Every once in a while a book crosses my path that captivates me; one such book is A New Model of the Economy. This book was written in the tradition of the School of Economic Science in London, which traces its lineage back to economic giants such as Henry George (many of whom, like George, were marginalized from mainstream economic thought due to resistance from wealthy interests). It presents a rational and clear theory of economic prosperity and bases this theory on a sound and logical framework. But the most important thing, to me, is that the entire theory is laid out with a lot of common sense.
Much of the so-called neoclassical economic theory, which is what’s taught at universities around the world today, does not treat land—that is, nature—as a separate “factor of production”; instead, the neoclassical economic schools treat land as a capital good (to be exploited for private gain), no different from objects like cars or computers. Most economic models based on this lack of distinction incur flaws that lead to incorrect economic forecasts and faulty economic applications in addressing social issues such as wealth inequality or ecocide.
Not A New Model of the Economy, however. From the start, A New Model of the Economy systematically recognizes land as a critical factor of production—separate from labor and capital—and thereby properly sets the stage for an in-depth analysis of what causes various social ailments such as wealth inequality, poverty, or the destruction of the environment.
Capitalism fails to understand the difference between beneficial profits (incomes that are created from production with the help of labor and the application of privately-owned capital goods, leading to net benefits to society) and monopoly profits (incomes that are extracted from society without the provisioning of a corresponding benefit to society). This lack of understanding has sadly led to confusing and failed economic policies. Communism, too, has failed to understand the difference between beneficial profits and monopoly profits, and has thus attempted to banish all forms of private wealth creation altogether, predictably leading to disastrous results. Socialism, meanwhile, attempts to do a little of both. But as A New Model of the Economy coherently explains, there is an alternative path: a path that would bring unprecedented prosperity to the whole of society.
I highly recommend this book to anyone who wishes to gain an in-depth understanding of economics, and especially to policymakers and economists worldwide.
—Martin Adams, author Land: A New Paradigm for a Thriving World
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