The Capitalism Project is undertaking a series of reflections on the loss of a sense of place in modern society. The Old Testament scholar Walter Brueggemann in his book The Land comments, “The sense of being lost, displaced, and homeless is pervasive in contemporary culture. The yearning to belong somewhere, to have a home, to be in a safe place, is a deep and moving pursuit.” The theologian Oliver O’Donovan explicitly connects this ‘homelessness’ with consequences of the modern economy: “Homo Oeconomicus [economic man], that unspiritual clod, has become a wanderer en masse.” This series will attempt to investigate the claims of Brueggemann and O’Donovan and consider the relationship between the loss of a sense of place and capitalism.
The Concept of Land in Economics
Place, as a category, is far too qualitative for the study of economics. Philosophers, sociologists, theologians and psychologists might reflect on the meaning of place but economics deals with the quantitative. As such, the correlative notion in economics is that of ‘land’. The history of the relationship between modern economics and ‘land’ reveals one of the main reasons for the modern sense of ‘homelessness’.
Prior to the dominance of the market, the established social structure of Europe was the feudal system. Land’s social function meant that it could not be bought and sold in anything remotely similar to the contemporary real estate market. It was likely that a family, whether they owned the land or were serfs, would live on the same plot of land their whole life. Phillip Sheldrake argues, “This sense of place shaped by social and religious ties as well as landscape, was intense… People felt spiritually and humanely dislocated when they moved, voluntarily or not, beyond familiar boundaries.” Sheldrake’s comments might be accused of romanticizing the past, but his understanding of the locatedness of human existence in pre-modern society is accurate. Karl Polanyi argues that this attachment to land was common throughout history and culture, leading him to wryly conclude: “What we call land is an element of nature inextricably interwoven with man’s institutions. To isolate it and form a market out of it was perhaps the weirdest of all undertakings of our ancestors.”
There are two ways of defining land in neoclassical economics: land as capital and land as commodity. However, land has not always been construed in this way. For instance, Adam Smith considered land to be one of the three factors of production alongside capital and labour. For Smith, land was of crucial importance in any economic activity. Smith’s notion, perhaps the result of the dominant economic activity being agriculture, came to be questioned in the twentieth century. In 1921, Frank Knight considered it unnecessary to distinguish land from capital. This is because land, like capital, has its price; may be bought and sold at will; is part of an individual’s assets and so on. “Land, as a factor of production, has no unique characteristics which should cause it to be set aside by itself in economic analysis.” This view became dominant. Henry C. Carey considered earth to be only the material for machines. Land, including all environmental resources, was completely removed from being a factor of production and was considered to be just like any other form of capital. Land as a meaningful category and as an area of research was all but eradicated from economics. Mason Gaffney notes that ‘Hundreds of books on economic theory are published with ‘land’ absent from the index.’
The implications of this shift have been significant. The abstraction of land to capital has meant that in economic theory land has the same attributes as any other form of capital. Capital is mobile, reproducible, impermanent, and it depreciates over time. As such, it is more efficient to consider the use of capital in the short term with little regard for the long term. Capital is also theoretically substitutable and therefore expendable. Robert Solow’s remarks are very revealing of the extent to which land became just another form of capital: “It is very easy to substitute other factors for ‘natural resources’… there is in principle, no problem.” Karl Polanyi predicted that the result of this would be that “nature would be reduced to its elements, neighborhoods and landscapes defiled, rivers polluted, military safety jeopardized, the power to produce raw materials destroyed.”
Another key consequence of neoclassical economics is the perspective of land as commodity. To explain how the commoditization of land has impacted society, Peter Berger’s model of the dialectic relationship between people and society is helpful. Berger argues for a threefold process that explains how society is socially constructed – the process of externalization, objectification and internalization. A product or idea is invented. This idea becomes objectified through production or communication. This then reflects back upon the society and shapes how the society sees the world. The idea that is externalized is that of land as a factor of production. As a factor of production it is given a value. This value is objectified by it being given a price. The success of this process, of creating a market for land, is then internalized – meaning that the value of land comes to be understood only by its market value, its price. This process results in homo oeconomicus developing what Martin Buber refers to as an I-It relationship to his natural environment. The I-It relation, in comparison to the I-Thou relation, is distinctly one sided with only one active voice. Alistair MacFadyen reflects on this: “Intending someone or something as an object is to intend the relation as a monologue…it cannot offer a point of moral resistance because it is not perceived as ethically transcendent. The relation can only be exploitative and manipulative.” David Loy is correct in recognizing that “a direct line runs form the commoditization of land… to the ozone holes and global warming of today.”
The contemporary environmental crisis is clearly connected to the understanding of land in modern economics. What is a more subtle effect is the resulting distancing of the relationship between people and the land. This has made a significant contribution to the loss of a sense of a sense of place in contemporary culture.
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