The Economic Argument of Henry George
[A criticism selected from the personal
correspondence of Spencer Heath,
published by the Science of Society
Dear Mr. G---:
You are indeed right in pointing out how Henry George denounced
taxation and all its effects -- except land value taxation --, just as
he advocated freedom, absolute free contract, for the distribution of
everything-except for the distribution of land.
But in his crucial economic argument of twenty pages he confessedly
argues for, and draws his dismal Maltho-Ricardian conclusion upon, the
avowed supposition (p. 155) that taxation was in no wise pertinent to
his argument, that in fact, in arguing to this dire conclusion,
taxation should be considered not even to exist. It is not that he
ignores taxation in his book, far from it, but that he expressly
ignores it in his argument, in his argument that rent-receiving by
contract, and not anything else, is the cause of our demoralization.
And upon this he is naive enough to suppose that the same arbitrary
power that seizes produce in general, once it seized all the part that
had been contractually ear-marked in the market as rent, would then
desist from all its former depredations.
It is very true that George elsewhere spent pages "showing how
taxes on production discourage production" as you say, but in his
central and basic argument against property in land, he leaves out all
this to show, via Ricardo, that not taxation but rent is what depletes
production. And it does this only when offered to and accepted by
landlords; yet this same rent would not diminish production at all if
intercepted or confiscated by tax-takers (pp. 405-6). Somehow the
taxation that George fancifully casts out for the purpose of his
argument or analysis is supposed to vanish in reality in proportion as
the politician lays violent hands on the portion of production that
otherwise would be rent (p. 406). In his argument, George casually
disregards the taxation that he elsewhere denounces and deplores. He
thus imputes maldistribution to a different cause, to that same "monopoly"
of land that he elsewhere casually concedes (p. 167) does not, "in
the modern form of society", even exist.
Taking account of the actualities asserted or admitted by Henry
George, vis a vis his Ricardian concept of rent and his
wishful thinking about taxation, other than on rent, diminishing, his
thesis would shape up in this wise:
- There are in force "schemes of taxation which drain the
wages of labor and the earnings of capital as the vampire bat is
said to such the blood of its victims" (p. 428).
- Leaving the effects of this taxation out of consideration,--"Whatever
be the increase of productive power, rent steadily tends to
swallow up the gain, and more than the gain."
- Therefore, we must "appropriate rent by taxation" and
thus make land "really common property" (p. 406), and
then, as this appropriation of rent is increased, this will cause
or permit to be abolished all those "schemes of taxation
which drain the wages of labor and the earnings of capital..."
For then, just as the taking of land rent by taxation is increased
so all other taking of the produce of labor and capital will be
abolished. This is the "simple yet sovereign remedy which",
he says, "will raise wages, increase the earnings of capital,
extirpate pauperism, abolish poverty, give remunerative employment
to whoever wishes it, afford free scope to human powers, lessen
crime, elevate morals, and trade, and intelligence, purify
government and carry civilization to yet nobler heights.
Such are the noble ends to be achieved by the political (legislative,
etc.) means of simply seizing rent by force. This is the vision, this
the promise, of Henry George. It does not follow.
What does follow is not merely that landowners would be despoiled of
their property, but that the autonomous institution of society,
property in land, by which its sites and resources are automatically
allocated non-politically to the most prepared and productive, would
be destroyed and the mass of land users would revert to servile
dependency under a bureaucracy of arbitrary and irresponsible
politicians prescribing their occupancies, seizing their properties
and regulating their lives.
Dear Mr. G---, I have written at much length, perhaps tediously, yet
I have ventured this in reliance on your profound and intelligent
interest and your sense of the importance of the subject-matter
involved. I have tried to be dispassionate and judicious towards ideas
and reasons that to me seem badly misleading to all of us and which I
am thus bound to oppose. I am glad to join you on the unimportance of
personal animadversions and to feel that you can thrill as I do to the
adventure of discovery and the joy of new understanding and the
fellowship it brings.