Is this unhappy result a kind of hybrid begotten of the Malthusian law and the law of diminishing returns? Must we, after all, agree with Malthus, Ricardo, and Mill when they say that the cause is to be sought in the increase of population outrunning the means of subsistence? Henry George thinks not, for experience everywhere seems to show that the rich are growing in numbers much more rapidly than the growth of population warrants, and that organisation is really performing wonderful feats under very difficult conditions.[1201]
Is it caused by the exploitation of labour by capital, as the socialists seem to think? George apparently thinks not, for the two factors, capital and labour, seem to him so intimately connected that both of them are easily exploited by the landowners. Every man, he thinks, could devote his energies either to the production of capital or to supplying labour—capital and labour being merely different manifestations of the same force, human effort. The benefits resulting from the formation of capital on the one hand and from the exercise of labour on the other tend to be equal, and any inequality is immediately counteracted by a larger production of one or other of these two factors, with the result that equilibrium is soon re-established. The rate of interest and the rate of wages can never vary inversely.[1202]
But if we can neither accuse over-population nor lay the blame at the door of exploitation, how are we to account for the fact that the labourer is still so miserably paid? It is entirely, he thinks, the result of rent. Hitherto exceedingly severe in his handling of some Ricardian theories, George has no hesitation in pushing the doctrine of rent to its extreme limits.
He points out that owing to the existence of competition between capital and labour the rates of interest and wages are determined by the yield of that capital and labour when applied to land on the margin of cultivation—that is, to land that yields no surplus or rent. And in virtue of the natural monopoly which landowners possess they can exact for the use of other lands any amount they like beyond this minimum. The result is that rent goes on gradually increasing as the limits of cultivation extend. As population grows and needs become more extensive and varied, as technical processes become more perfect and labour becomes less and less necessary, new lands are brought under cultivation, such lands being generally of an inferior character. The result is that the lands which were previously cultivated will always yield a rent to the proprietor. Thus the progress of civilisation, whatever form it take, always tends to the same result—a higher rent for the benefit of the landed proprietor.[1203]
“Here is a little village; in ten years it will be a great city—in ten years the railroad will have taken the place of the stage-coach, the electric light of the candle; it will abound with all the machinery and improvements that so enormously multiply the effective power of labour. Will, in ten years, interest be any higher?” He will tell you “No!” “Will the wages of common labour be any higher?” He will tell you “No!” “What, then, will be higher?” “Rent: the value of land. Go, get yourself a piece of ground, and hold possession.… You may sit down and smoke your pipe; you may lie around like the lazzaroni of Naples or the lepers of Mexico; you may go up in a balloon or down a hole in the ground; and without doing one stroke of work, without adding one iota to the wealth of the community, in ten years you will be rich! In the new city you may have a luxurious mansion; but among its public buildings will be an almshouse.”[1204]
Accordingly Henry George regards rent not so much as a species of revenue which, as Stuart Mill saw, is particularly easy to absorb by means of taxation, but as the very source of all evil. Once get rid of rent, poverty will be banished, inequality of wealth will be removed, and economic crises—which George thought were the result of speculation in land—will no longer disturb the serenity of commercial life. But it is hardly enough to aim at the future increments of rent, for the damning consequences of privilege would still remain if landowners were allowed to retain even their present rents. The whole abomination must be taxed out of existence.[1205] Such a tax would yield sufficient to defray all State expenditure, and other forms of taxation could then be dispensed with. In the single tax advocated by Henry George we have a curious revival of the Physiocrats’ impôt unique.
George’s system is open to serious criticism both from the economic and from the ethical standpoint. From the economic point of view it is obvious that the right of private property does confer upon the proprietor the right to such benefit as may accrue from a possible surplus value, but it is not at all clear—nor has George succeeded in proving it—that such a right absorbs the whole benefit which accrues from social progress. Besides, it seems rather childish to think that rent is the sole cause of poverty and that its confiscation would result in the removal of the evils of poverty.
From the point of view of equity it seems clear that George in removing one injustice is at the same time creating another. To rob the present proprietors of the rents which they draw is simply to deprive them of advantages which many of them have acquired either by means of labour or economy. Land is no longer acquired merely by occupation: the usual way of getting hold of it to-day is to buy it. And if we consider that such a transaction is just, we are bound to recognise the legitimacy of rent just as much as the interest of capital. Confiscation might be justified in the case of those who first unlawfully occupied the land. But how many of them are left now?
Further, if we are going to relieve the landowner of the rent which results from the progress of civilisation, we ought to indemnify him for any “decrement” which may have resulted through no error of his. Stuart Mill anticipated this objection[1206] and gave the dissatisfied proprietor the option of selling his land at a price equal to its market value at the time when the reform was inaugurated.[1207] Henry George apparently never faced this aspect of the question. He thought that “decrement” would be very exceptional indeed, and that the persistence of increment values is as thoroughly established as any law in the physical world ever was.