Austrian Theory and Land
[Reprinted from a Land-Theory online
(in response to comments by Al Date), 3 September, 2001]
It is over the definition of what constitutes just law that those of
us who subscribe to Henry George's definitions and those who subscribe
to Murray Rothbard et al. definitions are in philosophical conflict.
Well, the Austrians were correct on value theory, I believe.
The problem with Rand/Rothbard is that they attempted to transform
the subjectivist wisdom of the utilitarian economist von Mises into
overarching absolute objective truth. Philosophical alchemy! Mises
himself was appalled. It was equivalent to converting simple faith
into an Inquisitorial Church.
From our perspective, Mises' great weakness is that he ignored land
almost completely. Not being original economic thinkers, Rand/Rothbard
simply followed in lock step, thereby enshrining Mises one great
oversight into Party Platforms and absolutist treatises.
The Austrians were correct, but not complete. Value certainly can be
nowhere else but in the human mind. However, I suspect that pretty
much all Austrian professors first treat subjective valuation, then
move out to market values for the rest of the semester.
I like to kid Austrians by declaring a market value is an objective
value - that is, a value that can be seen by more than one observer, a
la physics or chemistry.
However, why is Austrian value theory incomplete?
Because it leaves value floating in limbo in the human mind. Their
theory has no anchor for its value.
Which deficiency leads us to George and the two Basic Assumptions of
"A person's desires are unlimited."
"A person seeks to satisfy his desires with the least
I'm not making it easy for myself, am I? It's usually expressed with "Man"
or, in these gender conscious days "People". However, that
buries the Assumptions in the populace - where surely it is "mostly
I like to make it personal - every one of us is described by these
Assumptions. You, Al, and I are described by these two Assumptions -
both of them.
These Assumptions provide Austrian value theory with an anchor.
Why do we value the way that we do? It's in order to satisfy our
unlimited desires with the least exertion.
My God! My God! It's a Labor Theory of Value!!!!!
Now, Austrians don't like Labor Theories of Value, presumably because
Marx had one. But, of course, the two theories are not the same. In
fact, the Georgist Theory is directly opposite to the theory of Marx.
We should note that Georgist Value Theory parallels the market, for
the price mechanism's job in the market place is to let us get as much
as possible for the lowest price.
Von Mises actually didn't ignore Land, he dismissed it as a player.
At one point he indicated that it might have a place, but of course
the value of land couldn't be separated, so how can it be taxed.
He assumed that Land was a child of the market place when, of course,
However, on this point we agree, insomuch as I see no way to find
Rent in the present economy. Trouble is we have to collect a sizable
piece of it before we can to see just how much we have.