American Journal of Economics and Sociology, The: Frank H. Knight's criticism of Henry George

FindArticles > American Journal of Economics and Sociology, The > Jan, 2008 > Article > Print friendly

Frank H. Knight's criticism of Henry George

Ross B. Emmett

   The economic and social ideas of Henry George are as a whole at the
   same pre-arithmetical level, the level of those held before and
   since his time by all who have held any at all, apart from an
   insignificant handful of competent economists and other negligible
   exceptions. Henry George's claim to be an economist (or social
   philosopher either) rests on the possession of linguistic powers
   not uncommon among frontier preachers, politicians, and
   journalists, and on the fact that his particular nostrum for the
   salvation of society appeals to a number of people, no doubt for
   the same reasons that made it appeal to him, and which give many
   other nostrums their appeal. (1)

The intensity of Frank Knight's attack on Henry George's system of political economy may come as a surprise to some. For those who know of Knight's attacks on the systems of other philosophers and social scientists of the time--from John Dewey and Mortimer Adler to Jacques Maritain and Terence Hutchison--it has a familiar ring. (2) What comes as a surprise to someone familiar with those other attacks is that, whereas their intensity is matched by their frequency, Knight only makes his attack on George twice--in a review of a book on George's philosophy in 1933 and then again in a short essay on the "single tax" published 20 years later in The Freeman. (3) Other views that Knight attacked with equal ferocity were accorded more frequent attention in his work. Despite the forcefulness of his attack on George, Knight grouped his system with that of Major Douglas and other populist approaches, all of which receive little attention in his work. In the short compass of my comments on this session, I will identify three aspects of Knight's attack on George that may help us to understand the nature of his attack, and why Georgist critiques of Knight such as the one offered recently by Tideman and Plassmann are less a criticism of unique Knightian views than the difference between the philosophical positions underlying George's interpretation of classical economics and neoclassical theory.

Let me preface my remarks by thanking Tideman and Flassmann for providing a Georgist response to Knight that usefully focuses the issues between Knight and George. Their article demonstrates that Knight didn't simply misunderstand George, but disagreed with him on what both authors thought were central philosophical, ethical, and economic issues. As they say at the end of their article:

   The heart of the disagreement between Knight and George's
   supporters is that George's supporters see an important difference
   between the rent of land and other returns. (4)

Knight would agree with this characterization of the disagreement, but refuses to give ground to George's supporters. What we are presented with, then, is a contrast between two economic approaches that disagree strongly about a central assumption. I have no intention of trying to settle the dispute!

The first aspect of Knight's response to George is philosophical. To put it simply, Frank Knight was allergic to proposals that called for single solutions to the problems of modern society. Today, we know him as a pluralist. (5) In his own time, he was known for his skepticism about the overextension of any single principle of social or economic philosophy. George's single-tax proposal seemed tailor-made to draw Knight's ire: The single principle is that land rents should return to the society at large. George's public promotion of his principle emphasized the fact that it would cure the evils of society, ending poverty through common prosperity.

Knight's response to philosophical systems that suggest one remedy for society's ills is encapsulated in his 1951 presidential address to the American Economic Association:

   The right principle is to respect all the principles, take them
   fully into account, and then use good judgment as to how far to
   follow one or another in the case in hand. All principles are
   false, because all are tree--in a sense and to a degree; hence,
   none is true in a sense and to a degree which would deny to others
   a similarly qualified truth. There is always a principle, plausible
   and even sound within limits, to justify any possible course of
   action and, of course, the opposite one. The truly right course is
   a matter of the best compromise, or the best or "least-worst"
   combination of good and evil. As in cookery, and in economic
   theory, it calls for enough and not too much, far enough and not
   too far, in any direction. Moreover, the ingredients of policy are
   always imponderable, hence there can be no principle, no formula,
   for the best compromise. (6)

This argument was repeated time and time again in his responses to various "solutions" to the social problem. His three favorite targets in the early 1930s were the neoscholasticism of Robert Hutchins and Mortimer Adler, the pragmatism of John Dewey, and positivism (7) He eventually combined the former with other religious approaches under the general heading of moralism. The second and third of these approaches were also merged, under the term he introduced: scientism.

The second aspect of Knight's attack on George that bears mention is, of course, economic. In the early 1930s, Knight began to rethink his way through economic theory, starting with cost theory. George's single-tax theory was built upon the classical cost theory of David Ricardo, with its tripartite division between land, capital, and labor. It was this classical cost theory on which Knight focused his theoretical criticism. The language was strong, reminding us of Knight's general rhetorical strategy of attack: His article on Ricardian theory (Knight 1999c), he tells us, is written on the premise that study of the classics is motivated by an interest in correcting their mistakes.

Tideman and Flassmann make Knight's rejection of classical cost theory the center of their critique of his response to George. They argue that Knight's refusal to treat land differently than labor and capital simply misses the obvious fact that marginal land is brought into economic use not by its improvement, but by one economic agent excluding others from use of the land. Assuming that justice demands that everyone be able to enjoy land's rewards, taxing land rents brings economics and ethics together.

The problem here is not that Knight rejected what Georgists see as the obvious claims of justice, nor is it that Knight misunderstood the economic process of bringing marginal land into economic use. Rather, Knight disagrees with George and classical economics on the central issue of land use. Knight's economic theory is built on the assumption that there is no difference between the way in which land, labor, and capital are brought into economic use. As he says in the second essay, the acquisition of "unearned wealth" by the heirs of those who initially acquired land is "not a sequel peculiar to land." (8) In Knight's estimation, no factor of production is simply acquired--they are always produced. Or, to put it differently, if land may be acquired unimproved, so too may labor or capital. Knight's position is one of the fundamental differences between neoclassical and classical economics.

Finally, Knight's attack on George has an ethical aspect. For Knight, social problems are ultimately ethical in character, not simply economic. No "single tax" can replace the wisdom gained from judgment of what we want now, and what we may come to be later. For Knight, social problems can only be addressed by social discussion, in which we consider the options, judge the relevance of various principles, and reflect upon who we are and what is good for us. The outcomes of those discussions can never be known in advance, either by appeal to moral principles or scientific prediction. George's single-tax proposal, in Knight's estimation, tries to substitute "scientific" conclusions for social discussion. (9)

References

Hands, D. W. (1997). "Frank Knight's Pluralism." In: Pluralism in Economics: New Perspectives in History and Methodology. Ed. A. Salanti and E. Screpanti. Cheltenham, UK: Elgar.

Knight, F. H. (1933a). "Review of The Philosophy of Henry George, by George R. Geiger." International Journal of Ethics 44(1): 162-165.

--. (1933b). "Review of The Philosophy of Henry George, by George R. Geiger." Journal of Political Economy 41(5): 687-690.

--. (1947). "Pragmatism and Social Action." In: Freedom and Reform: Essays-in Economics and Social Philosophy. New York: Harper.

--. (1953). "The Fallacies of the 'Single Tax'." Freeman August: 809-811.

--. (1999a). "God and Professor Adler and Logic." In: Selected Essays by Frank H. Knight. Ed. R. B. Emmett. Chicago: University of Chicago Press.

--. (1999b). "Modern Thought: Is It Anti-Intellectual?" In: Selected Essays by Frank H. Knight. Ed. R. B. Emmett. Chicago: University of Chicago Press.

--. (1999c). "The Ricardian Theory of Production and Distribution." In: Selected Essays by Frank H. Knight. Ed. R. B. Emmett. Chicago: University of Chicago Press.

--. (1999d). "The Rights of Man and Natural Law." In: Selected Essays by Frank H. Knight. Ed. R. B. Emmett. Chicago: University of Chicago Press.

--. (1999e). "The Role of Principles in Economics and Politics." In: Selected Essays by Frank H. Knight. Ed. R. B. Emmett. Chicago: University of Chicago Press.

--. (1999f). "Virtue and Knowledge: The View of Professor Polanyi." In: Selected Essays by Frank H. Knight. Ed. R. B. Emmett. Chicago: University of Chicago Press.

--. (1999g). "'What is Truth' in Economics?" In: Selected Essays by Frank H. Knight. Ed. R. B. Emmett. Chicago: University of Chicago Press.

Plassmann, F., and T. N. Tideman (2004). "Frank Knight's Proposal to End Distinctions Among Factors of Production and His Objection to the Single Tax." History of Political Economy 36(3): 505-519.

Tideman, N., and F. Plassmann. (2004). "Knight: Nemesis from the Chicago School." In: Critics of Henry George: An Appraisal of Their Strictures on Progress and Poverty. Ed. R. V. Andelson. Malden, MA, Blackwell.

Notes

(1.) Knight, F. H. (1933b). "Review of The Philosophy of Henry George, by George R. Geiger." Journal of Political Economy 41(5): 687-690.

(2.) See Knight, F. H. (1947). "Pragmatism and Social Action." In: Freedom and Reform: Essays in Economics and Social Philosophy. New York: Harper & Bros; Knight, F. H. (1999). "'What is Truth' in Economics?" In: Selected Essays by Frank H. Knight. Ed. R. B. Emmett. Chicago: University of Chicago Press; Knight, F. H. (1999). "The Rights of Man and Natural Law." In: Selected Essays by Frank H. Knight. Ed. R. B. Emmett. Chicago: University of Chicago Press; and Knight, F. H. (1999). "God and Professor Adler and Logic." In: Selected Essays by Frank H. Knight. Ed. R. B. Emmett. Chicago: University of Chicago Press.

(3.) The review was actually published twice: Knight, F. H. (1933a). "Review of The Philosophy of Henry George, by George R. Geiger." International Journal of Ethics 44(1): 162-165; (1933b). "Review of The Philosophy of Henry George, by George R. Geiger." Journal of Political Economy 41(5): 687-690; (1953). "The Fallacies of the 'Single Tax'." Freeman August: 809-811.

(4.) Tideman, N., and F. Plassmann. (2004). "Knight: Nemesis from the Chicago School." In: Critics of Henry George: An Appraisal of Their Strictures on Progress and Poverty. Ed. R. V. Andelson. Malden, MA, Blackwell.

(5.) Hands, D. W. (1997). "Frank Knight's Pluralism." In: Pluralism in Economics: New Perspectives in History and Methodology. Ed. A. Salanti and E. Screpanti. Cheltenham, UK: Elgar.

(6.) Knight, F. H. (1999). "The Role of Principles in Economics and Politics." In: Selected Essays by Frank H. Knight. Ed. R. B. Emmett. Chicago: University of Chicago Press.

(7.) Knight, F. H. (1947). "Pragmatism and Social Action." In: Freedom and Reform: Essays in Economics and Social Philosophy. New York: Harper; Knight, F. H. (1999). "'What is Truth' in Economics?" In: Selected Essays by Frank H. Knight. Ed. R. B. Emmett. Chicago: University of Chicago Press; Knight, F. H. (1999). "Modern Thought: Is It Anti-Intellectual?" In: Selected Essays by Frank H. Knight. Ed. R. B. Emmett. Chicago: University of Chicago Press.

(8.) Knight, F. H. (1953). "The Fallacies of the 'Single Tax'." Freeman August: 809-811.

(9.) Knight, F. H. (1999). "Virtue and Knowledge: The View of Professor Polanyi." In: Selected Essays by Frank H. Knight. Ed. R. B. Emmett. Chicago: University of Chicago Press.

By ROSS B. EMMETT *

* Ross B. Emmett is Associate Professor, James Madison College, Michigan State University. His two-volume edited collection The Selected Essays of Frank H. Knight was published by the University of Chicago Press in 1999. He is the editor of the forthcoming Elgar Companion to the Chicago School of Economics, the executive editor of the Biographical Dictionary of North American Economists, forthcoming with Thoemmes/ Continuum, and an editor of Research in the History of Economic Thought and Methodology. These comments prepared in response to Plassmann, F. and T. N. Tideman. (2004). "Frank Knight's Proposal to End Distinctions Among Factors of Production and his Objection to the Single Tax." History of Political Economy 36(3): 505-519; and Tideman, N. and F. Plassmann. (2004). "Knight: Nemesis from the Chicago School." In: Critics of Henry George: An Appraisal of Their Strictures on Progress and Poverty. Ed. R. V. Andelson. Malden, MA, Blackwell.