How our economy really works

These questions have confronted the UK economy for decades without resolution by governments of the right or left. It is the failure of economics, the author argues. Economists have long asserted that three factors of production, land, labour and capital, lie at the root of their subject. Yet in the development of the subject into theories and practical applications there has been a thorough analysis of labour and capital but a grievous omission of the factor of land. This is reflected in the minimal place it holds in modern textbooks, in popular discussion and political debate. Much of the argument about major issues, like industrial policy, the distribution of wealth and income and government policy reverts to a polarised struggle between two antagonists, labour and capital. The third factor, land, hides in the background unacknowledged yet exerting a major influence on the outcome of the whole economic process. What needs to change, the author argues, are deeply embedded features, which have generally been established for a very long time. They are principally the taxation system, the land tenure system, and the banking system. This can be initiated through a reform of taxation.

Brian Hodgkinson qualified as a chartered accountant in the City of London, then won a scholarship to Oxford where he took a first in Philosophy, Politics and Economics and won the George Webb Medley Prize in Economics. Subsequently he taught Philosophy in the Social Studies School at Sussex University, before switching to teaching Economics in Sixth Forms. As the founder editor of British Economy Survey, he kept in touch with applied economics and questions of public policy. He is the author of A New Model of the Economy, The Advancement of Civilisation in the Western World and several other books.