The Rent of Italy

by Karl Fitzgerald on June 16, 2008

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A grasp of economic rent is vital to understanding geoism and the path to social justice and environmental sanity.

Short definitions are helpful but limited – the return to privilege; a free ride at society’s expense; unearned increment; excess profits that monopolists reap in the absence of competition; income derived from assets that cannot be freely produced by private economic agents; income (real or imputed) that cannot be justified as an incentive for private economic agents; or even the natural source of revenue for the community.

Sydney’s David Smiley continues his series wherein he fleshes out the meaning of rent through a string of vivid historical examples.

David Smiley

writes:
Most history books attempt to explain progress, poverty and conflict in terms of charismatic actors and political events, seldom in terms of fundamental causes. It is therefore refreshing to find, in A Traveller’s History of Italy (Lintner, V. 1989, Gloucestershire, Windrush Press), explanations in terms of land ownership.

Let us start with the Etruscans, warrior kings and elites maintained in luxury by conquered tribes whose resources (rent) were ruthlessly exploited. The Etruscans were replaced by the Romans, with a larger but similar form of aristocratic government in which the majority lived in a kind of economic bondage. ‘The problem of wealth distribution concerned mainly land ownership. The patricians, predictably owned most of the land and exploited the poor by charging in kind [rent] for its use.’

The Romans obliterated much of Etruscan culture (Rule one of colonisation is take the land, rule two is remove any political objections to this by removing any coherent culture). But they copied and developed the Etruscan class structure. The new aristocracy, who now owned the land, exploited the poor by charging them for the use of this land. Not surprisingly there were objections from poor Romans and even poorer slaves. These objections were met in three ways. Landless Romans were given land in conquered territories, troublesome slaves such as Spartacus were ruthlessly crucified, and Tiberius Graccus, who had suggested land reform, was clubbed to death in the senate.

Gibbon attributes The Decline and Fall of the Roman Empire to ‘the natural and inevitable effect of immoderate greatness’. Today we might describe it as the result of punitive taxation needed to maintain the elite in a state of conspicuous consumption, while rent seekers called Vandals, Franks and Visigoths came and saw and conquered. The Franks eventually did a make-over, the Holy Roman Empire, which lasted for 1000 years during which time power was divided between the popes and the aristocracy, often interchangeable. But while part of the rents of church lands did trickle back to the poor in a rudimentary form of social security, a feudal lord was more prone to spend this money on rent seeking military excursions against another lord.

Thus, by the eleventh century Italian ‘cities were essentially administrative centres which lived, one might say parasitically, from taxing the countryside’. In the fourteenth century, after the Black Death which had reduced populations, supply and demand caused rents to fall and wages to rise. Then, anticipating the French Revolution, popular communes emerged. In these the urban middle class seized power violently from the aristocracy but, as with the French Revolution, they could not hold out against the ‘organised resources of land and big money’. And so, by the time of the Renaissance, Italy ‘saw an even greater concentration of wealth in the hands of the few powerful nobles who controlled the city states. The poor, needless to say, became poorer, while the interests of the majority were almost completely ignored….The peasantry were in general completely oppressed, living in abject poverty, much as they had done for centuries.’

By the eighteenth century land was being increasingly concentrated in the hands of fewer and fewer owners. In the Agro Romano around Rome 13 families owned 61% of the land, most of the rest belonging to 64 ecclesiastical bodies. In central Italy most peasants were now share-croppers typically handing over half their production to the landlord in rent. Not surprisingly, in conditions of abject poverty, exploitation, ignorance and illiteracy, peasants would fall into debt. Merchants would give exploitative loans of wheat to peasants, which were repayable in kind at harvest time when prices were much lower. Responses to this were often migration, or initiatives for land reform. But by the time of the French Revolution most such enlightenment reforms had petered out.

In the nineteenth century poverty was driving some 80,000 people each year into the rest of Europe and around 20,000 to America, while a neo-Roman-Empire was colonising land in Eritrea, Somalia and Abyssinia. In the twentieth century Italy annexed Libya and hoped for territorial gains in Europe out of WWI. These hopes turned out to be disappointing and not worth the cost which, as in most wars, was borne by the poor and not the elite. Joining the wrong side in WWII, Italy then lost the rental incomes of her African colonies as a punishment. However, while land rent in the south continued to be conspicuously consumed, in the north this surplus was now productively invested in an industrial takeoff that, while it did not remove inequality, removed the abject poverty that landed elites have inflicted on Italy throughout its history.

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