Our Unconscious Economic Theories
Economic Confusions
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Why have the economic views commonly known as Georgism or geoism not become more popular? Perhaps, says author Ian Lambert, people in our civilization hold unconscious assumptions about economics that preclude, or make it difficult to understand, the Georgist viewpoint. We are reprinting Lambert's important presentation on this subject in weekly installments. |
PART SIX
(Part One) (Part Two) (Part Three) (Part Four) (Part Five)
by Ian Lambert
11. The Myth of Over PopulationEver since Thomas Malthus' famous essay on population, we have resigned ourselves to the theory of over population, which holds that humanity increases at a rate which outstrips the earth's ability to sustain it. (Charles Darwin freely admitted that Malthus was a formative influence on him. One suspects that Malthus may also have contributed to Schopenhauer's poisoned view of the world and, through Schopenhauer, possibly to Nietzsche's profound despair.)
Those who contend that the earth is over populated cite the mass famine and poverty of the Third world and the destruction of the rainforests as evidence. The logical process seems to be that such events could only happen if the earth was over populated. But the difficulty lies in the "only". Such events could happen if the earth was over populated, but they could also occur for other very different reasons. The trouble with the theory of over population is that (just like the theory of the just price) it provides a simplistic "solution" and thereby prevents a proper analysis of the problem; it merely circumscribes the problem and subverts the taking of further evidence.
The taking of further evidence will show a bewildering world in which less than sixty per cent of the world's available arable land is devoted to agriculture, in which there are massive stock piles of food surpluses in the European Union and elsewhere in the West, which are "dumped" in other countries, and in which the government intervenes to keep prices up. (This last intervention is effectively justified on a "just price,, basis, the aim of the intervention being to ensure a "fair return" (principally wages) to the farmer, but only serving to increase the economic rent of agricultural land, while at the same time serving to reduce the real wages of the rest of the community by raising the cost of living.)
As Georgists will know, Henry George viewed the theory of over population as a pernicious attempt to justify economic injustice to the masses. Many pages in "Progress and Poverty" are devoted to proving it to be flawed. In his view, every birth brought into the world not merely another mouth to feed but also hands and feet with which it could obtain sustenance. Moreover, one great feature of man that distinguished him from all the other animals was his ability to use the reproductive forces in nature to husband and cultivate abundant fauna and flora which would more than provide for him. Indeed, in this century it has been the amazing scientific advances in fertilizers and animal foodstuffs that have caused agricultural productivity massively to increase, so much so that the prevailing problem is not over population but over production - why else do we have milk "quotas"?
George's view was that the problem of starvation was only the problem of poverty in a different form. It was the result of maldistribution of wealth. People starve because they cannot afford to buy food. There is no finer example of this than the Great Irish Famine of the nineteenth century. The Irish peasants paid their rent in the fine crops which they cultivated (corn, barley, etc.). They cultivated potatoes for their own sustenance. In 1845 the potato crop failed - but only the potato crop; huge amounts of other crops were harvested and exported from Ireland, while people rioted at the docks of the cities from which the ships carrying such crops departed. Over a million people died in the space of five years. They could have been saved; but the English placed their faith solely in the market. This was the great age of "economic liberalism", of freedom of contract. Adam Smith had demonstrated that interference with the market was both counter-productive and immoral. It was for this reason that the English authorities refused to intervene, maintaining that to do so would be to render the Irish a nation of "dependents" (in the literal sense). The Irish Famine is a great education in British economic mismanagement, not natural disaster - and perhaps a greater education in how practical men can be slaves of defunct economists!
12. Property and Wealth
Of all the evils that George saw relativism, moral populism and (most of all) the idea of the social contract giving rise to, in his opinion there was none worse than the idea that property was a creation solely of human law. So ingrained in our approach has this idea become that we find the notion of natural (moral) rights of property very quaint and old-fashioned, to be lumped with strange medieval views on the evils of interest, the just price etc. - part of a "flat earth" view of the world which was perhaps understandable in its day but is now surely obsolete.
To George the concept of "property" was something sacred and inviolate, something much more profound than a mere matter of convention. What a society did or did not treat as property had profound implications for everyone in that society.
The moral issue was more topical in George's time precisely because he was writing in America not long after the southern states had lost the Civil War and the institution of slavery had been abolished. Nineteenth century economists who claimed to be pursuing a "value free" science of political economy had claimed that slaves must be treated as chattels (because legally they were considered to be so) and therefore a species of wealth; it was not for the political economist to cast moral judgement on the institution of slavery. George vehemently criticized this approach for, he said, far from being a "value free" science, it was a science that was value-dependant, for it depended on the current "view" that slaves were wealth. The abolition of slavery would therefore change the existing science and make it inapplicable.
This notion of what is truly a "value free" science of political economy is absolutely central to George's work. He was not writing just about the American economy, the industrialized world or the nineteenth century. His was a science of political economy that would be equally applicable to any society, primitive or sophisticated, industrial or agricultural, civilized or barbaric, past, present or future. In this respect, his intention and approach diverges markedly from the Marxian. (Moreover, it is precisely because of his intention and approach that George has the ability to speak to our own situation in the twentieth century, and will continue to have the ability to uplift the hearts and minds of generations to come.)
I do not propose to enter upon a detailed consideration of wealth and property here; it suffices to say that George's view was that the overriding principles of freedom and equality guaranteed to an individual the right of property in everything which he produced and the right of equal access to what was produced by no man: nature. All our ideas of property flow from our concept of ownership of chattels, in which ownership can be traced back from transferor to transferee even unto the original producer. That which has not been produced cannot be owned for there is no original person to pass on title.
George claimed that the principles of freedom and equality dictated that there could be no right of property in slaves or in nature (land). That man has no inherent, natural, moral concept of property in land can be tested empirically, by examination of the laws and customs of other peoples. There is and has been almost no tribe or race to whom the idea of contract and the duty to perform one's contract is not sacrosanct. But there have been (and are) numerous tribes and races who have no concept of ownership of land, among them the American Indians, the New Zealand Maoris and the Australian Aborigines. For those people, the land does not belong to them; rather, they belong to it.
George viewed the legal institution of property in land as not merely a morally neutral convention - such as a law requiring you to drive on the left hand side of the road - but as a usurpation of people's rights without their consent and morally pernicious as a consequence. This accords precisely with the Indian concept of land, under which individual Indians could agree not to use land and leave the white man to use it in peace, but such an agreement was a mere contractual obligation; it could not bind future generations of Indians who did not individually agree to it. Is such a perception so wide of the mark? Do we not all believe that no man may be bound by an agreement to which he is not a party? True, he may be prevented from taking the benefit without assuming the burden - but there is no benefit to the future generations of Indians, only a burden!
It is this idea of the benefit: burden principle that leads us (appropriately) to land value taxation. It is sometimes suggested that George was in favor of the legal nationalization of land. He thought no such thing, and distanced himself from anarchists who did. The right of property in wealth necessarily meant that one had to acknowledge the right of private property in buildings and other improvements to land. To George this was a moral imperative. In terms of property legislation, George was therefore in favor of the whole vast machinery of conveyancing and other laws which guarantees the right of property in buildings and other improvements to land.
But the right to exclude others from using "your" land was a privilege for which the others must be compensated. The others cannot be forced to take the burden of your exclusive use of a particular site if they do not have the corresponding benefit; which benefit is the payment of the economic rent of that site to the community - land value taxation. (Rent in this context is, of course, the annual amount which the site alone, and free of improvements, will command.)
To George, property in land was clearly a legal fiction. There was no natural, moral concept underpinning it. In an age which still believed in natural rights, his opposition set out to discredit him and to distort his arguments, to make believe that there was some inherent natural right of property in land. In our relativistic age, we simply laugh at the idea that there could be moral rights of property in anything, given that property rights of their nature bind the world, but relativism maintains that there are no universal moral values. Relativism does not see the lack of any natural rights of property in land as being a problem!
continued in PART SEVEN
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Ian Lambert is a globetrotting man of many talents. This presentation was originally made at the 10th Annual Conference Of The Council Of Georgist Organizations, Santa Fe, New Mexico, July, 1990.
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