ‘servants’ in the larger communities, unlike those in a hotel, are neither hired by the owners nor furnished with any funds for the conduct of their services. For their recompense and expenses, therefore, these “servants of the people” both pledge and seize in advance the monies, credits and properties of the population and disburse these first to themselves (their salaries) and then largely for purposes tending to insure their re-election or otherwise per­petuate their arbitrary power.

 

 Throughout all history, the practice of such non-owning and therefore quite irresponsible community servants has been to expand beyond measure their predatory proc­esses, using their takings more and more to subsidize the dependence and the poverty that they cause and thus induce tolerance of and even popular demand for further extensions of their coercive powers. But protection of the societal, the non-political, system of prop­erty and exchange against unauthorized violence or theft is left to the same public authority whose depredations destroy it. So it comes about that its antisocial effects must be weighed off against the bene­fits and public services that are supposed to arise out of the violence of political operations. This weighing off is effected and takes place in the open market wherein are set, by consent of all and coercion of none, the price equivalents of all the net public services that have any salable or exchange value at the locations to which they are sup­plied. These prices (rents) are the market determinations of the net community values that emerge in virtue of the difference between all the benefits conferred by public authority and all the depredations and distresses sanctioned by and suffered under it.

 

 It is here that the indispensable function of the ownership of land appears. So long and so far as this social institution is sustained, just so long and so far, whatever actual net benefits and values of public services there are will come into the scheme of social relationships; for these public advantages will have owners, and these owners, as landowners, will distribute them to the occupiers, as their tenants, for equal values by the pro-social process of sale and exchange. These social benefits and services, being owned, can thus be purchased and securely enjoyed by the tenants to whom they are sold.

 

 First and foremost of these benefits will be security of possession. The occupant obtains this security by an exchange process that is inviolate only so far as private property in land is respected and up­held. While this institution stands, a civilized society with secure and definite places of work and abode and exchange is possible; when it is destroyed, there can be no security either of ownership or pos­session, no respecting of property or freedom in any form; for then no occupancy or possession can rest on any sanction but the arbitrary will and power of a self-constituted or an elected coercive authority. Respecting the prerogative of ownership, and thereby of the ex­change relationship between owners and tenants, is all that stands between the peaceable possession and use of land, between the ameni­ties of civilized relationships and finally the dearth and darkness of utter slavery or a nomadic barbarism. These dire alternatives to private ownership and, thereby, security in the possession of land make plain the absolute indispensability of that institution to any social or civilized order of life.

 

 Beyond seeing its indispensability, it remains to ascertain and measure the social value of the services rendered to society by the institution of property in land. Rather, it remains to be observed how, in the functioning of the social organism, this value is measured and its equivalent rendered in exchange. If it be suggested that the labor of land owners is very light, it should be remembered that not the onerousness but the need and social utility of a service is the gauge of its market value. Land owners may not even be conscious that their acts of ownership which confer security and services upon their tenants are an indispensable service to the society; nevertheless, they do cause whatever there is of net public services, less public dis­services, to be distributed without favor and for value received. Ground rents, then, taken in the aggregate, are the exchange equiva­lent that a community renders to the institution of property in land for the security of possession and access to public benefits that its members thus enjoy. This is the social value and justification of the institution as it now stands. So far as it is permitted to operate, so far as the owners are not taxed out of their values and thus out of their ownership, it is the instrument of society whereby security of possession is guaranteed to land users and the net benefits of public services, such as they may be, are apportioned impartially among those most capable of their productive use.

 

 It being accepted that property in land is the social device that confers security and thus makes other exchange relationships pos­sible, it still remains to discern why the recompense that it yields should be precisely what it is, namely, the whole ground rent remain­ing after taxes. Here a striking automatism of adjustment appears. When, as is now usual, land owners perform no administrative services beyond providing the security of possession that is implicit in their orderly merchandising of the rights of occupancy, then the rent that springs up by the open and unforced operations of the market is a recompense that is socially determined and automatically awarded to them for this limited service.

 

 Any public benefit that is not merchandised to the recipient for its full value in exchange must be a favor or a privilege and therefore a social detriment and of no social value. No exchange value can arise from it. The benefit to one becomes a detriment to others, and no social purpose is served. But the merchandising function converts public benefits into public values and services. It distributes them equitably, makes them legitimate, and also provides their recipients with the security necessary to enjoy them or to use them for the benefit of others in the course of business and exchange. There is no way in which public benefits can become services, not exploitations, except they be treated as the land owners’ properties and measured out by them in exchange for rent. Because this merchandising process lifts public benefits from what must otherwise be privileges and exploitations into their character as services, this process may be said to create them as and into services. The rent received for them is then seen as no more than the due recompense for creating them.

 

 With no other authority but location owners can this exchange relationship arise. The consequence is that when political activities are so carried on that there is any residue of benefits between the good and the evil of all public operations, then this positive residue of public advantage can be rightly obtained by no other means than by purchasing possession and use of the territory and locations to which these net benefits and advantages are served. The value, then, of security of possession is in reality the value of the services by which that security is obtained and assured. This security and its equitable distribution the private ownership of land alone creates and guaran­tees. The rents paid are the social values voluntarily and automati­cally rendered for this prime and vital public service.

 

 It may be objected that some part or all of the rent should be passed on to the ‘public servants’ (government) the net benefits of whose operations are the foundation — the raw material, as it were — of the services that land owners perform. The answer is that without the function of land ownership being performed in sales services, any public benefit or advantage to one would rest on even greater detriments to others, and because of this there would not be any net benefits. It is by this sales service alone that any public advantage can enter a market and thereby come into legitimate existence as a service or value given in exchange.

 

 Moreover, all community ‘servants,’ other than land owners, are already self-recompensed for all that they do. They receive no income and exercise no powers, have no instruments of work or weapons of war, but what they derive from the forcible appropria­tion of property and services. Thus they recompense themselves in advance for all that they do. But they advance no public costs, make no public investments, create no public values. Because they are ex­propriators of others, and not owners of what they seize, they can give it no productive administration, and it yields them no income. The ex-propriated wealth (government seizures), for want of au­thentic ownership, ceases to function as productive capital and melts away, to be replenished only by further seizures which, in their turn, are consumed and destroyed.

 

 The only pro-social and constructive public administration is that which is normally performed, albeit unknowingly, by the owners of community sites or lands. By their services alone are any political benefits raised from private privileges into public values through open bargain and sale. To them alone comes public revenue gauged to the value of the services received and not appropriated by force. Only through them can political actions result in social or public values. And only so far as this non-political administration and distribution is first performed by community owners can there be any other security of ownership, any measure of freedom from political administration of sites and resources and all that it entails, any general cooperation by free exchange, any free society at all.

 

The indispensability of property in land should be sufficiently clear, but the social potentialities of that institution have hardly been touched. When land owners extend their administration beyond the mere sale of possession and of the public benefits appurtenant thereto, when they organize themselves so as to enter into the conduct of community affairs as true and worthy lords (Anglo-Saxon: the guardians, the givers) of their lands, their first public service will be to procure reduction in some of the least necessary and more de­structive forms of tax taking and of tax spending that are degrading into tax-enslaved bondmen the men of business who strive to make productive use of the sites and resources of the land. Such tax re­duction, especially when seen as a continuing policy, will so release the frozen energies and facilities of production and exchange, and so replenish wages and profits out of the expanding production, that the demand for sites and lands, and therewith their value and income, will enormously rise. And it will rise at a rate far beyond the rate at which the tax burden on their use will be removed.

 

 When this occurs, then the institution of property in land will rise from its present lethargy and come into its own, the largest, the most productive, and the most profitable business in the world. The merely negative services of relief, of even partial restoration of free­dom inviolably to own and manage one’s business and property, will bring the whole exchange economy into such enormous pro­ductivity as to raise rents and land values permanently to heights un­dreamed. This will give the land owning interest — the organized land lords — a new, sound and abundant basis for the maintenance and operation of the existing community capital and services and for the financing of every new public enterprise that can justify itself by raising either the productivity or the cultural attractiveness of the community and so realize for land ownership, organized as a busi­ness, increasing profits and dividends by the creation of rent.

 

 In this proprietary administration of the community services and properties by the organized owners themselves, the slightest neglect of the public interest or lapse in the form of corruption or oppression would itself penalize them by decline in rents and values. Enterprise and efficiency will respond not only to the allurement of profit but will reap also the high satisfactions of honor and public acclaim. From region to region, the proprietary organizations, looking even beyond all material gains, will rival one another in the health and beauty of their communities and their peoples’ wealth and joy. Government by seizures and repressions and penalizations will emerge into the civilized technique of mutual service by voluntary exchange. Public administration will become at last a high emprise that may rise and attain even to a new world of beauty through creative artistry.

 

 For this mighty transformation, it is only necessary that the site-owning interest, or substantial portions of it duly organized in cor­porate or similarly effective form, merge their separate titles and interests and take in exchange corresponding undivided interests in the whole. To do this, they will have their separate interests ap­praised and vested in the corporate organization as trustee and certificates of stock or beneficial ownership issued back to them according to the appraised values of their respective contributions. This working organization will then, as it were, manufacture public benefits and services, beginning, doubtless, with protection against excessive taxation and over-regulation, and merchandise them to the rent-paying inhabitants. In this way public as well as private services will be produced and distributed by free enterprise to free men. The profits earned by such community organizations will surely grow to be enormous. Their common voting shares will come into wide popular demand, and the free and prosperous inhabitants will thus become the happily enfranchised owners as well as participants in the community properties and services that they own and enjoy. Thus will public proprietorship become available to all, and the voting of free men, duly qualified according to their ownership, will realize, in substance and in fact through popular proprietorship, the long-sought democratic dream.

 

 In the beginning, some owners will hold out for a time. They will benefit with the rest, but they and their unincluded properties will naturally receive second consideration in all matters of public benefit or preferment. Unenfranchised as owners, their influence and ad­vantages all will be of second rate, and self-interest will impel them to prefer and to bid for undivided interests and enfranchisement through ownership in the whole.

 

 Pending the necessary enlightenment for these happy consumma­tions through community land owners acting as business organiza­tions, it is only possible to regard with sorrow how they are allowing the freedom and the free enterprises of their inhabitants to be strangled and the income and value of their own properties thus to be destroyed under their very eyes.

 

 When one has no wrongs to avenge and no axes to grind, it is quite possible to observe objectively and describe correctly the structures in any accessible field of phenomena and the manner in which the diverse parts act with reference to one another to promote the growth of the structure and maintain the total functioning and integrity of the whole.

 

 Society is an organization of living units. It is therefore organic and alive. Its members, singly and in specialized groups, perform unlike functions or services in the satisfaction of each other’s needs and de­sires. This exchange process goes on only in places where common services that are necessary to the exchange relationship are performed upon the common and public parts of the community by some kind of public authority and through these public parts of the territory conveyed to and made appurtenant to the private parts held in ex­clusive possession. These private parts are under the social, non-coer­cive jurisdiction of publicly constituted owners as the proprietary offi­cers and, except in the early stages of a modern exchange economy, are chiefly in possession of tenants or lessees in a free exchange re­lation to them. The political authority, however, is observed to do not only needful and necessary things but also, and in ever increasing quantity and variety, things that are so harmful to the society that the net balance of good above the evil in the public administration ever tends toward zero. Exchange, and in consequence production, is inhibited and the diminished productivity causes at once a di­minished use, need and demand for lands or locations with a di­minished ability to pay for the diminished benefits of possessing them. But the net benefits of public operations, whether great or small, come to have an exchange value and to be distributed other­wise than as special privileges only through the merchandising of them by the owners of the sites and lands. The proprietors are recompensed in rents for the beneficial acts they perform in being the active agents of society by which security of possession, including all other public services, as such, are obtained. The value of this dis­tributive service, performed by proprietors, is attested by its being paid to them in open market with free competition on every side, and by the further consideration that without this service of con­tractual distribution by land lords, possession by or dispossession of any occupant would rest on nothing but the force or favor of politi­cally elected and obligated persons and all safety and security would be gone.

 

 In conclusion, it may be noted that no attempt has been made to lay the ghostly “moral” arguments against property in land. The

ponderous syllogisms of the early Herbert Spencer and the myopic formulations of Malthus, Ricardo and Henry George have a kind of formal symmetry within their premised settings; but they are not at all relevant even as partial descriptions of a functioning society or community organization. They are premised on the supposed sub­jectivity of an individual, his “rights” and desires and how he is supposed to feel about them, or their supposed infringement. No social institution can be evaluated or appraised on any such premises. Arguments so based can have no revealing pertinency in a picturing of the free and voluntary interactions among its units by means of which a society evolves and is sustained. This discussion therefore avoids both argument and refutation in its somewhat detached de­scription of how, in a social organization, human services, public as well as private, are incorporated in property and distributed by ex­change.

 

 When the real nature and the necessary services of property in land become better known and understood, land and site owners will organize themselves into agencies of much wider administrative service, authority and responsibility than they now assume. They will then be able to confer upon their respective communities almost unimaginable relief and advantages, and the production and ex­changes of their populations, so freed and so served, can then lift them all into all the plenty and peace they now so sadly lack and deeply crave. And these true lords of the land, guardians of its free men and public servants of all, will find themselves recompensed in such abundance of rent and capital values as were never known and in such finer satisfactions to themselves as only dreamers can con­ceive. With this wider service, the institution of private property in land will be in splendor redeemed and its blessings fully enjoyed; without this, it will continue to be governmentally destroyed and social progress cease.