Saurabh

Would you want to make this statement in the context of our example, and show why the problem does not exist? We can also postpone this debate for sometime - there is no unnecessary hurry.

Dear Jake, Your basic assumption here is that life is not a zero-sum game. That, in a capitalistic society, we all have more freedom, and so we can expand the size of the pie. I also belive that. My question is: What is the best way to convince other people of this? Lot of people are afraid of capitalism as they believe that life is zero-sum game - and if someone has unfair start over them, he will be able to get a part of their share of the pie too. Also, you don't have to know me to argue with me. Just focus on my arguments, and not on me.

Randroid, The basic issue involved here is not whether there will be enough divisions of labor. The basic issue is whether the markets - for those divisions of labor - will be competitive or not. The asnwer to which is yes - as far as unskilled labor is concerned. If any of these market (say cooks) start getting higher wages than the other unskilled markets, then workers will move there and wages will come down again. I agree that this will happen less in labor scarce countries like Germany and US, but in countries like India there are just too many laborers in any unskilled market. Let us argue with a concrete example here. Can you give one - in the context of our example? My approach is fully consistent with these properties of capitalism. Only, I believe that when 1-4 put the fence on the land, they do not earn it. They earned only the right to use it after paying the market price for that land (which was zero then, but is a positive amount now due to scarcity), and also the product of their labor on that land. The problem was that 1-4 were allowed to own the land then, as it was not scarce. But, now it is. And it is very difficult to undo the wrong done in the past, as that land has changed lot of hands by now (often with properly earned money). But this should not deter us from problem-solving (after agreeing that this is indeed a problem)

Randroid, If the profession some of these guys choose is unskilled (e.g. housemaids), then the problem of subsistence wages will again arise. If they want to upgrade their skills - then the problem is that they do not have the money for that. They will not be able to even take a break from their jobs and develop skills.

Freestyle and Randroid, I see my mistake here. 9 indeed has a monopoly in labor market - so he can push his wages up to the value he creates (marginal product of his labor). This is a logical conclusion, given the facts of the example. However, these facts do not conform with what we see around us - usually there are lot more laborers than there are landlords. This again resuscitates the issue I raised. Let us modify the example to make it closer to reality: 5 acres of land (1 acre has houses built on it, 4 acres are land for cultivation) 54 people (1-54) 4 people (1-4) own land at 1 acre each 50 people (5-54) do not have any land (as they were slow to claim it) Now, 5-54 are not in a monopolistic labor market. They are in a competetive market. Now my concern seems valid: 1-4 will bring the wages down from marginal product of labor to subsistence wages. P.S. I think the example approach is very useful. We can identify contradictions/errors very easily using this approach.

Randroid, I think 'enslave' was indeed a strong word - I take it back for now. But I stand by the rest of my post. I believe I am still not able to get my point on '9's lack of bargaining power' across to you. Just think about it a little more - only if you want to. Think of this as a barter economy. 1-8 will be able to force 9 to offer them anything he creates (however valuable it may be) for minimum possible food in return. 9 needs food to live, so he will be forced to comply. Am I making a mistake here? But if you think this debate is a waste of you time, then I would not encourage you to continue (though I was benefitting from your participation). Also, I have not starting reading Das Capital yet. Now, just as you were not objective in assuming that I am reading Das Capital, in the same way it may be likely that you are not being objective somewhere else. Just think about it.

Your argument makes lot of sense to me. I am wondering what makes most people around us not see this logic. Do you have any hypothesis here? Coz if we can understand this, then it will become easier to establish Capitalism... P.S. Not sure if I am digressing from the original debate here..

Thanks for the example Randroid. So your point is that since 9th person (9) was slow in claiming land, he has no right to ask for it now (at zero cost). I fully agree with your point, if 9 does not have any intention/capability to use the land. But, if 9 wants to use the land now, then he will need to buy it from any one of 1-8. And 1-8 can charge him any amount. They can actually enslave 9 - and force him to work for subsistence wages. 9 does not have any bargaining power now. You may say that 9 can develop other skills (e.g. become a musician). But, even if he becomes an extremely talented musician, he cannot demand higher wages. The terms of trade are in the hands of 1-8. 9 can't even go on strike, as there is no land where he can grow food and self-sustain. 1-8 know this - and hence they have the bargaining power.

Jake, The process for fixing the mal-distribution will have two design elements: - Guiding principles for the process - Operational details of the process I wanted us to ignore only the operational details for now. And, I am in full agreement with you on the guiding principle that the process should be objectively just. Now, I still want to understand better how are 1 and 2 the same. If someone has an unfair start over me (due to previous mal-distribution), then he will progress faster than me in a l-f capitalist society - e.g if he is rich, then he can buy better training than me from the free market, and get ahead. What are your thoughts?

I propose that we close this debate on this forum then - as we are stuck. In case anyone is still keen on debating - I will be more than glad. For those of you who are still keen: I was trying to get agreement on our basic point of disagreement- (a) There is some money that needs to be paid for the use of land just because of the fact that demand (at zero price) for land exceeds its supply My next steps would have been to argue that this money is not earned by any particular person - as it is arising out of demand (at zero price) exceeding supply. Then, I would have argued that this money needs to go equally to the group of productive people who have caused this scarcity. Nevertheless, I have enjoyed debating so far, and the debate has helped me modify my position as well. Thanks for that!

You are right here: without human effort land does not generate any value. But, once humans discover the productive properties of land, and everyone starts using it, there are more people wanting to use the land, than the supply of land. This leads to land fetching a price for usage (to match demand and supply). It is this usage price (scarcity rent) that should not go to any particular person - coz he did not create the productive properties of land. He did not even discover it. The discoverer is long since dead. His heirs are also untraceable. The discovery has become extremely diffused in the society. A particular person can, however, claim any differential or schumpeterain rent caused due to his own action (e.g. he made land more fertile by crop rotation, irrigiation, etc).

Exactly. You can only make demand equal supply by raising price. I made a mistake as well - when I wrote demand, I meant demand at zero price Rephrasing my points again: a) There is some money that needs to be paid for the use of land just because of the fact that demand (at zero price) for land exceeds its supply. b ) I am calling this money as scarcity rent; and my subsequent claims will refer to this money. I did not understand how? Can you please clarify?

I am rephrasing as I believe it helps eliminate communication gap, and helps summarize. Now, if you do not agree with my point a, please tell me how would you make the market clear if demand exceeds supply? There would have to be greater-than-zero price for the market to clear, right?

Zip, This is where you are making ar error. Gold has an element of human effort. Nature does not supply it freely. So, there is no moral basis for asking more its supply at zero price. Land however is provided with its productive properties, by nature. Do you see the distinction? I expected this to be clear to people by now.

Thanks. How would you rank the two options below? 1) Apply laissez-faire capitalism to the current state of the world 2) Apply laissez-faire capitalism, but only after ensuring that wealth mal-distribution issue has been ironed out Please ignore for now the concerns around how one would fix the mal-distribution. Thx!

So, main disagreement is on the first point itself. To know the root source of your disagreement, let me me elaborate/rephrase on this point. a) There is some money that needs to be paid for the use of land just because of the fact that demand for land exceeds its supply. b ) I am calling this money as scarcity rent; and my subsequent claims will refer to this money. Now please tell me where you guys disagree? Or you don't see the two versions as equivalent?

To add to David's point: It would be relatively easy to establish the first two facts (that A was the proper owner, and that B stole the land). But, it would be interesting to think how would the truth of the third claim be ascertained. My suggestion would be to collect evidence if A' inherited other property that A owned. If A gave his property equally to A' and A'', then I would do the same for the land that B' has right now.

OK. Thanks. I will wait for a few more responses before responding.

I belive in capitalism too. But, I still have an unresolved question in my mind: Is it the ideal system in a world that has an improper distribution of wealth? Force and Fraud (from govt or individuals or companies) has already caused mal-distribution of wealth in lot of countries. In this context, is Capitalism a good idea? (Also, I know socialism is not a good idea at all).

Guys, I have modified my position based on your arguments posted on this forum. Please take a look at my argument below, and let me know what you think is the basic point of dis-agreement. I will then focus the debate on arguing for just that basic point, before we move to the next points. a) Land generates scarcity rents b ) The scarcity is created by productive people who want to use land's productive powers to create something (food, etc) c) So, these rents should go to these productive people d) However, these rents need to be equally distributed among productive people - as no one in particular created more scarcity than the other e) People who do not have any intention of using the land, should not get any share in the scarcity rent, as they do not (and will not) contribute to the scarcity f) The questions around implementation of this approach will be dealt with later on, as it is important to first agree on the morality of the proposal. Thanks!

Randroid, My statement: Free market does not exist in defence and judiciary, but these are still thought a proper functions of a govt. Your Translation: "There is already plenty of legalized injustice around and I'm fine with it." How is defence and Judiciary injustice? I hope our disagreement is due to some communication gap. What I mean is that there cannot be a free market for everything -e.g. for Public goods such as Judiciary, Defence, etc

No - your understanding is not right. I don't understand how you made that extrapolation.

OK. Now I see what you are saying. Though, your definition of scarcity rent pertains to exhaustible resources (such as oil). But that's is fine. Now, let us assume for a moment that scarcity rents indeed cannot be determined though a free market. My question to you is: so what? Is that enough for us to discard the concept? Free market does not exist in defence and judiciary, but these are still thought a proper functions of a govt. So, even if we agree to your claim, it is not very clear how it implies that we should not collect these rents.

Zip, I am sorry but I still do not get your point. Can you please again explain to me your statement below? Sorry I could not understand it from your previous post. I am trying my best to be honest about the debate. However, if you do not believe me, then you have the right to make your own judgement about me and to stop dealing with me if you want.

Well, land can still be scarce due to two reasons: - if it is concentrated in few private hands - if govt owns it and restritcs public usage