Henry George's Land Reform: The Distinction between Private Ownership and Private Possession

American Journal of Economics and Sociology, The, April, 2001 by John Pullen

JOHN PULLEN [*]

ABSTRACT. Henry George stated that the taxation of land rent would amount to the abolition of the institution of private ownership of land, thereby alienating all those who, whether for economic or ideological reasons, regard the private ownership of land as essential for social order and progress. George believed that under his proposed reform the private ownership of land would be replaced by private possession. But his distinction between ownership and possession appears to have been based on a misconception of the nature of private ownership. His proposed reform could have been more logically described as a conditional, modified, or restricted private ownership of land, rather than as the abolition of private ownership of land.

I

George's Reform Policy: Initial and Modified Versions

IT IS WELL KNOWN that Henry George believed that radical land reform was the essential solution to the problem of persistent poverty in the midst of progress. The reform that he proposed--viz., the taxation of land rent--is quite clear and unambiguous; but whether this reform amounts to, or was intended to amount to, the abolition of the private ownership of land as a legal institution, was left far from clear. The aim of this paper is to explore the distinctions made by George between ownership [1] of land and possession of land, and between common ownership of land and private ownership of land. One of the conclusions of the paper is that the lack of clarity in these concepts in George's writings has impeded the acceptance of his reform.

His initial statements of the reform appear to be an unequivocal plea for land nationalisation and for the abolition of private ownership of land. He stated emphatically

we must ... substitute for the individual ownership of land a common ownership ... We must make land common property. (1956, p. 328)

and argued that since private ownership of land is the cause of the problem, nothing short of the abolition of private ownership of land can rectify matters. To remove an evil one must remove its cause. He regarded all other proposed remedies as mere palliatives, more or less inefficacious.

But despite having presented the case for land nationalisation in such ringing terms, he then proceeded to offer a modified and less radical measure, viz., the public ownership not of the land itself but of the land value, to be achieved by imposing a tax on every portion of land equal to its annual value. He believed that this measure would amount to the abolition of private ownership of land, and he said that those who occupy and use the land after the implementation of this reform would be merely its "possessors" not its "proprietors."

This distinction between possession and ownership was not formally defined, but can be inferred from statements such as:

I do not propose to either purchase or to confiscate private property in land. The first would be unjust; the second, needless. Let the individuals who now hold it retain, if they want to, possession of what they are pleased to call their land. Let them continue to call it their land. Let them buy and sell, and bequeath and devise it. We may safely leave them the shell, if we take the kernel. It is not necessary to confiscate land; it is only necessary to confiscate rent.

and

In form, the ownership of land would remain just as now. No owner of land need be dispossessed. (1956, pp. 405, 406)

Such statements indicate that for George the distinction between ownership of land and possession of land rests on the ownership of the land rent. The rights to "buy and sell, and bequeath and devise' are merely the "shell" or the "form" of ownership, but the right to the ownership of the land rent is the "kernel." When the state takes over ownership of the land rent through taxation, George believed it effectively removes the essence of private ownership of land, and transforms private ownership into private possession, even though the possessors may still regard themselves (and may be permitted to regard themselves) as landowners.

He seems to have argued that private possession involves security of tenure for the land and its improvements, but excludes ownership of the land rent; whereas land ownership includes ownership of the land rent. By vesting the land rent in the state through taxation he therefore believed that he had transformed private ownership into private possession. He argued that the private possession of land is desirable because without security of tenure and the right of bequest, land would not be properly used or developed, and the very structure of society could be endangered. But, for George, this does not mean that the possessor of the land needs to be also its owner: "there is no more necessity for making a man the absolute and exclusive owner of land, in order to induce him to improve it, than there is of burning down a house in order to cook a pig" (1956, p. 397).

George's reform in its modified version therefore did not mean the abolition of all rights of private individuals to land. Rather, he would maintain the right of private possession of land while taking away the right of private ownership of land. If in his system it is the ownership of the land value that determines whether we have a system of private ownership or private possession, it would logically follow that the state ownership of land values could not logically coexist with private ownership in land; they would be mutually exclusive concepts.