Re: The monopolization of the air and Georgism

ruetheday_at_outgun.com
Date: 01/24/05 

Date: 24 Jan 2005 13:17:45 -0800

>The problem here is Marx uses monopoly wrong. He is refering to
>collusion of oligolopist NOT A MONOPOLY. He says monopoly but what he
>meant was collusion by oligopolist. Marx makes the same mistake Roy
>makes. He says a CLASS of people having ownership makes a monopoly.
This
>is as silly as saying farmers have a monopoly over food but they
control
>the food supply. For a monopoly to exist landowners or farmers would
>have to collude. A group of people having ownership does not make a
>monopoly. The farmers are class of people who own all the means of
>production for farming does not mean they are a monopolist. The
>individual farmer or the individual land owner HAS LITTLE TO NO POWER
TO
>SET PRICE. Marx is not using the terms as a modern economist would.
Nor
>is using the term as other classical economist would.

You are using an extremely narrow definition of the word monopoly
(i.e., literally an entire market with only one seller). The classical
economists used the term "land monopoly" to mean that parcels of land
are sufficiently unique that the seller is in a monopoly position with
regard to that piece of land. Much like modern economists use the term
"monopolistic competition" to reference markets with product
differentiation (a weaker use of the term). They also use the term
monopoly to refer to situations where the government enforces a barrier
to entry as in the case of copyrights and patents (a stronger use of
the term).

>> Did the classical economists assume that land was inelastic in
>> supply? Here's the opinion of one economist:

>Who cares that is not the point. The point is that Roy assumed that
land
>tax have no effect on MARKET RENT. This can only occur if the supply
of
>land is perfectly inelastic. To reproduce George's analysis in modern
>understanding of taxation you must assume perfectly inelastic supply.
>George, to my knowledge, makes no mention of elasticity. I am not sure

>of the exact dates but I believe he may have written before the
marginal
>ist revolution took hold. So elasticity would have been somewhat of a
>foreign concept.

George may not have been familiar with the term, but he was certainly
familiar with the concept. He wrote extensively about why the land tax
would fall wholly on the landlord and not the renter.

>> "Likewise in classical economics, land in the sense of nature's
>> endowment of inorganic resources is taken to be an *exogeneous*
>> factor of production, relatively fixed in supply. By contrast,
>> in the pre-1850 classical view, labour population is in the
>> long run a factor readily reproducible, being in effect expandable
>> at the cost of subsistence wages, the needed fodder.

>> In the language of a post-classical generation of economists,
>> land supply is a *vertical ss* schedule in a plot of (land
>> supplied v. factor rent). By contrast, labour supply is a
>> *horizontal s's'* schedule in a plot of (population v.
>> real wage rate)."
>> -- Paul A. Samuelson, "Land". _The Elgar Companion to Classical
>> Economics_. 1998.

>I would need to read the context Samuelson is stating here. My guess
is
>he refering to a certain set of models. Sameulson and others would
>realize that the supply of land would not be perfectly inelastic at
all
>price ranges. This would imply that if the land were being given away
>free as many people would part with land if land sold for 10 billion
>dollars. This is an impossibility. Land or ANY other good will not be
>perfectly inelastic over all price ranges.

Nonsense. Do you understand how a supply curve is derived? It's just
a function showing how much of something will be produced given a set
of assumptions about marginal cost and marginal revenue. However, land
is not a produced good. There is no marginal production cost. When
economists draw a supply curve, they are attempting to represent the
quantity of something that will be produced at various prices (based
upon the cost of producing it). You are trying (incorrectly) to apply
that analysis to how many people would be willing to sell an existing
good at a particular price. If I draw a supply curve for television
sets, I can say that at a price of $100, TV set manufacturers would
produce 10 televisions; at a price of $200 they would produce 15. You
can't apply the same analysis to land. Whether the price of land is
$1/acre or $1,000,000/acre, the quantity of land on earth will be the
same. People may be more or less willing to part with what they
already have, but the total amount of land (the coordinate on the X
axis of your supply curve) will be unchanged, hence the vertical supply
curve Samuelson referenced.

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