|Rent in a Free Society is not as simple an idea as frugal savers earning rewards, but is a Non-earned income which really belongs to all the Community, because it arises from community activities. Poverty is clearly not in the nature of things. Where the complaints are justified they must be complaints about the interference of man-made law with the flow of natural law. Unemployment occurs despite mechanisation bringing more rather than less employment. So we always have two classes of poor: those with work and those without. Karl Marx called this last group the 'lumpenproletariat'. We are beginning to call this group the underclass.|
RENT AND SOCIETY
A COURSE IN GEORGIST SOCIAL PHILOSOPHY
in 6 Parts, plus Supplement and Appendix
TO THE STUDENT
This is the law of rent: As individuals come together in communities, and society grows, integrating more and more its individual members, and making general interests and general conditions of more and more relative importance, there arises, over and above the value which individuals can create for themselves, a value which is created by the community as a whole, and which, attaching to land, becomes tangible, definite and capable of computation and appropriation. As society grows, so grows this value, which springs from and represents in tangible form what society as a whole contributes to production, as distinguished from what is contributed by individual exertion. By virtue of natural law in those aspects which it is the purpose of the science we call political economy to discover - as it is the purpose of the sciences which we call chemistry and astronomy to discover other aspects of natural law - all social advance necessarily contributes to the increase of this common value; to the growth of this common fund.
Here is a provision made by natural law for the increasing needs of social growth; there is an adaptation of nature by virtue of which the natural progress of society is a progress toward equality, not toward inequality; a centripetal force tending to unity, growing out of and ever balancing a centrifugal force tending to diversity. Here is a fiund belonging to society as a whole from which, without the degradation of alms, private or public, provision can be made for the weak, the helpless, the aged; from which provision can be made for the common wants of all as a matter of common right to each, and by the utilization of which society, as it advances, may pass, by natural methods and easy stages, from a rude association for purposes of defence and police, into a cooperative association, in which combined intelligence can give to each more than his own exertions multiplied manyfold could produce.
By making land private property, by permitting individuals to appropriate this fund which nature plainly intended for the use of all, we throw the children's bread to the dogs of Greed and Lust; we produce a primary inequality which gives rise in every direction to other tendencies to inequality; and from this perversion of the good gifts of the Creator, from this ignoring and defying of his social laws, there arise in the very heart of our civilization those horrible and monstrous things that betoken social putrefaction.You will find several references in this course to Henry George. You will find a short biography in an appendix to the course.
MR W. A. DOWIE
"Men like Henry George are rare, unfortunately.
One cannot imagine a more beautiful combination of intellectual keenness,
artistic form and fervent love of justice."
Picture by courtesy of
Geonomics (USA and UK)
If I were to say that there is nothing wrong with our economy you might consider that a revolutionary statement. To say there is nothing wrong with our economy might seem provocative or, more likely, stupid. Everyone knows there is something wrong with the economy, and every sectional group sees something particularly wrong with the economy.
Consider. What do various groups think is wrong with the economy? Workers and employers, farmers and manufacturers, old people and young people, consumers and producers, exporters and importers; all complain differently about the economy. You are reading or listening to this material because you believe something is wrong with the economy.
Economics works under law and it works quite well.
Can you think of one economic law?...
Back in 1701 a London merchant named Sir Dudley North defended the East India trade this way:
"The East-India Trade procures things with less effort and cheaper labour than would be necessary to make the like in England."
One consequence was that:
"It must put an end to such of (English manufactures) as are most useless and unprofitable . . . "In other words, without man-made regulations, a society will arrange its economic activities according to their comparative advantage' over the same industries in other parts of the world. Nothing more is wanted than the effort to better one's own condition or, put another way, the effort to gain satisfactions with the least effort - which must surely be the first law of economics.
It is this law which dictates that men will trade. It is natural to barter an object that one does not want for some other article which one does want. As one man learns that he can get more of what he does want by producting more of what he does not want, specialisation or the division of labour grows. ln this way crafts are developed, inventions made, and individual talents developed. This specialisation will be limited by the extent of the market; a large market will cause a greater division of labour and a cheaper production of goods. This producing goods more cheaply then leads to selling goods even more widely; that is to even bigger markets.
Can you think of any examples of this?...
Adam Smith observed this in the opening sections of The Wealth of Nations written over 200 years ago. So struck was Adam Smith by the discovery of the unity and abundance which springs from human nature, even when that human nature is just "self-love" or trying to better one's own condition, that he said that in it he saw the hand of divine providence. He calls the hand of Providence "the invisible hand". Contrary to popular opinion Adam Smith did not see selfishness as the best attitude to have.
Have you ever thought that you are the beneficiary of this "invisible hand"? Have you ever compared what you receive with what you offer to society?...
Now if natural forces work so powerfully for abundance and human development what can we make of the complaints that are made so often about the economy?
Poverty is clearly not in the nature of things. Where the complaints are justified they must be complaints about the interference of man-made law with the flow of natural law.
In The Science of Political Economy Henry George says that the way men are led into unity by the social arrangements which they make to satisfy their material desires leads to a Greater Leviathan than the State. He compares the Greater Leviathan and the State in the following way. "This Greater Leviathan is to the political structure . . . what the unconscious functions of the body are to the conscious activities."
This suggestion that government trying to manage the economy is rather like the conscious mind trying to control the autonomic nervous system is the clue to what we think of as economic problems.
So, what is the problem? It is that false opinions lead to false solutions. And these false solutions for many turn into poverty. From time to time in this course we will examine these false opinions and assumptions. Obviously they can be discovered if we see more about the true nature of society. It is customary here to call this seeing into the nature of society 'seeing the cat'.
What is it about this picture of the landscape and the cat which is analogous to what has been said about the nature of society?...
There were two pictures. One was obvious, familiar and rather uninspiring; the other lay as it were beneath it and was far more interesting to see. But this underlying picture was only gradually and incompletely seen until the penny dropped'. Then it was seen all at once. In one way this resembles the way Henry George himself saw into the nature of poverty, something we will look at in the second half.
Just before Henry George left for Australia, in February, 1890, he spoke about the way he had come to his opinions about "progress and poverty". He had stumbled on the question at the age of eighteen, on his way to the Frazer River goldfields in British Columbia. The miners were talking about the Chinese and George ventured to ask what harm the Chinese were doing when all they did was to work the most marginal diggings. As George records it:
"One old miner turned to me, and said, No harm now; but it will not be always that wages will be as high as they are today in California. As the country grows, as people come in, wages will go down, and some day or other white men will be glad of these diggings that the Chinamen are now working. "Perhaps we have here identified in the landscape the white paw of the cat.
Having failed as a miner George returned to San Francisco. It was at the American Theatre in San Francisco that he came upon the subject again. At the close of the performance the curtain fell and on the curtain was painted the overland train coming into San Francisco. The sudden sight led to pandemonium. George stood and cheered with the rest. But then a thought crystallised. This is how he describes it:
"We were all - all of us, rich and poor - hoping for the development of California, proud of her future greatness, looking forward to the time when San Francisco was to be one of the great capitals of the world; looking forward when this great empire of the West was to count her population by millions, and underneath it all came to me what that miner told. What about the masses of the people?"...
He had by this time, you could say, still only seen in the landscape the barest signs of a cat.
Three years later (in 1869) and now thirty-two years old, one remarkable moment showed him the outline of the cat. Relaxing one afternoon George rode out into the hills overlooking San Francisco Bay. On these barren hills, whose only virtue was that they lay in the path of the transcontinental railroad, he met a passing wagon driver. As he told a friend in a letter over twenty years later: "for want of something better to say (I asked) what land was worth there. He pointed to some cows grazing so far off they looked like mice, and said, I don't know exactly, but there is a man over there who will sell some land for a thousand dollars an acre'. Like a flash it came to me that there was the reason for advancing poverty with advancing wealth. With the growth of population, land grows in value, and the men who work it must pay more for the privilege" .
Years later someone derisively called George 'the Prophet of San Francisco'. The criticism is well made. The question whether the world was made better off by the progress of inventions was something of a preoccupation in the 19th century. Vaguely it was called the Social Question. How could an uneducated man from a frontier town on the edge of civilization know more about this question than educated men at its very centre?
|OBJECTIVES: Social Justice, Land Rights for All, Collection of Site Revenue and Resource Rentals, Environmental Protection, Sustainable Development, Decentralisation, Opposition to Anti-Enterprise Taxes and Monopolies, Proportional Representation, Freedom from unfair sex and other unfair discrimination, Civil Liberties, Human Rights, Responsible Government Expenditure, Exclusive Land Occupation, Collection of Misappropriated "Economic Rent," Natural Public Revenue, Abolition of Involuntary Unemployment, Wealth Producers to keep Full Value of their Production and Enterprise, Reducing Speculation.|
If Henry George is correct the truly terrible fact about modern society is that the abundance that comes from the nature of man can be claimed, almost by accident, by those who own the land on which the abundance is produced. The result is that abundance often turns to scarcity. The producers are in fact left relatively worse off than they had been when they produced less. The words "almost by accident" are used advisedly because economic rent (of which we will learn more later) attaches itself to a title to land rather like the value of monopoly in the taxi cab business attaches itself to the title to a small metal taxi plate.
George first described what he saw in a little book addressed to Californians called Our Land and Land Policy. There he first mentions land value taxation as the remedy. Eight years further on George was able to sketch in detail the cat we have been talking about in his book Progress and Poverty. Those details will be given in the second and third parts of this course.
(You may like to compare standards of living in Australia with those of Britain, and to think about events in Australia in the latter half of the 1980s.)
England is of course an old country; in fact, the English claim to be the oldest nation on earth. Late in the 19th century it was obvious that real wages were rising yet William Gladstone when he was Chancellor of the Exchequer said:
"The fact is so astonishing as to be almost incredible . . . this intoxicating augmentation of wealth and power . . . entirely confined to classes of property . . . must be of indirect benefit to the labouring population, because it cheapens the commodities of general consumption. While the rich have been growing richer, the poor have been growing less poor."This leaves us in little doubt about whom Gladstone thought got the lion's share of the astonishing increase in wealth in England in the 19th century. It was 'the classes of property'. The poor picked up the crumbs in the form of lower prices for basic commodities.
Socialists might say that of the two classes of property that those who owned capital got a bigger share than those who owned land. But the reverse is true. Very few industrialists are among the very wealthy in l 9th century Britain. The really wealthy are aristocrats and merchants of the City of London. One authority says "the great landowners remained the richest group of men in Britain until the late nineteenth century". Unfortunately, he does not treat the wealth of the City of London as at all landed wealth but as commercial wealth....
But what of the landless masses? Whereas in 1858 85 per cent of the nation left no property at all that could be recorded for probate, by 1900, after nearly fifty years of astonishing progress, this figure had fallen to 83 per cent.
Today in Britain the landed aristocracy have recovered their wealth. All hold less land but they are richer than ever. Can you guess the reasons?...
Our authority gives two reasons. One is the rising price of land - the average was 53 pounds per acre in 1876, and 600 pounds per acre in 1974. The other reason is "the tax advantages of owning land"; in other words land is not taxed to the extent that income is.
One more detail. George says that with progress the poor become relatively poorer than men of property', but sometimes in his speeches and even once or twice in Progress and Poverty he goes further than this and says that the poor are becoming poorer in absolute terms.
This group, the unemployed, are far poorer than those living on the margin of civilization. Without charity they are destitute, and periodically they grow into enormous numbers when there is an economic depression. This kind of poverty not only impoverishes, it degrades as well. This degradation comes from being dependent upon others for the means of life.
But all those who live by wages fear too that they will become unemployed. They appear to be dependent for the means of life on their employers. And they are called a 'labour force' or 'cost of production'. In respect of personal dignity the poor in work are poorer than those working for themselves on the margin of civilization....
During the week ask yourself why do I work? and What weakens my will to work?
Q.2 Comment on the view that it is natural for wealth to be abundant in a populous community. What is said to retard or prevent this abundance? (p3)
Q.3 What kind of economic advantages and disadvantages do you think there are in living in a frontier society? (p 5)* Henry George, 2 September 1839 to 29 October 1897, author of Progress and Poverty, 1879.
The Association's magazine, Good Government, has been published since 1905,
or the ASSOCIATION FOR GOOD GOVERNMENT,
PO Box 443, Enfield, NSW, 2136, Australia.
Tel. (02) 9744 8815, (02) 9746 5154; Fax (02) 9744 3804
WRITE TO US on the VISITORS form, which for some people is easier to use than E-MAILING us on email@example.com. Or for deeper discussion, visit EarthSharing FORUM, based in Victoria. Please collect our Internet address http://www.multiline.com.au/~georgist as a Bookmark, Favourite, or Hotlist.
This Page© was written by Richard Giles and Ray Campton, Sydney, scanned at Tax Reform Australia, Melbourne, November 1996, created on HTML Assistant Pro3© by John Massam, to WWW 18 December 1996; 12 A4 pages, last revised 20 April 1998
DOC. 22: URL = http://www.multiline.com.au/~georgist/rent1.htm E-mail: firstname.lastname@example.org
For electoral purposes, all documents on this Website authorised by John Charles Massam, Georgist Education Association Inc., 10 Broome St., South Perth, 6151, Western Australia. Tel.: (08) 9367 5386