The Challenge of Henry George
[Reprinted from The Good Society, May, 1983]
|In May 1983 Warren Samuels
was professor of economics at Michigan State University, East
Two important issues in the study of the ideas of Henry George and
their reception by his and later generations have been raised in the
investigations of Aaron Fuller, Gene Wunderlich and Terence Dwyer: the
legitimacy of George as an economist and the significance of his
analysis for economics.
Let me begin with Fuller's correct assessment of some or much of
George's writing as hyperbole. If we mean by hyperbole that an
argument is overstated, that excessive claims are made, then surely
George's characterization of the moral and social regeneration to be
expected from the single tax qualifies:
The sterile waste would clothe itself with verdure, and
the barren places where life seemed banned would ere long be dappled
with the shade of trees and musical with the song of birds. Talents
now hidden, virtues unsuspected, would come forth to make human life
richer, fuller, happier, nobler.
They need but the opportunity
to bring them forth.
Consider the possibilities of a state of society that gave that
opportunity to all. Let imagination fill out the picture; its colors
grow too bright for words to paint. Consider the moral elevation,
the intellectual activity, the social life.
But lest we denigrate George unduly, let us consider the hyperbole
embedded in conventional practices in economics. First, limiting
assumptions are used, and conclusions are drawn and then extended
beyond the reach permitted by the assumptions. Second, partial
equilibrium solutions are used as proxies for general equilibrium
solutions. Third, as with Say's Law and the Coase Theorem, there is
casuistic manipulation of assumptions to maintain the ostensible
integrity and viability of certain desired conclusions.
George's immodesties are obvious; those found in more orthodox
economic analysis are more subtle and recondite, but no less present
and significant. Hyperbole lies without deceiving, Macaulay said, but
our kind deceives even ourselves.
Why has George's legitimacy as an economist been an issue? He clearly
had mastered economics as it stood in the 1870's, that is,
principally, classical economics. The original definition of an
economist "one who is conversant with, or a student of, economics
(the science)" is more inclusive, but the more recent use of the
term "one versed in the science of economics" includes
George, even if it should, regrettably, exclude one or two of his
critics. George actually was quite conservative; he largely accepted
classical economics, and his theory of economic policy gave effect to
the values of an industrial capitalist system.
But in our time there is another sense in which the term 'economist'
is used: to designate the members of a profession which, by its
research, adds to the body of economic science; or, by applying the
science, develops advice for decision-making on economic problems for
government and business executives and legislators as well as private
individuals; or, by teaching in academic settings, trains the next
generation of men and women to qualify for the designation under one
or another of its rubrics. The question of George's qualification for
the designation arises because he ran up against the arrogance,
hubris, and entry barriers of a newly professionalizing discipline.
But it is not only professional snobbishness that must be called to
account. George also was perceived as unsafe. Although he believed
that his policies would extend and strengthen individualism and the
system of nonlanded property, others, sensitive to any challenge to
established property rights and to policies seemingly socialistic
(George thought his policies would prevent socialism), considered his
proposals anathema. Many believed he opened the door to even worse
change, although the threat to landed fortunes was serious enough in
some eyes. George, accordingly, was and has been suspect as an
economist because he was a professional outsider (as the profession
came to define itself) and because he raised issues which many
believed it dangerous to associate with economics.
Even so heterodox an economist as Simon Nelson Patten would
restructure economic theory to render it immune from dangerous
conclusions such as those offered by George:
.... economic doctrine must be recast so that it would
rest wholly on present data. It will not accept socialism; and to
free itself from the snares into which it has fallen through the
careless statements of its creators, it must isolate itself more
fully from history, sociology and other disciplines that give undue
weight to past experience.
The central theme of Georgian positive economics is clear and
significant: the structure of individual opportunity sets has been
formed, to an important degree, through the evolution of landed
property as an institution, and the distributions of income and wealth
(as well as other facets of economic performance) reflect, in part,
the identification and assignment of real property rights.
George raised two fundamental policy issues: 1) he questioned the
terms of access to and use of land as channeled by real property and
other rights, and 2) he asked whether the institution of landed
property then extant was anachronistically suited to the enjoyment and
wealth of some as contrasted with all individuals.
Whatever one's normative views on these matters, the positive
analysis and the policy questions are fundamental. Both were anathema
to an establishmentarian perspective once any actual or potential
conflict between landed and nonlanded interests had been resolved.
The famous controversy between George and Francis A. Walker over the
interpretation of data from the census of 1890, recalled by
Wunderlich, is significant in precisely this regard. Data on
landholding and their interpretation were important to both the
analysis and the critical question of policy, for the data would help
define reality and influence the probative value of alternative policy
premises. The distribution of land ownership and the trends therein
are important and certainly were deemed so by most parties to the
Wunderlich, therefore, is absolutely correct in identifying the
importance for policy analysis of 1) specifications of universe and of
unit of observation and 2) data construction per se with regard to all
"facts" pertaining to land. Manipulation of such "technical"
matters could and did influence people's definition of reality.
George challenged the value system associated with landed property as
it then existed as a preeminent institution in American society. In
doing so, he also challenged both the theory and data construction
upon which important areas of economic analysis rested. To a very
large extent, the discipline of economics has sidestepped George's
It is ironical to note, as Dwyer does, that in pressing these
challenges George anticipated some of the developments of modern
economics. We honor some of his contemporaries with the mantle of the
profession for less. Perhaps it is fitting, now that a century has
passed, that we answer George's questions in our fashion.
Aaron B. Fuller: Managing senior associate - consulting firm, Booz,
Allen and Hamilton.
Terence M. Dwyer: Senior economist, Commonwealth Treasury, Australia.
Gene Wunderlich: senior economist, Economic Research Service, Dept.