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SCI LIBRARY

The Search for the Just Society


Edward J. Dodson



INSTRUCTOR'S MANUAL, LESSON 7


This lesson presents the nineteenth century influence of Marist and Socialist philosophy as a response to the recognition that industrial-landlordship (incorrectly but commonly referred to as capitalism) had to be restructured to meet the needs of the general population and not just a privileged few.

The philosophy of change was more Marxist (and, therefore, more radical) in central Europe and France.

In England and the United States, where a general spirit of individualism prevailed, reform took a more moderate path. The direction of reform was spearheaded in England by intellectuals who formed the Fabian (Socialist) Society and by labor leaders. In the United States, a new class of university educated professionals and social scientists initiated the Progressive movement.

Quite apart from these efforts, Henry George and those he attracted to his cause, espoused the restructuring of all societies based on principles of justice contained within a philosophy appropriately referred to by the term cooperative individualism (a term attributed to a supporter of Henry George's ideas named E.B. Gaston).

THE RISE OF MARXIST-SOCIALISM IN EUROPE

By the mid-1800s, Europe was experiencing tremendous social and political unrest. The French and German people lived under conditions approaching military dictatorship.

Two socio-political philosophers appeared calling for dramatic structural changes. The first was Pierre-Joseph Proudhon, the philosophical leader of the communitarian movement in France, who advocated the creation of a society built on voluntary associations.

The second was Karl Marx (working in collaboration with Frederick Engles), who called for an end to private property and communistic ownership of the means of production.

Without competition for property accumulation, Marx predicted the State would wither away, an unnecessary relic of class conflict.

Marxism is fundamentally redistributive concerning wealth, calling for a policy of "from each according to his ability, to each according to his need."

Another fundamental tenet of Marism is the labor theory of value, which states that the value of wealth is related to the quantity and quality of labor required in production. Neither the contribution of capital goods nor the willingness of others to give wealth or services in exchange are considered.

In contrast, Henry George's theory of value is based on demand. The price one is able to obtain for goods or services in the marketplace establishes value in exchange. While one generally would not expend the labor or capital goods on production without the expectation of some specific ability to exchange the finished goods for other goods or services, changes in demand may either increase or decrease what other are willing to give in exchange for what one produces. This is the inherent risk of markets.

The Communist movement in Europe was severely suppressed by the governments; Marx and Engles were forced to flee the continent for England, where Marx had limited influence.

FABIAN SOCIALISTS

In the 1880s, a group of English intellectuals and political radicals formed the Fabian Society to advance an agenda that combined government regulation (and limited nationalization) of the means of production, while protecting a considerable degree of private property in consumer goods.

Leading socialists included George Bernard Shaw, Eugene Debbs, and H.G. Wells.

Many Fabians in Britain and Progressives in the U.S. credit their zeal for socio-political reform to Henry George, who wrote and lectured extensively between 1880 and his death in 1897.

PROGRESSIVISM IN THE U.S.A.

Large-scale industrialization after the War Between The States required a large (and cheap) labor pool. Immigration to the nation's large cities was encouraged but resulted in overcrowding, increased crime, poverty, and the threat of plague associated with unsanitary tenement housing.

University-trained architects, engineers and social scientists began to call for rebuilding of the nation's decaying cities, the establishment of free public education (to Americanize immigrants and their children), libraries and hospitals. Another aspect of this movement was an effort to reform the political system and end widespread corruption; this resulted in the secret ballot, civil service and open primaries.

In late nineteenth and early twentieth century, the Progressives made significant strides in gaining government support for reform. Theodore Roosevelt and Woodrow Wilson were each considered as leaders of the Progressive movement. Roosevelt was an unapologetic Nationalist.

THE APPEARANCE OF HENRY GEORGE
AND HIS CHALLENGE TO THE SOCIAL SCIENTISTS

Henry George was a journalist and newspaper editor who became seriously interested in finding solutions to the mass poverty that plagued the U.S. and other societies during his lifetime.

George identified characteristics in the socio-political arrangements and institutions of all societies that virtually guaranteed the worsening of poverty, even under conditions of only modest population increases.

George's major contribution to science was in the skeptical re-evaluation of all that the classical political economists had written about human behavior and the natural laws operating in the production and distribution of wealth.

With respect to human behavior, George used history and observation, as well as reason (empiricism and rationalism) to support a crucial general principle; namely, that man seeks to satisfy desires with the least exertion. In Lockean terms, this led him to conclude that individuals will act to monopolize natural and unnatural opportunities (i.e., seek privilege or license under whatever societal structure they live under).

George accepted (as more nearly self-evident than had Hobbes and others) that all human beings had rights inherent to our equality as members of the same species.

Our most basic human right is that of an equal opportunity for survival. And, since one cannot survive without access to nature and the resources naturally available, our rights extend to equal access to the earth.

Just socio-political arrangements, then, exist only when all individuals are guaranteed the right of equal access to the natural opportunities provided by the earth.


Equal access cannot be achieved, practically speaking, without an understanding that the efficient use of land for purposes such as agriculture, forestry, mining, etc. require that some individuals are permitted to control large tracts of territory. Also, within towns and cities, the most central locations are unique and normally come to have a value superior to those less centrally-situated. This presented the challenge to Henry George and other political economists to devise a means by which equaity of opportunity could be reconciled with these practical considerations.

From this, George built a definition of natural property that tied ownership of property to production. One acquired property by applying one's labor to the earth and producing something material (or by providing services to others that in some meaningful way facilitiated production).

TITLEHOLDINGS TO NATURE
Landownership As The Primary Form of Economic License

Nature has a zero production cost (i.e., no labor is exerted to produce nature). The earth has been provided to mankind for exploitation; thus, our moral sense of right and wrong tells us that individual or group of individuals has a legitimate claim to nature (i.e., to locations and natural resource lands) as private property.

Locke Differs From George

John Locke argued that once an individual applied his labor to nature, the two became intertwined and the contribution of the individual could no longer be distinguished from nature, justifying claims to property in nature.

George observed that the free operation of buying and selling in the market would, in the form of price, reveal the value of whatever improvements were added by individual effort versus the price people were willing to pay for access to unimproved sites of equal natural amenities.

When society allows individuals to monopolize a part of nature for whatever purpose, society is effectively granting to those individuals a privilege or license. Whatever exchange value accrues to such a titleholding is distinct and apart from the property the individuals produce by applying their labor (and capital goods) to nature.

When the availability of free land of equal potential productivity disappears as a result of society handing out and protecting titleholdings, then the demand by non-titleholders for access to nature allows the titleholders to charge a fee, in effect, make a claim against the production of others simply because of possession of the legal evidence of ownership rather than a moral claim to ownership.

LICENSE TAKES TWO FORMS

Titleholdings (i.e., license) in nature that give special advantages in commerce to individuals or groups are economic licenses that generally come to have an increasing exchange value (i.e., an increasing claim on production).

Justice demands that these licenses be regulated and that any exchange value associated with such licenses be collected by government for distribution to all citizens, equally. By the democratic decision-making process, the citizens may direct that government perform certain services that private citizens are unable to provide efficiency (e.g., societal defense from external attack).

Individuals also exercise licenses that violate fundamental norms of moral and ethical behavior. These are generally described as criminal licenses.

Criminal licenses by their nature have no exchange value; rather, they involve actions that impose physical harm on others or damage to the property of others. Preventive measures must be provided by government (by appropriate use of police powers); or, when this fails, by the imposition of punishments.

The nature of punishments involve principles of justice of another sort. Democracy alone will not guarantee establishment of punishments appropriate to the criminal license exercised. Moral and ethical principles must be applied; and, here, a society most plagued by crime tends to be most violent in its response to crime.

LAWS MUST MEET AN OBJECTIVE TEST OFJUSTICE

A synthesis of the socio-political philosophies of Locke, George and Mortimer Adler is best represented by a fundamental principle of cooperative individualism contained in the following definition of liberty:

Liberty is freedom constrained by justice.

And, justice demands that the exchange value of economic licenses is collected by government (as agent for all individuals within society) and distributed equally.

Also, justice demands that criminal licenses are prohibited and to the extent possible prevented. Where criminal licenses are taken, action by government is taken to ensure such crimes are not repeated and that the victims are justly compensated by the criminal.

Thus, a society is just the degree to which its laws are consistent with the above principles and the extent to which government enforces just laws.

INCREMENTALISM AND THE WELFARE STATE
The Experience of the West

Although the writing and public speaking of Henry George influenced thinking of a large number of reform-minded individuals throughout the world, the social movement he started lost momentum after his death in 1897.

Hatred of the aristocracy eventually brought a peasant revolution to Russia, out of which the Bolsheviks (under the leadership of Lenin) emerged as the architects of a new society. Their rhetoric was Marxist (i.e., communist) but their actions established a centrally-controlled form of state-socialism.

Elsewhere in Europe, the military states continued to control socio-political institutions in conjunction with a lingering landed aristocracy and mercantilist industrial enterprise.

Political, religious and economic oppression sent millions of the Old World's citizens to North and South America. In Britain, the Fabian socialists eventually gained support from industrial laborers.

A growing Labour Party (sometimes joined with Liberals who adhered to many of the principles of cooperative-individualism) fought for reforms.

The Conservatives resisted and fought to retain the privileges of the status quo.

PROGRESSIVISM BECOMES LIBERALISM

In the U.S. the Progressives were successful in getting many reforms adopted. Yet, some were ill-conceived or subverted by political compromises.

Up until the 1930s and the Great Depression, the adoption of social welfare program were modest and very incremental. Government intervention in the economic system was largely restricted to the creation of the Federal Reserve System (another compromise that eastern banking interests conceived to prevent creation of a central bank actually owned and operated by the government).

The Depression brought massive unemployment and unrest. Franklin Roosevelt, who had been elected on a platform of fiscal conservatism and a balanced budget, introduced a program of government expenditures on public works to stimulate production and give workers purchasing power. This effort was modest and designed to prevent what many felt could become a Russia style upheaval.

Toward the end of the Second World War, political leaders and professional economists pressed for greater safeguards against deep and prolonged recessions or depressions. At the same time, social legislation was created to more evenly balance the power between the industrial-landlord group (owners of most of nature and capital goods) and the propertyless who worked for legal tender wages.

Government fiscal and monetary policy was from 1945 on directed by demand management theory, relying on loosening or tightening credit availability (and price of credit) as well as changes in taxation to stimulate investment to maintain full employment.

Tax theory made no distinction between income received based on the exchange value of titleholdings and other licenses as opposed to either production or services rendered.

Supply-side economic theory arose in the late 1970s to argue that heavy taxation acted as a disincentive against investment in plant and equipment. As a result, in Britain, the U.S. and other countries the marginal tax rates on high incomes and the tax rates on so-called capital gains were reduced. The longer-run results of this strategy were two-fold: (a) the liquidity provided to markets was speculatively invested in land and securities; and, (b) the price of land rose so rapidly as to make profitable development impossible in many areas, leading to crashes in regional economies.

INTRODUCTION

Lesson 1 * Lesson 2 * Lesson 3 * Lesson 4
Lesson 5 * Lesson 6 * Lesson 7 * Lesson 8