From Samuelson to George:
A Galbraithian By-Pass

Edward J. Dodson

[September, 1980]

My initial exposure to the world of formal economic study occurred early during my high school education. Not until my sophomore year in college, however, under the guidance of a somewhat unpretentious professor named Dr. Booth, was economics an area of study taken seriously. Paul Samuelson's 900-page Economics text now occupies a solemn place among those works academic in my library. As a matter of fact, I still have my notes from that course taken back in 1967. While collecting my thoughts for this article, I happened to run across this old notebook packed away in my clothes closet, pulled it from its box and flipped through its pages to see whether Dr. Booth had ever discussed the subject of land economics or political economy as presented by Henry George. He apparently had not, at least by my notes. Another thought came to me and I pulled Samuelson's text from its shelf and turned to the brief four-page analysis of George contained therein, wondering whether any margin notes or highlighting might have been made by me at the time. Again, not a thing. It would take some time for Henry George to make himself known to me. Still, Dr. Booth's lectures contained several rather interesting thoughts worthy of note. For instance:

"Government regulates business only because private enterprise will not or cannot do it efficiently ... the government does not want to compete with private enterprise, however, and acts as a regulator of price based on other things beside cost."

Well, he certainly was correct in his analysis of government not concerning itself with cost/benefit ratios. The power to tax has more than adequately supplanted the need for managerial ability. My understanding of history, however, must be slight because the only recollection of government working "efficiently" and not in competition with free enterprise might have been during the Second World War. Certainly, capitalism thrived. Free enterprise? I am not so sure.

A second page in my notes caught my attention; the words were bracketed and underlined (indicating the central thought must have been part of a five-part multiple choice question where all of the above, none of the above or some of the above were the correct responses). I am today pleased to discover how little impact the words had on my own ideas of political economy:

"… monopolies are necessary in American economics", lectured Dr. Booth, "as for the efficient running of utilities ... there is too much waste in competition, but certain competition is necessary," he went on. "In monopolies, however, the government regulates price."

I am of the opinion that considerable argument can be made supporting an adverse position to Dr. Booth's conclusions. Perhaps the world has changed substantially since 1967. Could it be that the study of economics should be divided into two periods: "pre" and "post" OPEC?

Up until the last few years, such has been the nature of my exposure to political economy. A second course in microeconomics was taught at a level even less stimulating. Unfortunately, the opportunity for learning and an expanded knowledge base in economics during college was replaced by cramming for examinations and the quest for grades.

Most of what I managed to learn of economics came out of a passion for the study of history, a close academic cousin perhaps -- but immensely less "scientific" or technical in nature. History deals with individuals and events -- motivation and the impact of humanity upon itself. My desire for knowledge and an understanding of historical events led me early in life to the world of books and their power, that of the written word. Through the words of Kenneth Roberts, I marched alongside Benedict Arnold through the snow-covered American wilderness toward Quebec and, captivated, accompanied William Shirer on his epic journey through The Rise and Fall of the Third Reich. There have been many more such powerful influences. Quite recently, J. Bronowski and Allistair Cooke presented me with new insights into The Ascent of Man and America, forcing me to look deeper into the human condition and evoking deep emotion for those who have gone before -- as they, themselves, strove to develop an understanding of the world. This growing process has been continuous and marvelously exhilarating.

There came to me during the late 1960's a strong sense of social responsibility (and rebelliousness). So many events opened the fissures yet present in the American social structure. Vietnam and the peace movement, the struggle by blacks and other minorities for both legal and economic parity with the Caucasian majority; all combined to create an anti-establishment mentality among those with whom I identified. Thus, for the better part of a decade I held a largely negative view of the "American experiment" and its prospects for the future.

Maturity, both intellectual and emotional, has altered that viewpoint. Part of the reason came from a shift from the study of events to the study of ideas and the individuals from whom they came. The philosophy of a number of thinking men have had significant influence upon me, one of whom I encountered quite accidentally. At home one evening I happened to view Bill Moyers Journal on the Philadelphia public television station. This occurred back in February of 1976 and Moyers' guest was a philosopher of whom I knew nothing; his name is Mortimer Adler. From Moyers' interview I learned that Adler was the co-author with someone named Louis Kelso of a number of books on the human condition, two of which were entitled The Capitalist Manifesto and The New Capitalists (written, I later discovered, in an effort to ensure the survival of capitalism as the system of economics by making all Americans owners of capital). These two works have been taken far less seriously in their time than Progress and Poverty was in its own. However, the manner in which Adler viewed humanity and, in particular, the problems of political economy proved extremely intriguing:

" … there is in the world today, both among the rich nations and among the poor, and between the poor and the rich within those nations, the strongest drive is toward equality. And it is easier to handle the problems of political equality; but when you get to economic equality, you are faced with the most difficult question. Do you mean by economic equality everyone with the same amount of goods? No differences in income? No differences in possessions ... the material possessions of the goods that are called economic?

If you do, then I think ... and that's what a large number of the people who are talking about equality ... are egalitarian in that sense (I use the word "egalitarian" as a term of derogation, not of praise). And that meaning of equality, I think, is not only unattainable, but in the effort to attain it, will necessarily require authoritarian means. It can't be done by free processes and ordinary legislation. Hence, unless we can reconceive equality so that we can understand what Toqueville means (and he is the man that created the phrase for us, an "equality of conditions," which is the ideal democracy), and I subscribe to that ideal."

Here, Adler presents very clearly the philosophical debate over the means by which a society should strive to achieve humanitarian goals. Listening to Adler, I discovered that all along I was in agreement with Toqueville. Well, Bill Moyers concluded that Adler's views were more than slightly utopian. My own feeling is that he is cautiously optimistic. Again, from the interview:

"Prior to this century, in every society there were oppressed majorities and privileged minorities. It was the larger part of the population that were in one way or another deprived of what human beings need to lead a human life. And a very small part of the population, the aristocrats, the landed gentry, the privileged class -- always a minority -- had ... not that they used it well ... but they had what human beings needed.

Now at some point in the twentieth century, in the more advanced countries in the world that have become our welfare societies, are societies with a conscience, where some satisfactory recognition of these basic human rights has occurred. Suddenly, it has been reversed. We now have privileged, or shall I say, satisfied majorities. Majorities whose needs are being taken care of and under-privileged and oppressed minorities. An advance from oppressed majority to an oppressed minority is a real advance. No enough -- you need to remove all oppressed groups; but true progress."

And, it cannot be denied that in America a majority of individuals have obtained an acceptable level of human dignity and relative freedom from economic hardship. Many of us are able to own a home, automobile and accumulate other possessions. A college education is available to the more gifted i~ each socio-economic class. Given the very brief period of time man has had to develop civilization, progress has been relatively swift. Unfortunately, there is yet a long way to go before the "equality of conditions" is achieved.

Adler concludes that the elimination of oppression in the world required the "elimination of war." Free from the threat of war, he says, the advanced nations would have no difficulty producing the "goods of consumption" necessary to bring all men out of poverty and into the mainstream of society. What of this idea? Certainly, absence of war or the threat of war would stabilize international trade and stimulate the world economy. The thought is noble; yet rather naive. I know not whether Mortimer Adler has read Progress and Poverty or any other of Henry George's great works. He may have forgotten what George proved so explicitly -- that man does indeed seek to satisfy his desires with the least amount of effort; and, therefore, the productivity shifted from the goods of war to the goods of peace would, under current economic practice, be taken by the owners of land and natural resources in the form of higher economic rents. As much as I have come to admire the wisdom of Mr. Adler, I must conclude his education remains incomplete. Within the writings of Henry George lies what I have come to understand as the key to solving the problems of political economy. At this point, I must add however that a considerable amount of time passed before I, myself, "discovered" Henry George.

There exists among men, at gatherings designed to exclude the participation of women, a tendency toward discussion of a particularly narrow range of topics -- normally, sports, women or politics (not necessarily in this order of priority and often simultaneously). One evening after a long workday, I met several friends (former college mates) to rehash old stories of our college days over a few cold beers. Before long the discussion turned to politics and to the nation's economic problems. One of my friends interjected a rather unique economic theory, something about there being a point at which increased taxation actually produced less revenue because of the negative impact upon productivity. This idea, he said, was known as the "Laffer Curve." Naturally, I did my best not to appear too dumbfounded as I silently wondered who "Laffer" was. At the time I had not yet heard of this maverick economist from U.C.L.A. whose theories on taxation and economic fluctuations were upsetting the world of "conventional wisdom" (a term of Galbraithian origin, and my favorite catch phrase). I soon learned that Arthur Laffer's economics had been superbly analyzed by one Jude Wanniski in his book entitled The Way The World Works, which came out in 1978. A few days later I put out $4.95 for the paperback edition and threw myself into Wanniski's book. The journey which began with Samuelson seemed to be ending. The Way The World Works dealt with economic questions in a manner which made great sense. Wanniski started back at the beginning of civilization and applied Laffer to history. It seemed to work, to require nothing more.

Generally a cautious fellow, I decided that the next thing to do was to develop credentials for myself among academics. I began to give strong consideration to graduate work in Economics -- which now seems much less frightening. Away from the formal classroom for some eight years, I contemplated step one and decided to take a basic course again in Economics -- get my feet wet, so to speak. Penn, Drexel and Temple Universities were all close by and offered courses in the evenings. I had not yet decided what to do when I ran across a small advertisement in a local news circular offering a free course in "Fundamental Economics" at the "Henry George School of Social Science." Henry George? The name had a familiar ring to it, but I couldn't place the historical significance of the individual. A few pages out of a college American History text refreshed my memory and I decided to register for the course.

The first "Fundamental Economics" class ended about a year ago. During the subsequent time I learned a great deal more from Henry George through his words and as a result of the inspired teaching of a committed Georgist, another George, this one named George Collins. He listened to my questions and answered my challenges; Henry George opened my mind. Summer's end found me attending the Joint Georgist Conference in New York City with many other supporters of the Georgist perspective on political economy. By the time this article has made it to print, I will no doubt have completed the first few classes of this Fall's course in "Fundamental Economics" -- this time as its teacher. My learning experience continues, but now t am sure I have found the best teacher.