Progress and Poverty Henry George

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<ol><li> 1. Progress and Poverty </li><li> 2. Progress and Poverty Why there are recessions and poverty amid plenty and what to do about it! Henry George Edited and abridged for modern readers by Bob Drake Robert Schalkenbach Foundation </li><li> 3. Henry George Progress and Poverty Why there are recessions, and poverty amid plenty and what to do about it! Edited and abridged for modern readers by Bob Drake Book and cover design by Lindy Davies ISBN 0-911312-98-6 Library of Congress Control Number: 2006928337 First Edition Copyright 2006 by the Robert Schalkenbach Foundation 149 Madison Avenue, Suite 601 New York NY 10016 </li><li> 4. Contents Publishers Foreword by Cliff Cobb............................... IX Editors Preface by Bob Drake....................................... XII Authors Preface to the Fourth Edition ....................... XV Introduction: The Problem of Poverty Amid Progress .... 1 First Part: Wages and Capital 1. Why Traditional Theories of Wages are Wrong ........ 8 2. Defining Terms ........................................................ 17 3. Wages Are Produced By Labor, Not Drawn From Capital ................................................................... 28 4. Workers Not Supported By Capital......................... 41 5. The True Functions of Capital................................. 46 Second Part: Population and Subsistence 6. The Theory of Population According to Malthus ... 51 7. Malthus vs. Facts...................................................... 57 8. Malthus vs. Analogies .............................................. 69 9. Malthusian Theory Disproved................................. 75 Third Part: The Laws of Distribution 10. Necessary Relation of the Laws of Distribution ...... 83 11. The Law Of Rent .................................................. 89 12. The Cause of Interest............................................. 95 13. False Interest ........................................................ 102 14. The Law Of Interest ............................................ 106 15. The Law Of Wages .............................................. 111 16. Correlating The Laws of Distribution ................. 120 17. The Problem Explained ....................................... 123 </li><li> 5. Fourth Part: The Effect of Material Progress on the Distribution of Wealth 18. Dynamic Forces Not Yet Explored ...................... 126 19. Population Growth and Distribution of Wealth ... 128 20. Technology and the Distribution of Wealth ........ 137 21. Speculation........................................................... 142 Fifth Part: The Problem Solved 22. The Root Cause of Recessions............................. 145 23. The Persistence of Poverty Despite Increasing Wealth .................................. 155 Sixth Part: The Remedy 24. Ineffective Remedies ............................................ 165 25. The True Remedy ................................................ 180 Seventh Part: Justice of the Remedy 26. The Injustice of Private Property In Land ........... 182 27. The Enslavement of Labor .................................. 192 28. Are Landowners Entitled to Compensation? ...... 198 29. History of Land as Private Property .................... 203 30. History of Property in Land in the US................ 211 Eighth Part: Application of the Remedy 31. Private Property in Land is Inconsistent with the Best Use of Land ................................... 219 32. Securing Equal Rights To Land .......................... 223 33. The Canons of Taxation....................................... 226 34. Endorsements And Objections ............................ 236 </li><li> 6. Ninth Part: Effects of the Remedy 35. The Effect on Production .................................... 242 36. The Effect on The Distribution of Wealth .......... 246 37. The Effect on Individuals and Classes................. 250 38. Changes in Society............................................... 254 Tenth Part: The Law of Human Progress 39. The Cause of Human Progress ............................ 263 40. Differences in Civilizations.................................. 270 41. The Law of Human Progress............................... 275 42. How Modern Civilization May Decline ............. 287 43. The Central Truth................................................ 295 44. Conclusion: The Individual Life.......................... 300 Afterword: Who Was Henry George? by Agnes George de Mille ......................................304 Index .......................................................................... 311 </li><li> 7. Publishers Foreword IX Publishers Foreword WE OWE Bob Drake a debt of gratitude for this meticu- lous condensation and modernization of Henry Georges great work. The original version had an elegance that evoked a passion for social justice among millions of read- ers in the nineteenth and early twentieth centuries. How- ever,by the beginning of the twenty-first century,Georges complex prose stood in the way of that intention for large numbers of people.Now his ideas can once again be widely accessible. What were those ideas and why are they still impor- tant today? When Progress and Poverty was published in 1879, it was aimed in part at discrediting Social Darwin- ism, the idea that survival of the fittest should serve as a social philosophy. That ideology, developed by Herbert Spencer, William Graham Sumner, and others, provided the intellectual basis for 1) American imperialism against Mexico and the Philippines, 2) tax policies designed to reduce burdens on the rich by shifting them onto the poor and middle class, 3) the ascendancy of the concept of ab- solute property rights, unmitigated by any social claims on property, 4) welfare programs that treat the poor as failures and misfits, 5) racial segregation in education and housing, and 6) eugenics programs to promote the supe- rior race. The intellectual defense of racism is in abey- ance, but the economic and political instruments of domination have changed little. The renewed defense of </li><li> 8. X Progress and Poverty taxing wages and consumer goods rather than property holdings, expanded intellectual property rights, and vast imperial ambitions are indications that Social Darwinism is back in full force. The revival of Social Darwinism continues to justify social disparities on the basis of natural superiority or fitness. Progress and Poverty,by contrast, reveals that those disparities derive from special privileges. Many econo- mists and politicians foster the illusion that great for- tunes and poverty stem from the presence or absence of individual skill and risk-taking. Henry George, by con- trast, showed that the wealth gap occurs because a few people are allowed to monopolize natural opportunities and deny them to others. If we deprived social elites of those monopolies, the whole facade of their greater fit- ness would come tumbling down. George did not advo- cate equality of income, the forcible redistribution of wealth, or government management of the economy. He simply believed that in a society not burdened by the demands of a privileged elite, a full and satisfying life would be attainable by everyone. Henry George is best remembered as an advocate of the single tax on location values. (I say location rather than land to avoid the common confusion that George was primarily interested in rural land. In fact his attention was focused on the tens of trillions of dollars worth of urban land that derives its value from location.) Yet, for George, wise tax policy was merely a vehicle to break the stranglehold of speculative ownership that effectively limits the opportunity to earn an decent living and participate in public life. Perhaps the image that best captures Georges ultimate intention is the final scene in a popular science fiction </li><li> 9. Publishers Foreword XI film, when the hero is able to restore the oxygen supply to the surface of a planet so that people will no longer be enslaved by the man holding the oxygen monopoly. Free- ing people from the oppression of monopoly power in any form was Henry Georges great dream. Those who have conceived of George as being concerned only with tax policy should closely read the last third of Progress and Poverty, which reveals his larger vision of justice and genuine freedom. Progress and Poverty stands the test of time. It con- tains profound economic analysis, penetrating social phi- losophy, and a practical guide to public policy. Those who read it today will find in Georges work a great source of vision and inspiration. Cliff Cobb, Program Director Robert Schalkenbach Foundation </li><li> 10. XII Progress and Poverty Editors Preface THOSE WHO FIRST pick up this book are likely to share some concern about the problem of poverty; those who finish it may also find some cause for hope. For the great gift that Henry George gave the world was a systematic explanationlogical and consistentof why wealth is not distributed fairly among those who produce it. But he did not stop therehe also gave us a simple yet far-reaching plan for a cure. It was, and still is, a plan for peace, pros- perity, equality, and justice. Progress and Poverty is an enduring classic. It has been translated into dozens of languages;millions of copies have been distributed worldwide. Why, then, the need for a modern edition, and an abridged one at that? Simply put, Henry George, like many late-19th century authors, wrote in a style that modern readers may find unduly complex. As editor, I have endeavored to break long and intricate sentences into shorter ones, creating what I call a thought-by- thought translation. Furthermore,references to history,mythology,and lit- erature that do not advance the central argument have been removed. Gender-balanced language has also been incor- porated. However, I have not attempted to update finan- cial statistics or technological examples. I prepared this edition in two distinct stages: modern- ization and condensation. I have sought to ensure that </li><li> 11. Editors Preface XIII nothing of substance was left out. In modernizing the text, I reduced the average sen- tence length and increased the number of sentences. Sen- tences were shortened by about one-third. For example, one passage showed a decline in average sentence length from twenty-eight words to nineteen words. By compari- son, the average sentence in Time magazine was fifteen words in 1974, perhaps fewer today. By simplifying language, I reduced the number of syl- lables per hundred words by about ten percent, to about 1.7 syllables per word. The number of sentences per hun- dred words was increased by fifty percent. The combined effect of these changes transformed the text from one comprehensible to only a small fraction of the population to one that can be easily read by a high- school senior. An early test I performed showed that stu- dents were able to read the modernized text about twenty-five percent faster than the original, even before condensation. Although no formal testing for comprehen- sion was done,anecdotal reports indicate that comprehen- sion was greatly improved. In the second stage, I condensed the modernized text by rewriting sentences using simpler language, removing multiple examples where one would suffice, and generally editing for brevity.Although I occasionally rearranged sen- tences for clarity and continuity, keeping Georges origi- nal thesis intact was of utmost importance. In doing this, I followed the exposition as Henry George presented it. I endeavored to remove what is excessive and retain what is essential. In the end, this edition is less than half the size of the original. This project has been a collective endeavor. Many people contributed to the various drafts,starting with those </li><li> 12. XIV Progress and Poverty teachers and students at the Henry George Schools in Chicago, New York, and Philadelphia who provided sug- gestions and encouragement. Many thanks to Terry Topczewski, Bob Jene, the late Roy Corr, and Chuck Metalitz for their help and encour- agement at various stages; Wyn Achenbaum, Herb Barry, Cliff Cobb, George Collins, Josh Farley, Damon Gross, Heather Remoff, and Tom Smith of the Robert Schalkenbach Foundation board for their editorial reviews; and George M.Menninger,Jr.,John Kuchta,Scott Walton, Sue Walton, Bruce Oatman, and Steve Zarlenga for their moral support.Particular thanks to Lindy Davies and Mark Sullivan for their assistance in the final stages of editing and text preparation. Thanks also to the Robert Schalkenbach Foundation and the Center for the Study of Economics for institutional support. Finally, special thanks must go to my wife (and great jazz singer) Spider Saloff. Without her love and support, none of the rest would have mattered. Bob Drake, President, Henry George School of Chicago April 15, 2006 </li><li> 13. Authors Preface XV Preface to the Fourth Edition IN 1871, I FIRST PUBLISHED these ideas in a pamphlet en- titled Our Land and Land Policy. Over time, I became even more convinced of their truth. Seeing that many misconceptions blocked their recognition, a fuller expla- nation seemed necessary. Still, it was impossible to an- swer all the questions as fully as they deserve. I have tried to establish general principles, trusting readers to extend their application. While this book may be best appreciated by those fa- miliar with economics, no previous study is needed to un- derstand its argument or to judge its conclusions. I have relied upon facts of common knowledge and common observation, which readers can verify for themselves.They can also decide whether the reasoning is valid. I set out to discover why wages tend to a bare mini- mum despite increasing productive power. The current theory of wages, I found, is based on a misconception [namely, that wages are paid from capital]. In truth, wages are produced by the labor for which they are paid. There- fore, other things being equal, wages should increase with the number of laborers. This immediately confronts the influential Malthu- sian doctrine that population tends to increase faster than subsistence. Examination shows that this theory has no real support. When brought to a decisive test, it is utterly disproved. </li><li> 14. XVI Progress and Poverty Since these theories cannot explain the connection between progress and poverty, the solution must lie in the three laws governing the distribution of wealth.These laws should correlate with each other, yet economists fail to show this.An examination of terminology reveals the con- fusion of thought that permits this discrepancy. To work out these laws, I first take up the law of rent. Although economists correctly understand this law, they fail to appreciate its implications. For whatever determines the part of production that goes to landowners must nec- essarily determine what is left over for labor and capital. Nonetheless, I independently deduce the law of inter- est and the...</li></ol>