Chapter dzǴ: Land, Money, and Capital Formation ȁȀȀon consumption, net rents expressed as percentages of the depressed land
values would rise. Arbitrage would communicate this rise in yields to the
interest rate in the more specific sense. Investment in time-consuming
production processes would suffer, as is already obvious from the reduced
freeing of resources for such investments.
Waiting, then, is the social function (along with others mentioned
by Rothbard) for which the landowner is “rewarded.” Saying so merely
notes a parallel with the receipt of interest; it is not meant tojustifythe
private ownership of land and receipt of land rent. Maurice Allais has even
expressed some worries (examined below) about private landownership
and rent collection.
঩őŞŚōŠŕśŚōŘ ŏōŜŕŠōŘ řśŢőřőŚŠş ŠŔŞśšœŔ
ŕŚŢőşŠřőŚŠ ঠŘōŚŐ
Another way in which placement of savings in land can affect the inter-
est rate and real capital formation is instructive. Foreigners’ purchase of
land in our country does so. Ļe transaction, counted as “capital inflow,”
contributes toward a balance-of-payments surplus on capital account and
deficit on current account. During a period of adjustment, imports of
goods and services exceed exports: our people gain the additional real
resources embodied in the net imports. Ļe foreigners perform waiting
for our country by surrendering these resources currently and waiting for
the yields on their newly purchased land. Furthermore, the foreign pur-
chase tends to bid up land prices, slightly reducing percentage yields and,
through arbitrage, the general interest rate as well. In this way, capital
inflow through foreign purchases of land promotes domestic capital for-
mation much the same as would capital inflow through purchase of secu-
rities. Ļis example reinforces the analysis of domestic saving devoted to
buying land.
ŜśşşŕŎŘő ŐŕŢőŞşŕśŚ śŒ ŠŔő ţŕŘŘŕŚœŚőşş Šś ţōŕŠ
One distinction between land and man-made capital goods holds in degree
if not in essence. Ļe supply of land given by nature in fixed quantities is
highly price-inelastic, while quantities of most capital goods can respond
to price. In some circumstances, then, the desire to accumulate wealth
in the form of land (wealth, not mere acreage) can be met through mere
growth in the market value of a fixed amount, while accumulation of wealth