In this radio programme Neil MacGregor examines the great Indus Valley civilisation. 4,500 years ago a state thrived in which it appears each contributor was valued equally.
The evolution of the science of economics featured the thinking of numerous philosophers, starting in the recent era with the French Physiocrats. These predecessors and teachers of Adam Smith knew that if the French Revolution was to be avoided there had to be a way to include all members of society in the fruits they all helped to produce.
Classical economics discovered that equality of opportunity could be achieved in societies where the net income is shared amongst the participants. Its thinkers realised that the rent of land and other natural resources had to be shared between its producers. Otherwise a two-tier society would emerge:
Tier 1: A privileged elite of site and resource owners.
Tier 2: An underclass consisting of those who received none of the net income.
How did the sustainable single tier version of society work?
To the classical economists ‘justice’ dictated that wealth belonged to its producers. They observed that labour and capital produced wages and profits. And that land produced rent. The latter was gathered freely from nature or from amenities funded by society as a whole. It was no great leap from there to work out to whom the rent (the net income) belonged:
If a viable and sustainable society was to be maintained – as seems to have happened in the Indus Valley civilisation – the net income had to be shared out between all participants in the joint social project that was ‘society’. Thus, those who monopolised a part of the commons had to compensate the community accordingly – with Ground Rent.
How else to explain a society in which all homes were of a decent size and the absence of any evidence of violence or conflagration? A sustainable society can exist today too which does not find itself constantly in danger of implosion, or where privilege must be ‘protected’ by strong ‘policing’.
The Physiocrats lost the argument just prior to the French Revolution when Marie Antoinette’s advisers threw out Turgot and his ideas. The inevitable social implosion found heads a-rolling…
When the simple observation that rent belonged to everyone was expounded and amplified by Henry George at the end of the 19th century in his famous book ‘Progress and Poverty’, those in unjust receipt of the net income were roused to action.
‘Georgists’ today (such as the SLRG) continue to promote the concept that a society will thrive if taxes are removed from wages and trade and revenue collected instead from the rent of a country’s land and resources – the compensation that should logically and fairly be given to the community by those using any and all of its resources.
When farming first arrived in prehistory, the very first enclosed field was removed from the commons. How was society to be sustained? What if ALL the commons was eventually to be privately owned? Adam Smith’s Annual Ground Rent is the answer: the means by which a society is rendered sustainable, peaceful and prosperous. Like the Indus Valley society.
The evolution of the economic philosophy dominating our 21st century world is decidedly NOT like the justice-based philosophy of the Physiocrats or Adam Smith or the Indus Valley. ‘Neo-classical economics’ has no notion of economic justice. The history of its cynical founding by vested US landed interests in the early 20th century is documented in Professor Mason Gaffney’s ‘The Corruption of Economics’… a hair raising tale of mercenary academics in the employ of wolves.
In the new economics fiscal justice is replaced by something called ‘utility’. ‘Land’ as a separate factor of production is conveniently absent. Which renders the activities of rent extractors hidden. Result? A two-tier society in which the net income is first camouflaged and then extracted unseen, creating an unsustainable society composed of the haves and the have-nots. At the heart of the new economics is the desperate goal to sustain the unjust privileges of an elite – the owners of land. And to keep for that minority group as much as can be achieved of the net income that has been produced by everyone.
Neoclassical economics laughs at the social schisms threatening human existence. Schisms that are the product of Neo-classical economics. Instead, the mission is to guard the concept of private property in land – even with special ‘human rights’ declarations, to remove all levies on land entirely and replace them with taxes on productive workers and traders.
In this way the cream of the socially produced rent of land (the net income of each country) can be extracted by a privileged minority of social parasites for producing and doing nothing in return.
Shall we put up with it any longer?