Gladstonian Ghosts

by Cecil Chesterton

The Taxation of Land Values is very popular with the Liberals just now. Whether it would be equally popular with them were they in office is perhaps a matter for legitimate speculation. It will be remembered that it was part of their programme in 1892, and is to this day faintly discernable on the newly cleaned slate of the party. As however it is re-emerging into prominence it maybe well to say something in reference to it.

A good deal of confusion is inevitable concerning this particular proposal, arising from the fact that it may be regarded in two entirely different lights. It may be considered simply as one way among many others of raising revenue to meet necessary public expenditure, or it may be regarded as a practical application of the economic doctrines associated with the name of Henry George, who taught that all revenue should be raised by a single tax (or more properly rent) on the site value of land. Now Georgian economics have made practically no headway in this country; their a priori logic, their reliance on abstract assumptions rather than on history and practical experiment, their rigidity and inflexibility of application, are exasperating to a people naturally impatient of metaphysics but keenly alive to immediate social needs. People who begin their economic speculations, as the Georgites generally do, by discussing what are the natural rights of man and deducing from this an ideally perfect system of taxation and government put themselves out of court with practical men. There are no natural rights of man; there is no abstractly perfect economic or political system; we are painfully struggling by means of many experiments and many failures towards something like a decently workable one.

But, though Georgism is a horse so dead that to flog it would be profitless malignity, the taxation of land values, conceived not as the only means of raising revenue, but as an additional means of doing so, is very much in favour both with some of the leaders and with the whole rank and file of the Opposition. Nor is the reason far to seek. The misery and waste produced by our present social system are so patent and terrible that a vague feeling that “something must be done” has been spreading rapidly through all classes, and even Liberals have caught the infection. Most drastic reforms however are impossible for them because such reforms would clash with the interests of the capitalists and traders who form the backbone of the party. To them therefore the proposal to tax land values comes as a special interposition of Providence to succour them in their need. It professes to do something for the poor,—exactly what they might find some difficulty in saying. But a certain amount of ill-digested Georgism can be exploited in support of their case, while at the same time a loud and definite appeal can be made to the Liberal capitalists and the Liberal bourgeoise to share in the plunder of the land-owners. Unfortunately the cock will not fight. The working classes, not believing in Georgian economics, are, because of the hardness of their hearts, supremely indifferent to the taxation of land values. Neither the ingenuity of eccentric economists nor the eloquence of Liberal capitalists can induce them to take the slightest interest in the subject. No Trades Union Congress can be persuaded to take it up; no Labour candidate will make it a prominent plank in his platform. The workers may not be expert economists, but they are not quite so easily deluded as the Liberals suppose. They have a very shrewd eye to their own interests, and are quite acute enough to know that it is the capitalist and not the landlord who is the most active and dangerous enemy of the labourer, and to perceive that the talk about “the land monopoly” is merely a clever if somewhat transparent dodge on the part of the former to divert public indignation from himself to his sleeping partner in exploitation.

I am for getting the last farthing of unearned increment wherever it can be got. But I can see no earthly reason for taxing unearned increment from land more than any other kind. What we really want is a heavily graduated income tax with a discrimination against unearned incomes. This would hit the landlord and the capitalist equally hard, and is therefore not likely to find favour with the Liberal party.

But even if the taxation of land values were as perfect a method of raising revenue for public purposes as its advocates assert, it would still be necessary to insist that no alteration in the incidence of taxation will ever solve the problem of poverty. Suppose that you have got every penny of unearned increment into the public treasury, the question then arises—What are you going to do with it? If you keep it locked up in a box, the last state of the people will be worse than the first. If it is to be of benefit to anybody this revenue must be used by the State as industrial capital. That is to say the socialisation of industry must go hand in hand with the reform of taxation.

Now what the Labour party really wants just now is two or three genuine installments of Socialism on which to concentrate its energies. A party without a programme is always an absurdity; a labour party without a programme is an absurdity passing the just limits of farce. It is futile to think that you can keep a party together much less build up a new one, with no common basis save the desire to amend trade union law, which appears to be the only demand on which the L.R.C. is united at present.

And the programme of the Labour party must, for reasons already cited, be a Socialist and not a Liberal programme. I do not mean that the whole party should call itself Socialist or should be committed to Socialism as that term is understood by the S.D.F. We have been surfeited in the past with abstract resolutions in favour of “the socialisation of all the means of production, distribution and exchange.” But I do maintain that the programme must be collectivist in tendency and must have the organisation of industry by the state and the abolition of industrial parasitism as its ultimate goal. Also it must as far as possible appeal directly to the interests of the people for with all his great qualities the British workman is constitutionary defective in the capacity for seeing far before his nose, and will not readily grow enthusiastic about the soundest economic measure which does not obviously improve the position of his class. At the same time the labour party would do well to avoid too much narrowness of outlook, since there are, as we shall see, some measures which do not appear at first sight to benefit the worker directly, but which are indispensable conditions of his ultimate emancipation. Such measures should therefore be put along side of the more patently beneficial one and their connection with these as far as possible made plain to the electorate.

The greatest strides which applied Socialism has made during the last twenty years have been made in connection with the municipalities. The best proof that can be given of the immense and salutary growth of municipal activity in recent years is to be found in the angry panic which this growth has produced among the financial exploiters of public needs. The latter, having at their back boundless wealth and influence, a powerful and lavishly endowed organisation, a vast army of lecturers and pamphleteers, and the greatest and most weighty of British newspapers, opened a year or so ago a fierce campaign against what they called “Municipal Socialism.” Never did so potent an army suffer so humiliating a reverse. On the progress of municipal trading the attack made no impression whatsoever. The public at large saw through the game and gave the public-spirited authorities their generous and energetic support. The municipal movement has received no check; it has gone on more triumphantly than ever. Energetic local bodies have pushed their activities further and taken the satisfaction of public needs more and more out of the hands of private speculators, vesting it in those of responsible public officials. But the opponents of municipalism are still active, clever and unscrupulous; and we cannot afford to leave the public interest at any disadvantage in dealing with them. It is unquestionably at such a disadvantage at present, partly on account of the inconveniently restricted boundaries of local areas, partly because of the anti-progressive bias of the Local Government Board, and partly because of the state of the law in regard to the powers of local authorities. The first point has been discussed so excellently by Mr. H. G. Wells and others that I need do no more than allude to it here; with the second I shall deal later. But the third is of special importance.

In the present state of the law a private individual or a collection of private individuals may do anything which the law does not expressly forbid; but a municipality or local body of any kind may only do what the law expressly permits. Thus for instance the London County Council has by law the power to run trams, but when it attempted to run an omnibus line to and from its tram terminus, the private omnibus companies successfully invoked the law against it. This is absurd; it is intolerable that a public authority should not be permitted to supply what its constituents definitely demand without going to a largely indifferent and largely hostile parliament for permission to do so. Broadly speaking County and Borough Councils at any rate should have power to do anything that the nation through the national legislature does not definitely prohibit. It would be well for the Labour party in Parliament to demand a free hand for progressive municipalities such as can only be secured by legislation on these lines.

The Housing Question connects itself closely with this matter, for its only possible solution will be found to be along the lines of municipal activity. But, in addition to a free hand for municipalities to build houses when and where they like, it would be well to consider whether in the face of the present house famine it is wise to raise our local revenues by what is in effect a heavy tax on houses. The payment of say half the rates on well-built and sanitary working-class dwellings out of the proceeds of government grants would give a much needed impetus to both municipal and private enterprise in this direction.