Saturday, April 14, 2012

Landed Property - Frédéric Bastiat - Pt 1

Landed Property

If the central thesis of this work is valid, we must conceive of mankind, in its relation to the world about it, along the lines that I shall now indicate.
God created the world. On the surface and in the bowels of the earth, He placed a host of things that are useful to man in that they are capable of satisfying his wants.
In addition, He imparted to matter various forces: gravitation, elasticity, density, compressibility, heat, light, electricity, crystallization, plant life.
He placed men in the midst of these raw materials and these forces and bestowed them upon him gratis. To them men applied their energies; and in so doing they performed services for themselves. They also worked for one another; and in so doing they rendered reciprocal services. These services, when compared for purposes of exchange, gave rise to the idea of value, and value to the idea of property.
Every man, therefore, became, in proportion to his services, a proprietor. But the forces and the raw materials, originally given gratis to man by God, remained, still are, and always will be, gratis, however much, in the course of human transactions, they may pass from hand to hand; for, in the appraisals that their exchange necessitates, it is human services, and not the gifts of God, that areevaluated.
From this it follows that there is not one among us who, provided only our transactions be carried out in freedom, ever ceases to enjoy these gifts. A single condition is attached: we must ourselves perform the labor necessary to make them available to us, or, if someone else takes this trouble for us, we must pay him the equivalent in other pains that we take for him.
If what I assert is true, then certainly the right to property is unassailable.
The universal instinct of mankind, which is more infallible than the lucubrations of any one individual could ever be, had been to adhere to this principle without analyzing it. Then the theorists came along and set themselves to scrutinizing the concepts underlying the idea of property.
Unfortunately, at the very beginning they made the error of confusing utility with value. They attributed inherent value, independent of any human service, to both raw materials and the forces of Nature. Once this error was made, the right to property could be neither understood nor justified.
For utility represents a relation between things and ourselves. No efforts, transactions, or comparisons are necessarily implied; it can be conceived of as an entity in itself and in relation to man in isolation. Value, on the contrary, represents a relation between one man and another; to exist at all it must exist in twofold form, since there is nothing with which an isolated thing can be compared. Value implies that its possessor surrenders it only for equal value in return. The theorists who confuse these two ideas therefore make the assumption that in exchange a man trades value supposedly created by Nature for value created by other men, that is, utility requiring no labor, for utility that does require labor—in other words, that he profits from the labor of others without contributing labor of his own. The theorists first characterized property so understood as a necessary monopoly, then merely as amonopoly, then as injustice, and finally as theft.
Landed property received the first brunt of this attack. It was inevitable. Not that all industry in its operation does not likewise use the forces of Nature; but in the eyes of the multitude these forces play a much more striking role in the phenomena of plant and animal life, in the production of food and what are improperly called raw materials, both of which are the special province of agriculture.
Moreover, if there is one monopoly more repugnant to human conscience than any other, it is undoubtedly a monopoly on the things most essential to human life.
This particular confusion—evidently quite scientifically plausible to begin with, since, so far as I know, no theorist avoided falling into it—was rendered even more plausible by existing conditions.
Quite frequently the landowner lived without working, and it was easy to draw the conclusion that he must indeed have found a means of being paid for something other than his labor. And what could this something be except the fertility, the productivity, of the land, the instrument that supplemented his own efforts? Hence, land rent was assailed by various epithets, depending on the times, such as “necessary monopoly,” “privilege,” “injustice,” “theft.”
And it must be admitted that the theorists were in part led astray by the fact that few areas of Europe have escaped conquest and all the abuses that conquest has brought with it. They understandably confused the phenomenon of landed property that had been seized by violence with the phenomenon of property as it would be formed naturally under normal conditions.
But we must not imagine that the erroneous definition of the word “value” did no more than undermine landed property. The power of logic is inexorable and indefatigable, whether it be based on a true or a false premise. Just as the land has light, heat, electricity, plant life, etc., to aid it in producing value, does not capital likewise call upon the wind, elasticity, gravitation to co-operate with it in the work of production? There are, therefore, other men, besides agriculturists, who receive payment for the use of the forces of Nature. This payment comes to them in the form of interest on capital, just as rent comes to the landowner. Therefore, declare war on interest as well as on rent!
Thus, property has been attacked with ever increasing force by economists and egalitarians alike, in the name of this principle, which I maintain is false: The forces of Nature possess or create value. For all schools are agreed that it is true and differ only in the violence of their attack and in the relative timidity or boldness of their conclusions.
The economists have stated: Landed property is a privilege, but it is necessary; it must be maintained.
The socialists: Landed property is a privilege, but it is necessary; it must be maintained, but required to make a reparation, in the form of right-to-employment legislation.
The communists and the egalitarians: Property in general is a privilege; it must be destroyed.
And I say, as emphatically as I know how: Property is not a privilege. Your common premise is false; hence, your three conclusions, though conflicting, are also false. Property is not a privilege; therefore, you cannot say that it must be tolerated, that it must be required to provide a reparation, or that it must be destroyed.
Let us review briefly the opinions voiced on this serious problem by the various schools of thought.
We know that the English economists have advanced this principle, with apparent unanimity: Value comes from labor. They may quite possibly be in agreement with one another, but can their agreement be called consistent with their own reasoning? Let the reader judge for himself whether or not they have attained this greatly-to-be-desired consistency. He will note whether or not they constantly and invariably confuse gratuitous utility, which cannot be paid for, which contains no value, with onerous utility, which comes only from labor, and which alone, as they themselves say, possesses value.
Adam Smith: “In agriculture, too, Nature labours along with man; and though her labour costs no expense, its produce hasnonetheless its value, as well as that of the most expensive workmen.”
Here, then, we have Nature producing value. And he who would purchase wheat must pay for this value, although it has not cost anybody anything, even in terms of labor. Who will dare step forward to claim this so-called value? But for this word “value” substitute “utility,” and all becomes clear, and private property is vindicated and justice satisfied.
This rent may be considered as the produce of those powers of Nature, the use of which the landlord lends to the farmer..... It [the rent!] is the work of Nature, which remains after deducting or compensating everything that can be regarded as the work of man. It is seldom less than a fourth and often more than a third of the whole produce. No equal quantity of productive labour employed in manufactures can ever occasion so great a reproduction. In them Nature does nothing; man does all.....
Is it possible to assemble a greater number of dangerous errors in fewer words? On this reckoning, a fourth or a third of the value of food products must be attributed exclusively to the powers of Nature. And yet the landowner charges the tenant, and the tenant the proletarian, for this so-called value, which remains after payment is made for the work of man. And it is on this basis that you propose to justify the right to property! What, then, do you propose to do with the axiom: All value comes from labor?
Furthermore, we have the assertion that Nature does nothing in manufactures! So gravitation, volatile gases, animals do not aid the manufacturer! These forces do the same thing in the factories that they do on the land; they produce gratis, not value, but utility. Otherwise property in capital goods would be as much exposed to communist attacks as landed property.
Buchanan, in his comment, while accepting the theory of the master on rent, is led by the logic of the facts to criticize him for declaring it advantageous.
Smith, in regarding as advantageous to society that portion of the soil's produce which represents profit on farm land [what language!] does not reflect that rent is only the effect of high price, and what the landlord gains in this way he gains only at the expense of the consumer. Society gains nothing by the reproduction of profit on land. It is one class profiting at the expense of the others.
Here we find the logical deduction: rent is injustice.
Ricardo: “Rent is that portion of the produce of the earth which is paid to the landlord for possessing the right to exploit the productive and indestructible powers of the soil.”
And, in order that there be no mistake, the author adds:
Rent is often confounded with the interest and profit of capital..... It is evident that a portion only of the money .... represents the interest of the capital which had been employed in improving the land, and in erecting such buildings as were necessary, etc.; therest is paid for the use of the original and indestructible powers of the soil. In the future pages of this work, then, whenever I speak of the rent of land, I wish to be understood as speaking of that compensation which the farmer pays to the owner of the land for the use of the original and indestructible powers of the soil.
McCulloch: “What is properly termed Rent is the sum paid for the use of the natural and inherent powers of the soil. It is entirely distinct from the sum paid for the use of buildings, enclosures, roads, or other improvements. Rent is, then, always a monopoly.”
Scrope: “The value of land and its power of yielding Rent are due to two circumstances: first, the appropriation of its natural powers; second, the labor applied to its improvement.”
The conclusion is not long in coming:
“Under the first of these relations rent is a monopoly. It restricts the usufruct of the gifts that God has given to men for the satisfaction of their wants. This restriction is just only in so far as it is necessary for the common good.”
How great must be the perplexity of those good souls who refuse to admit that anything can be necessary which is not just!
Scrope concludes with these words:
“When it goes beyond this point, it must be modified on the same principle that caused it to be established.”
The reader cannot fail to perceive that these authors have led us to the denial of the right to property, and have done so very logically by starting with this proposition: The landowner exacts payment for the gifts of God. Hence, land rent is an injustice that has been legalized under the pressure of necessity; it can be modified or abolished as other necessities dictate. This is what the communists have always said.
Senior: “The instruments of production are labour and natural agents. Natural agents having been appropriated, proprietors charge for their use under the form of Rent, which is the recompense of no sacrifice whatever, and is received by those who have neither laboured nor put by, but who merely hold out their hands to accept the offerings of the rest of the community.”
Having dealt property this heavy blow, Senior explains that a portion of rent corresponds to interest on capital, and then adds:
The surplus is taken by the proprietor of the natural agent, and is his reward, not for having laboured or abstained, but simply for not having withheld when he was able to withhold; for having permitted the gifts of Nature to be accepted.
We see that this is still the same theory. The landowner is presumed to come between the hungry and the food God had intended for them, provided they were willing to work. The owner, who had a share in its production, charges for this labor, as is just, and then he charges a second time for Nature's labor, for the productive forces, for the indestructible powers of the soil, which is unjust.
We are sorry to find this theory, developed by John Stuart Mill, Malthus, et al., also gaining acceptance on the Continent.
“When one franc's worth of seed,” says Scialoja, “yields one hundred franc's worth of wheat, this great increase in value is due in large part to the land.”
This is confusing utility with value. One might as well say: When water, which costs only a sou ten yards from the spring, costs ten sous at a hundred yards, this increase in value is due in large part to the help of Nature.
Florez Estrada: “Rent is that part of the product of agriculture which is left after all the costs of its production have been met.”
Hence, the landowner receives something for nothing.
All the English economists begin by asserting this principle: Value comes from labor. They are therefore merely inconsistent when they thereupon attribute value to forces contained in the soil.
The French economists, for the most part, assign value to utility; but, since they confuse gratuitous utility with onerous utility, the harm they do property is equally great.
Jean-Baptiste Say:
The land is not the only natural agent that is productive; but it is the only one, or almost the only one, that man has been able to appropriate. The waters of the sea and of the rivers, in being able to turn the wheels of our machines, to provide us with fish, to float our ships, likewise have productive power. The wind and even the sun's rays work for us; but, fortunately, no one has yet been able to say: The wind and the sun belong to me, and I must be paid for the service they render.
Say apparently deplores the fact that anyone can say: The land belongs to me, and I must be paid for its service. Fortunately, I maintain, the landowner can no more charge for the services of the land than for the wind's or the sun's.
The earth is a wondrous chemical workshop wherein many materials and elements are mixed together and worked on, and finally come forth as grain, fruit, flax, etc. Nature has presented this vast workshop to man as a gratuitous gift, and has divided it into many compartments suitable for many different kinds of production. But certain men have come forth, have laid hands on these things, and have declared: This compartment belongs to me; that one also; all that comes from it will be my exclusive property. And, amazingly enough, this usurpation of privilege, far from being disastrous to society, has turned out to be advantageous.
Of course, the arrangement has proved advantageous! And why? Because it is neither privilege nor usurpation; because the one who said, “This compartment is mine,” could not add, “What comes from it will be my exclusive property,” but instead, “What comes from it will be the exclusive property of anyone wishing to buy it, paying me in return for the pains I take, or that I spare him; what Nature did for me without charge will be without charge to him also.”
Say, I beg the reader to note, distinguishes in the value of wheat the shares that belong, respectively, to property, to capital, and to labor. With the best of intentions he goes to great pains to justify this first portion of payment which goes to the landowner and which is not charged against any previous or present labor. But he fails, for, like Scrope, he falls back on the weakest and least satisfactory of all available arguments: necessity.
If it is impossible for production to be carried on not only without land and capital, but also without these means of production becoming property, can we not say that their owners perform a productive function, since without it production could not be carried on? It is, indeed, a convenient function, although in the present state of society it requires an accumulation of capital goods from previous production or savings, etc.
The confusion here is obvious. For the landowner to be a capitalist, there must be an accumulation of capital goods—a fact that is neither questioned nor to the point. But what Say looks on as “convenient” is the role of the landowner as such, as someone charging for the gifts of God. This is the role that must be justified, and it entails neither accumulation nor savings.
If, therefore, property in land and in capital goods [why associate things that are different?] is created by production, I can fittingly liken property to a machine that works and produces while its owner stands idly by, charging for its hire.
Still the same confusion. The man who has made a machine owns capital goods, from which he derives legitimate payment, because he charges, not for the work of the machine, but for the labor he himself has performed in making it. But the soil, which is landedproperty, is not the product of human labor. On what grounds is a charge made for what it does? The author has here lumped together two different types of property in order to persuade us to exonerate the one for the same reasons that we exonerate the other.
The farmer who plows, fertilizes, sows, and harvests his field, provides labor without which there would be nothing to reap. But the action of the land in germinating the seed, and of the sun in ripening the crop, are independent of this labor and co-operate with it to form the value represented by the harvest..... Smith and many other economists have asserted that human labor is the only source of value. This is certainly not the case. The farmer's industry is not the only thing that creates the value in a sack of wheat or a bushel of potatoes. His skill will never be so great as to produce germination, any more than the alchemist's patience has discovered the secret of making gold. This is obvious.
It is impossible to confuse more completely, first, utility with value, and, secondly, gratuitous utility with onerous utility.
Joseph Garnier:
Rent paid to the landowner is fundamentally different from the payments made to the workman for his labor or to the entrepreneur as profit on the outlays made by him, in that these two types of payment represent compensation, to the one for pains taken, to the other for sacrifices or risks he has borne, whereas the landowner receives rent more gratuitously and merely by virtue of a legal convention that guarantees to certain individuals the right to landed property.1
In other words, the workman and the entrepreneur are paid, in the name of justice, for services that they render; the landowner is paid, in the name of the law, for services that he does not render.
The most daring innovators do nothing more than propose to replace private ownership by collective ownership..... They have reason on their side, it seems to me, as regards human rights; but, practically speaking, they are wrong until such time as they can demonstrate the advantages of a better economic system.....2
But for a long time to come, even though admitting that property is a privilege and a monopoly, we must add that it is a useful and natural monopoly.....
In short, it is apparently admitted by political economists [alas! yes, and herein lies the evil] that property does not stem from divine rights, or rights of demesne, or from any other theoretical rights, but simply from its practical advantages. It is merely a monopoly that is tolerated in the interest of all, etc.
This is the identical judgment passed by Scrope and repeated by Say in milder terms.
I believe that I have sufficiently proved that the economists, having started from the false assumption that the forces of Nature possess or create value, went on to the conclusion that private property (in so far as it appropriates and charges for this value that is independent of all human services) is a privilege, a monopoly, a usurpation, but a necessary privilege that must be maintained.
It remains for me to show that the socialists start from the same assumption but change their conclusion to this: Private property is a necessary privilege; it must be maintained, but we must require the property owner to furnish compensation in the form of a guarantee of employment for those who are without property.
After this, I shall summon the communists, who declare, still arguing from the same premise: Private property is a privilege; it must be abolished.
And finally, at the risk of repeating myself, I shall close by refuting, if possible, the common premise from which all three conclusions are derived: The forces of Nature possess or create value. If I succeed, if I demonstrate that the forces of Nature, even when converted into property, do not create value, but utility, which is passed on by the owner in its entirety, reaching the consumer without charge, then economists, socialists, communists will all have to agree to leave the world, in this respect, as it is.

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