Aristotle's metaphor for economic relations was the household. Although the household is engaged in the material activities of internal production, consumption and exchange which are economic, its fundamental connections are social. Social dynamics, including care, respect, authority, loyalty, charity and self-restraint are the motivations within the household. These are all virtues in Aristotelian terms and can be grouped under the more general social virtue of solidarity which is the intention to act in support and draw closer to the other in relationship in such a way as to become more perfectly human. An economics based on this family metaphor will be socially grounded, it is social economics. A key identifier of social economics is its capacity to realise the common good. This thesis is an examination of the contribution of property in land to the common good leading to the identification of the location of land within social economics.
An Aristotelian methodology has been adopted for this thesis, following an examination of its component parts and comparison with alternative methodologies. While the defense of the methodology is not exhaustive, it is sufficient to provide reasonable justification of Aristotelian realism and point out some of the shortcomings of competing approaches. Aristotelian realism is accepted as employing an acceptance of essences, the validity of abstraction, and the importance of observation. Contrasted to positivism, Aristotelian realism accepts knowledge that is not simply observation-based, especially the possibility of the knowledge of essences.
Property theory has been reviewed. This includes ancient positions on property as well as modern. Islamic property theory has been included in the review in order to broaden the cultural base. Ancient Western property theories have been been shown to be divided between simple acceptance of the fact of private ownership, especially evident in Roman law and early modern practice, and a more complex theory of ownership first articulated by Aristotle. Aristotle's theory of ownership was a dual principle of private ownership but common use. The Aristotelian position was developed by St. Thomas Aquinas in the Medieval period. St. Thomas recognised that property in external property was naturally for common use but privately owned by convention. John Locke attempted a labour based theory of absolute private property and Adam Smith returned to the positive fact of possession. The Islamic position straddled the Lockean and Thomistic. Modern property theory is a development of the Smithian identification property as a fact of society.
Apart from the institution of individual private property in land, several other economic institutions mark modern Western economics. The most important of these is the free market. The theoretical foundations of the free market have been examined and have been found to be based on moral foundations. The components of market theory have been reviewed and significant shortcomings have been revealed. The theory of supply has been found to contradict practice and the commonly portrayed market functions that are asserted to depict market behaviour in efficient circumstances have been shown be in error. Capitalisation has also been reviewed and its dependence on the risk-free real rate of return on money loans has been explored. The moral problem of usury has been introduced and linked to capitalisation, but not taken beyond recognition and defense of the fact that it is a social artifact rather than a product of economic forces.
The critical factor in the operation of the market was shown to be its inclusion of demand in the development of prices. In the absence of theoretical support, the acceptability of the market was tested empirically by surveying attitudes to demand based pricing. Three hundred and forty Sydney home-owners were asked ten questions regarding situations where prices and profits were linked to demand or price. The data was analysed and found to lend support to the hypothesis that demand-based pricing did not have community support.
A general theory of property was constructed from human nature and the nature of land. It was then used to develop an ethical structure for the pricing of wages, land and products. It was argued that property rights in labour were fundamentally different to property rights in land, the former being natural and the latter being conventional. It was also evident that the market was an inappropriate instrument for the determination of wages, but appropriate for the determination of commodity prices. Land was recognised to be the gap between wage price and commodity price.
Ricardo's rent theory was reviewed as a mechanism for pricing land income. Various aspects and implications were considered and it was recognised that in a closed land market the returns to land competed with the return to labour in a manner that was better explained in political terms than economic. Despite its importance in social economy, the operation of Ricardian rent theory is obscured other mediating factors. It has also been used as the central theory in a protracted political debate over the taxation of land. Both of these issues have contributed to the the marginalisation of interest in rent theory and a degree of suspicion as to its validity.
A behavioural experiment was run to examine the validity of Ricardian rent theory within the confines of its own assumptions, which are basically those of an efficient market and the recognition that land has varying productivity. The results of the experiment lent strong support to the theory but highlighted the conventional nature of the return to labour. One of the shortcomings of Ricardian rent theory is its assertions regarding subsistence wages, and there was evidence in the experiment that did not support this aspect of the theory.
The significance and construction of subsistence wages were specifically reviewed and also other sources of economic rents. An analysis of non-land economic rents revealed that they were either land-like, transient or politically maintained. A theory of supply was developed from a rent base that was argued to be causally accurate and returned a monotonic upward curve consistent with practical observation.
The implications of the political economy of the findings were reviewed. Some major traditions in economics interpreted in terms of the ethical issues revealed. The thesis concluded that many cultural resolutions of the property problem are possible, however they must conform to ethical fundamentals that may be paraphrased in the notion of solidarity. Suggestions for possible corrections or improvements to specific existing practices and policies were developed.