Progress and Poverty

“Production is always the mother of wages. Without production, wages would not and could not be. It is from the produce of labor, not from the advances of capital that wages come.”

To understand why wages have fallen amidst the backdrop of plenty brought about by the Industrial Revolution, George must examine key definitions in economics and the relationships between them. Here, he demonstrates that wages are not furnished by capital but that, in his view, it is labor that produces wages. This distinction is important for him to demonstrate what he considers the real reason behind the decline in wages—the increase in land value.

“The fifty miles of London undoubtedly contain more wealth than within the same space anywhere else exists. Yet were productive labor in London absolutely to cease, within a few hours people would begin to die like rotten sheep, and within a few weeks, or at most a few months, hardly one would be left alive. For an entire suspension of productive labor would be a disaster more dreadful than ever yet befell a beleaguered city.”

The author examines the greatest centers of wealth thanks to the technological development, efficiency, and mechanization of the Industrial Revolution. These are urban environments in Europe and the United States, with London being the most important city in this regard. George links London’s wealth with its labor force to demonstrate that the working class is being treated unfairly, as the total withholding of productive labor would be “a disaster more dreadful than ever yet befell a beleaguered city.”

“But the great cause of the triumph of this [Malthusian] theory is, that, instead of menacing any vested right or antagonizing any powerful interest, it is eminently soothing and reassuring to the classes who, wielding the power of wealth, largely dominate thought.”

Thomas Malthus’s theory about the relationship between population and food supply was popular at that time. Malthus argued that as the population grew, it ran into the limitation of food supply and caused poverty and starvation through famines. Henry George challenges Malthus’s assertions in several ways: from claiming that population growth trends fluctuate historically to suggesting that human intellect can identify ways to produce more food as the population grows. In George’s view, Malthus’s theory empowered the ruling classes and their exploitation of the laborers.

“For, even if the increase of population does reduce the power of the natural factor of wealth, by compelling a resort to poorer soils, etc., it yet so vastly increases the power of the human factor as more than to compensate.”

The Industrial Revolution brought about efficiency and technological advancements that also improved food production—for instance, during the agricultural revolution. These improvements are one of the key factors that Malthus failed to consider when he proposed his theory of population growth and the food supply. In George’s view, population growth alone does not explain the falling wages, growing poverty, and industrial depressions in the 19th century.

“The increase of rent which goes on in progressive countries is at once seen to be the key which explains why wages and interest fail to increase with increase of productive power [. . .] Thus, where the value of land is low, there may be a small production of wealth, and yet a high rate of wages and interest, as we see in new countries. And where the value of land is high, there may be a very large production of wealth, and yet a low rate of wages and interest, as we see in old countries. And, where productive power increases [. . .] wages and interest will be affected, not by the increase, but by the manner in which rent is affected.”

This is one of the most important statements in Progress and Poverty because it shows George’s mathematical reasoning. The author arrives at the cause of the decline in workers’ wages despite the improvements in technology and efficiency. These reasons are not the Malthusian population growth in the context of limited food supply or the division of capital, but rather the increasing rent on land. Ultimately, George argues that land and its natural resources should belong to all. By doing so, society would resolve many of its socioeconomic problems and become more just.

“[We] see, in the existence of deep poverty side by side with vast accumulations of wealth, the aggressions of capital on labor, and in reply it is pointed out that capital aids labor, and hence we are asked to conclude that there is nothing unjust or unnatural in the wide gulf between rich and poor; that wealth is but the reward of industry, intelligence, and thrift; and poverty but the punishment of indolence, ignorance, and imprudence.”

Here, the author combines economic theory with ethics. First, his objective is to challenge the assertion that capital furnishes wages. Instead, George argues that it is labor that creates wages. Second, he suggests that this false correlation between capital and labor is then used to justify the wide gap between wealth and poverty. In the 21st century, we still hear such arguments against social welfare programs helping the underprivileged on the false premise of associating laziness and lack of intelligence with poverty. The latter shows the continued relevance of George’s work.

“The effect of increasing population upon the distribution of wealth is to increase rent, and consequently to diminish the proportion of the produce which goes to capital and labor, in two ways. First, by lowering the margin of cultivation. Second, by bringing out in land special capabilities otherwise latent, and by attaching special capabilities to particular lands.”

George identifies the increase in land rent as the key reason for the decrease in wages—as a share and, at times, as a quantity. Population growth leads to superior and more effective methods of land cultivation, food production, and obtaining natural resources. Thus, it is the population that makes land more valuable. The objective of such detailed, systematic analysis is to ultimately demonstrate that land-value speculation is the cause of socioeconomic inequality.

“The reason why, in spite of the increase of productive power, wages constantly tend to a minimum which will give but a bare living, is that, with increase in productive power, rent tends to even greater increase, thus producing a constant tendency to the forcing down of wages.”

According to George, industrial depressions are primarily caused by the increase in land rent brought about by speculation. Thus, material progress is linked to the rise of land rents and, in turn, to falling wages despite the growth of material wealth. As wages fall, so does the standard of living of the already socioeconomically underprivileged working class. While some theorists advocated revolution, for George, the solution is less radical: the abolition of private land property.

“Everywhere, in all times, among all peoples, the possession of land is the base of aristocracy, the foundation of great fortunes, the source of power. As said the Brahmins ages ago: ‘To whomsoever the soil at any time belongs, to him belong the fruits of it. White parasols and elephants mad with pride are the flowers of a grant of land.’”

The Brahmins were a priestly caste in Hindu society. They had a high social status. “White parasols and elephants” are a reference to social privilege. In George’s view, this type of privilege arises from land ownership at the expense of other classes. The reason why the author refers to the Indian subcontinent and its ancient culture is to emphasize how long land privilege has existed. It is through land reform that George seeks to resolve the socioeconomic inequalities of an industrialized society.

“It is true that improvement in the material condition of a people or class may not show immediately in mental and moral improvement. Increased wages may at first be taken out in idleness and dissipation. But they will ultimately bring increased industry, skill, intelligence, and thrift.”

Here, George describes the effects of increasing worker wages. He challenges the common perception among the socially privileged that poverty is the result of lacking intelligence, work ethic, and education. George suggests that the amelioration of the socioeconomic status of the working class will eventually translate into improvements in the industries and in society at large.

“The ideal of socialism is grand and noble; and it is, I am convinced, possible of realization; but such a state of society cannot be manufactured—it must grow. Society is an organism, not a machine. It can live only by the individual life of its parts. And in the free and natural development of all the parts will be secured the harmony of the whole. All that is necessary to social regeneration is included in the motto of those Russian patriots sometimes called Nihilists—‘Land and Liberty!’”

Since socialism is underpinned by significant social cooperation and the sharing of resources, Henry George supports this ideal. However, in contrast to thinkers like Karl Marx and his followers, George believes that socialism must develop organically rather than through revolutionary means or in a top-down manner. He links freedom with the sharing of resources. George also mentions the Nihilists, one of the many radical left-wing groups in 19th-century Russia. George was familiar with the Russian socioeconomic conditions, especially the land question, such as the abolition of serfdom in 1861. In fact, his work left a significant impact on the famous author Leo Tolstoy, who shared many of George’s concerns about class-based inequality.

“We are made for co-operation—like feet, like hands, like eyelids, like rows of the upper and lower teeth.”

The author perceives humans to be social animals not only relying on, but also bettering themselves through, cooperation. The optimal society, in his view, is based on such cooperation, especially when it comes to the equal sharing of land and natural resources. Furthermore, he views social cooperation as the key to avoiding civilizational decline. For this reason, George mentions an organic form of socialism on a number of occasions throughout this book. His argument is similar to that of distributism.

“The necessary relation between labor and land, the absolute power which the ownership of land gives over men who cannot live but by using it, explains what is otherwise inexplicable—the growth and persistence of institutions, manners, and ideas so utterly repugnant to the natural sense of liberty and equality.”

The author systematically examines the problem of falling wages in the context of technological advancement and wealth production throughout this book. He arrives at the conclusion that it is private land ownership that is at fault. Speculative prices, especially in the form of land rent, take up a large portion of the wealth that could be used for wages and capital to improve workers’ lives and boost production. Furthermore, in his view, private land ownership has been problematic historically, especially in agricultural societies, whether for serfs in Russia or for the South Asians suffering under British colonialism.

“The harder times, the lower wages, the increasing poverty perceptible in the United States are but results of the natural laws we have traced—laws as universal [and] as irresistible as that of gravitation. We did not establish the republic when, in the face of principalities and powers, we flung the declaration of the inalienable rights of man; we shall never establish the republic until we practically carry out that declaration by securing to the poorest child born among us an equal right to his native soil!”

According to the author, socioeconomic inequality in the United States is incompatible with the ideals upon which the country was founded. The relationship between large-scale land ownership and political power is inconsistent with democracy and is reminiscent of European aristocracies from which the new American Republic wanted to be distinct. Nor does the growing poverty of the working class against the backdrop of the vast material progress of the Industrial Revolution support equality and individual rights.

“I do not propose either to purchase or to confiscate private property in land. The first would be unjust; the second, needless. Let individuals who now hold it still retain, if they want to, possession of what they are pleased to call their land. Let them continue to call it their land. Let them buy and sell, and bequeath and devise it. We may safely leave them the shell, if we take the kernel. It is not necessary to confiscate land; it is only necessary to confiscate rent.”

Through the process of elimination, the author identifies the root problem of socioeconomic inequality in the 19th century: The cause is private land ownership linked to the rising land rents and speculation on land values. His solution is to effectively abolish private land ownership. However, unlike other thinkers, George does not seek to do so through confiscation. Instead, he proposes the use of a single tax on land to support public spending. Thus, his solution is less radical than those proposing a social revolution in which, eventually, all private property is abolished through force.

“Thus, to relieve labor and capital from all taxation, direct and indirect, and to throw the burden upon rent, would be [. . .] to counteract this tendency to inequality, and, if it went so far as to take in taxation the whole of rent, the cause of inequality would be totally destroyed. Rent, instead of causing inequality, as now, would then promote equality.”

The author has identified land rent, especially speculation on land values, as the key culprit of uneven wealth distribution. Thus, his proposed solution is to implement a single tax on land instead of all other taxes currently in use. The tax would effectively end private land ownership and allow shared access to land and its natural resources for the community through public spending. George believes that his solution would lead to far-reaching, positive consequences to equalize wealth distribution and establish a just society.

“It seems to me that in a condition of society in which no one need fear poverty, no one would desire great wealth—at least, no one would take the trouble to strive and to strain for it as men do now.”

In the author’s view, one of the consequences of abolishing private land ownership and, therefore, redistributing wealth on an equal basis, is that people would no longer dream of being rich. George believes that such dreams originate from the state of lack. He seems to think that humans, in general, are rational beings rather than those driven by their desires. For George, it is crucial that such social egalitarianism arises voluntarily and organically instead of being enforced in a top-down manner or via revolution.

“The dangers that menace our civilization do not come from the weakness of the springs of production. What it suffers from, and what, if a remedy be not applied, it must die from, is unequal distribution!”

The unequal distribution of wealth is not simply the cause of poverty for the working class despite technological advancement in industrialized societies. In the author’s view, the very fate of Western civilization depends on attaining this type of socioeconomic justice. He believes that the cycle of growth and decay that all civilizations face can only be exited through equal wealth distribution, greater communal cooperation, and equal access to land’s natural resources. In the author’s view, the latter would lead to the establishment of a Golden Age.

“Wealth would not only be enormously increased; it would be equally distributed. I do not mean that each individual would get the same amount of wealth. That would not be equal distribution, so long as different individuals have different powers and different desires. But I mean that wealth would be distributed in accordance with the degree in which the industry, skill, knowledge, or prudence of each contributed to the common stock.”

When the author discusses wealth redistribution because of the single tax on land, effectively abolishing private land ownership, he does not mean its division into equal quantities among all community members. Instead, such redistribution should occur based on each community member’s contribution to labor based on their skillset and knowledge. As with other comparisons to Marx and more revolution-minded theorists, George’s solution to socioeconomic inequalities is less radical.

“Society would thus approach the ideal of Jeffersonian democracy, the promised land of Herbert Spencer, the abolition of government. But of government only as a directing and repressive power. It would at the same time, and in the same degree, become possible for it to realize the dream of socialism.”

George’s land-tax proposal is meant to bring about changes so far-reaching that society will move closer to the ideal democracy. He brings up different thinkers that theorized such an ideal society. However, the author does not go as far as to argue in favor of a Marxist-style stateless society. George only supports the abolition of government as a form of repression.

“Every civilization that the world has yet seen has had its period of vigorous growth, of arrest and stagnation; its decline and fall.”

According to the author, every civilization has a lifecycle comprised of birth, development, peak, and dissolution. There are many historical examples of this cycle starting from ancient Egypt, Greece, and Rome. In his view, regardless of the level of their technological development, civilizations decay because of unequal wealth distribution which causes other socioeconomic problems.

“[E]ach society, small or great, necessarily weaves for itself a web of knowledge, beliefs, customs, language, tastes, institutions, and laws. Into this web, woven by each society, or rather, into these webs [. . .] the individual is received at birth and continues until his death. This is the matrix in which [the] mind unfolds and from which it takes its stamp.”

In the author’s view, nurture—especially in the formative sociocultural environment—plays a greater role in shaping individuals than does nature, such as certain hereditary traits. It is the environment that largely explains the differences between cultures. For this reason, it is important to provide the optimal social environment—one of equal wealth distribution—so that people can develop to their full potential.

“Thus association in equality is the law of progress. Association frees mental power for expenditure in improvement, and equality, or justice, or freedom—for the terms here signify the same thing, the recognition of the moral law—prevents the dissipation of this power in fruitless struggles.”

The author argues that humans are community-oriented, and their optimal functioning within a group is important to the health of society at large. For this reason, reducing socioeconomic inequalities through his proposed land reform would improve their lifestyle and cooperation within their communities through the improved distribution of wealth. It is this type of communal development that would propel society forward in the direction of greater progress.