A Basic Introduction to Georgism
Despite unprecedented progress, why does such inhumane poverty exist?
On Henry George & Progress and Poverty
"Progress and Poverty" was born from a profound meditation on the socio-economic dynamics of the final closure of the frontier in the United States and the stark realities of urban and rural living conditions. With an intense passion for prosperity, Henry George sought to unravel a perplexing conundrum of the Gilded Age: Despite unprecedented progress — technological advancements and soaring productivity levels leading to accelerated wealth generation — why did such extreme poverty persist?
"Progress and Poverty" unveiled an in-depth economic analysis that was kindled by this stark paradox, and it provided a resounding answer to the pressing question: "Why does progress seemingly fuel wealth inequality?"
The response, both straightforward and unexpected, laid in the private ownership of land. More precisely, it was tethered to the economic rents derived from land, natural resources, and opportunities. These rents are essentially access fees: they are not exchange payments for goods or services — but for the privilege to use something pre-existing. Crucially, economic rents have a tendency to expand with enhancements in productivity. This insight is pivotal when we aim to construct a radically prosperous society that ensures economic gains from land are shared equitably.
Adam Smith noted this dynamic in the Wealth of Nations:
Every improvement in the circumstances of the society tends either directly or indirectly to raise the real rent of land, to increase the real wealth of the landlord, his power of purchasing the labour, or the produce of the labour of other people. The real value of the landlord's share, his real command of the labour of other people, not only rises with the real value of the produce, but the proportion of his share to the whole produce rises with it.
Land is of finite supply, an important detail that fuels its intrinsic rivalry. When one person claims ownership on a piece of land, it effectively denies others the same opportunity. With advancements in technology, the value of land amplifies: a modest rice farm, for example, can be transformed into a factory, generating considerably more wealth. The private ownership of land, hence, offers certain classes the power to siphon wealth from the society in the form of rents. They can levy charges for land access or appropriate the rents for themselves, all without making any direct contribution to the economic progress.
Historically, this was no mere coincidence that feudal societies across Europe established their power upon the private ownership or as I like to call it, the enslavement of land — a legacy that is still reflected in our modern term for landowners — the landlords. To rectify this socio-economic dilemma, Henry George advanced a scheme rooted in the communal ownership of economic rents— the land value tax. This proposed solution embodied his profound and radical desire for collective prosperity.
George wasn't pioneering this idea — his philosophical predecessors, such as Adam Smith, Thomas Paine, and the French Physiocrats Turgot and Quesnay, had previously explored similar concepts. Yet, George stood out in his ability to coalesce these ideas into a cohesive intellectual framework, as recorded in his seminal work. His book, "Progress and Poverty", not only earned the accolade of being the most popular economic text in American history but also ignited a reform movement. This wave of change influenced the political discourse, both in America and beyond, underscoring the power of radical thought in our collective pursuit of prosperity.
The journey of Georgist analysis has been both progressive and transformative since its inception. The contemporary world, having witnessed momentous shifts in the realms of economy, government, societal structure, and taxation post-George's era — is vastly different from his time. Nevertheless, economists inspired by George's revolutionary ideals — ranging from William Vickrey and Nicolaus Tideman — have carried his torch forward. They have proposed novel models to comprehend the effects of economic rent in today's complex economies — transcending the boundaries of George's original Single Tax proposition.
Georgist ideologies and policy suggestions have adapted to these changes with a resilience that echoes our radical aspirations. They have forged fresh analyses to decode the evolving economic and social landscapes and have championed innovative policies tailored to the intricate mechanisms of modern political structures.
Economic land transcends its simplistic perception as mere earth — it's a composite entity encompassing location, valuable natural resources such as oil, government-sanctioned monopoly rights like taxi medallions, and the global ecological commons including the precious atmosphere and oceans. These elements are often exploited for individual gains, undermining their collective worth.
Georgists passionately engage in discourses around multifaceted challenges such as shaping a sustainable green economy, reshaping the legal framework around patents and copyrights, and aiding developing nations to bypass the pitfalls of the so-called resource curse. Yet, Georgism as a philosophical paradigm transcends the mere concept of levying taxes on economic land. It forms a distinct school of economic thought — meticulously scrutinizing economic systems through the intricate lens of economic rent and land.
In terms of property ethics, Georgism adopts a balanced approach, harmoniously weaving a path between the philosophies of Locke and Proudhon.sFurthermore, it fosters an enlightened understanding of the symbiotic relationship between individuals and society. This relationship is often conceptualised as “cooperative individualism,” illustrating the delicate balance between personal freedom and communal obligations in the pursuit of a just society.
A Georgist society is not simply a society distinguished by a different tax model; it represents an entity with a fundamentally reimagined political-economic foundation. Such a society acknowledges the collective right of humanity to the universe and its wealth of natural resources, forces, and opportunities. It envisions a society where economic prosperity is a direct result of active, positive contributions to the collective wellbeing, making it a society that eradicates the possibility of wealth extraction through monopolisation and enslavement of land, exploitation of shared natural resources, or preferential treatment from government. Thus, a Georgist society is a space where the individual and community strive together, enriching each other through mutual benefit and respect for the collective heritage of the natural world.
Why Georgism? Why Now?
The Georgist perspective is particularly apt for our current political climate, and here's why. I find it fascinating how Georgism tends to resonate with those who initially embraced absolute ideologies—be it libertarianism, socialism, nationalism, or any others—but have since grown weary of their dogmatism, the stark divisions they fuel, and the unyielding litmus tests they impose.
Henry George, through his philosophy, adeptly addresses both our individualistic and communal tendencies, without imposing an arbitrary need to choose one over the other. This is a delicate equilibrium that not only nurtures our innate human tendencies, but also promotes a collective societal growth rooted in shared prosperity.
In George's vision, individuals have the right to make personal life choices and enjoy the benefits of their own labor, but this doesn't imply that they must become isolated entities who neglect societal welfare or the well-being of their fellow beings. The magic of Georgism lies in its affirmation of the harmony between individualism and collectivism, assuring people that they don't need to choose between their personal growth and societal obligations. This balanced outlook sets Georgism apart in a sea of extreme, binary worldviews that promote a zero-sum game.
Ideology serves as a convenient compass for individuals to gauge their positions on diverse issues, drawing cues from the opinions of those who share their worldview. Unquestionably, the human yearning for a belief structure is potent — a world without convictions can be overwhelming and draining.
The unique strength of Georgism lies in its ability to resonate with a wide spectrum of people with diverse value systems, all while promoting a unified and principled perspective. It's not about finding a middle ground between traditional "Left" and "Right" ideologies. Moreover, it achieves this without imposing significant demands or expectations on its proponents — adding to its appealing simplicity.
Do you believe in the inviolability of personal freedom and the pursuit of individual happiness? Are you motivated by the idea of retaining a greater share of your hard-earned income, while still supporting sufficient tax revenue to fund essential public services? Do you appreciate the beauty of nature or the dynamism of sprawling cities?
If so, rejoice, for you're already on the path. Welcome to the expansive canopy of Georgism. Georgism capably bridges these varying desires, providing a sound foundation for diverse ideologies. Henry George's philosophy carries a potent moral weight, resonating with our innate sense that accruing wealth without contributing value, or even at the expense of society — is fundamentally unjust. Yet, it also stands on a robust consequentialist bedrock that pragmatically interrogates: if we can amass revenue for public goods and social safety nets while deterring rent-seeking behaviours and minimising negative externalities, then why should we hesitate?
Indeed, I find that few other perspectives achieve this unique balance of morality and pragmatism with the same degree of cogency as Georgism. Georgism, with its holistic view, tackles a broad spectrum of the pressing challenges we face today — climate change, poverty, the dominance of big tech, the forces of globalisation, and skyrocketing rents. What makes it unique is its method of addressing these issues, distinct from conventional ideologies.
The potential strength of Georgism lies in its universal allure — it doesn't subscribe to the notion of a specific demographic or type of person who would adopt its tenets. However, the realization of this advantage is yet to be witnessed. This broad-based attraction could serve as a rallying point for diverse supporters, underscoring the inclusive character of Georgism.
Georgist principles could intriguingly serve as a common ground for individuals of vastly different backgrounds — say, a religious traditionalist nurturing a small farm in a rural expanse, or a freedom-loving city dweller battling sky-high rents in San Francisco. The unifying factor here would be a shared dedication to mutualism — making room for an array of lifestyles and perspectives.
In fact, the adoption of an open-minded and encompassing worldview like Georgism could potentially act as a catalyst for enhancing this mutualism. The elusive nature of a stereotypical 'Georgist' persona aids in transcending the tumultuous terrain of cultural conflicts, enabling a steadfast focus on issues that directly impact everyone's quality of life, irrespective of their cultural or personal affiliations.
Despite the long period of political quiescence Georgism has faced, we're presently witnessing a resurgence that brings with it a tremendous chance to refine our political dynamics. The possibility of an ideology that harnesses the power to unify disparate individuals around humanistic ideals appears to be precisely the panacea that the U.S., and indeed the world, require at this juncture.
Georgism is a perspective that balances pragmatism and empirical evidence, while simultaneously retaining a simplicity and ethical foundation appealing to the non-technocrats, appears as a promising recipe for triumph. The beauty of this philosophy lies in its approachability, its solid grounding in real-world data, and its unwavering commitment to the well-being of all people. It's a vision worth exploring and contemplating about — especially in these challenging times.