Citadel, Market and Altar
“For it is the potential function of property in land, when rightly understood as the contractual distribution of a community’s sites and resources and of access to its public advantages, not only to distribute these things peaceably and impartially to the most productive occupiers and users but also to provide the sites, and those who shall physically occupy them, with such protection and security and other services as will induce the voluntary recompense or value called land value or ground rent. This affords a purely contractual, non-political and non-compulsive process — a purely business and voluntary exchange method — of providing public services and of being abundantly recompensed for them without infringing the liberties or seizing the properties of those being served, even in the slightest degree.” — Spencer Heath
We hope you enjoy this month’s Governance Gauge: for more reading material, you can always visit our reading list for more on governance, special economic zones, best practices and studies!
In this work, Spencer Heath pioneered the theory of proprietary community administration. As a side note, the book also founds “Socionomy”, what Heath calls the science of society, but this Governance Gauge will not delve deeper into that part.
The main insight of this work is that the institution of private property in land can provide the economic incentive for a contractual delivery of public goods. The author argues that the value of ground rent serves as the market price for the totality of services provided by the landowner to the tenant. While normally this includes just leasing of land or housing units, delivering more services that are valuable to the customer can increase the ground rent and the land value. On the other hand, delivering unwanted services lowers the demand and consequentially the ground rent.
Ground rent as a source of income to landowners thus can be seen as the monetary reward for conducting a proprietary administration of a community. Heath sees potential in this kind of administration to deliver all of a state’s services on a contractual basis and with much higher efficiency, since the proprietor as administrator and management supervisor has a direct interest in the well-being of the community.
The book explores past historical examples of societies in which public services (mostly security) was delivered on a voluntary payment of rent from a freeholder to a landlord. While these examples can be seen in primitive tribes, the most prominent are of early feudalism and specifically pre-Norman England, which culminated in the prosperous period of the Alfredian Renaissance.
However, Heath views the market at his time as underdeveloped. This, according to him, is partly due to government taxation crowding out contractual public services delivery, since the potential income from tenants that could be spent on rendering higher rent for more services is diverted to government, which then provides these kinds of services itself.
The book is split into 30 chapters, in which Spencer founds a new science of society, examines the potential and past precedents of proprietary communities and explores related topics.
Creators of zones and societies can go to chapters 23–25 to learn more about the business of community economics and the administration of real property as community services.
Policymakers and analysts should refer to chapters 11, 13 and 20–22 to understand the public administrative function of private property in land and the process of government “social-ization”
Scholars and experts may read chapters 16–19 and 26 for the historical example of pre-Norman England and a forecast of the potential results of a society organized under proprietary administration.
The book can be found here.
Written by: Francisco Litvay