Henry George on Property Rights: Reply to John Pullen

American Journal of Economics and Sociology, The, April, 2001 by Kris Feder

KRIS FEDER [*]

ABSTRACT. John Pullen argues that Henry George's proposal to "make land common property" is inconsistent with his proposal to tax rent. This reply argues that George's two formulations are consistent, and that Pullen has confused common property with state property. On the other hand, Pullen's conception of property as composed of a "basket of rights" focuses attention on the question of whether, as trustee of the common property, a Georgist regime should be understood to have certain rights (and obligations) to constrain private land use decisions.

I

Land Taxation or Nationalisation

JOHN PULLEN ARGUES THAT Henry George presented two inconsistent versions of his reform proposal. The "initial" version was "to make land common property," [1] which Pullen interprets as "an unequivocal plea for land nationalisation and the abolition of private ownership of land." [2] The "modified" version was a tax on the rent of land (to replace taxes on labor, capital, and exchange). "Which did he really prefer?" Pullen wonders. [3]

Pullen himself favors the modified version, arguing that the phrase "single tax," by which the Georgist movement came to be known, correctly places the focus on its central policy prescription. Nationalisation, he says, is inconsistent with George's notion of a free and just society. Moreover, George's distinction between "ownership" and "possession" is misleading, because property rights are never absolute. Not only taxes, but also many other laws and regulations constrain the opportunities open to landholders. Like zoning rules and even criminal law, the single tax limits but does not "abolish" the rights of landownership. George's call to abolish private property in land, Pullen suggests, may have inhibited wider public acceptance of George's fiscal policy.

This reply argues that George's proposal to "make land common property" is not equivalent to land nationalisation. Common property and state property are distinct notions. George used the term "common property" in much the same sense in which it is used today. As he understood it, individuals' equal land rights are not surrendered to the government in a common property system, but are preserved and given effect through shared ownership.

Moreover, George's insistence that the receipt of rent is the essential "kernel" of property rights in land can be defended. It reflects his basic distinction between the two primary factors of production--labor, the human factor, and land, the natural factor. If George's theory is correct, the single tax system leaves to the individual the full value of his or her productive contribution, while taking for public purposes the social surplus that lodges in rent. There is no inconsistency between George's two formulations of his proposal.

On the other hand, Pullen's notion of property as composed of a complex "basket of rights" has considerable analytic value and suggests a question that George little explored--not whether private landholders should deem themselves owners, but which rights in the property bundle should be understood to belong to the rent-sharing community and which to individual titleholders. The close interdependence between economic systems and the physical and biological systems of nature underlies a persuasive argument for coordinated land management that George did not address. It could plausibly be argued that, as trustee of the common property, a Georgist rent-sharing community has certain rights (or obligations) to regulate land use for the purpose of safeguarding environmental quality and ecosystem services.

II

Private Property, State Property, and Common Property

AS PULLEN OBSERVES, George implicitly defines "ownership" of "property" to include the right to receive the income of the property owned. A tax that collects the full market rent of land would therefore "abolish private property in land." Pullen argues that George improperly identifies the single tax with nationalisation of land, making his fiscal proposal appear more radical than it actually is. However, George had clearly rejected that interpretation. [4] Nationalisation, in which the state claims ownership of the land and sets the conditions of access, would violate the natural rights of individuals to work, build, invent, improve, and enjoy the reward of their productive efforts.

In ascribing this view to George, Pullen has missed George's distinction between common property and state property. It may seem a distinction without a difference, as George expected formal governments to be assigned the responsibility of collecting and distributing the rent surplus. However, the common property regime he envisioned necessarily acknowledges and gives effect to individual rights, whereas a state property regime may compel individuals to surrender to the government some part of their natural rights. For George, the actions of a national government, even a democratic one, are legitimate only insofar as the rent surplus is distributed approximately equally among individuals and generations (and individual rights to the products of labor are respected).