Land prices are not simply a matter of supply and demand

By conflating land with capital, neoclassical economists remain in the dark about the bifurcation that has grown between economics and the theory of valuation, especially in the light of the land prices bubbles that so repetitively bring world economies to their knees. Even Tomas Piketty’s “Capital in the Twenty-First Century” demonstrates no knowledge of the rent-seeking mechanism which generates the wealth differentials he so laboriously documents.

The supply of and demand for land is one matter, but there are multiple other exigencies affecting land price. That professional economic forecasts may be relied upon to be consistently wrong is explained by ignorance of the reciprocal relationship between productivity and escalating land prices: it has gone largely unremarked that world economies founder as land prices and their attendant private debt levels have increased.

If we wish to understand the world’s current socio-economic plight, land needs to be distinguished from capital, as it was for centuries by classical economists from William Petty to Adam Smith, and down to the time of Henry George.

In 1994, two years before the current world bubble in land prices began to form, natural resource expert Professor Mason Gaffney documented in “The Corruption of Economics” why, amongst others, Ezra Cornell, a big landholder and founder of a US university, sought out economists who would mock Henry George’s claim that if nations were to succeed and prosper, the economic rent of land must be publicly captured. George had demonstrated that capturing land rent was fairer and more certain than arbitrary and self-defeating taxes upon labour and capital.

The miserable state of world economies attest to neoclassical economics' ‘success’ in dismissing Henry George’s notion of the importance of the public capture of land rent if we are to have healthy economies and provide cheap access to land.

The shame and vast disgrace of modern neoliberal economics lies in its clinging to the misbegotten edifice of ‘supply and demand’ in relation to land price, and its outright dismissal of the socially-devastating effects of land prices and the taxation of labour and capital.