In this issue we touch once more on the fundamental problem facing modern economic life – the over-capitalisation of real estate. We do so by looking at the history of the game of Monopoly, its Georgist origins as The Landlord Game, before it got caught up in the logic (and fun) of egotistical acquisition of all real estate, then developing it and renting it out until the entire economy became ransomed and there was no money left for life itself. Winner takes all. Game over. Market crashes. And then what a next step might be in the guise of Pent Up!, the outlining of an economic regeneration project in the town of Folkestone, England.
On 11 April 2015 The Guardian ran an article on The Landlord’s Game, invented by Lizzie Magie, a disciple of Henry George, to promote Georgist concepts of taxation and shared community benefit. A précis of the article is reproduced under Sign of our Time. It tells the story of how Ms Magie was unfairly treated, proving perhaps her very thesis regarding selfishness and disregard for others.
Henry George (1839-1897) was famous in the late 19th century in the USA in particular, where his book Progress and Poverty, was widely circulated and his ideas taken up, as much, perhaps, because of the note or moral fervour he strikes as for the strength of his economic argument. In Henry George, An Appreciation, Californian Georgist, Carl Flgyt, provides a summary of Henry George’s ideas. In essence, George believed that people legitimately own value they fairly create, but that natural resources and common opportunities, most importantly the value of land, belong equally to each person in a community. He therefore advocated land taxation so that the gains made in real estate did not accrue only to those fortunate enough to own property where improvements were located, but were shared by all the community.
As the Guardian article reports, The Landlord Game was hijacked and became Monopoly – with the ethos of ‘winner takes all’ displacing the Georgist notion of sharing in land values. In Pent Up! Revaluing Folkestone, a fresh review of these topics is essayed in the outline of a proposed 3-year case study where the three kinds of money – purchase, loan and gift – can be seen in the study’s three main ideas: stepped rents for traders, youth bonds for young people, and rent-free cultural facilities.
This is followed by a critique of both. Of Land and Gifts, the diseconomy of over-capitalised land references Rudolf Steiner’s central observation concerning the way that over-capitalised real estate denies economic life the gift-funding necessary for an active and free cultural life, itself the source of new values. Steiner argues that there would be enough funds for new initiatives were these funds not trapped in land, where their effect is to inflate all values because at the base of economic life a false value is created, starving the economics of creativity and human development – a kind of monster that has to be fed, but with food that should be going to human beings!
The AEX page features contributions on the definition of capital and the possibility of teaching economics through the use of games.
Accounting Backdrop concludes this issue by taking a look at the accounting treatment of property purchases by charities and the revaluation of investment properties by landlords.