Monday, February 11, 2013

Economic Life (15) Land and Capital

Christians who dislike Leviticus miss out on one of the most important economic principles in the scriptures.

The land must not be sold permanently, because the land is mine and you reside in my land as foreigners and strangers. Throughout the land that you hold as a possession, you must provide for the redemption of the land.

If one of your fellow Israelites becomes poor and sells some of their property, their nearest relative is to come and redeem what they have sold. If, however, there is no one to redeem it for them but later on they prosper and acquire sufficient means to redeem it themselves, they are to determine the value for the years since they sold it and refund the balance to the one to whom they sold it; they can then go back to their own property. But if they do not acquire the means to repay, what was sold will remain in the possession of the buyer until the Year of Jubilee. It will be returned in the Jubilee, and they can then go back to their property…. Houses in villages without walls around them are to be considered as belonging to the open country. They can be redeemed, and they are to be returned in the Jubilee (Lev 25:23-28,31).
When Israel entered the Promised Land, land was the main form of capital. The land was divided up evenly between tribes and family groupings, so that every family had a piece of land. God organised the situation so that capital was evenly distributed. This is an important principle. God wants to see capital evenly distributed. In the Micah’s vision of the kingdom, every man has his own vine and his own fig tree (Mic 4:4). This is the same principle.

In an agricultural society, land was the main form of capital (in an economic sense). Distributing the land evenly ensure that every family had access to capital. It was distributed evenly, so that every family had an equal opportunity.

In reality, some people use their capital productively and do well. Others misuse their capital and get into financial difficulty. If a family gets into serious financial trouble, they might not need to sell their land to settle their debts. However the land could not be sold in perpetuity, because it belongs to God. All that could be sold was the crops that would be produced between the present day and the next jubilee. The jubilee occurred every fifty years.
If an debtor family has sold their land to a creditor to settle their debts, three things could happen.
  1. A relative or neighbour to come to the aid of the debtor family and buy back the land from the creditor to whom it had been sold. The redeemer will pay the full price that paid by the purchase. This was a sacrifice as the relative or neighbour would receive very little. They might get some crops while they were getting the debtor family prepared to look after it again, but they will never own the land they have bought. This was essentially a gift from one person to another. It is generous giving at its best. The only benefit he gets is the benefit of living in a strong community.

    The Good Samaritan helped a man who was in a hole, perhaps due to his stupidity, by going places he should not have gone alone. The parable extended the scope of who is our neighbour to everyone that we encounter. It does not limit the scope of assistance to caring for sick people. The Torah teaches that being a Good Samaritan means recovering the property of a neighbour who has been forced into selling it to pay debt.

  2. If no one redeems the land sold by a person in debt and he returns to prosperity again, he can buy his family property back at any time. The price will be set at the value of the crops that will be received between the sale day and the jubilee. He does not have to repay the full amount, because the buyer has received crops from the land.

  3. If there is no redeemer and the person in trouble never recovers sufficiently to buy it back, the buyer can hold the land until the jubilee. This will affect the price paid for the land. The buyer is not really buying the land. He cannot because it belongs to God. He is actually buying the harvests that will occur between the purchase date and the jubilee. If he pays more than that is worth, he might be reluctant to return the land when the Jubilee comes. The benefit the buyer gets is the confidence that comes from being part of a strong community.

There were no penalties attached to this instruction, so it could not be enforced. It does not justify compulsory land re-distribution as some have claimed. This was a voluntary instruction to ensure that wealth and capital did not become too unevenly distributed. If one generation got into trouble and lost their capital, the next generation would get it back, and have a fresh start.

The prophets spoke against those who accumulated land and houses.
Woe to you who add house to house and join field to field till no space is left and you live alone in the land (Is 5:8).
These people were breaching God’s principle that all capital land should be evenly distributed. They would not have been able to do this, if they understood and applied the principle of the Jubilee.

This was not an individualistic concept of property. Land was assigned to the family group. It is held in trust for the benefit of future generations of the family. Losing the land was a failure of trust that cursed later generations. God protected the family line be providing a way to remedy a mistake that could affect future generations.

The classical economists like Adam Smith were concerned about economic rent. They saw it as a problem, because the aristocratic families whose ancestors had fought on the winning side in ancient battles controlled large blocks of land. They collected rent from their tenants with no need to give anything in return. The classical economists wanted to tax economic rent away. If God owns the land, the basis for economic rent disappears.

This instruction and the jubilee ensured that capital continued to be equally distributed, but this it only works in an agricultural society. In the modern world, most capital is plant machinery and equipment and other assets. Jesus put a twist on the jubilee laws that ensure that these will be relatively equally distributed too, but that is a topic for another post in another series.

1 comment:

Kublai7777 said...

Hi Ron

This post is particularly topical in New Zealand at the moment. All the major political parties have climbed into the debate about the cost of housing. The game of monopoly is well advanced. All my friends have multiple rental homes and yet wonder how their children will save for their deposit on their first homes. The process is accentuated by land zoning placing a collar around urban areas limiting land supply. In addition, well capitalised foreigners pump up prices. Combined all these processes contribute to a trend that could lead to New Zealanders becoming tenants in their own land in a few generations. That was the situation faced by the Palestinians in the 1800s when they too were reduced to being tenants in their own land by absentee Turkish landlords.

It led to an impoverished land. A land populated by the subservient with all ambition bred out of them. Serfdom. Is this New Zealand's future? How can the momentum be arrested and the direction reversed?