Henry George's Supply Side Economics

Dennis Teti

[Reprinted from The Political Science Reviewer, Vol. XIV, Fall, 1984]

The great success of George Gilder's supply side oriented Wealth and Poverty[1] 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.[2] 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 social philosophy.

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 today … 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 men." (131)

George's optimism on the question of population contrasts starkly with the gloom of Malthus.[3] 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 thousand millions. …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.[4]

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 social thought.

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." (480)

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 harshness.

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 elites.

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 shown below.[5]

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."[6] (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 land value.

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 proper. (452-53)

Another Lockean principle which George accepts as a corollary of "natural justice" is the so-called "spoilage rule," originating in "primitive Ideas."[7] (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.[8] 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 population growth.

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 liberal democracy.

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:

What I … propose … 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 heights. (405-06)

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 checked. (199)

George argues that economic growth is the effect of incentives. Prefiguring Gilder's contention for the "altruism" of the entrepreneur,[10] 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 economic growth.

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 problems. …" (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 rents.

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 defended.

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.[11] 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.[12]

George also follows Rousseau in characterizing rights as inherent in the human mind. (375) Locke, to the contrary, rejected the inherence of moral principles.[13] "Rights" are essentially another term for "powers" in Locke's treatment.[14] For Rousseau, on the other hand, power and right are totally distinct things.[15] Even an infant has a concept of right practically from birth.[16] From this difference it follows that Locke is prepared to legitimize slavery under certain circumstances.[17] Slavery for Rousseau, as for George, can never be based on right.[18] 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.[19] 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.[20] 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."[21] 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."[22] George's enterprise in Progress and Poverty is to correct the course of human history to avert that Rousseauian conclusion.

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 variation.

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. (530-52)

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[23] -- 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.[24] 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."[25]

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.[26] 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 into question.

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![27] 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.[29] 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.[30] It finds its highest justification in Kant's assertion that morality is the greatest human activity.[31]

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 moral, too.

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.)[32] 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)[33] 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."[34] 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 capitalist principles.

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. …He 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 resonates:

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 passion.

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.[37] 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,"[38] 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.[39] In modernity, human nature fulfills itself in asserting more and more control over the "things" of nature, and ultimately over human nature as well.[40] 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 self-interest.[41]

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.[42] 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.[43] In this respect Malthus and Darwin side with the modern Interpretation of nature.

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.[44] 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.[45] 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.


  1. George Glider, Wealth and Poverty (New York: Basic Books, 1981; paperbound ed., New York: Bantam Books, 1982).
  2. 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.
  3. 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!
  4. Henry George, Jr. conservatively estimated the book sales in its first twenty-five years at over two million. (xii)
  5. Kant, Critique of Pure Reason, 2nd ed.. Preface, xvi.
  6. Cf. Locke, Two Treatises of Government (Second Treatise) sec. 37, 40-43.
  7. 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.
  8. Locke. op. cit., sec. 32 ff.
  9. "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.
  10. Gilder, op. cit., ch. 3.
  11. 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.
  12. Rousseau. Social Contract, I, 9; Discourse on the Origins and Foundation of Inequality (Second Discourse). Second Part.
  13. Locke, Essay Concerning Human Understanding, I, 2.
  14. Locke, Two Treatises of Government (Second Treatise) sec. II, esp. lines 13-20.
  15. Rousseau, Social Contract, I, 3.
  16. Rousseau, Emile I (trans. Allan Bloom, New York: Basic Books. 1979), 85-66.
  17. Locke, op. cit., ch. 4.
  18. Rousseau, Social Contract, I, 3.
  19. 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).
  20. Cf. 475-78, with Rousseau, loc. cit., 101-02.
  21. 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.
  22. Rousseau, Second Discourse, loc. cit., 181.
  23. Cf. Plato. Republic. 473b-e.
  24. Gilder, op. cit.,59.
  25. 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.
  26. See Kant's essay, "An Old Question Raised Again: Is the Human Race Constantly Progressing?"
  27. 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 scientific necessity.
  28. Kant. Fundamental Principles of the Metaphysic of Morals, First Section, 11.
  29. 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.
  30. 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.
  31. 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.
  32. Kant, "Perpetual Peace," sec. 1. arts. 3 and 4, 345-47.
  33. Kant, op. cit., First Supplement, 368.
  34. 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 zum Frieden.
  35. Calston. loc. cit., 26-27.
  36. Calston, loc. cit., 36.
  37. Cf. Engels, Socialsim: Utopian and Scientific I (trans. Edward Aveling, New York: International Publishers. 1935). 38.
  38. See George Grant. Technology and Empire: Perspectives on North America (Toronto: House of Anansi, 1969), esp. 15-40.
  39. 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.
  40. Leo Strauss, "An Epilogue," in Herbert J. Storing, ed.. Essays On the Scientific Study of Politics (New York: Holt, Rinehart and Winston, 1982) V.
  41. 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).
  42. Joseph Cropsey, Political Philosophy and the Issues of Politics (Chicago: University of Chicago Press, 1977), Introduction.
  43. 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.
  44. See Friedrich Ceorg Juenger, The Failure of Technology (Chicago: Gateway Editions, 1956). esp. ch. 13.
  45. 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.