A Philosophy for a Fair Society

A Philosophy for a Fair Society

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Overview

Something must be done, explain the authors, but governments will fail again unless they shake off the economic orthodoxy which is now one of the problems rather than the means to a solution. This book investigates the roots of the problem, both historically and theoretically. Dr Michael Hudson draws on archaeology and history, from Bronze-Age Mesopotamia through Rome to Byzantium, to show how a destructive virus crept into the body politic. This led to a breakdown in man's relationship to the environment, and divided society into a wealthy ruling oligarchy and an impoverished majority. The Welfare State seeks to remedy this man-made injustice, but, despite the escalating cost to taxpayers, it has failed to stop the widening gap between rich and poor. Drawing on medical evidence, Dr George Miller demonstrates that not only have the poorest grown poorer relatively, but their health has suffered disproportionately, so that people born into the lowest classes still have a greater chance of dying before they can enjoy their pensions. A century ago, Henry George, in "Progress and Poverty", asked why there was still poverty, when the Industrial Revolution had made it possible to manufacture in a day what had taken weeks or months previously. Dr Kris Feder shows how the Georgist paradigm provides an ideal way of tackling the many ills besetting the industrialized and Third Worlds. It is recommended by three Nobel prize-winning economists as the way forward for Russia. Dr Feder clears away misrepresentations of George's thesis, and explains how it would not only lead to a fairer distribution of wealth, but would also simplify the tax system. Michael Hudson is the author of "Trade, Development and Foreign Debt".

Product Details

ISBN-13: 9780856833847
Publisher: Shepheard-Walwyn Publishers, Limited
Publication date: 01/01/1994
Series: Georgist Paradigm series
Sold by: Barnes & Noble
Format: NOOK Book
Pages: 169
Sales rank: 1,052,404
File size: 354 KB

About the Author


Michael Hudson is a visiting scholar at the Institute of Fine Arts at New York University. He is an economic adviser to United States, Canadian, and Mexican government agencies and to the United Nations Institute for Training & Research. Kris Feder is an assistant professor of economics at Bard University, New York. She specializes in public finance and the history of economic thought. G. Miller, M.D., is a fellow of the Royal College of Physicians, is a senior clinical scientist with the Medical Research Council's Epidemiology and Medical Unit in London. An international expert in heart diseases. He was professor in residence in epidemiology and preventative medicine at Alvbert Einstein College of Medicine, New York.

Read an Excerpt

A Philosophy for a Fair Society


By Michael Hudson, G.J. Miller, Kris Feder

Shepheard-Walwyn (Publishers) Ltd

Copyright © 1994 Fred Harrison, Michael Hudson, G.J. Miller and Kris Feder
All rights reserved.
ISBN: 978-0-85683-384-7



CHAPTER 1

Land Monopolization, Fiscal Crises and Clean Slate "Jubilee" Proclamations in Antiquity


Michael Hudson


This essay compares Middle Bronze Age Mesopotamia (2000-1600 BC), classical antiquity (750 BC-300 AD) and the Byzantine Empire (330-1204 AD) to trace the corrosive dynamics of debt, absentee land-ownership, monopolization and economic polarization. The interaction of these influences has destroyed societies repeatedly throughout history. The lesson to be learned is that private possession of communal land rights threw off its originally public context, undercutting society's economic viability again and again, to the point where it has destroyed entire civilizations.

This historical overview provides a basic insight into the origins of today's economic crisis. Debt overhead once again is transferring real estate and farms, natural resources (oil, other minerals and forest products), industry and government-owned assets into the hands of a narrowing layer of bankers, bondholders and other creditors. The concentration of land and natural resource rights into ever fewer hands is part of a longer historical process in which private investment has been at the expense of the public interest.

Over the past century a major field for finance capital has been the creation of railroads and exploitation of natural resources. In both cases such capital has negotiated special tax breaks that have involved the hoarding of land. The oil industry's international depletion allowance and low royalty payments at subsidized rates on public lands are the most notorious examples. Tax breaks for mining, real-estate depreciation and the interest payments are equally serious concessions. The upshot is to tax the rest of the public to create transport, water and other public infrastructure to enhance the value of private holdings. Meanwhile, the money for this public spending is borrowed at interest, burdening taxpayers with higher costs to facilitate these giveaways to special interests.

This has been the essence of monopoly power throughout history - and also the essence of hyperinflations. Matters have become especially pronounced in third world countries, whose regimes have come under life-or-death pressure from the International Monetary Fund and World Bank, backed by the U.S. and European governments, to provide special concessions to foreign investors in an attempt to generate more foreign exchange. Instead of being invested productively, this money is used merely to service existing foreign debts and facilitate capital flight to offshore havens, from which the money is recycled into the North American and European banking systems. The result has left ostensibly resource-rich countries in debt beyond their capacity to pay, creating a permanent fiscal and foreign-exchange crisis.

At least antiquity's governments were not debtors; typically they were creditors. Industry was not financed by debt; it was self-sustaining, as Moses Finley has demonstrated so strongly. But these conditions no longer are true, making the crisis all the more serious. A contrast between ancient and modern modes of public and private finance may provide a deeper understanding of the economic and fiscal drama now being enacted, and help show both good and bad ways that societies have chosen to resolve their debt, land-tenure and tax problems.

Public obligations owed by landed property-holders, above all for military service (and for the performance of corvée labor in the Near East), have a pedigree going back at least to Sumerian times in the third millennium BC. Almost as old is the striving by rich and powerful families to avoid such obligations on their own holdings. Prior to the development of a land market, large holdings were built up mainly by foreclosing on subsistence lands pledged by insolvent debtors.

The transfer of these hitherto communally allocated subsistence lands to large property owners helped consolidate hereditary aristocracies and oligarchies to the point where their own power was able to undercut that of centralized authority. The ensuing privatization of economic power - and its associated displacement of rights-of-person by property rights - was achieved by strangling governments fiscally and militarily, leading to political and economic collapse. This essay accordingly discusses the earliest documented examples in the Old Babylonian period (1800-1600 BC), and sketches the subsequent dynamic of economic polarization down through the Roman latifundia to Byzantium.


I Bronze Age


Mikhail Rostovtzeff (1926) has provided the classic description of how, during the early centuries of our modern era, Rome's wealthiest landowning families managed to throw taxes onto the classes below them. This prevented any "middle class" of "yeomanry" from emerging out of the ranks of the curialis class. Much the same phenomenon is found in the East Roman (Byzantine) empire from the 9th through 11th centuries. In England, warlord Norman kings parcelled out the land in huge tracts to their companions and barons in exchange for the latter providing money and services, only to see this reciprocity of obligations cut away by the Magna Carta in 1215, by the Uprising of the Barons in 1258-65, by the enclosure movements, and by the Glorious Revolution of 1688. Today, large developers in many cities and countries typically are reimbursed for their campaign contributions by receiving tax breaks for their property.

Internationally, repressive regimes gain support by turning over mineral and land rights to foreigners, while running into debt to build infrastructure to speed the process of denuding their forests, depleting their soil and mines, shifting the land from producing domestic food grains to export crops, and leaving holes in the ground where their national patrimony once lay - while taxing local populations to provide the roads, port facilities and cleanup costs needed to provide these to investors at as low a cost as possible, so as to provide as large a surplus as possible, to be capitalized as a basis for borrowing the money to set the process in motion. This is the strategy of international finance capital and the industries and agribusiness it has drawn into its sway.

In each society the winning of tax-exemption by well-placed landholders and natural-resource appropriators appears as a singular, nearly accidental result of jockeying for position, but looking over the broad sweep of history, a common pattern emerges spanning over four thousand years, extending back to the Middle Bronze Age, 2000-1600 BC. Typically a politically weak ruler is confronted with a strong aristocratic leader mobilizing the leading families behind him. Mesopotamian rulers countered this by periodically restoring "economic order," that is, by issuing Clean Slate proclamations, but this practice did not survive into oligarchic Greek and Roman antiquity.


Social functions of archaic land tenure

Self-support was the key to the economic survival of archaic communities. Recognizing this fact, the guiding Bronze Age spirit (dare we say ideology?) was basically one of mutual aid in a militarized context. Citizens were assured the means of self-support on the land in return for providing military service in the draft, often supplemented by various types of seasonal corvée labor.

Most tribal and other precommercial land tenure was communally allocated. Citizenship status typically was defined by the allotment of land rights so as to enable citizens to support their families. The objective was not anything so modern as to enable citizens to make money by leasing out the land for rent, much less to exploit it commercially by hiring landless cultivators. Certainly the aim was not to transfer land into the hands of absentee buyers. Rather, the objective was largely military. Armies were composed of all able adult males from the landed families. In addition to their military role, their labor might be requisitioned for communal tasks such as building dikes or harvesting grain on public lands. Newcomers, refugees seeking asylum, and the growing domestic population were either provided with their own land, or became dependents in the households of landholding families, or had to emigrate to colonial offshoots (typically after serving in the army to obtain veteran status).

Archaic communities restricted the sale or forfeiture of subsistence landholdings in order to preserve self-sufficiency for their members. Selling one's land, or even borrowing against it, impaired the ability of citizens to perform their communal duties, for it meant a loss of self -support. Archaic interest rates were beyond the ability of many debtors to keep up with, and property once mortgaged was often lost. This is why Mesopotamian communities, where interest-bearing debt is first attested, long blocked the land from being pledged and forfeited for more than merely temporary duration. If it had to be sold as a result of need, relatives or neighbors typically had the right of first refusal and the sale was only temporary, being subject to redemption. This redeemability sanction preserved land in the hands of local communities and their kinship groupings rather than letting it be forfeited or sold to outsiders, including merchants and royal officials.

Borrowing money to acquire land, the hallmark of modern real-estate development, was unheard of.


How the Sumerians maintained economic balance

Southern Mesopotamian land tenure involved numerous types of property (Diakonoff 1982 provides the classic review). Rural land was allocated to citizens as their means of self-support. Individual lots appear to have been redistributed periodically, normally to the heirs of its customary holders. These lots could be alienated temporarily as pledges for loans or other obligations, or even sold for emergency money, but were expected to be redeemed by the debtor, his relatives or neighbors as soon as economic conditions permitted. Failing such redemption, they were restored to their customary owners when rulers proclaimed "economic order" - amargi in Sumerian, andurarum in Akkadian and Babylonian, misharum in Babylonian, and shudutu in Hurrian, culminating in the biblical deror legislation of Leviticus 25, popularly known as the Jubilee Year.

Sumerian communities also set aside land in the form of perpetual holdings for their local temples to provide sustenance for their administrators and nonagricultural dependents who could not work in agriculture because of being widowed or orphaned, or because of illness, blindness, birth defects or other infirmities.

Turning over this land, as well as herds of animals and other assets to their city-temples to enable them to be self-supporting was the Sumerian alternative to taxation. These endowments were permanent, making their public holders the first documented landlords, at least in the sense of absentee landlords collecting a net usufruct from the land. These temple and palace lands thus represent history's first documented "permanent" property devoted to producing a regular rent-usufruct. Most of this land was let out on a sharecropping basis, usually via palace managers as middlemen, settling at a third of the crop by the end of the third millennium. Widowed mothers and orphaned children were placed in handicraft workshops to weave textiles for exports or perform other tasks compatible with their infirmities.

Whereas private land transfers were only temporary in duration, land transfers to the public sector were permanent. Temple lands could not be alienated, nor were those of the palaces, which emerged after about 2750 BC in southern Mesopotamia. Palace rulers purchased lands from the communal groupings (as documented for instance in the Stele of Manishtushu in the Akkadian period c. 2250 BC).

Merchants and other well-to-do citizens acquired town-houses, which they could buy or sell freely, including individual floors or rooms, without being subject to any repurchase options or other redistributive measures. Inasmuch as these properties were not part of the subsistence sector, there was no pressing need to redistribute them when rulers "proclaimed order." Their ownership was left intact, as were commercial silver-debts as opposed to consumer barley-debts. The overall economy thus was allowed to grow, while taking measures to prevent its wealth from being used in ways that would undercut the rural sector's long-term balance. Only subsistence lands were protected from permanent alienation, so as to preserve a self-supporting rural population intact alongside a commercial urban economy.

What concerned rulers was that in addition to being a misfortune for debtors (who typically lost their status as citizens when they lost their land), foreclosures caused fiscal problems for the public sector. Creditors wanted the land's usufruct, often at the expense of the palace in the case of royal sharecropping lands leased in exchange for a third or more of the crop as rent. Debtors were tied to their creditors virtually as servants, and hence were not available for the army or to provide labor services and pay fees.

To rectify this situation, rulers cancelled back taxes and the debts stemming from them, and also reversed the forfeitures of personnel and land to collectors and other creditors. These "restorations of order" were proclaimed at least once each generation, most typically when new rulers took the throne or when they celebrated their thirtieth anniversary of rule, or occasionally as economic and military conditions warranted.

Communal land tenure helped guarantee the supply of labor services to the public sector as part of the reciprocal responsibilities between community members, the palace and its administrative bureaucracy. This reciprocity was interrupted by absentee land acquisition on the part of members of the royal bureaucracy. Tamkaru merchants collected taxes and often, in the process, establishing financial claims on community members by paying on their behalf the moneys due - arrears which mounted up at interest.

Military disruption also disturbed the circular flow of products and money. When men were called away from their land to fight, or when fighting devastated the land, some families fell into arrears and ended up pledging their servant girls, children, wives, or cattle to creditors. In time they pledged their lands, or more accurately, their crop usufruct, for until a labor market developed in the second millennium, debtors were left on the land, where they were needed to plant and harvest the crops for their creditors.

The first response of Hammurapi and other Babylonian rulers to the land-foreclosure problem was to proclaim laws preventing creditors from interfering with the "originally" envisioned balanced order. Even more important, they proclaimed misharum acts, that is, Clean Slates. These edicts were designed to restore the idealized and symmetrical "straight order," or at least the status quo ante, by returning to customary holders the lands that had been forfeited for debt or, what virtually was the same thing, sold below market price.

This put local big-men and other members of Babylonia's royal bureaucracy in their place by taking away the land with which they had aggrandized themselves at the expense of the palace. Many of these lands had been foreclosed in settlement of unpaid tax obligations. Moneys owed by these officials to the palace likewise were annulled, enabling a new, equitable and debt-free fiscal and financial start to be made. This restored the ability of localities to perform the military duties with which they were charged and on which the palace depended.


Public temples as communal corporations

An archaeological review of Bronze Age Mesopotamia throws light on the debate over the "tragedy of the (unmanaged) commons" - the alleged tendency for communalistic forms of property to be unregulated, unmanaged and indeed, unmanageable. Communal resource-users are deemed unable to devise rules to restrain overgrazing on the land and other selfish exploitation of communal resources. A corollary is that communal ownership is not conducive to capital investment.


(Continues...)

Excerpted from A Philosophy for a Fair Society by Michael Hudson, G.J. Miller, Kris Feder. Copyright © 1994 Fred Harrison, Michael Hudson, G.J. Miller and Kris Feder. Excerpted by permission of Shepheard-Walwyn (Publishers) Ltd.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

Table of Contents

Contents

Prologue The Archaeology of Economic Collapse: A 4000 Year Perspective Michael Hudson and Fred Harrison,
Land Monopolization, Fiscal Crises and Clean Slate "Jubilee" Proclamations in Antiquity Michael Hudson,
The Health and Wealth of the Nation: A Critique of the Welfare State G.J. Miller,
Public Finance and the Co-operative Society Kris Feder,
About the Authors,
Index,

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