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Keynesianism - inflation
and the planned economy - authoritarianism. This dilemma, the author argues, stems from a distortion in our understanding of how the industrial economy works, a distortion he traces back to Adam Smith.
Adam Smith provided the captains of industry with a theoretical framework and moral justification for the new mode of production which sprang from the Industrial Revolution. He believed he was setting out the rules for a free market system but, inconsistently, he granted landowners an exemption enabling them to exert a monopoly influence on the market which remains to this day.
The Marxist critique blames the capitalist for the ills of the system, yet Marx himself acknowledged that the power of the owners of capital rested on the power inherent in land. Both Marx and Smith recognized the special role of landowners who, in the words of J.S.Mill, "grow richer in their sleep without working, risking or economizing", but neither pursued the macro-economic implications and, if anything, covered them up.
The author looks at the implications: the conflict between labour and capital is a false one that obstructs a rational strategy for rescuing the Western economy
the origins of the collapse of the 1980s are to be found in land speculation
this exploitation of the unique power, intrinsic to land, gives rise to inner city decay, urban sprawl, misallocation of resources, mass unemployment and the meteoric rise of property values.
The major industrial nations enter the1990s in the midst of land booms offering riches for a few but unemployment for many: banks in Texas have been bankrupted by massive speculation in real estate and even embassies have had to abandon their offices because they could not afford the rents in Tokyo. In Britain, the spoils from housing - the direct result of the way the land market operates - have enriched owner-occupiers but crippled the flow of workers into regions where entrepreneurs wanted to invest and lead the economy back to full employment.
Thus, it is the author's thesis that land speculation is the major cause of depressions. He shows how the land market functions to distort the relations between labour and capital and how land speculation periodically chokes off economic expansion, causing stagnation.
The remedy proposed by the author is a fiscal one which would remove the disruptive factor of land speculation and transfer the burden of taxes from labour and capital to economic rent, a publicly created revenue. This would create employment and higher growth rates, while avoiding the inflation-risk policy of deficit financing
increased consumption and investment would be generated by the private sector, not goverment.
320 pages, Hardcover
First published January 1, 1983