There are deep wrongs in the present constitution of society, but they are not wrongs inherent in the constitution of man nor in those social laws which are as truly the laws of the Creator as are the laws of the physical universe.  They are wrongs resulting from bad adjustments which it is within our power to amend. The ideal social state is not that in which each gets an equal amount of wealth, but in which each gets in proportion to his contribution to the general stock. And in such a social state there would not be less incentive to exertion than now; there would be far more incentive. Men will be more industrious and more moral, better workmen and better citizens, if each takes his earnings and carries them home to his family, than where they put their earnings in a "pot" and gamble for them until some have far more than they could have earned, and others have little or nothing.  ...   Read the entire article

The only reformer abroad in the world in my time who interested me in the least was Henry George, because his project did not contemplate prescription, but, on the contrary, would reduce it to almost zero. He was the only one of the lot who believed in freedom, or (as far as I could see) had any approximation to an intelligent idea of what freedom is, and of the economic prerequisites to attaining it....One is immensely tickled to see how things are coming out nowadays with reference to his doctrine, for George was in fact the best friend the capitalist ever had. He built up the most complete and most impregnable defense of the rights of capital that was ever constructed, and if the capitalists of his day had had sense enough to dig in behind it, their successors would not now be squirming under the merciless exactions which collectivism is laying on them, and which George would have no scruples whatever about describing as sheer highwaymanry. —Albert J. Nock "Thoughts on Utopia"  ... Read the whole piece

Louis Post: Outlines of Louis F. Post's Lectures, with Illustrative Notes and Charts (1894) — Appendix: FAQ

Q38. Is there no danger that under the single tax scheming men of great intellect would be able to take advantage of their less intelligent brethren, and by the competitive system corral everything as they do now?
A. If they did, it would not be by the competitive system, but because the competitive system was still imperfectly developed. Competition is freedom, and such a thing as you suggest could not be done where freedom prevailed. I believe that the single tax would perfect competition. If it did, and at any rate to the extent that it did, every one would get what he earned. ... read the book

While the land is what is called "ripening"for the unearned increment of its owner, the merchant going to his office and the artisan going to his work must detour or pay a fare to avoid it. The people lose their chance of using the land, the city and state lose the taxes which would have accrued if the natural development had taken place, and all the while the land monopolist has only to sit still and watch complacently his property multiplying in value, sometimes many fold, without either effort or contribution on his part.

This evil process strikes at every form of industrial activity. The municipality, wishing for broader streets, better houses, more healthy, decent, scientifically planned towns, is made to pay more to get them in proportion as it has exerted itself to make past improvements. The more it has improved the town, the more it will have to pay for any land it may now wish to acquire for further improvements.

The manufacturer proposing to start a new industry, proposing to erect a great factory offering employment to thousands of hands, is made to pay such a price for his land that the purchase price hangs around the neck of his whole business, hampering his competitive power in every market, clogging him far more than any foreign tariff in his export competition, and the land price strikes down through the profits of the manufacturer on to the wages of the workman.

No matter where you look or what examples you select, you will see that every form of enterprise, every step in material progress, is only undertaken after the land monopolist has skimmed the cream off for himself, and everywhere today the man or the public body that wishes to put land to its highest use is forced to pay a preliminary fine in land values to the man who is putting it to an inferior use, and in some cases to no use at all. All comes back to the land value, and its owner is able to levy toll upon all other forms of wealth and every form of industry.

Those were the words of Winston Churchill. And if you will examine the history of the major American depressions, you will find that virtually every one of them was preceded by a period of intense land speculation which had an inflationary effect upon the whole economy. In 1836, in 1857, in 1873, in 1893, and in 1929 -- in every instance, the big crash was precipitated by the bursting of the land bubble.   Read the whole article

Albert Jay Nock — Henry George: Unorthodox American

Progress and Poverty is the first and only thorough, complete, scientific inquiry ever made into the fundamental cause of industrial depressions and involuntary poverty. The ablest minds of the century attacked and condemned it — Professor Huxley, the Duke of Argyll, Goldwin Smith, Leo XIII, Frederic Harrison, John Bright, Joseph Chamberlain. Nevertheless, in a preface to the definitive edition, George said what very few authors of a technical work have ever been able to say, that he had not met with a single criticism or objection that was not fully anticipated and answered in the book itself. For years he debated its basic positions with any one who cared to try, and was never worsted.

... It is interesting, too, now that successive depressions are bearing harder and harder on the capitalist, precisely as George predicted, to observe that George and his associate anti-monopolists of forty years ago are turning out to be the best friends that the capitalist ever had. Standing staunchly for the rights of capital, as against collectivist proposals to confiscate interest as well as rent, George formulated a defense of those rights that is irrefragable. ...read the whole article

Frank Stilwell and Kirrily Jordan: The Political Economy of Land: Putting Henry George in His Place

Land is the most basic of all economic resources, fundamental to the form that economic development takes. Its use for agricultural purposes is integral to the production of the means of our subsistence. Its use in an urban context is crucial in shaping how effectively cities function and who gets the principal benefits from urban economic growth. Its ownership is a major determinant of the degree of economic inequality: surges of land prices, such as have occurred in Australian cities during the last decade, cause major redistributions of wealth. In both an urban and rural context the use of land – and nature more generally – is central to the possibility of ecological sustainability. Contemporary social concerns about problems of housing affordability and environmental quality necessarily focus our attention on ‘the land question.’

These considerations indicate the need for a coherent political economic analysis of land in capitalist society. Indeed, the analysis of land was central in an earlier era of political economic analysis. The role of land in relation to economic production, income distribution and economic growth was a major concern for classical political economists, such as Smith, Ricardo and Malthus. But the intervening years have seen land slide into a more peripheral status within economic analysis. Political economists working in the Marxian tradition have tended to focus primarily on the capital-labour relation as the key to understanding the capitalist economy. Neo-classical economists typically treat land, if they acknowledge it at all, as a ‘factor of production’ equivalent to labour or capital, thereby obscuring its distinctive features and differences. Keynesian and post-Keynesian economists have also given little attention to land because typically their analyses focus more on consumption, saving, investment and other economic aggregates.

However, there is an alternative current of political economic thought for which ‘the land question’ is central. This is the tradition based on the ideas of Henry George. This article seeks a balanced assessment of the usefulness of George’s ideas in the modern context. It outlines how insights derived from Georgist thinking can help in dealing with contemporary economic, social and environmental problems, while noting deficiencies and additional concerns. Following a general summary of Georgist ideas and policy proposals, six themes are addressed:

• the moral issue,
• wealth inequality,
• housing affordability,
• environmental concerns,
• urban development and
• economic cycles.

In each case it is argued that Georgist insights provide a valuable but incomplete basis for analysis and policy.

Economic Cycles

Georgists have also frequently claimed to be able to explain and ameliorate, even resolve, the cyclical character of the capitalist economy. George argued that a higher uniform land tax could reduce the severity of booms and busts in the housing market by reducing the speculative investment in land. This would produce more stable economic conditions throughout the economy, removing the boom-bust cycle to which capitalism is otherwise prone. It is an argument that has contemporary Australian relevance because the boom-bust character of the urban property market is clearly a significant factor in overall cyclical economic instability. An earlier article on Australian land price trends by Kavanagh (2001) has illustrated this connection, demonstrating that, while the property market is more volatile than the economy as a whole, there has been a clear temporal connection between the two patterns of cyclical behaviour over the last half century. Property booms and busts have typically coincided with swings in overall national economic performance. The policy implication is that, by smoothing out cycles in the housing market, a uniform land tax could help to avoid periodic crises in capitalist economies more generally. ...

Georgists have also frequently claimed to be able to explain and ameliorate, even resolve, the cyclical character of the capitalist economy. George argued that a higher uniform land tax could reduce the severity of booms and busts in the housing market by reducing the speculative investment in land. This would produce more stable economic conditions throughout the economy, removing the boom-bust cycle to which capitalism is otherwise prone. It is an argument that has contemporary Australian relevance because the boom-bust character of the urban property market is clearly a significant factor in overall cyclical economic instability. An earlier article on Australian land price trends by Kavanagh (2001) has illustrated this connection, demonstrating that, while the property market is more volatile than the economy as a whole, there has been a clear temporal connection between the two patterns of cyclical behaviour over the last half century. Property booms and busts have typically coincided with swings in overall national economic performance. The policy implication is that, by smoothing out cycles in the housing market, a uniform land tax could help to avoid periodic crises in capitalist economies more generally.

However, the argument needs to be kept in perspective. Periodic economic recessions cannot be solely attributed to speculation in land.

Inadequate levels of aggregate demand, problems of overproduction, and problems of instability in financial markets are among other causes of interruptions to the process of capital accumulation. Land tax cannot feasibly claim to redress all the systemic contradictions and malfunctions of a capitalist economy. Additional counter-cyclical policies are necessary. These include macroeconomic stabilisers, such as monetary and fiscal policies, that can contribute to reducing the cyclical tendency to which the economy is otherwise prone, along with incomes policy and the more radically interventionist ‘socialisation of investment’ that Keynes (1936: 378) advocated. So here, too, land tax seems to have the status of a necessary but not sufficient condition for progressive economic reform. ... read the whole article

Peter Barnes: Capitalism 3.0: Preface (pages ix.-xvi)

In retrospect, I realized the question I’d been asking since early adulthood was: Is capitalism a brilliant solution to the problem of scarcity, or is it itself modernity’s central problem? The question has many layers, but explorations of each layer led me to the same verdict. Although capitalism started as a brilliant solution, it has become the central problem of our day. It was right for its time, but times have changed.

When capitalism started, nature was abundant and capital was scarce; it thus made sense to reward capital above all else. Today we’re awash in capital and literally running out of nature. We’re also losing many social arrangements that bind us together as communities and enrich our lives in nonmonetary ways. This doesn’t mean capitalism is doomed or useless, but it does mean we have to modify it. We have to adapt it to the twenty-first century rather than the eighteenth. ... read the whole chapter

Peter Barnes: Capitalism 3.0 — Chapter 1: Time to Upgrade (pages 3-14)

Can we imagine, design, and install an upgraded operating system that fixes these flaws? This may seem a far-fetched dream. But consider that something comparable happened before, in 1935, with the enactment of Social Security.

Like the changes I’m suggesting here, Social Security is an intergenerational compact, engraved into our economic operating system. It was imagined, designed, and installed early in the twentieth century in response to what was then a looming crisis: the impoverishment of millions too old to work. The basic contract was, and remains, simple: active workers collectively support retired workers, and in return are supported in old age by the next generation of workers. For seventy years, this contract has been administered without scandal or waste by a trust fund that has never missed a payment. Thanks to this operating system upgrade, extreme old-age poverty, once rampant, is largely a thing of the past.

What we need now is a comparable system upgrade, this time to fix capitalism’s disregard for nature, future generations, and the nonelderly poor. ... read the whole chapter

Peter Barnes: Capitalism 3.0 — Chapter 2: A Short History of Capitalism (pages 15-32)

Before we consider how to upgrade our economic operating system, it’s worth contemplating how it came to be. Two parallel threads emerge: the decline of the commons and the ascent of private corporations. ...

Why isn’t economic growth making us happier? There are many possibilities, and they’re additive rather than exclusive.

• One is that, once material needs are met, happiness is based on comparative rather than absolute conditions. If your neighbors have bigger houses than you do, the fact that yours is smaller diminishes your happiness, even though your house by itself meets your needs. In the same way, more income wouldn’t make you happier if other people got even more. That’s why an affluent country can get richer without its citizens getting happier.
• A second reason is that surplus capitalism foments anxiety. Millions live one paycheck, or one illness, away from disaster. When disaster strikes, the safety nets beneath them are thin. And everyone sees jobs vanishing as capital scours the planet for cheap labor.
• Another reason is that surplus capitalism speeds up life and creates great stress. Humans didn’t evolve to multitask, sit in traffic jams, or work, shop, and pay bills 24/7. We need rest, relaxation, and time for companionship and creativity. Surplus capitalism can’t give us enough of those things.
• Similarly, its nonstop marketing message — you’re no good without Brand X — breeds the opposites of gratitude and contentment, two widely acknowledged precursors of happiness. According to the Union of Concerned Scientists, the average American encounters about three thousand such messages each day. No wonder we experience envy, greed, and dissatisfaction. ... read the whole chapter

Peter Barnes: Capitalism 3.0 — Chapter 7: Universal Birthrights (pages 101-116)

The perennially popular board game Monopoly is a reasonable simulacrum of capitalism. At the beginning of the game, players move around a commons and try to privatize as much as they can. The player who privatizes the most invariably wins.

But Monopoly has two features currently lacking in American capitalism: all players start with the same amount of capital, and all receive $200 each time they circle the board. Absent these features, the game would lack fairness and excitement, and few would choose to play it.

Imagine, for example, a twenty-player version of Monopoly in which one player starts with half the property. The player with half the property would win almost every time, and other players would fold almost immediately. Yet that, in a nutshell, is U.S. capitalism today: the top 5 percent of the population owns more property than the remaining 95 percent.

Now imagine, if you will, a set of rules for capitalism closer to the actual rules of Monopoly. In this version, every player receives, not an equal amount of start-up capital, but enough to choose among several decent careers. Every player also receives dividends once a year, and simple, affordable health insurance. This version of capitalism produces more happiness for more people than our current version, without ruining the game in any way. Indeed, by reducing lopsided starting conditions and relieving employers of health insurance costs, it makes our economy more competitive and productive.

If you doubt the preceding proposition, consider the economic operating systems of professional baseball, football, and basketball. Each league shifts money from the richest teams to the poorest, and gives losing teams first crack at new players. Even George Will, the conservative columnist, sees the logic in this: “The aim is not to guarantee teams equal revenues, but revenues sufficient to give each team periodic chances of winning if each uses its revenues intelligently.” Absent such revenue sharing, Will explains, teams in twenty of the thirty major-league cities would have no chance of winning, fans would drift away, and even the wealthy teams would suffer. Too much inequality, in other words, is bad for everyone. ... read the whole chapter