The need for an Integrated Approach to Social Reform

Before his afternoon lecture on 26 January 2017 at the Dialogue of Civilizations Research Institute (DOC), Fred Harrison, Research Director of the London-based Land Research Trust, held an internal seminar – the first of an ongoing series – with the DOC research team on ‘The need for an Integrated Approach to Social Reform’, in which he shared his ideas on the concept of land rents and social reform. Harrison, who predicted the economic crises of 1992 and 2005, explained that his interest in this topic began while working as a newspaper journalist, when he attended an economics evening class given by a landlord.

During the seminar, Harrison elaborated on the concept of land rent as a source of revenue, which according to him is the only alternative to the neo-liberal model. He argued that the implementation of this concept would successfully help to manage the daunting problems society is increasingly struggling with, including poverty, unemployment, and crime. He made clear that these debilitating problems are conditions created by the rules of the system. It is not the market which is to blame for economic failures – as is commonly argued by government representatives – but the overarching structural principles by which governments act. Therefore, as Harrison reiterated, what we need is systemic reform that tackles the roots of social problems.

Using a number of examples, Harrison illustrated how apparently beneficial economic initiatives cause damage through their unintended (but foreseeable) consequences. One such case is Matt Damon’s mission to provide drinking water for 600m+ people in need. The guiding idea of the initiative is that the provision of drinking water saves time, which increases productivity. However, Harrison emphasised that this productivity quickly pushes up rents, which in turn forces people to leave their homes. In search of affordable living space, those people frequently end up in slums. Another example is the so called ‘green revolution’, aimed at improving agriculture in India. The introduction of a genetically modified seed increased the productivity of peasant farmers, which again translated into higher rents, which pushed people who could no longer afford the rents into poverty and poor living conditions. As Harrison reiterated, the only way to collect revenue without causing adverse consequences is to obtain it directly from the rent of land.

Harrison reminded us that in ancient times, the creation of civilisation itself was made possible by economic rents. He highlighted the fact that rent was acknowledged by historically renowned philosophers such as John Locke and Adam Smith to be the source of private revenue. Even today, a number of celebrated mainstream economists agree that collecting revenue from different forms of rent, including land rents and infrastructure rents, is the most natural means of collecting revenue because in contrast to taxes, it does not incur deadweight loss.

Harrison drew attention to the lack of a broader public debate on this topic. The reason for this is that the land-owning middle-class, which is a large portion of society, does not have an interest in land rents being used as a source of revenue. According to him, the main challenge ahead is to bring the concept to wider public attention. He is therefore looking forward to conducting collaborative research with the DOC in order to further explore the topic and provide guidance to policy makers.

The Dialogue of Civilizations Research Institute very much appreciates Harrison’s achievements and efforts in carrying out effective social reform, and hopes for further fruitful cooperation aimed at examining economic and social models which address people’s needs in an efficient manner.

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