Distribution of Wealth
This phrase is commonly used to describe how the ownership of specific kinds
of assets falls across a population. (For example, the Federal Reserve Board's
triennial Survey of Consumer Finances tells us that the top 1% of the US households
Net Worth in 2004, up from 30.1% in 1989; the bottom 90% of us hold 30.5%,
down from 32.8% in 1989. Detail available here.)
But for the purposes of wealthandwant.com, "distribution of wealth" also
has to do with who gets what: what share of the pie does labor get? What
pie does the owner of the land get? And that leads to the question of what
it is legitimate to tap — to tax — in order to provide for
the revenue needs of the community.
If there is a kind of income which is truly "unearned," isn't that a legitimate
Henry George: Political
Dangers (Chapter 2 of Social Problems,
 Beneath all political problems lies the social problem of the distribution
of wealth. This our people do not generally recognize, and they listen to quacks
who propose to cure the symptoms without touching the disease. "Let us
elect good men to office," say the quacks. Yes; let us catch little birds
by sprinkling salt on their tails! ... read the entire essay
Louis Post: Outlines of Louis F.
with Illustrative Notes and Charts (1894)
3. THE DISTRIBUTION OF WEALTH
The chart on the following page displays the fundamental principle of
Production, which we considered at the beginning, and also the fundamental
principle of Distribution, which is yet to be considered. In the development
of the latter will be found the explanation of the divorce in the civilized
state of Labor from Land: [chart]
This chart reminds us that Labor (human exertion), by application to
Land (natural materials and forces external to man), produces Wealth
(the generic term for all those things that tend to satisfy the material
Wants of man), and so tends to abolish poverty. No man's poverty can
be abolished in any other way, unless it be by gifts, or vulgar robbery,
or legalized spoils.
The chart shows also that Wealth distributes ultimately in Wages 82
(a fund made up of the aggregate of the earnings of individual laborers),
which corresponds to Labor; and Rent 83 (a fund made up of the aggregate
premiums for specially desirable locations), which corresponds to Land.84
82. "What is paid for labor of any kind is called wages. We are
apt to speak of the payment given to the common day laborer only as wages;
and we give finer names to the payments which are made for some other
kinds of services. Thus we speak of the doctor's or the lawyer's fee;
of the judge's salary; of the teacher's income; of the merchant's profit;
of the banker's interest, and of the professor's emoluments. They are
all in reality only payments for labor of different kinds, or for different
results of labor, — that is, they are all wages." — Dick's
Outlines, p. 23
"Wages is what goes to pay for all the trouble of labor." — Jevons's
Primer, sec. 39
"His [the manager's] share is called the wages of superintendence,
and although usually much larger than the share of a common laborer,
it is really wages of the same nature." — Id., sec. 41.
"The common meaning of the word wages is the compensation paid
to a hired person for manual labor. But in political economy the word
wages has a much wider meaning, and includes all returns for exertion.
For, as political economists explain, the three agents or factors in
production are land, labor, and capital, and that part of the produce
which goes to the second of these factors is styled by them wages. .
. It is important to keep this in mind. For in the standard economic
works this sense of the term wages is recognized with greater or less
clearness only to be subsequently ignored." — Progress
and Poverty, book i, ck. ii.
83. Rent "is what is paid for the use of a natural agent, whether
land, or beds of minerals, or rivers, or lakes. The rent of a house or
factory is, therefore, not all rent in our meaning of the word." — Jevons's
Primer, sec. 40.
"The term rent in its economic sense . . . differs
in meaning from the word rent as commonly used. In some respects
is narrower than the common meaning; in other respects it is wider.
"It is narrower in this: In common speech, we apply the word rent
to payments for the use of buildings, machinery, fixtures, etc., as well
as to payments for the use of land or other natural capabilities; and
in speaking of the rent of a house or the rent of a farm, we do not separate
the price for the use of the improvements from the price for the use
of the bare land. But in the economic meaning of rent, payments for the
use of any of the products of human exertion are excluded, and of the
lumped payments for the use of houses, farms, etc., only that part is
rent which constitutes the consideration for the use of the land — that
part paid for the use of buildings or other improvements being properly
interest, as it is a consideration for the use of capital.
"It is wider in this: In common speech we only
speak of rent when owner and user are distinct persons. But in the
is also rent where the same person is both owner and user. Where
owner and user are thus the same person, whatever part of his income
obtain by letting the land to another is rent, while the return for
his labor and capital are that part of his income which they would
him did he hire instead of owning the land. Rent is also expressed
in a selling price. When land is purchased, the payment which is made
the ownership, or right to perpetual use, is rent commuted or capitalized.
If I buy land for a small price and hold it until I can sell it for
a large price, I have become rich, not by wages for my labor or by
upon my capital, but by the increase of rent.
"Rent, in short, is the share in the wealth produced which the
exclusive right to the use of natural capabilities gives to the owner.
Wherever land has an exchange value there is rent in the economic meaning
of the term. Wherever land having a value is used, either by owner or
hirer, there is rent actual; wherever it is not used, but still has a
value, there is rent potential. It is this capacity of yielding rent
which gives value to land. Until its ownership will confer some advantage,
land has no value." — Progress and Poverty, book iii,
84. "The primary division of wealth in distribution is dual, not
tripartite. Capital is but a form of labor, and its distinction from
labor is in reality but a subdivision, just as the division of labor
into skilled and unskilled would be. In our examination we have reached
the same point as would have been attained had we simply treated capital
as a form of labor, and sought the law which divides the produce between
rent and wages; that is to say, between the possessors of the two factors,
natural substances and powers, and human exertion — which two factors
by their union produce all wealth." — Progress and Poverty,
book iii, ch. v.
Care must be taken not to confuse the hire of a house,
commonly and legally termed "rent," with economic Rent.
House rent is really Wages; it is compensation for the labor of house
Rent is not compensation for anything; it is simply the premiums
for advantages of location. ...
This illustrates the elementary principle of Distribution, that Wages
fall and Rent rises as demand for land forces labor to land of lower
productiveness.90 The principle may be more graphically illustrated by
supposing that demand for spaces in the chart advances so far as to include
all the closed spaces, except part of the poorest one. Thus: [chart]
We now find that all Wages have fallen to the level of Wages on the
poorest land that yields anything to the given unit of labor force; while
the Rent of all but that has, at the expense of Wages, risen in proportion
to its superior productiveness.91
91. The labor that was forced to the poorest lands would continually
bid for the opportunities that the better lands offered, until an equilibrium
was reached at the point shown in the preceding chart, where the given
expenditure of labor is as well compensated in one place as in another.
If laborer and land-owner be different persons, the laborer receives
what is distinguished as Wages, and the land-owner what is distinguished
as Rent. If the same person, he receives Wages as laborer and Rent as
Reflection will convince us that this must be so. Wages for a given
expenditure of labor force are no more anywhere, for any length of time,
all things considered, than the same expenditure of labor force will
produce from the best land to be had for nothing. Rent absorbs the difference.92
92. But we must not jump to the conclusion that there is any essential
wrong in Rent. Rent is nature's method of measuring the value of the
differences in natural opportunity which different laborers, owing to
variations in land, are obliged to accept. And, what in practice is more
important, it is nature's method of measuring the value to each individual
of those advantages which consist in accumulations of common knowledge,
in co-operative effort, in good government, in a word, in the benefits
that society as a whole confers as distinguished from those which each
individual earns. The question is not one of the rightfulness or the
wrongfulness of Rent. Personal freedom necessitates Rent, for it necessitates
the private possession of land, and private possession of land makes
Rent inevitable. Nothing short of communism could abolish it. The real
question is, What shall society do with Rent? Shall it give it to individuals,
or use it for common purposes?
"Were there only one man on earth, he would have
a right to the use of the whole earth.
"When there is more than one man on earth, the right to the use
of land that any one of them would have, were he alone, is not abrogated;
it is only limited. . . It has become by reason of this limitation, not
an absolute right to use any part of the earth, but (1) an absolute right
to use any part of the earth as to which his use does not conflict with
the equal rights of others (i. e., which no one else wants to use at
the same time), and (2) a co-equal right to the use of any part of the
earth which he and others may want to use at the same time." — Perplexed
Philosopher, p. 45.
It is in adjustment of this co-equal right that rent occurs.
b. Normal Effect of Social Progress upon Wages and Rent
In the foregoing charts the effect of social growth is ignored, it being
assumed that the given expenditure of labor force does not become more
productive.93 Let us now try to illustrate that effect, upon the supposition
that social growth increases the productive power of the given expenditure
of labor force as applied to the first closed space, to 100; as applied
to the second, to 50; as applied to the third, to 10; as applied to the
fourth, to 3, and as applied to the open space, to 1. 94 If there were
no increased demand for land the chart would then be like this: [chart]
93. "The effect of increasing population upon
the distribution of wealth is to increase rent .. . in two ways:
First, By lowering the margin of cultivation. Second, By bringing
out in land special capabilities otherwise latent, and by attaching
special capabilities to particular lands.
"I am disposed to think that the latter mode,
to which little attention has been given by political economists,
is really the more important." — Progress and Poverty,
book iv, ch. iii.
"When we have inquired what it is that marks
off land from those material things which we regard as products of
the land, we shall find that the fundamental attribute of land is
its extension. The right to use a piece of land gives command over
a certain space — a certain part of the earth's surface. The
area of the earth is fixed; the geometric relations in which any
particular part of it stands to other parts are fixed. Man has no
control over them; they are wholly unaffected by demand; they have
no cost of production; there is no supply price at which they can
"The use of a certain area of the earth's surface
is a primary condition of anything that man can do; it gives him
room for his own actions, with the enjoyment of the heat and the
light, the air and the rain which nature assigns to that area; and
it determines his distance from, and in great measure his relations
to, other things and other persons. We shall find that it is this
property of land, which, though as yet insufficient prominence has
been given to it, is the ultimate cause of the distinction which
all writers are compelled to make between land and other things." — Marshall's
Prin., book iv, ch. ii, sec. i.
94. Of course social growth does not go on in this
regular way; the charts are merely illustrative. They are intended
to illustrate the universal fact that as any land becomes a center
of trade or other social relationship its value rises.
Though Rent is now increased, so are Wages. Both benefit by social growth.
But if we consider the fact that increase in the productive power of
labor increases demand for land we shall see that the tendency of Wages
(as a proportion of product if not as an absolute quantity) is downward,
while that of Rent is upward. 95 And this conclusion is confirmed by
95. "Perhaps it may be well to remind the reader,
before closing this chapter, of what has been before stated — that
I am using the word wages not in the sense of a quantity, but in
the sense of a proportion. When I say that wages fall as rent rises,
I do not mean that the quantity of wealth obtained by laborers as
wages is necessarily less, but that the proportion which it bears
to the whole produce is necessarily less. The proportion may diminish
while the quantity remains the same or increases." — Progress
and Poverty, book iii, ch. vi.
96. The condition illustrated in the last chart would
be the result of social growth if all land but that which was in
full use were common land. The discovery of mines, the development
of cities and towns, and the construction of railroads, the irrigation
of and places, improvements in government, all the infinite conveniences
and laborsaving devices that civilization generates, would tend to
abolish poverty by increasing the compensation of labor, and making
it impossible for any man to be in involuntary idleness, or underpaid,
so long as mankind was in want. If demand for land increased, Wages
would tend to fall as the demand brought lower grades of land into
use; but they would at the same time tend to rise as social growth
added new capabilities to the lower grades. And it is altogether
probable that, while progress would lower Wages as a proportion of
total product, it would increase them as an absolute quantity.
c. Significance of the Upward Tendency of Rent
Now, what is the meaning of this tendency of Rent to rise with social
progress, while Wages tend to fall? Is it not a plain promise that if
Rent be treated as common property, advances in productive power shall
be steps in the direction of realizing through orderly and natural growth
those grand conceptions of both the socialist and the individualist,
which in the present condition of society are justly ranked as Utopian?
Is it not likewise a plain warning that if Rent be treated as private
property, advances in productive power will be steps in the direction
of making slaves of the many laborers, and masters of a few land-owners?
Does it not mean that common ownership of Rent is in harmony with natural
law, and that its private appropriation is disorderly and degrading?
When the cause of Rent and the tendency illustrated in the preceding
chart are considered in connection with the self-evident truth that God
made the earth for common use and not for private monopoly, how can a
contrary inference hold? Caused and increased by social growth, 97 the
benefits of which should be common, and attaching to land, the just right
to which is equal, Rent must be the natural fund for public expenses.
97. Here, far away from civilization, is a solitary
settler. Getting no benefits from government, he needs no public
revenues, and none of the land about him has any value. Another settler
comes, and another, until a village appears. Some public revenue
is then required. Not much, but some. And the land has a little value,
only a little; perhaps just enough to equal the need for public revenue.
The village becomes a town. More revenues are needed, and land values
are higher. It becomes a city. The public revenues required are enormous,
and so are the land values.
98. Society, and society alone, causes Rent. Rising
with the rise, advancing with the growth, and receding with the decline
of society, it measures the earning power of society as a whole as
distinguished from that of the individuals. Wages, on the other hand,
measure the earning power of the individuals as distinguished from
that of society as a whole. We have distinguished the parts into
which Wealth is distributed as Wages and Rent; but it would be correct,
indeed it is the same thing, to regard all wealth as earnings, and
to distinguish the two kinds as Communal Earnings and Individual
Earnings. How, then, can there be any question as to the fund from
which society should be supported? How can it be justly supported
in any other way than out of its own earnings?
If there be at all such a thing as design in the universe — and
who can doubt it? — then has it been designed that Rent, the earnings
of the community, shall be retained for the support of the community,
and that Wages, the earnings of the individual, shall be left to the
individual in proportion to the value of his service. This is the divine
law, whether we trace it through complex moral and economic relations,
or find it in the eighth commandment.
d. Effect of Confiscating Rent to Private Use.
By giving Rent to individuals society ignores this most just law, 99
thereby creating social disorder and inviting social disease. Upon society
alone, therefore, and not upon divine Providence which has provided bountifully,
nor upon the disinherited poor, rests the responsibility for poverty
and fear of poverty.
99. "Whatever dispute arouses the passions of
men, the conflict is sure to rage, not so much as to the question
'Is it wise?' as to the question 'Is it right?'
"This tendency of popular discussions to take
an ethical form has a cause. It springs from a law of the human mind;
it rests upon a vague and instinctive recognition of what is probably
the deepest truth we can grasp. That alone is wise which is just;
that alone is enduring which is right. In the narrow scale of individual
actions and individual life this truth may be often obscured, but
in the wider field of national life it everywhere stands out.
"I bow to this arbitrament, and accept this test." — Progress
and Poverty, book vii, ch. i.
The reader who has been deceived into believing that
Mr. George's proposition is in any respect unjust, will find profit
in a perusal of the entire chapter from which the foregoing extract
Let us try to trace the connection by means of a chart, beginning with
the white spaces on page 68. As before, the first-comers take possession
of the best land. But instead of leaving for others what they do not
themselves need for use, as in the previous illustrations, they appropriate
the whole space, using only part, but claiming ownership of the rest.
We may distinguish the used part with red color, and that which is appropriated
without use with blue. Thus: [chart]
But what motive is there for appropriating more of the space than is
used? Simply that the appropriators may secure the pecuniary benefit
of future social growth. What will enable them to secure that? Our system
of confiscating Rent from the community that earns it, and giving it
to land-owners who, as such, earn nothing.100
100. It is reported from Iowa that a few years ago
a workman in that State saw a meteorite fall, and. securing possession
of it after much digging, he was offered $105 by a college for his "find." But
the owner of the land on which the meteorite fell claimed the money,
and the two went to law about it. After an appeal to the highest
court of the State, it was finally decided that neither by right
of discovery, nor by right of labor, could the workman have the money,
because the title to the meteorite was in the man who owned the land
upon which it fell.
Observe the effect now upon Rent and Wages. When other men come, instead
of finding half of the best land still common and free, as in the corresponding
chart on page 68, they find all of it owned, and are obliged either to
go upon poorer land or to buy or rent from owners of the best. How much
will they pay for the best? Not more than 1, if they want it for use
and not to hold for a higher price in the future, for that represents
the full difference between its productiveness and the productiveness
of the next best. But if the first-comers, reasoning that the next best
land will soon be scarce and theirs will then rise in value, refuse to
sell or to rent at that valuation, the newcomers must resort to land
of the second grade, though the best be as yet only partly used. Consequently
land of the first grade commands Rent before it otherwise would.
As the sellers' price, under these circumstances, is arbitrary it cannot
be stated in the chart; but the buyers' price is limited by the superiority
of the best land over that which can be had for nothing, and the chart
may be made to show it: [chart]
And now, owing to the success of the appropriators of the best land
in securing more than their fellows for the same expenditure of labor
force, a rush is made for unappropriated land. It is not to use it that
it is wanted, but to enable its appropriators to put Rent into their
own pockets as soon as growing demand for land makes it valuable.101
We may, for illustration, suppose that all the remainder of the second
space and the whole of the third are thus appropriated, and note the
At this point Rent does not increase nor Wages fall, because there is
no increased demand for land for use. The holding of inferior land for
higher prices, when demand for use is at a standstill, is like owning
lots in the moon — entertaining, perhaps, but not profitable. But
let more land be needed for use, and matters promptly assume a different
appearance. The new labor must either go to the space that yields but
1, or buy or rent from owners of better grades, or hire out. The effect
would be the same in any case. Nobody for the given expenditure of labor
force would get more than 1; the surplus of products would go to landowners
as Rent, either directly in rent payments, or indirectly through lower
Wages. Thus: [chart]
101. The text speaks of Rent only as a periodical
or continuous payment — what would be called "ground rent." But
actual or potential Rent may always be, and frequently is, capitalized
for the purpose of selling the right to enjoy it, and it is to selling
value that we usually refer when dealing in land.
Land which has the power of yielding Rent to its owner
will have a selling value, whether it be used or not, and whether
Rent is actually derived from it or not. This selling value will
be the capitalization of its present or prospective power of producing
Rent. In fact, much the larger proportion of laud that has a selling
value is wholly or partly unused, producing no Rent at all, or less
than it would if fully used. This condition is expressed in the chart
by the blue color.
"The capitalized value of land is the actuarial
'discounted' value of all the net incomes which it is likely to afford,
allowance being made on the one hand for all incidental expenses,
including those of collecting the rents, and on the other for its
mineral wealth, its capabilities of development for any kind of business,
and its advantages, material, social, and aesthetic, for the purposes
of residence." — Marshall's Prin., book vi, ch. ix, sec.
"The value of land is commonly expressed as a
certain number of times the current money rental, or in other words,
a certain 'number of years' purchase' of that rental; and other things
being equal, it will be the higher the more important these direct
gratifications are, as well as the greater the chance that they and
the money income afforded by the land will rise." — Id.,
"Value . . . means not utility, not any quality
inhering in the thing itself, but a quality which gives to the possession
of a thing the power of obtaining other things, in return for it
or for its use. . . Value in this sense — the usual sense — is
purely relative. It exists from and is measured by the power of obtaining
things for things by exchanging them. . . Utility is necessary to
value, for nothing can be valuable unless it has the quality of gratifying
some physical or mental desire of man, though it be but a fancy or
whim. But utility of itself does not give value. . . If we ask ourselves
the reason of . . . variations in . . . value . . . we see that things
having some form of utility or desirability, are valuable or not
valuable, as they are hard or easy to get. And if we ask further,
we may see that with most of the things that have value this difficulty
or ease of getting them, which determines value, depends on the amount
of labor which must be expended in producing them ; i.e., bringing
them into the place, form and condition in which they are desired.
. . Value is simply an expression of the labor required for the production
of such a thing. But there are some things as to which this is not
so clear. Land is not produced by labor, yet land, irrespective of
any improvements that labor has made on it, often has value. . .
Yet a little examination will show that such facts are but exemplifications
of the general principle, just as the rise of a balloon and the fall
of a stone both exemplify the universal law of gravitation. . . The
value of everything produced by labor, from a pound of chalk or a
paper of pins to the elaborate structure and appurtenances of a first-class
ocean steamer, is resolvable on analysis into an equivalent of the
labor required to produce such a thing in form and place; while the
value of things not produced by labor, but nevertheless susceptible
of ownership, is in the same way resolvable into an equivalent of
the labor which the ownership of such a thing enables the owner to
obtain or save." — Perplexed Philosopher, ch. v.
The figure 1 in parenthesis, as an item of Rent, indicates potential
Rent. Labor would give that much for the privilege of using the space,
but the owners hold out for better terms; therefore neither Rent nor
Wages is actually produced, though but for this both might be.
In this chart, notwithstanding that but little space is used, indicated
with red, Wages are reduced to the same low point by the mere appropriation
of space, indicated with blue, that they would reach if all the space
above the poorest were fully used. It thereby appears that under a system
which confiscates Rent to private uses, the demand for land for speculative
purposes becomes so great that Wages fall to a minimum long before they
would if land were appropriated only for use.
In illustrating the effect of confiscating Rent to private use we have
as yet ignored the element of social growth. Let us now assume as before
(page 73), that social growth increases the productive power of the given
expenditure of labor force to 100 when applied to the best land, 50 when
applied to the next best, 10 to the next, 3 to the next, and 1 to the
poorest. Labor would not be benefited now, as it appeared to be when
on page 73 we illustrated the appropriation of land for use only, although
much less land is actually used. The prizes which expectation of future
social growth dangles before men as the rewards of owning land, would
raise demand so as to make it more than ever difficult to get land. All
of the fourth grade would be taken up in expectation of future demand;
and "surplus labor" would be crowded out to the open space
that originally yielded nothing, but which in consequence of increased
labor power now yields as much as the poorest closed space originally
yielded, namely, 1 to the given expenditure of labor force.102 Wages
would then be reduced to the present productiveness of the open space.
102. The paradise to which the youth of our country
have so long been directed in the advice, "Go West, young man,
go West," is truthfully described in "Progress and Poverty," book
iv, ch. iv, as follows :
"The man who sets out from the eastern seaboard
in search of the margin of cultivation, where he may obtain land
without paying rent, must, like the man who swam the river to get
a drink, pass for long distances through half-titled farms, and
traverse vast areas of virgin soil, before he reaches the point
where land can be had free of rent — i.e., by homestead entry
If we assume that 1 for the given expenditure of labor force is the
least that labor can take while exerting the same force, the downward
movement of Wages will be here held in equilibrium. They cannot fall
below 1; but neither can they rise above it, no matter how much productive
power may increase, so long as it pays to hold land for higher values.
Some laborers would continually be pushed back to land which increased
productive power would have brought up in productiveness from 0 to 1,
and by perpetual competition for work would so regulate the labor market
that the given expenditure of labor force, however much it produced,
could nowhere secure more than 1 in Wages.103 And this tendency would
persist until some labor was forced upon land which, despite increase
in productive power, would not yield the accustomed living without increase
of labor force. Competition for work would then compel all laborers to
increase their expenditure of labor force, and to do it over and over
again as progress went on and lower and lower grades of land were monopolized,
until human endurance could go no further.104 Either that, or they would
be obliged to adapt themselves to a lower scale of living.105
103. Henry Fawcett, in his work on "Political
Economy," book ii, ch. iii, observes with reference to improvements
in agricultural implements which diminish the expense of cultivation,
that they do not increase the profits of the farmer or the wages
of his laborers, but that "the landlord will receive in addition
to the rent already paid to him, all that is saved in the expense
of cultivation." This is true not alone of improvements in agriculture,
but also of improvements in all other branches of industry.
104. "The cause which limits speculation in commodities,
the tendency of increasing price to draw forth additional supplies,
cannot limit the speculative advance in land values, as land is a
fixed quantity, which human agency can neither increase nor diminish;
but there is nevertheless a limit to the price of land, in the minimum
required by labor and capital as the condition of engaging in production.
If it were possible to continuously reduce wages until zero were
reached, it would be possible to continuously increase rent until
it swallowed up the whole produce. But as wages cannot be permanently
reduced below the point at which laborers will consent to work and
reproduce, nor interest below the point at which capital will be
devoted to production, there is a limit which restrains the speculative
advance of rent. Hence, speculation cannot have the same scope to
advance rent in countries where wages and interest are already near
the minimum, as in countries where they are considerably above it.
Yet that there is in all progressive countries a constant tendency
in the speculative advance of rent to overpass the limit where production
would cease, is, I think, shown by recurring seasons of industrial
paralysis." — Progress and Poverty, book iv, ch. iv.
105. As Puck once put it, "the man who makes
two blades of grass to grow where but one grew before, must not be
surprised when ordered to 'keep off the grass.' "
They in fact do both, and the incidental disturbances of general readjustment
are what we call "hard times." 106 These culminate in forcing
unused land into the market, thereby reducing Rent and reviving industry.
Thus increase of labor force, a lowering of the scale of living, and
depression of Rent, co-operate to bring on what we call "good times." But
no sooner do "good times" return than renewed demands for land
set in, Rent rises again, Wages fall again, and "hard times" duly
reappear. The end of every period of "hard times" finds Rent
higher and Wages lower than at the end of the previous period.107
106. "That a speculative advance in rent or land
values invariably precedes each of these seasons of industrial depression
is everywhere clear. That they bear to each other the relation of
cause and effect, is obvious to whoever considers the necessary relation
between land and labor." — Progress and Poverty, book
v, ch. i.
107. What are called "good times" reach
a point at which an upward land market sets in. From that point there
is a downward tendency of wages (or a rise in the cost of living,
which is the same thing) in all departments of labor and with all
grades of laborers. This tendency continues until the fictitious
values of land give way. So long as the tendency is felt only by
that class which is hired for wages, it is poverty merely; when the
same tendency is felt by the class of labor that is distinguished
as "the business interests of the country," it is "hard
times." And "hard times" are periodical because land
values, by falling, allow "good times" to set it, and by
rising with "good times" bring "hard times" on
again. The effect of "hard times" may be overcome, without
much, if any, fall in land values, by sufficient increase in productive
power to overtake the fictitious value of land.
The dishonest and disorderly system under which society confiscates
Rent from common to individual uses, produces this result. That maladjustment
is the fundamental cause of poverty. And progress, so long as the maladjustment
continues, instead of tending to remove poverty as naturally it should,
actually generates and intensifies it. Poverty persists with increase
of productive power because land values, when Rent is privately appropriated,
tend to even greater increase. There can be but one outcome if this continues:
for individuals suffering and degradation, and for society destruction.
Rev. A. C. Auchmuty: Gems from George,
a themed collection of excerpts from the writings of Henry
George (with links to sources)
IN the economic meaning of the term production, the transporter or exchanger,
or anyone engaged in any subdivision of those functions, is as truly
engaged in production as is the primary extractor or maker. A newspaper-carrier
or the keeper of a news-stand would, for instance, in common speech be
styled a distributor. But in economic terminology he is not a distributor
of wealth, but a producer of wealth. Although his part in the process
of producing the newspaper to the final receiver comes last, not first,
he is as much a producer as the paper-maker or type-founder, the editor,
or compositor, or press-man. For the object of production is the satisfaction
of human desires, that is to say, it is consumption; and this object
is not made capable of attainment, that is to say, production is not
really complete, until wealth is brought to the place where it is to
be consumed and put at the disposal of him whose desire it is to satisfy. — The
Science of Political Economy unabridged:
Book III, Chapter 1, The Production of Wealth: The Meaning of Production • abridged:
Part III, Chapter 1, The Production of Wealth: The Meaning of Production
PRODUCTION and distribution are not separate things, but two mentally distinguishable
parts of one thing — the exertion of human labor in the satisfaction of
human desire. Though materially distinguishable, they are as closely related
as the two arms of the syphon. And as it is the outflow of water at the longer
end of the syphon that is the cause of the inflow of water at the shorter end,
so it is that distribution is really the cause of production, not production
the cause of distribution. In the ordinary course, things are not distributed
because they have been produced, but are produced in order that they may be distributed.
Thus interference with the distribution of wealth is interference with the production
of wealth, and shows its effect in lessened production. — The Science
of Political Economy — unabridged
Book IV, Chapter 2, The Distribution of Wealth: The Nature of Distribution • abridged
Part IV, Chapter 2, The Distribution of Wealth: The Nature of Distribution
OUR inquiry into the laws of the distribution of wealth is not an inquiry into
the municipal laws or human enactments which either here and now, or in any other
time and place, prescribe or have prescribed how wealth shall be divided among
men. With them we have no concern, unless it may be for purposes of illustration.
What we have to seek are those laws of the distribution of wealth which belong
to the natural order — laws which are a part of that system or arrangement
which constitutes the social organism or body economic, as distinguished from
the body politic or state, the Greater Leviathan which makes its appearance with
civilization and develops with its advance. These natural laws are in all times
and places the same, and though they may be crossed by human enactment, can never
be annulled or swerved by it. It is more needful to call this to mind, because,
in what have passed for systematic treatises on political economy, the fact that
it is with natural laws, not human laws, that the science of political economy
is concerned, has, in treating of the distribution of wealth, been utterly ignored,
and even flatly denied. — The Science of Political Economy — unabridged:
Part IV, Chapter 1, The Distribution of Wealth: The Meaning of Distribution • abridged:
Part IV, Chapter 1, The Distribution of Wealth: The Meaning of Distribution
THE distinction between the laws of production and the laws of distribution is
not, as is erroneously taught in the scholastic political economy, that the one
set of laws are natural laws and the other human laws. Both sets of laws are
laws of nature. The real distinction is that the natural laws of production
are physical laws and the natural laws of distribution are moral laws. . . .
The moment we turn from a consideration of the laws of the production of wealth
to a consideration of the laws of the distribution of wealth, the idea of ought
or duty becomes primary. All consideration of distribution involves the ethical
principle, is necessarily a consideration of ought or duty — a consideration
in which the idea of right or justice is from the very first involved. — The
Science of Political Economy — unabridged:
Book IV, Chapter 4, The Distribution of Wealth: The Real Difference Between Laws
of Production and of Distribution • abridged:
Part IV, Chapter 3: The Distribution of Wealth: Physical and Moral Laws
THE primary purpose and end of government being to secure the natural
rights and equal liberty of each, all businesses that involve monopoly
are within the necessary province of governmental regulation, and businesses
that are in their nature complete monopolies become properly functions
of the State. As society develops, the State must assume these functions,
in their nature co-operative, in order to secure the equal rights and
liberty of all. That is to say, as, in the process of integration, the
individual becomes more and more dependent upon and subordinate to the
all, it becomes necessary for government, which is properly that social
organ by which alone the whole body of individuals can act, to take upon
itself, in the interest of all, certain functions which cannot safely
be left to individuals. — Social
Problems — Chapter
17, The Functions of Government
IT is not the business of government to make men virtuous or religious, or to
preserve the fool from the consequences of his own folly. Government should be
repressive no further than is necessary to secure liberty by protecting the equal
rights of each from aggression on the part of others, and the moment governmental
prohibitions extend beyond this line they are in danger of defeating the very
ends they are intended to serve.— Social
Problems — Chapter
17, The Functions of Government
ALL schemes for securing equality in the conditions of men by placing the distribution
of wealth in the hands of government have the fatal defect of beginning at the
wrong end. They pre-suppose pure government; but it is not government that makes
society; it is society that makes government; and until there is something like
substantial equality in the distribution of wealth, we cannot expect pure government. — Protection
or Free Trade, Chapter 28 econlib ... go to "Gems from George"
Charles B. Fillebrown: A
of Natural Taxation, from Principles of
Natural Taxation (1917)
Q22. What is privilege?
A. Strictly defined, privilege is, according to the Century Dictionary, "a
special and exclusive power conferred by law on particular persons or classes
of persons and ordinarily in derogation of the common right."
Q23. What is today the popular conception of privilege?
A. That it is the law-given power of one man to profit at another man's expense.
Q24. What are the principal forms of privilege?
A. The appropriation by individuals, or by public service corporations, of
the net rent of land created by the growth and activity of the community
without payment for the same. Also, the less important privileges connected
with patents, tariff, and the currency.
Q25. Where in does privilege differ from capital?
A. Capital is a material thing, a product of labor, stored-up wages; an instrument
of production paid for in human labor, and destined to wear out. Capital
is the natural ally of labor, and is harmless except as allied to privilege.
Privilege is none of these, but is an intangible statutory power, an unpaid-for
and perpetual lien upon the future labor of this and succeeding generations.
Capital is paid for and ephemeral. Privilege is unpaid for and eternal. A
man accumulated in his profession $5,000 capital, which he invested in land
in Canada. Ten years later he sold the same land for $200,000. Here is an
instance of $5,000 capital allied with $195,000 privilege. This illustrates
that privilege and not capital is the real enemy of labor.
Q26. How may franchises be treated?
A. Franchise privileges may be abated, or gradually abolished by lower rates,
or by taxation, or by both, in the interest of the community.
Q27. Why should privilege be especially taxed?
A. Because such payment is fairly due from grantee to the grantor of privilege
and also because a tax upon privilege can never be a burden upon industry
or commerce, nor can it ever operate to reduce the wages of labor or increase
prices to the consumer.
Q28. How are landlords privileged?
A. Because, in so far as their land tax is an "old" tax, it is a
burdenless tax, and because their buildings' tax is shifted upon their tenants;
most landlords who let land and also the tenement houses and business blocks
thereon avoid all share in the tax burden.
Q29. How does privilege affect the distribution of wealth?
A. Wealth as produced is now distributed substantially in but two channels,
privilege and wages. The abolition of privilege would leave but the one proper
channel, viz., wages of capital, hand, and brain.
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