This post continues the story of quantum economics, which began here. There is a summary of posts to date at the end of this post.
Can you please note when reading this post and others in the series that I am not suggesting that quantum physics and economics are akin to each other. Instead, I am exploring how quantum thinking might help build new economic narratives, which is quite a different goal.
Land as the Field
“Man did not make the earth. It is the value of the improvements only, and not the earth itself, that is individual property. Every proprietor owes to the community a ground rent for the land which he holds.” – Thomas Paine
If labour is the photon of value, what is the field in which it operates? In physics, photons travel through and interact with fields. Without a field, energy has no medium.
In economics, land is that field. Not just soil, but all natural resources: minerals, water, air, forests, and the very space we occupy. Land is finite, immovable, and not the product of human effort. It is the substrate without which labour cannot act.
Henry George, the nineteenth-century political economist, saw this. In his work, Progress and Poverty (1879), he argued that land's unique nature made unearned gains from it — economic rent — socially destructive. He proposed a land value tax to return this unearned wealth to the community.
His insight remains relevant. Modern economics has buried land within “capital,” disguising rent as profit. But if we want a realistic political economy, we must recognise land as the field of value.
First: the classical trinity
Classical economists distinguished three factors of production: land, labour, and capital.
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Labour: human effort.
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Land: the natural world, freely given and not made.
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Capital: tools and improvements, themselves products of past labour applied to land.
This trinity grounded economics in reality. It acknowledged nature's role and labour's primacy and placed capital in the perspective of time and knowledge.
Second: the neoclassical erasure
Neoclassical economics then made the mistake, quite probably deliberately, of collapsing land into capital. Land became just another asset, owned, bought, and sold like machines or buildings.
This erasure had consequences:
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Rents from land were disguised as returns to capital.
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The distinction between earned and unearned income was lost.
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The power of landlords and resource monopolists disappeared from theory.
By burying land, economics legitimised rentier extraction.
Third: land as a finite field
Unlike capital or money, land is finite. We cannot create more. We can only use what exists.
This finitude creates scarcity rents. Control over land gives control over access to the field itself. It allows landlords to charge for the use of what nature provides freely, a fact they ignore when claiming their income to be profits
Labour is abundant and money is unlimited, but land is scarce. This asymmetry gives land a unique role.
Fourth: Henry George's insight
George argued that rising land values, driven by community growth and public investment, should belong to society, not private landlords.
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A new railway increases land values near stations. The uplift comes not from the landowner's effort but from collective action.
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A growing city makes urban land scarce. The increased rent reflects community demand, not the landlord's contribution.
For George, private appropriation of these gains was unjust and economically destructive. His solution was a land value tax. His suggestion was that this appropriation should be corrected by imposing a tax on the rental value of land to return unearned gains to the community.
Fifth: quantum analogy — land as field
If labour is the photon, land is the field.
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Photons excite fields, producing observable effects.
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Labour excites land, producing goods and services.
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Without the field, photons do nothing. Without land, labour is impotent.
Value arises not from labour alone, but from labour applied to land. Both are indispensable, but land is the substrate, the stage, the finite medium.
Sixth: the problem of speculation in land
Like financial speculation, land speculation traps value in sterile loops.
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Investors buy land not to use it, but to wait for its price to rise.
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This withholds land from productive use, driving up costs for housing, farming, and business.
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The community pays twice: once through higher rents, again through lost opportunities.
Speculation in land is, if anything, worse than in shares. Shares can be created. Land cannot. Withholding it creates artificial scarcity.
Seventh: modern relevance
This insight is not antiquarian. It is urgent today.
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We have a housing crisis. Land values drive unaffordable housing. Rents absorb incomes. Ownership is concentrated.
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We have a climate crisis. Control of land determines energy use and food systems, leading to deforestation and the destruction of the biosphere. Private profit often trumps public need.
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We have an inequality crisis. Land ownership is among the most unequal forms of wealth. A few own much, while many rent precariously.
Ignoring land leads to failed policy. Treating it as capital misses its unique role.
Eighth: policy implications
Recognising land as a field demands new policies:
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Land value taxation needs to be considered. Whilst it would be inappropriate to shift all taxation from labour and production onto land rents, as some argue, because land is not the only source of value. But to tax land is appropriate, to discourage speculation, reward productive use, and return value to society.
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Public land banks are needed to hold land in common ownership for housing, infrastructure, and green transition. We must stop speculative hoarding.
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We must plan for sustainability. Land use must balance human need with ecological limits. Land should be treated as a common heritage, and not as a private commodity.
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Land ownership must be transparent. We need land ownership registers that expose hidden landlords and offshore owners. Democracy requires knowledge of who controls the field.
Ninth: the politics of land
Land is political. Control of land means control of society. From enclosures to colonialism, from aristocracy to oligarchy, power has historically flowed from land ownership.
Today, land politics is hidden behind property markets and financial jargon. But the essence is the same: who controls the field?
A politics of care must reclaim land for the community. Without land, labour cannot function. Without community control, value leaks to rentiers.
Conclusion
If labour is the photon, land is the field. Together, they ground economics in reality.
Henry George saw this. His call for land value taxation was not just a technical fix. It was a demand for justice: that the unearned gains of landowners be returned to the community. That remains the case now.
Modern economics, by erasing land, erased reality. It legitimised rentier extraction and blinded policy to the housing crisis, climate crisis, and inequality.
To rebuild economics, we must restore land to its rightful place. We must recognise its finitude, tax the rents it generates appropriately, and plan its use sustainably. Only then can labour's photons operate freely in the field.
And only then can we fund the future.
Previous posts in this series
- Discussing quantum economics, accounting, money and more
- Quantum economics, part 1: Why Quantum Thinking Matters for Economics
- Quantum economics, part 2: Money as Particle and Flow
- Quantum economics, part 3: Entanglement and Double-Entry Bookkeeping
- Quantum economics, part 4: Quantum Uncertainty and Economic Forecasts
- Quantum economics, part 5: Speculation, Potential, and Energy
- Quantum economics, part 6: Infinite Promises, Finite Energy (MMT and constraint)
- Quantum economics, part 7: The Photon Question — labour as the Quantum of Value
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Richard, here’s a related analogy from the world of classical physics/ electrical engineering.
There is sometimes an analogy drawn between land (natural, finite, essential to support productive capacity) and electromagnetic spectrum (particularly the radio waves used for mobile and satellite communications, broadcasting, GPS, etc). They are also natural, finite, and essential to support productive use. Their use in a given time / space constrains alternative uses in the same time/space (field).
Regulators license spectrum for agreed use, for a limited time, by groups, companies, individuals, etc. Some uses (e.g., aircraft or maritime safety, radio observation, Earth Sensing) are globally harmonised / protected.
High level global coordination is protected by UN treaty and adjusted every 3-4 years. Typically national use is sovereign (eg mobile phone licences) and can be valuable (operators paid £22.4bn for their 3G licences in the UK, for example).
Having a right to use radio spectrum precludes others from using it (like hoarding land). Based on work by Prof Martin Cave, the UK began charging fees for licences (ground rents) based on the opportunity cost of any more valuable use from the 1990’s. This encouraged the military to release a lot of spectrum for commercial use.
This seems analogous to charging a ground rent for hoarded land not on the current use but on best potential future use (which is why it is being hoarded). By charging this higher use speculators would pay a premium and be motivated to use … Cost of hoarding would be same as use without the profit of that better use.
Of course this “new ” micro-economic thinking approach to radio spectrum is still rooted in concepts of “ownership” of a public, natural resource – and western concepts of land ownership. The Chinese approach to land ownership is quite different.
BTW, Regular readers may not be surprised that organisations, including Alphabet, have offered to help relieve administrations of the burden of their regulation, to manage spectrum use more efficiently….
BUT – we all ended up paying for that rent in consumer prices.
So, there was nop social gain from the way Gordon Brown did this.
He should have denied the aiwaves to companies and supplied an essential service at lower price. That was the right answer.
I was citing the example just to provide an analogy … Not to advocate the auction method of assignment!
But the use of pricing unused spectrum on the basis of the value of uses foregone (eg leaving land in a land bank instead of building houses) might be relevant …. And not unprecedented.
I was going to wait until the end to comment because I think I need to see the whole argument but I am concerned that this thought experiment may be going awry.
The insight that economics (and more specifically macroeconomics) is not deterministic and mathematical like classical Newtonian mechanics is right of course. But I just don’t see how economics is “quantum” either (whatever that is meant to mean). It is a complex mixture of nonlinear systems and feedback (most of which you can do with a classical deterministic formalism – chaos theory being one example) but also also psychology and other things, so many of our simple intuitions are plainly wrong.
Having thrown out parallels with one paradigm in physics, I’m not sure it helps too much to key into other existing physical paradigms. It is its own thing.
“Land is the field” is quite a neat phrase. But in physics, a field is not a medium. Photons do not require a medium. They travel though a vacuum. There is no luminiferous aether. Photons mediate the electromagnetic force (if you prefer, they are excitations of the electromagnetic field) but they are not the only quantum of physics. Other particles or quasiparticles (or quanta, if you like) mediate other forces or effects – not just the strong and weak nuclear forces, but also rotations and vibrations and sound waves and so on.
You are going to say these are only analogies and it is it about building a narrative or changing the framing, and it will sound impressive, but you are going to lose people like me who understand (or at least used to understand) some of the physics.
Try it this way. What do you mean by “land is a field” and “labour is a quantum”. What do you think a field or a quantum is?
I think you are misunderstanding what I am doing.
I am seeking to build a new metaphor, and to use analogies as a way to do that.
I never suggested I was trying to replicate the thinking of quantum thinking in economics precisely. What I always said was:
– That the economic thinking that we we have has failed
– We need something better
– We can learn from physics that it had to recognise that what it had (Newtonian thinking) was not good enough, however much it worked in past
– In seeking new ways to tackle issues, physics had to break some of the thinking that was deeply implicit in its subject prior to the quantum era precisely so that it could take a leap forward. Economics has to do the same thing.
– Doing so, physics had to start by undertaking thought experiments, many of which when published had no experimental proof to support them, and some of which lacked mathematical robustness until the likes of Heisenberg and Schrodinger came along, each offering quite different proofs of concept.
Right from the start, I did not pretend that the experiment that we were undertaking would work for everyone. It happened to work for Jacqueline, my wife, and me, but if it doesn’t for you, that is not a problem. It just suggests that you might think in a different way on the neurodiversity spectrum from the way in which we do. Both ways are fine, I am sure, but maybe just different.
For example, unless I am very mistaken, you are a lawyer. I’m the first to recognise that lawyers have an important role to play, but equally I could never have been one. The desire for precision that most lawyers have is, to me, profoundly frustrating because in the hands of most lawyers (and I am not generalising about you) it can be used to constrain, limit, and even suppress the use of language.
On the other hand, I see words as providing the opportunity to explore and liberate.
I am using the words of quantum physics and mechanics to liberate ideas in the economic fear. I am not using them to claim the two are the same, or that one can define the other. I think that is the point that you are not understanding, but I’m happy to explore this further.
Mechanics of any sort is about how things work – and also, how they work together and – also – why they DON’T work. I think that Richard’s approach is valid, because there are are a hell of a lot of lies told about how things are supposed to work in economics.
My brother is a lorry mechanic. Watching him, he sees lorries as a system. If that oil filter is blocked, the engine will not stop working; if the coolant is leaking, the engine will fail; if that electrical system has failed, the compressor for the air breaks fails and the brakes are compromised. He has a systematic way of dealing with every engine problem he comes across by checking all the inputs into the engine that makes it and keeps it working.
Therefore mechanics is inclusive – it covers everything and accepts these inputs as fact. A lorry is a sum of its parts. Similarly I wager, quantum mechanics looks at the physical world as a sum of its parts and knows that these parts exist (we’ve discovered them, we know they are there and are discovering more) .
Much of Neo-liberal economics OTOH is more of belief system than a system of fact. It also ignores irrationality and other things. For example the ‘invisible hand’ identified by Adam Smith is to me just corruption, insider trader and capture of the legal system – so classical economics can’t even name inputs – especially negative ones – properly. And its definition of effectiveness is too narrow. The other thing about Neo-lib economics is that which Steve Keen mentions – that it is static and not dynamic at all. Mechanics is obviously about dynamics – flows, interactions etc.
I think that looking at economics through the prism of mechanics – and mechanics is really about looking at inter-dependencies – at a time when we are so hyper-individualized, is not only brave but absolutely bloody necessary in my view.
Thanks
I think this is one of the ideas behind the Biblical Jubilee year. Every 50th year, land outside of city boundaries was returned, without payment, to the original family owners. That way no one, in theory, was without some form of property in perpetuity and stopped land speculation. Not sure if it actually worked that way though.
“Value arises not from labour alone, but from labour applied to land. Both are indispensable, but land is the substrate, the stage, the finite medium”.
I like this idea but it begs questions that I am sure will be addressed later:
Currently value, as currently defined by Newtonian Economists, includes financial services within the Value Production Boundary. The data used consists of value as price and used as a wellbeing barometer, referred to as GDP. Clearly an unsatisfacory state of affairs.
Gaia (land) is the wellhead of all value and it’s wellbeing is curently deemed an externality and the cost to Gaia – pollution, ecosystem destruction etc has no place in the classical model. (Ed – surely some mistake)
Is not the wellbeing of Gaia our species wellbeing?
It will intresting to see how this core element reflects through the quantum lens
That is implicit in the term land here.