There are three factors of production: land, labor, and capital. Production that is more land-intensive will necessarily be less labor-intensive, and vice-versa. Capital-intensity can either support or inhibit labor-intensity depending on its rate of turnover. Long-term fixed capital tends to increase with rising land values, and therefore has a negative correlation with labor-intensity, while short-term circulating capital such as inventories can provide a continual source of employment for labor.
Now, the rise and concentration of huge, multi-national corporations tends to be seen by both their defenders and detractors as the natural operation of the free market. So-called "economies of scale" are usually brought up as an explanation for their growth and success. Yet, when you think about it, a larger firm will almost by definition be more land-intensive, and therefore less labor-intensive. Thus, with increasing scale, larger firms receive more and more of their income from rent, and less from production. This is why Thorstein Veblen observed that large firms are stores of value first and centers of production second.
The concentration of land by value increases with personal income, but corporate landowners are the biggest of them all. Some might actually think this isn't so bad, since ownership of corporate ownership is spread out among shareholders. However, someone who owns stock in one company will tend to own stock in several others, so it turns out stock ownership is extremely concentrated toward the top. The companies whose stock is worth the most will tend to receive a greater share of their profit from rent. As such, the richest stock-holders also tend to be the biggest rentiers, even if they personally own very little land of their own.
Small businesses, by contrast, are necessarily more labor-intensive. They have smaller spaces, which use less fixed capital, and rely more on inventories of circulating capital that turn over quickly. This is true of farmland as well. Factory farms are far more land-intensive, and use capital-intensive methods of fertilization and heavy amounts of pesticides. Organic farming, by contrast, is more labor-intensive, and more efficient for small farms. The factor of rent is what distorts the market towards the former method and away from the latter.
Economies of scale probably do exist to some extent. But whatever that proper scale is, it is most certainly distorted by the free lunch that is rent. Taxing the rent would help break up these large firms into more efficient, smaller units that use more labor and circulating capital, thus helping achieve full employment, while also eliminating the "too big to fail" problem. E.F. Schumacher was right: small is beautiful. It is also more efficient, and more just. And a market freed of this distorting influence will help achieve that beauty.
Now, the rise and concentration of huge, multi-national corporations tends to be seen by both their defenders and detractors as the natural operation of the free market. So-called "economies of scale" are usually brought up as an explanation for their growth and success. Yet, when you think about it, a larger firm will almost by definition be more land-intensive, and therefore less labor-intensive. Thus, with increasing scale, larger firms receive more and more of their income from rent, and less from production. This is why Thorstein Veblen observed that large firms are stores of value first and centers of production second.
The concentration of land by value increases with personal income, but corporate landowners are the biggest of them all. Some might actually think this isn't so bad, since ownership of corporate ownership is spread out among shareholders. However, someone who owns stock in one company will tend to own stock in several others, so it turns out stock ownership is extremely concentrated toward the top. The companies whose stock is worth the most will tend to receive a greater share of their profit from rent. As such, the richest stock-holders also tend to be the biggest rentiers, even if they personally own very little land of their own.
Small businesses, by contrast, are necessarily more labor-intensive. They have smaller spaces, which use less fixed capital, and rely more on inventories of circulating capital that turn over quickly. This is true of farmland as well. Factory farms are far more land-intensive, and use capital-intensive methods of fertilization and heavy amounts of pesticides. Organic farming, by contrast, is more labor-intensive, and more efficient for small farms. The factor of rent is what distorts the market towards the former method and away from the latter.
Economies of scale probably do exist to some extent. But whatever that proper scale is, it is most certainly distorted by the free lunch that is rent. Taxing the rent would help break up these large firms into more efficient, smaller units that use more labor and circulating capital, thus helping achieve full employment, while also eliminating the "too big to fail" problem. E.F. Schumacher was right: small is beautiful. It is also more efficient, and more just. And a market freed of this distorting influence will help achieve that beauty.
