Henry George's Supply Side Economics
[Reprinted from The Political Science Reviewer,
Vol. XIV, Fall, 1984]
The great success of George Gilder's supply side oriented Wealth
and Poverty published in 1981, suggests that we might profit
from looking again at its century old namesake, whose title it so
self-consciously emulates: Progress and Poverty, by Henry
George. Whether by chance or by design, the similarities in the
themes and arguments of these two books are striking. Both treat the
problems of economic growth, stagnation, and distribution; both defend
the principles of private property; both cut through complexities of
economic phenomena to offer a single, radical solution to the problems
of the economy, a solution involving taxation; both are democratic in
outlook and optimistic in tone; both are strongly anti-Malthusian; and
both authors regard themselves as founders of a new economic science.
I hope to show in the following analysis the self-consistency of
Henry George's masterpiece, and how what I have called the "socialist
idealism" of its conclusion follows from the supply side approach
of its economic logic. In this way the reader of George's book will be
enabled to grasp the "dialectical" relationship between
those two views of economic and social order -- capitalism and
socialism -- normally supposed to be opposites. Considering that
Gilder's book is the work of a Ripon Society Republican who still
praises the liberal politics of Nelson Rockefeller; that at least some
aspects of the supply side program, and much of its rhetoric, have
been embraced by liberals and "neo-liberals" in and out of
Congress; and that the "new" economics has been greeted
suspiciously by many conservatives, there is some reason to believe
that supply siders and socialist planners may share a common horizon.
The synthesis of opposites attempted in George's book simultaneously
conceals and reveals a more comprehensive orientation which socialist
idealism and supply side economics participate in together, in
opposition to an older outlook they together replaced, or were
intended to replace.
Henry George is perhaps the most brilliant, original economist
America has produced. He is one great example of the irrelevance of an
academic education in the field of social science. His reader can
hardly help feeling that a formal training in economics -- which
George lacked -- would probably have destroyed his razor-sharp
perception of common daily life, not to mention ruining his vigorous
rhetorical style. Henry George is that rare case of a thinker with a
priceless capacity to write with clarity, force, and passion together.
Lacking an academic education did not mean, however, that George was
unlettered. The scope of his learning, evidenced by the writers he
cites, is majestic for an unschooled mariner and printing-boy. Adam
Smith, Ricardo, Malthus, John Stuart Mill, Buckle, Quesnay, Gibbon,
Bagehot, Comte, McCullogh, Darwin, Plutarch wander through his text.
More than merely having read them, George struggles with their thought
as a personal familiar. He knows them as intimates. Yet, oddly, the
names of the three overwhelming influences on his work -- John Locke,
Jean Jacques Rousseau, and Immanuel Kant -- never appear, even though
their respective teachings pervade the entire hook. Progress and
Poverty, one may say, is no more a mere text in economic theory
than Marx's Capital is -- both works embrace the full scope of
Progress and Poverty is formally divided into forty-five
chapters, assembled into un Introduction, ten Books, and a Conclusion.
Its internal structure, vaguely reminiscent of Tolstoy's War and
Peace, is articulated into halves, the first of which (from the
beginning to Book VII, chapter 5) might have been called "Poverty,"
the second (VIII, 1 to the Conclusion) "Progress." Each half
is in turn split by a "peak" chapter (V, 2 and IX, 4), both "peaks"
together circumscribing the horizon of the whole work. Progress
and Poverty has a dynamic, "oscillating" design, so to
speak, consisting of a wave upward (beginning to V, 2), a decline (VI,
1 to VII, 5), a second steep ascent (VIII, 1 to IX, 4), and a plateau
which finally disappears in misty poetic heights at die close (X, 1 to
the Conclusion). The second "peak" chapter (IX, 4) is
breathtakingly "higher" than the first (V, 2); its horizon,
the scope of its "view," is much more extensive, taking the
measure of the flow of all human history. The first "peak"
chapter states George's discovery of the most critical law of
economics; the second may be described as a critique of "petty
realism" from the vantage point of a transformed moral idealism.
This internal design simulates the actual moments of human history,
alternating between growth and contraction in pre-Georgist history,
describing a post-Georgist history-to-be of future progress whose
limits cannot be ascertained a priori. George claims to have
discovered the single economic law enabling mankind to overcome the
periodic contractions of civilizations. George understands himself as
the redeemer of history.
Economic science has reached an impasse; it has proven unable to
account for the greatest, most obvious economic problem of all time.
(10f) Modern civilization has progressed in its capacity to produce
material wealth to an extent far beyond anything previously imagined.
So much wealth has been generated, yet in the midst of unsurpassed
material riches the most abject poverty proliferates. The disparity
between rich and poor is most evident just where civilization has
progressed furthest, in the great cities of Europe and America.
Poverty of the most debasing kind abounds in the center of
unparalleled wealth. On the other hand, in young, sparsely settled
areas where there is no wealthy class, there is no destitution. George
concludes that these "social difficulties" are not
accidental; they are "engendered by progress itself." (6-8)
There must be a "law" that accounts for the massive
inequality of wealth and poverty which appears universally under the
conditions of progress.
George's attempt to bring the law to light begins with a review and
correction of certain essential terms of economic discourse. He opens
his review by asking a fresh question, which is in fact a restatement
of the original problem: "Why, in spite of increase in productive
power, do wages tend to a minimum which will give but a bare living?"
(17) This phenomenon George observes together, of course, with Karl
Marx (the "subsistence level of wages"); but George does not
ascribe a natural cause to it. (163)
Carefully and exhaustively, George analyzes the then current
conceptions of wages, interest, and rent. He
argues that wages and interest can be observed to rise and fall
proportionately; whereas rent rises and falls inversely to the first
two. He blames Adam Smith, "who gave the direction to economic
thought that has resulted in the current elaborate theories,"
because if "the great Scotsman" had not committed a decisive
error in his account of wealth, "political economy today
would not embrace such a mass of contradictions and absurdities."
(51) Smith's error, followed by Ricardo, McCullogh, J.S. Mill, and the
orthodox economists, was in arguing that wages were paid out of
capital. According to George, this is the reverse of the facts. Wages
are the result of labor alone. The product of capital is interest;
that of land is rent. Labor, capital, and land are the three factors
of production. (38) These three factors are ultimately reducible to
two, labor and land, since capital is itself an intermediate product
of these two. Moreover, George is insistent in describing wealth as
that portion of the "tangible product" of labor "which
has and retains the power of ministering to desire." (42) Labor
which ministers to desire directly, e.g. the cultivation of a farm
strictly for one's own consumption, is wealth-productive but not
capital-productive, Capital is that part of wealth "which is
devoted to the aid of production." (42, 46-47)
He is concerned to clarify these terms because he believes certain
errors of definition first led to the mistaken notion that capital and
labor are antagonistic, in the sense that the profit of capital, which
is interest, is gained at the expense of wages, the profit of labor.
This erroneous opinion was advanced by Smith, Ricardo, and Mill; it is
current economic doctrine; and -- although George does not explicitly
say so -- it underlies the Marxist teaching.
The pessimistic view that capital and labor are antagonists finds "its
greatest support" in Malt bus's teaching concerning population. "Malthusianism
stands in the world of thought as an accepted truth,
which compels the recognition even of those who would fain disbelieve
it." (96) So significant is the Malthusian justification of the
errors of modern economics that George is forced to devote one full
Book to an extensive and thorough refutation of it, on both
theoretical and practical grounds. He takes pains to prove that the
growth of population causes, not scarcity, but Increase in the
production of food and other goods. Very populated nations tend to
become rich, and become resource producers rather than net consumers
of the world's goods. The reason for this is that in populated
regions, labor is minutely divided and thus becomes very efficient.
The great difference in wealth and resource production is not the
generosity or "niggardliness" of nature in different
countries, but the organization and division of labor. Malthus's error
arises from an insufficient reflection of the difference between
beasts, which "take only what they can find," and men, who
cultivate: "There is more food, simply because there are more
George's optimism on the question of population contrasts starkly
with the gloom of Malthus. George goes so far as to argue that an
increasing population is a blessing to all mankind: "Compared
with its capacities to support human life the earth as a whole is yet
most sparsely populated." (110)
What are the true limits of population growth? Physical space alone. "The
earth could maintain a thousand billions of people as easily as a
Life does not use up the forces that maintain
life." (133) I believe we may fairly conclude that, whatever the
theoretical defects of his specific "land tax" notions, the
sanguine character of George's work was the most important reason for
the book's tremendous popularity, from the end of the nineteenth
century until today.
Why did the dark Malthusian view achieve such unchallenged authority?
Malthus's teaching, according to George, had risen to the level of "a
central truth": it established the ground for nineteenth century
ideas of "the development of life in all its forms." (100)
In the language of Thomas Kuhn, Malthus had created a new paradigm for
In the first place, Malthus was able to build on the authority of
Adam Smith's "speculations" on wages, which had set
economics off on its "misdirection." Smith was in some
respects a proto-Malthusian, according to George. Secondly, Malthus's
doctrine received critical impetus from the experiments of Charles
Darwin, who characterized his own theory of the struggle for existence
as "the doctrine of Malthus applied with manifold force to the
whole animal and vegetable kingdoms." (101) By assuming the form
of social Darwinism-a theory attacked throughout Progress and
Poverty -- capitalism took on "a sort of hopeful fatalism,"
according to which "progress is the result of forces which work
slowly, steadily, and remorselessly, for the elevation of man."
It is quite likely that the theoretical justifications for free
market economics which have been successively advanced over time
explain why the popular credibility of capitalism was damaged if not
destroyed by its own defenders. From Smith's overriding concern for "natural
liberty," through the gloomy predictions of Malthus, to the ever
struggling cosmic evolution of Darwin, capitalism took on an ever
harsher, more austere character utterly alienating the masses of the
poor in their hopes for a better life for themselves and their
progeny. Progress and Poverty is Henry George's project
designed to rescue the economics of growth by correcting Adam Smith's
mistakes and thus steer clear of Malthusian darkness and Darwinian
George's most profound insight into Malthus's triumphant doctrine
touches one of the principal problems in modern philosophy -- the
tendency to collapse the distinctions between species of animal life,
including human life. By ignoring the significance of the human mind,
Malthus played on the "greater weight" modernity gives to
analogies between the forms of life. (96) Man, like the animals, would
be a net consumer of nature's goods if he were not a cultivator. The
same nature which makes the animals destructive makes man creative and
progressive. George understood the import of the philosophical
premises underlying contemporary politico-economic doctrines. We will
later examine the philosophical premise of George's own teachings to
see whether he himself escapes the same modern problem.
George also took note of the psychological importance of Malthus in
legitimizing the "special privileges" of elites. By giving a
natural rather than a political reason for poverty, Malthusianism
reassured and soothed the dominant classes. This reassurance was
especially gratifying at a time when "the power of wealth"
was under attack by radicals and egalitarians. The purpose of
Malthus's Essay on Population, said George, "was to
justify existing inequality by shifting the responsibility for it from
human institutions to the laws of the Creator." (98) This shift
destroys the ground for radical and reform policies aimed at the
But for George the view that nature is the cause of human inequality
amounts to a blasphemy. (128, 341) Economic science, he never tires of
repeating, has arrived at a dead end because it is unable to account
for the paradox of wealth and poverty. George's work raises "political
economy" to the level of "true science" for the first
time. It provides "certitude;" it redirects economics on a
path in sympathy with "the aspirations of the masses of men."
(xvi) Progress and Poverty, he strongly implies, is a "Copernican
revolution" in economics. His discovery of the fundamental
economic law reduces the confusion and contradiction of current
economic thought to "simplicity and harmony." (221-22)
The Kantian resonance of this claim is not accidental, as will be
In order to found a true science of economics, George retraces the
course of economic logic back beyond Adam Smith, to the first
principles of property and labor. These principles were formulated by
John Locke in his Two Treatises of Government.
Modern complex societies and social relations are nothing more than "elaborations"
of the simplest human beginnings. Analysis of the first relations
shows that the production of goods out of raw nature to satisfy "the
various desires" is a direct result of human labor and nothing
else. At first every man "makes" everything he needs. In
time a division of labor arises under which goods are traded or "earned"
by each laborer working on just one, or even a part of one, product.
Payment for labor by money wages is merely a further refinement of
payment in kind. George reminds the reader that even now we say "I
made so much" meaning "I earned so much":
"Earning is making." (26-28) And making is human labor mixed
with the materials of nature.
All wages, George asserts, are the fruit of preceding labor; wages,
that is to say. are emphatically not advances from capital. Capital
itself, on the contrary, is a result of previous labor. Capital is
merely an intermediary term in the productive process -- wealth
intended to produce more wealth. George understands by money a "draft"
or claim based on a promise to pay from the stock of goods already
produced in labor.
Keeping the fruits of one's work for oneself, i.e., private property,
is a right given to man by nature. "As a man belongs to himself,
so his labor when put in concrete form belongs to him." (334) "Natural
right" is the only possible source of the right to property --
any other claim falls before the right of man to himself and the
produce of his labor.
George follows Locke's teaching so closely here that he reproduces a
microcosmic history of a Lockean society developing from what might be
called a "state of nature," beginning with a pristine "unbounded
savannah" about to receive its "first immigrant." (235
ff.) Since the first settler has no one to help him, he has to provide
all the necessities of life for himself; he is poor because there is
no division of labor. It is hardly necessary to review the entire
history from the arrival of the next settlers until the account is
completed with the growth of a great city, for this is easily
imagined. All growth is premised on the division of labor and its
corollary, the continual increase of population. George focuses
attention on the fact that the value of the uninhabited and unused
land in the "state of nature" is effectively nil, while in
the great city at the end of his imagined history, the smallest parcel
of real estate is worth huge sums because of its incredible
productiveness. "The productive powers which density of
population has attached to this land are equivalent to the
multiplication of its original fertility by the hundredfold and the
thousandfold." (241, 149-30) Land and the raw materials it
contains are worth nothing in themselves; they acquire "social
value" by their rational use in organized society. The Individual
laborer does not impart value to the land; it is the existence of the
whole community with its organized division of labor which creates
We note that in asserting a natural right to the fruit of one's
labor, George legitimizes some unequal distribution of private
property: some inequality is undeniably rooted in nature. "Different
powers and different desires" make some inequality inevitable and
Another Lockean principle which George accepts as a corollary of "natural
justice" is the so-called "spoilage rule," originating
in "primitive Ideas." (386) That rule, limiting
possession to the extent of reasonable capacity for use, is virtually
intuitive. It was adopted "by common consent," for instance,
during the California gold rush and incorporated into territorial law.
But George concentrates the "spoilage rule" on the use of
land itself, and thus begins to depart from Locke on the matter of
land ownership. For if labor gives the laborer a natural right to
private property in the product of his labor, it follows that there
can be no right to property in what is not the product of man's labor,
such as land or undisturbed raw materials. (366) The community by its
very nature retains the right to the land and its resources because
there is no natural right that can justify any individual in exclusive
possession. And if there is no private property in land, there is a
fortiori no private right to claim rent for the use of land.
By this point George has moved to a Rousseauian reformulation of
Locke's principles of property. The signs of that movement are
conspicuous in his text. At the same place where he articulates the
Lockean natural right argument for private property, George describes
it as a "sentiment which acknowledges his exclusive right
as against all the world." (334; my emphasis) Just previous, he
asserted that his discovery of the land tax would demonstrate that "the
laws of the universe do not deny the natural aspiration of the human
heart." (330) The sentimental language of Romanticism can hardly
be less Lockean; it signifies George's shift to the ground established
by the philosopher of Geneva.
But we cannot turn to the influence of Rousseau on Progress and
Poverty until its Lockean foundation is fully described. For it is
Locke, not Rousseau, who gave the earliest systematic argument for
encouraging economic growth, the same argument which lies at the heart
of .supply side economics. On this central issue, Rousseau was
resolutely opposed to Lockean commercialism. And George stands wholly
with the English thinker on this Issue. For Locke economic growth, or
"comfortable self-preservation" as he deemed it, makes
possible a stable, orderly, free society. Without a growing economy, a
stern Hobbesian Leviathan government is the only alternative to
anarchy and civil war. A regime of economic prosperity is Locke's technique
to make civil war obsolete.
George welcomes economic growth because it is universally beneficial.
In an expanding economy, both wages and interest (capital profits)
increase. (19) Given the observed fact that rent is inversely
proportional to wages and interest, it might be objected that economic
growth is not beneficial for landowners. George grants this
possibility in an inequitable economic order, where private landowners
may withhold land from use for speculative purposes. But in a properly
ordered economy where a land tax absorbs rent, productive landowners
share in the great benefits of prosperity even though their rental
profits have been transferred to the government. (IX, 3) Only pure
speculators receive no benefit; but, as has been shown, their
ownership was never justifiable in any case.
It is necessary to explain the theory of George's land tax at this
point, in order to proceed with the discussion of economic growth. For
land ownership is the "wedge" (9) driving the classes apart
and preventing an uninterrupted continuation of progress. The land tax
is George's acclaimed solution to the economic impasse.
He argues that the value of all land (thus, of rent, the profit of
land) is determined by the value of marginal land, i.e. land whose
productivity is at the minimum below which land is unusable at any
given point in time. All land which is more productive than marginal
land is incrementally more valuable, and, as such, receives higher
returns. As society progresses, two effects take place. First,
population grows. This has the effect of pushing marginal land
outward. For example, because of the demand for more living space,
land which was previously considered too far away from the city and
was therefore uninhabited now begins to rise in price (and rent) and
is purchased by, or leased to, people who will use it for habitation.
Second, progress means technological improvement and an increasing
efficiency of land. Land that was once unproductive now becomes useful
because of new technological advances. New methods of irrigation open
up deserts previously thought to be unarable. Or, reverting to our
earlier example, new highways and high speed commuter trains make it
possible to live further away from the central city, turning
uninhabited rural or waste land into suburban commuter bedrooms. Thus,
technological progress has the same effect on land values as
Since the value of marginal land increases due to these two social
effects, the value of all more than marginal land necessarily
increases proportionately. George sees that these social forces give
the landowner a huge windfall rental profit, even though he has
exerted no labor whatever on his land and has done nothing to earn
that rental windfall but hold the property over time. (420)
This is an injustice which might be tolerable in itself, but It leads
to a catastrophic result. Realizing that their rents increase over
time, landowners engage in speculation, buying land and leaving it
fallow, waiting for values and rents to rise further. Speculation
is a necessary and inevitable result of progress, in George's
account. Speculation becomes a third, fatal factor impinging on the
marginal value of land and its profits. Population growth and
technology in themselves would permit all factors of production to
generate higher profits over time. They would at least balance each
other even if that balance were not just. But speculation feeds on
itself, driving property values and rents ever upward. The increasing
pressure of rent places too great a strain on the process of economic
production, because the speculative rise in rent squeezes wages and
interest downward. Eventually, when wages and interest fall below the
subsistence level, production slackens and grinds to a halt. The
supply of goods and services is interrupted; industrial depression
sets in. Once depression has travelled its merciless course, the
speculation on land is alleviated. Prices and rent fall, productivity
resumes, and the cycle begins anew.
George's ingenious explanation of vicious business cycles is
trenchantly argued and brilliantly deduced. It is, so far as I know,
original with him. Moreover, the theory of business cycles becomes the
central idea in his wider analysis, in the second half of the book, of
the progress and decline of civilizations. But, uncharacteristically,
a presentation of sufficient empirical evidence for the theory is
lacking. George ought to have given actual data comparing the rise and
fall of rents and land values with the movements of business expansion
and decline; even a series of simple observations over the courses of
several such cycles would help. He does not offer any such evidence.
On the showing of the book, apart from the theoretical presentation,
we simply cannot say whether the "law" he claims to have
discovered is a valid account of the facts of business cycles.
However that may be, the solution to the problem of periodic
depressions is implicit in the situation he has described. Since he
has shown that there is no natural right to private property in land,
and having demonstrated that speculation in property ownership is the
direct cause of depressions, George concludes that "we must make
land common property" (328) by restoring it to its rightful "owner,"
society as a whole.
Our author has slowly, carefully led us to this radical, confiscatory
solution by his rigorous step-by-step treatment of the definitions and
the problem. In the previous chapter (VI, 1), having just demonstrated
that land speculation is the cause of depressions and impoverishment,
he examines several less shocking and radical remedies, rejecting them
all as insufficient and even counterproductive.
George's rhetorical art is nowhere better demonstrated than at this
juncture. In fact, he is not truly interested in the radical solution
of land confiscation. What he actually intends is to impose a tax on
land, equal to one hundred percent of the rental value of the
unimproved plot (165 and IX, 3), leaving the property formally in
private hands. In order to convince the reader to accept this
apparently modest proposal, George, first, forces him to consent to
the need for the radical solution; second, argues for the justice of
that remedy through the next five chapters; and only then replaces the
confiscatory solution with the "moderate" proposal to tax
the land, some seven chapters after offering the radical plan. His
rhetoric is self-consciously Machiavellian." Having compelled the
reader to contemplate the most unpleasant "communist"
answer, George relaxes: the "communist" solution has been
transformed into a tax on private property quite in the spirit of
This response to the problem of economic contractions is intended to
liberate the economy and allow the improvement of productivity to such
an extent that no one can safely predict its limits. For George,
economic growth is the answer to nearly every social problem:
will raise wages, increase
the earnings of capital, extirpate pauperism, abolish poverty, give
remunerative employment to whoever wishes It, afford free scope to
human powers, lessen crime, elevate morals, and taste, and
intelligence, purify government and carry civilization to yet nobler
The current "vulgar theories" claim that wages are derived
from capital. This would mean that as population (the number of
workers) Increases, wages must fall. In a growing economy, however,
the opposite result has been observed -- both wages and interest are
seen to rise as a result of new production. (25,181) Capital and labor
share an interest in increasing productivity:
For if wages fall, Interest must also fall in proportion,
else it becomes more profitable to turn labor into capital than to
apply it directly; while, if interest falls, wages must likewise
proportionately fall, or else the increment of capital would be
George argues that economic growth is the effect of incentives.
Prefiguring Gilder's contention for the "altruism" of the
entrepreneur, George stresses that the incentive of earning profit
produces social benefits almost by necessity. Private profit is "a
natural reward" for labor directly or indirectly exerted. "No
one can keep to himself the good he may do, any more than he can keep
the bad." (435) The profit-seeking individual is virtually
compelled, willy-nilly, to invest for the benefit of the people. "Nature
laughs at a miser," George remarks. The miser tries not to give;
he saves his money in bank accounts; he accumulates and hoards, and
his very hoard "sprout[s] and grow[s] into trees," (436) The
natural laws of human life do everything possible to increase the
production of goods for our consumption and use.
What thwarts infinite progress is not nature but man himself, by
destroying the incentives to produce. Destroying incentive means
essentially robbing man of the rewards of his labor. In general, the
power which George Identifies as capable of that theft is monopoly
power. (III, 4) But monopoly power finds its origin and support in
government power; for government either exercises its own monopoly on
violence over the economy by overtaxation; or else it creates,
institutionalizes, or at any rate makes little effort to diminish
private concentrations of power. In a state where government expenses
are supported only by a single tax on land, and therefore whose
economy is free in the decisive sense, monopoly is swallowed up in
I believe George has earned a solid reputation on the "supply
side" of economics, yielding to no one who has written in this
century on the disincentives of taxes. In an extended discussion of
poverty In India, for instance, the burden of excessive taxation is
squarely blamed for that nation's notorious starvation. One writer
George quotes in fact described Indian food shortages as "financial
famine," due to the tax-generated inability of the Indian people
to save or invest. (119) The British empire commits the ultimate
outrage in India by taking food from the natives in lieu of monetary
revenue, which is practically nonexistent. Overtaxation destroys the
incentive to cultivate; therefore the English confiscate what little
food is left in the country instead of the trickle of tax money.
The English in India, says George, committed the tragic and absurd
error of insisting on the construction of vast capital projects, such
as railroads, which have nothing to transport because the high taxes
extracted from the populace to finance that construction make
industrial activity impossible. The imperial government believes such
projects will modernize that backward country; but "the very
efforts made by the government to alleviate famines do, by the
increased taxation imposed, but intensify and extend their real cause."
(120) The railroads, instead of easing, become a new barrier to
industry and commerce. George is certain that relieving the tax burden
on the Indians would lead to agricultural and economic expansion. He
footnotes an 1878 article showing that the most prosperous state in
the country of India is the one where taxes are lightest. (119)
The nineteenth-century mistake of the English in India, repeated over
and over by the guilt-ridden Western nations in this century, is to
base their policies toward the former colonies on the belief that
underdevelopment is due to lack of capital. But a capital shortage,
according to our author, only points to a more fundamental problem. "Is
it not the capacity and abuses of government, the insecurity of
property, the ignorance and prejudice of the people, that prevents the
accumulation and use of capital?" (83) Sufficient capital from
domestic or foreign entrepreneurs becomes available in a country whose
government's economic and social policies secure property, provide
incentives to work and save, and educate citizens. Bad policy, not
capital starvation -- "the rapacity of man, not the niggardliness
of nature" -- is the true cause of poverty.
In the more advanced nations, well meaning people design plan after
plan to relieve the suffering of the poor. George respects their good
intentions, but rejects every such scheme.
Welfare programs? They are self-perpetuating and destructive of the
qualities of independence and self-respect, which the poor need most
to escape their condition. (492)
Labor unions? Their effectiveness depends on their power to destroy
wealth by striking, and their benefits, marginal at best, apply to
their own members, not to all workers. (310 ff.)
International protectionism against imports? George considered
tariffs and quotas inconsistent, absurd, and fallacious. (18)
Protectionism is essentially theft practiced by government against the
consumer. (300) George actually wrote an entire separate work
attacking the idea of protectionism, in the name of free trade.
Co-operatives and shared management strategies? "[S]triking
proof of how first principles are ignored in dealing with social
" (317) "Cooperation" cannot increase
wages, relieve impoverishment, or achieve any general result that
competition cannot attain.
Land redistribution? This proposal touches on the problem he had
identified as the central one. But redistribution is counterproductive
as long as property in land remains private and untaxed. Since it is
impossible for all to share equally, it intensifies the difficulties
by multiplying the number of landowners having an interest in
strengthening an unjust system. (326) We note that he does not take
cognizance of the objection that increasing the number of private
landowners might lead to competition for tenancies, thus lowering
George even criticizes policies designed to educate laborers and
improve work habits. Education for us moderns is regarded as "a
magical power," able almost to transform human nature. But modern
education tends to the abstract and useless. Moreover, while some
people may be helped, it cannot make possible a general rise above the
poverty level. So long as the system of private land ownership holds,
the improvement in general work habits has the same effect as other
technical improvements, which is to increase speculation and so drive
down wage levels. (303 ff.) George is certainly not opposed to
education in itself; but he believes education is an effect rather
than a cause of increasing prosperity.
Graduated Income taxes? They encourage bribery, perjury, evasion, and
unscrupulousness, and strain the individual citizen's conscience; they
require an army of bureaucrats "clothed with inquisitorial powers";
they demoralize the populace's opinion of their government. Worse yet,
the greater the progressivity of the tax rates, the more they diminish
incentives to earn, save, and invest.
But the incentive to accumulate wealth is "one of the-strong
forces of industrial progress." (320) Thus, all hope for
Improving the general lot of mankind, rich and poor, depends on
maximizing that incentive.
Government economic planning? Far from helping, "whatever savors
of regulation and restriction is in itself bad, and should not be
resorted to if any other mode of accomplishing the same end presents
Itself." (ibid.) George is among the defenders of the
free market because he believes freedom per se must be
He is certainly in favor of reducing government expenditures, not
because overspending causes poverty or depression, but because
minimizing the size of government is a democratic principle:
The more complex and extravagant government becomes, the
more It gets to be a power distinct from and independent of the
people, and the more difficult does it become to bring questions of
real public policy to a popular decision. (303)
The Reagan Administration's effort to reduce the federal budget so
that people can increase control over their own lives (as the
President often expresses this idea) finds a certain support in
George's thought. In this regard, it is not a little surprising to
read in his text that by 1879 -- fifty years before the Keynesian
aftermath of the Great Depression -- George is expressing alarm over
the increasing acceptance by the urban poor of the notion of public
employment as an economic benefit, on the ground that such employment
puts money into circulation. Boss Tweed of New York was a popular hero
in the Senate, in court, and in prison, George claimed. His thefts
from the public till were not harming them, the poor evidently felt.
To the contrary: the urban poor acted on the basic notions of Keynes's
General Theory, five decades before the English economist
elaborated the dubious principle of government spending as a means of
escaping economic contractions.
The teaching of supply side doctrine which most distinguishes it from
more orthodox treatments of capitalism is the stress placed on
taxation and its incentive effects on economic production. The
post-Smithian mainstream of capitalist thought tended toward an
economics of equilibrium and stability rather than toward growth and
risk. Adam Smith firmly opposed business corporations because they
insulate entrepreneur from personal risk which he thought was
essential. One theme of The Wealth of Nations is the desire of
businessmen to shield themselves, by incorporation, price-fixing, or
other means, from the effects of free market competition -- a desire
Smith argued government must resist. But capitalist theory soon
absorbed the business corporation, and moved in the opposite
direction. Corporations today are thought to be almost the only source
of innovation and productivity (see, e.g., Galbraith and Schumpeter).
Oriented toward economic growth, George found himself outside the
orthodox mainstream, opposing Malthus, Ricardo, Herbert Spencer, and
John Stuart Mill. It is, I believe, an essential aspect of his land
tax proposal that it makes possible the abolition of every other form
of taxation. (406 f.) Hence George's proposal is frequently called the
"single tax." The entire third chapter of Book VIII is an
explication of four problems of taxation in the tight of supply side
considerations: (1) Its disincentive effects on production; (2) ease
of collection and imposition on the "ultimate payers"; (3)
certainty; and (4) equity.
Taxation which lessens the reward of the producer necessarily lessens
the incentive to production," George argues; "taxation which
is conditioned upon the act of production, or the use of any of the
three factors of production, necessarily discourages production."
(409) Several examples are cited: the date palms of Egypt, cut down
because of a heavy tax which was imposed on dates; a Dutch general
sales tax which "would, had it been maintained, have all but
stopped exchange while yielding little revenue"; and the American
ship-building industry, destroyed by tariffs on foreign trade.
George supports luxury, inheritance, and natural monopoly taxes -- in
the latter case because monopoly profits are themselves "a tax
levied on production." Land is, as has been said, the greatest
natural monopoly, hence the fittest subject of taxation. He is well
aware that production and sales taxes are never paid by the producer,
but are shifted through price increases to the consumer, with
additional profit to all intermediaries. This in turn effectively
tends to curb production since price hikes discourage demand. (416,
428) But some producers are not especially opposed to such taxes,
precisely because they are so easily shifted to consumers. George here
notes a fact which tax-prone politicians like to conceal: many taxes,
such as protective tariffs, license taxes, and manufacturing imposts
are favored by special interests as a method of excluding potential
competitors from entering a controlled market. George understands
that high "business taxes" are merely another means of
helping large corporations keep prices high by discouraging
competitive entry into the marketplace.
The cost of collecting taxes increases with the factor of
uncertainty: evasion and fraud by taxpayers in reporting income,
personal property, and customs taxes, necessitate a huge bureaucracy
of tax collectors, opening up possibilities for bribery,
arbitrariness, and tyranny. Worst of all, "[t]axes which lack the
element of certainty tell most fearfully on our morals" by
destroying that civic attachment to the government which is essential
to democracy. (417)
The effect of abolishing all taxes on production, George contends, "would
be like removing an immense weight from a powerful spring." The
current system of taxing economic production "operates upon
energy, and industry, and skill, and thrift, like a fine upon those
qualities." (434) Today the state punishes the producers of
wealth for their benefits to the people. George's single tax is
intended to convert today's punishment into reward.
On first considering George's plan in its radical, confiscatory
version, the reader might object that common land ownership destroys
or diminishes incentives and opportunities for land use. The enormous
tracts of land in the United States which are controlled by the
Interior Department and are prohibited to exploration and development
of mineral resources in the name of "conservation" exemplify
this objection. But George's argument is quite the opposite: from his
standpoint the real problem is the refusal of private land
speculators to use their property. (VIII, 1) If we remember that the
land tax is imposed on the rental value of unimproved land, the
Georgist proposal in its "moderate" form has a considerable
incentive attached to it; land would virtually be put up "at
auction to whomever would pay the highest rent (i.e., tax) to the
state." (437) Taxed unproductive land is a financial drain on the
owner. Taxed land is only worth possessing if the owner is gaining a
profit from the utilization of that land in a productive way. Hence
land use is encouraged and the supply of goods und services from land
increased under the land tax regime.
We may conclude this section by mentioning George's description of
that paradigmatic supply side concept made famous in our day by
Professor Arthur Laffer of the University of Southern California. "Rent,"
i.e., taxes, is bid up on any given parcel of land by eager
entrepreneurs, productive investment not being otherwise taxed in
Georgist economy. The general increase In economic prosperity
generates a greater number of "renters" and ever more land
under use and "rented," i.e., taxed. The result is that "[t]here
would be a great and increasing surplus revenue from the taxation of
land values, for material progress, which would go on with accelerated
rapidity, would tend constantly to increase rent." (456) This
conceptual account of how tax revenues rise as the tax burden on
production declines may be said to be the supply side principle par
excellence; it proves Henry George rightly belongs among that
group of economic theoreticians.
We have seen how the economic growth component of George's work
derives from the thought of John Locke. But, apart from the support
for commercialism, Progress and Poverty is grounded as well in
certain Rousseauian principles of egalitarianism and democracy. It was
a Rousseauian refinement of Locke's private property doctrine,
followed by Henry George, that the right to own land cannot be derived
from nature. That right is, at most, civil; only the right to property
in one's own labor and its products is natural, or pre-political.
George also follows Rousseau in characterizing rights as inherent in
the human mind. (375) Locke, to the contrary, rejected the inherence
of moral principles. "Rights" are essentially another
term for "powers" in Locke's treatment. For Rousseau, on
the other hand, power and right are totally distinct things. Even
an infant has a concept of right practically from birth. From this
difference it follows that Locke is prepared to legitimize slavery
under certain circumstances. Slavery for Rousseau, as for George,
can never be based on right. Slavery and tyranny elicit George's
moral outrage. He draws a close connection between those forms of
governing and the private ownership of land. Since land is both a
human necessity and a natural monopoly, It is the great origin of
slavery and tyranny. (338, 345)
At the core of George's attack on private land ownership is his
egalitarianism. The large disparities in the distribution of wealth
caused by land ownership nullify the principles of equality in the
Declaration of Independence. George repeatedly reminds the reader that
slavery, whether explicitly legal as before the Civil War, or implicit
in private landholding in the post-bellum years, is a contradiction of
the Declaration's doctrine of human rights. (357, 388, 394, 546) On
the other hand, the elimination of land ownership, or -- which is the
same thing -- imposition of the land tax, is all that is necessary to
bring those principles to fruition.
The problem George is treating at this point is complex. Rousseau
distinguished between the "very limited needs" of men in the
state of nature and the "multitude of new needs" of social
man. In the natural state, man, needing so little, Is independent
of his fellows. There is no poverty because there is no wealth. In
society, the variety of human needs creates dependency, poverty, and
inequality. George implicitly follows Rousseau's hypothetical human
prehistory. Man, "the unsatisfied animal," has "desires"
as well as "wants." (466) Wants, like Rousseau's "very
limited needs," can be satisfied with material wealth. Desires,
however, can never be satisfied; they are infinite, and therefore
always act as spurs to fresh human activity regardless of the degree
of material riches. But whereas Rousseau clearly regrets the
generation of unlimited human needs in society, George legitimizes
them. It is true that impoverishment, shame, degradation, the
distortion of the sweetest human affections can all be blamed on
unlimited wants. (457 f.) Nevertheless, the highest actions of men in
society also spring from these low beginnings -- actions of which
pre-social men are incapable. These activities show man in his highest
moral stature; as such, they redeem their rootedness in the
multiplicity of desires.
George's egalitarianism also reveals itself in his adoption of the
Rousseauian opinion that the great "differences of natural power"
among men -- the differences, say, between Shakespeare and some day
laborer -- are attributable to external "conditions that permit
so few to .develop." (469) By nature the differences between
mental powers are probably no greater than those of height or physical
strength. For many, social conditions stunt and deform the full growth
of mental capacities. As Rousseau expresses it at the beginning of
Emile: "Everything is good as it .leaves the hands of the
Author of things; everything degenerates in the hands of man."
According to Rousseau, the only solution to this problem, although
perhaps impossible to achieve, is educational reform. For George, it
is political reform, which will result from the education he seeks to
instill with his book. Lacking that political reform, civilization
will divide ever more sharply between poor and rich; as progress
continues, inequality will grow until the establishment of a kind of
equality of slaves destroys even a semblance of legal equality. (VII,
2; X, 4) George has followed Rousseau's Second Discourse to
the last sentence on the progress of inequality, where "a handful
of men [are] glutted with superfluities, while the starving multitude
lacks necessities." George's enterprise in Progress and
Poverty is to correct the course of human history to avert that
By encouraging economic growth, George fosters two Rousseauian ends
-- equality and democracy -- using Lockean means. Without the barrier
of private property in land, the increase in wealth leads to equal
distribution, or more precisely, to a distribution which varies
according to "industry, skill, knowledge, or prudence," that
is, by merit. (453) Since these qualities in themselves are not
grossly different among men, economic rewards will not show great
Private land holding is the basis of aristocracy. (350-51) As such,
it is inconsistent with a democratic order. Now democratic rights per
se -- the right to vote, for example -- will not suffice to solve
the central problem. The United States, unlike aristocratic Europe
where inequality first appeared as a social problem, always had
republican institutions ruled by free men. The link between accessible
and useful land In the United States, and the democratic character of
its people and institutions, can be observed in the history of the
frontier. George compresses into a few brilliant paragraphs the "frontier
thesis" which was fully articulated thirty years later by
Frederick Jackson Turner. The "unfenced land" of the West
created the proud American type, with his self-reliance, his
consciousness of freedom, his optimism, generosity, elasticity, and
ambition. These democratic qualities were fostered among "thriftless,
unambitious" European immigrants by the easy availability of
American land, where these settlers built their homes and earned their
livelihoods free of interference from distant governments and stifling
societies. "But our advance has reached the Pacific. Further West
we cannot go," and that fact too is bound to mark the American
character, for the worse. Inequality makes its appearance with the
closing of the frontier. (390 f.)
European destitution has indeed appeared now in republican America.
(300) "[A]bsolute political equality does not in itself prevent
the tendency to inequality involved in the private ownership of land,"
George concludes. In fact, without land reform, democracy may
aggravate the problem. This type of democracy destroys national
character, corrupting the political order, and leading to despotism.
George faces an obvious difficulty at this point: how can the single
tax become policy in a corrupt democracy? Political reform has to come
about by democratic means in the United States. But the popular
corruption engendered by private land ownership would mean that the
electorate has neither sufficient power nor the desire for reform. The
landholding aristocrats are clearly not willing to support a plan
which seems to oppose their own interests. (98-99) No solution to this
difficulty -- which can be characterized as a version of the central
problem of every political order -- appears in the text. The
reader is compelled to infer that George has exaggerated the impotence
of the American electorate. It is absolutely essential that his
teaching be popularized and disseminated immediately.
Progress and Poverty sold millions of copies in its first few
years -- more than all previous American economic texts together.
According to George Gilder, it is still the "leading best-seller"
in economic literature. Henry George himself ran for Mayor of New
York twice, largely on the strength of his reputation from this book,
and finished second in his first campaign, ahead of Theodore
Roosevelt. The book has been condemned repeatedly, from his day till
ours, by right and left wing professional economists, but it was and
remains enormously popular with the reading public. George touched the
optimistic spirit of the average man; he left intellectual elitists
with their pessimism cold. He clearly believed in the educability of
ordinary citizens -- his own experience might have suggested that to
him -- and, accordingly, in the real possibility of democratic reform.
Not without reason did Vernon Parrington once describe Progress
and Poverty as a book of "democratic economics."
But while George's democratic egalitarianism derives from Rousseau,
he deserts Geneva for Koenigsberg on the issue of moral progress.
Rousseau, in his First Discourse, had rejected the view that
progress in morality could result from progress in the arts and
sciences. Immanuel Kant, Rousseauian in so many other respects, took
the opposite point of view on this question. The progress of morality
through history is a cornerstone of Kantian thought. Henry George
regards his solution to the economic problem as the elimination of the
only remaining barrier to moral as well as economic progress, which
may thus be considered an historical certainty. George summarizes the
"law of human progress" as "association in equality."
(508) And he proclaims openly that "moral law" means the
same thing as improvement, equality, justice, and freedom, (ibid.)
The desires of men are the springs of history and progress, according
to George. (506) Because human desires are infinite, each advance in
history becomes the occasion for new desires and further progress. The
Implication of this reasoning is that/ if desires can never be finally
satisfied, progress can never reach an end. The idea of perpetual
progress may seem at first to be an infinite human benefit. But there
Is an insuperable problem with this idea: it lacks what might be
called internal and external certainty, thus calling its beneficence
It does not have external certainty because, in order to know whether
a particular human action is progressive, it is necessary to know the
end, in the sense of the telos, of that action. A law of
progress which denies as a matter of principle that there can be an
end to progress thereby deprives it of any certain knowledge that it
is, in fact, progressive rather than regressive. George never
describes a complete Georgist social order, nor does he assert that
there can ever be a completed order: beyond a particular point in the
social transformation of man, George replaces the language of logic
with the speech of poetry and mysticism. (552, 565)
His argument also lacks internal certainty, for without a direction
toward a telos, progressive movement must always be tentative.
Progress can be lost; mankind can backtrack. If we think of progress
as the construction of a bridge between primitive society and a
mature, ideal society, the "bridge" of progress appears as a
one-sided projection thrust out of the present into an unknown and
unknowable future. If that bridge projects too far without finding
support at the other end, it may collapse. Men may retreat in haste,
fearing the unknown, instead of advancing. For how is it possible to
know that some phase of the future is not by necessity harsh or
repellent, in the transition to a better life? It is, accordingly, not
surprising that serious believers in progress are crisis-prone.
Whatever must be done for the sake of progress must be done
immediately. At any point all the advances of progress -- necessitated
by history though they may be -- may be lost in one stroke! George
ends one of his late chapters as follows:
The civilized world is trembling on the verge of a great
movement. Either it must be a leap upward, which will open the way
to advances yet undreamed of, or it must be a plunge downward which
will carry us back toward barbarism. (543)
George's book is one long consideration on this crisis of history.
Although he writes as if progress is a certainty, George places
himself at the literal crux of history.
It is always deceiving to accept uncritically any theory of the
inevitability of progress. Kant describes the "good will" as
the only unqualifiedly good thing conceivable, in the world or out of
it." Even though for Kant progress is inevitable, he insists on
the need to will progress. According to Kant, the good will must
be located in the camp of progress as its efficient cause, because
progress implies freedom and morality, the goals of a good will.
George similarly remarks, "The will within us is the ultimate
fact of consciousness." (470)
We may now go further with the question of George's overall purpose,
in the light of this Kantian reflection. George intends his book to
help create the will to progress. That will would manifest itself in
the Imposition of the single tax on land, which thus becomes the focal
point for human morality in the present age. (295)
George's understanding of the relations between desire and intellect
is certainly Kantian. He explicitly acknowledges that "the desire
higher yet" than knowledge for its own sake -- e.g., the
knowledge of the astronomer -- is "the desire that he, even he,
may somehow aid in making life better and brighter." (136; cf.
444) Morality surpasses wisdom in dignity. The man of moral will may
say that his purpose is the destruction of sin, sorrow, and shame, and
the growth of leisure, independence, and intelligence among the people
of the world. This may be granted; but the idea that the highest way
of life is in easing the burdens of others is neither classical nor
Christian; it is distinctively modern. George simply denies that older
view according to which there is a pleasure that can be pursued for
its own sake. (467) Indeed, bespeaks of "learning." But such
learning is clearly in the service of practical ends.
George's argument finds its support in the twin Baconian principles
that "knowledge is power" and that the "relief of man's
estate" is the primary purpose of science. It finds its
highest justification in Kant's assertion that morality is the
greatest human activity.
The transformation of material desires into moral will is mediated by
the tendency toward equalization in the distribution of wealth under
the Georgist regime. (445-46; cf. 309) Want having been banished
through supply side economic growth, and inequality having been
minimized by the land tax, George maintains that greed and envy lose
their roots in material desires and begin to abate. Wealth reaches a
point of superfluity. Who would walk around in the hot sun wearing an
overcoat? Under the conditions of vast, equalized riches, mental
activity is transformed into moral activity simply because the
intellect now has leisure to concentrate on moral actions. Adam
Smith's "invisible hand," it appears, makes men rich and
Many forms of crime would disappear under the regime of economic
growth, along with the government apparatus for criminal justice.
(455) Standing armies would be dissolved because of "the growth
of intelligence and Independence among the masses" and advances
in military technology; so would the enormous public debt which funds
the military establishment, (ibid.) Kant knew how to
promote the peaceful advantages of bourgeois capitalism. George
accepts Kant's belief that the interests of commerce are incompatible
with war. (512) Ceorgist supply side economics supports the
doctrine of pacifism, a doctrine given its first respectable
philosophical formulation in Kant's essay on "Perpetual Peace."
A major theme of Progress and Poverty is the transformation
of ignoble passions, especially selfish greed, into the noble
sentiments of selfless morality. It is a work of purest "idealism."
(see esp. IX, 4) There is in the law of historical progress a
dialectic, but that dialectic has until now operated imperfectly.
(508) It has caused civilization to advance, then to contract. To use
Brooks Adams's phrase, it is "the law of civilization and decay."
Civilization grows by progress, and it is destroyed by progress
through an internal contradiction. (488) Progress depends on changes
in the degree of association in equality. Modernity has advanced in
its respect further than ever before, because equality has been
explicitly recognized in the principles of human rights. (524) But
those principles conceal the germ of their own destruction, since the
"right" of property in land, which is the origin of
inequality, was uncritically incorporated as part of modernity's
extension of freedom. (381)
Hans Saner has brilliantly treated Kant's philosophical method as the
means by which theoretical contraries are impelled to a transcendent
unity. Kant is, so to speak, the "metaphysical peacemaker."
George may then be regarded as the "peacemaker of economics"
-- he has discovered how the contradictions of progress can be
overcome, not violently a la Marx, but peacefully through political
reform. The imposition of the land tax resolves the most critical
problem of history and leads to the unity of human equality and
unlimited progress. Liberty and equality are revealed as the
precondition and central truth behind all human goods. (IX, 5 esp.
546, 548) The land tax allows these two Kantian ideals to come forth
into the light of full human recognition at last.
It is fair to say that the two "ideals" of liberty and
equality, which permeate the politics of modernity, are the poles
toward which the contemporary right and left respectively gravitate.
These two ideals find perhaps their deepest expression in the work of
Kant. Quite properly does Professor William Calston observe that Kant
is both the "completer of liberalism" and the founder of the
mode of thought which gave rise to the Marxist opposition to
liberalism.1' Kant's student, Henry George, faithfully mirrors that
dualism in his attempt to build a socialist order based on supply side
We have seen how strenuously George promotes the idea of economic
growth on the basis of supply side economics. The destruction of the
incentives to growth which is inevitable under socialism as we know it
is as intolerable to George as the dictatorial arbitrary government
socialism spawns. (319-21) Moreover, in his thoughtful discussion of
the causes of depressions, George rejects the traditional answers of
the left (overproduction) and right (overconsumption). (266 f.) "As
an explanation of the phenomena, each is equally and utterly
preposterous." (267) The view that depression originates in a
decline in the supply of goods and services is George's unique
conclusion, indebted to neither of the traditional ideologies.
The key to understanding the synthesis of George's teaching is his
treatment of technological progress. George argues that advances in
the efficiency of labor-saving machinery are infinitely possible. The
overwhelming increase in wealth from supply side policy is in great
part attributable to the incentives offered to discoverers of new
technologies. However, he claims that the "point of the absolute
perfection of labor-saving inventions" is being approached in
modern society. (253) This implies that there is indeed some point
beyond which technology will not advance. George must be referring,
not to the intrinsic character of technological improvement, which in
itself is open ended, but to the Incentive to push such improvements
beyond that point. We have shown that for George, after some finite
degree of accumulation of wealth, human desires turn away from
material towards spiritual ends. The continuation of progress in
technology inevitably must slow down in an extremely wealthy state
where the distribution of wealth is essentially equal. (444-46) At
that state, he queries, "though this incentive to production be
withdrawn, can we not spare it?" (446) It is at that very point
that the moral transformation of the desires of men is complete.
The character of work is also transformed in post-Georgist society.
Hard physical toil performed out of necessity, which does not seem to
the laborer to issue in u tangible product of his personal effort, is
u "curse" on the laboring class. Under the regimen imposed
by modern industrial society, the laborer loses his "manhood.
becomes a slave, a machine, a commodity -- a thing, in some respects,
lower than an animal." (285) At its worst, the system of private
land ownership dehumanizes everyone alike: "Labor has become a
commodity, and the laborer a machine. There are no masters and no
slaves, no owners and owned, but only buyers and sellers. The higgling
of the market takes the place of every human sentiment." (353)
But under post-Georgist conditions of plenty, labor is "a
lightsome thing," first, because the worker labors more for
pleasure than from necessity, and second, because labor increasingly
becomes intellectual rather than physical. (467-68)
George deserves credit for discerning, a century ago, the outlines of
the post-industrial service-oriented "high tech" society we
live in today. He deserves less credit for imagining that the desires
of post-industrial men would be more elevated or less "alienated"
(using Marx's, not George's, term) than those of industrial men.
Marxian strains sometimes reverberated in George's book. George
utilizes the famous Marxist distinction between economic substructure
and ideological superstructure in accounting for the problem of
inequality: "I mean, so to speak, that the garment of laws,
customs, and political institutions, which each society weaves for
itself, is constantly tending to become too tight, as the society
develops." (514) For Marx, the contradiction between economic
modes and ideological relations eventuates in violent revolution
overthrowing the ruling class. When George's moral outrage reaches its
highest, in his reference to the Irish oppression, open violence
Were it not for the enervating effect which the history
of the world proves to be everywhere the result of abject poverty,
it would be difficult to resist something like a feeling of contempt
for a race who. stung by such wrongs, have only occasionally
murdered a landlord! (127)
There is, however, a decisive difference between the two writers.
George's manly anger is testimony to his moral decency. In fact, the
writing of Progress and Poverty seems to have been occasioned
by his sense of injustice, leavened by the Kantian moral teaching
which easily lends itself to extremism." Marx's doctrine, on the
contrary, has nothing in common with morality, Marxist revolution is
an impersonal, necessary result of objective historical conditions.
For Marx, revolution is cold-blooded science, not hot-tempered moral
The will, for George, can peacefully correct injustices, but it needs
the education taught in his book. And the end of that education is not
capitalism, but socialism. In the preface to the Fourth Edition
(1880), he claims that his economic science unites Adam Smith and
David Ricardo with the socialist writers Proudhon and Lasalle, "to
show that laissez faire (in its full true meaning) opens the
way to a realization of the noble truths of socialism; to identify
social law with moral law . . . ." (xvii) If its progress is not
hindered by private ownership of land, the free market leads
automatically to a socialist order. The opposition he had expressed to
socialism in the discussion of incentive loses its significance when
human desire turns from material to spiritual concerns. To force
socialism on society in its present state would be "a
retrogression that would involve anarchy and perhaps barbarism."
But true socialism is never imposed; it comes into being by itself.
Society is organic, not mechanical: socialism "must grow."
And George is convinced that it will in time be realized. (321)
In his last, most revealing reference to the topic, in the very
paragraph where he has given a Lafferian description of tax revenue
growth from economic expansion, George concludes that those revenues
will support a growing number of public projects, beginning in the
areas of leisure and entertainment, extending to transportation and
public utilities. Eventually "[w]e should reach the ideal of the
socialist, but not through government repression. Government would
change its character, and would become the administration of a great
co-operative society." (456) The substitution of administration
for government, we note, is a basic Marxian goal. George's
thought, supply side growth replaces the proletarian revolution in the
transition to the socialist idea.
It may strike us as very strange that a writer would combine
antithetical theories like capitalism and socialism into one synthetic
system. Individualism and communitarianism seem to be the two
antipodes which exhaust the forms of economic and political order. Yet
in the 1960s some such synthesis was beginning to form in the United
States. The Kennedy-Johnson supply side tax cuts in 1964 had generated
a tax revenue windfall as a result of the economic expansion the cuts
ignited. President Johnson und the Democratic Party created the
social-welfarist "Great Society" programs, believing they
could be financed indefinitely by future economic growth. The early
popularity of the "Great Society" and the preservation of
most of its programs by Johnson's "conservative" Republican
successor, Richard Nixon, suggest that the American electorate can
support such a synthesis. It is not surprising that early in the 1960s
writers were describing the decade as "the end of ideology."
In fact, the capitalist and socialist "ideologies" share a
common outlook which can be distinguished from the view of classical
and Christian antiquity. They share the same premise on which George's
book, too, is based; they may be said to be two variations on the
common theme of modernity. That theme is "the empire of
technology," the central idea of which is that nature is a
field of lifeless material substance existing for human domination.
By contrast, pre-modernity thought of nature as the whole of being,
of which man is a constituent part, and toward which the proper
attitude is piety or contemplation. In modernity, human nature
fulfills itself in asserting more and more control over the "things"
of nature, and ultimately over human nature as well. For
antiquity, human perfection is achieved in the political, philosophic,
or religious way of life. Antiquity celebrated the austere virtues of
self-control. Modernity encourages the rewarding virtues of rational
There is no sign in Progress and Poverty that any alternative
is available to modern man. The technological spirit has long since
triumphed; George s task is to complete the perfection of that spirit.
His procedure throughout is to interpret human phenomena In the light
of the subhuman. From the premise of the "physical law that
motion seeks the line of least resistance," George deduces the
anthropological conclusion "that men seek to gratify their
desires with the least exertion." (12) This proposition "is
to political economy what the attraction of gravitation is to physics."
(170) That proposition is in fact the major premise of George's entire
work -- it is "the fundamental law of human action" from
which it is possible to determine all the relations of economics.
(204, 218) An "economy of desires," in the dual sense of the
term, is a necessity because desires are infinite, as we have shown.
(134, 244 f.) To understand human psychology as an extension of
physical forces as George attempts, the analysis of the species and
their differentiation must be quantitative rather than qualitative in
nature. It is no accident that George defines man quantitatively, "the
unsatisfied animal." (134) The classical qualitative definition
was Aristotle's zoon politikon.
The philosophers we have identified as most influential on George's
book utilize similar quantitative distinctions in accounting for the
human condition. Locke's interpretation of civil society emerges from
the "inconveniences" of the pre-social state of nature,
Rousseau's man grows out of the darkness of a subhuman prehistory: his
man is pure possibility. Kant's morality is an attempt at revolt
against the subhuman determinism of the earlier moderns: yet Kant
unswervingly embraces the scientific/technological project. Each of
these philosophers drives modern life further in the same direction,
fostering a human type who fulfills himself by transcending the limits
of nature, reducing the cosmic order to pliant matter for human
purposes. The progress of thought in modernity reaches its logical
culmination in the universal homogeneous society of Marxian
historiclsm, and the will to power of Nietzschean nihilism.
George ultimately adopts modern thought. Land ownership, that
aristocratic atavism, is the last remaining obstacle to infinite
progress, i.e., to the complete technological mastery of nature. His
vehement objections to Malthus and Darwin stem from the assertion of
both thinkers that nature is determinative for man, and therefore the
technological project cannot be realized as moderns believe. Yet
Malthus and Darwin also believe nature is harsh and alien, Man remains
estranged in their universe, a world denuded of the formal and final
causes which are the ordering principles making nature luminous.
In this respect Malthus and Darwin side with the modern Interpretation
We have called attention to George's insightful objection to
Malthus's "leveling," a tendency endemic to "modern
thought" as he points out. But this objection, profound though it
is, comes stillborn from his p\n. Like his master Kant, George
instinctively shrinks from the radical conclusion toward which his own
opinions tend. He insists on defending the benevolence of nature
throughout his book. (128, 141, 341, 544, etc.) But, sharing Kant's
acceptance of the worth of the technological project, his defense of
nature is fatally weak, crippling the attack on Malthusianism.
On the plane of "the empire of technology," the differences
between capitalism and socialism disappear. Economic growth is an
essential requirement In both views; equitable distribution is a
necessity for both. Marx understood that the socialist idea could not
be fully realized until technology had solved the problem of
satisfying man's material needs: the dictatorship of the proletariat,
after all, is not the ideal but a phase. Locke and Smith had to
demonstrate that the distribution of wealth in the capitalist society
was just. Economic growth and equitable distribution are two faces on
the same modern coin. Consideration of the technological will of
modern man points to the grand tension that, in Nietzsche's phrase,
stretches the bow in the Western soul. Today it is crucial that the
free regimes of the world recover the reasoned optimism out of which
they were born in self-certainty about the superiority of progress,
equality, and human rights. At the same time, it is critical for
philosophy to think through its classical roots against which the
modern totalitarianisms are in radical rebellion. Henry George's
Progress and Poverty, a work which tries to embrace the
alternatives modernity offers, can help both statesman and philosopher
in their respective tasks.
- George Glider, Wealth and
Poverty (New York: Basic Books, 1981; paperbound ed., New
York: Bantam Books, 1982).
- Henry George, Progress and
Poverty: An Inquiry Into the Cause of Industrial Depressions and
of Increase of Want with Increase of Wealth; The Remedy (lst
edition, 1879); all citations to page numbers in the text are to
the Modern Library edition.
- For the classic and most
subtle treatment of the positive relationship between population
and economic growth, see Montesquieu, Spirit of the Laws II,
xxiii. Montesquieu blames Christianity for opposing population
increase by stressing the virtue of celibacy. Christianity was the
Malthusianism of Montesquieu's time. (It is probably no
coincidence that Malthus was a clergyman.) Today, Christianity is
blamed for encouraging overpopulation: how ideology advances in
two hundred years!
- Henry George, Jr.
conservatively estimated the book sales in its first twenty-five
years at over two million. (xii)
- Kant, Critique of Pure
Reason, 2nd ed.. Preface, xvi.
- Cf. Locke, Two Treatises
of Government (Second Treatise) sec. 37, 40-43.
- It is arguable that the
spoilage rule, as one feature of natural justice, is at the origin
of contemporary environmentalist politics. See 451-52, note.
Environmentalism originates as a specialized application of the
Lockean justification for a free economy.
The spoilage rule is extensively discussed in: C.B. MacPherson,
The Political Theory of Possessive Individualism: Hobbes to
Locke (Oxford: Clarendon Press, 1962) V, 2; and Leo Strauss,
Natural Right and History (Chicago: University of Chicago
Press, 1953; paperbound ed., Phoenix Books, 1985) V, B, 236 ff.
- Locke. op. cit., sec.
- "It Is an axiom of
statesmanship, which the successful founders of tyranny have
understood and acted upon -- that great changes can best be
brought about under old forms. We, who would be free men, should
heed the same truth. It is the natural method." (405) Cf.
Machiavelli. Prince VI.
- Gilder, op. cit., ch.
- As a recent example of this
phenomenon, we may recall the enthusiasm of the executives of the
Atlantic Richfield company for the "windfall profits"
tax imposed on oil companies by Congress in 1979.
- Rousseau. Social Contract,
I, 9; Discourse on the Origins and Foundation of Inequality
(Second Discourse). Second Part.
- Locke, Essay Concerning
Human Understanding, I, 2.
- Locke, Two Treatises of
Government (Second Treatise) sec. II, esp. lines 13-20.
- Rousseau, Social Contract,
- Rousseau, Emile I
(trans. Allan Bloom, New York: Basic Books. 1979), 85-66.
- Locke, op. cit., ch.
- Rousseau, Social Contract,
- Rousseau, Second Discourse,
Second Part (trans. Roger D. and Judith R. Masters, in The
First and Second Discourses, New York: St. Martin's Press,
1964, 147, 156).
- Cf. 475-78, with Rousseau,
loc. cit., 101-02.
- Rousseau, Emile I, 37.
Yet removing the social conditions limiting Intellectual growth
might conceivably widen those differences. George, following
Rousseau, teems to have fallen Into the philosophical trap for
which he blamed Malthus. of paying insufficient attention to the
human Intellect. See 7-8, 41, infra.
- Rousseau, Second Discourse,
loc. cit., 181.
- Cf. Plato. Republic.
- Gilder, op. cit.,59.
- Vernon Louis Parrington, Main
Currents in American Thought: An Interpretation of American
Literature From the Beginnings to 1920, Vol. III. 1860-1920:
The Beginnings of Critical Realism in America (New York:
Harcourt. Brace, 1930) Book I. Part I, ch. III. iv, 1. 125.
- See Kant's essay, "An Old
Question Raised Again: Is the Human Race Constantly Progressing?"
- The cries of protest by
liberal progressives against the Reagan administration's budget
cuts are one example of this phenomenon. Fifty years of "progress"
were destroyed by one budget, even though liberal? had always
assured us that their progressive programs were the "wave of
the future". Similarly, orthodox Marxists were completely
bewildered by the working class "counter-revolution" in
Poland after years of rule by the vanguard of the proletariat, the
Communist Party which Man demonstrates as an historical and
- Kant. Fundamental
Principles of the Metaphysic of Morals, First Section, 11.
- See Kant, "Idea For a
Universal History From a Cosmopolitan Point of View," Second
Thesis; and "Reviews of Herder." In Kant, On History,
ed. Lewis White Beck (Indianapolis: Bobbs-Merrill. 1963), 51.
- See Hans Jonas, The
Phenomenon of Life: Toward a Philosophical Biology (New York:
Harper and Row, 1966), Eighth Essay; and Howard B. White, Peace
Among the Wiltows: The Political Philosophy of Francis Bacon
(The Hague: Martinus Nijhoff, 1968), passim.
- William A. Calston, Kant
and the Problem of History (Chicago: University of Chicago
Press, 1975), Introduction. Bacon's experimental science is the
ground for the critical philosophy of Kant, who prefaced the
second edition of his Critique of Pure Reason with a
Baconian motto. The Critique may be considered the
profoundest attempt of theoretical reason to describe the limits
of its own range. Critical philosophy gives birth to a "higher"
morality because human freedom, unlike pure reason, is unlimited.
Morality is the new substitute for theoretical reason In the
latter's Kantian tameness.
- Kant, "Perpetual Peace,"
sec. 1. arts. 3 and 4, 345-47.
- Kant, op. cit., First
- See Hans Saner, Kant's
Political Thought: Its Origins and Development, trans. E.B.
Ashton (Chicago: University of Chicago Press, 1973). particularly
327, n. 7. The German original is entitled Kants Weg vom Krieg
- Calston. loc. cit.,
- Calston, loc. cit.,
- Cf. Engels, Socialsim:
Utopian and Scientific I (trans. Edward Aveling, New York:
International Publishers. 1935). 38.
- See George Grant. Technology
and Empire: Perspectives on North America (Toronto: House of
Anansi, 1969), esp. 15-40.
- Jonas, op. cit., First
Essay. The attitude of piety toward nature, characteristic of
traditional conservatism, appears prominently in a series of
articles on conservative thinkers of the twentieth century,
written by Senator John East and published in Modern Age
magazine, beginning with Vol. 18, No. 3 (Summer 1974). Senator
East hosts his conservatism on the political thought of Augustine.
This no doubt accounts for his acute embarrassment that there are
some eminent new "conservatives" whose piety is
seriously open to question; see John P. East, "The Political
Relevance of St. Augustine," Modern Age 16 (Spring
1972). The Senator appears to follow the late Frank S. Meyer in
his effort to "fuse" all strains of conservative thought
without considering that some of the old varieties may be simply
incompatible with some new ones.
- Leo Strauss, "An
Epilogue," in Herbert J. Storing, ed.. Essays On the
Scientific Study of Politics (New York: Holt, Rinehart and
Winston, 1982) V.
- Cf.. Rousseau: "Ancient
politicians incessantly talked about morals and virtue, those of
our time talk only of business and money." Discourse on
the Sciences and Arts (First Discourse), Second Part (in
Masters, trans., op. cit., 51).
- Joseph Cropsey, Political
Philosophy and the Issues of Politics (Chicago: University of
Chicago Press, 1977), Introduction.
- See Jones, op. cit.,
passim. The perspective of this book is richly informed by
Jonas' implicit reconsideration of the theoretical value of the
Aristotelian four causes.
- See Friedrich Ceorg Juenger,
The Failure of Technology (Chicago: Gateway Editions,
1956). esp. ch. 13.
- The agreement among the ways
of thought and the social systems of the modern age as against the
outlook of antiquity and Christianity is a profound theme in the
work of Aleksandr Solzhenltsyn. See esp. his Commencement Address
Delivered at Harvard University, June 8, 1978, A World Spilt
Apart (New York: Harper and Row, 1978). The outrage of Western
intellectuals and commentators which followed Solzhenitsyn's
address is ironic testimony to the accuracy of his analysis.