Progress and Poverty: A Suppressed Economics Classic

progress

Progress and Poverty

by Henry George (1879), edited and abridged by Bob Drake, Robert Shalkenbach Foundation (2006)

Downloadable as free PDF:Progress and Poverty

Book Review

Progress and Poverty is an economic classic which has been suppressed in the US owing to its subject matter: the elimination of poverty and economic inequality by restoring the Commons. Written over 130 years ago, the book provides uncanny insights for the current difficulties capitalism faces (i.e paralyzing recession, massive public and personal debt and growing income inequality). Internationally George’s economic theories are regarded as comparable to those of Marx, Keynes and Galbraith. Yet despite being the third most famous American in 1879 (after Edison and Mark Twain), George’s work remains largely unknown outside of Australia, New Zealand, Hong Kong and Taiwan.

Why Development Always Produces Poverty

George’s goal in writing Progress and Poverty is to explain, in economic terms, why material progress (i.e. economic development) is always accompanied by poverty and increasing inequality. Employing Adam Smith’s classical definitions of labor, capitol, wages and interest and Ricardo’s Law of Rent, he argues that development must always produce poverty and inequality so long as a privileged elite holds an exclusive monopoly on the ownership of land and basic resources.

George starts from the premise that land and natural resources are the source of all wealth, though wealth itself can only be created through human labor. According to George, the relative monopoly the elite hold on land allows them to capture all increases in productivity and production as “rent” increases.

The History of Land Privatization

George’s approach is relatively unique for political economists in his emphasis on the role ideology plays in the economic theories that gain popular acceptance. In contemporary society, no one questions the right of a privileged elite to monopolize land and natural resources for their own benefit. However private land (and resource) ownership is a relatively new concept originating in seventeenth century Britain with The Enclosure Act.

About a third of Progress and Poverty traces the historical evolution of private land ownership. In all human societies, the common right of all people to use the earth to support themselves has been sacrosanct. The concept of individual land ownership only emerged as societies advanced and either concentrated power in privileged classes or seized land and slaves through military conquest. Prior to the rise of Greek and Roman civilization, all land was communally owned and the notion of an individual claiming a patch of land as his exclusive possession was unthinkable.

Henry George sees the mass seizure of land by the nobility (in Rome this was referred to as the latifundia) as responsible for the death of democracy in these early societies and the ultimate collapse of both civilizations.

After the Roman Empire fell, feudalism was characterized by systems of communal and private property rights that operated in parallel. A feudal estate was considered to belong to society at large. The king, as the chief representative of the people, merely granted its use in trust to church leaders and military officers in return for services rendered to the commonwealth. Churches were expected to provide for the care and welfare of the sick and poor. For their part, feudal lords were expected to defend the king’s military interests.

Because they allowed the British system of private land ownership to persist in the US, George accuses the founding fathers of failing in their efforts to establish a true republic. Despite abolishing heredity titles and establishing the right to vote, they failed to reestablish the communal property rights that enabled the Greek and Roman democracies to flourish. He contends that political equality, when coexisting with wealth inequality, must always lead to either dictatorship or anarchy.

Restoring The Commons Through a Land Tax

George proposes that the wealth inequality, recessions and numerous other evils commonly attributed to the capitalist economic model could be totally eliminated by restoring public ownership of land and resources.

Rather than advocating outright government seizure of private land, he proposes to accomplish this by imposing a tax on unimproved land roughly equivalent to its rental value. Such a system would allow landholders to preserve their right of tenure, while discouraging them from speculating by holding land and resources out of production. While ending land speculation and recessions, this type of tax would simultaneously expand land and resource access for workers and capital investment. Any productivity increases (beyond interest on capital), would accrue to the government, rather than private landholders.

According to George, the government could use revenue from land and resource taxes to abolish taxes on wages and capital (which discourage production) and to pay down public debt.

13 thoughts on “Progress and Poverty: A Suppressed Economics Classic

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  3. Current Federal tax law is spread over 70,000+ pages, ignorance of the law is not an option, it’s a given 🙂 With that out of the way I must admit that this is an interesting idea because it would turn land ownership into a liability instead of an asset. Barbed wire comes to mind, because we still face the problem of how to secure the Cattleman’s right to passage while protecting the Farmer’s Corn field. This idea will be a hard sell, but certainly worth looking at, especially since we’re running out of options globally. Great post, greetings 🙂

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    • The thing that boggles me is that Henry George was so popular at the beginning of the 20th century that the US very nearly wound up with a land value tax instead of a federal income tax. Many cities and regions still have a land (or resource) value tax. Alaska’s oil tax is modeled on the LVT. LVT was especially popular here in New Zealand, and my town New Plymouth is still funded by an LVT.

      In the US it took a deliberate conspiracy (by Rockefeller and the other robber barons) to invent and teach a cockamanie form of economics called neoclassical economics in American universities to suppress the LVT movement. Mason Gaffney writes about it in Classical Economics as a Strategem Against Henry George: http://stuartjeannebramhall.com/2013/12/28/the-mythology-of-neoclassical-economics/

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      • Aha, I think I should forgo the comments and simply read all your posts. Every time you suggest another one, I find something I was tracking years ago or is right up my ally 🙂

        Something I noticed when I bought my last house in Mn., was that the mineral rights were claimed by the state, different from the previous house in the same neighborhood that I had purchased 9 years earlier. I wasn’t informed before buying the House and wasn’t aware of any legal changes. I see this as theft, a way to sell mineral rights without having to compensate property owners. When I researched the titles to other recently sold properties, I found the same changes had been recorded. I guess they’re waiting for enough properties to change hands before they start drilling/fracking for gas. Glad I no longer own the property as the fracking will likely lead to earth quakes like we get them here in Groningen (NL) not to mention the potential contamination of well water.

        On to the next post, thanks,
        Onno.

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        • Sorry, I don’t really mean to answer all your comments with a link. Fracking (by US and Canadian oil companies) is a terrible problem here in New Plymouth. In New Zealand the government owns all mineral rights. Land owners have to sign a consent (they get paid for it) for drillers to sink a well on their property. However if they refuse, the NZ government can overrule them in court.

          They have sunk literally hundreds of well in our pristine rural community in the last few years, causing major problems for our dairy industry as well as horrible noise and fumes for residents who live right next to the wells. At the moment, we’re battling a new well they want to dig 600 meters from a school.

          Fortunately several companies have abandoned their well sites with the recent drop in oil prices.

          Liked by 2 people

          • That wasn’t a complaint, but a compliment, you seem to have hit Paydirt with this reader 🙂

            Fracking sounds like a good idea, until your house splits in half and you can set your tap water on fire. For the recent drop in oil prices, we get to thank Mr. Putin who stubbornly refuses to play ball. We get to thank Victoria Nuland for his stubbornness and having been caught with her pants down, she wants to “XXX” the EU. Now Putin is getting Greece’d. Puppet theater as usual.

            Thank you for your time, now I’m off scouring the rest of your posts 🙂

            Like

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