Enthusiasm for Capitalism
Harry Gunnison Brown
[Reprinted from the Henry George News, July
According to the Marxist-Leninist-Stalinist economic philosophy labor
produces all that is produced, and income from property is "surplus
value." Its adherents manifest little or no interest in
differentiating between the capital which, by working and saving, men
produce to aid them in further production and, on the other hand,
natural resources, urban sites and tracts of land usable for
agriculture, forestry and grazing.
There is, however, a philosophy that does distinguish between capital
and land and between the incomes yielded by the one and by the other.
Adherents of this philosophy stress the thought that, since man-made
capital can come into existence only as there is work and saving, and
since capital adds to the productiveness of industry, the private
enjoyment of income from capital is a desirable -- and a deserved --
incentive to bringing capital into existence.
But they look with less kindly eyes on the private enjoyment of
income from land, purely as such, and favor having an increasing
amount of such income taxed into the public treasury. For the private
enjoyment of such income appears, to adherents of this philosophy, as
a requirement from landowners that others pay them for permission to
use the earth. More specifically, they think of land rent as payment
required by landowners of the payers for permission to work, live on,
and draw subsoil deposits from, the earth or those parts of the earth
which geological forces and community development have made relatively
productive and livable.
Is there or is there not significant reason for distinguishing
between the capital that, by working and saving, men produce to aid
them in further production and, on the other hand, natural resources,
sites and tracts? Is there, in short, good reason for distinguishing
between capital and land?
Surely the rent of land is in a very peculiar sense socially produced
rather than individually earned, and it ought to be sharply
distinguished in thought from interest on capital produced by men's
labor and saving. If there is any kind of return which is peculiarly
fitted to be a source of public revenue, it is the rent of land.
Time was when the American Declaration of Independence and the
struggle of the American states for freedom from political domination
by Great Britain, stirred the imaginations of liberty-loving people in
many other countries. Today we seek allies and sympathizers in our
ideological struggle against the socialistically regimented countries
of the Communist bloc. Will it help us in this ideological struggle --
will it stir enthusiasm for capitalism -- if in the "capitalism"
that we practice and urge upon others, we include vast private income
derived from charging (a) for permission to use -- and history might
have been such as to make it so -- navigable lakes and streams, or (b)
for permission -- and this is the way history really has made it -- to
work on and to live on the earth?
Professor Henry E. Hoagland has stated that vacant lots are the
largest single class of property in American cities. His statement is
substantiated by a survey of eighty-six cities ranging In population
from 900 to over 800,000, the results of which were published in 1955.
The survey showed that approximately 43 per cent of the land area --
excluding streets and water areas -- was held vacant.
When land is held out of use speculatively or otherwise, rents which
must be paid for apartments or homes and their sites become higher;
thus the purchase price of land -- and homes -- increases. Wherever
large amounts of land are vacant all public utility services become
more expensive to install and maintain. If our taxes were shifted more
largely to bare land and reduced or abolished on buildings and other
capital, the building of apartment houses and other dwelling units
would increase. Capital, because taxed less and thus yielding more,
would flow in, causing rents to fall.
Without understanding the theory of land value taxation no economist
can be expected to advise wisely regarding what tax policy is
favorable to low-cost housing, slum clearance, industrial development
or labor productivity. How shall we account, unless by the existence
of an unfavorable intellectual climate among the economics
professoriate, for the persistent ignoring, by most -- not, of course,
quite all -- of our economists and their textbooks, of cause and
effect relations so clear and so significant?
"Capitalism" is under heavy attack in a large part of the
world. And the college graduates our economics professors have taught,
are but poorly armed against the bombardments of communist and
socialist ideology, when they can oppose the optimistically idealized
programs of the "planners" with nothing better than the
contemporary caricature of what capitalism could be at its possible
best. Why have they not been shown the blueprint of a free private
enterprise system which would be for many a college student, were it
adequately explained to him, an acceptable societal goal and an
inspiration to personal effort towards its realization?