air, water and shorelines.
The Institutes also identified a category called res nullius, or “nobody’s things,” that included uninhabited land and wild animals. Such things weren’t immune to propertization; they just hadn’t been propertized yet. Uninhabited land could be privatized by occupying it, wild animals by capturing them. A bird in hand was property; a bird in the bush was not.
In England during the Middle Ages, most of the valuable land was privately owned by barons, the Church and the Crown, but sizable common areas were also set aside for villagers. These commons were essential for the villagers’ sustenance: they provided food, water, firewood, building materials, and medicines.
There were many battles over what should be private and common. Until 1215, English kings granted exclusive fishing rights to their lieges; then, the Magna Carta established fisheries and forests as res communes. However, starting in the seventeenth century and continuing into the nineteenth, in a process known as enclosure, local gentry fenced off village commons and converted them to private holdings. Impoverished peasants then drifted to cities and became industrial workers. Landlords invested their agricultural profits in manufacturing, and modern times, economically speaking, began.5
Universal property lies somewhere between individual and state property. In Roman terms, it converts a large swathe of res nullius into a species of res communes: instead of being owned by nobody, many gifts of nature and society would be owned beneficially by all.
While we are thinking historically, it is worth remembering that the limited liability corporation, which is so dominant today, is a relatively recent phenomenon. Prior to the nineteenth century, there were barely a handful of corporations in the UK and US; the dominant form of business organization was the partnership (in which all partners are liable for the partnership’s debts). Limited liability corporations arose only when it became necessary to amass capital from strangers.
Similarly, until the eighteenth century, there was no such thing as intellectual property. Ideas and inventions floated freely in the air. The world’s first copyright law, the Statute of Anne, was passed in England in 1710. Today, the world is flooded with copyrights, patents, trademarks, and trade secrets, all essential to the profits of giant corporations.
Like intellectual property, universal property can turn intangible assets into rights respected by markets and capable of generating income. And, like corporations that manage assets on behalf of shareholders, trusts can manage assets on behalf of future generations and all of us equally. The reason there is more intellectual than universal property today is that capital owners have fought for their most beneficial forms of property rights, while we, the people, haven’t fought for ours. But that could change if we set our minds to it.
The idea of universal property isn’t new. It was the invention of Thomas Paine, the English-born essayist who inspired America’s revolution and much else. Indeed, virtually all the ideas in this book can be traced back to a single essay he wrote in the winter of 1795/96.
Paine led an extraordinary life. Unlike other American Founders, he wasn’t born to privilege. The son of a Quaker corset-maker, he emigrated to Philadelphia in 1774 and found himself in the thick of pre-revolutionary ferment. Inspired, he wrote a pamphlet called Common Sense, which quickly sold half a million copies (in a nation of three million) and transformed the prevailing discontent with King George III into ardor for independence and a united democratic republic.
And that was just the beginning. Another series of essays, The American Crisis, kept the patriotic flame alive as the war for independence slogged. After America’s victory, Paine returned to England to raise money for an iron bridge he wanted to build over the Schuylkill River in Philadelphia. While there, he wrote Rights of Man in response to Edmund Burke’s repudiation of the French Revolution. Charged with sedition, he escaped to France, where he was greeted as a hero and elected to the National Assembly. Then came the Jacobin Terror, during which he was sentenced to death for having opposed the execution of Louis XVI. He spent ten months in Luxembourg Prison before being saved by the American ambassador, James Monroe, who persuaded his captors that Paine was a citizen of the United States, France’s ally, not Britain, its foe.
It was during his years in France that Paine wrote his last great essay, Agrarian Justice. In Rights of Man, Paine had criticized the English Poor Laws and argued for what today would be called a welfare state, including universal education, pensions for the elderly and employment for the urban poor, all paid for by taxes. In Agrarian Justice he went farther, arguing that poverty should be systemically eliminated with universal income from jointly inherited property.6
There are two kinds of property, he wrote: “firstly, property that comes to us from the Creator of the universe – such as the Earth, air and water; and secondly, artificial or acquired property – the invention of men.” Because humans have different talents and luck, the latter kind of property must necessarily be distributed unequally, but the first kind belongs to everyone equally. It is the “legitimate birthright” of every man and woman.
To Paine, this was more than an abstract idea; it was something that could be implemented within a laissez faire economy. But how? How could the Earth, air and water possibly be distributed equally to everyone? Paine’s practical answer was that, though the assets themselves can’t be distributed equally, income derived from them can be.
How again? Here Paine came up with an ingenious solution. He proposed a “national fund” to pay every man and woman about $18,000 (in today’s dollars) at age twenty-one, and $12,000 a year after age fifty-five. In effect, nature’s gifts would be transformed into grants and annuities that would give every young person a start in life and every older person a dignified retirement. Revenue would come from “ground rent” paid by private landowners upon their deaths. Paine used contemporary French and English data to show that a ten percent inheritance tax – his mechanism for collecting ground rent – could fully pay for the universal grants and annuities.
An important nuance here is that the rent would be collected not only on a deceased person’s land, but on his entire estate. It would thereby recoup many of society’s gifts as well as nature’s. And in Paine’s view, there was nothing wrong with this. “Separate an individual from society, and give him an island or a continent to possess, and he cannot … be rich. All accumulation therefore of personal property, beyond what a man’s own hands produce, is derived to him by living in society; and he owes, on every principle of justice, of gratitude, and of civilization, a part of that accumulation back again to society from whence the whole came.”
What Paine invented here, in my retrospective opinion, was a prescient stroke of genius. Long before Wall Street sliced collateralized debt obligations into risk-based tranches, Paine designed a simple way to monetize co-inherited wealth for the equal benefit of everyone. It is a model as relevant – and revolutionary – today as it was then.
Notes
1 1. Herbert Simon gave two estimates of the share of present US wealth that is attributable to co-inherited social capital: 80 and 90 percent. In “UBI and the Flat Tax,” Boston Review, October 1, 2000, http://bostonreview.net/forum/basic-income-all/herbert-simon-ubi-and-flat-tax, he estimated it was 90 percent. In his last public lecture, he dropped it to 80 percent, the figure I have quoted. https://inst.eecs.berkeley.edu/~cs195/fa14/assets/pdfs/simon_last_lecture.pdf.
2 2. William Easterly and Ross Levine, “Tropics, Germs, and Crops: How Endowments Influence Economic Development,” Journal of Monetary Economics, 50 (1), (January 2003), http://www.nyudri.org/research-index/2003/tropics.
