Henry George's Resurrection
of the Science of Political Economy
PART ONE

Edward J. Dodson

[1996]

Having discovered the true causes of poverty and the fundamental check to progress, it was simple for [Henry] George to propose the remedy. It would consist of one single massive tax on land, a tax which would absorb all rents. And then, with the cancer removed from the body of society, the millennium could be allowed to come. The single tax would not only dispense with the need for all other kinds of taxes, but in abolishing rent it would "raise wages, increase the earnings of capital, extirpate pauperism, abolish poverty, give remunerative employment to whoever wishes it, afford free scope to human powers, purify government, and carry civilization to yet nobler heights." It would be -- there is no other word -- the ultimate panacea. [Robert L. Heilbroner] [1]

Driven by an intense spiritualness and sense of moral obligation, Henry George had far more in common with Horace Greeley and the generation of reformers who were his contemporaries than with the degreed individuals who emerged from the universities of Europe and North America during the same period. "He was," observes Albert Jay Nock, "one of the greatest of philosophers, and the spontaneous concurring voice of all his contemporaries acclaimed him as one of the best of men."[2] And, he attracted many like-minded individuals to his side. However, among the growing number of professional economists and others who taught the social sciences, George's ideas and writings were generally treated with a mixture of benign neglect or animosity. He was branded a heretic by most of those who at the time comprised the world's transnational community, and relegated to the position of a somewhat troublesome voice in the wilderness. After his death and as the number of his dedicated supporters passed on and were not replaced, the full scope of his intellectual contribution was largely ignored while the remaining Georgists and their antagonists alike debated, first, the so-called Single Tax, and, then, the merits of taxing land values as a reform in the system for raising municipal revenue.

Henry George's every waking moment after the mid-1870s had been devoted to defending not merely his own scientific observations but the classical form of political economy as a closed system. He has been fairly described as the last of the classical political economists, and the force of his arguments left their mark on many individuals who could not bring themselves to accept his condemnation of the private appropriation of rent as a scourge on humanity. As one American, the economist John R. Commons explains in his autobiography:

In my first year at Oberlin, 1882, I had read [Henry] George's Progress and Poverty, recommended to me there by a good old fellow printer. In my senior year I joined with other students to organize the Henry George Club. We brought George himself to Oberlin for a public lecture, well attended but strongly resisted from the floor. ... Afterwards I attended all the single-tax clubs wherever I happened to be. Yet I was a convinced protectionist [and did not] like his shifting of taxes to the farmers' fertility of the soil which he and the single taxers thought was God-given, whereas I, agreeing with Ricardo, could see that it was mostly man-made. [3]

Commons was deeply moved by George's analysis of land monopoly and how the concentrated control over land condemned so many to lives of hardship and sacrifice. As an economist, he thought the farmer ought to be exempted for having to pay taxes on land valued according to its fertility, arguing the point that agricultural land soon loses its natural fertility if not intensely cared for. In this, Commons proved to be exceptional by his periodic involvement in the public debate over adoption of George's proposals. As revealed in the above quotation, Commons accepted the arguments for protectionism and looked to unionization and the collective bargaining of workers as the primary means by which they could improve their condition. George was unsure of how long the struggle for justice, for equality of opportunity and for a market system conducted on a fair field without favors would take. He understood the motivation of workers who attempted to gain bargaining strength by unified action but also asked them to work for permanent, structural reforms that would create a labor market where there would nearly always be more jobs looking for people than people available to fill them. "[I]t is necessary, if workmen would accomplish anything real and permanent for themselves," wrote George, "not merely that each trade should seek the common interests of all trades, but that skilled workmen should address themselves to those general measures which will improve the condition of unskilled workmen."[4]

Few economists and other social scientists could bring themselves to accept George's assertion that a natural harmony existed between labor and capital as factors of production. Even in the United States, the day-to-day experience of propertyless workers competing with one another for scarce employment opportunities suggested the need for intervening, anti-trust legislation; however, few others came forward to side with George in his recognition of the industrial landlord as a combination titleholder, laborer and capitalist.

George's own personality, his popularity with the worker class and his seeming radicalism, combined to alienate him from most of those who viewed science as something to be conducted separate and distinct from the political world. As a consequence, his converts within academia were few and far between. Even Commons cannot be accurately described as a solid supporter. Less than three years after George's death in 1897, the Adam Smith Professor of Political Economy at the University of Glasgow, William Smart, included a rather long commentary on George's career in a book[5] presenting the arguments for and against the taxation of land values. Smart called attention to George's general disdain for most of his contemporaries who practiced political economy, including a quote from George's The Science of Political Economy that is worth repeating here:

[T]he science of Political Economy, as founded by Adam Smith, and taught authoritatively in 1880, has now been utterly abandoned, its teachings being referred to as teachings of the 'classical school' of political economy, now obsolete.

What has succeeded is usually denominated the Austrian school, for no other reason that I can discover than that "far kine have long horns." If it has any principles, I have been utterly unable to find them. The inquirer is usually referred to the incomprehensible works of Professor Alfred Marshall, of Cambridge, England ...; to the ponderous works of Eugen V. Bohm-Bawerk, ...; or to Professor [William] Smart's "Introduction to the Theory of Value on the Lines of Menger, Wieser and Bohm-Bawerk," or to a lot of German works written by men he never heard of and whose names he cannot even pronounce.[6]

As if this were not enough to arouse the animosity of the professionals, individuals who devoted years to formal study with very little financial remuneration, George attacked not merely the quality of what they learned and then taught but their motives in advancing a set of doctrines he found incomprehensible and without scientific foundation:

This pseudo-science gets its name from a foreign language, and uses for its terms words adapted from the German -- words that have no place and no meaning in any English work. It is, indeed, admirably calculated to serve the purpose of those powerful interests dominant in the colleges under our organization, that must fear a simple and understandable political economy, and who vaguely wish to have the poor boys who are subjected to it by their professors rendered incapable of thought on economic subject.[7]

Interestingly, Smart omitted in his quotation of George's sentiments the reference to Smart himself as one of the key spokespersons for the new, so-called Austrian school. He then went on to challenge George's own moral values, speaking directly to the question of whether the rental value of land is a legitimate form of private income.

Smart agrees with George that the rental value of nature arises and increases because of aggregate demand and the investment by society and individuals in physical and other types of infrastructure. Yet he mistakenly concludes that George holds government, as agent of the State, rather than society (i.e., the collective citizenry) as the legitimate claimant to the aggregate exchange value of all of nature. Smart suggests that George "conceives of the government having, or desiring to have, a private estate, the land of the nation, the produce of which goes to defray the expenses of government."[8] Had he referred to George's Social Problems, he would have realized George held no such view:

It is as social development goes on that we find power concentrating, and institutions based upon the equality of rights passing into institutions which make the many the slaves of the few. How this is we may see. In all institutions which involve the lodging of governing power there is, with social growth, a tendency to the exaltation of their function and the centralization of their power, and in the stronger of these institutions a tendency to the absorption of the powers of the rest.[9] To prevent government from becoming corrupt and tyrannous, its organization and methods should be as simple as possible, its functions restricted to those necessary to the common welfare, and in all its parts it should be kept as close to the people and as directly within their control as may be.[10]

George had, in fact, broken with the English Fabians and other socialists over what he believed to be their misdirected quest to wrestle the power of the State from the agrarian and industrial landlords and to nationalize both land and capital. George's scheme for the collection of the rental value of land was universal in its ideal application and based on a moral theory of property rights in the products of labor (such products to include capital as well as articles of consumption). As a practical matter, George also advocated and believed in local and cooperative decision-making on questions of how land use might be regulated. He had learned from his study of history the potential of centralized government for excess and tyranny.

As did George, William Smart also feared the growing power of the State. Unaccountably, however, he defended the very system on which such power had been secured, arguing that the "present system makes the government dependent year by year on the taxpayers for the funds which it is to administer."[11] To the extent taxation was necessary to pay for government services, Smart argued unconvincingly that each citizen benefited equally and should pay equally. By taking such a position, even though poorly supported by the facts, he could safely conclude that the collection of rent by government was an unfair confiscation of one form of sanctioned private property to the benefit of those who held other forms of private property. In the relations between private individuals, the collection of rent by titleholders from tenants (or, when capitalized into a selling price) was simply the price mechanism at work as a market clearing device for land brought to the market. What Smart also ignored is that land (i.e., nature) has a zero production cost in terms of labor and capital. And, in fact, neither labor nor capital is able to produce land. The bottom line with Smart was the fact that George was stirring deeply-rooted animosities, creating "the new battle-ground of poor against rich, the economists in this case being regarded, thanks to Mr. George, as holding briefs for the oppressors."[12] In this last assessment, his understanding was quite accurate.

Smart and many others in Britain who studied George's proposals recognized in them a power to democratize British society by overthrowing the fundamental relationships created under the British constitution of government. Smart, in his criticisms, was also careful to point out to socialists that if George's ideas were adopted, industrial landlords would no longer be taxed on the value of their capital goods. That many of the personal fortunes of the industrial landlords had been acquired at the expense of those who actually labored could not be denied. Titleholdings and the private appropriate of rental value were important but not the only forms of monopolistic privileges enjoyed by this group. George was more concerned with recharting the future than in rectifying past injustices. Yet, he was not inherently opposed to taxing very high incomes or huge estates as measures necessary to mitigate the worst examples of wealth concentration. History and the observation of human behavior brought George to warn, however, that such measures carried serious risks:

The object at which it [a graduated tax on incomes] aims, the reduction or prevention of immense concentrations of wealth, is good; but this means involves the employment of a large number of officials clothed with inquisitorial powers; temptations to bribery, and perjury, and all other means of evasion, which beget a demoralization of opinion, and put a premium upon unscrupulousness and a tax upon conscience; and, finally, just in proportion as the tax accomplishes its effect, a lessening in the incentive to the accumulation of wealth, which is one of the strong forces of industrial progress. [13]

In many other respects, Henry George was a strong advocate of individualism and a highly participatory form of government. He recognized as did Herbert Spencer and others the tendency of the State to fall into despotic hands and to restrict individual liberty while advancing institutional license. Political economy -- and economics -- had already suffered by the pressures of the State (particularly in Germany) to provide technical assistance in the direction of production for nationalistic objectives. The work of economists and other social scientists in every society was coming under the direction and funding of the State apparatus.

Another reason why so few economists could bring themselves to base their investigations on classical political economy was that the imperial State could not be maintained under an atmosphere of either free trade or laissez-faire policies. The allocation of scarce national resources required planning and organization at all levels of society; individualism and the invisible hand of Adam Smith had to be controlled and directed by a new architecture constructed by the hand of social engineering. Economist Robert Heilbroner concludes, for example, that the nineteenth century system (what I have described as industrial landlordism) "poses a paradox. Unregulated, it will lead to results ... that are not only 'ethically' intolerable, but that require government intervention to assure its continued functional operation."[14] Thus, the more centrally-controlled societies embarked on programs of planned industrial growth and social development as means to an end. Societies in which unbridled individualism slowed or prevented centralization, gradually introduced many of the same programs in response to actual and perceived internal and external threats. In the United States, this process of incremental change developed into the complex set of conflicting programs and policies that, taken together, define the limits of twentieth century Liberalism.

The message taught by Henry George was a simple one that largely escaped many of those attracted to the moral tone of his writings and speeches. The consequences of human actions, natural though they might be and governed by laws of tendency, yield an unjust distribution of wealth as well as serious disruptions to the win/win relationships characteristic of fully competitive markets. Intervention, George agreed, was required. The philosophical debate centered on what sort of intervention ought to replace either mercantilism or laissez-faire. The State-socialists offered a program designed around the control and direction of individual decision-making. At the other extreme, anarchists called for absolute voluntary association. By 1892, Frederick Engels was confident that the public disclosure of numerous corruptions marked the beginning of the end of the old system. All the outward signs suggested that European societies were headed into a period of transition and systemic change. The socialist revolution would take longer to achieve results in the United States, he wrote to Friedrich Sorge, because of its youth and the "predominantly material nature" involving "a certain backwardness of thought, a clinging to the traditions connected with the foundation of the new nationality."[15] And, although he did not understand this, the long experience with self-government and mutual assistance had created a people who instinctively continued to practice many elements of cooperative individualism. What finally shocked Americans out of their relative comfort was the mass migration of southern and eastern Europeans beginning in the 1880s. Ten million people arrived in the United States from the Old World between 1860-1890, most of whom came from the British Isles or northern Europe. Between 1890 and the beginning of the First World War, another fifteen million people came, "drawn very largely from Austria-Hungary, Italy, Russia, Greece, Rumania and Turkey."[16] Second, third, fourth and fifth generation Americans, fearful that the arrival of such a vast number of unskilled immigrants would drive down wages and bring unemployment, agitated for legislation to dramatically slow the process. Laws were passed restricting Chinese immigration and the importation of contract labor. Americans finally faced the disconcerting reality of limited opportunity. Disappearance of the frontier also hastened the appearance of weaknesses in the American system and brought out the monopolistic nature of industrial landlordism. Fear of the immigrant rather than a confidence in manifest destiny now came to dominate American politics. Protestants became apprehensive over the transfer of political power in the nation's largest cities to Irish Catholics, and a general anti-Catholic mood quickly spread across the country. Similar nativist reactions arose in turn against virtually all new immigrant groups.

Economists and other social scientists, particularly in New England, used the persuasive power of their research to raise concerns that immigration was jeopardizing the homogeneous development of an American nationality. Francis A. Walker, president of the Massachusetts Institute of Technology, authored a widely-discussed study in which he first identified a declining birth rate among the American population, then suggested this was in some way caused by competition from foreign immigrants. When Henry George entered the debate over immigration with an article published in Frank Leslie's Illustrated Newspaper, he first concentrated on the Irish, charging the British government with "shipping off its people, to be dumped upon another continent, as garbage is shipped off from New York to be dumped into the Atlantic Ocean."[17] George went on to describe as an oxymoron "the land of the free" to which they had come:

Have they, then, escaped from the system which in their own country made them serfs and human garbage? Not at all. They have not even escaped the power of their old landlords to take from them the proceeds of their toil. For we are not merely getting these surplus tenants of English, Scotch and Irish landlords -- we are getting the landlords, too. Simultaneously with this emigration is going on a movement which is making the landlords and monopolists of Great Britain owners of vast tracts of American soil. There is even now scarcely a large land-owning family in Great Britain that does not own even larger American estates, and American land is becoming with them a more and more favorite investment.[18]

Ireland was, to be sure, merely the most immediate and accessible example of the method by which an oppressive and dominant minority (in this case, also largely absentee) systematically denied the majority access to land, and thereby to an opportunity for self-sufficiency.

Identifying land monopoly as the primary cause of poverty and source of injustice might have been enough to assure George a place in history. Armed with the truths he had discovered, he embarked on a crusade to teach others how they could rebuild society and preserve liberty for future generations. This required the development of a full philosophical treatise and examination of human socio-political institutions. Over time, however, less and less attention was paid by critics and supporters alike to George's overall plan. To the extent that individuals such as William Smart analyzed George's theoretical work, they consistently misrepresented either George's individualist or cooperativist sentiments. Under George's patient explanation, for example, Ricardo's presentation of rent theory is more fully developed into an operational law of tendency fitting into a comprehensive set of principles governing the production and distribution of wealth. Smart attempted to counter George by introducing data that suggested both rent and land values had risen hardly at all over several decades in many parts of Britain, despite an increasing population. In this effort, he was really responding to Ricardo rather than George. George not only examined the natural circumstances under which the potential rental value of land might remain stable or even decline, he devoted considerable attention to the influence of various externalities on the direction and extent of such changes. In doing so, however, George admits to moving beyond political economy and into the study of political science. "Political economy can deal, and has need to deal, only with general tendencies," stresses George. "The derivative forces are so multiform, the actions and reactions are so various, that the exact character of the phenomena cannot be predicted."[19]

Henry George argued, almost as a matter of commonplace observation, that "a speculative advance in rent or land values invariably precedes ... industrial depression[s]."[20] The greater the concentration of control over land (that is, the greater the portion of a society's citizenry not holding title to land on which to live and work at a fixed cost), the more vulnerable that society was to the siphoning off of wages and interest by titleholders, leaving the remainder of citizens with reduced purchasing power. Anyone with common sense could see that these dynamics resulted in the build-up of inventories, declines in prices (often to below the cost of production), laying off of workers and shutting down of plants and equipment. And yet, many of George's contemporaries and those who followed him succeeded in converting externalities into economic science that the principles espoused by George became deeply buried in the archives of science no longer considered to be alive. Harry Gunnison Brown (1880-1975), one of the few professional economists of the early twentieth century to faithfully practice the science of political economy, devoted much of his career to the thankless task of trying to resurrect and improve upon George's analysis. His name is fairly added to those whose voices have been raised from the wilderness in defense of cooperative individualism; and, in an essay published in 1958 defending free enterprise capitalism, he echoed the conclusions and warnings offered by Henry George more than a half century before:

The clear logic of the matter ... indicates not only that to relieve capital from taxation, so far as we can, by drawing heavily on the annual rental value of land, tends definitely to the strengthening of the free private enterprise system. The same logic indicates that to follow the opposite policy, i.e., to abolish the tax on land and take by taxation practically all the yield of capital, must lead to the management of all or practically all industry by the State, with saving thereafter compulsory.[21]

Harry Gunnison Brown had lived through the changes Henry George had visualized beyond the horizon. George conceptualized and tested his closed system of political economy within the dynamic laboratory of human civilization. He was not, as has been shown, off in some ivory tower contemplating the meaning of the universe, but in the thick of things in a world that seemed to have gone quite wrong.

Nationalism And Laissez-Faire
A Marriage Of Protectionist Doctrines

During the decade following the end of the war between the American States, the conclusion of which established the United States of America as a centrally-governed nation, life in the northeastern cities was fast becoming indistinguishable from that in the industrialized cities of Britain, continental Europe or Russia. In every city the number of very poor increased with each passing year. Poverty and other forms of oppression resulted in a mass exodus of people from all over Europe and Asia. Many came to the northeastern cities of the United States and were joined by African-Americans who migrated north after emancipation. Almost everywhere, they formed ethnic enclaves where the number of individuals competing for money wages almost always exceeded the opportunities for employment and the demand for housing far exceeded what was either available or affordable. The rising urban populations, too poor to acquire housing of their own, were forced to compete for living space in large homes built by earlier generations and converted into tenement houses. Other, multi-storied dwellings, divided into as many units as possible, were hastily constructed one next to the other in uniform ugliness for block upon block. Hot in the summer, cold in the winter, without sunlight or fresh air, built without indoor plumbing and infested with insects and rodents -- these were the living conditions of hundreds of thousands of immigrant poor.

In the more affluent parts of the cities and within the ring of suburban enclaves arising along rail and trolley lines, many continued to live the American dream. A generation of educated and highly trained specialists emerged in the late nineteenth century, engaged in scientific research across a broad range of disciplines. Colleges and universities were becoming the source of the nation's professional managers, engineers, social scientists, teachers and physicians. The corporation was taking over as the major player in international finance and commerce, protecting its interests by any and all means, and the world's research laboratories became inseparably linked to corporate needs. Standard Oil, formed by John D. Rockefeller, consolidated monopolistic control over the production and distribution of petroleum products in the United States. A similar petroleum-based empire arose in Europe under the direction of Marcus Samuel. Rockefeller and Samuel then fought each other for control of new oil fields all around the globe. Other industrialists built similar empires in minerals, agribusiness, forestry, aquaculture and chemicals within a socio-political environment that sanctioned open access to (or control over) external markets and protection from foreign competition at home. Only Britain continued to experience the benefits of commerce unimpeded by tariffs or other protectionist measures.

The exploits of the industrial landlords and the corruption of public officeholders that defined the monopolistic game finally aroused a general call for reform. Henry Demarest Lloyd -- trained in law at Columbia University, a free trader by inclination and a strong believer in the Democracy -- opened his detailed attack in 1894 on Standard Oil with a call for justice:

Nature is rich; but everywhere man, the heir of nature, is poor. Never in this happy country or elsewhere ... has there been enough of anything for the people. Never since time began have all the sons and daughters of men been all warm, and all filled, and all shod and roofed. ...

The world, enriched by thousands of generations of toilers and thinkers, has reached a fertility which can give every human being a plenty undreamed of even in the Utopias. But between this plenty ripening on the boughs of our civilization and the people hungering for it step the "cornerers," the syndicates, trusts, combinations, with the cry of "overproduction" -- too much of everything. Holding back the riches of earth, sea, and sky from their fellows who famish and freeze in the dark, they declare to them that there is too much light and warmth and food. They assert the right, for their private profit, to regulate the consumption by the people of the necessaries of life, and to control production, not by the needs of humanity, but by the desires of a few for dividends.[22]

Henry George, who possessed great faith in the power of competitive capitalism to improve the material well-being of all citizens, agreed with Lloyd that "Liberty produces wealth," and would have understood but argue against his conclusion that "wealth destroys liberty."[23] An important difference between these two reformers was that in Lloyd's mind the problem was as much moral, as much a question of character, as one of monopolistic socio-political arrangements and institutions:

If our civilization is destroyed, ... it will not be by ... barbarians from below. Our barbarians come from above. Our great money-makers have sprung in one generation into seats of power kings do not know. The forces and the wealth are new, and have been the opportunity of new men. Without restraints of culture, experience, the pride, or even the inherited caution of class or rank, these men, intoxicated, think they are the wave instead of the float, and that they have created the business which has created them. ...They claim a power without control, exercised through forms which make it secret, anonymous, and perpetual. ...They are gluttons of luxury and power, rough, unsocialized, believing that mankind must be kept terrorized.[24]

Others, more radical in their assessment of conditions and the cause of misery, looked to socialism as the solution, trusting in a ideologically-directed State to act in the best interests of all citizens. The promise of their hopes depended, unfortunately, on a very dramatic change in human behavior. Max Hirsch (1853-1909), a Prussian-born free-trader and one of the leading turn-of-the-century critics of socialism, pinpointed the full nature of this problem:

Socialism disregards the teaching of universal history -- runs counter to the course which the evolution of human society has taken. Instead of aiming at less regulation, it aims at more regulation; instead of reducing the coerciveness of regulation from without, it must increase it. For the supersession of the unconscious and voluntary co-operation of to-day by a system of compulsory co-operation consciously directed by State agencies, involves universal regulation of the most minute and despotic kind.[25]

Hirsch became a powerful voice for the socio-political philosophy of cooperative individualism, as well as a key figure in the global Georgist movement. He was engaged in a number of business activities that took him to the far reaches of the world, and he eventually settled in Australia, after which he dedicated himself to the mutual struggles for economic, social and political justice. Francis Neilson, a British activist and member of the House of Commons from 1910-1915, wrote of Hirsch in 1939 that "[m]any of the leading Socialists of Great Britain and Australia, somewhat reluctantly, admitted that Hirsch had destroyed, in his analysis, Marx's notions of labor time and surplus value."[26] Hirsch's writing on political economy, fashioned closely on the analysis provided by Henry George, strengthened the case that exchange value for any good has only an indirect relation to the cost of production. The production of goods for exchange is initiated on the prospect that a demand exists at a price sufficient to recover all out-of-pocket costs, the amortized depreciation of capital goods and to compensate all those involved for their labor. What producers often come face to face with is one of the most powerful of economic laws; namely, the law of unforeseen consequences. For some, this generates better than anticipated results; demand is higher than forecasted and either more units are produced and sold at a given price or the price commanded by each unit increases (at least temporarily) until other producers become competitive with similar types of goods. For others, the anticipated demand does not materialize, the price commanded per unit is lowered in order to dispose of inventory and the returns to labor and capital fall well below the average return in the marketplace. These results are not difficult to recognize in the simplistic model of factor ownership; in a modern environment of industrial landlordism, however, a business may still end up recording profits because of the hidden benefits of imputed rent. Where a business holds title to land acquired at very little cost and subjected to little or no annual rental payments either to a private titleholder or the community, the owners have a significant advantage over other manufacturers who must make high rental payments to titleholders and somehow achieve levels of productivity enabling them to remain price competitive.

The expansion of industrial landlordism and the corporate form of ownership had important implications for the future of political economy as a scientific discipline. A transition of sorts displaced moral and practical philosophers who had long been the stalwarts of political economy with professional economists who viewed the world from the perspective of the market researcher, planner and statistician. Government sponsored research, which gradually increased during the final quarter of the nineteenth century, focused the attention of economists on the role of government in developing a communications and transportation infrastructure, as well as the marshalling of resources for warfare. One need only recall the reports written by Alexander Hamilton to demonstrate that the advocates of a strong national State recognized the importance of encouraging technological advances. Paul Dickson traces the origins of the military-industrial State in the United States to the 1830s, "when the Secretary of the Treasury, confronted by pesky steam boilers that kept exploding in American steamboats, contracted with the Franklin Institute of Philadelphia for a study of the problem."[27] Opportunities for individuals with training in economics, able to advise industry and government leaders on the allocation of scarce private and public resources, expanded enormously with the technological age. Henry George belonged to an earlier age and to a school of thinkers concerned with broad questions of morality and justice, as well as economic efficiency.

As a self-taught political economist of the classical school, concerned with socio-political questions as well as the science of the market, Henry George recognized in the emergence of the State as benefactor of industrial landlordism (and vice versa) the greatest of dangers to individual liberty. This same partnership he understood would destroy political economy as an objective scientific discipline. In The Science of Political Economy, George expresses the depth of his concerns:

[T]he professors of political economy, having the sanction and support of the schools, preferred, and naturally preferred, to unite their differences, by giving up what had before been insisted on as essential, and to teach what was an incomprehensible jargon to the ordinary man, under the assumption of teaching an occult science, which required a great study of what had been written by numerous learned professors all over the world, and a knowledge of foreign languages. So the scholastic political economy, as it had been taught, utterly broke down, and, as taught in the schools, tended to protectionism and the German, and to the assumption that it was a recondite science on which no one not having the indorsement of the colleges was competent to speak, and on which only a man of great reading and learning could express an opinion.[28]

The favor was returned. Reviewing The Science of Political Economy in the August, 1898 issue of The Yale Review, Arthur Twining Hadley observes that while George "criticizes his predecessors with no sparing hand ... he lays himself open to the same kind of criticism in far greater measure."[29] Hadley, who in the following year became president of Yale University, added that George began his career as a "good preacher" and ended a "poor controversialist." Even from among those whom George had solicited critical input, George received the candid assessment that "much of the manuscript seemed irrelevant." [30] Louis F. Post, one of George's closest collaborators, was even more frank in his criticisms. George responded, "I pit my own judgment against yours ... and my own judgment is that this will be equal to Progress and Poverty."[31] Charles Barker and others record that George's ill health made impossible the intensive research that would have made his last book worthy of serious contemporary scrutiny. What does seem the case is that by the 1890s, he realized that the battle for the hearts and minds of the social scientists was largely lost. The teaching of political economy at the University of Pennsylvania had, for example, been taken over by ardent protectionists under Professor E.J. James, who looked upon classical political economy as "a closed circle" but one which had "no line of advance."[32] James was convinced, moreover, that the State "must be continually interfering [to promote and create industry; otherwise, progress would stop, and retrogression set in."[33] The ascendancy of James occurred at the expense of the Scotsman, Robert Ellis Thompson, who George described as one of the classical school "who had been up to that time teaching the best scientific justification of protectionism that could be had."[34] Here, we see that although George disagreed with Thompson's conclusions, he looked upon him as a legitimate representative of the classical school. James, on the other hand, seemed to George not a scientist but a propagandist and apologist.

If the University of Pennsylvania emerged in George's view as a center for disseminating protectionist doctrine, the direction taken at Harvard University was quite different. Harvard's professors of political economy sought the same independence from socio-political pressures that the research laboratory had long provided to the physical scientists. The orchestration of this transition from moral philosophy to social research was overseen by Charles Franklin Dunbar (1830-1900), who after graduating from Harvard in 1851 and eventually studying law, spent a decade as editor of a New England newspaper, The Advertiser. In 1869 Dunbar was approached by Harvard's president, Charles William Eliot, to replace Francis Bowen, who was retiring, as professor of political economy. Although interested, his sense of inadequacy sent Dunbar to Europe for a two-year period of study. Then, back at Harvard, he embarked on a quest to train a new generation of students in the science of economics. Frank W. Taussig, who eventually joined the faculty at Harvard, wrote glowingly of the intellectual objectivity and character of this pioneer in economics:

For many years after his appointment Professor Dunbar was virtually engaged in equipping himself as a teacher of economics. Cherishing high ideals of scholarship, he delved in the earlier and later literature of his subject. He became widely read in the classic writers of England and France. It was not until a later period that he turned to German writers also, who indeed hardly deserved attention in so great degree at the outset of his academic career. He knew his Locke and Hume, Quesnay and Turgot, Adam Smith and Malthus and Ricardo and Mill, not to mention Say, Senior, Storch, Rossi, Bastiat, and the whole host of minor writers. ...

Not less characteristic than this absorption in the general literature of economics was his complete abstention from the discussion of current questions of economics and politics. His experience as editor had informed him of every detail in contemporary history, and had habituated him to constant and prompt discussion of questions of the day. It would have been natural that, as professor, he should continue such discussion. He never did so, and consistently rejected all proposals to contribute to periodicals on current topics. ...[This] was due to his ideal of the duties of the University teacher. Such a teacher should be, as he believed, a leader in thought and in investigation, elucidating the principles on which the solution of current problems must depend, contributing by slow accretions to the mass of information on which the advance of knowledge must rest, and leaving it for others to spread and apply the results of the scholar's research.[35]

Three years before Henry George completed Progress and Poverty, Dunbar was already writing in terms that reveal a deep frustration with how grossly prejudiced were the writings of self-described political economists (few of whom had any formal education in the subject). Individuals such as Henry C. Carey and Robert E. Thompson had for decades repeatedly defended protectionism as a key element in the expansion of national wealth; and, during the same period the nation had been subjected to the economic consequences of the political debate over the circulation of legal tender in lieu of coinage and how to retire a national debt incurred during the struggle to bring an end to slavery and the southern States back into the Union. These were essentially political questions and only secondarily questions of economic importance to Dunbar. His view of intellectual life within a democratic system is reminiscent of Tocqueville:

Our position as a nation charged with the business of subduing a new world, and the rapid material development which has attended our success in this work, have given to our life for the greater part of the century an intensely practical aspect. Practical objects, and pursuits which are believed to be practical, have occupied the first place, almost as a necessity of our external conditions.[36]

He understood, as did Frederick Jackson Turner, that few of those caught up in the day-to-day business of taming the continent gave much if any thought to the day when the "monitions of economic law"[37] would operate in the New World much as they did in the Old, at which time hard decisions would be necessitated about how to guarantee some equality of access to increasingly scarce resources.

Dunbar's chief quarrel with the best minds of the classical school, of whom John Stuart Mill was the recognized leader during Dunbar's formative years, was their reliance on the deductive method of gaining knowledge. In response, he called for the "verification of results reached by deductive reasoning" by the "patient collection and ... conscientious sifting of facts." [38] By such efforts, for example, Ricardo's law of rent could be refined to account for all the different circumstances of time and place. In words Dunbar did not use but which are certainly appropriate, he raised his voice from the wilderness to remind his colleagues that the laws of production and distribution were neither hard nor fast, but laws of tendency. Moreover, he was convinced that the usefulness of economic research to those concerned with "higher purposes and duties"[39] would be greatly enhanced by investigations free of conventional wisdoms deductively obtained. Henry George shared similar concerns and devoted considerable space in his final work to a clarification of the proper use of both deduction and induction:

In my view of the matter those who have said that the deductive method was the proper method of political economy have been right as to that, but wrong in principles from which they have made deductions; while those who contended for the inductive method have been wrong as to that, but right as to the weaknesses of their opponents.[40]

One arrives inductively at probable laws of nature by looking at a preponderance of evidence and by identifying commonalities between causes and effects. Armed with an understanding of such laws, George argues, one is then able to reason deductively by forming and testing hypotheses. Departing from George's assertions, Dunbar held that the changing nature of the human condition made virtually impossible the formation of principles universal in their application. Nevertheless, he and those who studied under his direction struggled to find comfort in some balance between deduction and induction. He was led by this conviction to write that, "while the connection between assumed premises and the logical conclusion is immutable, so much of the economist's conclusions as are based on conditions peculiar to his own time must lose a part of their importance as years pass."[41] He was joined in his assessment by two other Americans who also studied with professors in the European universities, Edwin R.A. Seligman[42] (1861-1939) and Richard T. Ely.[43]

As alluded to above, the generation of transition-era economists nurtured by Dunbar also included Frank W. Taussig (1859-1940), who graduated with honors from Harvard in 1879 and then spent half a year studying political economy at the University of Berlin. Upon his return to the United States, he accepted a position as secretary to the President of Harvard and began work on his doctorate in economics. Deeply interested in history, Taussig's dissertation and subsequent books dealt with the history of the tariff and the effects of protectionism on international trade. Joseph Schumpeter wrote of Taussig that "[t]o him, economics was always political economy," so that "[t]he practical problem in its historical, legal, political, in short, in its institutional aspects attracted him much more than any theoretical refinements ever did."[44] After ten years of teaching economics, Taussig in 1886 authored Wages and Capital, a book delving into the history of the wage-fund doctrine; in this work he also provided a critique of Henry George's arguments, although Taussig devoted considerably more space challenging the moral basis of George's reform proposals than their economic consequences.

Steven Cord, examining much of what George's contemporaries and immediate successors had to say about him, documents what can only be described as a pattern of very strong emotional reaction to George. The result was widespread inconsistencies in most response to George's economic and socio-political principles. Such was the case of John Bates Clark[45] (1847-1938), who Cord describes as having "an incomplete understanding of George's law of wages"[46] and, perhaps more importantly, revealed very confused ideas about how land markets operated, going so far as to defend land speculation as necessary for individuals to rise above poverty on the frontier. In essence, Clark held that the ability of some to charge others for the use of land, enabled one portion of the population to accumulate wealth they otherwise would not have been able to produce on their own. Ignoring the moral injustice caused by this form of confiscation, Clark's logic suggests, then, that if a small amount of land speculation is good, widespread land hoarding and permanent monopolization of land must be even better. The basis for his arguments had little to do with economic efficiency. Speculation in land had been encouraged by individuals in control of the U.S. government for a multitude of reasons (not the least of which was their own pecuniary interests). Clark defended the continued support of this monopolistic privilege on the grounds that preventing speculative investment in nature would penalize those who had made investments in land on the promise of future gains. A response to this argument came from, among others, Henry George, Jr., who had been elected as a New York representative to the U.S. House of Representatives. In a speech made before the House on June 10, 1911, George pointed out the great harm of speculation and the liberating aspects of its prevention:

The hope of speculation gone, it is probable that there would be an abundance of free land open to whoever might wish to use it. Instead of having to go away out to the remote fastnesses of our mountains to find free land, we could then find free land accessible to our city populations, and, some part of the people going out upon it, city congestion would be relieved. ... [47]

There is no real scarcity of land anywhere. There is no scarcity even in the city of New York with its great population. Great areas are vacant on the outskirts, and you can go along Broadway and Fifth Avenue, the greatest and proudest thoroughfares on the whole hemisphere, and find vacant lots, and one and two-story shacks where there ought to be imperial buildings.

Why is this? Because the penalty of holding land out of use is so slight that men can pay the small tax and yet, owing to social growth and social improvement, and the consequent increase in value, realize handsome profits by the speculation. Some men acquire fortunes in a short time by simply getting hold of a piece of land, sitting down, and letting society do the rest.

This is so in every State; it is so in every village, town, and hamlet of our country. It is so throughout the agricultural regions; it is so throughout the mineral and timber regions.[48]

Henry George, Jr., although never achieving the same level of public support as his father, adhered to the principles of cooperative individualism preached by George. In 1905, the Macmillan Company published Henry George, Jr.'s own written attack on class structure, titled The Menace Of Privilege. Two years earlier, Louis F. Post's Ethics of Democracy covered much the same ground. Tragically, there was no serious attempt by any trained political economist within the Georgist ranks to complete the scientific work Henry George had chosen to leave unfinished. Not until Harry Gunnison Brown (1880-1975) earned his doctorate in economics under Irving Fisher at Yale University did any mainstream economist develop more than a passing interest in George's reconstruction of classical political economy. Brown fought a delaying battle to prevent the theoretical fusion of land and certain forms of material wealth into the single factor of production, capital. He also challenged Clark's assertions that the opportunity for speculative gains from land investments was necessary for populating the interior of the North American continent.[49] In 1932, Brown expressed a deeply-held concern that many of his colleagues had ceased to think and act as scientists where questions relating to land were concerned:

Are the economists who [confuse the issue] too intellectually inept to appreciate the essential distinction between capital and land! Or is the explanation rather that, seeing clearly this distinction, they yet find the single-tax idea so vicious as to justify, in their minds, the weapon of confusion to discredit it!

There are, also, enough recent text books and books of readings published by economists of the "institutionalist" and "behaviorist" schools and pretending to be "realistic" which avoid, as if it were a plague, any passage which might emphasize or clarify the distinction between capital and land.[50]

E.R.A. Seligman, Richard Ely and Frank Taussig were all on Brown's list. Yet, within the professional ranks of economists there were few -- even if they shared Brown's views -- willing to take on the social science establishment. John Bates Clark, the Frenchman Leon Walras (1834-1910) and the Austrian Carl Menger (1840-1921) had emerged at the end of the nineteenth century as a triumvirate, leading the movement toward new economic reasoning. They ushered in a new wave of Utilitarian theory, seizing, as Harvard's Karl W. Bigelow wrote in 1925, "the hedonistic principle that man always seeks pleasure and avoids pain."[51] From this, they postulated theories of marginal utility, but also mistakenly attributed to price the power to clear virtually all markets; that is, the expectation of specific monetary returns would always bring resources to the market in response to demand. The experience of everyday activity notwithstanding, they ignored the complexity of human behavior and created the fictional economic man. They also ignored the distributional implications of socio-political arrangements and institutions and the tendency of individuals holding wealth and political power over others to defend their positions with all manner of means. Their model of the world was static, influenced in no small measure by the type of analyses performed in German universities by professors who served the interests of a rigidly nationalistic and militaristic State. And, although Menger discounted the value of mathematics as a tool for economists, a growing number of his contemporaries were making use of calculus in the development of economic functions. Menger might have concurred with Ludwig von Mises, who concludes that the "mathematical economists reiterate that the plight of mathematical economics consists in the fact that there are a great number of variables. The truth is that there are only variables and no constants. It is pointless to talk of variables where there are no invariables." [52]

Over the course of the twentieth century, most economists have virtually if not absolutely abandoned all connection with moral philosophy as held high by Smith, Malthus, Quesnay and their American disciples of the late eighteenth and early nineteenth centuries -- and which was the driving force behind the reconstruction of classical political economy by Henry George. Even before the publication of Progress and Poverty in 1879, George had already come to the conclusion that the institutional environment of universities made them unlikely places to find individuals engaged in an unfettered analysis of socio-political arrangements and institutions or whose objectives included discovering the keys to equality of opportunity, the securing of liberty or the establishment of justice. In a speech made in 1877 before the students and faculty of the University of California (where he was under consideration for its first chair in political economy), Henry George repeated his sentiments. There is, perhaps, no statement from George that is more direct or that so well describes the distance between his view of scientific investigation and that of most university-trained economists:

It seems to me that the reasons why political economy is so little regarded are referable partly to the nature of the science itself and partly to the manner in which it has been cultivated.

In the first place, the very importance of the subjects with which political economy deals raises obstacles in its way. The discoveries of other sciences may challenge pernicious ideas, but the conclusions of political economy involve pecuniary interests, and thus thrill directly the sensitive pocket-nerve. For, as no social adjustment can exist without interesting a larger or smaller class in its maintenance, political economy at every point is apt to come in contact with some interest or other. ...Macaulay has well said that, if any large pecuniary interest were concerned in denying the attraction of gravitation, that most obvious of physical facts would not lack disputers.

As laid down in the best text-books, political economy is like a shapely statue but half hewn from the rock -- like a landscape, part of which stands out clear and distinct, but over the rest of which the mists still roll. ...That it is so, you may see for yourselves in the failure of political economy to give any clear and consistent answer to most important practical questions -- such as the industrial depressions which are so marked a feature of modern times. ...

Nor is it merely ignorant pretenders who thus degrade the name and terms of political economy. This character has been so firmly stamped upon the science itself as currently held and taught that not even men like John Stuart Mill have been able to emancipate themselves. Even the intellectually courageous have shrunk from laying stress upon principles which might threaten great vested interests; while others, less scrupulous, have exercised their ingenuity in eliminating from the science everything which could offend those interests. ...

All I wish to impress upon you is the real simplicity of what is generally deemed an abstruse science, and the exceeding ease with which it may be pursued. For the study of political economy you need no special knowledge, no extensive library, no costly laboratory. You do not even need text-books nor teachers, if you will but think for yourselves. All that you need is care in reducing complex phenomena to their elements, in distinguishing the essential from the accidental, and in applying the simple laws of human action with which you are familiar. Take nobody's opinion for granted; "try all things: hold fast that which is good." In this way, the opinions of others will help you by their suggestions, elucidations, and corrections; otherwise they will be to you but as words to a parrot.

If there were nothing more to be urged in favour of the study of political economy than the mental exercise it will give, it would still be worth your profoundest attention. The study which will teach men to think for themselves is the study of all studies most needed. Education is not the learning of facts; it is the development and training of mental powers. All this array of professors, all this paraphernalia of learning, cannot educate a man. They can but help him to educate himself. Here you may obtain the tools; but they will be useful only to him who can use them. A monkey with a microscope, a mule packing a library, are fit emblems of the men -- and, unfortunately, they are plenty -- who pass through the whole educational machinery, and come out but learned fools, crammed with knowledge which they cannot use -- all the more pitiable, all the more contemptible, all the more in the way of real progress, because they pass, with themselves and others, as educated men.[53]

One can imagine the discomfort among the university faculty members sitting in the audience as George's words filled the air. Needless to say, George was not offered the appointment. Over the twenty years remaining to him, his relationship with university and college professors ranged from cool to hostile. Sensitive to the long-standing accusation that political economists were little more than defenders and apologists of industrial landlordism, Richard Ely countered in 1884 by declaring that his "younger political economy no longer permits the science to be used as a tool in the hands of the greedy and the avaricious for keeping down and oppressing the laboring classes."[54] Ely allied himself with those who looked to the growing interventionist powers of the State to promote social welfare reforms and mitigate social problems. They were among the Progressives in the vanguard of professional planners and scientists who would introduce interventionist policies as the basis for twentieth century Liberalism. A year later, Ely brought together a number of his colleagues to found the American Economics Association, whose members generally accepted the premise that laissez-faire was "unsafe in politics and unsound in morals; and that it suggest[ed] an inadequate explanation of the relations between the state and the citizens."[55] Ely later wrote that although he and his colleagues were far from being socialists and believed in the spirit of individualism, they were also convinced "there are certain spheres of activity which do not belong to the individual, certain functions which the great co-operative society, called the state -- must perform to keep the avenues open for those who would gain a livelihood by their own exertions."[56] The basis for giving these functions to the State are straightforward. "The avenues to wealth and preferment are continually blocked by the greed of combinations of men and by monopolists, and individual efforts are thus discouraged."[57] With this perspective guiding their recognition of the need for societal change, Ely and the other Association founders were soon joined by new converts who extended their problem-solving techniques beyond economics and into public administration, corporate management and institutional finance. A new generation of professionals was being trained to think in a dramatically different way about the world in which they lived and worked:

Evolution and pragmatism profoundly affected the interpretation of politics and history. ...There was a widespread revolt against Newtonian concepts of government -- against the tyranny of abstract concepts like sovereignty, the state, the separation of powers, and the illusion that there could be such a thing as 'a government of laws and not of men.' Instead scholars and statesmen turned to the analysis of constitutions and government as they actually functioned: to the Constitution as a mechanism that often broke down and had to be tinkered with rather than as a sacred Covenant which (as one Judge put it) meant precisely the same in his day as it had meant in 1887! They studied the actual administration rather than impersonal government; analyzed what presidents and judges did rather than abstractions called The Executive Power or the Judiciary; explored the battlefields of party politics or the misty fogs of public opinion rather than the formal documentary record.[58]

What this meant in practical terms was that the consideration of self-evident truths so important to the moral and socio-political philosophies of the late eighteenth and nineteenth century transnationals was all but abandoned to relativism. Only those at the fringe, individuals such as Henry George, Louis F. Post and Max Hirsch, continued to challenge the foundation of industrial landlordism as characterized by a deep moral corruption posing the gravest of dangers to the longevity of participatory government.

Perhaps the best example of the difference in thinking between George and the economists (as well as most other social scientists of the late nineteenth century) was his view that government ought to provide certain important, even necessary, services to citizens only where the market could not be relied upon to do so. Beyond that, government ought to use its powers to secure and maintain a fair field with no favors in the realm of property and commerce. Once the accomplishment of these two objectives had been made commonplace, there would be little or no need for a redistribution of wealth and income from producers to those classified as poor. George's moral argument was, essentially, that a redistribution of wealth occurred whenever those who held titles or otherwise controlled land were able to collect the annual rental value of those titleholdings for themselves. History revealed that this tendency was prevalent in virtually every society practicing a settled existence; the greater the hierarchical structure of leadership -- the less democratic in form and substance -- the tighter was the concentration of control over nature, resulting in a massive private confiscation of nature's rental value. From such early relationships had evolved the system of the nation-state, under which leaders repeatedly directed the productive capabilities of their citizens into armed conflicts initiated to gain control of additional territory, other people and other markets. By the late nineteenth century, industrial landlordism had become an integral part of the existing structure of power, resulting in a proliferation of centrally-controlled military-industrial-states. The price in human terms has been horrific.