LIMITATIONS ON THE LANDOWNER'S RIGHT TO RENT
The chapters immediately preceding have led to the conclusion that
private ownership is the best system of land tenure, and that the
individual has a natural right to participate in its advantages.
Although this system confers upon the individual owner the power to
take the rent of the land, we are not logically debarred from raising
the question whether this power is a necessary part of the moral
rights of landownership. Does the right to own a piece of land
necessarily include the right to take its rent? By what ethical
principle of distribution is the landowner justified in appropriating
a revenue in return for which he has performed no labour, nor made any
sacrifice? This is unquestionably what happens when a man hires out
his land to another. And in conditions of perfect competition, those
owners who operate their own land are fully remunerated for their
labour in the form of profits. Over and above this sum they receive
rent, the payment that they could get from the land if they were to
let its use to tenants. In the normal situation, therefore, rent is a
workless income. On what moral ground may it be taken by the
landowner?[47]
The fact that we have rejected the Single Tax and the confiscation of
rent by the community, does not of itself commit us to the conclusion
that the private owner has a moral right to receive rent. We have
condemned the State appropriation of rent on the assumption that it
would take place without a similar confiscation of interest. Such
discrimination would be grossly unfair; for it would cause land values
to sink to zero, while leaving the value of capital substantially
undisturbed. To carry out such a programme would be to treat property
owners unequally, to penalise one set of beneficiaries of "workless"
incomes, while leaving another set untouched. Consequently, the State
is not justified in confiscating rent unless it is justified in
confiscating or prohibiting interest; and the landowner is as fully
justified in taking rent as the capital owner is in taking interest.
The contention of the Single Taxer that ownership of the former kind
is morally wrong, while ownership of capital is morally legitimate,
has already received sufficient discussion. The specific question
remains, therefore,--whether the landowner and the capitalist are
justified in receiving and retaining their "workless" incomes.
Inasmuch as the principles and pertinent facts involved in this
question can be more effectively and more conveniently discussed in
relation to interest than in relation to rent, the solution will be
deferred to the chapters on interest. Assuming provisionally that the
outcome of the discussion will be favourable to the claims of the
landowner, let us inquire whether he always has a moral right to _all_
the rent. The parallel question regarding the capitalist will be
considered in connection with the right of the labourer to a living
wage.
_The Tenant's Right to a Decent Livelihood_
The actual payments made by tenants to landowners sometimes leave the
former without the means of decent living. Such had been the condition
of a large part of the Irish tenant farmers before 1881, when the Land
Courts were established. In the course of twenty-five years these
courts reduced the rents by twenty per cent. on the average in upwards
of half a million cases. While a part of the reductions was intended
to free the tenants from the unjust burden of paying rent on their own
improvements, another part was undoubtedly ordered on the theory that
the tenants were entitled to retain a larger share of the product for
their own support. Yet the latter portion of the reduction apparently
represented true economic rent; for it was included in the difference
between the product and the current cost of production; it was
included in the amount that men in Ireland were willing to pay for the
use of land. It was a part of the surplus that they had left after
defraying their expenditures for capital and labour. To be sure, the
tenants in some other countries, say, the United States, would not
have been satisfied with such a small remuneration, and would not have
handed over so much to the landlord; but if the concept of economic
rent is to have any serviceable meaning it must be determined by the
actual returns to capital and labour in each locality, and not by the
standards of some other place which are assumed to be normal. In any
case, the Irish Land Courts did reduce the rents below the level fixed
by competition, by the unregulated forces of supply and demand.
Was this treating the landlords justly? May a tenant ever retain a
part of the rent which the free course of competition would yield to
the landowner? Here we must distinguish between the tenant who is and
the tenant who is not in possession of a holding sufficiently large to
require all the time and labour of a cultivator possessing average
efficiency. The tenant who controls and cultivates less than this
amount of land ought not to expect to get all his livelihood
therefrom. Failure to do so would not necessarily mean that he was
paying exorbitant rent. Holdings of this sort are rightly called
"uneconomic"; that is, they are too small to permit a profitable and
reasonable application of labour and capital. On such holdings the
fair rent would be that amount per acre which would be regarded as
fair for the use of the same land held in farms of "economic" size.
The proper recourse for the occupiers of uneconomic holdings is to get
control of more land, which is exactly what has been happening in
Ireland through the action of the Congested Districts Board.
This brings us to the case of the man who cannot pay the competitive
rent on a holding of normal size, and have sufficient left to provide
himself and family with a decent livelihood. The fundamental reason why
the rent is so high is to be found in the economic weakness of the
great mass of the tenants, who can neither emigrate to another country
nor get a better living as wage earners in their own. Their predicament
is exactly the same as that of the helpless and unskilled labourers who
are compelled by the force of competition to accept less than living
wages. In these circumstances it seems clear that a government
commission would be justified in reducing the rents to such a level as
would leave the tenants of average efficiency on normal holdings the
means of maintaining a decent standard of living. In such cases, then,
the landowner has not a right to the full economic or competitive rent.
His right thereto is morally inferior to the tenant's right to a decent
livelihood, just as the capitalist-employer's right to the prevailing
rate of interest is morally inferior to the labourer's right to a
living wage. Neither in the one case nor in the other is mere
competition the final determinant and measure of justice. It has no
moral validity when it comes into conflict with man's natural right to
get a reasonable livelihood on reasonable conditions from the bounty of
the earth. These fundamental questions will be discussed at length in
the chapters on wages.
To the possible objection that the concept of a "normal" holding is
vague, the sufficient reply is that in practice it can be estimated
with as much definiteness as the concept of the "average" labourer. As
we see from the history of the Irish Land Courts and their "Judicial
Rents," it can be defined with sufficient accuracy to serve the ends
of practical justice. More than this is not attained in any department
of human relations, particularly, economic relations.
_The Labourer's Claim Upon the Rent_
Should any part of the rent go to the labourer? Let us take first the
case of the labourer who is employed by a tenant, and who is not
occupied in personal service but in some productive task connected
with the land. Like all other wage earners he has a right to a
sufficient share of the product to afford him a decent livelihood.
Since the tenant is the employer, the director of the business, and
the owner of the product, he rather than the landowner is the person
who is primarily charged with the obligation of providing the labourer
with a living wage. As noted above, his own claim to a decent
livelihood is morally superior to the landlord's claim to rent; but
if, having taken this amount from the product, he finds himself unable
to pay living wages to all his employees unless he deducts something
either from the normal interest-return on his own capital or from the
rent that would ordinarily go to the landowner, he is morally bound to
choose the former course. He, not the landowner, is the wage payer.
That he is obliged to provide living wages to his labour force even
at the cost of interest on his own investment in the business, is a
proposition that will receive ample discussion and defence in a later
chapter.[48]
Suppose, however, that the tenant has not the means of paying full
living wages after turning into the wage fund all the money that he
had hoped to retain as interest on his capital. May he withhold from
the landowner a sufficient portion of the rent to cover the deficit in
wages? Were this action practicable it would be undoubtedly
justifiable; for the landowner's claim to rent is no stronger than the
tenant-capitalist's claim to interest. As claims upon the product,
both are morally weaker than the labourer's right to a living wage.
Nevertheless, the tenant who should attempt to carry out this course
would probably be prosecuted for non-fulfilment of his contract with
the landowner, or would be evicted from the holding. Nor is the
landowner obliged in such cases to give up the rent in order that a
living wage may be paid to the tenant's labour force. He cannot be
certain that the failure of the latter to receive full living wages
has not been due to inefficiency or fraudulent conduct on the part of
the tenant. Moreover, the landowner would be justified in seeking to
protect himself against the recurrence of such situations by putting
his land in charge of a more capable tenant, or by selling it and
investing or lending the money elsewhere. However clear may be the
abstract proposition that the claim to a living wage possessed by the
employee of the tenant is superior to the claim to rent possessed by
the landowner, the difficulty of realising this right in practice is
sufficient to relieve even conscientious proprietors from the
obligation of giving up the rent for this purpose.
When the landowner is operating or cultivating his land himself, he is
evidently obliged to pay a living wage to all his employees at the
expense of rent, just as he is obliged to do so at the cost of
interest on his artificial capital. To be sure, the first charge upon
the product should be a decent livelihood for himself; but, when he
has obtained this, the right of his employees to a living wage is
morally superior to his right to either rent or interest.
At present the State takes a part of the rent through taxation. May it
take a larger share without violating justice? This question will be
considered in the second chapter following. In the meantime, we shall
examine the principal defects of the existing system of land tenure
with a view to the suggestion of appropriate remedies, whether through
taxation or otherwise.
FOOTNOTES:
[47] The assumption that perfect competition is even roughly
approximated in relation to men who operate their own land, and that
they generally obtain an adequate return for their labour in addition
to the sum that they might have obtained through hiring out their
land, may appear rather violent in view of the estimate that the
average farmer in the United States gets only $402 annually in payment
for the labour of himself and family. See article on "The Farmer's
Income" in the _American Economic Review_, March, 1916. However, this
income is mostly in the form of food, fuel, and shelter, which would
cost very much more in the city; consequently it is probably
equivalent to an urban income of $600. Its value is still further
enhanced by the farmer's independent position, and by his expectation
of profiting by the future increase of land values. Hence it would
seem that the rent and interest allowance of $322 might fairly be
regarded as a surplus in excess of the necessary payment for labour.
[48] Chapter xxii.