4. Land is central to understanding the triple crisis

This paper was first presented and published at the AHE Conference, University of Greenwich, July 2014  https://showtime.gre.ac.uk/index.php/business/AHE/paper/viewPaper/448 (needs login)

Michael Joffe

Imperial College London



Of the three factors of production in classical economics – land, labour and capital – the first has tended to become neglected in core theory. This is partly because a wide variety of perspectives implicitly take manufacturing as the paradigm activity, despite its decreasing size in the developed world. The economy then comes to be seen as composed primarily of labour and capital, along with their quality (manifest as human capital and productivity). The importance of land is analysed only in sub-disciplines concerned with real estate or with commodities, or in environmental economics.

Yet land is arguably increasing in economic importance relative to manufactured goods. US households doubled the proportion of their expenditure on housing between 1919 and 1998 (see http://www.bls.gov/opub/mlr/2001/05/art3full.pdf, table 4), although admittedly it is difficult to compare the share of different components in household budgets over time, e.g. because of changes in quantity and quality. Commodities such as food and fuel are now subject to long-term price increases, as well as periodic fluctuations and Engel effects.

This paper argues that land is central to household debt, socio-economic inequality and environmental degradation. The triple crisis cannot be understood without bringing it back into the centre of economic analysis.