Land (economics)

2007 Schools Wikipedia Selection. Related subjects: Economics

In economics, land comprises all naturally occurring resources whose supply is inherently fixed (i.e., does not respond to changes in price), such as geographical locations (excluding infrastructural improvements and "natural capital", which can be degraded by human actions), mineral deposits, and even geostationary orbit locations and portions of the electromagnetic spectrum. In classical economics it is considered one of three factors of production, the other two being capital and labor; income derived from ownership or control of natural resources is often referred to as rent.

Land in the economic sense of the term is not produced by human labor, but only by the forces of nature (or God, in theistic views). Georgists hold that this implies a perfectly inelastic supply curve (i.e., zero elasticity), suggesting that a land value tax that recovers the rent of land for public purposes would not affect the opportunity cost of using land, but would instead only decrease the value of owning it. This view is supported by evidence that although land can come on and off the market, market inventories of land show if anything an inverse relationship to price (i.e., negative elasticity). And although land (especially in the form of, e.g., mineral deposits) must first be discovered in order to have value or be put to use, it is generally conceded that the fruits of scientific discoveries, whether of natural laws or of mineral deposits, cannot rightly be monopolized for purposes of private economic rent capture.

Land, particularly geographic locations and mineral desposits, has historically been the cause of much conflict and dispute; land reform programmes, which are designed to redistribute possession and/or use of geographic land, are often the cause of much controversy, and conflicts over the economic rent of mineral deposits have contributed to many civil wars, particularly in Africa.