Individuals may not own countries any more, but land inequity is still a huge problem in both poor and rich nations. Is it time for a progressive land tax?
Book review: Who Owns the World by Kevin Cahill (Mainstream Publishing, £25)
First published in Prospect Magazine, January 2007.
When William the Conqueror commissioned the Domesday Book at Christmas 1085 he instructed his emissaries to find out “what or how much each landholder had in land and livestock, and what it was worth,” so he could properly tax his new kingdom.
According to Kevin Cahill, who has set out to compile a modern Domesday Book on a global scale, the British monarch’s pre-eminence in absolute land ownership has grown over the centuries and the Queen remains by far the world’s biggest landowner, today owning a sixth of the Earth’s land surface. This may be a bombshell headline, but it is also pretty meaningless, since Cahill rests his argument on the absurd notion that the Queen not only “owns” the entire United Kingdom and all its dependencies and territories, but also Canada, Australia and New Zealand.
Cahill breathlessly cites constitutional texts and arcane feudal laws, but he misses the vital point that allodial ownership (absolute ownership without any encumbrance of law) is, in the modern era, the domain of states and not individuals. To put it another way, the idea of ownership is empty without the possibility of making a sale. Although there have been major land sales in modern history, such as the Louisiana and Alaska purchases in the 19th century, it is pretty hard to imagine the Queen offering to sell George W Bush a slice of Canada. Whatever Cahill might say about the matter, Canada is clearly not the Queen’s to sell.
This should not detract from the mammoth scale of Cahill’s undertaking nor devalue the two principal conclusions of his research. First, reliable data on private land ownership is very hard to come by. The Land Registry of England and Wales holds records for less than half of all land in the two countries. The land ownership records of the US are scattered in 3,143 local land registries and there is no central database. In Brazil, barely a tenth of land is covered by the land registry. Second, land ownership has long been concentrated in the hands of a very few people.
Cahill claims that these two things are not unrelated. The relationship between the concentration of ownership and the obscurity of data can be illustrated by the fate of the “second Doomsday,” a land census carried out in the 1870s and compiled in a report called The Return of Owners of Land. The report detailed every landowner in Britain and Ireland and showed that fewer than 3,000 families held about 95 per cent of the present UK. This was not something that politically powerful landowners wished to advertise. According to Cahill, the report was quietly removed from public record.
Historically, large private landholdings were accumulated by conquest or gifted by the sovereign, secured by the threat of violence and perpetuated through inheritance. But John Locke challenged this feudal basis of land ownership with his labour theory of value, holding that people can only take rightful ownership of land once they have “mixed” their labour with it. Although this enlightenment idea did little to change land ownership in Europe (despite the lasting land reform that occurred during the French revolution), it did end up being the model for the allocation of land to settlers in frontier America.
Ruling elites in Washington resisted the claims of penniless immigrants for as long as they could, but in the end they recognised that squatters had been settling land extra-legally for decades. The law was changed so that if squatters could show they had in some way “improved” a parcel of land-by enclosure, cultivation or irrigation-it became theirs to own. The result was an initial land distribution much more equal than Europe’s, and a system of property law that, according to the celebrated Peruvian economist Hernando De Soto, is a critical precondition for the development of a successful capitalist economy.
Economists fret about the lack of capital for investment in new businesses in poor countries, but according to De Soto these countries do not lack assets. Rather, they lack the systems of property law needed to transform fixed assets into working capital. By his calculations, all the real estate held, but not legally owned, by the world’s poor is 90 times more than the aid given to poor countries in the past three decades. However, secure property depends on legal rights of ownership, which often requires land reform.
In Europe, revelations about the concentration of farm subsidies in the hands of aristocratic landowners and corporate agribusiness are giving the lie to the notion that the EU’s common agricultural policy supports small-scale family farms. Today in the UK, 69 per cent of land is owned by just 158,000 families, mostly descendants of the 3,000 families identified 140 years ago in The Return.
The young Winston Churchill felt that there was something unfair about profits derived purely from land ownership: “Roads are made; electric light turns night into day; water is brought from reservoirs a hundred miles off-and all the while the landlord sits still?… He contributes nothing to the process from which his own enrichment is derived.” An illustrious line of economists starting with David Ricardo has advocated a land tax as the most efficient way of financing government expenditure, particularly expenditure on infrastructure improvements. It is an idea which has united the neo-Keynesian Robert Solow with Milton Friedman, the high priest of monetarism.
In an era of globally mobile capital and international migration, governments face the challenge of financing new infrastructure and expensive social welfare without driving wealth-creation overseas. But land remains the one truly fixed asset-and one crying out for progressive taxation. Instituting such a tax would help move us beyond the neo-feudal patterns of land ownership that Cahill has so tirelessly documented.