Expulsions, Complexity and Brutality in the Global Political Economy
Economy | Information | History | Online | Facts | World | Global | Money
Professor Saskia Sassen, Robert S. Lynd Professor of Sociology, Department of Sociology and Co-Chair, Committee on Global Thought, Colombia University, New York City delivered this lecture on 19th February 2014, as part of Durham University's Caslte Lecture Series.
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The thing that counts for nearly everything is not banking but what drives banking, namely "land monopoly" and its child "land speculation." Land markets are the primary driver of every economy. Every person needs land and the resources that come from land (i.e., from nature). Our system of law is, however, based on entrenched landed privilege, privilege that grew with the first phase of the privatization of land in the early Renaissance. Feudal mutual obligations were replaced by the markets and the introduction of money in lieu of commodity rents. The commons disappeared into private hands. All of this established a rentier elite, not challenged until the time of Turgot and the French school of political economists developed their physiocratic doctrines. Turgot called for the landed elites to turn over the rents to society. Thomas Paine, in 'Agrarian Justice' added his voice to the call for the collection of ground rents from those who enjoyed the privilege of holding land.
For a short period in history, the global economy had relatively honest money and banking. This occurred when the Bank of Amsterdam was established as a bank of full deposit, issuing certificates of deposit circulating as currency. After the Bank of Amsterdam succumbed to the lure of issuing bank notes in excess of deposits held, banking never returned to this full deposit structure. Today, what we have in every country is not a fractional reserve system; rather, it is a system detached from any real reserves; bank notes are declared legal tender but a essentially a promise to pay nothing in particular.
Late in the 19th century, the American political economist Henry George tackled the land question left unsettled by the generations of Turgot and Paine. He also tried to tackle the money question. His solutions were logical and practical but strenuously resisted by those who held power and wealth. The result was to doom societies to repeated boom-to-bust cycles, interrupted only when world war created full employment periods (accompanied, of course, by previously unimagined loss of life and destruction of material goods as well as damage to the natural environment.
What deregulation of the financial system did was to exacerbate the upward climb of land prices, driven by credit-fueled speculation. So, it should be no surprise that when land prices reached a level that neither consumers nor businesses could afford a crash followed. Governments have thus far failed to address the volatility of land markets by imposing a high annual tax on the rent of land. This is the only economic policy that will work to bring down and stabilize land prices.
If only the power of ideas, of the ideas put forward by Henry George, would find widespread support from the world's peoples. Only then would we really address the issues raised by Professor Sassen.
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