and the Critics of Henry George
Vic H. Blundell
[Reprinted from Land & Liberty,
Henry George's theory of interest is untenable but it makes no
difference to his main economic analysis indeed George, at the end of
his chapter on interest, wrote: "I have endeavoured at this
length to trace out and illustrate the law of interest more in
deference to the existing terminology and modes of thought than from
the real necessities of our enquiry
Nonetheless, his interest theory remained part of his laws of
distribution and open to legitimate attack on theoretical grounds.
(George regarded the payment of interest as justified and did not
advocate any interference with its determination in the market place
and proposed that, like wages, it should be untaxed at The expense of
It might be objected that it is a little late in the day to deal with
these early critics, and that anyway many of the arguments under
discussion have little relevance to today's economic problems.
That would be a mistaken view; George lost his first battle with the
economists not through unsound theories but because he antagonised
them and because, as Andelson says in his introduction: "It was
his (George's) misfortune to have launched his theory just as
economics was becoming a specialised profession, as signaled by the
founding of the American Economic Association in 1885 by scholars,
many of whom had done postgraduate study in Germany. Henceforth, at
least in the United States, he who presumed to write on economics
without having first armed himself with advanced degrees in the field,
would run the risk of being disparaged as an amateur in academic
A leading journalist on a famous London paper, when approached by
your reviewer to examine Henry George's practical proposals, admitted
that he had not read Progress and Poverty. He had, however,
read Mallock on George and that was sufficient for him. Mallock had
disposed of George's theories to his satisfaction.
The battle has to be fought again and Dr. Andelson has enlisted the
aid of contributors well equipped with the necessary academic
qualifications to discourage prejudical charges of amateurism.
Whatever the obstacles, real or imaginary, to Henry George's
proposals thrown up since George's day, the problem and George's basic
answer to it remains the same. If consideration of George's main
thesis is to be encouraged among land economists today, then something
more than a reiteration of George's ideas is required. Many of today's
standard objections to George had their origin in the early critics
and a good demolition job is required to redress the balance of
opinion. The Critics does the job effectively.
With fifteen contributors and twenty-four critics dealt with, it
would be surprising if one or two authors did not leave themselves
open to comment on some of the matters discussed. How important these
are must be left to readers. But your reviewer could not resist the
challenge of questioning certain views in conflict with his own,
although none is of significance when considering George's main stream
Charles F. Collier (Ph.D., Duke University) reviews Reuben C.
Rutherford's book Henry George versus Henry George (1887), a
326-page critique of Progress and Poverty. Collier at times
baffles your reviewer with some of his statements.
Rutherford defends the wages-fund and Malthusian theories attacked by
George and Collier reveals the flaws in Rutherford's arguments. But,
in taking Rutherford to task, Collier concedes too much to Rutherford,
supporting him in the contention that George's definition of capital
supports the wages-fund theory.
The definition "wealth in the course of exchange" is, on
its own, perhaps not clear enough or broad enough to encompass
George's concept behind it, but George makes clear in his exposition
just what he means by these words.
Collier says "Rutherford was able to show that such a definition
was not really very different from the wages-fund theorists'
definition to which George objected elsewhere. After all, if labourers
were engaged in a lengthy project, they would have to live on goods
equivalent in amount to their productivity, as discussed above. Such
goods, according to George's own definition, would be 'wealth'. But
since these goods were not produced directly by the labourers
involved, they could be obtained only by exchange. That, then, would
make the goods on which the labourers lived 'wealth in the course of
exchange' or capital, as a wages-fund theorist would argue."
But Collier's use of "exchange" above does not carry the
meaning that George was using in his definition of capital.
Collier then proceeds to outdo Rutherford in his criticism of George.
When in Progress and Poverty George explains how increases in
population force down the margin of cultivation (he doesn't "concede"
it, as Collier says) and how the division of labour increases
production, sustaining a bigger population, Collier says: "George
is arguing that labour is subject to unlimited increasing returns
his argument is thoroughly invalid since the laws that factors of
production are subject to decreasing returns, at least after some
point, are amongst the most frequently verified laws of all economics."
George is arguing nothing of the kind and indeed later, in Science
of Political Economy, he expounds these "most verified
laws of economics," and in no way contradicts what he wrote
earlier or feels the need to modify it.
Collier in a later contribution, repeats this charge and says that
George "categorically rejected" the law of diminishing
returns and did not accept it until he wrote his Science of
It is a little hard on George that because he did not specifically
mention the law of diminishing returns in Progress and Poverty,
he should be accused of denying its existence or categorically
Even so, although one can, without difficulty, cite instances of this
law of diminishing returns to labour operating in micro-economic
situations, there is little evidence of it in macroeconomics so far.
One might expect to have reached the point of diminishing returns of
labour in Hong Kong with its high population and its limited natural
resources, but a hundred years after Progress and Poverty was
written Hong Kong is still exhibiting the predicted effects of the
division of labour -- high productivity and high land values. It has
some way to go yet and even Hong Kong could be considered a
micro-economic example when one looks at the vast world around it.
Collier says later, regarding land speculation, despite ample
evidence to the contrary, ". . . there is simply no reason why
land speculators will hold their land idle."
Another inexplicable statement that Collier makes, having taken over
the role of a critic of Henry George himself, is contained in the
following passage: "And since George believed that rent increases
would be continuous, the pressure of population against the margin
must be continuous." Not at all. George wrote:
But while the increase of
population thus increases rent by lowering the margin of
cultivation, it is a mistake to look upon this as the only mode by
which rent advances while population grows. Increasing population
increases rent, without reducing the margin of cultivation.
And George adds that this mode of increasing rent is the most
important and is one to which little attention has been given by
But Collier is not finished with his criticism of George. "Rutherford
spent most of his time trying to show that the Malthusian Theory was
correct and that George's objections were invalid. He overlooked,
however, the main flaw in George's arguments -- the fact that the only
fully valid point that George raises in his discussion of the dynamics
of income distribution theory implicitly assumes a Malthusian
And later: "Thus the only argument presented by George that is
correct (in relation to population, rent and the margin) is the one
that presupposes a Malthusian population theory."
But the Malthusian theory is not just one of population; it posits
that population naturally tends to increase faster than
subsistence, and George took great pains to show that pressure by
population on the margin of cultivation could not be taken in
isolation as evidence that population tended to outrun subsistence
(ignoring the division of labour and improvements in the arts of
Francis D. Longe and Francis Wrightson, two Britishers, presented
Fred Harrison with a difficult task as these critics advanced most
plausible arguments against George's theories -- arguments still heard
today in one form or another. These include Lange's support of various
aspects of the wages-fund theory (despite his stated objections to it)
and particularly that which concludes that labour is dependent upon
capital for employment and for wages. Lange also rejected the marginal
productivity theory of wages.
Lange, explains Harrison, frequently avoided logical conclusions by
introducing special pleading to justify the status quo, and in his
faulty logic he "time and again sets up an objection and then
destroys it himself."
Francis Wrightson's criticisms are in the same class. "I do not
believe in the existence of any law with regard to rent," he
declared, and went onto argue that because Ricardo confined his theory
of rent to agricultural land (not strictly true) that George was wrong
in extending it to urban lands and in introducing the element of
location. As for rents of urban land, they were compensation for loss
of agricultural use!
Harrison deals with these and other erroneous ideas and illustrates
the point that the sillier the objection, the more troublesome it is
There is a most important section of this review that deals with the
national income and its distribution amongst rent, wages and "profits"
and the seductive but fallacious arguments of Wrightson (and Mallock)
are admirably dealt with.
This is a valuable contribution to the necessary refutation of ideas
still current today.
Dr. Roy Douglas's essay on Mallock reinforces Harrison's conclusions,
and in another contribution he deals kindly but effectively with the
criticisms of Laveleye -- "the critic ripe for conversion."
Dr. Douglas's best contribution, however, is on Thomas Henry Huxley
(1825-1895), and here Huxley's economic, biological and philosophical
objections are examined.
Huxley not only denies the existence of natural rights, he denies the
possibility of determining what constitutes the natural reward of
labour and argues that a man's qualities are very largely the product
not of his own efforts but of the efforts of others.
Dr. Douglas deals with natural rights, the survival of the fittest
argument, the rights of property, and the rights of the individual, on
all of which Huxley was at odds with George.
Answering Huxley's assertion that a man owes his abilities to others
and therefore has no exclusive right to his own personal production --
a still widely held view -- Dr. Douglas writes: "Every man, it is
true, has derived benefits, and even his personal qualities from
others: but it is also true that each man has given benefits to others
and contributed to their qualities." He adds that because it is
impossible to draw up a satisfactory balance sheet, the most simple
and practical device is to presume that everyone is entitled to those
things which he has made.
More than one critic tackled by the contributors raises the issue of
the proportions of wealth that go to landowners, capitalists and
labourers as rent, interest and wages, and how these proportions are
affected by increases in population and by improvements in productive
power, inventions, etc.
Much confusion arises because the participants in the arguments are
not always talking about the same thing. When, added to this, the
statistics produced against George are unreliable, ill defined and
frequently based upon assumptions, it is not surprising that the
outcome of the debate is not always clear.
The total amounts taken in rent, wages and interest and the
relationship these amounts have to each other as proportions of the
whole, and whether one group increases or falls as a proportion to the
other, is irrelevant in the discussion of who benefits at the expense
Totals in this context have no more relevance than averages. What
is of importance is the rate of wages, the rate
of interest and what is left as rent for land after paying these rates
to labourers and capitalists engaged in production.
George showed that as societies progressed there was a tendency
for the rate of return to labour and capital to a minimum because rent
tended to rise to absorb increased productive power; not uniformly,
but in accordance with the law of rent, being greater at the centres
of industry, commerce and trade and relatively lower elsewhere.
Whatever the arguments as to what constitutes a minimum at any time
or place (and this will be affected by a variety of factors not
excluding competition among landowners for labour or the lack of it),
the determination of what goes as rent on any particular plot of land
and what goes as payment to individual labourers (be they
highly skilled or not) is governed at the margin. Rent as a proportion
of total produce has relevance only as a measure of the loss to
society as a whole.
If George overstated his case, if he was unduly optimistic as to the
effects of his "sovereign remedy," it is of little
consequence. It is not uncommon for sound basic arguments to become
clouded because of attempts to extend them beyond the strictly
verifiable field. It cannot change the main thesis and it is this that
matters in the long run.
Is the Critics the last word on George versus his opponents?
Perhaps not. There is much left to argue about but not much of
It has not been possible to comment on all the contributions for
reasons of space, but they cover a wide field and the book as a whole
is the most comprehensive ever to be published on the ideas contained
in George's classic Progress and Poverty.
Robert Andelson, who is to be complimented on a well-produced and
well edited work, has the last word in his final chapter Neo-Georgism.
"Only capitalism can provide the incentives imperative to keep
production capable of satisfying needs. But only a purified
capitalism in which the distribution of the product reflects
unmonopolized natural opportunity, can commend itself to the
disaffected millions upon whose allegiance the course of history could
very well depend. Perhaps, as the lessons of experience become too
obvious to ignore, these disaffected ones will apprehend that
indiscriminate dispossession of the propertied is no real solution to
social problems. Then the long-neglected doctrine of Henry George,
pruned of questionable but inessential details and supplemented by
fresh understandings and techniques, may come into its own.
1. Critics of Henry George,
Editor: Robert V. Andelson. 400 pp. Associated University Pressesine.
2. Progress and Poverty, p.203 Anniversary Ed. 1979. Robert
Schalkenbacb Foundation, New York.
3. Ibid, p.48.
4. Science of Political Economy, p.368-369. Robert
5. Critics of Henry George, p.266.
6. Progress and Poverty, p.234.