Progressive Libertarianism

Part 7: Land Value Tax and Basic Income

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Natural vs. Artificial Property

In The Natural and Artificial Right of Property Contrasted, libertarian theorist Thomas Hodgskin presents a theory of natural law heavily influenced by the Lockean labor theory of appropriation. Similar to Lysander Spooner and F. A. Hayek, Hodgskin contends that natural law precedes legislative law, emerging initially through custom. The concept of property rights, specifically, originated from natural possessory rights before being formalized within legislative frameworks. Hodgskin emphasizes that property rights derive from individual labor and productive efforts, challenging the notion that they are solely based on legal constructs. He distinguishes between two types of property: natural, which emerges in a free market without government intervention, and artificial, which characterizes existing capitalism and relies on government enforcement of legal documents. Hodgskin advocates for the “natural right of property,” rooted in Lockean principles, which recognize property acquired through original appropriation and voluntary means. He opposes the “artificial right of property,” which he attributes to the utilitarian belief in legislation as the source of rights.

“I heartily and cordially concur with Mr. Locke, in his view of the origin and foundation of a right of property. ‘Every man,’ he says, ‘has a property in his own person that nobody has any right to but himself. The labour of his body and the work of his hand are his property. Whatsoever, then, he removes out of the state that nature hath provided and left it in, he hath mixed his labour with it and joined to it something that is his own, and thereby makes it his property. It being by him removed from the common state nature hath placed it in, it hath by this labour something annexed to it that excludes the common right of other men. For the labour being the unquestionable property of the labourer, no man but he can have a right to what that is joined to — at least, where there is enough and as good left in common for others.’
“ ‘He that is nourished by the acorn he picked up under an oak, or the apple he gathered from the trees of the wood, has certainly appropriated them to himself. Nobody can deny but the nourishment is his. I ask, then, when they began to be his? When he digested? Or when he eat, or when he boiled? Or when he brought them home? Or when he picked them up? As it is plain, that if the first gathering made them not his, nothing else could. That labour put a distinction between them and common, that added something to them more than nature — the common mother of all — had done, and so they became his private right….
“ ‘But the chief matter of property being now,’ he goes on, ‘not the fruits of the earth and the beasts that subsist on it, but the earth itself as that which takes and carries with it all the rest. I think it plain that property in that too is (ought to be?) acquired as the former. As much land as a man tills, plants, cultivates, and can use the products of, so much is his property. He, by his labour, does, as it were, enclose it from the common.’
“Thus the principle Mr. Locke lays down is, that nature gives to each individual his body and his labour; and what he can make or obtain by his labour naturally belongs to him….
“The enjoyment is secured by the individual’s own means. No contract, no legislation, is required. Whatever is made by human industry, is naturally appropriated as made, and belongs to the maker. In substance, I would feign hope, there is no difference between this statement and that of Mr. Locke; but I wish to mark, stronger than I think he has done, the fact, that, antecedently to all legislation, and to any possible interference by the legislator, nature establishes a law of appropriation by bestowing, as she creates individuality, the produce of labour on the labourer….
“Without the intervention of any law, contract, or agreement between individuals, as to what shall belong to each, Nature produces in each the idea of individuality, which she extends to ownership, by bestowing on each individual, and exclusively, whatever he produces.” — Thomas Hodgskin (The Natural And Artificial Right of Property Contrasted)

When a person uses their labor to transform something from nature or to create something new, they naturally acquire a right to that property. This right is not granted by society or the State, but is derived directly from the act of labor itself, which is a natural and fundamental human activity. This natural right of property is quite different from the system of property that exists under capitalism today. The current system of property is artificial and based on legal title.

“The important and yet perhaps trite fact to which I wish by these remarks to direct your attention is, that law and governments are intended, and always have been intended, to establish and protect a right of property, different from that which, in common with Mr. Locke, I say is ordained by nature. The right of property created and protected by the law, is the artificial or legal right of property, as contra-distinguished from the natural right of property. It may be the theory that government ought to protect the natural right; in practice, government seems to exist only to violate it. Never has the law employed any means whatever to protect the property nature bestows on individuals; on the contrary, it is a great system of means devised to appropriate in a peculiar and unjust manner the gifts of nature. It exacts a revenue for the government, — it compels the payment of rent, — it enforces the giving of tithes, but it does not ensure to labour its produce and its reward….
“[A]ll the laws of Europe have been made with a view to maintain and preserve by force an artificial right of property, a scheme of appropriating the land, and a system of political power, all of which were originally established by the sword. It is another such fact, that the laws have not accomplished this object.” — Thomas Hodgskin (The Natural And Artificial Right of Property Contrasted)

Hodgskin criticizes “artificial” property rights, established and enforced by governments and laws, which may not reflect the natural investment of labor. These rights, Hodgskin contends, often favor the wealthy and powerful, perpetuating social inequality and exploitation. He argues that such rights, imposed by the state, maintain existing hierarchies and control rather than safeguarding the legitimate products of individual labor. Hodgskin particularly scrutinizes state power and laws, such as patent and land laws, for distorting natural property rights and leading to social and economic injustices. His argument centers on the premise that genuine property rights emanate from individual labor and creation, rather than being dictated by arbitrary legal and governmental structures. Additionally, Hodgskin asserts that extreme inequality and poverty result from the shift towards an unjust artificial right of property, departing from the natural right of property where ownership aligns with occupancy and use. Under the artificial system, ownership is detached from occupancy and use, enabling individuals to accumulate wealth through rent-seeking without labor. Under a natural system of property, one can only acquire as much land as one can personally maintain. Under the artificial system, there is no upper limit to how much one can accumulate. This artificial property system facilitates the stark wealth disparity observed today, contrasting with the more equitable distribution envisioned under natural property rights.

Common Ownership of Land & Land-Value Dividend

In Thomas Hodgskin's philosophy, we see a clear delineation between what is created by human effort and what exists as a natural endowment. Hodgskin argued that the former, being a product of individual labor, rightfully belongs to the laborer, while the latter should be shared among all as a common heritage.

This critique naturally leads us to consider the work of another libertarian thinker, Thomas Spence, who extended this logic by proposing practical measures to ensure that natural property benefits everyone. Spence, a radical advocate for the equitable distribution of land’s value, introduced the concept of a land-value dividend. He envisioned a system where the economic rent derived from land — a resource no individual created and thus shouldn’t exclusively own — would be collected and redistributed to all members of society.

Spence’s ideas align closely with the principles laid out by Hodgskin, as both thinkers emphasize the moral imperative to distinguish between earned and unearned wealth. By transitioning from Hodgskin’s theoretical foundation to Spence’s framework, we can further explore how implementing a land-value dividend can address modern economic disparities and uphold the libertarian values of fairness and individual liberty.

“There are but two ways of inheriting the earth agreeable to justice and the rights of man: the first is in the patriarchal and Indian manner by using it as a common grazing pasture and hunting park, as was done by Abraham, Issac, and Jacob, and Esau and Ishmael. The second is by letting out in farms and tenements for cultivation and habitation as at present, but reserving the rents to the people of the district in lieu of their rights of pasturage, and hunting.” — Thomas Spence (The Restorer of Society to Its Natural State)

The Dialectical Lens

The establishment of a State involves conquest, confiscation, and the assumption of eminent domain over land. Landholders effectively become tenants of the State. The State, acting as the ultimate landlord, distributes land to beneficiaries. Notably, the State’s land-tenure system confers two distinct monopolies: one related to labor-made property and the other to law-made property. The former grants exclusive rights to use-value and possession resulting from labor application, while the latter pertains to economic rent and the desire of others to possess the property. Ultimately, the State’s primary purpose is to enable the exploitation of one class by another, necessitating expropriation before exploitation can occur. Albert Jay Nock writes:

“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 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 holder.
“Bearing in mind that the State is the organization of the political means-that its primary intention is to enable the 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.” — Albert Jay Nock (Our Enemy, the State)

If, as Nock contends, the establishment of a State and its artificial system of property entails some sort of historical injustice, does it not follow that people are entitled to some sort of compensation or reparations for this wrong? If, as Hodgskin contends, poverty and inequality are a result of the artificial system of property, would a dialectical libertarian not have a reason to demand that the State, so long as it continues to exist, play a role in mitigating those problems? The simplest solution would be for the community to collect ground rent or a land value tax and to distribute the revenue equally amongst the citizens as a land-value dividend, a policy that would function as a universal basic income or a minimum income guarantee.

Real Libertarianism

In Are you a Real Libertarian, or a ROYAL Libertarian? Dan Sullivan examines land ownership from a geolibertarian perspective. He critiques the traditional view that land, once acquired, ought to perpetually remain the property of the one who has acquired it, labeling this view as “royal libertarianism.” Sullivan argues that land cannot be considered the result of labor since it is not created by human effort. Instead, he suggests that our system of land tenure, based on state-issued titles, grants noble privilege to landowners, enabling them to levy tolls on others. Contrasting this with the classical liberal perspective, Sullivan advocates for recognizing common rights to the earth and limiting the concept of unlimited land ownership. Sullivan highlights the distinction between common and state property, advocating for community collection of land rent to prevent land monopolization. Drawing from classical liberal principles, Sullivan proposes a land value tax to fund government activities without taxing productivity or improvements. He stresses the communal nature of land ownership and urges a shift towards geolibertarian principles prioritizing individual freedom and equitable access to land resources.

“[Libertarians] call ourselves the “party of principle,” and we base property rights on the principle that everyone is entitled to the fruits of his labor. Land, however, is not the fruit of anyone’s labor, and our system of land tenure is based not on labor, but on decrees of privilege issued from the state, called titles. In fact, the term “real estate” is Middle English (originally French) for “royal state.” The “title” to land is the essence of the title of nobility, and the root of noble privilege….
“According to royal libertarians, land becomes private property when one mixes one’s labor with it. And mixing what is yours with what is not yours in order to own the whole thing is considered great sport. But the notion is filled with problems. How much labor does it take to claim land, and how much land can one claim for that labor? And for how long can one make that claim?
“According to classical liberals, land belonged to the user for as long as the land was being used, and no longer. But according to royal libertarians, land belongs to the first user, forever. So, do the oceans belong to the heirs of the first person to take a fish out or put a boat in? Does someone who plows the same field each year own only one field, while someone who plows a different field each year owns dozens of fields? Should the builder of the first transcontinental railroad own the continent? Shouldn’t we at least have to pay a toll to cross the tracks? Are there no common rights to the earth at all? To royal libertarians there are not, but classical liberals recognized that unlimited ownership of land never flowed from use, but from the state.” — Dan Sullivan (Are you a Real Libertarian, or a ROYAL Libertarian?)

The Lockean Proviso

The Lockean proviso, articulated by John Locke, states that individuals have the right to appropriate resources from nature through their labor, as long as there is “enough, and as good” left in common for others. This ensures that one’s appropriation does not disadvantage others by depleting the available resources.

In the essay Atlas Nods: The Libertarian Case for a Basic Income, Miranda Perry Fleischer and Daniel Hemel point out that Robert Nozick, one of the leading libertarian intellectuals of the 20th Century, argued in a manner that suggests that some degree of redistributive taxation is morally justified in order to satisfy the Lockean proviso.

“Apart from the argument that the separateness of persons requires a safety net, minimal state libertarians may also accept a limited amount of redistributive taxation as a necessary precursor for satisfying the Lockean proviso. Recall that the Lockean proviso holds that an individual can justly acquire property rights in a resource by mixing her labor with it if, and only if, ‘enough and as good’ is left for others. As Nozick notes, the proviso cannot be interpreted literally to mean that one must leave ‘enough, and as good’ of the exact resource in question for others. If it were, the proviso would be impossible to fulfill with respect to any resource that is finite in quantity or variable in quality.
The proviso is thus frequently interpreted as meaning that others cannot be made ‘worse off’ in some sense by an appropriation or use. Nozick and most other minimal state libertarians take that to mean that others cannot be made ‘worse off’ in welfare terms after an appropriation as compared to before. In their view, the Lockean proviso is satisfied as long as appropriation generates positive externalities equal to or in excess of the value of the land at the time it is appropriated. For example, Dana may comply with the Lockean proviso if she plants a coconut grove on part of her acre and uses the rest to build a coconut water factory, thus providing jobs to the others and contributing to the island’s economy such that her fellow islanders are better off than they were.” — Miranda Perry Fleischer and Daniel Hemel (Atlas Nods: The Libertarian Case for a Basic Income)

Thus, Fleischer and Hemel lay out one solution to the problem posed by the Lockean proviso. However, they note that this is not the only possible solution.

“There are, however, two other plausible interpretations of the Lockean proviso. The first interprets the proviso as meaning that “enough, and as good,” is left for others if everyone has a sufficient level of resources to meet their basic needs. One individual’s selfownership can be impacted by how others use their resources if that use impinges on her ability to interface with the world. So too, an individual needs some baseline amount of resources to exercise her own self-ownership. In order to be able to use one’s self, an individual needs oxygen, food, water, and other basic necessities. Resources provide opportunities for one’s “self-preservation and selfgovernment,” meaning that after appropriation, “[w]hat must be guaranteed to each person is the opportunity of a living — a condition of nondependence, in which one is free to better oneself, govern one’s own existence, and enjoy the goods God has provided for all.” If private appropriation or use denies an individual access to these necessities, the individual’s self-ownership is infringed.
“Although the positive externalities created by a free market and private property will on net enhance most individuals’ self-ownership, some individuals will, unfortunately, find their powers of self-ownership diminished. In the latter situations, others are exercising their property rights in ways that impinge on these individuals’ selfownership. Providing these individuals with basic necessities protects their rights to self-ownership and by so doing assures that the proviso is met with respect to all members of society. At the same time, limiting any such redistribution to the necessities protects the self-ownership and private property rights of the individuals who are made better off by private appropriation. We also offer here a second interpretation of the proviso, one that posits that the appropriate basis of comparison is not any prehistoric state of nature, but plausible modern-day alternatives to the extant property rights regime. Under this interpretation, private appropriation of resources leaves others at least as well off if and only if such others — thinking rationally and looking out for their own interests — would not choose to prevent such appropriative acts from occurring. In making this judgment, individuals consider the range of likely outcomes under alternative property regimes (or propertyless regimes), rather than the unlikely possibility of permanent reversion to statelessness.” — ibid.

It follows that some provision for the basic necessities is justified by libertarian logic and that a universal basic income might thereby be justified.

Conclusion

Thomas Hodgskin argued that property rights originate from individual labor and productive efforts, rooted in natural law and preexisting legislative frameworks. He differentiates between “natural” property, which emerges in a free market without government intervention, and “artificial” property, characteristic of existing capitalism, reliant on government enforcement and legal constructs. Hodgskin contends that natural property rights, aligned with Lockean principles, are derived from labor and voluntary means, whereas artificial property rights often result from government intervention and legislation, favoring the wealthy and perpetuating social inequality. This critique underscores the moral imperative to distinguish between earned and unearned wealth and advocates for a return to property rights that reflect true labor and creation. Thomas Spence, making this same distinction between earned and unearned income or wealth, argues for a land-value dividend (functionally a universal basic income) in order to satisfy the Lockean proviso. Albert Jay Nock makes the case that such a land-value dividend might be looked at as compensation for the past injustices entailed in the existing system of artificial property, while Fleischer and Hemel make a slightly different case that provision of basic necessities through something like a universal basic income might be required to satisfy the Lockean proviso.

One thing that is seldom talked about is the fact that a minimum income guarantee would actually end up being much cheaper than the existing welfare state. We spend roughly $1.8 trillion per year on anti-poverty measures and see very little reduction in poverty as a result. The cost of a Negative Income Tax, a form of minimum income guarantee that was advocated by Milton Friedman and which would virtually eliminate poverty, on the other hand, would be just $219 billion. The policy would totally pay for itself, as it would cost less than the programs it would replace by default (i.e. the programs that would be eliminated simply because no one would be poor enough to qualify for them anymore).