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SCI LIBRARY

Why You Should Read Progress and Poverty

Frank C. Genovese



[A paper presented under the Henry George Research Program at Pace University, New York, 4 November 1982. Reprinted with permission from the author]


I come here today with a piece of advocacy and appeal to your intellect, your curiosity and your concern with the subject of economics. Your motivation for studying the subject must be, at least in part, that you feel it has to do with human well being. I come to urge you to read one of the great books on the subject of Economics - Progress and Poverty, written by Henry George in 1879.

It may be well to tell you first why you should be interested enough in the history of economic thought to read the masters. Addressing this point, Vincent Bladen said:

It is not an antiquarian interest that I want to promote, for I believe that contemplation of the work of the great economists of the past will increase ... understanding of current economic writings and of the contemporary economic world. This last is the most important, and I would add that I am concerned to increase understanding in order to improve the quality of human life. My concern goes beyond the positive science of economics to the art of political economy, to problems of economic policy.[1]

While it is important to increase everyone's understanding of economic matters, it is particularly important for economists to be as fully equipped as possible. Perception, imagination and reason are qualities Professor Marshall felt were needed, and Boulding has mentioned "insight" and "logic" as part of the desirable equipment.

Bladen felt comfortable in the ability we, as teachers, have to teach positive economics, that of mathematics and logic, but he feared such teaching could inhibit the development of imagination, insight, and judgment.

I wonder if we do not dull the moral sense of the economic technicians we are developing. Are we worldly philosophers or are we engineers, and would it not be best if we were both?

Since the ideas of economists become reflected in legislation and affect culture and living standards, is it not important that they be not only sound but also just?

There is one aspect of the training of economists which is seldom mentioned; it is one in which we can take inspiration from Henry George. It is training in communication techniques. George was a superb communicator; his writing was precise, uncomplicated, and at the same time lyrical. And we must believe, from the enthusiastic responses he elicited from audiences, that he was also an extremely talented speaker. All too often in our field we put a positive premium on bookishness and labyrinthine prose. We sometimes confuse public presentations with intellectual prostitution. Remarkably, we associate public presentation with "money grubbing", and this in a primarily private enterprise society.

Let us not fall into this narrow-minded trap. Let us seek the very best reasoned and researched economics, which takes cognizance of human well being, and let us learn how to bring it to the bar, not just of professional opinion, but to the more difficult bar of public opinion. Let us not rest on the assumption that sound ideas will be picked up and publicized by others with little effort on our part to encourage them. Part of the ability to practice the art of economics must rest upon our ability to communicate.

However, one must tread lightly on this point since there is much opinion among economists that "...the ills and shortcomings of our science are due to the scientific incompetence of very many economists who never learned their own business and turn to politics and philosophy because they are not up to the tasks of the scientist."[2] And Lionel Robbins in his Essay on the Nature and Significance of Economic Science[3], expresses the general opinion that economics is the happy hunting ground of those adverse to the rigors of thought.

Schumpeter was able to condone preachment when it was solidly based. One feels sure he would endorse the statement of Arthur Burns that:

An economic theorist is justified on many occasions in oversimplifying facts to clarify in his own mind what he believes to be significant relationships. He is likewise justified in bringing the results of his speculative inquiries before his colleagues, whether to seek their critical appraisal before going further or to stimulate them by his work. As long as the economist moves within these boundaries, he may be excused even for not making a strenuous effort to discover how seriously he has distorted the facts by his simplifying assumptions. But when he attempts to give practical advice, he loses his license to suppose anything he likes and to consider merely the logical implications of untested assumptions. It then becomes his duty to examine with scrupulous care the degree in which his assumptions are factually valid. If he finds reason to question the close correspondence between the assumptions and actual conditions, he should either not undertake to give any practical advice, or frankly and fully disclose the penumbra that surrounds his analysis and the conclusions drawn from it. Better still, he should rework his assumptions in the light of the facts and see whether he is justified on this new basis in telling men in positions of power how they should act. Economics is a very serious subject when the economist assumes the role of counselor to nations.[4]

Schumpeter was very respectful of Henry George, who was called "the Prophet of San Francisco" by his multitudes of admirers, a title which had been derisively thrust upon him by the Duke of Argyll. Schumpeter tended to distrust philosophers, but of George, the Prophet, he said:

But we cannot afford to pass by the economist whose individual success with the public was greater than that of all the others on our list, Henry George. The points about him that are relevant for a history of analysis are these: He was a self-taught economist, but he was an economist. In the course of his life, he acquired most of the knowledge and the ability to handle an economic argument that he could have acquired by academic training as it then was. In this he differed to his advantage from most men who proffered panaceas...he was a very orthodox economist and extremely conservative as to methods...up to and including Mill's treatise, he was thoroughly at home in scientific economics; and he shared none of the current misunderstandings or prejudices concerning it. Even the panacea - nationalization not of land but of the rent of land by a confiscatory tax - benefited by his competence as an economist, for he was careful to frame his "remedy" in such a manner as to cause the minimum injury to private enterprise economy.

Professional economists who focused attention on the single tax proposal and condemned Henry George's teaching, root and branch, were hardly just to him. The proposal itself...though vitiated by association with the untenable theory that the phenomenon of poverty is entirely due to the absorption of surpluses by the rent of land, is not economically unsound, except in that it involves an unwarranted optimism concerning the yield of such a tax. In any case it should not be put down as nonsense. If Ricardo's vision of economic evolution had been correct, it would even have been obvious wisdom. And obvious wisdom is in fact what George said in Progress and Poverty (ch. l, Book IX) about the economic effects to be expected from a removal of fiscal burdens - if such a removal were feasible.

Schumpeter, like Bladen, gives us some reasons for studying the history of economics, even though he was more concerned with the development of methodology than was Bladen. He cited "pedagogical advantages, new ideas, and insights into the ways of the human mind" and some He added that there are reasons for believing that in economics the case for a study of the history of analytic work is stronger than it is for other fields.[7]

He felt the study of only current economics would lack "direction and meaning" since, "the state of a science at any given time implies its past history and cannot be satisfactorily conveyed without making this implicit history explicit."[8]

He felt such study might give us new inspiration, and expressed this graphically thus;

A man's mind must be indeed sluggish if, standing back from the work of his time and beholding the wide mountain ranges of past thought, he does not experience a widening of his own horizon.

And furthermore, such study "teaches us much about the ways of the human mind...It displays logic in the concete, logic in action, logic wedded to vision and to purpose. Any field of human action displays the human mind at work but in no other field do people take so much trouble to report on their mental processes."[9]

The development of economics is itself a unique historical process, since the economists dealt with the problems of their times from the perspective of their time and under the pressures of their times. Schumpeter notes that, "the filation of ideas has met with more inhibitions in our field than it has in almost all others."[10] And, while in subjects such as physics where study of the history of the subject is less necessary

"...much more than in physics have results been lost on the way or remained in abeyance for centuries. ...Stimulating suggestions and useful if disconcerting lessons are much more likely to come to the economist who studies the history of his science than to the physicist who can, in general, rely on the fact that almost nothing worth while has been lost of the work of his predecessors."[11]

In short, we might say we study the mountains of past economic thought "because thar's gold in them thar hills."

Now that I have convinced you that there is value in studying the history of economic thought, may I direct your attention to a particularly rewarding book which represents one of the peaks in the mountain ranges that Schumpeter described. There is a wonderful view from the top, and reading this will make your study of many dull tomes on the subject worthwhile. This is a piece of inspirational literature, and a well-reasoned one. Its vision, its purpose and its lessons are still alive. It is a call to humanity for thought and action. It is, unlike any economics book you have ever read. It will enliven your study of economics and give it purpose. A brief passage will illustrate the quality of the prose and the heady, enthusiastic tone of the book::

Give labor free field and its full earnings; take for the benefit of the whole community that fund which the growth of the community creates, and want and fear of want are gone. The springs of production would be set free, and the enormous increase of wealth would give the poorest ample comfort. Men would no more worry about finding employment than they worry about finding air to breathe; they need have no more care about physical necessities than do the lilies of the field. The progress of science, the march of invention, the diffusion of knowledge, would bring their benefit to all.

With this abolition of want and the fear of want, the admiration of riches would decay, and men would seek the respect and approbation of their fellows in other modes than by the acquisition of wealth. In this way there would be brought to the management of public affairs, and the administration of common funds, the skill, the attention, the fidelity, and integrity that can now be secured only for private interest, and a railroad or gas works might be operated on public account, not only more economically and efficiently than as at present, under joint stock management, but as economically and efficiently as would be possible under single ownership. The prize of the Olympian games, that called forth the most strenuous exertions of all Greece, was but a wreath of wild olive; for a bit of ribbon men have over and over again performed services no money could have bought. [12]

You can see George was a man with a vision of a better life. And he felt he had the key to this better life if he could unlock the mind of man and displace false ideas selfishly implanted by others with sound ideas presented by economics. He deplored economic inequality and its impact on every phase of life. And he deplored the loss to themselves and to society of the undeveloped talents of the great majority of the people, the poor.

He wanted a basically competitive order driven more by love or sympathy than by self interest.13 This would include private ownership of houses, capital, and other equipment and private possession of most land and natural resources. But he wanted to tax away monopoly returns to land and resource owners, to have public ownership of utilities, since they were monopolies, and to abolish other monopolies, such as patents.

He defined land to include "all natural materials, forces and opportunities."[14] By this definition, oil reserves under the sea would have enriched the whole population, not just the lucky and undeserving land owners. Perhaps more important to the purity, or lack of it, of the political process, radio and television station licenses would be rented to the operators by the government rather than being awarded to them. On this broader interpretation of "land" we have at least a partial answer to the criticism of many economists (remarkably, including even Sclmmpeter) that the single tax would not bring in enough revenue.[15]

With this ordering of society, he felt poverty would no longer exist side by side with great wealth and unused productive power.

I would second Professor Harriss' opinion that there is an enormous amount left of great value in the teachings of Henry George. While there are many exceptions, it is apparent that the chief factor affecting the living standards and levels of attainment of most members of one generation is the level of income of their parents. This is even apparent in S.A.T. test scores, which were recently published in the New York Times.

Perhaps I should become more technical and stress George's achievements as an economic theorist.

He spread the seeds that blossomed into marginal productivity theory.

He shattered the easy, facile, and spurious mathematics of Malthus on population and production increases and the wages fund doctrine, both of which had impeded attempts to improve the conditions of the multitudinous poor.

And he strongly influenced many economists to seek ways to improve the economic order, and the public to clamor for beneficial change, and the politicians and government leaders to heed the clamor.[16][17]


FOOTNOTES


1.Vincent W. Bladen, From Adam Smith to Maynard Keynes, (Toronto: University of Toronto Press, 1974), p. xi.
2. Joseph A. Schumpeter, "The Crisis in Economics-Fifty Years Ago", The Journal of Economic Literature, Vol. XX, No. 3 (September 1982), p. 1053.
3. Lionel Robbins, Essay on the Nature and Significance of Economic Science, Second Ed., revised and extended, (London: Macmillan and Company, 1935).
4. Arthur Burns, The_Frontiers of Economic Knowledge, (Princeton: Princeton University Press, 1954), pp. 229-30.
5. The title of an article by the Duke of Argyll in the Nineteenth Century, April, 1884, reprinted with George's reply in Complete Works, III, "Property in Land, A Passage at Arms between the Duke of Argyll and Henry George," at pp. 7-40, and 41-74, Fels Fund Library Ed., (Garden City, N.Y.: Doubleday, Page and Co., 1906-1911).
6. Joseph A. Schumpeter, History of Economic Analysis, (New York: Oxford University Press, 1954), pp. 864-65.
7. Ibid., p. 4.
8. Ibid.
9. Ibid., p. 5. 10. Ibid., p. 6.
11. Ibid.
12. Henry George, Progress and Poverty, (New York: Garden City Publishing Company, Inc., 1926), pp. 459-60.
13. Ibid.., pp. 460-61.
14. Ibid.. 15. Ibid., p. 37.
16. Steven B. Cord, Henry George: Dreamer or Realist, (Philadelphia: University of Pennsylvania Press, 1965);
17. If you wish to follow through on the Ricardian rent theory on which he relied, read pp. 1055-56 of Joseph A. Schumpeter, "The Crisis in Economics", Journal of Economic Literature, Vol. XX, No. 3, (September 1982); History of Economic Analysis, (New York: Oxford University Press, 1954), pp. 458-59; and Vincent W. Bladen, From Adam Smith to Maynard Keynes, (Toronto: University of Toronto Press, 1974), pp. 195-96.