The Land Cycle is a major new paper by Catherine Cashmore, warning that Australia is in the late stages of a historically recurring land price cycle that has repeatedly preceded major economic downturns in Western economies.
Drawing on more than 250 years of historical evidence, this paper contends that speculative booms in land values are not random events, but part of a recurring economic rhythm that typically unfolds over approximately 18 years.
Key points:
- Land speculation, fuelled by expanding credit and reinforced by tax systems that reward unearned gains from rising land values, lies at the heart of recurring financial crises.
- As land prices rise, increasing amounts of capital are diverted away from productive sectors of the economy and into speculation.
- Debt expands against inflated land values, while productive activity becomes progressively weaker relative to the growing debt burden.
- Eventually, the system becomes unstable and vulnerable to collapse.
The paper argues that this process has repeated with remarkable consistency across multiple countries and historical periods. Researchers, including Fred Harrison, Fred Foldvary, Homer Hoyt, Roy Wenzlick, and Edward Dewey, independently identified recurring boom-bust cycles tied to land markets, construction activity, and credit expansion.
Many of these analysts successfully forecast major downturns years in advance, including the early 1990s recession and the 2008 Global Financial Crisis (GFC).
A key argument of the paper is that the 2008 GFC was not an unforeseeable “black swan” event, but the predictable culmination of a mature land and credit cycle. Georgist economists Fred Harrison and Fred Foldvary both forecast the timing of the crisis more than a decade earlier by applying land cycle analysis. Their work demonstrated how speculative increases in land values eventually overwhelm productive economic activity, leaving the financial system highly exposed once credit conditions tighten.
The Land Cycle concludes with the solutions that can be found in reforming the tax system. By shifting taxation toward land values and away from productive activity, to reduce speculation and stabilise the economy.
Subscribe to our newsletter
Be the first to hear about our latest research, campaigns and upcoming events.