Can Georgism and Socialism Be Reconciled?

Ernest J. Farmer

[Reprinted from The Square Deal, November, 1956]

Many unthinking people speak or write as if Georgism, or "single tax", were a variety of Socialism. This is about as logical as to speak of Islamism as a variety of Protestantism, merely because it differs from Roman Catholicism. Georgism and Socialism have something in common, to be sure; but so have Islamism and Roman Catholicism as well as Islamism and Protestantism. In all these cases there are fundamental differences.

Georgists and Socialists are alike in realizing that the greatest single evil afflicting the people on this planet is, the gross maldistribution of wealth. In the poorest countries the wealthy waste immense amounts of wealth on mere ostentation, which adds to the happiness of nobody, and on indulgences which are not only useless but harmful. In the richest countries millions of people lack the means of keeping themselves in good health, and millions more lack the commonplace comforts which raise human living conditions above those of a healthy animal.. JJQ tiling can be more obvious than that a more equable distribution or existing wealth would raise the standard of human welfare, in devising methods of combating this evil, however, Georgists and Socialists are irreconcilably at variance.

Georgists approach, the evil of maldistribution in fashion at once scientific and practical. Knowing that superficial measures have never cured any evil, and in countless cases have aggravated the very evils they were meant to correct, they have studied and found .the causes of maldistribution of wealth. Among these causes they found differences of ability and industry to be of small consequence. In many localities it seemed indeed to be the rule that the idle and extravagant are rich, the industrious and thrifty poor. The chief effective cause was found to be a system of privileges which enable a a limited, a self-perpetuating class to exact from those who produce wealth a large, and in general constantly increasing, part of the wealth produced without giving any service in return. Of these privileges by far the most important is, the privilege of excluding others from the land they must have if they are even to live, still more to work. Other privileges are of minor importance and are mainly dependent upon this chief privilege. This privilege is particularly injurious, because it results not only in depriving producers of much of the wealth they produce, but in preventing much wealth from being produced at all. These effects are aggravated by taxation, which in most countries is so levied as to take a larger proportion of the smaller incomes, and which, being levied mainly upon production, further limits the amount of wealth produced.

From recognizing the chief causes of maldistribution to planning effective measures for its cure is but a short step. Most of the less important privileges may easily be abolished - though not without some resistance from the privileged ones. It is indeed impossible to abolish the privilege of landholding without ruinously hindering production, and it is impracticable to make individual holdings equal. It is simple, however, to equalize privileges in landholding by requiring each landholder to pay into the public treasury each year the difference between the annual value of his holding and that of the poorest holding: that is, the economic rent. The valuations required are much easier and more exact than those on the basis of which existing, public revenues are collected.

This principle hag nowhere been put into practical effect except to a partial extent: not enough to lessen the incomes of the rich. The incomes of the poor have been increased, but less than the increase in production which resulted. The principle can be put into effect to a degree which will come as near to abolishing incomes from privilege as any governmental measures ever come to effecting their purpose.

Socialists are primarily not scientists or economists, but politicians. They look upon the Georgists' study of causes as a waste of time. They are leas anxious to know where they are going than to be on their way. They want results quick enough and obvious enough to appeal to the unthinking masses. If they attend at all to the matter of privilege, it is only to spread privileges more widely. To this end they create fresh privileges: public housing schemes, for example, give to a select class the privilege of leasing houses or flats at a fraction of cost. To carry out these schemes they must create an expensive bureaucracy. The increased taxation necessary to carry out these schemes leaves the great number of those altogether unprivileged in worse state than before, socialists are not content with taking from the rich - they often impose taxes which, like sales taxes, are paid by the poorest.

Georgists propose to simplify government. Socialists are suspicious of simplicity; they want, grandiose schemes, which invariably are expensive.

Georgists know that men differ so much in so many ways that the attempt to make incomes, altogether equal is neither just nor economic. Men's rights are equal, just as in geometry all right angles are equal; but in everything except their rights, men differ. On this matter, Socialists differ among themselves. Some, like G. B. Shaw, declare that equality of income is of the essence of Socialism. Others say, like Marx: "From each according to his ability; to each according to his need. But human nature being what it is, nine hundred and ninety-nine men out of a thousand honestly believe their own needs to be greater than those of other people. Some authority must decide what each man's needs are -- and invariably those in authority find, as they did in Russia, that their position of responsibility makes necessary incomes many times greater than those of the common people.

Georgists are realists: they know that while men do at times use unwisely wealth which they have themselves produced, in general the producer is the best judge of how wealth should be used. The Socialist is not a realist. He thinks that the producer should have, not what he actually wants but what some bureaucrat thinks he wants. The Socialist's naive belief that merely putting a stupid person in a position of authority makes him capable of managing the citizen's affairs better than the citizen himself can, would be funny if it were not such a menace.

But while Georgists reject the principle of absolute equality of income, the Georgist plan, carried out to its logical conclusion, must result in incomes becoming more nearly equal than they can be under Socialism. The great cause of inequality in income is, the appropriation of the rent of land by a privileged few. Were land rent equally distributed, or used for the general welfare, inequalities in income could arise only from differences in ability and industry -- that is, from differences in wages -- or from differing receipts from capital -- economic interest. Both interest and wages, however have for long been constantly diminishing as a proportion of the total wealth produced. It was shown in the article "Economic Concepts" (S. D. November 1955) that in a Georgist system interest would eventually fall to an extremely small quantity, and might under certain conditions become negative.

Wages are also diminishing as a proportion of the total product, and as population increase must continue to fall. Under existing conditions, in which rent is received by but a small part of the population, and in which taxes take a considerable part of wages, wages must remain above the minimum needed for subsistence. In Egypt wages are but a fifth of the product, and are further reduced by taxes, the revenue from which is used in ways which benefit principally the landlords; yet the people exist, and are even slowly increasing. Were rent used for the general welfare, however, population might increase to the point at which wages were below the subsistence minimum; they might fall to the amount which workers could wrest from the barren regions in the far north; yet the people, sharing in an abundant rent fund, might be prosperous and happy. Not only might public services "be increased, but pensions far in excess of those promised by, the Social Credit orators might be paid out of the rent, fund; just as at one time in certain German towns the burghers not only paid no taxes but received free supplies of firewood. Wages might fall so low as to provide insufficient incentive for productive exertion. In that case it would be necessary to reverse the present policy of penalizing production through taxes, and instead give workers extra bonuses.

It is extremely improbable that population will ever increase to any such extent. As Juan de Castro has shown in his Geography of Hunger, the high birth rates in the poorest countries are the effect rather than the cause of dire poverty, as if they were the result of a desperate struggle for the survival of the race under almost impossible conditions. Where people are prosperous, comfortable and happy and have little fear of their children surviving to maturity, the instinct for parenthood is satisfied by two or three children. If the time should come where an increase in population is possible only at the cost of seriously reduced living conditions, it is likely that two children per couple will become the rule, with only enough' exceptions to make up for the few, premature deaths and occasional sterile couples . But this contingency is still a long way off. This planet can support far more human beings than at present in greater comfort than is now enjoyed by the average citizen in the most favored countries: seven or eight billion, easily; ten or twelve, not quite so easily; fifteen or twenty, perhaps. They would probably not be able to waste power tearing around the country at preposterous speeds to no purpose, but they would have abundance of more reasonable enjoyments. The more people, the greater the chances for the development of transcendent geniuses who might lead the race to undreamed of heights.