1. By the year 1900, all land had been enclosed everywhere: it was a complete state of private ownership. Today, it is sold and bought just like any product of human industry.
It is one thing to hold land, and quite another to own land. Holding land is necessary, since a man must hold a piece of land to live and/or work on, to the exclusion of others; just as a farmer needs the farm and his home, or a painter must have his/her home and studio. But that does not imply ownership. Even in Britain what really is sold and bought in land-dealings is the “freehold” of the land not the land itself.
In contrast to all other goods that can be produced, such as buildings, land cannot be created; it predates humanity and perseveres through the ages, while humans are transient beings, just like all their own creations.
2. Let us return to the simplified model of the agricultural community with equal amounts of land and labour (D1). However, let us assume now that there is no free land available for newcomers to settle at no cost.
In this community, some new immigrant arrives. Since there is no free land for them to start their own farm and if they do not wish to incur debt by buying or renting a field, they offer their labour.
What will their wages be?
Had land been freely available, they would ask for a wage somewhere around 30, i.e. close to the production of the marginal area. But, now that there is no free land, what is it that will determine their wage?
Their wage will now be determined by other conditions, such as labour laws and minimum wage, unemployment levels, the general state of the economy and so on and so forth. The final determining factor is what they are willing to accept themselves.
3. While there were lands still freely available (as in D2), the first settlers, especially those with the largest production, began acquiring additional lands at the outskirts of the community. The newcomers then had to settle in lands that were progressively farther from the centre and were less productive. At some point, it became unprofitable for a newcomer to settle that far away. Thus, the marginal and least efficient lands, which more or less define the level of wages for labour, were artificially pushed further away by means of land enclosures. Lands were kept out of use on purpose, reducing the efficiency and production of the marginal areas and thus bringing wages down. Moreover, the landowners could now sell or lease the unused lands, since those were in more advantageous locations than the farther, outlying free lands.
Using their new wealth and power, the landowners could now acquire even more lands, command greater wealth and power, and become masters of a province. They did not shy away from using criminal methods (extortion, theft, forgery, murder) to accomplish their end.
Many aspects of this procedure were captured in film productions, ones demonstrating the transformation of free lands into smaller or larger properties, with the landowners using all means available to them to increase their wealth and power in the Far West of the USA in the middle of the 19th century: films such as Shane with Allan Ladd, Silverado with Glenn Scott and Kevin Kline etc.
4. In diagram 3 we are shown the economy of a modern nation, where there is no free land: it is either in private hands or state-owned. No one can have free access to a piece of land – not in the cities, nor in the countryside. If people wish to use land, they must pay for it. Some pieces of land, the ones between columns B and C and between D and E are kept out of use for profiteering.
Column A is the zone of the most central locations, where the large companies of the finance sector move billions, lend to small and large states by buying their bonds, trade entire groups of companies etc. Then come the large groups of weapons systems, electronics, IT, pharmaceuticals and similar, and so on, until the marginal farming units in the furthest and least efficient locations in zone Z.
There is no free land anywhere for someone to settle.
An unskilled worker is out of options: they find themselves trapped between unemployment and low wages, the level of which depends on the culture of the country, determined by what is generally acceptable as the lowest wage.
In times of financial growth, the lowest wage can by quite high; but in times of recession and crises it will tumble down (as was clearly demonstrated in the 1930’s in the USA and Britain and more recently, after 2010 in Greece) to the levels of poverty and hardship.
5. Wherever there is no free land and people have no free access to the land, the wages drop to the lowest possible level that the unemployed would accept. In times of recession that level is extremely low, in times of growth, less so. Skilled labourers receive more (The variation is demonstrated by the two dotted lines in diagram 3: 20 for the wages of the skilled labour and 15 for the unskilled).
Presently, this is the situation for the reward of labour in all Western countries. The rest, above 20 in diagram 3, is an artificially enlarged income which we term the entrepreneur’s share and includes the ‘economic rent’.
But it is from this entrepreneur’s sharethat many other incomes are drawn: taxes, insurance contributions, interest from loans as well as the unearned income of landowners and speculators.
Whereas the nominal minimum wage in Greece might be, say €500, the take home pay is much less (say €410) after tax and pension contributions. Those are not paid by the labourer.
The lowest acceptable wage is the take home pay that the labourer will receive after deductions. These other payments and contributions are necessarily paid for by the entrepreneur out of his share of production.