“Four Worlds In Economics” by Mildred J. Loomis

Many people commonly identify nations by their geographical location, along with their degree of industrial development. In this naming, the Western “advanced” industrial nations (U.S. Canada and Europe) are the first world; Russia and her satellites are the second world; and the third world includes the relatively undeveloped countries in Asia, Africa and South America. Organizers of the Fourth World conference refer to nations small in size or which hopefully can be made small, if they are now large. In this paper I use another method for numbering worlds 1, 2, 3 or 4.

I propose a nation be identified by the essence and nature of the economic structure under which differing peoples live. Economics is the science of survival–SOS an old distress signal. Economics almost everywhere today is in distress, facing sink or swim; life or death. A more explicit definition is “Economics is the science of the production and distribution of wealth”; it deals with land, the surface of the earth; with labor, i.e., the physical-mental energy which produces and distributes goods; and with capital, or the tools and equipment which assist that production and distribution. From my lifelong studying, observing and experimenting in economic practices, it1s clear that there are at least four distinguishable ways of dealing with land, labor and capital. One of them is capitalism.

Capitalism

Much of the world is influenced by the Western world’s capitalism. They welcome the remarkable technology and affluence it has produced. Many nations in the rest of the world envy it, and want to copy it. Other people criticize and deplore it.

Any serious student of economic affairs knows that freely choosing one’s life is needed, and should result from economic arrangements. Any serious student of Western capitalism recognizes that (while independence and liberty are said to attend Capitalism) fundamental freedom is in shambles. Most of the Western world — assuredly the United States — has become increasingly governmental. More laws, more regulations, more bureaus, more federal control coming from Washington DC at the loss of local and direct-community action. Why?

Why did this trend appear (circa l800s) and why has it proliferated since the 1900s and 1930s? Largely because the capital-individual approach to economics and survival did not extend its comfort and affluence to everyone. Involuntary unemployment appeared; bank failures, economic depressions and failure to find jobs were part of every decade. Too many families were without a pay check or lived in fear of being without a paycheck.

What can a person do who is unemployed; — who has no regular source of work or survival? Most people prefer to work and earn — but when this is not available in an “economic collapse”, what then? Such victims have three options — l) turn to stealing and crime, personal violence;) 2) he can be assisted by charity, 3) but if charity-benevolence is not adequate, then government support is turned to. This, a perceptive reader will point out, is legal violence. A legal agency, government, taxes and takes by force from those who have, and turns it over to those who haven’t a means of survival.

Some people approve this third system, noting that recipients of charity or government pensions and social security welcome it. Is this true? Many – most — Americans resisted early social security. Their pride and integrity were threatened. Dependence was an insult; they wanted survival of course, but they wanted it by their own efforts.

But necessity made it a habit. Necessity and repetition can even change self-confidence. So in America, government-help has to a notable degree, become the accepted, even the desired, the sought-after, along with its drop in integrity. A whole school of thought now supports the governmental answer. In many parts of the world, people think it is a good and proper answer to “How shall people survive?” They say, “In a complex world, government help is necessary. Justice can and should be attained by laws, regulating the distribution of wealth.”

Some countries have moved full-scale into that pattern. The Russians did it by fiat, government edict and violence. They call it Communism. In my list, I name it the “second world in economics”. Most of Russia’s people accept, praise, promote and presumably enjoy it. They feel that its resulting guaranteed livelihood is better than the enforced poverty and riches under the Czars. Books and journals the world around explain, extol and criticize it. Enforced, collective ownership of land and capital, i.e. Communism, is a second answer to the universal problem of “How shall a human being’ survive?”

A Third Economic World

Another alternative moves in a similar direction. It would do this by vote of the electorate and first teaching the people the means and methods of public ownership of survival goods and services. They avoid armies, violence and government edict. This more gradual and temperate approach to the governmental answer to survival, many call Socialism. A dozen kinds of third-world Socialism exist: Domestic Socialism, Workers’ Socialism, Peoples’ Socialism, etc. Many countries have organized their economic and political systems socialistically — in Europe, Asia, Africa, South America and some in the Western continent, including some provinces in Canada.

Let’s return to the first world, Capitalism. From its beginning Western capitalism was geared to avoid governmental action. America’s founders fled the tyranny of a monarchial system where rulers and parliaments controlled and owned the land and goods. Western capitalism stressed idividualism, attained through private property, i.e, one’s own title to land and earnings; to business and factories title to capital and wages. They had come to the land of the free; they wanted both independence and security; and essentially they had it until about 1800.

What went wrong? Why the bank panics and economic depressions? Why the Great Depression of the Thirties, followed by wholesale turning to government to bail out banks, businesses, farms and home-owners from debt? Why the failure of the American Dream? Why has capitalism changed to a predominantly government-oriented “socialistic” system? Why the welcome to this system, by so many people? Why is a strong opposition developing to it? What are ethical alternatives?

Analysis of Ethical Alternatives

A fourth way is available, long espoused and championed by a few great American economists and philosophers. Let’s carefully note the root aspects of the economy by underlying a fourth and more ethical handling of land, labor and capital,. For this let’s agree on definitions of these terms.

Every person in the world is affected by the way his society handles land, labor and capital. Most people see but two ways — to treat everything individually (including cooperative), or to treat everything governmentally.

Factor No. 1 Land, of course, is the natural world — the earth, water, air; plains, valleys, seashores, mountains from which all food and shelter are attained by labor. Labor is No. 2 — the mental and physical energy people use with No. 3, the tools or capital, on the land. Who should own (have title to) these things?

We can quickly agree that humans own our own Life, our energy. It belongs to us; we say we have ‘rights’ (title) to our own energy — that is, to our own labor. Then it follows that what we produce from and by our own labor is also ours. Do not the products of labor belong, by ethical right, to those who produce them? Would it therefore be wrong – unethical — for one person to claim what another produced? O.K. Labor (human energy) and capital (tools) belong to the individual. No wonder American forebearers had such strong devotion to private property. It was their base for getting out from under tyrants, rulers and government to their own independence and security.

Rights to Land?

But what about land? What about rights and title to natural resources? Did any humans produce them? Think carefully here. Sure, people produce from and on the land, in both urban and rural settings. But the land itself? Who has natural title to that? Here’s where promoters of a fourth alternative economic system make obvious and ethical conclusions. They emphasize that all natural resources are Nature- (or God-) created. By their differing fertilities, natural resources yield differing amounts to the same labor on differing sites. Non-manmade fertility makes a difference. Land and its value responds, too, to community factors. The value and yield of land goes up when it is near good streets, sewers, schools, fire and police protection. Did the holder-owner create this value in his land? Obviously, no. Should he then pocket this value in sale or rent of that land? Watch your answer. For centuries the Old World said “Yes”.

The Old World, especially Merrie England, has been the historic scene for struggle around this problem. Before the Roman conquest, in the early days, English land was free. Sheep could graze anywhere. But lords and nobles changed that. Especially after the invention of the spinning wheel and loom, were their changes crucial. They passed the Enclosure Acts, giving possession and title to any person of all land which he could claim, fence or “enclose” with boundaries. Then a sheep-owner must pay rent for its use to a land-lord. Many of them were forced to move into cities to become weavers and wage-workers in factories. Rack rents increased; wages fell. After payment for access to the land, how much production is left to pay for labor and capital? It was this economic oppression, not primarily religious domination, that early dissidents were fleeing in coming to America.

In America, for the most part in the early days, they found a new freedom. Why? They had all the land they could use and more. Some tried to practice “common land” — witness Boston Commons. But the old habit of profit and property in land asserted itself. Individuals “bought up” land (more than they needed) to hold and sell to newcomers. Private property in, and sale of, land became an American ideology.

As land values soared in Eastern cities people could “escape” to cheap or free land farther west. Cheap and free land were the root of liberty. For how long? For so long as any free land remained. But land is a limited resource. More people need and demand it than the supply can meet. That time is now. All American land is held — much of it, sad to say — held idle, awaiting a higher price.

The sorry land holding statistics in America show, to the informed, an exploitative situation. Here in the U.S, a handful of corporations own a land area larger than Spain and Japan. About 5% of the population own 55% of all American land. The top 1% owns more land than the rest of the population together. During the past 50 years, 40% of the farm population has been squeezed out of their livelihood by land prices, mortgages, taxes and insurance. Today small and medium-sized farmers are leaving their land at the rate of 2,000 per week. 25 landowners hold over 16% of California’s private land. All this because land is considered property, subject to private title, buying and selling.

A Fourth, Property-Trusterty System

Perceiving the crucial difference between land and products of labor, promoters of a fourth solution to economic survival arrange treating land as a common heritage. They separate land and land-value from the value in the products from the land. These persons suggest that the unearned value from natural fertility and the land value due to the community-services available to the land, be turned to the use of the community. Leave the value of the products of labor — crops, trade, wages, etc. — to the producers and workers. The community-land-value would then pay for the community’s common needs — the streets, schools, protection, sewers, etc, The value of the buildings, equipment, wages, income — would be private, subject not even to taking by taxation.

With good results, citizens and voters in many places have implemented this system — in Alberta, Canada; in New Zealand, Australian cities, partially in Denmark. in Scranton, Pittsburgh and other Pennsylvanian cities. Their salubrious effects are widely discussed; articulate promoters urge its wider use.

Observers note that a confirmed American pattern of separating land from improvement in assessment and taxation is in this fourth dimension. Agreed; this partial approach accounts for much of the existing democracy and independence in American history. Its extension and increase would be a welcome, ethical and crucial step.

The Community Land Trust

A group of American decentralists implement the common heritage of land in another fourth-approach via the Community Land Trust. The Community Land Trust is a cooperative association of persons who are convinced that the land should be held as a trust for future, as well as present, generations, free of buying and selling. They join in a non-profit corporation, procure an urban or rural land-site, and in charter and by-laws, dedicate it to trust-use. Contracting parties use the land for an agreed-on annual rental (to the trust) rather than a sale price. A group of American decentralists implement the common heritage of land in another fourth-approach via the Community Land Trust.’ The Community Land Trust is a cooperative association of persons who are convinced that the land should be held as a trust for future, as well as present, generations,- free of buying and selling. They join in a non-profit corporation, procure an urban dr rural land-site, and in charter and by-laws, dedicate it to trust-use9 Contracting parties use the land for an agreed-on annual rental (to the trust) rather than a sale price.

Ralph Borsodi, founder of the School of Living, in a life-time (1886-1977) of work initiated the community land trust as early as 1932; repeated it in 1935-45 at the Suffern, N.Y. School of Living and several intentional communities. In 1968, the concept was internationalized and registered at Luxembourg. Borsodi recognized the validity of private property in lab-or products; similarly he recognized the trust-nature of land. He named trust-holding of land, “trusterty”. The fourth economic-political system of property-trusterty is welcome, and is being implemented. Hundreds of groups are studying and working toward it; some thirty community land trusts are guided by The Institute of Community Economics, 120 Boylston St., Boston, Mass.

“Ralph Borsodi’s Principles for Homesteaders” by Mildred J. Loomis

RALPH BORSODI (1886-1977) was the author of 13 books and 10 research studies. He was also physically active, a productive homesteader and a real doer who practised what he preached. He experimented and implemented on many levels-from good nutrition, through building his own home and garden; weaving his clothes and furnishings; organizing experimental small communities, a School of Living for a new adult education, and developing new social institutions-the Community Land Trust and a non-inflationary currency, which he called Constants.

No one of today’s specialty-labels encompass Ralph Borsodi. I am pushed to use more general and abstract terms-decentralist, liberator and human benefactor. This article will concentrate on his efforts to implement the community-use of socially-created values in land as part of his plan to encourage people to leave cities for more rural living. .

Ralph Borsodi was never in public school, infrequently in private schools, and did not attend college. (Yet St. Johns College of Annapolis later conferred on him a Masters, and the University of New Hampshire, a Doctorate.) He was educated mostly by wide readings in libraries, and by his father, a publisher in New York City. Borsodi Sr. wrote the introduction to Bolton Hall’s A Little Land and Living, which encouraged living on, and intensive production on, small plots of land, and the public collection of site-values.

Ralph Borsodi, Jr. joined the Single Tax Party which grew out of popular enthusiasm for Henry George and his two campaigns for the mayoralty in New York in the 1880s. Borsodi mounted his soap box in Union Square to exhort people to vote for the land-value tax. The Party named Borsodi editor of The Single Taxer. In it he discussed the need for a school to teach economics as George presented it, placing land in a category separate from capital, showing how the law of rent determined the law of wages, and how private use of land values resulted in the disparity of wealth-poverty on the one hand and riches on the other.

When still a young man, in 1910, Borsodi was sent by his father to dispose of some Texas land holdings. What to do with several hundred acres of land in the Houston area? He knew that this land was part of a “great Savannah” — in the path of progress. His errand brought him both conflict and guilt. As people would come to this area, the value of the Borsodi land would rise. What price should he ask for it? Should be accept money which he had not earned? “Don’t be foolish, man,” a local hotel-keeper advised him. “Hang on to that land and who knows you might become a millioriaire!”

Troubled, Borsodi bought a small-town paper, The Rice City Banner, wrote editorials, printed news, and discussed the land problem. After a year, he made a decision. He would sell the land at a modest price to a realtor. But Borsodi would go on to find ways to “solve” the land problem. The realtor would not worry about unearned increment from the land, and doubtless went on to pocket a large sum.

Borsodi returned to the East with a mission. Now, 1911, he saw Megalopolis with new eyes. More than ever he was conscious of ground space. On Manhattan’s 22 square miles, two million people were rushing to and fro, on, above and beneath its surface, needing space and giving to land its fabulous value.

At that time New York City represented 20 billions of dollars worth of wealth. Half of it was in land, most of the value concentrated in a small core at the centre. A few blocks away was an ocean of squalor, filth and poverty. Who had title to that land? Certainly not the two million people working there. Probably a few large holders with familiar names — Rockefeller, Astor, Vanderbilt. Land bought and sold for hundreds of thousands of dollars a front foot! Millions of tenants paid rent each month with barely enough left over to keep body and soul together. To Borsodi, New York was a devouring ugly monster.

His friendship deepened with Myrtle Mae Simpson, a Kansas farm girl. They married in 1912, and Borsodi’s father assigned them to a job in Chicago. Chicago’s Loop was even more concentrated, though with more over-all sprawl, destitution, slums and ugliness than in New York.

Borsodi contacted Louis Post, editor of The Public, a journal devoted to Henry George’s principles. Borsodi used its columns to challenge Socialist and Marxist ideas.

The Borsodis took other radical steps. Myrtle Mae’s anemia, the children’s coughs, and Borsodi’s rheumatism led them to investigate natural therapies. They turned to whole foods. Explaining it as best they could to the two boys, Ralph and Myrtle Mae gathered up the loaves of white bread and boxes of white sugar and packaged cereals and chucked it all into the garbage pail. In 1920 they left the city and moved to 16 wooded acres in Rockland county. They built temporary shelters and settled down to modern “homesteading”.

They used rock to build shelters for chickens, rabbits, goats and a pig; and for the first of a three-sectioned home for themselves. They added a craft section for looms and weaving; a breeze-way for pool and billiards. They planted, tilled, harvested and processed vegetables, and in a few years berries and fruit. They were 80% self-maintaining in food. They felled trees and cut wood for fireplaces and furnace. They built a swimming pool and tennis court, and installed a linotype in their basement — Borsodi had things to say about the modern crisis and what to do about it.

In 1928 Borsodi startled the world by publishing This Ugly Civilization, America’s first documented critique of over-centralized industrialism. which was widely read during the ensuing Great Depression. Because of it Borsodi was invited to Dayton, Ohio, in 1932, to deal with their overwhelming unemployment. Borsodi saw this as a way to extend “homesteading” as a social movement, and a way to implement a trustee-ship, rental-form of land-tenure.

He proposed that families should return to the land: “Ring Dayton with many small communities of from 30 to 50 families, each producing their food and shelter on 2 to 5 acre plots. Let a Homestead Association of families hold title to the land; let each family pay an annual rental fee to their association rather than pay an outright purchase price.”

Persons involved agreed. Social agencies advanced money to buy 80 acres. Independence bonds were issued to provide loans to families for buildings and equipment. Families applied, plots were assigned, individuals instructed in gardening and building: construction was begun. Suddenly the funds were exhausted.

To obtain more financial support, the only alternative seemed to he: “Borrow from the Federal Government.” Borsodi advised against it. “Government money usually means government supervision and control. Government is to protect persons and property from harm-not to build homes. Keep Government out of business'” Borsodi concluded that if the homesteaders chose government aid, he would withdraw and return to his homestead.

The homesteaders chose government funds. Borsodi withdrew, saying: “If we in the U.S. are to get a proper balance between city and country, and learn the proper function of government, we will need a new education.” Family and friends helped him plan and establish the School of Living in 1936, near Suffern, New York. On its four-acre homestead, the school was at the centre of 16 family homesteads, on a 40 acre plot called Bayard Lane Community. Here, too, Borsodi initiated the group-title to land, with member-families paying an annual rental rather than a fee for outright private ownership.

Affairs went well; sixteen lovely homesteads surrounding the School of Living, where gardening, home-production and workshops in adult education were continuous. Educators, authors, homesteaders, and social-changers attended, from 1936 to 1945. After college degrees and social work in Chicago’s slums, I studied with, and assisted, the Borsodis for the year 1939-1940.

One Bayard Lane homesteader, H.M., had good results with his homestead flock of chickens. He envisioned a thriving business of 1,000 laying hens in a 3-storey chicken house. But his contract under group-title to land prevented this. He would change the land-tenure back to private ownership. He was determined and energetic. By a narrow margin of votes, these homesteaders rejected group-tenure and reverted to fee-simple.

Borsodi resorted to writing and travel. In 1939 he analyzed predatory economics in Prosperity and Security. He described and advocated modern homesteading in Agriculture in Modern Life. Reluctantly he sold the School of Living building to a homesteader, and in 1945 moved its library and activities to the Loomis homestead in Ohio. He travelled to Mexico and India, studying and lecturing at a Gandhian University in Ambala. There he examined the village-title to land, wrote A Decentralist Manifesto, and began his magnum opus, a curriculum for adult education –the definition and analysis of Seventeen Major Problems of Living, along with alternative (including decentralist) solutions.

Returned to the United States, now past 80 years, Borsodi had a new opportunity to achieve his two most cherished ideas of land and money reform. A younger friend, Robert Swann, was in Georgia — hoping to prevent the racial tension from erupting into violence. Swann was appalled by the poverty, the helplessness and the illiteracy of both blacks and whites. “What these people need is an economic base,” he decided, and turned to Borsodi for guidance.

“What shall we do?” he asked.

“Get the families on the land!” Borsodi replied.

“But how?”

For weeks Borsodi and Swann worked on what in 1966 was registered in Luxembourg as The International Independence Institute (I.I.I.) — to teach and help establish the trusteeship of land. I.I.I. is a quasi-public cooperative corporation, in which individuals become members and in which they may invest funds. The I.I.I. secures land, by purchase or gift, and then declares the land in trust, never to be sold again. The I.I.I. is taking land, now, and making it available to users for an annual rental to the Trust. It does not wait until voters in a country, state or nation are persuaded to use the socially-created value of land for the community in lieu of taxes. It proceeds to secure land and turn it as a “gift to mankind” for users who contract to use it ecologically.

The history and goals of this effort are described in a book, The Community Land Trust, A New Land Tenure for America. Some 100 community land trusts, with impartial, non-land-holding trustees from the communities in which they exist, are now operating. The first Community Land Trust, New Communities, Inc. (Atlanta, Ga.), took 5,000 acres out of the speculative market into a community trust.

In almost every region of the U.S. — in Maine, in the mid-Atlantic, in the Great Lakes Region, Oregon, California, and even in Washington, D.C. — urban trusts are assisting people to learn and practise the concept that land is the common heritage of all people, that freedom and security require that land be not a commodity for buying, selling and profit-making.

Originally appeared in Land & Liberty, November-December 1978.

“A Practice in Social Change” by Mildred J. Loomis

THE term “land trust” is a new phenomenon in social change. Young people in great numbers are discussing and forming “communes.” In December 1969 I took part in two conferences attended largely by the “new generation.” Discussion and planning sessions were long and earnest. The Peacemakers, an action group for peace, now see the relevance of free land to a peaceful world. They determined to constitute an incorporated Peacemaker Land Trust which would act as a receiver of donated land – the land to be placed in trust would not be reconvertible into property, but would remain in trust in perpetuity. Owners of other land would not be eligible as trustees (users) and no trust land would be leased or subleased when it was no longer in use. Under no circumstances would legal coercion be brought to bear – only moral suasion was to be the guiding influence.

Ralph Borsodi was one of the first to declare, in This Ugly Civilization (1928), that “land is a trust.” In 1936 he founded the School of Living in Suffern, New York, in which I participated. Hundreds of families who wanted “a little land and a living” were encouraged to incorporate as nonprofit, land-holding, homesteading associations. An Independence Foundation provided loans at low interest rates. Families were to build and own their individual homes and homesteading buildings. Each was to possess and occupy its acre or two on a 999 year lease from the Association on terms indicated in a legal document called Indenture for the Possession of Land.

The indenture spelled out the new concept of land as a trust rather than as private property. It transferred to each homesteader possession of a certified plot, subject to “productive and creative work in the home, shop and on the land, primarily for family use,” on monthly payment of a small annual assessment to the Homestead Association.

In Israel a similar move has been widely implemented. The Jewish National Fund has been buying and holding title to land since 1948, making it available to groups of settlers on long term leases. Instead of selling the land or giving title to individuals and groups, the land remains the property of the Fund in the name of “all the people,” free from speculative landlordism. Thus land users get a start without the prohibitive cost of buying land. A wide variety of Israeli communities and specific holding agreements have developed, but in recent years the trend is toward group trust-holding of land and individual- and family-holding of buildings and produced goods. This gives a balance of individual and communal interests so necessary to a healthy growth of both individual persons and community interaction.

Gramdan (village trust-holding of land) was begun in India in 1949 by Vinoba Bhave, Gandhi’s successor. It is a massive application of the land-trust idea. Gramdan means village trusteeship of land, allotted to users in town meeting. The movement now includes more than half of all the land in Bihar previously held by private landlords. Bihar is one of India’s poorest states. Expectation is that Gramdan will take over three to six more of the remaining fifteen Indian states by 1975.

In 1967 the land-trust ideas and practices in the early School of Living communities were revived. Robert Swann, after working with evicted share croppers – feeding them, finding jobs and helping them find homes — decided that “free land” or land as a trust, was a primary need. With Ralph Borsodi’s help a new International Foundation for Independence was instituted for the purpose of securing funds and making loans at low rates to groups of families who would hold title in common, on long term leases, and pledge never to turn the land back into speculative private ownership. To date the Foundation’s small capital has assisted groups in Georgia, Mississippi, New Mexico and Mexico.

Related to this Foundation is an International Independence Institute for teaching the Foundation’s concepts and practices to communities, colleges and government agencies. It has been instrumental in initiating an independent action group – New Communities, Inc. One of its first projects in Southern Georgia will be to assist some 500 families to resettle a 5000 acre tract on a lease-hold, trust holding, common possession pattern. Thus one large plantation will become a self-maintaining, diversified, homesteading, non-speculative community of families. The anticipation of course is that this will become an on-going, dynamic method with enduring benefits, both to participants and to non-participants, in reduced land values. It aims to help rural people maintain and develop successful communities on the land and thus eliminate some of the rural roots of the urban crisis. This work is directed by Robert Swann assisted by Erick Hansch. Information is available from them at RFD 1, Voluntown, Connecticut.

The Indenture for the Possession of Land has been termed a remarkable document in legalizing trust or common title to land. If that had become a much more widely-used pattern of land development, important social results could have been realized. Hundreds of thousands of families moving into such communities when it was introduced thirty years ago would have benefited from lower costs and indenture holding, and land values would have dropped in surrounding areas. But instead government and regular real estate development continued to be the pattern, and the general impact of this ethical trust holding was not felt.

Originally appeared in the Henry George News, February 1970.