Reconsideration of
Progress and Poverty
by Henry George
Peter Barnes
[Reprinted from The New Republic, 11
December, 1971]
When Progress and Poverty was first published by Appleton in
1880, it became a worldwide best-seller almost at once. Reviewers
hailed it as one of the most remarkable books of the century.
Newspapers ran portions of it as a serial. Cheap paperback editions
were printed in both America and England. Foreign editions were
published in more than a dozen languages. Within a few years more than
two million copies of the book had been sold, and many more than that
number of people were familiar with its ideas. Henry George's
popularity was such that, when the Labor Party drafted him in 1886 to
run for mayor of New York City, he finished second in a three-way
race, outpolling Theodore Roosevelt but losing to the Tammany
candidate.
When George died a decade later in the heat of another New York
mayoralty campaign, more than a hundred thousand people passed his
bier to pay respect, and the funeral procession through the city
streets was compared to Lincoln's.
Yet such are the vagaries of intellectual fame that Henry George
today is little more than a footnote in the history and economics
texts. When he is remembered at all it is as a single-taxer, a
semi-crackpot with a magic cure-all for society's ills. His name is
magic only in the dozen or so Henry George schools that have sprung up
to perpetuate George's teachings.
This is a great pity, for Progress and Poverty is a
monumental work that deals only briefly with the single tax. No other
economics book that I have read possesses the lucidity, grace or
compassion of George's classic. And while there are faults in George's
reasoning, and much of what he says has been blunted by the passage of
time, what strikes the modern reader is how extremely pertinent this
book remains.
The fundamental question posed in Progress and Poverty is as
the title implies: Why, in the midst of ever-growing plenty, does
poverty persist and indeed flourish? Why, "amid the greatest
accumulations of wealth, do men die of starvation, and puny infants
suckle dry breasts?" This paradox, while worldwide, is nowhere
more evident than in the United States, where "almshouses and
prisons are as surely the marks of 'material progress' as are costly
dwellings, rich warehouses, and magnificent churches." On the
American frontier, George observed, there was neither great wealth nor
grinding poverty; all men worked hard and were rewarded with material
blessings in approximately equal proportion. Yet as industry
progressed and cities rose, so too did the disparity of income and
opportunity. New York, the greatest city of all, swarmed with paupers,
and San Francisco, where George was a printer and newspaperman, was
not far behind. Far from alleviating human want, material progress was
augmenting it. "It is as though an immense 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."
To discover and then eradicate the root cause of this phenomenon was,
for George, the paramount task of political economy. Clearly, he
reasoned, the cause must lie somewhere in the mechanics of the
distribution of wealth. At about the same time that Karl Marx was
placing the blame on the expropriation by capitalists of the surplus
value of labor, George's analysis was leading to a different
conclusion.
His basic argument can be briefly summarized. Wealth is produced by a
combination of three factors: land, capital and labor, the returns on
each being, respectively, rent, interest and wages. As the productive
capacities of labor and capital increase, so too does the value of the
land upon which they must operate. Rent (defined as payment for the
use of bare land, as opposed to payment for the use of buildings)
therefore rises as fast as wages and interest. Indeed, rent rises so
fast that it swallows up all increases in the value of production,
thus making landowners, rather than workers or capitalists, the sole
(and wholly undeserving) beneficiaries of progress. "The great
cause of the inequality in the distribution of wealth, is inequality
in the ownership of land," George concluded, and this led
inexorably toward his famous remedy -- the transformation, through a
tax on rent, of individual land ownership into common land ownership.
George's economic reasoning was buttressed by an excursion into the
realm of social ethics, much of which is strikingly resonant with what
ecologists are saying today. The only private property that is
legitimate, he contended, is that which is the product of labor; as a
man belongs to himself, so his labor, when put in concrete form,
belongs to him and no other. The gifts of nature, on the other hand,
are given to all indiscriminately, and no man has a right to possess
what is equally the birthright of his fellows. When, because of
population growth or the advance of civilization, a particular piece
of land or natural resource rises in market value, that rise is not
the result of any one man's exertions, and cannot rightfully be
appropriated by any one man. To tax that rise in value - indeed to
confiscate it - is therefore just; to tax the fruit of a man's labor,
while sometimes necessary, is essentially unjust.
George's economic reasoning has flaws. While for example, some
increase in the value of production is appropriated by the owners of
land, all of it is not thusly stolen. Private land ownership is not
the only cause of poverty amidst plenty, and taxation of land values,
while reasonable and just, cannot by itself bring abundance to all.
And yet, despite these and other weaknesses in George's arguments,
and despite the flood of economic writing we have had in this century,
I am convinced that American economic thought has, in a most important
respect, regressed since Progress and Poverty. The great
fascination of latter-day American economics has not been the laws of
distribution of wealth; it has been, to use the fancy term,
macroeconomics: the national-scale problems of growth, inflation and
unemployment, and how to use government policies to control them. The
present mechanisms for distributing wealth within the total economy
are accepted almost worshipfully. All that is necessary, says the
conventional economic wisdom, is to iron out the business cycle and
increase GNP; income distribution will then take care of itself,
mainly through the trickle-down process. If, for any reason, some
Americans don't get themselves aboard the gravy train, they can be
kept alive (barely) through welfare.
The failure of modern economics to question the distributive system
has been accompanied by a parallel brainwashing of the general public.
In George's day, millions knew the underlying cause of poverty was not
Americans' unwillingness to toil, but the fact that Robber Barons were
squeezing every possible penny out of the hides of working men. Today
the monopolists are subtler, the unions stronger, and Madison Avenue
more ingenious. The Horatio Alger myth, with all its corollaries, is
more firmly entrenched than ever. It's not the system that creates
economic inequality, says the myth, it's personal inadequacies: lack
of education, sloth, a defective family structure. Improve the
individual and you eliminate poverty. Henry George disposed of such
theories swiftly: "If one man work harder, or with superior skill
or intelligence than ordinary, he will get ahead; but if the average
of industry, skill, or intelligence be brought to the higher point,
the increased intensity of application will secure but the old rate of
wages, and he who would get ahead must work harder still. . . The
fallacy is similar to that which would be involved in the assertion
that every one of a number of competitors might win a race. That any
might is true; that every one might is impossible."
When the War on Poverty arrived in the early 1960s and raised the
same question posed by George in 1880, it came up with all the wrong
answers: give "them," the poor, job training; give others,
the bureaucrats, jobs; but don't for a moment tamper with the tax laws
or anything that might fundamentally alter the distributive system.
Now, five years from the date proclaimed by Sargent Shriver as the
millenium by which all poverty was to disappear, there are more poor
people in America than before the War on Poverty began.
The great wonder is not that American economists have failed to
resolve the poverty-amidst-plenty enigma (for it is a highly
cure-resistant paradox) but that they have so easily been diverted
from the quest. I am certain that Henry George, were he alive today,
would not be nearly so complacent. It outraged him in 1880 that "New
York alone spends over seven million dollars a year" on official
charity; imagine his sense of injustice today! Perhaps, in surveying
our high-technology economy, he would perceive the insufficiency of
his land value tax approach; perhaps not. In any case he would
assuredly be asking the right questions.
American interest in Progress and Poverty ought to revive.
Some vital questions might then be reinjected into the economic debate
in this country -- questions such as whether land, and even capital,
are public resources, and thus ought not to be monopolized for the
profit of a few; whether income earned through labor ought to be taxed
at the same rate as income not so earned (thanks to the capital gains
and other loopholes, labor-earned income is currently taxed at an even
higher rate than income gained through manipulation of capital and
land); and where, in the entire economic system, the diversions occur
that prevent an equitable distribution of wealth. It has not been
fashionable of late for economists to poke at the inner workings of
our system, or to evince the passion and compassion Henry George did.
That is another reason why Progress and Poverty deserves to be
revived: it could help make American economics the essentially humane
and radical discipline it ought to be. In his preface to Progress
and Poverty, George wrote that what he tried to d0 was to
reconcile the laissez faire ideals of liberty and individualism with
the socialist goal of economic justice -- as he put it, "to unite
the truth perceived by the school of Smith and Ricardo to the truth
perceived by the schools of Proudhon and Lasalle." Ninety years
later that remains an unfinished task. American political economy
should get on with it.
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