Challenges Faced by Proponents
of Henry George's
System of Political Economy

Frank McEachran

[A paper titled, "... will not find easy acceptance," presented at the 13th International Conference on Land Value Taxation and Free Trade. Douglas, Isle of Man; September 1973]

We have to face the true, though lamentable fact, that of the two great economic philosophers of the nineteenth century, Henry George and Karl Marx, the ideas of the first have achieved little success, whereas those of the second have spread round half the world. I venture to suggest one or two reasons why this is so.

In the first place Henry George, like a true scientist, made his appeal mainly to the human reason which is not, or should not be, emotionally inspired. Marx appealed to the emotions; some of them the lower emotions -- envy, fear, hatred -- some of them higher -- justice, indignation -- and emotions have always been potent factors inciting men to action. Man is a fighting animal and many men enjoy revolutions. Thinkers, as a rule, do not and they think better because of it. Henry George tried to analyse the economic world objectively as a scientist should, and to formulate a science of economics. He succeeded in the sense that no one has ever proved him wrong, but neither he nor his followers have succeeded in persuading men to implement his ideas. Now just as each science takes certain units of nature as its subject matter -- physics, pieces of dead matter, biology, examples of living matter -- so also George in his economics treated man as a unit of human nature producing wealth, and so built up his system. Karl Marx saw men collectively, even anthropologically, dividing them into species (not all that far from a racial division), wage earners (workers and peasants) on the one hand, landlords and capitalists (bourgeoisie) on the other. Here straightway is a confusion between economics and anthropology; man is homo sapiens, not just a worker or a bourgeois, and in economics he is a producer of wealth, nothing more or less. This is the first point.

Add to this a further confusion in that Marx presented the workers and peasants as engaged in mortal conflict with the bourgeoisie (class war) on the traditional lines of sheep and goats, good angels against bad angels, Ormuzd against Ahriman, Marduk against Tiamat, thus introducing a mythological element of great antiquity. This religious division into sheep and goats, with the implicit belief that the sheep must attain salvation and not the goats, lies deep embedded in the human psyche. We have seen it in operation in this century in more than one form, in its Nazi interpretation as Aryans against Semites, in its Marxist form proletariat against.capitalists. Recalling then that man is a fighting animal we can well appreciate the clarion call of the Communist Manifesto of 1848 "Workers of the world unite; you have nothing to lose but your chains." There is nothing so thrilling as this In Henry George, nor can we expect it; we get from George something different -- an explanation , simple enough in essence, of why workers were in chains under capitalism and also why they are still in chains under Communism.

The practical outcome of the doctrine of the Communist Manifesto, with its substitution of a state bureaucracy in place of the monopoly capitalist, would probably make Karl Marx turn in his grave, but that is not what we are concerned with here. The point is that the masses see in bureaucracy their only hope. The fact that it does not succeed in its aims does not reduce its credibility. The masses see no alternative. It embodies the general will of the people, it has the best intentions, and one day, an ever receding day, we may add, it will put things right. Even in the comparatively laisser-faire Western "societies this kind of mentality continues to grow, and slowly and surely permeates every sphere of human life, from the supply of milk to children in schools up to the Olympic games. Everything becomes political.

At this point a word about the general will, the philosophy of collectivism, which so fetters the human mind today, is pertinent. Rousseau, who wrote his famous Contrat Social in 1762, was a man who had experienced the humiliation of serving other men -- he was a valet at one time, and even when he rose in the world and became secretary to the French ambassador to Venice he was made harshly to feel his social inferiority. The idea came to him that this kind of subjection, dependence on other men, might be avoided if all men were made dependent on the state, and this is really the psychological background to his book. He did not, unfortunately, foresee the appalling situations which would arise from this kind of subservience. In the Contrat Social the argument runs that the will of the state is the essence of all the individual wills and incorporates or embodies their own best intentions, so that a priori the will of the state has precedence over the wills of individuals as such and any individual who raises his ugly personal ego in protest must by definition be in the wrong. This kind of political theory was developed further by Hegel, from whom the Marxists derive.

Granting the truth of this theory, although it is in fact not true, the state can do no wrong and can even re-write history to suit its ends. From our point of view it is clear that where this climate of opinion holds, Georgeist arguments will not get very far, as any of us will be aware who have tried to discuss the matter with Marxists. The party system of Western Europe, above all the two party system in USA and UK, still preserves the older and more rational point of view that a government may be in the wrong. But for how long, one wonders?

Revolutionaries seek power and that is why there will never be a Georgeist revolution. It would be a contradiction in terms. Georgeists do not want power for themselves alone; they want to diffuse it throughout the population, each according to his capacity, and they supply an economic background which would further this policy. Here again, granting once more that man is a fighting animal, we have got to realise that there are men, who even if they understood what we wanted and saw its general benefits, would not wish it to prevail. They would prefer the continuance of the present system in the hope of obtaining great power themselves -- governing power or financial power. They would be willing to run the risk of other people outdoing them in the struggle. Many men of this kind exist and we have to face the fact.

Now unlike revolutionaries, politicians as a rule do not believe in violence, but they resemble them in seeking power, and to ask them to implement a policy, even though it be logical and just, which diminishes their power, is asking the unreasonable and even the impossible. By and large no one will deny them their good intentions. But they wish to do it their own way, and their way, as we know full well, is a wrong way. They wish to help the comparatively poor by soaking the comparatively rich, oblivious to the fact that in the long run this policy may steer the ship of state on to the rocks. To bring about a situation where most men would be rich merely by their own exertions is not what politicians want, even if they believed it possible, which they do not. They are blinded, partly by habit, partly by the actual state of the world they live in; with its overwhelming superstructure of vested interests standing in the way of reform. Hence the Georgeist dilemma. Only a revolution could remove the dead weight of centuries, but revolutionaries are anti-Georgeist. The tragedy is all the time that men of good will realise that something is very wrong in the structure of society, but can see no other solution except the State. They are unaware that something very important has escaped their attention.

This brings me to a pessimistic consideration. There are certain reforms you can bring about in a civilisation when it is young which you cannot bring about when it is old. The Greek philosophers were worried about the institution of chattel slavery. One of them, Alcidamas by name, even wanted to abolish it. The Gracchi in Rome were worried about the land monopoly, and they tried to do something about it, unsuccessfully. Later there arose the great slave-holding Empire of Rome and even if men in large numbers had wanted to abolish slavery and land monopoly they could not have done it. It was too late. The Empire was grinding to its ruin. It was a benevolent empire in some ways, with a bureaucracy of the best intentions. Good emperors like Hadrian built towns with amphitheatres in Britain, with government money extracted from the provinces by taxation. It was hoped that once the towns were built, with their amenities, the natives would flock into them. Sometimes they did, sometimes they didn't, and the amphitheatres remained empty. In the end, largely because of the heavy burden of taxation, the Roman Empire decayed, and no amount of fiscal ingenuity could save it.

Now the point I am making by analogy is that the vast superstructure of vested interests which has been erected in the world under the aegis of the State, whether in the tightly knit Communist societies suffering from over-centralisation, or in the more loosely knit Western societies suffering from over-taxation, not only renders it difficult for men to understand what we are saying, but also cuts the ground from under our feet whenever any feeble attempt is made to put Henry George's philosophy into action. Thus in actual practice only the surface is scratched -- a little site-value tax here, a little reduction in tariffs there, a subsidy removed elsewhere, etc. What is the good, then, of us telling people with the purest economic logic that if they would only implement a certain policy (our policy) they could put the world right in, shall we say, fifty years? (To do it in less time than this would involve too much dislocation of the vested interests.) But men do not wish to wait fifty years. They want the just society here and now, or at least within their life time.

Perhaps at this point a word may be said on the effects of the rise of history as a basic subject in education. Not history on the highest level, of course, but history as it is taught to the ordinary man who lives in the ordinary world and reads ordinary newspapers. He learns at school, at least in Britain, that Britain was a Free Trade country from about 1840 to 1932. Before that time there were Corn Laws and after that time tariffs of various kinds; three successive historical facts corresponding, no doubt, to three successive epochs of history. The deeper issues involved are not dwelt upon, nor even understood. That a regime where goods flow into a country freely may also mean that ideas flow in freely, and may be a step in the direction of freedom generally, is not registered in the history books. Again, it is a historical fact that in 1919 Germany ceded her colonies to Great Britain under the peace treaty of Versailles, a treaty which aroused many pricks of conscience in the victorious powers later, although, in point of fact, it was more just than the treaties which followed the Second World War.

The point lam making is this. Time and again British politicians, aiming at appeasing Germany, talked vaguely about "giving back her colonies to Germany" but never explained in black and white what this meant. Now if you look below the historical slogans in matters of this kind, you will find that when a territory changes hands the economic situation will change inside the territory. German citizens, often farmers, in a German colony will prefer to live under German government, and so many will sell their farms and go home. Other settlers, mainly British, will come in to take their place. These will for the most part strongly object to being handed back to German rule and this is why it is seldom possible to exchange territories without a war. Throughout the inter-war period journalists wrote cheerfully about "giving back her colonies to Germany" without any reference as to who was in fact now living in the colonies and actually owning the land. In fact the simple but concrete Georgeist query "give back what to whom?" was never mentioned. Similarly with regard to the Polish corridor. There is no need to expatiate on the fishermen who happened to own the barren foreshores of Gdynia when that city was built (actually most of the trade in that area was sufficiently dealt with by Danzig), how the land values shot up and how they made fortunes, probably subsidising nationalist Polish newspapers dilating on how essential it was for Poland to have her corridor. The simple Georgeist answer to all that kind of thing is the answer given as long ago as 1776 by Adam Smith -- free trade throughout the area. How many people would think of that now? In the centralised Communist economies, which do not even have convertible currencies, the idea of trade at all is nothing more or less than a glorified system of barter. So primitive have things become!

Yet in so far as there are many intelligent human beings in the world It does seem strange that more people have not understood -- men of the calibre of Adam Smith and Henry George. Men understand the complicated structure of the atom, men can explain the obscure philosophy of Emmanuel Kant and the mathematical logic of Whltehead and Bertrand Russell. Why is it that they cannot understand the far simpler theories of Henry George? Perhaps the reason is that the truth in Henry George is not so simple after all. There is a twist in it which is easily overlooked and may explain the mystery. We may recall the story of the puzzle tree in San Francisco in which there was, if one was sharp enough to spot it, the outline of a cat. Usually if one looked long enough one would spot the cat, although some people, and intelligent ones, could never spot it. Or, again, perhaps they did not look long enough. And now, at some length, I will try to describe the outlines of the cat so hard to discern.

Some of us will have been interested in philosophical problems and may have met the puzzle of the "pure ego" of Kant which makes judgments but which cannot become part of the judgment because it is doing the judging. This difficulty cannot be explained either in speech or on paper, since everything one says or writes becomes objective by the very speaking and writing. Some mystery of this kind applies to the problem of rent and wages and although it looks simple there is a catch in it which is the hardest thing in the world to locate. That is why so many people do not and cannot "see the cat." To illustrate this difficulty may I ask you to see yourself in your mind's eye standing on the site you are using, and working on it, producing the fruits of the earth or maybe building a shop. The fruits of the earth or the shop are your property. But while you are standing there you must also turn round and see yourself as others see you. People who have worked, and are working, on the sites round yours have created a value for you which was there when you took on the site and which is called the economic rent. It is this activity which makes a few yards of earth in Regent Street, London, many times more valuable than an equal amount in the Highlands of Scotland. Now it is equally true that you by your work on your site are creating a value for the people round you, and the better you work and the more useful shops you build the more the benefit you will do these people. Now unless you can do a volte-face and look both ways at once, you will be inclined to think the value created by the others (and which may, of course, go up or down) is yours. Similarly, the others round you may well think that the Increased value of their sites produced by your good work is theirs, but if so, they, like you, are mistaken. Unfortunately, since the orthodox books of economics talk of rent objectively just as they talk of capital and wages (and it makes no difference to them whether you Invest your money in land or capital enterprises) people just fail to understand the differences we have been analysing. Just as the pure ego which makes judgments cannot be put into the judgment but always remains outside it and presents a mystery to most people, so also the fact that rent is outside your site as regards yourself, but inside for the others, and similarly with their rent, is an equally difficult relationship for the human mind to grasp. Wages and capital are subjective to the producer but rent is objective, and here is the point that is always missed. To express it in another way, seen inwardly from his own point of view a man produces wages and capital on his own site, while he is receiving (quite inequitably) a rental value produced by society round him, and the others round him are in exactly the same position. Seen outwardly from the point of view of society, his activity in producing wages and capital on his site is enhancing the value of all the sites round about. Men working on their own sites cannot see that their own site value is produced by others, not by themselves, and (under the present system) claim it as a result of their own activity. This is a sort of facing both ways very difficult to make clear, especially because when men purchase a site they think they have bought the rental value and in part are justified in thinking so.

This may sound too philosophical for many people, although to my mind it is the essential difficulty and explains why quite intelligent people cannot see what we are driving at. There are others, of course. There is the argument about insecurity which impels men to "own" the land on which they build their houses. Recently we have seen biological studies which seem to suggest that we inherit from the animal world the desire to hold on to the earth beneath us. Robert Awdrey in The Territorial Imperative has made it clear that the robin does not, as Goethe thought, sing its song out of pure joy, but as a warning to other species to keep off its little piece of territory. This may be so, but it is also true that primitive human communities have no idea of private property and any inborn instinct of a possessive kind there is seems to be in favour of communal ownership. Even in Europe in medieval times the feudal system to some extent recognised this before the Reformation introduced the idea of private property, a point which I do not need to elaborate here. It may have developed into custom and so have become a dead weight but it is a custom not really more than three hundred years old and by no means innate. And if it is done for security, impelled by the fear of insecurity, then we shall have to accept that for the sake of the security of a few, most men will be condemned to insecurity, since there have always been few landlords compared with the vast numbers of the landless.

After these rather pessimistic utterances is there anything left to propose of a more helpful nature? Perhaps there are one or two things, and one above all is a change of language. We know quite well that the Georgeist doctrine of society collecting rent is totally different from the concept of taxation, yet we continue to use the word taxation in all our writings, splattered on every page of our magazines. Words do have an effect. If we go on telling people that we advocate a new kind of taxation they will take us at our word and will think us narrow minded in demanding all the rent and not allowing for ordinary taxation as well. People do really get bogged down in accepting the policy as a new and better form of taxation. The very name so often used -- Taxation of Land Values -- is terribly misleading. No one will ever believe we can rejuvenate the world by new fiscal arrangements. People are sick of taxation and in no wise inclined to believe that salvation can come in that direction.

Equally pernicious is the fact that people have got into the habit of thinking of economics in terms of money and are inclined to think that if only governments are skilful in juggling with the money supply all things can be put right. This is partly, perhaps wholly, the reason for the complete divorce in the human mind between real wealth (what man produces) and the money value which is stamped upon it. A cobbler makes boots by his work and everyone would concede, as an ethical and economic point, that the boots were his property. If one cobbler worked harder than another and produced twice as many boots as another, they would also concede that he had a right to his extra wealth, because it was the result of his labour. But once the argument turns to money, seen as being a hand-out by employers or by government, then the cry can easily become equal pay for equal work when in fact there is anything but equal work. And far worse than this, intelligent people who have acute minds in their own sphere of interest, loudly assert that perhaps the best solution for our economic evils, particularly in view of the gross inequality of incomes, would be for the government to pay everyone the same sum of money. They can see the argument in the case of the cobbler; they cannot see it in the general supply and demand world. The same bedevilment of the human mind led an intelligent friend of mine, who thought he knew what I was driving at, to say he agreed with me fundamentally, but the fact remained that the rent of land would not supply sufficient revenue to keep the social services going! Yet it is this same divorce between paper money and reality which lies at the root of idiotic new ideas about taxation, such as Value Added Tax or perhaps a tax on anyone with a title or on anyone buying or selling at a certain time or in a certain way. The fundamental fact that there is a natural limit to what a man owes his fellow-man, namely the rent of land which his fellow-men allow him to possess, is obscured by this superstructure of unreality.

This is why we must lay special stress on the true definition of the science we claim to teach. It has been given many definitions, most of them entirely wrong, as for example the science of scarcity or choice, or the science of controlling money, or of estimating the effects of tariffs and subsidies on the national or international market. Our definition is surely much better. It is the science of the division (by natural taw, not government control) of wealth into wages for labour, interest for capital and rent for land. We add to it a moral argument in that here is the point where ethics and economics interlock. The rent of land is social property, collective property, which should suit the Marxists, whereas wages and capital are individual property, an argument which should suit the followers of John Locke. Are there words in the world which will bring this over to people? I wonder. Above all there is that strange error of the orthodox text book of economics where is set out the division of wealth as wages for labour, interest for capital, and profit for enterprise. One more confusion of categories. Enterprise is a psychological category (risk) on a quite different plane from economic categories such as wages and capital. A confusion no doubt deliberately fostered to justify the enormous inequalities of the modern world. Plato says in his Republic that the State will never be a just state until either philosophers become kings or kings philosophers. I should myself add that economics will never become a science until logicians become economists or economists logicians. Perhaps this will happen one day.

What stands in the way of Georgeist policy is precisely the State as we know it, and it is no use at all hoping that any State as such will ever put it through. Our only hope is to diffuse the knowledge through the general public as long as the state will allow us. All we can do as a minority is to battle on, and, in scriptural phrase, to be voices crying in the wilderness. Perhaps when this civilisation comes to an end, minds uncontaminated by the state may one day listen. Perhaps even the Marxists when they discover their goal is ever-receding may one day realise that Henry George knew the way, and the only way, that the state might "wither away."