Progress and Poverty: Towards a New Georgist Dialogue
An Introduction to the SubStack
In the fall of 1879, a San Francisco journalist by the name of Henry George published 500 copies of a book he had labored on for several years. Progress and Poverty was the result of deep contemplation and study of the economics of the closing frontier of the United States and the material conditions of city and country life. Subtitled An Inquiry into the Cause of Industrial Depressions and of Increase of Want with Increase of Wealth: The Remedy, Henry George hoped to explain the reasons behind the problem that bedeviled the Gilded Age: if technology improved and productivity increased, if more wealth was being generated faster than ever before… why was there so much abject poverty?
While this may not seem obvious to modern readers living in the age of the welfare state, in George’s time it was a clear phenomenon. The cities, where new manufacturing technology and economies of scale were concentrated, were deep in the refuse of the tenements. The long settled and industrialized east had more paupers than the west, industrial powerhouse England more than industrializing America. The only seeming exception was the American south, where the concentration of landownership was fundamentally interlocked with the rural plantation system and the dreary echo of slavery that sounded dully from the huts of the sharecroppers.
Progress and Poverty set forth an analysis of the economy inspired by this gradient, and detailed a definitive answer to the question “why does technological progress seem to increase economic inequality?” The answer was both simple and counterintuitive: land. To be more specific, the economic rent of land and natural resources and opportunities. Rents are access charges: they are not paid in return for a good or service, but for access to something which already exists. Most importantly, economic rents scale with improvements in productivity, according to the Ricardian Law of Rents. Adam Smith noted this dynamic in the Wealth of Nations:
Every improvement in the circumstances of the society tends either directly or indirectly to raise the real rent of land, to increase the real wealth of the landlord, his power of purchasing the labour, or the produce of the labour of other people.
The real value of the landlord's share, his real command of the labour of other people, not only rises with the real value of the produce, but the proportion of his share to the whole produce rises with it.
Land is a good of fixed supply, meaning that it is perfectly rivalrous. Any land which is possessed by one person, is possessed at the expense of another. As technology progresses, land becomes more lucrative to labor: what can generate only a little wealth as a rice farm can generate much more as a factory. The possession of land allows classes of people to extract wealth from society in the form of rents, by charging for access to land or taking its rents for themselves, without contributing to the economy at all. It was not by accident that the feudal societies of Europe based their power on the ownership of the land- a heritage we acknowledge in the very modern term for landowner, the landlord.
To solve this economic and social problem, Henry George promoted a program based on the common ownership of economic rents through a land value tax. George was not the first to promote such a program- others before him, including Adam Smith, Thomas Paine, and the French Physiocrats Turgot and Quesnay, had made similar arguments. However, he was the first to systematize them into a coherent school of thought in his book. Progress and Poverty would go on to be the best-selling economic text in American history and launched a reform movement which changed the political conversion in America and across the world.
Georgist analysis has come a long way since 1879. The modern world has seen dramatic changes in the economy, government, society, and the tax system since George died. However, economists inspired by George- from Harol Hotelling to William Vickrey and Mason Gaffney- have continued his work, proposing new models for understanding the impact of economic rent in modern economies which range far beyond the Single Tax proposals of the past. Georgist thought and policy proposals have responded accordingly, creating new analyses of evolving economic and social situations and promoting new policies specific to modern political systems. Economic land is much more than mere dirt- it includes location, natural resources like oil, intellectual property, government-granted monopoly rights such as taxi medallions, and the global ecological commons including the atmosphere and the ocean which are routinely abused for private profit. Georgists have much to say on problems as diverse as creating a sustainable green economy, reforming patents and copyrights, and helping developing nations avoid the resource curse.
However, Georgism as an ideology goes beyond the taxing of economic land. It is a school of thought which analyzes economic systems from the lens of land and land rents. It is a property ethic, which treads a middle ground between Locke and Proudhon. It is an understanding of the proper relationship of the individual and society, what has sometimes been termed ‘cooperative individualism.’ A Georgist society is not merely a society with a different tax structure, but a society with an entirely different political-economic basis. It is a society in which the common right of mankind to the universe and its natural materials, forces, and opportunities is recognized, a society in which economic success can be achieved only by positive contribution to the community, a society where it is no longer possible to extract wealth from others through the monopolization of nature’s gifts, abuse of the commons, or favors bestowed by government.
This newsletter will continue the original project laid out in Progress and Poverty for a modern audience by exploring the different facets of Georgist philosophical, social, and economic thought and bringing Georgist analysis to the problems that face the world today. We’ll also take a look at the history of the Georgist movement and where it should be focusing its energies in order to make real positive change in the world.
If you’d like to contribute, don’t hesitate to contact us on our Twitter or leave a comment below.