|Wealth and Want
|... because democracy alone is not enough to produce widely shared prosperity.
About Henry George
Kris Feder: Progress and Poverty Today
As this book was written, the Industrial Revolution was transforming America and Europe at a breathless pace. In just a century, an economy that worked on wind, water, and muscular effort had become supercharged by steam, coal, and electricity. Canals, railroads, steamships and the telegraph were linking regional economies into a national and global network of exchange. The United States had stretched from coast to coast; the western frontier was evaporating.
American journalist and editor Henry George marveled at the stunning advance of technology, yet was alarmed by ominous trends. Why had not this unprecedented increase in productivity banished want and starvation from civilized countries, and lifted the working classes from poverty to prosperity? Instead, George saw that the division of labor, the widening of markets, and rapid urbanization had increased the dependence of the working poor upon forces beyond their control. The working poor were always, of course, the most vulnerable in depressions, and last to recover from them. Unemployment and pauperism had appeared in America, and indeed, were more prevalent in the developed East than in the aspiring West. It was "as though a great wedge were being forced, not underneath society, but through society. Those who are above the point of separation are elevated, but those who are below are crushed down." This, the "great enigma of our times," was the problem George set out to solve in Progress and Poverty.
Economists will recognize his analysis as a precursor to the modern marginal productivity theory of functional distribution. His story is framed in the language of what is today called classical political economy, though George was careful to avoid inconsistencies of definition and reasoning which, he showed, had led other economists astray.
A central feature of the British classical school was the classification of productive resources into three "factors of production" - labor, land, and capital. Most classical economists had conceived of these in terms of three great social classes (the workers, the landed aristocracy, and the capitalists). George, on the other hand, identified them as functional categories, distinguished by the conditions under which the factors are made available for production.
In a competitive economy, the earnings of the factors of production measure their separate contributions to the value of the product. Payments for the use of labor are called wages; payments for land are called rent; the income of capital is interest. In George's terms, the distress of the working classes had to do with a persistently low level of real wages. "Why," he asked, "in spite of increase in productive power, do wages tend to a minimum which will give but a bare living?"
The book proceeds systematically. First, George explores the prevailing scholarly and popular explanations, which relied principally on the famous population theory of Malthus, in combination with the "wage fund" theory of British political economy. Together these theories implied that the aggregate income of labor depends upon the amount of capital devoted to the payment of wages. An increase in wages required an increase in the amount of capital per worker. However, any rise in living standards above mere subsistence motivated workers to marry younger and bear more children, until population growth caused capital per worker - and, therefore, wages - to recede again.
Moreover, population growth diminished agricultural productivity by forcing recourse to inferior soils. Technological advance and capital accumulation might afford a period of relative prosperity - but ultimately, increasing applications of labor to a fixed amount of land could raise output only at a diminishing rate. In short, immutable laws of nature - the population principle and the law of diminishing returns to land - were widely believed to explain the persistence of poverty.
To George, the Malthusian analysis was abhorrent: It asserted that no institutional reform could fundamentally alter the pattern of income distribution, and that charitable support for the needy only compounded the problem - by lowering death rates and raising birth rates. ...
In his own analysis, George takes meticulous care to avoid inconsistencies of definition and reasoning. ...
Public debate about economic policy revolves today, as it always has, around a tension between two fundamental social goals. Economists and policymakers lament a perennial "trade-off between efficiency and equity." ...
Most economists deem it their business to evaluate the efficiency of policy choices, but, claiming no special knowledge of ethics, they leave it to philosophers and the political process to evaluate questions of justice. Can it be true that society's arrangements to provide for common needs must always confront a divisive choice between equity and efficiency - between what is fair and what is feasible?
Henry George not only denied it; he asserted the reverse: Full recognition of economic rights and responsibilities would reveal the goals of equity and efficiency to be mutually reinforcing. Neither social justice nor a well-functioning free market system can long be enjoyed without the other. "The laws of the universe are harmonious," George proclaimed. His analysis showed that the root cause of widening inequality lies not in the laws of nature, but in social maladjustments which ignore them. Moreover, the breach of justice which underlies the problem of poverty is not merely incidental to economic development; it impedes development, leading to wider and wider inequality.
George emphasized that unequal distribution is itself wasteful of wealth.
Unemployment and underemployment of labor mean that energy and intelligence go untapped. ...
In short, an unjust system of privileges and entitlements tends to cause misallocation of resources, macroeconomic instability and stagnation, political corruption, and social conflict that ultimately may threaten whole civilizations. George's central contribution was to show that the distinction between individual property and common property forms a rational basis for distinguishing the domain of public activity from that of the private. ...
George's insights have wide application to modern problems. ...
Modern fiscal and monetary policies have not resolved the problem of macroeconomic fluctuations. Yet a half century before Keynes, George outlined a theory of boom and bust which explained the underlying instability of the market economy under present fiscal institutions. ...
Many American cities are plagued by the twin problems of urban decay and suburban sprawl. ...
Thus, George's synthesis informs a research program of remarkable breadth. Some writers understand Georgism to constitute a distinct paradigm of political economy, one which reconciles the contradictions between the two competing paradigms dominant in the world today - the mainstream neoclassical school, which tends to focus on the impressive efficiency properties of free markets, and Marxist socialism. Other Georgist writers believe that Georgism can and should be explained in the modern language of neoclassical economics. What is certain is that geoclassical thought bears crucially on some of the foremost controversies in America and the world today. Read the whole article
Nic Tideman: Basic Tenets of the Incentive Taxation Philosophy
We are not the first people to assert that governments should not allow anyone to appropriate an excessive share of nature's bounty. Hints of our ideas can be found in the writings of 17th century English philosopher, John Locke.
The physiocrats of 18th century France: Quesnay, Turgot, Condorcet and others who sought to reform that country's tax system prior to its bloody revolution understood the importance of collecting a nation's revenue from levies upon land. The 19th century English philosophers Herbert Spencer and John Stuart Mill understood the injustice of claims to the ownership of land, though they could not bring themselves to recommend the fiscal measures that flow naturally from that insight.
But the person whose writings gave greatest impetus to our ideas was the 19th century American social philosopher, Henry George. His books and speeches contain powerful elucidations of ideas that we espouse. We particularly recommend Progress and Poverty and Protection or Free Trade. It should be understood that while we admire George's work, we do not regard him as an infallible authority. Our commitment is to principles of justice that we believe are part of the understanding of all open-minded people. George is the person who, in our view, has provided the best written expression of these principles so far.
Among the famous persons who have endorsed George's ideas are Albert Einstein, Leo Tolstoy, Winston Churchill, and Sun Yat Sen.... Read the whole articleRobert V. Andelson Henry George and the Reconstruction of Capitalism
I like to picture economic theory as a vast jigsaw puzzle distributed across two tables, one called Capitalism and the other, Socialism. But mingled with the genuine pieces of the puzzle are many false pieces, also distributed across both tables. Most of us are either perceptively limited to one table, or else we are unable to distinguish the genuine pieces from the false. But Henry George knew how to find the right pieces, and, therefore, he was able to put the puzzle together -- at least in its general outlines. I don't claim that he was infallible, or that there isn't further work to be done. Yet if I find a little piece of puzzle missing here or there, it doesn't shake my confidence in the harmony of the overall pattern he discerned. It doesn't make me want to sweep the puzzle onto the floor and start all over again from scratch.
Henry George was born in 1839 in Philadelphia, and died in 1897 in New York City. It was in the San Francisco of the 1870s that he wrote his masterwork, Progress and Poverty. For the greater part of his adult life he had been a working newspaperman, beginning as an apprentice typesetter and making his way up to the editor's desk. His was a peculiarly Californian saga. His philosophy was forged out of his observation of conditions in a burgeoning new state, where he was able to examine, as in a laboratory, the genesis and development of social and economic processes. Progress and Poverty has been translated into at least 27 languages.
Among books of nonfiction, its sale was for many decades exceeded only by the Bible. At Oxford University, in the English literature department, it is used as a model of the finest prose. The rest of Henry George's life was one great crusade for social justice, at the end of which he literally martyred himself by campaigning for public office against his doctors' urging. In the midst of the campaign he died, and was spontaneously accorded the greatest funeral that New York City had ever witnessed.
His genius has been glowingly acknowledged by such renowned figures as philosophers John Dewey and Mortimer J. Adler, presidents Woodrow Wilson and Dwight D. Eisenhower, scientists Alfred Russel Wallace and Albert Einstein, essayists John Ruskin and Albert Jay Nock, jurists Louis D. Brandeis and Samuel Seabury, columnists William F. Buckley and Michael Kinsley, and statesmen Winston Churchill and Sun Yat-sen. These names cover the entire political spectrum from Conservative to Liberal, yet all of them saw something of immense value in George's thought. I'll take time to quote from only one of these testimonials — the one by Dr. Sun Yat-sen, the founder and first president of the Republic of China. "I intend," he declared, "to devote my future to the welfare of the Chinese people. The teachings of Henry George will be the basis of our program of reform." I think we may safely say that had Dr. Sun lived to carry out his promise, the Chinese mainland would not today be Red. But Taiwan, where it has been carried out, by no means fully but to a considerable extent, has, as a result, witnessed a spectacular transformation from abysmal poverty to vibrant prosperity distributed so as to benefit all levels of the population.
I said that I'd quote from only one testimonial, and I'll keep my word. But I do consider it apposite to mention that Count Tolstoy, author of War and Peace, Anna Karenina, and of the explicitly Georgist novel, Resurrection, wrote a long letter to Tsar Nicholas II in January, 1902, warning of mounting public disaffection, and pleading for reform along Georgist lines as the most immediate measure necessitated both by the demands of justice and the threat of socialist revolution. It was followed in May of the same year by a letter to another member of the imperial family, spelling out the specifics of George's proposal. May one not reasonably assume that, had Tolstoy's warning and plea been heeded, Russia would have been spared more than seven decades of Communist tyranny; its satellite and subject nations, their respective periods of Marxist domination; and the West, the burden of the Cold War? Or that, by disregarding that warning and that plea, Nicholas II forfeited the lives of hapless millions, including, ironically, his own and those of his cherished wife and children?
For a long time, it was the fashion among academic economists to ignore or patronize Henry George -- whether for his lack of formal credentials, for his propensity to mingle moral arguments with economic ones, or for other perceived intellectual crimes even more monstrous. Today, this is becoming less and less the case, although, of course, there were honorable exceptions from the outset. But now we find economists of every stripe, including at least four Nobel laureates, united in agreement that George has much to say that is of vital contemporary importance. The list is far too long to read in its entirety, but it includes such names as Gary Becker, Kenneth Boulding, James Buchanan, Milton Friedman, Mason Gaffney, Lowell Harriss, Alfred Kahn, Arthur Laffer, Franco Modigliani, Warren Samuels, Robert Solow, James Tobin, and William Vickrey -- the last of whom served recently as president of the American Economic Association.
In the preface to the fourth edition of Progress and Poverty, Henry George wrote: "What I have done in this book, if I have correctly solved the great problem I have sought to investigate, is to unite the truth perceived by the school of [Adam] Smith and Ricardo to the truth perceived by the schools of Proudhon and Lasalle; to show that laissez faire (in its full true meaning) opens the way to a realization of the noble dreams of socialism..." Let us return now to our illustration of the economic jigsaw puzzle, and take a look at the pieces which he selected from the two tables of Capitalism and Socialism. ... Read the whole article
William F. Buckley, Jr.: Home Dear Home
Henry George was one of the most famous reformers of the late 19th century. Ever since the 1879 publication of his book, Progress and Poverty, his ideas have inspired people working for economic and social reform all around the world. He is most famous for proposing the abolition of all taxes except for a tax on the value of land. But I will argue that the single tax on land was not George's most important contribution, and that the power of his thinking can be best appreciated by focusing on the theory of social justice that he used to explain why a single tax on land is just.
In the first chapter of Book VI of Progress and Poverty, George analyzes six different proposed remedies for persistent poverty and explains why they are inadequate. In the second chapter, which consists of just three pages, he asserts that the only effective remedy for the relief of poverty and the unacceptable distribution of wealth is to "make land common property."
George's choice of words here may have been unnecessarily inflammatory. When people see this phrase, they generally presume that George was proposing public ownership of land. In fact he rejected public ownership of land. What he actually meant was that we must recognize that land is everyone's common heritage, and we must develop institutions that reflect this. In any case, he recognized that his assertion would sound outrageous to many of his readers, and he promised to defend it:
The laws of the universe are harmonious. And if the remedy to which we have been led is the true one, it must be consistent with justice; it must be practical of application; it must accord with the tendencies of social development and must harmonize with other reforms.
Accordingly, Book VII is concerned with the justice of making land common property, Book VIII deals with the method and practicality of making land common property--not by public ownership of land, but by abolishing other taxes and financing government by public collection of the rent of land, and Book IX explores economic consequences of this remedy.
The first chapter of Book VII thus plays the crucial role of overcoming the reader's inclination toward knee-jerk rejection of George's startling idea. And George is prepared with a theory of justice in powerful language:
What constitutes the rightful basis of property? What is it that enables a man justly to say of a thing, "It is mine!" From what springs the sentiment which acknowledges his exclusive right against all the world? Is it not, primarily, the right of a man to himself, to the use of his own powers, to the enjoyment of the fruits of his own exertions? Is it not this individual right, which springs from and is testified to by the natural facts of individual organization--the fact that each particular pair of hands obey a particular brain and are related to a particular stomach; the fact that each man is a definite, coherent, independent whole — which alone justifies individual ownership? As a man belongs to himself, so his labor when put in concrete form belongs to him.2
George then argues that if ownership is derived from labor, then no one can own land, since no one produced it:
This right of ownership that springs from labor excludes the possibility of any other right of ownership. If a man be rightfully entitled to the produce of his own labor, then no one can be rightfully entitled to the ownership of anything which is not the produce of his labor, or the labor of someone else from whom the right has passed to him. If production give to the producer the right to exclusive possession and enjoyment, there can rightfully be no exclusive possession and enjoyment of anything not the production of labor, and the recognition of private property in land is a wrong. . . .
To summarize George's rights-based theory of justice: Each person has an exclusive right to his or her productive powers. We understand this intuitively, and on this basis accept the idea that people own what they produce. But if this is what ownership means, then no one can claim to own land, since no one produced it. People do have rights to the productive opportunities that nature offers, which are here for our use, but the rights of each person are limited by the equal rights of all other persons.
A careful analyst might object that there are some logical gaps in George's theory of justice. Logically, a right of ownership of things based on the right of each person to his or her productive powers does not preclude a right of ownership of natural opportunities on some other basis. We could mean by ownership only those rights that are derived from the right of each person to his or her productive powers, but we could also mean something broader and more complex.
The easiest way to repair this gap in George's theory is to specify that rather than having just one axiom, that each person has a right to his or her productive powers, he actually has two, the second one being that all persons have equal rights to natural opportunities.
A second logical gap occurs when George asserts that because people have rights to their productive powers, they own what they produce. This would follow only if they also had rights to the natural opportunities that they appropriate in the process of production. It is possible that the natural resources component of what a person produces is more than his share, considering the equal rights of everyone to all that nature offers. This caveat can be conceded without jeopardizing the two axioms, that each person has an exclusive right to his or her productive powers, and all persons have equal rights to the productive opportunities that nature offers.
This pair of axioms is the logical starting point of George's ideas. His proposal for the abolition of all taxes except a tax on land is a consequence that follows from them. Coercive taxes on the act of producing or on income from productive effort are unjust because people have rights to their productive powers. On the other hand, taxes on the rental value that land would have if it were not improved are not unjust, since this value is not produced by human effort. Support of government spending from this source is a convenient way of giving expression to the equal rights of all to natural opportunities. ... Read the whole articleNic Tideman: The Shape of a World Inspired by Henry George
How would the world look if its political institutions were shaped by the conception of social justice advanced by Henry George?Mason Gaffney: Henry George 100 Years Later: The Great Reconciler
Henry George (1839-1897) is best known today for Progress and Poverty (1879). Eloquent, timely and challenging, this book soon became and remains the all-time best-seller on economic theory and policy.
In 1879, George electrified the world by identifying one underlying cause for two great economic plagues:
These twin plagues arose from concentrated ownership of land, compounded by land speculation. Large landowners and speculators (often one and the same) held the best land idle or underused, forcing labor onto marginal land and driving down wages. Collapse of speculative land price bubbles caused periodic slumps.
(By "land" George meant exclusive rights to use natural resources in a specified territory. It included mining, water, fishing, and timber rights, road and rail rights-of way, and some patents. George emphasized the high value and productivity of urban land, which facilitated communication and trade. Today, we would add to "land" such items as taxi medallions, telecommunications licenses and pollution "rights".)
George followed his analysis with a plausible, practicable remedy: eliminate all taxes except for a tax on land values. The "single tax," as it later became known, would invigorate the economy by breaking up large idle holdings, making land available to those who would use it. And it would suck the air out of speculative bubbles, damping the boom and bust cycle.
George toured the world as an immensely popular political activist, orator and folk hero. He died suddenly in 1897, while running a second time for Mayor of New York City. A hundred thousand mourners marched at his funeral.
In the US, "Georgism" melded into the populist movement, and later into the Progressive Movement. At the national level, the Progressive Movement dominated both major political parties for 17 years, 1902-19. At the local level, its influence continued through the early 1920s. Local property taxation was modified along Georgist lines: land assessments were raised relative to improvements and rates were increased substantially. California water districts financed by land taxes catapulted California to the top-producing farm state in the Union, using land that had been desert or range. California generated farm jobs and homes, while other states destroyed them by allowing well-connected speculators and "robber barons" to grab large tracts of land. A Georgist, Congressman Warren Worth Bailey of Pennsylvania, drafted the first Federal personal income tax law on Georgist lines: falling mainly on very high incomes from property. ...
Neo-classical economists give us only a hard choice: we may have equity, or efficiency, but not both. By contrast, George's program reconciles equity and efficiency. Think of it! George takes two polar philosophies, collectivism and individualism, and composes them into one solution. He cuts the Gordian knot. Like Keynes after him, George inspires us by saying, "Forget the bitter tradeoffs; we can have it all!" Read the whole articleMason Gaffney: Neo-classical Economics as a Stratagem Against Henry George (in The Corruption of Economics, London: Shepheard-Walwyn, 1994)
Henry George, in contrast, had a genius for reconciling-by-synthesizing. Reconciling is far better than merely compromising. He had a way of taking two problems and composing them into one solution, as we lay out in detail infra. He took two polar philosophies, collectivism and individualism, and synthesized a plan to combine the better features, and discard the worse features, of each. He was a problem-solver, who did not suffer incapacitating dilemmas and standoffs. ...
Before Keynes there was another great reconciler, Henry George. In 1879, George electrified the world by identifying a cause of the boom/slump cycle, identifying a cause of inadequate demand for labor, and, best of all, following through with a plausible, practicable remedy. Like Keynes and Laffer after him, he turned people on by saying "Forget the bitter trade-offs; we can have it all."
George came out of a raw, naive new colony, California, as a scrappy marginal journalist. Yet his ideas exploded through the sophisticated metropolitan world as though into a vacuum. His book sales were in the millions. Seven short years after publishing Progress and Poverty in remote California he nearly took over as Mayor of New York City, the financial and intellectual capital of the nation. He thumped also-ran Theodore Roosevelt, and lost to the Tammany candidate (Abram S. Hewitt) only by being counted out (Barker, pp.480-81; Myers, pp.356-58; Miller, p.11). Three more years and he was a major influence in sophisticated Britain. In 1889, incredibly, he became "adviser and field-general in land reform strategy" to the Radical wing of the Liberal Party in Britain, where he was not even a citizen. "It was inevitable that, when (Joseph) Chamberlain bowed out, George should become the Radical philosopher" (Lawrence, pp.105-06). It also happened that when Chamberlain bowed out, the Radical wing became the Liberal Party. It adopted a land-tax plank after 1891 (The "famous Newcastle Programme"), and came to carry George's (muted) policies forward under successive Liberal Governments of Campbell-Bannerman, Asquith, and Lloyd George.
How could a marginal man come out of nowhere and make such an impact? The economic gurus of the day, even as today, were in a scolding mode, blaming unemployment on faulty character traits and genes, and demanding austerity. They were not intellectually armed to refute him or befuddle his listeners. He had studied the classical economists, and used their tools to dissect the system. Neo-classical economics arose in part to fill the void, to squeeze out such radical notions, and be sure nothing like the Georgist phenomenon could recur.
Again, are we not imputing too much weight to a minor figure? We are told that Georgism withered away quietly with its founder in 1897.9 That, however, is warped history. One of the great derelictions of American historians is to have neglected the single-tax movement, 1901-24. It is also a warped view of "The Single Tax" as a discrete, millenial change, a quantum leap away from life as we know it (Gaffney, 1976). Pure Georgism never "took over whole hog," but no single philosophy ever does. Modified Georgism, melded into the Progressive Movement, helped run the U.S.A. for 17 years, 1902-19, working through both major political parties.10 At the local level, it continued on through the early 1920s. Local property taxation was modified on Georgist lines even as it rose in absolute terms. The first Federal income tax law was drafted by a Georgist (Congressman Warren Worth Bailey of Johnstown, Pennsylvania) with Georgist goals uppermost.11 Real concessions were made: the politicians heard the voters. Historians of the Populist Party and movement often note that its ideas succeeded even though the Party failed, because its ideas were coopted by major parties. Georgism was a strand of American populism, later wrapped into Progressivism. Read the whole article
Lindy Davies: Socialism, Capitalism and Geoism
It may seem odd that both "capitalists" and "socialists" speak of the justice of their system and the vile in-justice of their opponents'. (Of course, the emotion behind such discussions is often heightened by a kind of home-team fervor.) Is there any universal standard of justice upon which economic policy can be based?
The answer lies in clarifying the question of the rightful basis (if there is one) of public vs. private ownership. For the thorough-going free-market capitalist, "public ownership" of anything is anathema: the community's interests are best served by the unhindered interactions of self-interested producers and traders. But the poverty, suffering and environmental destruction that come under such a "private property" regime cannot be denied. Because of this, the great bulk of social-policy debate revolves around how much of the efficiency of free enterprise must be traded for public interference, imposed in the name of equity. The question of the rightful balance between public and private control becomes one of expediency and political fashion, lacking any guiding principle. Indeed, modern "neoclassical economics" denies that any such principle exists.
For Henry George, however, the principle was clear. The value of natural opportunities belongs entirely to the community, and the production of wealth by labor, using capital, should be entirely unhindered by the penalty of taxation. For George, the most important question was not the amount of wealth that should be taken by the community, but the kind of wealth that should rightfully go to the community, because it is a value that the community has created.
In recent years, this understanding of the distinctive character of natural opportunity (land) as a factor of production has led to the coining of a new term: Geoism, indicating a philosophy based on the rightful understanding of the place of the Earth (Geo-) in economic life. Read the whole article
Karl Williams: Social Justice In Australia: INTRODUCTORY KIT
WHO WAS HENRY GEORGE?
In broadening one's understanding of Geonomics, the newcomer repeatedly encounters the name of Henry George. Since George did not discover Geonomics (but rather rediscovered it quite independently), why is his name so prominent?
Firstly, George's writings enlarged Geonomics - its details and full consequences - far more than any single person before or since. Secondly, his persuasiveness and sheer character popularised these reforms enormously, building up a sweeping tide of millions in the late 1800s. Thirdly, George's concepts were clearly a living, integral part of his being, and his writings are better understood with the understanding of his peculiar personal surroundings.
A REMARKABLE LIFE
But there's one more reason - George's remarkable life. The singular uniqueness of George's life and training, bizarre as compared to the biographies of other thinkers, must be grasped by anyone interested in his ideas. It is certainly unusual for a noted philosopher to have been a sailor and a printer, a journalist, tramp, worldwide lecturer and political candidate.
In the goldfields of California and British Columbia, George had the unique opportunity of studying the formation of a civilization - the change of an encampment into a thriving metropolis. He saw towns of tents and mud change into fine cities of paved streets and decent housing, with tramways and buses. And as he saw the appearance of wealth, he noted the first appearance of real poverty. He saw human degradation forming as an integral part of the rise of leisure and prosperity, and he felt compelled to discover the cause of this awful paradox.
Born in Philadelphia in 1839, George broke away from his restrictive family at the earliest opportunity, sailing the world at the age of 16. His restless and ever-inquisitive nature took him to the west coast where, after a spell in the goldfields of Canada, he based himself in San Francisco. From a type-setter he became a newspaper editor, and was soon churning out fierce condemnations of the social problems of his day. In particular he became a strong critic of mining interests, political corruption and land speculation.
THE PROSPERITY PARADOX
But it was a visit to New York which really galvanised his reformist resolve, where he was shocked by the co-existence of wealth and poverty. The result was the book Progress and Poverty in 1879, which is the all-time bestseller on economics and, in its day, was the most widely-read English book in the world after the bible. In a nutshell, his fundamental remedy for poverty was a tax/rental levied on the value of land exclusive of improvements, and the simultaneous abolition of all taxes which fall upon industry and thrift.
Despite his growing public profile and his reputation as a magnetic public speaker, George never had (or cared for) personal wealth. In fact, his early years of dire poverty - to the point of starvation for himself and his young family - were major character-builders. Even during the height of his much-acclaimed world lecture tours, he never forgot his roots and what he saw as his calling ....
George ran for mayor of New York in 1886 and was nearly elected. He died in 1897 at the height of his second campaign for mayor of New York. During his lifetime, he became the third most famous man in the United States, only surpassed in public acclaim by Thomas Edison and Mark Twain (himself an outspoken supporter of Georgist economics). Leo Tolstoy's appreciation stressed the logic of George's exposition: "The chief weapon against the teaching of Henry George was that which is always used against irrefutable and self-evident truths. This method, which is still being applied in relation to George, was that of hushing up."
His ideas stand: he who makes should have; he who saves should enjoy; what the community produces belongs to the community for communal uses; and God's earth, all of it, is the right of the people who inhabit the earth.
"For some years prior to 1952 I was working on a history of American reform and over and over again my research ran into this fact: an enormous number of men and women, strikingly different people, men and women who were to lead 20th century America in a dozen fields of humane activity, wrote or told someone that their whole thinking had been redirected by reading "Progress and Poverty" in their formative years. In this respect no other book came anywhere near comparable influence, and I would like to add this word of tribute to a volume which magically catalyzed the best yearnings of our fathers and grandfathers." - Dr. E. F. Goldman, Princeton historian Read the entire article
Karl Williams: Social Justice In Australia: ADVANCED KIT
HISTORY: HENRY GEORGE AND THE LAND VALUE TAX
"We ought to tax all idle land the way Henry George said - tax it heavily so that its owners have to make it productive." - Henry Ford, (1863 - 1947)
"I believe that Henry George was one of those really great thinkers produced by our country." - Franklin D. Roosevelt, (1882 - 1945)
Beyond knowing that Henry George had all the experience he needed in terms of poverty, odd-jobbing, writing and publishing, the life of this man of vision can be read elsewhere. On finding himself out of work in Philadelphia, he followed the trail of the forty-niners to San Francisco. Two expeditions in search of gold produced nothing but hunger and disappointment.
THE GREAT PARADOX
For a long time an idea was turning over in his head.
In San Francisco he had seen the growth of progress together with poverty. A trip to New York showed him the process in its full maturity. The shocking contrast between the most bare-faced opulence with the most abject squalor turned into an obsession the need to find an answer to the old question.
But he did not find that answer in New York. He found it in San Francisco a few months later. During a horse ride in the hills east of the city he dismounted to let the animal rest. Just to start conversation he asked a teamster what the value of land was in the district. "I don't know," answered the man, "but there is a man over there asking 1000 dollars for an acre." What was happening "over there" for an acre of land to be worth a fortune in the California of 1869?
The transcontinental railway was about to arrive. The land value throughout Oakland was being catapulted to the stars with speculators vying with each other to secure land titles before the arrival of those who would need land to live and work.
In a flash, George understood. Land value increases with the increase in population, and those who needed land had to pay for the privilege of using it. But the land is the primary source of all that human beings need to live. If there is such a thing as a universal right to life, there must also be a universal right to the Global Commons necessary for life. He who owns ends up controlling the destiny of him who works. Words like "republicanism" or "democracy" may be high-sounding, but empty.
The remedy suggests itself. To restore the control of land to those who use it, it is enough to take the rent of it as a social charge with which to defray public expenditure. The rent of land, instead of ending up in private pockets, would pay for defence, administration and the social services. Put it another way, let whoever occupies land pay in proportion to the quantity and quality of value subtracted from the common resources of nature, not for value added on them by his/her own exertion. And let all receive the value of those resources in the form of public services. Nobody would thus be defrauded of the fruits of their labour, and the load of taxation would cease to fall on production.
There was nothing new in that flash of understanding. He had independently arrived at the conclusions of feudalism, of Quesnay and of Turgot, without having ever heard of the three.
He began studying and writing. In 1879, at 40, he finished Progress and Poverty. The book is still in print, by far outselling all the works of Marx put together and has been translated into the major world languages.
In the 1880s and 1890s Henry George had captivated much of the English-speaking world with his books and hundreds of public speeches. The merit of Henry George is therefore not originality but an uncommon clear argument backed by a polished expression that makes of the book a classic of both economics and literature. Why is its author then not better known? Because he championed the efficiency of Land Value Taxation so well and identified the underlying cause of social injustice so successfully that he had to be stopped.
And he was stopped, by the so-called neo-classical economists bankrolled by vested interests. ... Read the entire article
Bill Batt: How Our Towns Got That Way (1996 speech)
Professor Gaffney has for the first time shown how powerful economic interests in American society essentially bought the leading figures of the newly-established American Economics Association with all the blandishments that can be used to influence academicians. Leading scholars were induced to change definitions of terms so that special interests would be advantaged. What were those interests? Primarily the railroad industry, which at the time was probably the most powerful political force in America. By changing definitions and conflating the land factor into capital, it was no longer essential for land rent to be paid in taxes, and the railroads, holders of some of the most valuable land in the nation, were thereby able to escape their full duty. This is an astonishing story, one never fully spelled out until now, and it explains both how the academic community was beholden to powerful interests and how many of the social problems we see today could have been avoided.
The classical tradition of economic thought was ably synthesized and represented by one dominant figure of the age: Henry George. All but forgotten today, perhaps in good part due to the assiduous disparagement of his economic foes, one should note that he was more widely known in his time in America than anyone except Thomas Edison. His 1879 book, Progress and Poverty, sold more copies throughout the world than any book till that time except the Bible. Born in Philadelphia the son of a publisher of religious books, he traveled to California as a young man to make his fortune as a journalist. But what he saw in land speculation and the exploitation of labor soon led him to study the classical economists and to write his ideas down. Upon publication of his book he shortly became known throughout the world, and traveled and lectured widely as a social reformer for the rest of his life. By the time he died he had become so famous that he almost won the mayoralty of the city of New York. He ran twice, losing to Tammany Hall the first time in what was probably a corrupt election (but beating the third-place finisher, Theodore Roosevelt) in 1886, and died four days before a second election he might have won in 1897. As a spellbinding orator and lucid writer, he captivated the world with his vision of societies made more just by a proper understanding of economics. Gaffney shows that it was George, not Marx, that was the primary threat to dominant interests in end-of-century United States. He had to be stopped, and he was.
In classical economics, the definition of capital grew out of labor mixed with earlier capital. Land, by conventional definition, was not capital, nor was it a component of wealth. Rather land was its own category. Conflating land into capital allowed land rent to be hidden and diluted in ways so that the unearned increment arising from social improvements fell to speculators rather than being returned to society in rent. The failure of society to recapture the appropriate level of land rent from titleholders led also to depression of labor wages at the margin, creating poverty and artificial scarcity of labor where otherwise it could be relieved. Hence the title of George's book, Progress and Poverty. George recognized that the value of any land parcel arose out of its social activity, not from anything which a titleholder might have done to it. He recognized that many, perhaps most, titleholders in land were speculators, reaping the benefit of others' investments, and selling out at last when their price was met. Hence it made sense that society had a right to a return on what it had brought about, as well as from the fact that those titles could never be other than leaseholds. That land rent, shortly confused by use of the words "single tax," was, to George, the rightful return to society.
The railroad barons of the 19th century were not just coincidentally the land barons. They also had strong holds on the founding and growth of the major American universities of the period, some of which carry their names. Johns Hopkins, Andrew Dickson White, Daniel Gilman, John D. Rockefeller, George Leland Stanford, Nicholas Murray Butler were all as attached to various universities in the country as they were to powerful railroad interests. They were able, through their control of universities either as actual presidents or as benefactors, to influence the dominant figures responsible for establishing the American Economic Association in 1885. The actual intrigue is too complex to be recounted here: who got appointed and promoted, who was funded in research, which were given endowed chairs, who got stock options, and so on. The preoccupation with defeating Henry George, Gaffney shows, was a paramount preoccupation of all of these figures. The central figures were:
These figures are even today the honored founders of an esteemed profession. So great was their victory over rival schools of thought that they are a century later seen as paragons of clear thinking and virtue. The intrigue and the inside deals are long forgotten. The lineage to contemporary scholarship continues in a "chain unbroken from Seelye to Clark to Johnson to Knight to Stigler, Friedman, Harberger and now thousands of Chicago-oriented economists." Indeed, when Henry George ran for mayor of New York in 1897, it was against the wealthy patrician Seth Low, President of Columbia University, who had recently recruited Clark to come to Columbia. To really understand the academic tension of the period, one must look at the published papers, the speeches and debates, the newspaper articles, and the citations at the end of those articles. These, even more than the interlocking directorates of faculty appointments, explain how much George was opposed, perhaps more feared. Was it for the falsity of his views? Clearly not, as few critics then or since then have managed to strike a knock-out blow against his theories. Rather, it was the threat George represented to powerful interests that required him to be defeated, and in doing so they succeeded but only in the short run, as they were within decades victims of their very successes. Today we see that the railroads have failed in this country for lack of traffic. It will soon be evident why.
There were many arguments to be made for the classical tradition, the result of which would be to rely upon payment of rent of land according to its value to society. George recognized that land value is largely a function of how society has elected to invest in any general neighborhood; there is no argument for any one titleholder to reap the reward of what others have invested. Gaffney points out that, from the standpoint of economic theory, the framework had the following virtues:
Those economists who today still persistently hold to the view that there is something special about land that make it unwise to treat as a form of capital are known as Georgists. They represent a small minority of the economics profession, but, little known as they are, they are among its most esteemed members.
Two-factor economics, however, had advantages to influential individuals and special interests. Land speculators who were positioned to profit from knowing where locational values would increase, or were in a position to cause those increases, could quickly and easily reap a private gain. Simply by holding title to parcels of real property, without doing anything at all to increase their value, one could quickly turn a profit. This is because the increment of unearned increases resulting from social investments were left for owners to reap rather than recovered by society. In three-factor economics, land rent reverted to society in an automatic and efficient manner. When a railroad magnate like George Leland Stanford extended the Southern Pacific track to the east of Los Angeles on land that he was granted by the government, all he then needed to do was to sit back and wait for the land sales to give him a return on that which was made more valuable by his investment in the line. All across America, land speculators learned that capturing monopoly titles to tracts of land allowed them to quickly and easily turn a "profit" on their investment yet hardly raising a finger.... read the whole articleBill Batt: The Compatibility of Georgist Economics and Ecological Economics
As with all nineteenth century moral philosophers, Henry George subscribed to a belief in natural law. The natural order of things as he saw it required that land be held in usufruct and that rent from such should be returned to society. The theory was inspired by his deeply religious roots and grounded in his reading of the prominent thinkers that predated him. The natural order was also a moral order, and the failure to comply with the order of nature and society as he saw it was a perversion of justice. The fruits of the land belonged to everyone, just as the fruits of one’s own labor were uniquely one’s own. Since one owned one’s body, one was entitled to keep the product of one’s physical efforts. Society had no more right to confiscate the earnings of one’s sweat and brow than it ought to leave in the hands of rich landowners the rent that was everyone’s inherent birthright to be shared. There were just and unjust taxes, and the only just tax was that which grew out of rent, of the unearned increment that visited certain land sites as windfall gains because of the efforts and investments by the community. Income and excise taxes were unjust and confiscatory — even theft, as especially were tariffs. Taxing or collecting land rent alone was the means of ending poverty and restoring progress. Indeed many Georgists reject use of the word tax entirely, preferring instead to talk instead about rent collection. There is even a lapel button Georgists use that says “Abolish all taxes; collect ground rent instead.” ...
Any failure to pay back that increment to society, or of government to recapture it in the form of taxes, constituted not only an injustice to the poor but a distortion of economic equilibrium. He witnessed first hand the perverted configurations of land use that today we know as sprawl development— even in his time it was apparent that urban, high value land parcels were being held off the market for speculative gain by meretricious interests. He witnessed also the boom and bust cycles of the land markets on account of such speculation, effects which spread far wider than just land prices. These inevitable cycles would dislocate labor and capital supply, giving impetus to the impoverishment and suffering which he himself had experienced. He understood that holding the most strategically valuable landsites out of circulation constituted a burden on the economy. He understood that financial resources spent to pay exorbitant land prices had a depressing effect on capital and labor. And because government was taxing labor and capital instead of recovering land rent, it was further restricting the job market and the growth of capital. He realized that people who captured monopoly control of strategically valuable landsites could do so because they were privy to information prior to its public release. It was not by any means his insight alone; it was captured also by George Washington Plunkett writing at the same time:
There’s an honest graft, and I’m an example of how it works. I might sum up the whole thing by sayin’: “I seen my opportunities and I took ‘em.”
Just let me explain by examples. My party’s in power in the city, and it’s goin’ to undertake a lot of public improvements. Well, I’m tipped off, say, that they’re going to lay out a new park in a certain place.
I see my opportunity and I take it. I go to that place and I buy up all the land I can in the neighborhood. Then the board of this or that makes its plan public, and there is a rush to get my land, which nobody cared particularly for before.
Ain’t it perfectly honest to charge a good price and make a profit on my investment and foresight? Of course, it is. Well, that’s honest graft. 32
32William L. Riordan, Plunkett of Tammany Hall. New York: Dutton, 1963, p. 3.
All society needed to do was to collect the economic rent from landholders as its rightful due, a solution that became part of the subtitle of his book, “the remedy.” Taxing the land (or, alternatively, collecting the economic rent) was something common citizens could understand.
Georgist Economics: Moral Premises
What distinguished Henry George’s views from those of his adversaries in the last decade of his life was his assertion that economics was necessarily a moral science. Unlike those who became the founders of the American Economics Association in 1885, most of whom were transitional figures to what would become neoclassical economics, the primary focus of George and his disciplines was economic justice. This is not to say that explanation was cast aside; indeed the subtitle of his magnum opus, Progress and Poverty, was An Inquiry into the Cause of Industrial Depressions and of Increase of Want with Increase of Wealth . . . The Remedy. Why, he asked, in the midst of such boundless plenty is there such abject poverty? He would dedicate his book, first published in 1879, “to those who, seeing the vice and misery that spring from the unequal distribution of wealth and privilege, feel the possibility of a higher social state and would strive for its attainment.” He had known poverty first hand when he was struggling to support his young family and establish himself as a printer, a journalist and a publisher. He could also see before him the fruits of land and nature easily available to be harvested but for its legal capture by monopoly titleholders. He wrote of all this in some six books and countless other essays, the focus always on the theme of economic justice.... read the whole article
Weld Carter: An Introduction to Henry George
Henry George, American economist and philosopher, was born in Philadelphia in 1839 and died in New York in 1897. His major works are:
Of all these works, Progress and Poverty first drew large-scale attention to George. This is the book to which George Soule alludes in his Ideas of the Great Economists, when he writes, "By far the most famous American economic writer, author of a book which probably had a larger world-wide circulation than any other work on economics ever written, was Henry George, author of Progress and Poverty (1879)." ... read the whole essayMason Gaffney: How to Revive a Dying City
One reason we remember Henry George is his pioneering study of how cities work and the good they do. Previous economists showed limited understanding of location value and its causes. Even von Thunen, father of location theory, approached cities in an antiseptic way that left out what today we call urban linkages and synergy. George was a mensch, seeing cities in human, interactive terms.
George saw cities as foci of civilization's basic mechanisms. People with mutual access, associating on equal terms, expedite cooperation and specialization through the market. Multivariate interactions are synergistic. Indeed, while each parcel is developed in the stage of decreasing returns, the composite city is generally in a stage of increasing returns, thanks to synergy: the whole exceeds the sum of its parts, and increases to the whole yield more than the sum of increases to the parts. Synergistic surplus, said George, lodges in urban land rents. Thus he explained a phenomenon which other economists overlooked: the unparalleled rise in urban rents and land prices, and in owners' wealth and power. ... read the whole article
Alanna Hartzok: In the History of Thought: Henry George's "Single Tax"
Judge Samuel Seabury: An Address delivered upon the 100th anniversary of the birth of Henry George
Joseph Cottler: The Printer and the Riddle, excerpt from "Champions of Democracy" - SMOG factor of 7.87 (reading level of middle school students)
Elbert Hubbard: Little Journeys to Homes of Reformers: Henry George
Albert Jay Nock — Henry George: Unorthodox American
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Wealth and Want
... because democracy alone hasn't yet led to a society in which all can prosper