How our economy really works. Brian Hodgkinson

      

      Also by Brian Hodgkinson

       A New Model of the Economy

       The Advancement of Civilisation in the Western World

      Volume 1: Egypt, Greece & Rome

      Volume 2: The Medieval World

      Volume 3: The Modern World

      © Brian Hodgkinson 2019

      All rights reserved. No part of this book may be reproduced in any form without the written permission of the publisher, Shepheard-Walwyn (Publishers) Ltd

      First published in 2019 by

      Shepheard-Walwyn (Publishers) Ltd

      107 Parkway House, Sheen Lane,

      London SW14 8LS

      in association with

      The School of Economic Science

      11 Mandeville Place

      London W1U 3AJ

       www.shepheard-walwyn.co.uk

       www.ethicaleconomics.org.uk

      British Library Cataloguing in Publication Data

      A catalogue record of this book is available from the British Library

      ISBN: 978-0-85683-529-2

      Typeset by Alacrity, Chesterfield, Sandford, Somerset

      Printed and bound in the United Kingdom

      by 4edge Limited

      Contents

       Preface

       1Introduction

       2Rent

       3Wages

       4Capital

       5Structure of Industry

       6Property

       7Taxation

       8Public Expenditure

       9Money, Banking and Interest

       10Transport

       11Housing

       12Public Utilities

       13Retailing

       14Agriculture

       15Foreign Trade and Investment

       16Historical Outline

       17Economic Justice

      Acknowledgements

      OVER MANY YEARS I have learnt a great deal from teachers and students of Economics, but a considerable part of this book is the outcome of informal conversations with my wife Catherine and son David over the dinner table. I am particularly grateful, however, to Dr Peter Bowman for some valuable insights. My daughter-in-law Catherine helped with several aspects of publishing. Once more I am indebted to the publisher, Anthony Werner, for his efficient and friendly services. My thanks are also extended to the School of Economic Science for enabling the book to be published.

Preface

      IN ONE SENSE this book has nothing to do with Brexit. It could have been written twenty years ago, or even much earlier. Above all it is a response to the fundamental questions that have confronted the UK economy for decades, and with which successive governments of the right and the left have failed to deal adequately. Some of these questions are obvious, such as, ‘Why does poverty still beset a large number of people, whilst others are grossly well-off?’; ‘Why are house prices continuously rising much faster than inflation, so that more and more people are left without a house of their own, or are borne down by the weight of a mortgage?’; ‘Why does UK productivity remain persistently low, despite constantly improving technology?’. Other questions are less obvious, or are ignored through a belief in their arising from the natural order of things, such as ‘Why do the majority of workers find themselves as employees in jobs that give them little real sense of fulfilment?’; ‘Why is there awful traffic congestion, despite heavy expenditure on transport infrastructure?’; ‘Why does the tax system fail to bring about greater equality, despite progressive rates of tax on incomes?’ All these questions, obvious or not, are perennial ones, not particularly related to membership of the European Union, although some extreme advocates of Brexit might claim that they are.

      In another sense this book has a lot to do with Brexit, for the simple reason that all would agree that Brexit leaves the UK economy in a new, unprecedented position. This inevitably arouses both hopes and fears of substantial change. Such hopes and fears may alike be irrational, but even so they raise the possibility of genuine reform. Yet it is my contention that Brexit alone does not change anything fundamental about the economy.

      Why this is so emerges in the argument which follows. In short, it is that what requires fundamental reform is not any features of being or not being within the EU, but more deeply embedded ones, which have generally been established for a very long time. They are principally threefold: the taxation system, the land tenure system, and the banking system. All three are profoundly interconnected. All three require root and branch reform. The presence of concerns engendered by Brexit may provide an opportunity lacking in more equable times.

      Perhaps one final concession may be made to the Brexiteers. Fundamental reform of all three systems might be easier to carry through outside the EU. Full national sovereignty gives, at least, an opportunity to make changes to the very structure of the economy. Ideally these reforms would spread beyond the UK, or perhaps there would have been a chance of the EU itself adopting them under the influence of the UK as a member. But that would require an even greater revision of endemic ideas than reform in the UK alone would necessitate.

1

      Introduction

      ECONOMISTS HAVE long asserted that three factors of production lie at the root of their subject: land, labour and capital. Yet in the development of the subject into theories and practical applications there has been a thorough-going analysis of labour and capital and a grievous omission of the factor of land. This is reflected in the minimal place it holds in modern text books, in popular discussion and in political debate.