Political Economy 7: Distribution of Wealth

1. Let us summarise the basic ideas we have studied so far.

PE7 D1

Diagram 1 shows the basic parts in the play of the life of man. The setting is the universe. The protagonists are Man, the surrounding Nature and certain Conditions, climatic, social, cultural etc., within which Man meets and works with Nature.

PE7 D2

Diagram 2 introduces more players in the greater scheme of things. Men are constantly under various influences stemming from Nature, such as sunlight, wind, rain etc; their own particular skills and functions are also given by Nature at conception and should be counted among those influences. Through labour, which is the use of their own nature-given functions and skills, Man meets the land, also given by Nature, and this meeting takes place in certain conditions. In this way emerges the man-made world which consists of agriculture, industry, commerce, communities, cities, states and civilisations.

PE7 D3

Diagram 3 brings into focus the scene where labour takes place on land in certain conditions, which are geophysical, social but also psychological. This is how wealth is produced, i.e. the goods and services that sustain and enrich our lives. What the term “Conditions” fundamentally represents is a given society, nation or state, its institutions, laws and traditions that provide man-made conditions, other than the geophysical and general natural influences, in which humans live and work.

2. Since the three factors above are primary (or, as Marx would have it, “the base” as distinct from the superstructure formed by secondary stages) in the production of wealth, then this wealth is to be distributed primarily between them. In other words, every factor should receive its own proper, natural and fair share.

What is it that determines the natural reward of each factor ?

It is immediately apparent that Land is in no need of a reward. The only thing it requires is good use and care, so that it does not become contaminated with harmful substances. Farmland should also remain uncultivated for a certain period, depending on the nature of its production. That is all that the land needs. Irrigation and fertilisation are not aspects of reward; they simply facilitate the production process and should be (as they usually are) counted among the costs.

What is the natural compensation of Labour and what would it be for the Conditions?

I have frequently mentioned the natural reward of labour. How is that determined? This question can be left aside for the moment.

It was mentioned that the “Conditions” represent the State and society. Its reward usually takes the form of taxation which is, in our days, totally haphazard and unreasonable.

3. Let us now turn to this third component from a practical point of view. The Conditions are formed of two elements: on the one hand, the geophysical and climatic aspects, which are derived from nature, and, on the other, the social and cultural which are derived from the greater society, the State and, ultimately, humankind itself.

The pivotal element, however, is the socio-political and cultural conditions and that means the State at large (as said above, at the end of §1). It is this factor which continually gives greater value to the land, as was demonstrated in Political Economy 6, §4 and elsewhere.

In other words, it is the existence of (Humankind and) a particular society that primarily creates the incremental value of land, known as ‘surplus value’ or “economic rent”. The individual and his labour come second: they add little or nothing to the given piece of land but work done on that specific land may enhance the value of adjacent sites.

Since these surplus values are created by the presence of the entire society, they constitute the natural reward of the Conditions, the third factor. In any case, the geophysical and climatic conditions require nothing as compensation.

It is this increment in land-values, produced by the increase of population, the advance of sciences and technology and the progression of civilisation, that should form public revenue, as was described in Political Economy 1, earlier.

But how is the division and distribution of wealth to take place?

We will examine this topic on our next post.

– Nikodemos


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