This is the second instalment of a multi-part series. Read part one here.
OK, so Marx, and the Marxist tradition, got a description correct in many respects of the way capitalism is working now. The important point to remember is that Marx isn’t a bounded “philosopher” like Aquinas or Locke, arguing for an eternal, particular truth — he had a specific argument about the way capitalism worked at the time. But he also had a general theory of how knowledge worked — that we must assume a material, extended world of knowable processes; that we ourselves transform, as a species that has come to acquire consciousness and the possibility of projective action.
Marx thus contemplated that large parts of his particular theory could be overthrown. Indeed, as Gareth Steadman Jones’ recent biography reveals, he was convinced by the 1870s that Capital would have to be redone. And it was.
But the crucial point is that Marx is not simply Marx. He’s Hilferding, whose 1910 Finance Capital could be seen as volume five of Capital (Volume four? Too complicated to explain). He’s Paul Sweezy and Paul Baran, whose 1964 Monopoly Capital is a pretty good account of Facebook, Google, etc, from half a century away; Samir Amin, whose account of systematic underdevelopment Accumulation On a World Scale shows why China roared ahead, while India has put a light overlay of urbanism across stagnation, and large parts of Africa have gone backwards. He’s all these, and more, and I choose them because they have followed the straight-arrow “Marxian” economic tradition.
What did Marx and the Marxists get wrong at a deep level? The greatest challenge was from the Austrian tradition, which first tackled Marx in Bohm-Bawerk’s Karl Marx and the Close of his System, which argued that Marx had compared apples and angle-grinders in his argument as to how a deep structure of “value” — as cost of production — related to prices. Bohm-Bawerk suggested that two different ways of doing that in Capital showed a sleight-of-hand, which made a fall in the rate of profit appear inevitable, when there was no such guarantee.
The “transformation problem” debate has continued for a century. Marx had never said that the rate of profit would bust through all other conditions to doom capital mathematically. Cartel-isation, monopoly and capitalist state terror could potentially keep the thing bubbling along until the organised working class ended it. For the most part, he saw capitalism as a system with, potentially, a long way to go.
The Austrians also made a challenge as to how any form of steered socialism could work — “the problem of the millions” — but that was about socialism, rather than capitalism per se. The most serious challenge came from the “neo-Ricardian” Piero Sraffa, with his 1960 book Production of Commodities by Means of Commodities: Prelude to a Critique of Economic Theory.
In this 60-page work, Sraffa showed that both Marx and marginal utilitarians took certain variables as constants to ground their theories. Marx, for Sraffa, is a rival post-Ricardian, who takes human labour as a special type of production input, and assigns it a value at a certain time, and then generalises that to a production process over a time series in ways that do not cohere; marginal utilitarians by contrast do not acknowledge that the circular mathematics of product “switching” render the real calculation of marginal advantage simply magical thinking (this is one base of Steve Keen’s assault on economics as a “naked emperor”). (This is my ham-fisted take; I’m open to correction).
Sraffa was a leftist — a friend and supporter of the Italian communist Gramsci — and his argument was political; a capitalist state could keep capitalism going by endlessly resetting wage/profit ratios, interest rates, etc. (Sraffa, a Cambridge man, was also more or less a co-author of Keynes’s General Theory, and many of the ideas leading to the Bretton Woods post-World War II order are arguably, partly at least, his). In 1978, Ian Steedman produced Marx After Sraffa, which expounded the argument in great detail, and more or less smashed “inevitabilist” Marxism to pieces. The book sent a generation of ’60s/’70s Marxist intellectuals out of the movement altogether, and towards postmodernism and post-Marxist politics.
Since then, there have been renewed challenges to the Sraffian critique, from schools such as the TSSI group, and others (don’t ask). And, in historical terms, we can see that the end of capitalism is being talked about by everyone. So what’s happening, and where’s the revolutionary working class who were going to deliver the killing blow? We’ll see, in part three, next week …
Guy thank you for a thoughtful exposition. It was well worth a read.
I’m going to hold off detailed comments until at least part three, but note the following two points:
1. That argument is presented as discredited because of a very singular event in 20th century history: the World Wars of 1914-1945, the collapse of the European Marxist movement into national patriotism, and the triumph of Russia’s Bolsheviks. I don’t think that’s nearly sufficient to explain the discrediting, though I don’t doubt it’s a reason.
2. the crucial point is that Marx is not simply Marx. That could be a problem. Certainly, evolution isn’t simply Darwin; and to draw a longer bow, by no means is modern Christianity just the quoted words of Jesus. However, we know precisely what evolution is today not because of what Darwin said it was, but because of what we can observe. By contrast, the problem with Christian theology (or indeed theologies in general) is that nobody knows what it is: it’s layer after layer of apologetics, selective de-authorisation, speculative interpretation and reinterpretation.
Which leads to the fundamental question: is Marx not Marx in the way that evolution isn’t Darwin, or is it not Marx in the way that modern Christianity isn’t the quoted words of Jesus?
As I’ve observed it, it’s the latter, and for reasons that relate fundamentally to why all 19th century economic philosophies ought to be discarded, except possibly as a source of carefully-examined language.
Thank you GR & RD. This is a fascinating discussion for politico-economic illiterates – like me. That I’ve never heard of Sraffa despite thinking that I had some grasp of Keynes and Bretton Woods, speaks as much to the carefully maintained blinkers of Neo Liberal propaganda that I grew up with.
RD: Returning to my comfort zone – evolutionary dynamics and consequences are not”Darwin”. They have much deeper and less debatable effects on most systems than either economic or theological arguments. The dismal science is not one.
Hi Rhwombat,
You’re right. Key to distinguishing science from some other form of ideological dogmatism is that you don’t need to read original papers to understand science.
Modern physicists don’t have to read Einstein in the original, and few do; most modern biologists can’t remember the full title of On the Origin of Species. If they’ve ever read it, it’s as an historical curio. To understand evolution, you just need to read the theory, the observations, the experiments and the results, in any form that captures them faithfully. Scientific work can be taken out of historical context provided that formulae and methods are reproduced faithfully. That’s the whole point: science works, regardless of who you are and when you do it, as long it’s done systematically and without bias.
Not so with Dr Marx. To understand him you have to read him in full, says Helen Razer. And Marx isn’t Marx, says Guy Rundle: exactly what is said of religious prophets. In short, the only way Marx has political credibility is the via the very methods that deny him any scientific authority. More simply still: Marx can be respected historically and philosophically, but not scientifically.
Which is fine, but as far as truth and knowledge go, the whole point of the Enlightenment was to establish that philosophy, revelation and received wisdom aren’t truth, no matter who utters it. Such utterances aren’t knowledge. They’re at best conjecture — and sometimes they’re not even that.
The weird thing? Journalists already know this! That’s why they corroborate sources and rely on photography, public records, private correspondence — stuff that independently confirms verbal claims.
There’s a ‘so-what’ to all this, associated with how we balance economic agility with social equity. Clearly, we need both. But I believe they can’t be thrashed out by pitting a term that doesn’t really mean anything (‘Capitalism’) against another produced by pseudoscientific magical thinking (‘Marxist socialism’). Like the squabble in Gulliver’s Travels, it’s Big Endian vs Little Endian: a parody of intelligent and constructive discourse.
We need different language, better categories and an end to a the pointless tribal squabble that fruitlessly tries to prove one ignorant tribe right by pointing out another ignorant tribe is hysterically wrong.
The sad thing? We’re a species used to living in insular bands of thirty, now required to cooperate on a scale approaching ten billion, with no history of sustaining peaceful interaction on that scale, and an horrific history of doing anything else.
The consequence? Social sciences are critical for the sustainability of our species. We cannot engineer what we don’t understand.
And these reductionist, blinkered squabbles of individualism vs. collectivism; enterprise vs. regulation; and privatisation vs. socialisation aren’t even the majority of what the social sciences do. It’s just the way they’re reported politically by people cashing in on outdated ideological conflicts.
What readers do with an authors work isn’t a particularly good argument for discarding the work. Especially for an author who regularly roasted his readers and those that claimed to follow him, while he was still alive.
“all 19th century economic philosophies ought to be discarded”
I’ve been dumbing my thumbs on the desk for most of the weekend over this very assertion, Ruv, and I wonder if it is just a tad extreme. By way of an illustration I doubt that Idealism is deemed a serious philosophy by any empiricist (of which I include myself) but having made that point the writings of Bishop (George) Berkeley – to identify one example (or Russell’s 1912 book : Problems of Philosophy – which puts, rather forcefully, the case for Idealism) do have some educational value if only for a sense of humility.
As an aside, I ought to make clear to other readers that Bertie Russell and, for that matter, George Moore, who were both educated and lectured at Cambridge, were schooled in the philosophy of Idealism – as one was if one attended Cambridge in the mid to the late 19th century. However, subsequently and independently, Moore & Russell discredited the philosophy of Idealism.
Marx, is most certainly relevant as is some of the wisdom contained . in the Bible remains relevent (thus declared by yours truly who is a confimed athiest). However, the game has changed. On this account I agree with you.
I’ve suggested to Guy (see my post) that he makes mention of the post-Keynesian school which, inter alia, makes a distinction between the income and spending of various classes; capitalists and workers in the simplest case. Then some comments regarding the Australian economy could be either made or inferred.
As to “ALL” (19th century philosophers) I suggest that Herbert Spencer (and Huxley, Dewey, Whitman [better include some yanks!] etc. remain(s) relevant if only to identify just how they influenced others.
On the one hand, Guy, – again – not too bad but here are some fearful omissions and absence of significant detail in regard to your exposition that, just for the sake of coherency, ought to have been covered. I, along with your good self, am going to have to assume that the reader is familiar with (1) The (Smith/Ricardo) Labour Theory of Value [LTV]; i.e that value is implicit in labour and NOT in utility – i.e. the degree to which the good is desired and concepts such as (Marxist) surplus value etc. Having made that point this topic is seldom treated (if an all) prior to 3rd year at a “top” university or at Masters level. As with Sir Humphrey, I am not at all sure as to where to begin.
“Bohm-Bawerk suggested that two different ways of doing that in Capital showed a sleight-of-hand, which made a fall in the rate of profit appear inevitable, when there was no such guarantee.”
Actually, there is a “guarantee” but we will come to that, via Sraffa. The Austrian/Bohm-Bawerk/von Hayek – and later the Solo/Samuelson + the Chicago school were at pains to discredit the LTV. Given an argument that prices are a function of utility (Demand or Marginal Benefit to the consumer) an argument for the market determining the “correct” allocation of resources (and NOT the government) is all too apparent. To this end the neo-classicists (i.e. those cited) had/have a vested interest in (1) discrediting Marxism and (2) removing the government from any role in the economy. The Supply-Siders” (or neo-libs – there are differences but they seldom matter) are the latter-day representatives of the neo-classicists.
As an aside, but as I have pointed out previously, the term neo-classical is a misnomer but econocmics is “stuck with it” along with the dependent and independent varialbe being a’ about on economic graphs.
> The “transformation problem” debate has continued for a century.
Your treatment of the Transformation Problem, Guy, really does have to be tidied up for the sake of (1) your argument and (2) the readership.
Marx made it clear (Vol. I) that each industry would have a different rate of profit because each industry uses a different ratio of living (labour power) and dead labour (i.e. pass labour contained in previously produced goods or capital items). Marx did recognise the behaviour of markets in tending to effect a uniform rate of profit across industries (or the economy as a whole). That is, the surplus value created across the economy is reallocated to different capitalists so as to provide for a general (uniform) rate of profit.
Yet, as Marx pointed out, this process seems to happen the other way round inasmuch as in determining the price of their goods, i.e. effecting a supply curve – which in Marxian terms has nothing to do with the marginal cost of the product – (i.e. another nail in the neo classical coffin), capitalists mark-up their input costs of production and then mark up the price according to the general rate of profit multiplied by the capital invested. It THEN appears as if the capitalist simply receives from society a share of total profit reflecting their investment.
The “bleating” over “tranformation” presented itself in terms of what one considered value. The matter is entirely ideological and hence, as you put it Guy, the FUD by comparing apples with angle-grinders. If one “belives” (unreservadly) in the market then there is no need of Marx. If one has the view that left to its own devices (e.g. the 18th and 19th centuries with the attendent poverty of about 60% of the population) then one will form the view that a market could not clear itself to save itself.
Now, in contrast to Mr Rundle’s “ham-fisted take” let’s make an effort to consider Sraffa with with some sense of reality to what Sraffa actually wrote. One might recall from their 1st year macro economics lectures such concepts as production possibility frontiers (PPFs, or curves) and indifference points or optimal points in micro. The illustrations are (only) two factor; guns and butter or (collective) goods and services. Sraffa pointed out that one needs butter to make guns and one needs goods to provide services and v.vercer. In fact, when extended to three or more factors the maths for PPFs do NOT observe the two dimensional worlds anymore than 3d vectors have the properties of 2d vectors.
Now, does anyone remember solving two simultaneous equations with two unknown values (at school)? What follows is a set of simultaneous equations in “n” unknown variables. For those who do not comprehend the liner algebra that follows I suggest that they take a writ out against the Federal (and respective State) Minister for Education, providing, of course, that the appellant is able to prove due diligence in class (and homework) when it was “all happening”
Consider an economy which has inputs and outputs. The inputs are the Xi(s) and the outputs are the bi(s). Therefore, we have,
k1Xi + k2X2 + k3X3 + …. + k(n-1)X(n-1) + knXn = b1
liXi + l2X2 + l3X3 + …. + l(n-1)X(n-1) + lnXn = b2
etc
miXi + m2X2 + m3X3 + …. + m(n-1)X(n-1) + mnXn = bn
were ki, li, mi (etc) are any real numbers
Putting this economy into matrix form (and these matrices do exist and are modeled by Treasury)
[matrix] k1 …….kn [matrix] X1 [matrix] b1
l1 …….ln X2 b2
etc =
m1 …….mn Xn bn
(I need to upload a .pdf (with subscripts) and appropriate notation but the text will have to do!)
OR AX = B where A, X and B are the matrices defined above.
The question now, is what is the solution for the “inputs” – i.e. matrix X to provide the required (necessary) outputs for the economy – i.e. matrix B. The solution to the system (in Shraffan terms) is X = A[inverse][X] [B]
For Sraffa the rate of profit is NOT a price and, in particular, it is NOT clear that it is determined in a market. The rate of profit only partially reflects the scarcity of the means of production relative to their demand. While the prices of different types of means of production are prices the rate of profit can be seen in Marxian terms as reflecting the social and economic power that owning the means of production gives this minority to exploit the majority of workers and to receive profit. This, on my reading of your article, Guy, is where you got it a’bout! But no matter. Your understanding of Vector Spaces (a senior topic in Linear Algebra) would have to be rather good in order to follow Sraffa.
The, above, Sraffian approach illustrates (we would need 2×50 minute lectures to actually demonstrate the following) that a change in the rate of profit would change the measured amount of capital in significantly nonlinear directions. Future values are of the form A /[P(1+r)^k] where k is the term and r is the rate of interest/profit.
Some basic application of the model could yield the following: an increase in the rate of profit might initially increase the value of CapitalItem_A more than CapitalItem_B. Yet a continued increase in the rate of profit could, at some time into the future, reverse the relative vales of ItemB with ItemA. This phenomenon is known as (capital) restitching. The same can be applied to labour and alternatives to labor (such as robots or capital items such as bulldozers). The phenomenon of “Reswiching” destroys the fabric of neo-classical economics!
In other words, successive intensive use of a factor (of production) when the real-word necessity of taking other factors of capital into account (and NOT ignoring them or constructing idiotic and misleading two factor (2d) models, can well be associated with a higher (and not the implicit – contrary lower) price of that factor.
In summary, neo-classical economics is a crock. When the reality of the ‘production of commodities BY the MEANS of commodities is taken into account (and not ignored as it is tyically) in Economics neo-classical economics falls to bits. As an aside, despite assertions to the contrary in 1st year texts, Economics is NOT a science or does it possesses even the pretence to be a science.
“In 1978, Ian Steedman produced Marx After Sraffa, which expounded the argument in great detail, and more or less smashed “inevitabilist” Marxism to pieces.”
Oh .. really Guy? I actually remember the publication of the book by Steedman. There were reviews (of varying quality) everywhere. However, the question that you ought to answer is : “are you making this assertion, based upon your own reading or are you deferring to another author in making this assertion”. I, for one, really would be interested!
Having regard to what I have written this far there isn’t the space to contradict his/your assertion but I am happy to do so if Crikey is to offer the space. Suffice to observe that the real price of almost everything (from guns, to cars, to whiskey to house funriture, to butter) is declinging. Just undertake the exercise yourself from about 1900.
The ONLY exception is land BECAUSE the banks are lothed to whitness a real decline in value over the lenght of a mortage. Obtaining a loan for a (new) car [which does decline in value having left the showroom], by comparison, doesn’t seem to bother the banks! In this respect the property market is manipulated. The extreme forms exist in OZ, NZ, parts of China but very much less so in market economices such as the USA and Canada and, Scandanavia but for different (non-market) reasons.
Given the assumptions of scarcity (finite resources and an increasing population) one would expect the real price to increase but the contrary is the case. This phenomenon materially affects the long term rate of profit – as Marx pointed out. It has also been pointed out in Australia that an over-valuation in property (commercial and domestic) of something like 35% is just not sustainable in the long term. More ought to be said but I’ll leave it at that.
I, as with others, will await your next installment. For what it is worth, I am surprised and gratified that you mentioned Shraffa. I haven’t read the fellow for some number of decades. However, the next step (so to write) would be to include the post-Keynesians such as Robinson, Pasinetti & Kalecki (will do).
It took some time to collect some references, hence my tardy reply to your article, but here they are. I have referred to Dobb on a number of occasions, previously, but it is not an introductory text. The book, on the other hand, does “say it all”. The article by Ben Fine is readable by the layman; at least for a “gist” of what is going on.
I am happy to be “taken-on” by “all-comers” but I do anticipate (and presume) that the references are familiar to any proponent who wishes to take me on.
Baumol, WJ (1974) The transformation of values: What Marx meant. Journal of Economic Literature 12(1): 51–62.
Dobb, M (1973) Introductory: On ideology. In: Dobb, M (ed.) Theories of Value and Distribution since Adam Smith. Cambridge: Cambridge University Press, pp. 1–37.
Fine, B, Harris, L (1979) Value, price and the transformation problem. In: Fine, B, Harris, L (eds) Rereading Capital. London: Macmillan, pp. 21–48.
Sweezy, P (1942) The transformation of values into prices. In: Sweezy, P (ed.) The Theory of Capitalist Development: Principles of Marxian Political Economy. New
York: Monthly Review Press, pp. 109–132.
Kyle wrote: the real price of almost everything (from guns, to cars, to whiskey to house furniture, to butter) is declining
Should this surprise us, Kyle? Population is growing; automation is increasing; productivity is burgeoning due to growths in both labour and efficiency — and moreover, most ‘stuff’ produced by 80% of the world’s producers is going to 20% of the world’s consumers. Until we hit a resource limit (as we surely shall), and begin to reprioritise what stuff is really important (as we presently don’t), we can expect the real price of stuff to fall.
Kyle wrote: The ONLY exception is land BECAUSE the banks are lothed to whitness a real decline in value over the lenght of a mortage
When we buy land we’re not really buying soil, but socially-enforced restraint. (Like the ironic commentary about prostitution: you’re not really paying for sex, but for your partner to leave you alone after the sex.) Land ‘ownership’ is just a license. The value attaching to that license depends on what behaviours exist or are anticipated, how effectively they’re being restrained, and what that leaves you free to do.
For example, presently a land ‘ownership’ license lets you suck water out from any water table under your soil, and sell it to Asahi, even though the water is shared with other licensees. On the other hand, it’s damn near impossible to keep junk email out of your letterbox, or stop couriers from entering your property when you’ve told them a dozen times to leave your crap at their depot for collection because they can’t be relied on to knock loud enough when you’re working from home — or not to chuck boxes all over your front doorstep and almost kill you when you step out for milk.
My point being: the land might look much the same from generation to generation, but its usage, along with behaviours allowed and restrained could be shifting substantially, so the comparison might not be apples with apples.
“ the real price of almost everything (from guns, to cars, to whiskey to house furniture, to butter) is declining” —- Should this surprise us, Kyle”
Well, Ruv, the empirical evidence contradicts the (cough) “assumption of scarcity” which is (1) blurted in every first year text (in the first chapter) – and 1st lecture for that matter – and (2) is fundamental to neo-classical economics! That is the point. The implied point, as pointed out in my original article, is that neo-classical economics is an obvious “crock” but the Western word persists with the fiction nonetheless! So much for Popper (again) and the “so called” Social Sciences(!)
“When we buy land we’re not really buying soil, but socially-enforced restraint.”
Fascinating philosophical (and to the best of my knowledge an original) point! However, either way, the banks distinguish between loans (on depreciating items) and mortgages on (they hope) non-depreciating items. For the latter the market HAS to be manipulated. AR provided data, this week, where a corner block in suburban Sydney appreciated at well over 30% p.a. (compound) for seven years into the correction/recession of the early 90s.
“Like the ironic commentary about prostitution: you’re not really paying for sex, but for your partner to leave you alone after the sex.
A barrister’s picnic here!
“Land ‘ownership’ is just a license. The value attaching to that license depends on what behaviours exist or are anticipated, how effectively they’re being restrained, and what that leaves you free to do. .. My point being: the land might look much the same from generation to generation, but its usage, along with behaviours allowed and restrained could be shifting substantially”
At the risk of wandering off topic do you think that an enlightened approach would be to dispense with the institution of property as it pertains to land? Yes, the suggestion reeks of perceptions of communism but the long term I wonder if there is going to be an alternative. Failing that we (somehow) reduce the population of the world to something like three billion and then, as Lovelock pointed out, most of the major problems will disappear!
Kyle wrote: the empirical evidence contradicts the (cough) “assumption of scarcity” which is (1) blurted in every first year text (in the first chapter) – and 1st lecture for that matter – and (2) is fundamental to neo-classical economics!
At least someone has kindly labelled it as an assumption and not pronounced it a metaphysical law. 🙂 I suppose zero-sum games make convenient theoretical sandpits but they may not inform the way a person really makes decisions.
For example, my ability to consume food is limited by my lifespan and metabolism. Past a certain point, food has no more value to me, no matter who made it, what’s in it, what they did to it, or how it was promoted on MasterChef. Likewise, no matter how many homes, beds or cars I may be said to possess, there is still only a limited number of hours I can spend living, sleeping or driving in them — their utility to me is necessarily limited. After that, any value they have to me is based purely on exploitative restraint: free-riding on property laws to deny their utility to someone else, creating scarcity to build my own socioeconomic privilege.
It’s not hard to tell (in my own mind) whether I’m using something or simply seeking rent on it. Since my physical needs are limited, and I’m opposed to rent-seeking in every case I can think of, any capacities I have past meeting my needs are an opportunity to grow the pie for others, not a war-chest to be spent on claiming more of a limited pie.
Depending on my subsistence-efficiency, I can at least spend any surplus on developing transferable social and intellectual capital: stuff that doesn’t really consume much but time and surplus effort: art, education, advice, civic discussion… As far as I can tell, that’s growing the pie for the society that grew and nurtures me.
Someone recently said that I have too much time on my hands, but I think that’s precisely the point: the more time we can quarantine from subsistence, the more we can spend doing something for someone else. (Apparently I’m supposed to spend that time passively, turning economic surplus into artificial scarcity? Bwah.)
Anyway, as you know, science is allowed to be wrong as long as it’s wrong traceably. 😀 Scarcity might be true some of the time, but if it’s wrong some of the time too, it’s also a traceable wrong, which is honourable, if regrettable and a bit embarrassing.
I wrote: When we buy land we’re not really buying soil, but socially-enforced restraint
Kyle replied: Fascinating […] At the risk of wandering off topic do you think that an enlightened approach would be to dispense with the institution of property as it pertains to land?
As you rightly pointed out, this is only philosophy until someone systematically tests it. But it’s testable, so if it’s wrong it should be wrong honourably. 🙂
It seems to me that our current property laws only make sense if we aspire to be farmers. If you look at the way hunter-gatherer peoples work, they don’t do property the way agricultural societies do. They use whatever’s around them, and then return it to more or less wherever they found it, and let it go about its own ecological business.
A few things they keep for individual use, but those things can still be claimed for use by the family, tribe or band. So if you want to claim an object or place against anyone else using it, you have to make it sacred with taboo. You decorate it, tell stories about it; give it a social identity beyond mere utility. You might do that with a place or thing that’s part of a natural schoolroom or cultural theatre — something used to build social or intellectual capital. But it’s the seasonal use that makes it sacred, not the fact that you’ve said it is. So your possession requires your periodic expenditure of energy to reaffirm its sanctity.
But when you clear, till and plant land it’s a different story. Your investment of effort is slow to mature. You’re counting on it producing a food surplus, otherwise why not just gather and hunt? But you also can’t have others coming in, uprooting your crops and planting theirs, or harvesting yours and claiming any surplus for themselves. So you have to treat your land like you do your clothes: a manifestation of personhood. And society has to uphold this and others have to spend effort enforcing restraint on your behalf, lest you won’t enforce restraint on theirs. Neighbours who respect property lines and keep an eye on your possessions are called ‘good neighbours’, and it makes sense to do that, because a food surplus benefits everyone: your capacity to eat is limited.
But if I’m a city dweller, that isn’t really how I live. I choose my dwelling based on location and services. It’s not the land itself that has value so much as who and what it connects me to. I still need enforced restraint: I don’t want to come home from work to find a stranger sleeping in my bed and using my Internet account; but really what I need restrained is other peoples’ intrusion on my access, if that makes sense. I don’t want them moving ‘my’ bus-stop, reattaching ‘my’ Wifi, disconnecting ‘my’ water, closing ‘my’ local primary school, demolishing ‘my’ Woolworths, or letting ‘my’ roads crumble into potholes.
But beyond that, I’m probably not as attached to actual place as I am to its connections. That’s why despite the immense social inconvenience I’ll move without a second thought when I change jobs.
I think the problem with attaching farmer’s idea of property to a city-dweller’s idea of utility is that it creates perverse incentives.
As a farmer, when I buy land (if I bought it and didn’t simply occupy it), I’m paying a fixed price for the variable-cost service of enforcing restraint. That sounds dubious, but it’s okay: I’m using the land to produce a food surplus, so society gets both recompense for opportunity costs, as well as a continuing return on its investment in my occupancy. That lasts as long as I farm the land: well and good.
But as a city-dweller, if I’m not living in and working from the place I occupy, then I’m either renting it out or speculating on it. I’ve paid a fixed cost for the variable-priced service of enforcing restraint. I’m free-riding on the property laws, creating scarcity on a utility essential not just to other citizens, but to the prosperity of society itself: convenient access to useful locations.
So yes, I think we may need to restructure the way we do urban property according to the way we actually use it, rather than upholding ancient farming paradigms we no longer subscribe to. 🙂 There’s more than one way to do it, and I think some are more equitable and practical than others. The way we’re doing it at the moment though, seems barking mad to me. I don’t understand why we have more properties than we use (I don’t, but many of my generation do), over-decorate them, yet under-invest in the services they connect to. Why on earth would we think that prosperity?
I am almost embarrassed, Ruv, as to how much thought you give to your submissions and, by comparison, how little thought I give my submissions. I would make my submissions “tighter” (and typo-free) if I was offering a professional product but what I try to offer is [in no particular order] (1) an argument for empiricism and, by corollary, an argument against (2) sentimentalism or sensationalism or against (3) outright unsubstantiated assertion or (4) plain heresy.
When I suggested that the institution of property ought to be either suspended or eliminated I intended to (and was remiss for not making the implication clear) suggest that a Right to USE real property might exist for a finite period of time (n = x years; x = 20, 25, 31, .., 159 .. whatever) and for residential real property in particular. Hardware and software was licensed, in the early days, on just this principle.
I did not intend to convey that the institution of property be dispensed with willy-nilly and you have, with some detail, alluded to the likely, consequences of such a state of affairs. An exception would have to be made for viable farms and not those (e.g Europe) that require substantial subsidies.
I don’t see the “current” model as sustainable as the population of the world proceeds towards 10 billion people. I’m (I’d like to think) too long in the tooth to advocate a ‘single’ panacea [I could ask my mate Jim for a suggestion for a quick fix 🙂 ] and I accept that the matter is complex but I wonder, for a population greater than 6 billions (at <= 3 billions the argument changes at this point) if the "solution" is be quasi-Marxist with greater uniformity of services and aesthetics across suburbs.
Kyle wrote: what I try to offer is an argument for empiricism, against sentimentalism, sensationalism or outright unsubstantiated assertion or plain heresy
That sounds like fun to me. 🙂
Kyle added: a Right to USE real property might exist for a finite period of time
Yes. That’s how the ACT government does it. You can ‘own’ your home outright, in the sense that you owe no mortgage on it, however the land on which it stands is occupied under a renewable 99-year leasing arrangement for what I believe is a peppercorn fee.
When ‘owning’ land is normative this can seem a strange arrangement, and given the costs involved you’d have to trust the Territorial government to enter into a home purchase at all under that scheme. However, property prices are the second highest in Australia, so it doesn’t much affect consumer confidence. It has some other interesting side-effects too:
For example, any improved land valuation is effectively owned publicly, not privately. People do speculate on ACT land, but only in limited ways: developers ‘land bank‘ and redevelop inner urban areas, trying to add value by consolidating, and investors ‘flip’ newly-built, plan-bought apartments like crazy, but your rates tie directly to land value; there’s no sense in which you can free-ride on any improvements to infrastructure. Whatever benefits you receive from improved services and connectivity, you pay for. The approach is value-driven rather than cost-driven: an interesting way to do things.
I’ve never seen it tested, but I also assume that resumption of property is easier than under some other systems. Presumably, if the ACT government offers you fair market value for whatever repurposing then you can haggle over price, but not the eventual outcome. You know that when you purchase.
It’d be easy to exploit if you had a corrupt government playing, but it’s harder to corrupt the government with back-door property deals in the first place. Rezoning gives you no free benefits, and therefore no spare cash to bribe bureaucrats with (as we’ve seen egregiously in New South Wales.)
For all I know that might not be the best way to do things everywhere, but once we realise that the way we do property is historical and that there’s more than one way to do it, there’s no good reason to knee-jerk over discussing changing needs: the only people who’ll knee-jerk either don’t understand, or are profiting from unfair practices.
I don’t see the “current” model as sustainable
I agree, Kyle. Urbanisation is smart, but the way we’re governing it isn’t.