Lawrence White: The Clash of Economic Ideas: The Great Policy Debates and Experiments

Lawrence H. White is Professor of Economics at George Mason University in Fairfax, Virginia, USA. He specialises in monetary theory and banking history. He is best known for his research on free banking, which finds that free-market monetary arrangements are stable and efficient. He also works on the history of economic thought.

His presentation will offer highlights from his latest book, The Clash of Economic Ideas: The Great Policy Debates and Experiments of the Last Hundred Years (Cambridge University Press, 2012), which has been described as "one of those rare books that makes the history of economic thought an intellectual adventure while remaining highly relevant to the issues and controversies of the present day." Professor White received his B.A. from Harvard and his M.A. and Ph.D. from the University of California, Los Angeles. He has been a Visiting Professor at Queen's University Belfast, a visiting lecturer at the Swiss National Bank, a visiting scholar at the Federal Reserve Bank of Atlanta, and Visiting Fellow at the Australian National University.

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Interestingly, Karl Marx described the book "Progress and Poverty" as a last-ditch defense of capitalism. At the same time, people like George Bernard Shaw and the Webbs gravitated to Fabian Socialist ideas after hearing Henry George speak on the causes of poverty.

A blind spot of analysis shared by Hayek and Keynes was (and is) the increasing power of the rentier elite to claim in the form of privatized land rents and, as capitalized in quasi-monopolistic land markets,   rising land prices what others produced with their labor and capital goods.

Today's public discussion focuses on "resource rents" and the control over natural resources required by the modern, industrialized economies. Almost ignored are location rents in cities measured by square footage rents and prices for land parcels. A close reading of Adam Smith on the subject leads one to at least consider the wisdom of the public collection of land rents to pay for public goods and services, rather than the taxation of earning income flows and actual capital goods. Milton Friedman on a number of occasions echoed this view (although he attributed the policy proposal to Henry George rather than Adam Smith).

The real unresolved debate is over how we define what is "private property" versus how we define "public property." In 1995 I joined a team organized by British economist Fred Harrison and U.S. economist Nicolaus Tideman asked to provide input to the Russian Duma on how to move to a market-based economic system. This team came with the consensus view embracing a labor and capital goods basis for private property. We recommended to the Russian that the nation's land be allocated to private individuals and entities under a leasehold structure awarded by competitive bidding. If adopted, this would bring in land rents to pay for public goods and services. Natural resource-laden lands could be put under the control of state government with federal oversight. The allocation of village, town or city land should be the function of local government. The Russians listened politely. Leading economists supported the proposals, but in the end Russia's land and natural resources were turned over to the politically-influential under extremely corrupt arrangements.