By George!

I’m not sure where I first heard of Henry George. Probably browsing some urban related website. He’s usually introduced as the best-selling economist of all time (not counting Marx – forcing someone to get a book does not count). His most famous work is “Progress and Poverty”  of 1879, where he examines why despite enormous economic progress in the west, the number of destitute and poor increased as time went on. He traced the cause of this to the fact that land rent absorbed any additional production produced by labour and capital. And the more we educate workers, improve efficiency, etc., the higher rents become. His solution is to tax the entire rent of land (and abolish taxes on production like income, sales, tariffs, et al). As this is un-earned income produced by society’s advancement, it should return to society. I’ll explain more later.

I’ve started reading “Progress and Poverty*”. Just into chapter 2, but already he’s given some huge ideas about labour, capital, and land. He points out a glaring error of classical economics when dealing with wages – ie. that the wages are paid out of capital, so the level of wages is determined by the amount of available capital for paying wages, divided by the amount of labour supplied. I.e. the more workers and the same amount of capital, means lower wages. Or that the more capital we spend on equipment and machinery, the less left over for wages. Nonesense! He easily shows that wages are paid out of the production of labour. And the level of wages is determined by how much of the production is paid to rent, wages and capital. Never knew that classical economists had screwed something like that up.

* Full title: Progress and Poverty: An inquiry into the cause of industrial depressions and of increase of want with increase of wealth. The Remedy

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Published in: on September 4, 2006 at 11:11 pm  Comments (2)  

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  1. Progress and Poverty is available online at the http://www.schalkenbach.org/ website. Hardcopy is also available from their bookstore. And this summer, a new thought-by-thought updating and abridgement of P&P was published, also available from Schalkenbach.

    The book is magnificent. It integrates things that one might not otherwise realize are intimately related to each other. And it makes clear that problems we tend to regard as relatively recent ones were sufficiently visible 125 years ago to attract a thoughtful person’s attention.

    And not only does George’s understanding and remedy provide us the way to relieve poverty and reduce the extremely concentrated distribution of wealth, it also provides a straightforward way to reduce and even reverse urban sprawl and thereby reduce our energy usage and pollution. There is something there for virtually everyone to like.

    Isn’t it puzzling that so few of us know about these ideas?

    If you’d like to know more about Henry George’s ideas in a 21st century context, spend some time exploring http://www.wealthandwant.com/.

  2. Good suggestion about wealthandwant – I was actually reading their postings etc. before I got my hands on the book. Although the book is free on the site mentioned, I found that old copies of the book (from the 1890’s – 1920’s) are really cheap at alibris.com (like $7 – $20 US). Hey, it was a best seller, so no shortage, right?


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