So, after
’s recent piece on GDP, I had asked him a question that had been sitting in the back of my mind for quiet a long while - since his Recommended Reading List on Economics, really. And that is, what is Georgism? Because he’d talked about it a few times in private chats, and I’d also been curious about where the term ‘rent seeking’ came from when I listen to podcasts by the wonderful Michael Hudson. I wanted to confirm it meant the logical explanation based on how he was using the term - those that seek profits undue to them from the things that they own.Well, was I in for a treat! The good Tree gave me two fruits, a starter and a heavier, A Wikipedia on Henry George and his book Progress and Poverty, the easy one. Then one on rentier class, Rival Definitions of Economic Rent by a Beth Stratford. From the paper, we’re only going to focus on Rent Seeking, and not other topics.
Ms Stratford, being a much more researched and expert opinion than I, has the history down pat in the modern era.
And the reality all backwards. As most intellectuals do.
Rent Seeking
As stated above, rent seeking began mostly as I described it, both in reality and in economic theory. The idea was that those nasty, rich land owners got a monopoly on land, and held it over those who didn’t have land in order to drive down labor, while simultaneously increasing rent.
Thus, rent seeking.
While not laid out in the paper, this would be more grievous with the use of Usury, as rent seekers would be able to use their gains to further monopolize, and seek out a larger monopoly.
As far as I can see from the paper, this was the beginning of the term “rent seeking.” Then, over time, it evolved to also throw in other capital gains that could be sought. Stocks, bonds, their derivatives, apartments, industrial buildings and equipment, government contracts, regulatory capture, etc.
Of course, just so as not to seem Marxist or classist, there are mumblings of labor able to be ‘rent seeking’ as well. However, I have never seen or heard the word used in such a manner, was shocked to see it mentioned in such a way, and doubt it actually occurs in reality.
As such, I’m going to be fairly positive in my claim that anyone who views the world in a rent seeking fashion is, at minimum, already ascribing to Marx’s Class Struggle dynamics, if not an outright Marxist. That’s fine, I’m just calling it like I see it.
Thus, those with Capital are always seeking to retain their capital, and lend it out at greater profits than it’s value is worth for it’s use. This is always and every where immoral, and such people should be hung for the pirates they are.
Profit Seekers
This is not a new term, though one that moderns are not used to. So, let me expound some definitions.
Value of materials = The dollar cost of what you paid to put into a product or rental, or what it would be worth if you already own it
Value of labor = The cost of a year’s upkeep of the laborer (house, family, food, car, everything) / 365 + a modest saving
Value of a rental, goods, or labor sold = value of materials/rental + value of labor
Profit = unjust gouging of money beyond the value of the goods, rental, or labor exchanged
As you can see, I would consider our nation one of Profit seekers. This goes beyond class warfare, because all are guilty. From the poor, to the rich. All against all, in a death of Darwinian fashion. Only the strong survive in our modern culture.
There is no common good.
There is no just exchange of values.
We believe in Capitalism, and that the simple agreement between two people make the exchange of value Just, Equal, and good.
Meanwhile we ignore social dynamics, power structures, poverty with regards to people’s need to eat, to provide shelter and food, the reality that Capital doesn’t make money by itself, but often doesn’t pay its labor until after the work (and the Profit) is made. So any lack of payment is a dire theft.
Now, my earlier statement that we’re all Profit seekers is not to ignore the different culpabilities of the different classes - merely to state that, unlike Marx, I’m not laying everything at the Burgousies’ feet.
As such, we must learn to work together, and not be pirates at each other’s throats, seeking to plunder the goods of the other for whatever price we can get.
Because Pirates are always hung.
Value Seekers
One thing that I’ve said before, but bears repeating as it is on topic, is that property exists for the common good of all. So all capital is created and existed to be used for the common good of everyone in the Polity. However, individuals have Just claims upon it, which we call ownership. This is avoid quarrels, increase productivity, encourage stewardship, and as a just reward for their claims upon the property.
However, these goods morally are obligated towards the common good. The ownership comes with a duty/stewardship/privilege relationship that was present within pagan cultures such as the Romans, and continued until the Enlightenment. The easiest example is squatter laws, which still exist till today, the premise being that if one is so derelict of duty towards one’s property so as not to notice squatters upon it, one is truly not an owner of the property - the squatter is. Property is meant to be used and used for the common good.
It has a value as such, in that use. Asking for more compensation for the use of property beyond the value of the use of the property is morally wrong, breaks the common good, and destroys community.
With this in mind, it would be a good time that we repeat the definitions from the previous section, that we might recognize what we must live up to in those definitions:
Value of materials = The dollar cost of what you paid to put into a product or rental, or what it would be worth if you already own it
Value of labor = The cost of a year’s upkeep of the laborer (house, family, food, car, everything) / 365 + a modest saving
Value of a rental, goods, or labor sold = value of materials/rental + value of labor
So, if money is representative of labor, and the value of a rental is in it’s use over it’s expected life, what is a reasonable expectation for a moral rental? Well, most houses last longer than their 30 year mortgage - so paying someone to buy their house (plus interest) is out, morally speaking. If one expects it to last 60 years, you would take 60 years, plus expected amounts of labor, fixing roof, painting, etc - with a small amount every year to put towards savings. Then you are morally allowed to charge that for rental.
Even supposing a theoretical house that lasts forever - an obvious impossibility - one has to put labor into that house to upkeep it and make it last forever. Entropy comes for us all. Taxes and insurance must be paid. Interiors need repairs, and there is wear and tear that comes with pests over time. There is obvious utility to renting, where in some base amount can be charged. But, given a prior where money is a stand in for labor, you run the calculations, and charge appropriately.
One can see that the moral amounts for rent drop significantly, went looking at the value in a classical economist theory, using actual definitions as they were always used. If this were something enforced by laws, it would also bring down the prices of homes to the level of affordability for purchasing, while making a modest, working man’s income for those that owned properties outright, and invested labors into their properties to upkeep them. This would be especially true if Usurious home loans were also banned at the same time.
As I’ve stated elsewhere, money is a means of exchange that is representative of labor. So, there is a value to renting a property, but that value is absolutely not the price of what it takes for someone to sell themselves into debt slavery plus make a profit, while putting no labor into repairing a degrading property.
Or the same for any capital purchase - renting it out does not mean that someone pays to buy it for you, if you put no labor into it. Morally it means that they can pay you for your labor to upkeep your assets, and a small amount of the charge for the utility for the cost of the capital.
There is a price of goods. But that price is the price of the goods and the labor that goes into them - which in a factor set up means paying the factory workers living wages. That whole living wage for one year / 365. And yes, because people are human, and humans get sick, have holidays, etc - I really mean the whole 365. We’re not robots. For higher end goods, you obviously pay higher. For much in our economy this means paying less on an hours worked basis, if the whole economy shifted. For some high end goods, this would mean paying much more.
For some goods, that we don’t want to pay living wages, what we’re telling the market is we don’t value human life or people doing it, if they can’t raise a family on the wages because the goods/services can’t command enough margins to pay that much. In a moral world, this would mean those goods are worthless and should go out of business. I’m looking at you, McDonalds.
Value of Services. This means that what a service is worth, is what the value is. The same that applies to Goods applies to services. Skilled labor might make more per hour, because they’re able to get valuable work done efficiently. Or, because they’re doing detailed work, they may take their time and do beautiful carvings of stone, or wood, etc. I know some wonderful stone masons and blacksmiths that do things you wouldn’t believe.
But, these things become something where the exchange is something where we’re philosophically exchanging a like good, for money or something of equal value.
And we should all want to exchange equal value. While we all love getting deals - the virtuous man should want to pay what a thing is worth. There is an understanding, yes, that men sell things cheaply because they need the money now; there is nothing wrong with that intrinsically. Yet, if one lords it over the desperate man, and drives the price down yet further - that is the act of a pirate, a scoundrel, and a profiteer.
So if you pay me for a good or skill with a cow, it’s because we have determined a cow is of equal value to the good or skill. Or a Pig. That is obviously in a barter economy.
Or if we go to a credit economy of old England and the Tally sticks, I may take what you owe me down to the general store, and buy goods on your credit.
Or whatever form of recognized trade we have - it literally is a different philosophy, one of equal exchange.
Which, given Aristotle and Aquinas’ view of the equality necessary for Friendship - has a significant impact on the common good, and social benefits of the Polity.
With which I will rest, in equal friendship with all.
Unless you’re a Pirate.
Because, no matter who you are, or what state you are in life….
Pirates get hung.
I find this interesting because I'm in business, and I would like to do things by profit at worst and by value at best if I can.
Would you consider a vertically integrated (own your supplier/distributor) or horizontally integrated (run multiple businesses together) enterprise a viable method towards Value seeking? If you have your fingers in more pies, you could probably charge less for each of them and make more on the whole with costs.