ECONOMIC PROBLEMS.

Gisborne Times, Volume V, Issue 75, 3 April 1901, Page 4

ECONOMIC PROBLEMS.

Land never increases or decreases in quantity or quality. What then, is the source of Land Values and the Unearned Increment ? (By C. P. W. Longdill.) The above statement must of course be taken in a broad sense, for the purpose of the investigation, which the title impb'es I propose to make. It is true that, to a comparatively insignificant extent, the earth’s surface may be increased by reclamation or decreased by floods, etc., and the quality may be improved by allowing land to become overgrown with vegetation for a number of years, but since no one has ever supposed that this is a source of the unearned increment, we may safely assume that land values and the unearned increment are not, economically speaking, due to any increase or decrease in the quantity or quality of the land. I propose, therefore, in this essay, to discover the tue source of all land values, including the unearned increment. It is an admitted fact, that in sparselypopulated countiies, there is little, or no unearned increment, the land being obtainable for little more than the cost of survey. But as the population increases, the value of the land rises at about the same rate. We may at once infer from this fact, to which no exception can be found, that the price and value of land corresponds with and is caused by the population of a country. We must next endeavour to discover the co-relation between land and other values (iov all values have one source) and labour, by which I mean the total mental and physical labouring power of the community, including the increased labouring power obtained by machinery. This relation will not be difficult to find if we first learn the true definition and origin of “ value.” Value is really an abstract term denoting quantities of labour embraced in the production of wealth, as “ power ” is a term used to denote the energy of steam devoted to moving machinery. Hence pounds, shillings and pence are used to measure abstract quantities of labour as horse-powers are the unit by which volumes of steam energy are measured. This would be more apparent if we had a currency called days, hours and minutes, instead of pounds, shillings and pence, a day being equal to Bs, one hour to Is, five minutes to one penny of British money. Economic value, therefore, i lcluding land values, is neither more or less than an abstract idea of a quantity, or shall wo say a force, which is the natural possession and part and parcel of every individual, which by its nature* cannot be “ intrinsically ” exchanged, yet is capable of producing every form of wealth obtainable by man, i.e., “ Labour,” the amount of labour represented in this wealth being called “ value.” It is necessary to measure the value in this wealth, so that the products of each man’s labour can bo exchanged for other men’s labour throughout the social organism. Hence we see that in studying economic questions all value should primarily be conceived as existing in the time and energy of humanity devoted to the production of wealth and not in the land ; and therefore the greater amount of other men labour that can be obtained by the possession of any given piece of land, the greater the value of the land. Labour thus being perceived to be the true source of all values of whatever nature, it is easy to perceive that what is called increase in the value of land and increase in the labouring power of the community arc synonymous terms, from which fact we may safely infer that what is commonly called the value of land is really an increase in tho right to the laboring power of the people comprising the community, and the steady rise in tho aggregate of land values as population increases corresponds to an equal increase in the fund out of which to pay wages to the increase in the community. Which fund is in truth the very labor itself, tho products of that labor being simply the value exchanged. For example, if one person were placed upon an island it is clear that his wages will be exactly what ho produces. If another man comes it may be considered advisable to institute the payment of wages, the amount paid in wages being, we will supi3osc, ,£2 per man per week. The gross value of tho land may then be said to be i£4 per week, for it yields an income to this extent. It is a common saying among farmers in New Zealand that the value of land is what can be made out of it. If a third man comes, in order that all throe may participate in the standard wage tho value becomes T 6 per week. Now, when the laud has risen to say £2O per week, or in other words, when there are 10 men upon our imaginary island, certain economic divisions of labor become possible which were totally impossible when there was only one man upon the island. When there come to be 10 men it is quite possible that six of these 10 persons will be ample to do all the work necessary to comfortably support all. Now, if four of these persons can only obtain a private right to the whole island they can still draw their «£2 per week each by charging the remaining six, what is commonly called a rent, for the land, amounting to £8 per week. The four who obtained the rent could thenceforth live in idleness upon the labor of the others. Now, it will be observed that each and all the members of the community are still receiving exactly the same wage per head from the land at the start —viz., £2. Yet a new economic factor has arisen by which a certain percentage of the people have obtained the capacity to live without working upon the labor of the remainder. It will be seen, however, that it would be quite impossible by any system of financing for all to live without working. The important question now to decide is this: Since these ten persons are each receiving exactly the same wage as they have always been accustomed to receive, are they any worse off or better off by the introduction of this new economic factor we call rent ? The answer is clear enough. The drawers of rent have obtained an independent (of their own work) existence, and those who pay the rent and do the work have not only to supply the private owners of the land with a value of goods equal to the rent, but they have also lost the labor of these four people—the products of which labor would have been divided in equal proportion among all the members of the community, if they had been compelled to work. It would be as well to stop for a moment and consider whether the introduction of rent will cause a rise in the price of commodities of the community. Now when, rent being established, only six out of the total of ten men are devoting their time to the production of wealth, these six, other things being equal, will only produce three-fifths of one thousand pounds, i.e., six hundred pounds of wealth per week. Now since we are assuming that there is in circulation the same amount of money per head of population now as when all were working ; yet, as we have seen, the wealth produced only amounts to 600 in place of 1000 formerly. It is evident that it will tako as much money now to purchase 601 b of flour as it did formerly to purchase 1001 b. So that the drawers of rent, as" w'ell as the wageearners, will find the cost of living greater; that is to say, their money will not go so far as it did previously, when all did their fair share of work. And thus the only way the cost of living can be cheapened is by labor-saving machinery or longer hours of labor on the part of tho workers to make up for those who do not work. Thus we see that rent, or land values, or the unearned increment, which really all have the same meaning, increases the cost of living without necessarily reducing wages. Thus are the laborers deluded into supposing that by receiving high wages they are obtaining the fruits of thentoil, no matter how high rents may be. The same law applies to interest profits as well as to reut.