Silvio Gesell: The Natural Economic Order
Part 1: Distribution


  1. The wage of the average worker is equal to the proceeds of labour of the average cultivator of freeland and is entirely determined by these proceeds. Every modification in the proceeds of labour of the cultivator of freeland is transmitted to wages, no matter whether such modifications are brought about by technical improvements, by scientific discoveries, or by legislation.
  2. The so-called "iron law" of wages is therefore an illusion. For the individual, the wage oscillates about the amount mentioned under 1. It may rise above this amount in the case of specially efficient work, but it may also fall short of it, just as it may even fall short of the minimum standard of existence.
  3. The whole wage-scale for skilled work up to the highest levels is based on the labour-proceeds of the cultivator of freeland.
  4. Rent on land is what remains of the produce of the land after deducting wages (and capital interest). As the amount of this deduction (wage) is determined by the proceeds of labour on land, rent is also determined by the proceeds of labour of the freeland-farmer.
  5. Interest is the close ally of rent.
  6. It cannot be asserted without qualification that technical progress always benefits rent. The contrary is often true. Progress and poverty are not necessarily coupled. Progress and growing general prosperity as often go hand in hand.
  7. Nor can it be definitely stated whether the burden of a tax on land can, or cannot be shifted. The question can be definitely answered only when the destination of the revenue from the land-tax is indicated. The land-tax may hit rent twice (first, through the tax itself, secondly, through the increase of wages) or it may benefit rent by more than its amount.
  8. If the yield of the tax on rent is employed for the benefit of the cultivators of freeland, for instance as a premium on imported grain or as a subsidy for the cultivation of waste land, the State, if it wishes, can confiscate rent completely. The burden of a tax on rent, when the yield of the tax is so employed, cannot be shifted.

Figure 1. The price of Agricultural land.

The price of land increases: With increase of quality and agricultural prices. With decrease of wage-rates and rate of interest.


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