LVRG Scrapbook — Thursday, April 12, 2007:
Samuel Griffith's Elementary Property Law
Parliament of Queensland
A BILL
To declare the Natural Law relating to the Acquisition and Ownership of Private Property
(Sir Samuel Griffith, 1890)*
Contents
1. Land
2. Value of land
3. Rent
4. Labour
5. Wages
6. Property
7. Production
8. Capital
9. Interest
10. Productive labour
11. Net products
12. Cost of production
13. Positive law14. Equal right of all persons to life and freedom of opportunity
15. Natural forces common property
16. Land common property
17. Positive law
18. Functions of positive law with respect to natural law
19. Private rights to land
20. Property the result of labour
21. Measure of wages
22. Ownership of net products
23. Application of labour to property
24. Rights of possessors of land receiving rent
25. Rights of occupiers
26. Ownership of products
27. Enforcement of rights to share of products
28. Duty of State29. Short Title
WHEREAS it is essential to the good order of every State and the welfare of the People, that all persons should have and enjoy the fruits of their own labour, and to this end it is expedient to declare the natural laws governing the acquisition of private property: BE IT DECLARED AND ENACTED by the Queen's Most Excellent Majesty, by and with the advice and consent of the Legislative Council and Legislative Assembly of Queensland in Parliament assembled, and by the authority of the same, as follows:—
Definitions
1. Land
The term "land" means land in its natural condition resulting from the operation of natural forces unaided and undirected by man, and does not include any improvements made upon it.
2. Value of land
When the term "value" is used with reference to land, it signifies the extent of the difference between the advantage of having the use of the land in question and the advantage of having the use of the nearest other land the use of which can be obtained by mere occupation without making payment to any person for such use [1].
3. Rent
The return or payment demanded by persons having, by positive law, the right to the exclusive possession of land, for the permission to use that land, is called "rent".
Rent is therefore a measure of the value of land.
4. Labour
The term "labour" includes all modes of exercise of the human faculties, whether of mind or body. It therefore includes the function of supervision or organisation of other labour.
5. Wages
The immediate remuneration of labour is called "wages".
6. Property
The term "property" includes all forms of material things in the possession of man which have a value for the purpose of exchange or use. It also includes inventions and other immaterial results of the exercise of the faculties of the mind [2].
7. Production
The term "production" includes any act or series of acts by which labour is applied, either directly or indirectly, to property, and the result of which is new property, or property in an altered form, or in a different place.
It also includes the exercise of the faculties of the mind or body, the result of which is property, although the exercise of those faculties was not applied to property [3].
8. Capital
The term "capital" means and includes all forms of property not being land which are in use for the purposes of production. It therefore includes as well property which is consumed or destroyed as property which is not consumed or destroyed in the process of production.
9. Interest
The term "interest" is used to denote either the immediate return derived from the use of capital for the purpose of production, or the payment received by the owner of capital from another person by way of return for the use of that capital.
Interest is therefore a measure of the value of the use of capital [4].
10. Productive labour
The term "productive labour" means labour applied for the purpose of producing some property which is, or is intended to be, of greater value than the value of the property (if any) to which the labour is applied [5].
11. Net products
The terms "net products of labour" and "net products" mean the net increase in property resulting from productive labour, after allowing for the cost of production.
12. Cost of production
The cost of production may include all or any of the following elements:
(1) The replacement of the property which is consumed, or destroyed, or altered in form, or changed in place, in the course of the process of production;
(2) The wages of the labour engaged in the production;
(3) Interest on the capital used in the production;
(4) Rent of the land used for the purposes of the production [6];
(5) Incidental expenses not falling under any of the foregoing heads.
13. Positive law
The term "positive law" includes all written laws enacted by a competent legislative authority.
It also includes all unwritten rules declared by any competent judicial authority to be the law of the State.
First Principles
14. Equal right of all persons to life and freedom of opportunity
All persons are, by natural law, equally entitled to the right of life, and to the right of freedom for the exercise of their faculties; and no person has, by natural law, any right superior to the right of any other person in this respect.
15. Natural forces common property
The right to take advantage of natural forces belongs equally to all members of the community.
16. Land common property
Land is, by natural law, the common property of the community.
17. Positive law
Positive law is the creation of the State, and may be altered or abrogated by the State from time to time.
18. Functions of positive law with respect to natural law
The application of the natural law of equality and freedom may be modified by positive law, so far as the common advantage of the community may require, but not further or otherwise [7].
19. Private rights to land
The rights of individual persons with respect to land are created by, and their incidents depend upon, positive law.
20. Property the result of labour
All property, other than land, is the product or result of labour.
21. Measure of wages
The natural and proper measure of wages is such a sum as is a fair immediate recompense for the labour for which they are paid, having regard to its character and duration; but it can never be taken at a less sum than such as is sufficient to maintain the labourer and his family in a state of health and reasonable comfort [8].
22. Ownership of net products
The net products of labour belong to the persons who are concerned in the production.
If one person only is concerned in the production the whole net products belong to him.
If more persons than one are concerned in the production, the net products belong to them, and are divisible amongst them, in proportion to the value of their respective contributions to the production.
23. Application of labour to property
When labour is not applied directly or indirectly to property, the whole products belong to the labourer.
When labour is applied directly or indirectly to property, the person who is lawfully entitled to the use of that property is deemed to be concerned in the production as well as the labourer [9].
24. Rights of possessors of land receiving rent
When for the purposes of production the use of land is required, then the rent (if any) payable for that use is a part of the cost of production [10].
The person who receives the rent is not, by reason only of his permission to use the land, concerned in the production, but may otherwise be concerned in it.
He is therefore not entitled, by reason only of such permission, to any share of the net products [11].
25. Rights of occupiers
For the purpose of ascertaining the net products of productive labour applied to land, and the persons entitled to share in those products, the land to which the labour is applied is to be considered as if it were capital, and were the property of the person who for the time being is entitled to the possession of it.
The amount of that capital is to be taken to be equal to the value of the land burdened with a perpetual rent equal to the rent (if any) payable by him for the time being [12].
26. Ownership of products
The share of net products coming to each person who contributes to the production from which they arise is the property of that person, and may, subject to any positive law, be disposed of by him at his pleasure during his lifetime or by will [13].
27. Enforcement of rights to share of products
Any person entitled to a share of the net products of any productive labour may enforce that right by proceedings in a Court of competent jurisdiction.
28. Duty of State
It is the duty of the State to make provision by positive law for securing the proper distribution of the net products of labour in accordance with the principles hereby declared [14].
Short Title
29. Short Title
This Act may be cited as "The Elementary Property Law of Queensland".
Notes
[1] This is a concise, precise, general statement of Ricardo's law of rent.
[2] The definition of property includes, but is not restricted to, real estate. It also acknowledges the existence of "intellectual property".
[3] Thus "intellectual property" is further acknowledged to be a result of "production". If Griffith had lived 100 years later and seen what trivial and obvious ideas are now held to be patentable, he might have felt obliged to qualify that statement. The same sentence allows for "production" of property by the application of labour to raw materials which, in their raw state, are not yet property.
[4] To reconcile this definition with modern terminology, consider interest to be net of insurance and economic profit, where insurance is the return to risk (which is quantifiable) and economic profit is the return to uncertainty (which is unquantifiable and therefore uninsurable). These distinctions make sense when we remember that the "profit" of a business is net of outgoing "insurance" premiums and of "interest" paid on the start-up costs. However, what is commonly called the "interest" on a loan also includes allowances for risk and uncertainty borne by the lender, whereas interest in the strict economic sense includes no such allowances, but represents the safe return on capital.
[5] The category "productive labour" excludes labour expended in services. Nowadays both goods and services are classified as "products" and included in national accounts. But services are not property.
[6] This definition is from the viewpoint of the producer (individual or firm), for whom the rent of land used in production is a cost of production in every sense: it is realized in cash terms and in accrual terms, and is a sine qua non of production. From the viewpoint of society, however, the rent actually paid for the use of land is not a cost of production, because the land is a gift of God/nature, Who/which does not require payment, while the rental value (potential rent) of the land is a cost of production only in the sense of being an opportunity cost. The difference between the individual and social viewpoints does not arise in respect of labour and capital, each of which will cease to be available to individual producers and to society if the cost of maintaining and replacing it is not met.
[7] In other words, positive law may modify natural law so as to give an advantage to all, but not so as to give an advantage to some at the expense of others. This does not rule out the creation of a social safety net, of which everyone is at most one accident or illness away from being beneficiary. But it does rule out the creation of advantages which by nature are restricted to particular vested interests. This principle is so self-evident that anyone who wishes to be publicly respectable must at least pretend to subscribe to it. Hence politics, in the main, is the art of pretending that a private advantage at public expense is a public advantage.
[8] The first half of this statement acknowledges the market forces affecting the cost of labour. The second half does not necessarily seek to impose an overriding moral constraint on economic laws; rather, it acknowledges the economic reality that if labourers are not paid sufficient wages to support themselves, attract partners and support offspring, the supply of labour will dry up. One must admit, however, that Griffith's statement fails to allow for the subsequent rise of the welfare state. If the cost of maintaining and replacing labourers will be met regardless of whether they are employed, then it is not part of the cost of employing them and should not be imposed on employers as employers; if this cost is shifted onto employers who hire previously unemployed persons, it will create an artificial demand for unemployed persons, and employers will satisfy that demand! The implication is that if the welfare system is not to cause unemployment, earned income must not be means-tested, and that any means-testing must therefore be based instead on unearned means. Mainstream political, economic, and moral-philosophical opinion is blind to this simple reality.
[9] Note that the person "lawfully entitled to the use of that property" is not necessarily the owner, but may be a tenant or lessee.
[10] Again, this statement expresses the viewpoint of the producer (individual or firm), not the viewpoint of society.
[11] For example, the owner-operator of business premises is "concerned in the production" as the operator, and as the owner of the building(s) and equipment, but not as the owner of the underlying land, and is therefore entitled to be rewarded in the first two capacities but not in the third.
[12] The reference to the rent payable "by him" (not "to him") indicates that the person "who for the time being is entitled to the possession" is the tenant per se, not the owner per se. So the implication of the first paragraph is that whoever rents the land also rents the right to receive its product. The analogy with capital is made because capital by natural law can be private property, whereas land by natural law cannot (cf. s.16).
[13] In particular, the share of net products coming to a worker or owner of capital is the property of that person (s.23), while the share coming to an owner of land is not (ss.16,24).
[14] Those principles imply that the rental value of land should be the source of public revenue, leaving workers and suppliers of capital to enjoy their full rewards, unmolested by the taxing power of the State.
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* HTML version edited by Gavin R. Putland, April 12, 2007; reposted November 3, 2011. The text is found in Kenneth Jupp, Stealing our Land: The Law, Rent & Taxation (London: Vindex, 1997), pp.141–146, and Philip Day, Hijacked Inheritance: The Triumph of Dollar Darwinism? (Brisbane: Copyright Publishing, 2005), pp.174–179. In this HTML edition, section numbers have been shifted to headings, and quotation marks in headings have been replaced by bold or italic type. The Contents and Notes were added by the Editor.
