Mill’s system, though much more moderate than George’s, is by no means beyond reproach. The common element in both systems—i.e. the emphasis laid upon unearned increments—has been criticised both by socialists and economists.
The socialists point out that if the object is to get rid of unearned incomes the interest of capital as well as the rent of land ought to be confiscated. While agreeing with the object, they claim that they are more logical in demanding the extinction of both kinds. But this criticism is not quite a complete answer to Mill and his supporters, for the latter regarded interest as the legitimate remuneration, if not of the labour, at least of the abstinence of the capitalist. Interest is the remuneration of sacrifice.[1208] But the socialists are not convinced. They cannot see how the negative effort of the capitalist is to be compared with the positive effort of the labourer, and they have not been sparing in their denunciation of Mill and his followers.
The economists adopt a different line of criticism. The argument is that the rent of land is illegal because the progress of society has contributed more to it than the work of the proprietor. But is there any kind of revenue which is altogether free from such criticism? Every kind of revenue contains some elements that are essentially social in character; that is, elements that depend entirely upon the demands of society. The growth of social demand often brings to capital as well as to land, to labour as well as to capital, quite unexpected and occasionally extravagant incomes. Has not political economy in the course of its development been forced to recognise the existence of a whole series of rents differing from the rent of land merely in respect of their shorter duration? Was the fortune of the celebrated hunchback of Quincampoix Street, who lived in the glorious days of Law’s system, in any way different from the fortune of the Duke of Westminster, who owns large areas of the city of London? Or is the surplus value conferred upon old capital by a mere fall in the rate of interest in any respect different from the surplus value acquired by land under the pressure of growing population? The most striking thing, apparently, about unearned increment is its ubiquity. Society, presumably, does not distribute its revenues in the way a schoolmaster rewards the most painstaking or the most meritorious pupil. It puts a premium upon the services that are rarest, but never inquires whether they involved any greater amount of sacrifice. Such premiums simply denote the intensity of its own demands. What right have we to isolate one of these and demand that it and it alone shall be confiscated?
Stuart Mill has given the only reply that is possible by showing that none of the other rents has either the persistence or the generality of the rent of land.[1209] That reply seems clear enough to justify at least a partial application of the systems of Henry George and Stuart Mill.
About the year 1880 several leagues were founded in England, America, and Australia with a view to propagating what George’s followers call his “sublime truths.” During the last few years they have not been nearly so active, although several attempts have since been made, especially by municipalities, to tax surplus values.[1210] Even as far back as 1807 a law was passed in France requiring riparian owners to pay compensation in cases where their estates bordered upon public works which in any way contributed to the greater value of the property. But the law is very seldom enforced.[1211] In London the principle was recognised as far back as the seventeenth century, but has long since fallen into desuetude.[1212] The idea is again gaining ground very rapidly in England and Germany especially. Numerous projects have been launched with a view to taxing the surplus value of urban lands not used for building purposes, and some of the schemes have been fairly successful. The adoption of this principle was one of the more prominent features of the famous English Budget of 1909, which roused so much opposition and brought the long constitutional struggle between the Liberal Government and the House of Lords to a head. The economists are still divided on the question. The imposition of a Werthzuwachssteuer by certain German municipalities led to a fresh discussion of the topic in a number of reviews and polemical works, but the principle stands enshrined in the German Imperial Act of 1911.
These ideas have never obtained the same hold in France, where property is subdivided to a much greater extent than it is in England, and where rent is accordingly distributed among a greater number of cultivators and naturally raises less opposition. In addition to this, the slow growth of the population in France makes the problem less acute than it is in Germany, where the workers find that an increasing proportion of wages is absorbed in the payment of rent. But the question will demand attention sooner or later, and France, like other countries, will have to look for an answer.
III: SYSTEMS OF LAND NATIONALISATION
The “land-nationalisers,” whose schemes now come under consideration, not content with the taxation of a part of the revenue of the land, demand that the whole of it should again become the property of the State.
Apparently a much more thoroughgoing suggestion than any of the preceding ones, especially Mill’s, in reality it is a much simpler system that is proposed. The advocates of land nationalisation think, with Mill, that the surplus value of the land should be reserved for the State, and, like him, they have great faith in the persistence and continuity of this surplus value. They also agree with him when he puts forward the claim of society to the possession of the soil, but they never suggest that it should be taken from its present owners. They reject the distinction between earned and unearned income and consider that they are both equally legitimate. But, unlike Mill, they never feel that they can say to the landed proprietor, “Thus far and no farther.” Appropriation is advocated simply on the ground of its public utility, and care is taken to hedge it round with all kinds of guarantees. Proprietors are to be indemnified not merely for the loss of income it would immediately involve, but also for the loss of any future revenue upon which they had reckoned. Could anything be simpler or more reasonable?
The practical interest of a system of this kind obviously cannot be very great. Such a fundamental change in the institution of private property, especially in old countries, could only be accomplished by means of a revolution. Revolutions are to be undertaken in no light-hearted fashion, and never without the sanction of absolute necessity. Curiously enough, all the changes made in France, for example, since the Revolution, in Russia since the emancipation of the serfs, and in Ireland during the last hundred years have been in the opposite direction. They have extended rather than contracted the area of private property. Russia at the present moment is engaged in this very task. The prospects of nationalisation are certainly not very rosy. New countries may perhaps prove more favourable grounds for experiment: there the State may possibly show itself more jealous of its rights. But as a matter of fact it is just in those countries that the State is most reckless, the reason undoubtedly being that the abuses of private property have not yet had time to make their influence felt.