But a consistent theory of liberty could not rest wholly satisfied with the actual system under which property is held. The first point of attack, already pressed by the disciples of Cobden, was the barrier to free exchange in the matter of land. It was not and still is not easy for the landless to acquire land, and in the name of free contract Cobden and his disciples pressed for cheap and unimpeded transfer. But a more searching criticism was possible. Land is limited in amount, certain kinds of land very narrowly limited. Where there is limitation of supply monopoly is always possible, and against monopoly the principles of free competition declared war. To Cobden himself, free trade in land was the pendant to free trade in goods. But the attack on the land monopoly could be carried much further, and might lead the individualist who was in earnest about his principles to march a certain distance on parallel lines with the Socialist enemy. This has, in fact, occurred in the school of Henry George. This school holds by competition, but by competition only on the basis of a genuine freedom and equality for all individuals. To secure this basis, it would purge the social system of all elements of monopoly, of which the private ownership of land is in its view the most important. This object, it maintains, can be secured only through the absorption by the State of all elements of monopoly value. Now, monopoly value accrues whenever anything of worth to men of which the supply is limited falls into private hands. In this case competition fails. There is no check upon the owner except the limitations of demand. He can exact a price which bears no necessary relation to the cost of any effort of his own. In addition to normal wages and profits, he can extract from the necessities of others a surplus, to which the name of economic rent is given. He can also hold up his property and refuse to allow others to make use of it until the time when its full value has accrued, thereby increasing the rent which he will ultimately receive at the cost of much loss in the interim to society.
Monopolies in our country fall into three classes. There is, first, the monopoly of land. Urban rents, for example, represent not merely the cost of building, nor the cost of building plus the site, as it would be if sites of the kind required were unlimited in amount. They represent the cost of a site where the supply falls short of the demand, that is to say, where there is an element of monopoly. And site value—the element in the actual cost of a house or factory that depends on its position—varies directly with the degree of this monopoly. This value the land nationalizer contends is not created by the owner. It is created by society. In part it is due to the general growth of the country to which the increase of population and the rise of town life is to be attributed. In part it depends on the growth of the particular locality, and in part on the direct expenditure of the ratepayers’ money in sanitation and other improvements which make the place one where people can live and industry can thrive. Directly and indirectly, the community creates the site value. The landlord receives it, and, receiving it, can charge anyone who wants to live or carry on industry upon the site with rent to the full amount. The land-nationalizer, looking at rights of property purely from the point of view of the individual, denies the justice of this arrangement, and he sees no solution except this—that the monopoly value should pass back to the community which creates it. Accordingly, he favours the taxation of site value to its full amount. Another element of monopoly arises from industries in which competition is inapplicable—the supply of gas and water, for example, a tramway service, and in some conditions a railway service. Here competition may be wasteful if not altogether impossible; and here again, on the lines of a strictly consistent individualism, if the industry is allowed to fall into private hands the owners will be able to secure something more than the normal profits of competitive industry. They will profit by monopoly at the expense of the general consumer, and the remedy is public control or public ownership. The latter is the more complete and efficacious remedy, and it is also the remedy of municipal socialism. Lastly, there may be forms of monopoly created by the State, such as the sale of liquor as restricted by the licensing system. In accordance with competitive ideas the value so created ought not to pass into private hands, and if on social grounds the monopoly is maintained, the taxation of licensed premises ought to be so arranged that the monopoly value returns to the community.
Up to this point a thoroughly consistent individualism can work in harmony with socialism, and it is this partial alliance which has, in fact, laid down the lines of later Liberal finance. The great Budget of 1909 had behind it the united
