Friday, August 18, 2023

"When Marx Attacked The Single Tax"

Back when economists could sell a book or two. (Piketty being the exception that proves the rule.)

From MerionWest: 

    “Georgism dissolves socialism; it is pro-worker and pro-capital at the same time. 
This is impossible for the socialist who believes to his core that labor can only win if capital loses.”


“When Karl Marx died in 1883, there must have been dozens of Englishmen who had argued about Henry George for every one who had even heard of the Prussian Socialist.”
 —Roy Douglas, Land, People and Politics—The Land Question in the United Kingdom 1878-1952 (1976) (p48)
“When I was swept into the great Socialist revival of 1883, I found that five sixths of those who were swept in with me had been converted by Henry George.”
—George Bernard Shaw, Tribute to the Work of Henry George (1904)
“Little as Henry George intended it, there can be no doubt that it was the enormous circulation of his Progress and Poverty which gave the touch that caused all seething influence to crystallize into a popular Socialist Movement.”
—Sidney Webb, Socialism in England (1889)
“George’s book, indeed, had a more dramatic effect upon British political thought than any work published during the last century. It dominated the minds of the Radical wing of the Liberal Party just as it galvanized into action those who had been groping towards a socialist commonwealth. It even achieved the undoubted feat of making Karl Marx a popular author, for chapters of Das Kapital were published and read as sequels to Progress and Poverty.” 
—H. Russell Tiltman, J. Ramsay Macdonald (1929)


Henry George (1839-1897) is most famous today for having been forgotten. As a journalist in San Francisco, he had witnessed the ending of the American frontier and had long puzzled over why unemployment and poverty, as if by some unknown law, occurred everywhere. He had experienced both, and wrote about the time he’d almost attempted robbery to feed his young family. He went on to become the leader of a movement and toured and spoke across continents.

His signature work, Progress and Poverty: An Inquiry into the Cause of Industrial Depressions and of Increase of Want with Increase of Wealth: The Remedy (1879) started to sell in very large numbers in 1881. Karl Marx received several copies, one from a regular correspondent in America.

Marx wrote to Friedrich Adolph Sorge In Hoboken [London,] 20 June, 1881:

Before your copy of Henry George arrived I had already received two others, one from Swinton and one from Willard Brown; I therefore gave one to Engels and one to Lafargue. Today I must confine myself to a very brief formulation of my opinion of the book. Theoretically the man is utterly backward! … His fundamental dogma is that everything would be all right if ground rent were paid to the state. (You will find payment of this kind among the transitional measures included in The Communist Manifesto too.)
When reading Progress and Poverty, Marx was faced with the charge that he had mistaken a symptom for the disease. While Marx claimed that Capital exploits Labor, George argued that Monopoly—land monopoly—exploits both Labor and Capital.

The outcry against “Capital” on the part of financed labour advocates tends to disguise an older and more formidable enemy of Labou …a system which is in reality the parent of capitalism and all its works and pomps. The capitalist is the objective agency whereby the worker is made to surrender to profit what a just system of wealth distribution would award his labour, but the efficient cause of this underpaid sweat and toil is found in the laws which enable an idle interest to tax both capital and labour.
—Michael Davitt, The Single Tax, Vol 1 No. 1 June 1894

George’s interpretation was phenomenally popular. It penetrated down into the body politic. It explained working class poverty and unemployment, as well as “landlordism” and the resultant land wars in Ireland, Scotland, and elsewhere. It declared that the project to end slavery was not complete: chattel slavery had been abolished, but industrial slavery remained. George made frequent speaking tours and left in his wake scores of Land Reform societies and Single Tax clubs. His proposals radically influenced both Labor and Liberal politics at local and national level in many countries, especially in the United States and Great Britain.

It’s little wonder that Marx was irked. “George … has the repulsive presumption and arrogance which is displayed by all panacea-mongers without exception,” Marx wrote.

It has to be said that Marx was absolutely right. The Single Tax thesis does claim that, “Everything would be alright if ground rent were paid to the state.” It is an astonishing claim, facile on the surface, a panacea: that poverty, inequality, and unemployment are all caused by a tax system fatally incompatible with capitalism and all fixable by doing no more than modernizing that system.

Some captious critics… damn Geofiscalism as a “panacea.” The word betrays a curiously warped mindset: who would damn a solution for the very reason that it is a solution?
—Mason Gaffney, Answer to Futilitarians (1998)
Geofiscal reform would substitute all existing taxes with a Land Value Tax (LVT). This would target the rent of land i.e. that portion of land’s value that does not arise from the labor of the owner. It falls into two categories, natural resources (such as the value of crude oil) and location value (People, of course, pay to live in desirable places; a plot in New York City has a different market value, a higher rent, than one in say, Trenton).

For Marx, land had no special theoretical place; it was one form of capital, a means of production. For George, following classical economics, land was distinct from labor and capital and of equal importance. Land is not capital because it cannot be manufactured; it has no production cost. Land is in fixed supply, vulnerable to monopoly. Land is, in fact, a precondition of labor and capital. We must all “monopolize” a certain amount of land in order to exist. Demand for land is guaranteed; it is a captive market, and we all bid for land. You cannot say these things about capital. 

Land monopoly is thus, according to George, a very significant thing. The landowner, as land monopolist, knowing that both capital and labour must bid for land, will always have the power to cream off the wealth they produce, leaving just enough to keep them bidding. The wealth that they generate has the effect of bidding up land values; successful economies have high land values. This effect can be seen everywhere today. Monopoly, not capital is the cause of unemployment, poverty and inequality, and monopoly on land is, by far, the largest monopoly. The land market (so rarely discussed) drives the economy; the boom bust cycle is the land market cycle.

Modern capitalism, as we interpret it, failed to develop along sound and normal lines owing to a very simple reason. This was the failure, in post-feudal times, to collect land values for revenue and the consequent creation of a population permanently unable to buy the wealth it produced. …

All values in the long run accrue as rent and although the superstructure of modern capitalism conceals the fact, vast accumulations of finance capital depend finally on land values. … What the Marxists call surplus value … is an effect of land values accruing privately.
—Henry George and Karl Marx, a talk given by Frank McEachran (1936)
In September 2013's "Ben Franklin on Labor Economics (or how to create an underclass)" I intro'd with:
The easiest way to create a dependent class is to price them out of the real estate markets.
"In countries fully settled…those who cannot get land must labor for others that have it; when laborers are plenty, their wages will be low; by low wages a family is supported with difficulty; this difficulty deters many from marriage, who therefore long continue servants and single...."

—Benjamin Franklin, Observations Concerning the Increase of Mankind, 1751

We have quite a few posts on Henry George, here's one from 2016:
Forgetting History: "Nothing Like This Has Ever Happened Before"
Back in 2012 there occurred one of those eruptions of comment* that seem to happen for no discernible reason other than some combination of network effects and echo chambers.

The eruptions peak and die away as the crowd moves on leaving almost imperceptible ripples where there had been much thunder and fury.

This is a reflection on one of them, Henry George and the land tax, updated for current values and valuations....
*Even by the time we posted "The Economist Calls for More Taxes on Land" in July 2013 the commentariat was moving on:....