Rents and sustainability.

• Author: Dodson, Edward J.
• Position: Letter to the editor

A century ago, political economists tragically abandoned the most important investigative component of their science, namely, whether the laws of production and distribution of wealth described a closed system with ethical values at their base. The rise of the militaristic state created a great need for data on resources available to fuel imperialistic endeavors, and the universities responded by establishing the value-free field called economics (defined consistently as "the study of the allocation of scarce resources"). Rather quickly, political economists of the old persuasion were replaced by European-trained economists, and neoclassical economic theory that treats nature as just another form of capital or a "factor input" to production relegated political economy to the status of a dead language. One direct result is a century and more of public policies advanced and adopted based on economic theory that cannot explain the dynamics occurring in the world.

At the heart of political economy's closed system of analysis is the distinction between nature (described by the term "land"), and what people ("labor") produce with or without tools ("capital goods"). From this perspective, nature is the source of private property but is (and under law ought to be) the property of communities and societies. With population growth and migration the opportunity to occupy and make use of nature of equal value disappears. From this point on, whoever controls nature (communities or individuals) is able to claim as "rent" a portion of the wealth produced by labor and capital. The political economist as moral philosopher could look back to John Locke and Adam Smith, among others, for arguments to demand that "rent" be publicly collected and used to provide for public goods and services. This moral argument has been ignored, with the result that government raises most of its revenue by penalizing people and producers for investing in goods production and the delivery of services, while rewarding them for speculation in nature (i.e., in locations in our cities and towns, in natural resource-laden lands, in sources of water, in the broadcast spectrum, and many other opportunities).

Today, almost every location on the globe has some potential...