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Henry George: A Neglected Economist

March 16, 2014 Frontpage No Comments


American economist Henry George (1839-1897) is best known for his site rent philosophy — the so-called “single tax.” He argued that land values arising from society and natural advantages should be the source of government revenue, instead of taxing the money that people earn by labor or investment.
I have written about that on various occasions, but in this article I want to sketch other parts of his thought, aspects that are often neglected when he is discussed. Not that we hear much about him today, which is regrettable; although organizations promoting his land philosophy are active in many countries, including the United States.
In the late 19th century and the early 20th century, his views were widely discussed, with many people opposed to him and many supporting him. His land revenue doctrine had wide political support, with Winston Churchill in England and Sun Yat-sen in China promoting it. His books became best-sellers, especially Progress and Poverty.
He had a strong following among Catholics, but unfortunately some, including high-ranking ecclesiastics, misunderstood his doctrine about land, and thought (completely erroneously) that he advocated government ownership of all land, with the occupiers being tenants of the government. In fact, his position here is fully compatible with Catholic social teaching.
What is often overlooked is that his view of the land revenue question formed part of a general economic philosophy, its principles being as applicable today as they were in his time. Let us glance at some of its main elements, particularly his devastating refutation of Malthusianism.
Economics and the moral law. In his work The Reduction to Iniquity, George declares: “I am willing to submit every question of political economy to the test of ethics. So far as I can see there is no social law which does not conform to moral law.”
And in the same work: “I am convinced that the attainment of pure government is merely a matter of conforming social institutions to moral law.” He speaks of “that moral law which is before and above all human laws, and by which all human laws are to be judged.” In his book The Science of Political Economy, he states: “Natural laws…pertain to the natural order of things; to that order in which and by which not only man himself but all that is, exists…they are expressions, not of the mutable will of man, but of the immutable will of God.”
Economics is ordered to higher ends. The economy is the means of getting a living, but human life is for higher things. A sound economy provides the means and the leisure for cultural and religious activities, as befitting man, who transcends the animal world. In his most famous work, Progress and Poverty, he argues in the final chapter that there is life after death. “What then is the meaning of life — of life absolutely and inevitably bounded by death? To me it seems intelligible only as the avenue and vestibule to another life.”
Few economists have seen economics as ordered to life after death!
The worker is central. George criticizes the view that capital is the predominant factor in production, and that capital employs labor. Labor (in the sense of the exercise of mind and will in production) is the principal factor, and capital is a tool employed by the worker. “All production results from the action of labor on land, and hence it is truly said that labor is the producer of all wealth” (The Science of Political Economy, book III, chapter 16).
The two sources of value. When the economic value of a product arises from the work and capital needed to produce it, this is healthy and just. But there is also what George terms “value from obligation”; this is usually unjust, arising as it commonly does from unfair advantages the powerful can exert over other people. The value of a slave in a slave market is an extreme example. This kind of value does not increase wealth: It simply redistributes it from the less powerful to the more powerful.
George’s distinction between the two sources of value in the price of things is vitally important, and has to be seen if we are to distinguish between the good and bad features of a capitalist economy — or for that matter, any economy.
Free trade versus protectionism. George argued strongly for free trade, but saw that for this to exist, human rights for all must be respected and monopolies must be overcome. He rejected the naive view of those who assume that if governments don’t intervene everything will work out for the best. His book Protection or Free Trade gives a strong case against protectionism.
Refutation of Malthus. Four chapters of George’s most famous work, Progress and Poverty, are devoted to an examination of the claim of Thomas Malthus that overpopulation is the main cause of poverty and a threat to civilization. As this fallacy is still with us, and is a major weapon in the arsenal of the abortion movement, George’s critique is very relevant.
Malthus claimed that unchecked population growth results in population outstripping food supplies. George shows very clearly that a larger population leads to a proportionately larger per capita supply of food, unless systemic injustices block this from happening. A greater division of labor results from a larger population, there are greater economies of scale, there is greater incentive to find creative solutions. Malthusians worry about how all the additional mouths are to be fed; but they forget that each new mouth is accompanied by a pair of hands.
Further, while a larger animal population leads to scarcity of food to feed the increasing number, man is different: He produces food. As George puts it, man and the jay hawk both eat chickens; but the more chickens the jay hawk eats, the fewer there are, whereas the more man eats, the more there are — because he breeds them.
Nor is the tendency to increase a uniform phenomenon. It is strong “where a greater population would give increased comfort, and where the perpetuity of the race is threatened by the mortality induced by adverse conditions; but weakens just as the higher development of the individual becomes possible and the perpetuity of the race is assured.”
Selfishness is not the driving force. In Progress and Poverty George writes: “Shortsighted is the philosophy that counts on selfishness as the master motive of human action. . . . It is not selfishness that enriches the annals of every people with heroes and saints. . . . It was not selfishness that turned Gautama’s back to his royal throne or bade the Maid of Orleans lift the sword from the altar.” He quotes Plutarch: “The soul has a principle of kindness in itself.”
There is a natural harmony in the working of an economy. The economic system results from the coordinated efforts of millions of individuals, and the harmony thus produced cannot be achieved through state regulation. It is cooperation which requires direction from within, not direction from without. To attempt the latter “is like asking the carpenter who can build a chicken house to build a chicken also” (The Science of Political Economy, book III, chapter 10). To attempt this “is the fatal defect of all forms of socialism.”
The economic philosophy of Henry George demonstrates a natural harmony between all those engaged in economic activity, provided they allow the God-given order to operate. I see it as tragic that George’s thought is today neglected by most economists, and unknown to most of the general public.

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