Excerpted from a draft paper in which Pat Conaty situates land and money reform in the commons. November 2014.
Practical land reform: co-operative and municipal support past and present
“As Polanyi highlights in the Great Transformation, land enclosure evolved over centuries and in England was accelerated by thousands of Parliamentary acts of land enclosure in the eighteenth and nineteenth century. He highlights that resistance to a self-regulating market economy required the liquidation of the beneficial constraints exercised by usury laws, the rights of commoners, the guilds and other kinship and civil society institutions. In England the struggle to preserve these constraints by the working class was fierce between the 1770s and 1850. The resistance to land enclosure in Newcastle Upon Tyne led to the practical proposal of Thomas Spence for Parish Land Trusts. Proposed in 1775 these were to be set up to hold rural and urban land in trust on behalf of local people and to capture economic rent for the benefit of the citizens. The Spence Plan influenced wider thinking. Robert Owen’s plan for Villages of Unity and Co-operation from 1817 sparked the development of the co-operative movement. David Ricardo invested in Owen’s New Lanark scheme and argued for taxation of unearned economic rents in his Principles of Political Economy and Taxation in 1817.
Many Owenite socialist communities were founded but none survived. Owen’s ideas inspired Feargus O’Connor to set up the Chartist Co-operative Land Company in 1846 that secured significant capital from trades union members to developed a number of co-operative villages. A few villages were built before the company was forced to close by government in 1851.
Land reform interest grew and broadened to public land solutions. John Stuart Mill strongly supported the co-operative movement’s efforts to bring land into commonwealth and argued for the municipalisation and nationalisation of land progressively. Mill proposed an affordability remedy: convert land into commonwealth with a long lease to (a) control rising costs and (b) capture socially both the ‘unearned increment’ and economic rent for the welfare of all.
The popularity of Henry George’s, Progress and Poverty, and his argument for a land taxation builds on the solid intellectual arguments of Ricardo and Mill for ending unearned rental income windfalls and utilising land taxation as a strategic land transfer mechanism. Municipal land reformers like Joseph Chamberlain implemented slum clearances in Birmingham and other cities followed this lead from 1873 with efforts to pursue Mill’s policy arguments. Publicly owned infrastructure including municipally owned gas, water and sewerage arose from these reforms where the development of land as a public asset led the way.
Other efforts before World War 1 showed how a comprehensive land reform system could work for an entire city. Linking up the vision of Spence and Owen and the municipal land reform progress to tackle slum conditions and develop public utilities, Ebenezer Howard, the founder of Letchworth Garden City in 1903, showed how to put Mill’s insights into practice through a novel ‘co-operative land society’.
This Garden City mission was strategically ambitious as the agreed 1919 definition highlights:
“A Garden City is a town designed for healthy living and industry of a size that makes possible a full measure of social life but not larger, surrounded by a rural belt; the whole of the land being in public ownership, or held in trust for the community.”
By holding all the land (5,500 acres) in co-operative ownership, Letchworth, the first Garden City, was able to capture lease income from the land, from commercial buildings and to reinvest that money continuously in community improvements. By 1945 Letchworth was generating and capturing economic value through mutually owned infrastructure, including: water, sewerage, gas, electricity, roads, transport services, places of employment, farmland, schools, hospitals and recreational amenities. These assets and economic rent had become co-operative commonwealth harnessed for the benefit of 33,000 citizens. No other urban land reform initiative has matched the self-financing economic success of Letchworth. Though it has lost land and the UK nationalisation of energy after 1945 and through leasehold reform legislation since 1967, Letchworth Garden City Heritage Foundation still holds £127 million in assets generating reinvestment income of over £7 million annually.
Typically, land values account for 25-75% of house prices. So if you can remove land from the market, you can both drastically reduce housing prices and keep homes permanently affordable. That is what community land trusts (CLTs) can do. The diagram below shows how Community Land Trusts can secure affordable housing by removing land from the market into democratic ownership and control through the trust.
In 1970 Bob Swann and Slater King (the cousin of Dr. Martin Luther King, Jr.) set up the one of the first US CLTs, New Communities Inc, on 5000 acres of land at Leesburg, Georgia, near Albany.
The CLT in Burlington, Vermont led by former Mayor Bernie Sanders has been a pioneer and the Champlain Housing Trust Vermont in the city highlights well the benefits. It was founded as Burlington Community Land Trust in 1984 after cutbacks in federal programs to fund affordable housing. Instead of the conventional strategy of housing subsidy, which would try (and fail) to keep up with rising land values, the CLT would take land out of the market. Crucial was a social-public partnership between community groups and the city council. The city supplied a core revenue grant to set up the CLT and an additional $1 million line of credit from the city employees’ pension fund.
The CLT has expanded steadily and now manages over 2,000 affordable units of housing including part-equity homeownership and apartments to rent. The CLT also supports on its land an additional 81 limited-equity homes provided by five housing co-operatives. In addition to housing, the CLT has developed a day centre for the elderly, a nursery facility, managed office space for social enterprises and non-profits, a shop-front for the region’s community development credit union, and a multi-unit housing and workspace complex for local businesses.
Since 2000, municipally-supported partnerships are responsible for the most innovative CLT work in the United States and a City-CLT partnership model has emerged. A growing number of cities support existing CLTs, are starting new ones and actively fostering their development: including Chicago, Albuquerque, Irvine (California), Portland (Oregon), and Syracuse (New York). The Irvine master plan is building 5000 “permanently affordable” homes on a redundant military base (4700 acres).
A number of factors have prompted this new-found support. The leading one is the proven ability of CLTs to use discounted land and other government subsidies to maintain the affordability of housing despite rising real estate markets. For over 26 years neither land nor homes have been lost from the CLT portfolio in Burlington. Additionally, CLTs have a track record for avoiding problems with debt and mortgage foreclosures when markets contract. Thus CLTs provide both land and housing stewardship and especially when working hand in glove with city staff. City-CLT partnerships are winning wider recognition as a robust way to prevent the loss of affordable housing (and other community assets) secured by municipal investment. There are now over 250 CLTs in the USA and about 50 in the UK. The model is being developed in Canada and in Belgium and gaining interest in France and Portugal.”