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Land Rights and Land Value Capture Online Course Development

Module 4: Economics of War and Peace

1

1.1 Now we will take a step deeper into our land economics analysis and focus on how the private appropriation of land rent leads inexorably towards a warfare state and a highly militarized economic structure. The following diagrams will give you an even greater appreciation of the importance of land value capture in building a world of peace and plenty for all.

1.2

1.3 This first diagram brings our attention to the fundamental person/planet relationship - that of human beings applying their energies to the gifts of nature in order to obtain food, shelter and other basic necessities of life. Part One reminds us that some people, even today in developed countries, are finding deep satisfaction in living simple lives in harmony with the natural world and that they can meet much of their basic needs for food, shelter and energy with little need for cash. The most essential requirement is access to land that can be made fertile and productive.

1.4

1.5 Diagram 2, above, shows that structural violence, indicated by the gun images, begins at the point when land is privatized by the few who are then in a position to charge Rent as a condition for others to have access to land. In economies having exclusive private property rights to common assets, as economic growth and development proceeds, land and resource values increase, and the wealth of elites grows as a result of the private appropriation of Rent. This inequitable accumulation of private wealth gives elites a disproportionate capacity to make loans to others. Thus they are able to capture massive amounts of financial interest as well.

1.6 The “Privilege Fund” is the descriptive term in the diagram indicating economic rent (unearned income) captured by economically powerful corporations, banks and individuals. Wages do not keep up with the cost of land for housing, and in many countries taxes fall heavily on wages, so most people must borrow and pay interest for their homes, business capitalization, higher education, etc. The middle class, if there was one, shrinks while multi-millions of people face poverty, homelessness, and food insecurity. At this point the rent-seeking activities of finance capitalism has overpowered the productive economy.

Oil rich countries of Africa (namely Nigeria, Gabon, Sudan, Congo, Equatorial Africa, and Chad) have long histories of coups, military rule and dictatorship. Millions have died of hunger, disease and murder while wars over oil, diamonds, copper, and other mineral resources made life-generating economic activity difficult or impossible to proceed. - Africa under further menace of Resource Wars

1.7

1.8 Diagram Three indicates that as the wealth and power gap between the very rich and the rest continues to grow the swelling Privilege Fund gives both motivation and capacity to invest in land, resources, and industries abroad and/or to engage in resource wars. The Privilege Fund is used also as a loan fund to indebt poorer countries. For instance, some international financial institutions’ original “portfolios” were secured by profits (resource rent) derived from oil.

Student Activity: Please read this article and view the map of resource conflicts – Africa at the Boiling Point here: www.fromthewilderness.com/free/ww3/012505_ftw_maps.shtml

1.9

1.10 The protection of massive privatized assets requires armaments and a clever system of propaganda to convince the general public that they must pay taxes from their wage income and/or incur public debt to pay for these “protective services.” At this stage a war economy is in full swing. The military-industrial-financial complex leads to super-state expansion and resultant covert and overt wars for geo-spatial control of natural resources and prime locations such as ports and other transport nodes.

Dr Martin Luther King said that only ‘the radical reconstruction of society itself' and ‘a radical redistribution of economic and political power' could ‘save us from social catastrophe.” He told us that "a nation that will exploit economically will have to have foreign investments and everything else, and will have to use its military might to protect them… the problem of racism, the problem of economic exploitation, and the problem of war are all tied together. They are the triple evils that are interrelated."

1.11 What is the true cost of war?

2 Transforming the Privilege Fund

2.1 Diagram Four

2.2 Diagram Four describes a new role for democratic governance. This graph shows the Privilege Fund converted to a Resource Rent Fund utilized for the benefit of the people as a whole. A condition for land enclosure for private use would be payment of land rent to the entire community. This is the goal of “land value capture.” “Exclusive” private property rights to land, which includes the right to privately appropriate land rent, is thereby easily converted to “conditional” private use rights to land. Individuals, groups, or businesses can secure use rights to land provided that they pay the full rent of land to society as a whole to be utilized for the benefit of all.

2.3 Land Value Capture places the economic foundation of society on the principle of equal economic human rights to the value of earth’s resources – the “right to land rent.” We might call this new mandate for governance “earth rights democracy.”

2.4 Another way to grasp this concept is to consider that land belongs to all on an equal basis, each with an “equal share.” In the best forms of tribal land tenure systems there is an agreed upon process or leader making fair decisions about allocations of land use to clans and families. In complex cash economies, public systems of land value capture play this allocative role. Those who privatize or enclose the most and the best land would pay the most land rent to the common fund. Those with little or no land or poorly located land would pay little or nothing. Taxes on their wages or other productive activities would be eliminated.

2.5 Thus, instead of rent being captured by the few leading to wealth inequality, the new role of democratic governance is to capture land rent for the many leading to a much fairer distribution of wealth.

2.6 As the economy develops and becomes more complex and land rent grows, a percentage of the rent from the now public resource rent fund could be distributed as equal cash payments to everyone, a “citizens dividend” similar to the previously described Alaska Permanent Fund dividend system. Surface land rent is one of the best sources of funds for citizen dividend payments, better than oil rent which would best be utilized to finance renewable energy systems.

2.7 Optional Reading: The Law of Rent and the Economics of War and Peace This paper, first presented in New York at the Eastern Economics Association Conference (2007) on the panel organized by Economists for Peace and Security, further develops the themes of each of the four diagrams in this section.

LAND CONFLICT RESOLUTION

A similar pattern exists for conflicts around the planet: the economic prize of land and natural resource wealth and power-seeking to get that prize. Land value capture can work to directly address issues of territorial conflict. The key to peace is to equitably distribute the land rent throughout the area in dispute.

Those pursuing non-violent solutions to land conflicts would initiate information gathering to determine the approximate amount of land and resource rent that could be captured from the territory experiencing land conflicts. They would publicly and transparently post this information in the form