Review of the Book

Basic Principles of Economics
by Harry Gunnison Brown

Paul Peach

[Reprinted from The Freeman, March, 1942]

Most men, said Oscar Wilde (wasn't it?) kill the thing they love. Communities and civilizations sometimes do the same. The American people are committed by tradition, by preference, by every conceivable bond, to the theory that there can be no good society save it be based upon liberty, equality, justice -- in short, upon the guarantees of the Bill of Rights. The concepts of free enterprise and individual initiative are implicit in the American Credo. Americans generally detest collectivism; there have even been written into statute law provisions discriminating against individuals who adhere to the Communist party. And yet, despite this love for and faith in free enterprise, the ideal itself is not only as remote today as it ever was, but appears even less attainable than before. Indeed, by preaching freedom on one hand and seeking special preferential legislation on the other, huge pressure groups in our body politic threaten to wreck the very system of private enterprise to which they give not wholly insincere lip service.

Such, it seems, is the point of view from which Professor Brown approached the subject of political economy in his new textbook. "I have attempted here," he says, "to present a sort of philosophy or defense of the price system (capitalism) -- not; a defense of it as it is but an explanation and defense of it as it might be." In the words of his publishers, he raises by implication the question, "Are we sabotaging our system of free industry, the competitive, voluntary price system commonly called capitalism?"

Those who know Professor Brown will not be surprised to learn that his book gives full and adequate treatment to the nature of rent (i.e., the rent of land) and the social and economic effects of our system of land tenure, and examines in some detail the speculations raised by proposals to shift taxation to the site value of land. His penetrating analysis of the relation of "vested rights" to the taxation of land values follows much the same line as in his earlier "Economic Basis of Tax Reform" and his still earlier "Theory of Earned and Unearned Incomes" -- an analysis which caused Hotelling of Columbia to observe (Econometrica, 1938, p. 256) that "The proposition that there is no ethical objection to the confiscation of the site value of land by taxation, if and when the non-landowning classes can get the power to do so, has been ably defended by H. C Brown."

Professor Brown makes, in connection with supposed extreme rates of return on capital, one point which is generally overlooked in arguments on entrepreneurial profits, but which, if properly apprehended, 'helps to clarify one or two much mooted questions. "Some of the incomes which are often thought of as unearned are chance gains so offset by corresponding deficiencies at other times, as to mean no average loss to the public." The "corresponding deficiencies" may of course be in other places, rather than at other times. Such unusual profits as are reaped by (e.g.) successful cigarette manufacturers may well fall into this category; if we consider them as a chance gain, offset by the losses of those who try to crash the cigarette market and fail, we have at least some basis for assuming that the expectation of profit is approximately equal for all competitive capitalist enterprise, the principal difference being in the magnitude of the stakes.

But it is not possible to dismiss the book with unmixed praise. Its length (507 pages, not counting the appendix, glossary and index) is forbidding, and likely to frighten away students who might profit by it -- unless, of course, they read it as a text book, under duress. This forbidding aspect is somewhat enhanced by having the book printed on comparatively thick paper. (The print, however, is large, and the style smooth and readable.) Again: the discussion of the rent of land occupies the closing portion of the book -- and unless student practice has changed considerably since the writer's own day at Missouri University, there is reason to fear that the majority of students will never "get to that part."

On the other hand, the work's value as a text is probably enhanced by this arrangement, at least from the point of view of those teachers of economics who diverge most sharply from Dr. Brown on the rent question. The earlier chapters of the work, though individual and provocative, are nevertheless not so unorthodox as to be revolutionary. All in all, the book deserves a large readership, and may yet wield an important influence in shaping American economic destiny.

It may not be cut of place to include here a word of appreciation for Professor Brown's gracious acknowledgment of material which appeared originally in The Freeman.