All about land

How to improve land and capture its value is central to growth and development policy even in the 21st century

- MIHIR S SHARMA

It is two centuries, a year, a month, and a week since David Ricardo died. Ricardo was many things: A financier, an abolitionist, a liberal politician. He is remembered, however, as the founder of modern economics. He developed many of the essential principles that underlie economic theory, from the law of diminishing marginal returns, to comparative advantages in trade, to the functional equivalence between different ways of raising money.

But if I were to paraphrase Ricardian principles today, it would be this: When wealth grows, money is spent, or technology improves, the benefits flow to those who control what is most scarce, and usually to those that determine the fate of the one irreplaceable resource, land. The Ricardian theory of rent was revolutionary in that he showed improvements that made farming more productive would benefit landowners, not tenants.

Ricardo was able to understand the centrality of land policy to Regency-era British political economy because it was, after all, an economy, society and polity still obviously dominated by landowners. When he famously made his million speculating on the Battle of Waterloo, he immediately removed to Gloucestershire to set himself up as a country squire and enter Parliament.

National and global economies are infinitely more complex than they were 200 years ago. But land, land improvements, land use, and land value are at the centre of 21st century development and growth in a manner that the discipline of economics is not quite as prepared to describe today as it was in Ricardo's day.