Wealth and Want
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Free Market Capitalism

As some wag said, capitalism is a fine system, and we really ought to try it some time. What we live with now is land monopoly capitalism, and what Georgists advocate is free market capitalism. The distinction is important: it can reduce or eliminate poverty, sprawl, joblessness, our increasingly tilted distribution of wealth and income. Isn't this enough to recommend it?

We're talking about capitalism on a level playing field. A fine goal!

Were we to implement Henry George's ideas about taxing land rent, we would leave to capital its rightful return and to labor its rightful return, both of which would be far greater than they receive today, gross or net! Today, the owners of land collect the rent as their private treasure, and leave a smaller pie for capital and labor to divide.


H.G. Brown: Significant Paragraphs from Henry George's Progress & Poverty: 10. Effect of Remedy Upon Wealth Production (in the unabridged P&P: Part IX — Effects of the Remedy: Chapter 1 — Of the effect upon the production of wealth)

... To abolish the taxation which, acting and reacting, now hampers every wheel of exchange and presses upon every form of industry, would be like removing an immense weight from a powerful spring. Imbued with fresh energy, production would start into new life, and trade would receive a stimulus which would be felt to the remotest arteries. The present method of taxation operates upon exchange like artificial deserts and mountains;

  • it costs more to get goods through a custom house than it does to carry them around the world.
  • It operates upon energy, and industry, and skill, and thrift, like a fine upon those qualities.
  • If I have worked harder and built myself a good house while you have been contented to live in a hovel, the taxgatherer now comes annually to make me pay a penalty for my energy and industry, by taxing me more than you.
  • If I have saved while you wasted, I am mulct, while you are exempt.
  • If a man build a ship we make him pay for his temerity, as though he had done an injury to the state;
  • if a railroad be opened, down comes the tax collector upon it, as though it were a public nuisance;
  • if a manufactory be erected we levy upon it an annual sum which would go far toward making a handsome profit.
  • We say we want capital, but if any one accumulate it, or bring it among us, we charge him for it as though we were giving him a privilege.
  • We punish with a tax the man who covers barren fields with ripening grain,
  • we fine him who puts up machinery, and him who drains a swamp.

How heavily these taxes burden production only those realize who have attempted to follow our system of taxation through its ramifications, for, as I have before said, the heaviest part of taxation is that which falls in increased prices. ... read the whole chapter

H.G. Brown: Significant Paragraphs from Henry George's Progress & Poverty: 11 Effect of Remedy Upon the Sharing of Wealth (in the unabridged P&P: Part IX Effects of the Remedy — Chapter 2: Of the Effect Upon Distribution and Thence Upon Production

But great as they thus appear, the advantages of a transference of all public burdens to a tax upon the value of land cannot be fully appreciated until we consider the effect upon the distribution of wealth.

Tracing out the cause of the unequal distribution of wealth which appears in all civilized countries, with a constant tendency to greater and greater inequality as material progress goes on, we have found it in the fact that, as civilization advances, the ownership of land, now in private hands, gives a greater and greater power of appropriating the wealth produced by labor and capital.

Thus, to relieve labor and capital from all taxation, direct and indirect, and to throw the burden upon rent, would be, as far as it went, to counteract this tendency to inequality, and, if it went so far as to take in taxation the whole of rent, the cause of inequality would be totally destroyed. Rent, instead of causing inequality, as now, would then promote equality. Labor and capital would then receive the whole produce, minus that portion taken by the state in the taxation of land values, which, being applied to public purposes, would be equally distributed in public benefits.

That is to say, the wealth produced in every community would be divided into two portions.

  • One part would be distributed in wages and interest between individual producers, according to the part each had taken in the work of production;
  • the other part would go to the community as a whole, to be distributed in public benefits to all its members.

In this all would share equally — the weak with the strong, young children and decrepit old men, the maimed, the halt, and the blind, as well as the vigorous. And justly so — for while one part represents the result of individual effort in production, the other represents the increased power with which the community as a whole aids the individual.

Thus, as material progress tends to increase rent, were rent taken by the community for common purposes the very cause which now tends to produce inequality as material progress goes on would then tend to produce greater and greater equality.

Who can say to what infinite powers the wealth-producing capacity of labor may not be raised by social adjustments which will give to the producers of wealth their fair proportion of its advantages and enjoyments! With present processes the gain would be simply incalculable, but just as wages are high, so do the invention and utilization of improved processes and machinery go on with greater rapidity and ease.

But I shall not deny, and do not wish to lose sight of the fact, that while thus preventing waste and thus adding to the efficiency of labor, the equalization in the distribution of wealth that would result from the simple plan of taxation that I propose, must lessen the intensity with which wealth is pursued. It seems to me that in a condition of society in which no one need fear poverty, no one would desire great wealth — at least, no one would take the trouble to strive and to strain for it as men do now. For, certainly, the spectacle of men who have only a few years to live, slaving away their time for the sake of dying rich, is in itself so unnatural and absurd, that in a state of society where the abolition of the fear of want had dissipated the envious admiration with which the masses of men now regard the possession of great riches, whoever would toil to acquire more than he cared to use would be looked upon as we would now look on a man who would thatch his head with half a dozen hats.

And though this incentive to production be withdrawn, can we not spare it? Whatever may have been its office in an earlier stage of development, it is not needed now. The dangers that menace our civilization do not come from the weakness of the springs of production. What it suffers from, and what, if a remedy be not applied, it must die from, is unequal distribution!

Nor would the removal of this incentive, regarded only from the standpoint of production, be an unmixed loss. For, that the aggregate of production is greatly reduced by the greed with which riches are pursued, is one of the most obtrusive facts of modern society. While, were this insane desire to get rich at any cost lessened, mental activities now devoted to scraping together riches would be translated into far higher spheres of usefulness. ... read the whole chapter

Bill Batt: The Compatibility of Georgist Economics and Ecological Economics

... Georgists today adhere to much the same points of view, although there are some significant differences. George himself was an ardent free trader, mainly because he believed that the single tax should supplant tariffs. After Ricardo, he accepted the idea of comparative advantage that arose from trade, but only after land (resource) rents were collected so as to preclude the raping of the natural environments of countries rich in such resources. He also believed that population growth was good — the more the better, and took special pains to refute Malthus. But one should also recall that he was living at a time when the expanse of the American continent was still open to any homesteader who chose to do so. Population growth was not a problem at that time. These elements of George’s thought are inconsequential to his followers today. Yet it is important to note that Georgists are not socialists; they do not subscribe to the view that society should own the means of production. These should remain privately owned by and large (except perhaps as today’s economic theory would call for, i.e., natural monopolies, public goods, and other government instruments). They are, rather, free-marketers in the full sense of the world, even more ardently than many contemporary American conservatives. He believed that removing the accretion of economic rent from landsites would restore self-regulating equilibrium of the marketplace, thus obviating the need for the heavy hand of government controls.

Restoring land sites to the arena and influence of market forces by collecting land rents eliminates the incentive to hold them for speculative investment and thus expands the reach of the free market. As much as that term has been now overused, Georgism constitutes a “third way.” It is the distinction between the right of real property ownership for use versus real property ownership for gain that sets Georgists apart from other free market capitalists.34... read the whole article

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Wealth and Want
... because democracy alone hasn't yet led to a society in which all can prosper