35: Neo-Georgism

American Journal of Economics and Sociology, The, April, 2004 by Robert V. Andelson

Henry George and His Critics: Where Do They Stand Today?

If Henry George had created a system capable of withstanding a century of criticism in all its details, he would have been sui generis among social scientists and philosophers alike--not a mortal theorist but a veritable god. Contrary to what some people mistakenly believe, Georgism is not a cult. It may inspire deep loyalty and fervor, yet it maintains no establishment for the determination or preservation of orthodoxy, and many of its most ardent adherents are quick to point out their disagreements with the master. To be a Georgist in the larger sense does not mean subscribing to the notion that everything Henry George penned must be accepted as holy writ, or that no aspect of his system is open to question. To be a Georgist in this sense is just to believe that, in the main, on the most vital points, more than any other single social ethicist or political economist, George had it right. To recognize that some of his ideas are flawed does not destroy his stature as a thinker of the first magnitude whose economic methodology was, in fact, far more informed and sophisticated than is generally appreciated, and whose prescription for reform contains basic features that have enduring relevance.

Possibly George misconceived the problem, and was mistaken in assuming that, absent his prescription, poverty necessarily increases with industrial advance. * At least, so it might appear. Yet when we look behind appearances, we may discover that the expedients whereby this grim outcome has been forestalled give rise to ultimate consequences still more grim, consequences now presaged by inflation and ever-mounting public debt. We may discover, in other words, that we have been living in a fool's paradise, that George was a better prophet than we realized, and that welfare spending, monetary tinkering, and union pressure have purchased temporary respite from the process he descried at the eventual price of a total and possibly irreversible collapse. This is, of course, a long-run augury; those who live only for the immediate present will dismiss it with Lord Keynes's flippant quip that "in the long run we are all dead."

Which is not to say that George's "all-devouring rent thesis" (to use Professor Cord's apt phrase) should be accepted unreservedly. One may nevertheless contend that land rent is a highly important economic factor and that George performed a real service in calling attention to this truth, however extreme his inferences from it may have been. The role of land rent in the United States, even if overemphasized by George, is yet far from inconsiderable; in most other countries (where land monopoly is more acute) it must be still greater by no small degree.

For the most part, George's errors are, as in the case of his "all-devouring rent thesis," errors merely of exaggeration. For example, descanting upon the growth of morality to be anticipated from the adoption of his proposal, he is not content merely to predict a marked diminution in crime and vice that stem from the brutalizing effects of poverty, but pictures a veritable Peaceable Kingdom in which greed has virtually disappeared along with the need for judges, police, and lawyers, and in which liberated human energies are spurred by pure and noble promptings to ever more exalted heights of creativity. (1) Alas! There is in human nature an intractable perverseness, which George's evangelical parents called "original sin" and that no social rearrangement can dispel. Material security and equality of opportunity, however desirable, will not usher in a moral paradise. Well-fed, well-housed, well-educated Sweden, with its disturbing incidence of alcoholism, suicide, and juvenile delinquency, may be cited as a case in point.

In keeping with the classical tradition, George insisted upon interpreting land rent as a monopoly price. For this he has been reproved by various critics from Marshall to Oser, who correctly observe (in Hebert's paraphrase) that "as long as land has alternative uses and many owners it comes to be supplied under conditions approaching competition." Again, however, George's error was essentially one merely of exaggeration. In the first place, land ownership in much of the world, including many parts of the United States (e.g., Orange County, California, where the Irvine Estate holds approximately 20 percent of the land, and is a major factor in keeping up prices in the small areas it develops and sells), is sufficiently concentrated that monopoly, or, at any rate, oligarchy, actually does obtain. In the second place, the fact that the supply of land is inelastic as respects location means that even where land ownership is diffuse, land rent still involves a monopolistic element not characteristic of the price of capital goods (except for such economically insignificant items as antiques and works by famous artists). For although land may have alternative uses, and in that regard not be perfectly inelastic as to supply, its inherent inelasticity of location gives the owner a built-in advantage.