Property and Political Economy - Land as a Form of Property - Literature review Example

Property vs. land – a view from two economic perspectives Name Institution Introduction De soto (2000, p. 35) used a very methodical and analytical approach to address the issue of land as a form of property. Though his postulations and ideologies were considered a little controversial, they gained him fame and this raised a lot of debate among various scholars and economists across the globe pertaining to the issue of land and property. De soto’s work is just one of the many documented among the neo-classical economists view of the land and property issue. George (1887, p. 107) is also one of the economics who have addressed the land question, property and tax in the past. Other economists (predominantly political economists) however, had their own school of thought. To them, land and property were placed on different pedestals and issues concerning either dealt with separately. This essay seeks not to clear the contention, but to provide an appraisal and an analysis of both sides. It shows how each side portrays the issue of land and property. The Neo- classical economists These economists were more liberal than their counterparts and mostly their views on many issues affecting the economies of different nations across the globe differed and were considered to be controversial. However, they gained a lot of prominence because their way and line of thought was mostly in tandem with the expectations and tribulations that the people (especially the poor) had. A classic example of this is through the works of de soto. De soto was among the most popular economists in the united states following his stand on the concept of land and property. Land as a form of property According to de soto, and many other neo-classical economists who did not quite gain as much fame but who, nonetheless shared this opinion, land was supposed to be treated as property. Property was subject to taxation from the properties act but land did not receive such form of treatment. People (the poor) who did not own any land did not have any means to access any form of capital because, clearly, they could not afford to put up anything as a form of security. In the stipulations of de soto, even the ‘poor’ people who might own some form or piece of land are only described as being poor only on paper, whereas their status is absolutely different. A classic example showing how the poor becomes non-poor following an uplift of shape and value of their land in a fashionable style has been described too (De Soto, 2000, p.2). What makes land become valuable? Can land qualify to become rated in the same scale as other forms of property? Many neo-classical economists would answer the above question in the affirmative (Treagold & Pullen, nd, p. 3). Land can definitely describe as a form of property. The following arguments form the core of the neo classical understanding of land as a form of property. Land is a foundation upon which everything thrives. It is on land that all other things that are termed as property thrive. It is on the soil that buildings, houses, skyscrapers and cities are made (Harvey 2008, p.23). Nobody has figured out yet how to make floating buildings in the air. They all have to lay foundation on earth, land. It is on this that roads that transverse the globe, carrying products made from factories built on earth are made. So technically, land forms the foundation from which all other recognized forms of properties (exempting virtual forms such as stock and bonds of companies) are made. With this in mind, it becomes easier for the neo classical economists to value land as a form of property as well. Land is used as a source or raw materials and minerals. The bulk of the gigantic and most profitable companies in the globe draw their source of wealth, influence and affluence from the earth. Some of the notable companies are oil refineries, natural gas production, steel, jewellery and even hydroelectricity to name but a few. The earth provides numerous rich minerals that companies have exploited for thousands of years to the benefit of humankind. Stilwell (nd, p. 108) states that the environment (in this case the term ‘environment’ skewed and narrowed to imply ‘land’ for the purpose of analysis) is the most important single form of property in the globe and therefore, its protection from destruction should be a paramount concern. The environment provides the world with numerous resources, most of them free, and for this reason, instead of destroying the environment, we should market it as a prime piece of property (Harvey 2008, p. 28). Land appreciates in value following its proximity to certain factors that are in demand. For instance, as an example, Disney land is built on a piece of land that was not considered to be as primes as those close to the city. However, the grandiose nature and image of the portion of land started creating demand from people. Immediately, the prices and values of land that were near this Disney land shot up, even though they had remained idle and in limbo for so long. In their argument, these economists believe that just putting a value of land and having the same depreciate or appreciate makes the land achieve the characteristics of a normal property. The view from the political economist side Bush et al (2011, p. 187) talk of land grabbing and land dispossession in many places across the globe but particularly in the African continent. Most politicians are involved in this unjust process of land grabbing in different parts of the world. They use the land to create other forms of property from the same. Their view on land is however different and diversified from that of the orthodox neo-classical view analysed in the preceding statements. According to these political economists (Polanyi, quoted in Castles et al 2011, p.3 ), land is envisioned as a factor of productivity. Their argument shows that if land is not utilized in the proper manner to ensure that it provides an avenue for production of goods and services and other factor services, then it cannot be termed as profitable and hence cannot be described as a form of property. land, according to them is seen as a facility in or through which other forms of property (e.g. roads, buildings) are created. It serves to provide a platform for the development of property. Their argument is strengthened by their own example and postulation that land, if left idle does not increase in value. What makes the value of land increase is through utilizing this land to create wealth. The various production activities that are conducted on land resulting to the creation of wealth are what value is put upon and hence they are termed as property in the view of these political economists (Anderson nd, p.136). Taxation of land does not make it a form of property according to them. Every other forms of property are taxed because there is an actual value that could be placed on them concerning their capacity to produce profits or revenues. How do you measure the value land? The political economists state that the method used by the neo-classics of placing a value to land is somewhat vague. If the value of land could be measured using the produce that a piece of land has or just by being in proximity of certain ‘desirable elements and facilities’ like cities and infrastructure, this would imply that land is considered as a form of property. As such, a single tax policy (like one advocated by George 1887) on land would not be applicable in this case. They argue that if this would be the acceptable scenario, then all the forms of taxes that are applicable to all the other forms of property such as buildings would need to be implemented on land as well. Conclusion The analysis above provides an appraisal into two different schools of thought about land being a form of property or not. These are the neo classical and the political economists’ schools of thought. It has been observed that the neo classic economists are far more liberal than their political counter parts in this particular case. From the neo classic point of view, land is indeed a form of property. It is within this form that all the other forms of property thrive. So instead of admonishing it, according to them, land should be exalted as the prime of all. The political economists think otherwise. They do not refute that it is within land that other forms of property thrive. Their argument is that land only derives value for its capacity to produce and sustain other forms of property. For this reason, land cannot be a form of property. Rather, it is a factor of production. Land is tasked with the absolute role of facilitation of creation of other forms of wealth. In conclusion, the debate about this issue could go on forever, so it remains that depending on which side of the table one sits, land could be viewed as a either a form of property or as a factor of production. References Anderson, T nd, ‘Some thoughts on method in political economy’, Journal of Australian political economy, no. 54, pp. 135-145. Bush, R, Bujra, J & Littlejohn, G 2011, ‘The accumulation of dispossession’, Review of African Political Economy, vol.38, no.128, pp.187-192. Castles et al 2011, ‘Karl Polanyi’s Great Transformation as a Framework for understanding Neo- Liberal Globalization’, Social Transformation and International Migration in the 21st Century Working Paper 1, viewed 6 November 2013, http://sydney.edu.au/arts/transformation_migration/downloads/STIM_WP1_Final.pdf De Soto, H 2000, ‘This Land Is Your Land: A Conversation with Hernando de Soto,’ World policy journal, vol. 28, no.2, pp. 35-40. Harvey, D 2008, ‘The right to the city’, New left review, vol. 53, pp. 23-40. Sitwell, F nd, ‘Marketing the environment’, Journal of Australasian Political economy, no. 68, pp. 108-127. Treagold, M, L & Pullen, J, M nd, ‘Henry George in northern new south Wales newspaper account of two lectures’, viewed 6 November 2013, http://www.hetsa.org.au/pdf-back/23-A-6.pdf Read More