Progress and Poverty 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 Robert Schalkenbach Foundation 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 Contents Publisher’s Foreword by Cliff Cobb............................... IX Editor’s Preface by Bob Drake.......................................XII Author’s 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 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 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 Publisher’s Foreword (cid:141) IX Publisher’s Foreword WE OWE Bob Drake a debt of gratitude for this meticu- lous condensation and modernization of Henry George’s 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, George’s 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 X (cid:141) 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 George’s ultimate intention is the final scene in a popular science fiction