What is Science? The dictionary defines science as knowledge, the truth of which is certain. The scientific method and the advancement of science are based on the search for truth.
Economics is currently seen as a Social Science but it is a Natural Science because the production and distribution of wealth obey Natural Laws, as natural as the Law of Gravity. The Natural Laws of Economics were described by Classical Economists, the most important being Adam Smith, David Ricardo and Henry George:
[Centenary Essay No.2, published by the Economic and Social Science Research Association, 1980]
TO MARK the centenary of the publication of Henry George’s classic, Progress and Poverty, in 188O, the Association invited various authors to write essays which would relate his philosophy and economics to conditions prevailing today. The Association was incorporated on 23rd June 1969 and began activities during April 1970. Its objects are the promotion and advancement of learning in the field of economics and social philosophy by research, by sponsoring study courses and by publishing research and discussion papers. Sections of this paper may be reproduced in magazines and newspapers with acknowledgment to the Economic & Social Science Research Association. The views expressed are those of the authors and do not necessarily represent those of the Association, or its consultants. Consultants Dr. Roy Douglas, University of Surrey F. Harrison, BA (Oxon) M.Sc. Professor F.J. Jones, University College, Cardiff Dr. Roger J. Sandilands, University of Strathclyde Editors V.H. Blundell E.A. Nichols1
“One of the truisms of the ecology movement is this: everything is connected to everything else. Everything else must include economic phenomena. A parallel truism of the body economic is: the cost of anything depends on the cost of everything else. Everything else must include the cost of the air we breathe and the cost of the water we drink.”
The national economy and economic life is a means to an end – it is not the end or purpose of a nation or of a human life. It is the means by which the needs and wants of people living in a civilised society may be met. Its success is not thus to be measured by its size but by how it contributes to the provision of a happy and satisfying life for the nation and its citizens. In a modern economy public revenue and expenditure represent a huge fraction of the wealth that a nation produces. How public revenue is collected has a profound impact upon both how wealth is produced and how it is distributed throughout society.
Would taxing the rich reduce inequality? We need to know how it is to be done, how would the tax be raised, and how would the extra revenue be used?
Shall we tackle the last question first?
How would the tax be used? The current cry is that wages are too low, so we might suppose that some or all of the extra tax is to be used to alleviate the condition of the poorest. They are certainly squeezed. If you read the writings of Paul Nicolson of “Taxpayers Against Poverty” it is plain that the poorest are under great pressure (1). So, maybe the minimum wage is increased, or the level of benefits is raised, or that VAT is reduced. What would be the result?
Here is an example told by Winston Churchill in his campaign speeches of 1909. “Some years ago in London there was a toll bar on a bridge across the Thames, and all the working people who lived on the south side of the river had to pay a daily toll of one penny for going and returning from their work. The spectacle of these poor people thus mulcted on so large a proportion of their earnings appealed to the public conscience, an agitation was set on foot, municipal authorities were roused, and at the cost of the ratepayers the bridge was freed and the toll removed. All those people who used the bridge were saved sixpence a week. Within a very short period from that time the rents on the south side of the river were found to have advanced by about sixpence a week, or the amount of the toll which had been remitted.” (2)
Land value tax (LVT) has been high on the political agenda for most of the past two centuries; in the three decades up to World War I it was backed by a widespread popular movement. Thus, in the broader perspective, its eclipse since about 1950 is exceptional. The flurry of fresh interest in recent years is due, amongst other things, to the
realisation that tax systems have hit the limit to what they can raise, whilst expectations of government continue growing and attempts to cut large welfare bills consistently fail.
LVT in its classic form is a tax on the annual rental value of all land, ignoring buildings and other developments, the valuation being on the assumption that the land is at its optimum use. It would not be additional to existing taxes but a partial or complete replacement for them. Proponents argue that it is a precondition for the solution of a wide range of apparently intractable economic ills. Opponents usually come up with objections
which are criticisms of what is not actually being proposed.
The vision of Economics with Justice is that a well-run economy can provide prosperity for all. There does not have to be a situation where a few get rich whilst most stay poor. There do not have to be violent cycles of boom and bust.
By taking recent examples of good practice and examining why they were effective,Peter Bowman, Head of Economics, explores how an economy can be developed and directed to work for the common good.
We live in interesting but uncertain times. In the economy a sense of instabilitycontinues to pervade. The crash of 2008 has not been followed by any fundamental reforms or substantial change and we still live in its shadow. A heavy burden of indebtedness, probably worse in the private sector than in the public sector and the pervasiveness of the doctrine of austerity has made recovery slow and painful. Meanwhile there is a growing suspicion that conventional economics is not the best voice to listen to find out how to make the world a better place. A growing number of economics students are demanding reform of their university curriculum. They are saying that it should at least be widened to include views other than just the orthodox one and there should be a more critical approach so that the basic assumptions and models should be carefully examined rather than just being passively accepted and applied.
Having a parent at home to take care of the family is a choice most families feel they can’t make.
The purpose of this booklet is to shed light on the economic conditions bearing down on families to better understand the pressures they are under and the choices available to them.
We have seen an increasing rise in the numbers of mothers returning to the workplace when their children are very young. Not such a long time ago 70% families had a mother at home, now only 28% do and that figure is falling fast. Crucially more stay at home mothers have gone back to employment in the past two years than in the previous 15 years combined.
I am not saying that mothers should not go out to work or that mothers at home should be regarded as better but I am questioning whether this is really what all these mothers want and whether they have a choice in the matter.
Today the market is seen as the pivotal point around which our economic system moves, and the starting point for the study of economics. The laws of the market – the laws of supply and demand – are said to direct economic activity, and, so it is said, if the market is allowed to operate in an open, free and self-regulating manner, the prosperity of all will increase.
Today the market includes not just what is produced, but also the factors of production and the producers. There are markets for claims on production, markets for future production, and markets for ideas. There is almost nothing that cannot be bought and sold.[1] It is almost impossible to imagine a world without markets.
But this was not always the case. Our Anglo-Saxon forebears, after settling in England, were self sufficient, without markets, money or specialisation. This is the story of the genesis of trade, specialisation and the use of money in Anglo-Saxon England.
There are a great many faults in the UK tax system, but in this paper three authors look at just a few from different angles.
—————————————————————————————————-
1. VALUE ADDED TAX, THE STEALTHIEST OF STEALTH TAXES. By Duncan Pickard. The author is a working farmer, who has had a good deal to do with VAT in practice.
In 1954 France was the first country in Europe to introduce a national VAT. France persuaded Germany and then other “common market” countries to adopt VAT.
When any country wanted to join the EEC, which became the EU, it had to have VAT. It was introduced in the UK in 1973.
VAT is the most harmful to economic activity of all the harmful taxes. It is the largest of the indirect taxes and affects poor people much more than the rich. The poorest fifth pay 31% of their take- home pay in indirect taxes, the richest fifth pay 13%.
A few days after I accepted the invitation to give this talk, I looked at the poster advertising the event and I was struck by the realisation that the title was absurdly ambitious and, since then, the absurdity of the ambition has increased day by day. So if you were anticipating a comprehensive history I am afraid I am going to disappoint you. This history will be very selective. I am going to concentrate on the period of the late 19th century and the first half of the 20th because that covers the time when public revenue without taxation had widespread public support in both Britain and America and its prospects of being introduced looked most promising.
I shall use as my text for today’s talk a statement from the gospel of John Maynard Keynes. Right at the end of his great work, The General Theory of Employment, Interest and Money, Keynes rewards all those who have managed to get thus far with this observation;
The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. I am sure that the power of vested interest is vastly exaggerated compared with the gradual encroachment of ideas. Not, indeed, immediately, but after a certain interval’’.
