Austrian Theory and Land

Harry Pollard

[Reprinted from a Land-Theory online discussion
(in response to comments by Al Date), 3 September, 2001]

AL DATE:

It is over the definition of what constitutes just law that those of us who subscribe to Henry George's definitions and those who subscribe to Murray Rothbard et al. definitions are in philosophical conflict.

Well, the Austrians were correct on value theory, I believe.

The problem with Rand/Rothbard is that they attempted to transform the subjectivist wisdom of the utilitarian economist von Mises into overarching absolute objective truth. Philosophical alchemy! Mises himself was appalled. It was equivalent to converting simple faith into an Inquisitorial Church.

From our perspective, Mises' great weakness is that he ignored land almost completely. Not being original economic thinkers, Rand/Rothbard simply followed in lock step, thereby enshrining Mises one great oversight into Party Platforms and absolutist treatises. Intellectually indefensible!

HARRY POLLARD:

The Austrians were correct, but not complete. Value certainly can be nowhere else but in the human mind. However, I suspect that pretty much all Austrian professors first treat subjective valuation, then move out to market values for the rest of the semester.

I like to kid Austrians by declaring a market value is an objective value - that is, a value that can be seen by more than one observer, a la physics or chemistry.

However, why is Austrian value theory incomplete?

Because it leaves value floating in limbo in the human mind. Their theory has no anchor for its value.

Which deficiency leads us to George and the two Basic Assumptions of Political Economy.

"A person's desires are unlimited."

"A person seeks to satisfy his desires with the least exertion."

I'm not making it easy for myself, am I? It's usually expressed with "Man" or, in these gender conscious days "People". However, that buries the Assumptions in the populace - where surely it is "mostly right".

I like to make it personal - every one of us is described by these Assumptions. You, Al, and I are described by these two Assumptions - both of them.

These Assumptions provide Austrian value theory with an anchor.

Why do we value the way that we do? It's in order to satisfy our unlimited desires with the least exertion.

My God! My God! It's a Labor Theory of Value!!!!!

Yep.

Now, Austrians don't like Labor Theories of Value, presumably because Marx had one. But, of course, the two theories are not the same. In fact, the Georgist Theory is directly opposite to the theory of Marx.

We should note that Georgist Value Theory parallels the market, for the price mechanism's job in the market place is to let us get as much as possible for the lowest price.

Von Mises actually didn't ignore Land, he dismissed it as a player. At one point he indicated that it might have a place, but of course the value of land couldn't be separated, so how can it be taxed.

He assumed that Land was a child of the market place when, of course, it isn't.

However, on this point we agree, insomuch as I see no way to find Rent in the present economy. Trouble is we have to collect a sizable piece of it before we can to see just how much we have.