John Carr, a disillusioned neoliberal American kiwiphile, has published in the Herald two full-page open letters on the
state of the New Zealand economy. The second was on Monday, 16 October (see www.ilovenz.co.nz/letter2.htm). One
interesting statement of Carr's was: 'Think of the Government as a one third shareholder in every business in New
Zealand. Ask each day what new thing your Government has done to create value in the enterprise to justify your free
He's saying that the government's 33% company tax take can be better thought of as a dividend. He's also saying that the
public side of our society - indeed any society - freeloads on the domain of private enterprise capitalism. And he's
saying that the government could choose to behave like an entrepreneur instead of as a parasite.
The idea that the government is a partner of capitalist enterprises is a very useful one. It goes back to the French
'economistes' of the 3rd quarter of the 18th century (also known as 'physiocrats') who coined the term 'laissez faire'.
But we need to be careful with our language. The government is an agent of the sovereign people; of the 'Crown'. It is
the people and not the government who are one-third (or whatever) shareholders. Each person has an equal ownership stake
in the Crown.
Shareholders, public and private, are better thought of as landlords than as entrepreneurs. They supply capital and land
rather than labour. Managers, entrepreneurs, governments and many others supply labour.
The Crown contributes by supplying resources that are in the 'public domain'; resources not in private ownership that
contribute to the creation of value. It also contributes through the entrepreneurship of its agent, the government. John
Carr is right to suggest that the government should add value to all businesses on behalf of the people it serves; ie on
behalf of the public interest, of the property interest of each member of the public.
Once upon a time, all resources were in the public domain. Our history is one of private appropriation of public
property. It is not a history of the public encroachment on property that, as Mr Carr sees it, is innately private.
Despite past private appropriation ('theft' is what Karl Marx's rival Proudhon called it) of property, the expansion of
public domain resources has arguably outstripped the growth of private property.
Historical analysis of long-run economic growth suggests that the contribution of public domain resources to world
economic growth has been and will be far more than 33%. The internet is a public domain resource. So is the knowledge
that is held in the world's libraries. So is social capital, culture, liberal education, public health and law. Also
infrastructure, institutions and the environment. And government.
If we think of personal income tax as an extension of company tax, then business pays about 33% of value-added to the
Crown. That's a bargain, considering that public domain resources constitute the principal source of value. (The
physiocrats, taking a more extreme perspective, said that 'land' was the only source of net value). But even if that 33%
wasn't a bargain - ie if the Crown really was a parasitic landlord - then businesses would continue to maximise returns
to private shareholders. The market system - the drive for higher profits - does not depend on profits being high.
The people of a nation, through their equal share of their nation's sovereignty (embodied by the Crown), are equal
proprietors of around one-third of gross domestic product (GDP). If a substantial proportion of that revenue were to be
paid out in the way that private profits are distributed, then our distribution of income would be more equal than it
The problem is that, as individual members of 'the Crown', we see very little if any revenue that we can identify as
dividends paid to us through the Crown. Because the Government spends all of the Crown's revenue on our behalf, we fail
to identify Crown dividends as a part of our incomes that should be protected and expanded. We enforce public property
rights weakly, to our detriment.
If the Crown, whether considered as a landlord or as a business partner, both collected more rent/profit and distributed
its revenue equitably, then we could have a prosperous egalitarian society; a system of social capitalism. As 'total
factor productivity' increases - largely a result of the contribution of public domain resources - each member of the
public should be depending less on his/her wages and salaries, and receiving proportionately more as proceeds of the
Crown's interest in each and every productive enterprise.
By turning John Carr's proposition on its head, the responsible Left could adopt a view of the future that utilises
capitalism to achieve increased equity, productivity and leisure. The bigger the stake the Crown holds, the more
property income most people can lay claim to. A bigger Crown need not mean bigger government.
An objective analysis of past and present economic development suggests that returns to public property should be high
and rising. Instead, right-wing ideologies continue to advocate the minimisation and privatisation of public revenue
streams. One way they do this is by using words like 'government' and 'the state' in preference to terms like
'sovereignty' and 'public property rights'. The result is that our public agencies are seen as "them" rather than "us".
This century we need to learn to use our collective power as landlord, much as the collective use of labour power raised
living standards in the 20th century.
(c) Keith Rankin 2000