Progress and Poverty

Contents

1. Preface to the Fourth Edition 14 min 11

   After a dedication and two poetic epigraphs, George’s preface to the fourth edition (1880) traces the book back to his 1871 pamphlet on California’s land policy and lays out the whole argument: the wage-fund theory and Malthusianism are false; the law of rent explains why wages and interest stay low as wealth grows; land speculation causes depressions; the remedy is to make land common property by taxing land values alone. He claims to unite the truths of Smith and Ricardo with those of Proudhon and Lassalle, and notes the book was written between 1877 and 1879.

2. Introductory: The Problem 23 min 7

   George states the problem. The nineteenth century has multiplied the power to produce wealth, yet poverty, unemployment and depression appear everywhere and are worst where progress has gone furthest. New settlements have no beggars; as they grow into cities, tramps, almshouses and prisons follow. Progress drives a wedge through society, raising those above and crushing those below. Economists offer contradictory explanations while dangerous ideas spread among the masses. George proposes to find the law that associates poverty with progress by the methods of political economy, taking nothing on authority.

3. I.1 The Current Doctrine of Wages—Its Insufficiency 25 min 14

   George reduces the problem to why wages tend to a bare minimum, and examines the orthodox answer: wages are fixed by the ratio of workers to the capital set aside to employ them. If so, high wages should go with low interest; in fact wages and interest rise and fall together, as Californian experience shows. The theory is a deduction from the premise that wages are drawn from capital. George announces his counter-thesis, that wages are drawn from the product of the labour for which they are paid, and illustrates it with the division of labour: earning is making.

4. I.2 The Meaning of the Terms 39 min 9

   A digression on definitions. In political economy wages means every return to labour, not only hired pay. Capital is defined inconsistently by Smith, Ricardo, McCulloch, Mill and lesser writers. George excludes from capital everything that is land (all natural opportunities) or labour (human powers), and from wealth all mere claims such as debts, slaves and land values. Wealth is natural material modified by labour; capital is the part of wealth devoted to producing more wealth, which he defines as wealth in course of exchange, as opposed to wealth in the consumer’s hands.

5. I.3 Wages Not Drawn from Capital, but Produced by the Labor 43 min 10

   George argues that wages, even when paid by an employer, are not drawn from capital. He moves from the self-employed gatherer through payment in kind, whalers’ shares, Farallon egg-gatherers and placer miners to the manufacturer, whose weekly inventory shows more capital after paying wages than before. Labour always precedes wages, so the worker advances to the employer, not the reverse. Even in long works like ships and tunnels value is created at every stage. Capital is needed only to hold or accumulate products, never as such to pay wages.

6. I.4 The Maintenance of Laborers Not Drawn from Capital 18 min 5

   George answers the objection, from Mill and Mrs Fawcett, that workers live on the produce of past labour. A man must eat before working, but his food need not come from a capitalist. Crusoe built his canoe while gathering food; the rich idler eats fresh produce; London would starve in weeks if work stopped. Society lives on contemporaneous production, and the demand for consumption directs labour, so each worker virtually produces what he consumes. The Californian drought of 1877 shows held-back grain released by the work of the next crop.

7. I.5 The Real Functions of Capital 18 min 5

   If capital does not pay or maintain labour, it increases labour’s productivity through tools, natural reproduction and the division of labour. It may limit the form and productiveness of industry, but not industry itself, which is limited only by access to natural materials. Poor countries are held back by misgovernment and custom more than want of capital, and in advanced countries capital overflows in depressions. Book I concludes that wages should rise with the number of workers, unless nature’s productiveness diminishes, the question that leads to Malthus.

8. II.1 The Malthusian Theory, Its Genesis and Support 25 min 12

   George turns from the wages-fund doctrine to its “twin,” Malthus’s theory that population tends to outrun subsistence. He sets out Malthus’s two ratios and his preventive and positive checks, and restates the doctrine in its strongest form. Then he explains its success. It fits the wages-fund theory and Ricardo’s theory of rent, it seems to match visible facts, and Darwin’s struggle for existence lends it new prestige. Above all, it comforts the rich by blaming poverty on nature, not on institutions. Malthus wrote it to answer Godwin’s case for equality.

9. II.2 Inferences from Facts 53 min 19

   George argues that the facts cited for Malthus do not support him. He ridicules the Essay’s ratios and reasoning and notes that its own survey traces misery to bad government and war. History shows populations falling as often as rising, families dying out, and religions urging fertility. He then takes the standard cases. India’s famines come from tyranny, British taxation and the drain of tribute; China’s poverty from insecurity. Ireland exported food during its famine to pay absentee landlords. In each case the cause is human rapacity, not the niggardliness of nature.

10. II.3 Inferences from Analogy 23 min 3

    George rejects the analogy between people and plants or animals. Humans are the only species that increases its own food supply: more men means more chickens and more salmon. Since matter and force are never destroyed, the only final limit to population is space, which is too remote to matter. Unlike animals, human wants grow and become refined once basic needs are met, so people develop rather than merely multiply. He points to a third check on population, a lower birth rate where comfort and intellectual life increase.

11. II.4 Disproof of the Malthusian Theory 24 min 5

    George tests Malthus against the facts. He quotes Mill’s claim that a larger population must be worse provided for, and denies each point: in any given state of civilisation, more people can produce more per head. Denser and older countries are richer and support more luxury and idleness. California since 1849 shows wages and interest falling while production per worker rose, so the cause must lie in distribution. Accumulated wealth explains little, since wealth must constantly be reproduced. Poverty amid plenty therefore cannot be blamed on weak productive powers.

12. III.1 The Inquiry Narrowed to the Laws of Distribution—The Necessary Relation of These Laws 25 min 4

    Having ruled out the limits of capital and of nature, George turns to the laws of distribution between land, labour and capital. He attacks the economists’ use of “profits,” which mixes wages of superintendence, insurance against risk and interest, and replaces it with interest. Set side by side, the textbook laws of rent, wages and interest do not fit together as shares of one whole should. The economists’ error comes from treating the capitalist as the starting point, whereas the natural order is land, labour, capital.

13. III.2 Rent and the Law of Rent 16 min 12

    George defines rent as the share of wealth that goes to landowners because they own natural opportunities, whether paid to a landlord or capitalised in a selling price. Rent is the price of monopoly, not a reward for anything produced. He adopts Ricardo’s law: rent is the excess of produce over what the same labour and capital get on the poorest land in use. It follows that wages and interest together equal produce minus rent. If rent rises as fast as productive power, wages and interest cannot rise.

14. III.3 Of Interest and the Cause of Interest 34 min 7

    George asks what justifies interest. He rejects the theory that it rewards abstinence, and he takes apart Bastiat’s story of the borrowed plane, which would end by making the borrower the lender’s slave. His own answer is that some capital, such as seed, livestock and wine, increases by itself over time, and exchange gains from differences between places. Competition averages this increase over all capital. He divides production into adapting, growing and exchanging, and concludes that interest is natural and therefore just.

15. III.4 Of Spurious Capital and of Profits Often Mistaken for Interest 13 min 4

    Much of what is called interest, George argues, is something else. Land values and government bonds are not capital: the bonds are claims on future taxes. Watered railway stock, patents, tariffs and the power of combined capital give monopoly profits; he compares railway companies to highwaymen. Other gains are wages of superintendence or the winnings of speculation, where one person’s gain is another’s loss. The great fortunes of his day came largely from these sources, not from interest. Confusing them makes it seem that labour and capital are in conflict.

16. III.5 The Law of Interest 18 min 3

    George states his law of interest. Since labour employs capital, and capital can always be increased by labour, interest and wages settle at a ratio where equal exertions earn equal returns. That ratio is fixed by the average power of increase in capital, so interest and wages rise and fall together and both depend on the margin of cultivation. Imagining a land where capital produces without labour shows that rising rent must reduce interest. The basic division of wealth is really between rent and wages.

17. III.6 Wages and the Law of Wages 27 min 6

    George derives the law of wages independently. Since people seek to satisfy their desires with the least exertion, no one will work for an employer for less than they could earn on the best land free to them. Wages therefore depend on the margin of production; all the differences between occupations rest on the lowest and widest stratum of wages. High wages in new countries come from cheap land, as Smith saw in the colonies. He stresses that wages fall as a proportion of output, not necessarily in quantity.

18. III.7 The Correlation and Co-ordination of These Laws 3 min 1

    George sets the current statement of the laws of distribution beside his own. All three, he says, follow from one principle, that people seek least exertion. Accepting Ricardo’s law of rent therefore commits economists to his laws of wages and interest. In his version rent, wages and interest all depend on the margin of cultivation, so they fit together as parts of a whole.

19. III.8 The Statics of the Problem Thus Explained 8 min 1

    George compares current political economy to Ptolemaic astronomy, with its cycles and epicycles, and offers his theory as the Copernican alternative. Land, labour and capital produce wealth; landowner, labourer and capitalist share it. If wages and interest do not rise as production grows, the landowner must take the gain, and rising land values mark every advancing society. “Rent swallows up the whole gain and pauperism accompanies progress.” The worst poverty is found in the great cities, where land is most valuable.

20. IV.1 The Dynamics of the Problem Yet to Seek 5 min 5

    Book IV asks why rent rises as society progresses. George grants Ricardo that population growth forces cultivation onto poorer land, raising rent, but argues that this explanation is incomplete and has been distorted by false theories of capital and wages. He divides material progress into three elements: growth of population; improvements in the arts of production and exchange; and improvements in knowledge, government and morals so far as they raise productive power. He will treat population and improvement separately.

21. IV.2 The Effect of Increase of Population upon the Distribution of Wealth 30 min 4

    George argues that population growth raises the productivity of labour, not lowers it, because cooperation and exchange multiply what people can do. Rent rises not only because poorer land is brought into use but because density gives particular sites, above all city centres, a productive power that attaches to the land. A parable traces a settler on an empty prairie whose land, as a town and then a city grow around it, becomes worth millions without any effort of his own.

22. IV.3 The Effect of Improvements in the Arts upon the Distribution of Wealth 22 min 5

    Holding population fixed, George argues that every labour-saving improvement also raises rent. Since human wants are unlimited, gains in productivity become demand for more wealth, and so for more land, pushing the margin of cultivation down. Where land is all owned and workers must take work on any terms, invention benefits landowners, not workers or capital; if labour were abolished altogether, rent would take everything. Better government, free trade and honest administration would likewise only raise rent.

23. IV.4 Effect of the Expectation Raised by Material Progress 12 min 3

    A third force raises rent: the confident expectation that land values will keep rising. Owners hold land out of use for a higher price, which acts like a combination among them and pushes the margin of production farther than necessary. George illustrates it with the scattered settlement of the American West, vacant city lots, and uncut redwoods near San Francisco. Speculation makes rent rise faster than production, can lower wages absolutely, and brings tramps and paupers to new countries.

24. V.1 The Primary Cause of Recurring Paroxysms of Industrial Depression 40 min 9

    George explains recurring industrial depressions as the result of speculative land prices. When land values outrun what labour and capital can earn, production at the base of the economy stops growing; the check spreads through exchange as falling demand, producing what looks like overproduction or overconsumption, both of which he rejects. Credit delays the effect and makes it sudden. He illustrates the cycle with California before and after the transcontinental railroad and predicts recovery and renewed speculation, with wages and interest lower each time.

25. V.2 The Persistence of Poverty Amid Advancing Wealth 31 min 7

    The problem is solved: wages tend to a bare minimum because rent rises faster than productive power. Progress should abolish poverty but its gains are intercepted by landowners, and the specialised modern labourer has less independence than a hunter-gatherer. Evidence from new and old countries, from England after the Black Death and under the Tudor enclosures, and from the California gold rush shows wages high where land is free and low where it is dear. The ownership of land determines a people’s whole condition.

26. VI.1 Insufficiency of Remedies Currently Advocated 1 h 1 min 10

    Before stating his remedy George rejects six others. Cheaper government, education and thrift, trade unions, and cooperation would all raise productive power or a few workers’ position, and so in the end raise rent. Unions can raise wages at the expense of rent, but strikes are wasteful and the land owners can wait longest. Government direction or socialism would restrict freedom and fail. Dividing land among more owners would reduce output, make no difference to the propertyless, and strengthen the landed interest against reform.

27. VI.2 The True Remedy 4 min 2

    The cause of poverty amid wealth is private property in land, so the only remedy is to abolish it: “We must make land common property.” George expects bitter opposition and promises to show that the remedy is just, practicable, in line with the course of social development, and compatible with other reforms, ending with Marcus Aurelius on human beings made for cooperation.

28. VII.1 The Injustice of Private Property in Land 29 min 7

    Book VII turns from economics to ethics, the “final test”. George grounds all rightful property in a person’s right to themselves and to the products of their labour, so that a title can exist only to things labour has made. Land is the free gift of nature, so private property in it denies everyone else’s equal right and lets non-producers take part of what producers make. Titles to land everywhere go back to force, and priority of occupation gives no right against later generations. Rent, he argues, measures exactly what an occupier owes the community.

29. VII.2 The Enslavement of Laborers the Ultimate Result of Private Property in Land 22 min 6

    Owning the land means owning the people who must live on it, as George shows with an island of a hundred men. He traces helotry, serfdom and the Roman colonate to the appropriation of land, and argues that modern wage-earners are slipping into “virtual slavery under the forms of freedom”, driven not by a master but by impersonal competition. Southern planters, he notes, kept command of freed labour through their land. As the American public domain closes, the pressure on workers will grow.

30. VII.3 Claim of Land Owners to Compensation 20 min 8

    Should landowners be compensated? George says no. Buying the land at market price would pay owners even speculative future rent, and Mill’s plan to take only the future “unearned increase” leaves the present injustice in place. Because rent is drawn from present labour, it is a fresh robbery every day. Even the common law gives an innocent buyer of a defective title nothing. Still, George lets owners keep their improvements and claims that resuming the land would benefit even landholders.

31. VII.4 Private Property in Land Historically Considered 35 min 8

    George answers the claim that private landed property is natural with history. Following Maine, Laveleye and others, he argues that land was originally held in common everywhere, and that private ownership grew from conquest, priestly and legal influence, and the power of chiefs. Great estates ruined Greece and Rome. Feudalism treated land as a trust charged with public duties, but modern liberty has brought more absolute ownership. English landowners shed their military dues in 1660 and shifted the cost onto consumers, and Sieyès vainly opposed abolishing the tithe in 1789.

32. VII.5 Of Property in Land in the United States 21 min 4

    In California’s gold fields, miners spontaneously treated land as common property, held only while it was worked. Elsewhere, the abundance of free land hid the injustice of private ownership from Americans and shaped their national character. Now the best public land is gone, rents and tenancy are rising, and poverty grows in the new states as in the old. George calls for securing an equal right to the soil, without which the republic and emancipation remain incomplete.

33. VIII.1 Private Property in Land Inconsistent with the Best Use of Land 12 min 4

    Book VIII applies the remedy. George argues that private ownership is no more needed for improving land than burning a house is for roasting a pig, the image he takes from Lamb’s essay. What improvement needs is security for the improver, which leases already provide in London and New York. The government-leased fur-seal islands of Alaska show common property well managed, while private ownership lets land be held idle for speculation.

34. VIII.2 How Equal Rights to the Land May Be Asserted and Secured 11 min 6

    How should equal rights be secured? Formally nationalising the land and leasing it out, as Spencer proposed, would work. But George prefers a quieter method that keeps old forms: leave owners their titles and take the rent through the existing tax system. His remedy is “to appropriate rent by taxation” and, in practice, “to abolish all taxation save that upon land values”, raising the tax as rent grows. He expects resistance from those who would benefit most.

35. VIII.3 The Proposition Tried by the Canons of Taxation 27 min 6

    George tests the land-value tax against four canons adapted from Adam Smith. It does not check production but encourages it, by ending speculative holding. It is cheap to collect and cannot be shifted onto prices. It is certain, because land cannot be hidden. And it is the most equal tax, because land value is created by the community rather than by its owner. Other taxes discourage industry, multiply as they pass through prices, and corrupt officials and taxpayers.

36. VIII.4 Indorsements and Objections 16 min 3

    George cites Ricardo, McCulloch, Mill and Fawcett as having in substance admitted that rent is the proper subject of taxation, and he credits the Physiocrats with proposing his remedy. He dismisses the difficulty of separating land value from improvements. He also argues that a single tax would increase landholding and civic spirit. Other taxes survive because they can be shifted onto consumers and serve particular interests, while a powerful landowning class opposes the land tax.

37. IX.1 Of the Effect upon the Production of Wealth 14 min 6

    George opens Book IX by recalling the Physiocrats’ impôt unique and sets out what a single tax on land values would do for production. Taxes on buildings, machinery, goods and trade act as fines on industry; abolishing them would release production like a spring. Taxing land values up to their full rent would end speculation, throw idle land open to use in town and country, and lower the price of access. Employers would then compete for workers against the option of self-employment on freed land, wages would rise, and depressions would cease.

38. IX.2 Of the Effect upon Distribution and Thence upon Production 14 min 3

    Taking rent for public use would turn the main engine of inequality into an engine of equality: wages and interest would go to producers, rent to the community as public benefits. Speculative rent would collapse, and future gains from progress would be shared. George argues that equality would itself raise production by ending the waste of pauperism and crime and by making labour more efficient, since high wages bring intelligence and invention. He admits the pursuit of great wealth would slacken, and argues that society can spare it.

39. IX.3 Of the Effect upon Individuals and Classes 13 min 5

    George answers the fear that the single tax would rob landowners. Wage-earners and capitalists plainly gain. The homestead owner loses only the selling price of his lot and gains through lower taxes and higher earnings. The working farmer, burdened now by taxes on improvements and by the tariff, would be relieved of nearly all taxation and would gain from denser settlement. Great landlords such as the Duke of Westminster and the Astors would remain rich. Large fortunes would shrink, but no one would be impoverished.

40. IX.4 Of the Changes That Would Be Wrought in Social Organization and Social Life 39 min 7

    George sketches the social changes the reform would bring. Government would simplify, courts and prisons would empty, and debts and armies would fade. The state could approach both Jeffersonian minimal government and “the dream of socialism”, using surplus rent for railways, telegraphs and public amenities. He argues that greed springs from want and the fear of want, sustained by society’s worship of wealth. Once want was abolished, people would seek esteem through public service, sympathy would outweigh selfishness, and talents now wasted would flourish.

41. X.1 The Current Theory of Human Progress—Its Insufficiency 30 min 11

    Book X asks what the law of human progress is. George rejects the prevailing evolutionary view, derived from Darwin and Spencer, that civilization advances through the struggle for existence and the hereditary fixing of improvements. He argues that this theory merely dresses up existing race prejudice. It cannot explain the arrested civilizations of Asia, nor the universal pattern of rise, stagnation and fall. Bagehot’s “cake of custom” fails too. George concludes that the obstacles which halt progress are produced by progress itself.

42. X.2 Differences in Civilization—To What Due 34 min 6

    George argues that differences between civilizations lie in societies, not in individuals. Language, belief, custom and manners are learned, not inherited, as shown by children raised in other cultures, by class differences within one nation, and by the Jews, Janissaries and Chinese in California. Bagehot’s claim that civilized constitutions grew tougher is rejected; Native Americans die out because they are dispossessed. Each society weaves a web of knowledge and custom into which individuals are born, and progress consists in passing that inheritance on.

43. X.3 The Law of Human Progress 45 min 9

    George states his law: association in equality. Association frees mental power for improvement; equality prevents its waste in conflict. Natural barriers and war first limit association, while conquest, commerce and religion widen it. But as society integrates, collective power, above all the value of land, lodges in a few hands. Kingship, castes and priesthoods follow, and inequality brings petrifaction, as in Egypt, or decay, as in Rome. Europe advanced through dispersed power and Christianity’s idea of equality. Slavery never aided progress, and the law of progress is the moral law.

44. X.4 How Modern Civilization May Decline 35 min 8

    Modern civilization, George warns, can decline as Rome did, unnoticed by those living through it. Political equality is most advanced in the United States, but combined with growing inequality of wealth it breeds corruption. City machines rule by bought votes, corporations name governors and senators, the rich escape justice, and faith in the republic weakens. Rising pauperism, crime and insanity, recurring depressions and the decay of religious belief show a civilization at a turning point: either a leap upward or a slide toward barbarism.

45. X.5 The Central Truth 19 min 3

    George draws the central truth together. Poverty in the midst of abundance comes from denying the equal right to land, which is a denial of justice and of the Declaration of Independence. Political liberty without that right means only the liberty to compete for starvation wages. Liberty has called forth all progress in history and must now be trusted fully. Blaming Providence for poverty is blasphemy. If the injustice is righted, the result would be the City of God on earth.

46. Conclusion: The Problem of Individual Life 22 min 6

    Having finished his inquiry, George turns to the meaning of individual life. He argues that the doctrines that destroyed belief in immortality came from social science: Malthusian population, misery as a natural law, and progress by race development. Since the book has refuted them, hope returns. Political economy, freed, shows that economic law and moral law are one. Since justice prevails in social life but not visibly in individual life, he infers that individual life continues beyond death, and closes with Plutarch.