Our Enemy, The State, Ch. 4

by Albert Jay Nock, 1935



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After conquest and confiscation have been effected, and the State set up, its first concern is with the land. The State assumes the right of eminent domain over its territorial basis, whereby every landholder becomes in theory a tenant of the State. In its capacity as ultimate landlord, the State distributes the land among its beneficiaries on its own terms. A point to be observed in passing is that by the State-system of land-tenure each original transaction confers two distinct monopolies, entirely different in their nature, inasmuch as one concerns the right to labour-made property, and the other concerns the right to purely law-made property. The one is a monopoly of the use-value of land; and the other, a monopoly of the economic rent of land. The first gives the right to keep other persons from using the land in question, or trespassing on it, and the right to exclusive possession of values accruing from the application of labour to it; values, that is, which are produced by exercise of the economic means upon the particular property in question. Monopoly of economic rent, on the other hand, gives the exclusive right to values accruing from the desire of other persons to possess that property; values which take their rise irrespective of any exercise of the economic means on the part of the landholder. [1]

Economic rent arises when for whatsoever reason, two or more persons compete for the possession of a piece of land, and it increases directly according to the number of persons competing. The whole of Manhattan Island was bought originally by a handful of Hollanders from a handful of Indians for twenty-four dollars worth of trinkets. The subsequent "rise in land-values," as we call it, was brought about by the steady influx of population and the consequent high competition for portions of the island's surface; and these ensuing values were monopolized by the holders. They grew to an enormous size, and the holders profited accordingly; the Astor, Wendel, and Trinity Church estates have always served as classical examples for study of the State-system of land-tenure.

Bearing in mind that the State is the organization of the political means--that its primary intention is to enable the economic exploitation of one class by another--we see that it has always acted on the principle already cited, that expropriation must precede exploitation. There is no other way to make the political means effective. The first postulate of fundamental economics is that man is a land-animal, deriving his subsistence wholly from the land. [2] His entire wealth is produced by the application of labour and capital to land; no form of wealth known to man can be produced in any other way. Hence, if his free access to land be shut off by legal preemption, he can apply his capital only with the landholder's consent, and on the landholder's terms; in other words, it is at this point, and at this point only, that exploitation becomes practicable. [3] Therefore the first concern of the State must be invariably, as we find it invariably is, with its policy of land-tenure.

I state these elementary matters as briefly as I can; the reader may easily find a full exposition of them elsewhere. [4] I am here concerned only to show why the State system of land-tenure came into being, and why its maintenance is necessary to the State's existence. If this system were broken up, obviously the reason for the State's existence would disappear, and the State itself would disappear with it. [5] With this in mind, it is interesting to observe that although all our public policies would seem to be in process of exhaustive review, no publicist has anything to say about the State system of land-tenure. This is no doubt the best evidence of its importance. [6]

Under the feudal State there was no great amount of traffic in land. When William, for example, set up the Norman State in England after conquest and confiscation in 1066-76, his associated banditti, among whom he parcelled out the confiscated territory, did nothing to speak of in the way of developing their holdings, and did not contemplate gain from the increment of rental-values. In fact, economic rent hardly existed; their fellow-beneficiaries were not in the market to any great extent, and the dispossessed population did not represent any economic demand. The feudal regime was a regime of status, under which landed estates yielded hardly any rental-value, and only a moderate use-value, but carried an enormous insignia-value. Land was regarded more as a badge of nobility than an active asset; its possession marked a man as belonging to the exploiting class, and the size of his holdings seems to have counted for more than the number of his exploitable dependents. [7] The encroachments of the merchant-State, however, brought about a change in these circumstances. The importance of rental-values was recognized, and speculative trading in land became general.

Hence, in a study of the merchant-State as it appeared full-blown in America, it is a point of utmost importance to remember that from the time of the first colonial settlement to the present day, America has been regarded as a practically limitless field for speculation in rental-values. [8] One may say at a safe venture that every colonial enterpriser and proprietor after Raleigh's time understood economic rent and the conditions necessary to enhance it. The Swedish, Dutch and British trading-companies understood this; Endicott and Winthrop, of the autonomous merchant-State on the Bay, understood it; so did Penn and the Calverts; so did the Carolinian proprietors, to whom Charles II granted a lordly belt of territory south of Virginia, reaching from the Atlantic to the Pacific; and as we have seen, Roger Williams and Clarke understood it perfectly. Indeed, land-speculation may be put down as the first major industry established in colonial America. Professor Sakolski calls attention to the fact that it was flourishing in the South before the commercial importance of either negroes or tobacco was recognized. These two staples came fully into their own about 1670--tobacco perhaps a little earlier, but not much--and before that, England and Europe had been well covered by a lively propaganda of Southern landholders, advertising for settlers. [9]

Mr. Sakolski makes it clear that very few original enterprisers in American rental-values ever got much profit out of their ventures. This is worth remarking here as enforcing the point that what gives rise to economic rent is the presence of a population engaged in a settled exercise of the economic means, or as we commonly put it, "working for a living"--or again, in technical terms, applying labour and capital to natural resources for the production of wealth. It was no doubt a very fine dignified thing for Carteret, Berkeley, and their associate nobility to be the owners of a province as large as the Carolinas, but if no population were settled there, producing wealth by exercise of the economic means, obviously not a foot of it would bear a pennyworth of rental-value, and the proprietors' chance of exercising the political means would therefore be precisely nil. Proprietors who made the most profitable exercise of the political means have been those--or rather, speaking strictly, the heirs of those--like the Brevoorts, Wendels, Whitneys, Astors, and Goelets, who owned land in an actual or prospective urban centre, and held it as an investment rather than for speculation.

The lure of the political means in America, however, gave rise to a state of mind which may profitably be examined. Under the feudal State, living by the political means was enabled only by the accident of birth, or in some special cases by the accident of personal favour. Persons outside these categories of accident had no chance whatever to live otherwise than by the economic means. No matter how much they may have wished to exercise the political means, or how greatly they may have envied the privileged few who could exercise it, they were unable to do so; the feudal regime was strictly one of status. Under the merchant-State, on the contrary, the political means was open to anyone, irrespective of birth or position, who had the sagacity and determination necessary to get at it. In this respect, America appeared as a field of unlimited opportunity. The effect of this was to produce a race of people whose master-concern was to avail themselves of the opportunity. They had but the one spring of action, which was the determination to abandon the economic means as soon as they could, and at any sacrifice of conscience or character, and live by the political means. From the beginning, this determination has been universal, amounting to monomania. [10] We need not concern ourselves here with the effect upon the general balance of advantage produced by supplanting the feudal State by the merchant-State; we may observe only that certain virtues and integrities were bred by the regime of status, to which the regime of contract appears to be inimical, even destructive. Vestiges of them persist among peoples who have had a long experience of the regime of status, but in America, which has had no such experience, they do not appear. What the compensations for their absence may be, or whether they may be regarded as adequate, I repeat, need not concern us; we remark only the simple fact that they have not struck root in the constitution of the American character at large, and apparently can not do so.




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.. [1] The economic rent of the Trinity Church estate in New York City, for instance, would be as high as it is now, even if the holders had never done a stroke of work on the property. Landowners who are holding a property "for a rise" usually leave it idle, or improve it only to the extent necessary to clear its taxes; the type of building commonly called a "taxpayer" is a familiar sight everywhere. Twenty-five years ago a member of the New York City Tax Commission told me that by careful estimate there was almost enough vacant land within the city limits to feed the population, assuming that all of it were arable and put under intensive cultivation!

.. [2] As a technical term in economics, land includes all natural resources, earth, air, water, sunshine, timber and minerals in situ, etc. Failure to understand this use of the term has seriously misled some writers, notably Count Tolstoy.

.. [3] Hence there is actually no such thing as a "labour-problem," for no encroachment on the rights of either labour or capital can possibly take place until all natural resources within reach have been preempted. What we call the "problem of the unemployed" is in no sense a problem, but a direct consequence of State-created monopoly.

.. [4] For fairly obvious reasons they have no place in the conventional courses that are followed in our schools and colleges.

.. [5] The French school of physiocrats, led by Quesnay, du Pont de Nemours, Turgot, Gournay and le Trosne--usually regarded as the founders of the science of political economy--broached the idea of destroying this system by the confiscation of economic rent; and this idea was worked out in detail some years ago in America by Henry George. None of these writers, however, seemed to be aware of the effect that their plan would produce upon the State itself. Collectivism, on the other hand, proposes immeasurably to strengthen and entrench the State by confiscation of the use-value as well as the rental-value of land, doing away with private proprietorship in either.

.. [6] If one were not aware of the highly explosive character of this subject, it would be almost incredible that until three years ago, no one has ever presumed to write a history of land-speculation in America. In 1932, the firm of Harpers published an excellent work by Professor Sakolski, under the frivolous catch-penny title of The Great American Land Bubble. I do not believe that anyone can have a competent understanding of our history or of the character of our people, without hard study of this book. It does not pretend to be more than a preliminary approach to the subject, a sort of pathbreaker for the exhaustive treatise which someone, preferably Professor Sakolski himself, should be undertaking; but for what it is, nothing could be better. I am making liberal use of it throughout this section.

.. [7] Regard for this insignia-value or token-value of land has shown an interesting persistence. The rise of the merchant-State, supplanting the regime of status by the regime of contract, opened the way for men of all sorts and conditions to climb into the exploiting class; and the new recruits have usually shown a hankering for the old distinguishing sign of their having done so, even though the rise in rental-values has made the gratification of this desire progressively costly.

.. [8] If our geographical development had been determined in a natural way, by the demands of speculation, our western frontier would not yet be anywhere near the Mississippi River. Rhode Island is the most thickly-populated member of the Union, yet one may drive from one end of it to the other on one of its "through" highways, and see hardly a sign of human occupancy. All discussions of "over-population" from Malthus down, are based on the premise of legal occupancy, and are therefore utterly incompetent and worthless. Oppenheimer's calculation, made in 1912, to which I have already referred, shows that if legal occupation were abolished, every family of five persons could possess nearly twenty acres of land, and still leave about two-thirds of the planet unoccupied. Henry George's examination of Malthus's theory of population is well known, or at least, easily available. It is perhaps worth mention in passing that exaggerated rental-values are responsible for the perennial troubles of the American single-crop farmer. Curiously, one finds this fact set forth in the report of a farm-survey, published by the Department of Agriculture about fifty years ago.

.. [9] Mr. Chinard, professor in the Faculty of Literature at Johns Hopkins, has lately published a translation of a little book, hardly more than a pamphlet, written in 1686 by the Huguenot refugee Durand, giving a description of Virginia for the information of his fellow-exiles. It strikes a modern reader as being very favourable to Virginia, and one is amused to read that the landholders who had entertained Durand with an eye to business, thought he had not laid it on half thick enough, and were much disgusted. The book is delightfully interesting, and well worth owning.

.. [10] It was the ground of Chevalier's observation that Americans had "the morale of an army on the march," and of his equally notable observations on the supreme rule of expediency in America.