PROGRESS AND POVERTY...a passion for social justice among millions of readers in the nineteenth and...

Progressand

Poverty

© Robert Schalkenbach Foundation

HenryGeorge

Progressand

PovertyWhytherearerecessionsandpovertyamidplenty—andwhattodoaboutit!EditedandabridgedformodernreadersbyBobDrake

RobertSchalkenbachFoundation


ProgressandPoverty(modernedition)

EditedandabridgedformodernreadersAuthor:HenryGeorgeEditor:BobDrakePaperbackISBN:9780911312980FirstPublished2006Copyright©RobertSchalkenbachFoundationTheRobertSchalkenbachFoundation(RSF)isaprivateoperatingfoundation,foundedin1925,topromotepublicawarenessofthesocialphilosophyandeconomicreformsadvocatedbyfamed19thcenturythinkerandactivist,HenryGeorge.Today,RSFremainstruetoitsfoundingdoctrine,andthrougheffortsfocusedoneducation,communitiesoutreach,andpublishing,workstocreateaworldinwhichallpeopleareaffordedthebasicnecessitiesoflifeandthenaturalworldisprotectedforgenerationstocome.RobertSchalkenbachFoundation

[email protected]

www.schalkenbach.org


mailto:[email protected]

http://www.schalkenbach.org/

ContentsPublisher’sForewordbyCliffCobbEditor’sPrefacebyBobDrakeAuthor’sPrefacetotheFourthEditionIntroduction:TheProblemofPovertyAmidProgressFirstPart:WagesandCapitalChapter1WhyTraditionalTheoriesofWagesareWrongChapter2DefiningTermsChapter3WagesAreProducedByLabor,NotDrawnFromCapitalChapter4WorkersNotSupportedByCapitalChapter5TheTrueFunctionsofCapital

SecondPart:PopulationandSubsistence

Chapter6TheTheoryofPopulationAccordingtoMalthusChapter7Malthusvs.FactsChapter8Malthusvs.AnalogiesChapter9MalthusianTheoryDisproved

ThirdPart:TheLawsofDistribution

Chapter10NecessaryRelationoftheLawsofDistributionChapter11TheLawOfRentChapter12TheCauseofInterestChapter13FalseInterestChapter14TheLawOfInterestChapter15TheLawOfWagesChapter16CorrelatingTheLawsofDistributionChapter17TheProblemExplainedFourthPart:TheEffectofMaterialProgressontheDistributionofWealth

Chapter18DynamicForcesNotYetExplored


Chapter19PopulationGrowthandDistributionofWealthChapter20TechnologyandtheDistributionofWealthChapter21SpeculationFifthPart:TheProblemSolved

Chapter22TheRootCauseofRecessionsChapter23ThePersistenceofPovertyDespiteIncreasingWealth

SixthPart:TheRemedy

Chapter24IneffectiveRemediesChapter25TheTrueRemedySeventhPart:JusticeoftheRemedyChapter26TheInjusticeofPrivatePropertyInLandChapter27TheEnslavementofLaborChapter28AreLandownersEntitledtoCompensation?Chapter29HistoryofLandasPrivatePropertyChapter30HistoryofPropertyinLandintheUS

EighthPart:ApplicationoftheRemedy

Chapter31PrivatePropertyinLandisInconsistentwiththeBestUseofLandChapter32SecuringEqualRightsToLandChapter33TheCanonsofTaxationChapter34EndorsementsAndObjectionsNinthPart:EffectsoftheRemedy

Chapter35TheEffectonProductionChapter36TheEffectonTheDistributionofWealthChapter37TheEffectonIndividualsandClassesChapter38ChangesinSociety

TenthPart:TheLawofHumanProgress

Chapter39TheCauseofHumanProgress


Chapter40DifferencesinCivilizationsChapter41TheLawofHumanProgressChapter42HowModernCivilizationMayDeclineChapter43TheCentralTruthChapter44Conclusion:TheIndividualLife

Afterword:WhoWasHenryGeorge?byAgnesGeorgedeMille


Publisher’sForeword

WeoweBobDrakeadebtofgratitudeforthismeticulouscondensationandmodernizationofHenryGeorge’sgreatwork.Theoriginalversionhadanelegancethatevokedapassionforsocialjusticeamongmillionsofreadersinthenineteenthandearlytwentiethcenturies.However,bythebeginningofthetwentyfirstcentury,George’scomplexprosestoodinthewayofthatintention for large numbers of people. Now his ideas can once again bewidelyaccessible.

What were those ideas andwhy are they still important today?WhenProgress and Poverty was published in 1879, it was aimed in part atdiscreditingSocialDarwinism,theideathat“survivalofthefittest”shouldserveasasocialphilosophy.Thatideology,developedbyHerbertSpencer,WilliamGrahamSumner,andothers,providedtheintellectualbasisfor1)American imperialismagainstMexicoand thePhilippines,2) taxpoliciesdesignedtoreduceburdensontherichbyshiftingthemontothepoorandmiddleclass,3)theascendancyoftheconceptofabsolutepropertyrights,unmitigatedbyanysocialclaimsonproperty,4)welfareprogramsthattreatthe poor as failures and misfits, 5) racial segregation in education andhousing, and 6) eugenics programs to promote the “superior” race. Theintellectualdefenseofracismisinabeyance,buttheeconomicandpoliticalinstruments of domination have changed little. The renewed defense oftaxingwagesandconsumergoodsratherthanpropertyholdings,expandedintellectualpropertyrights,andvastimperialambitionsareindicationsthatSocialDarwinismisbackinfullforce.TherevivalofSocialDarwinismcontinuestojustifysocialdisparitieson

thebasisofnaturalsuperiorityorfitness.ProgressandPoverty,bycontrast,reveals that those disparities derive from special privileges. Manyeconomistsandpoliticiansfostertheillusionthatgreatfortunesandpovertystemfromthepresenceorabsenceofindividualskillandrisktaking.HenryGeorge, by contrast, showed that the wealth gap occurs because a fewpeople are allowed tomonopolize natural opportunities anddeny them toothers.Ifwedeprivedsocialelitesofthosemonopolies,thewholefacadeoftheirgreater“fitness”wouldcometumblingdown.Georgedidnotadvocateequality of income, the forcible redistribution of wealth, or government


management of the economy. He simply believed that in a society notburdened by the demands of a privileged elite, a full and satisfying lifewouldbeattainablebyeveryone.HenryGeorgeisbestrememberedasanadvocateofthe“singletax”on

locationvalues. (I say“location” rather than“land” toavoid thecommonconfusion that George was primarily interested in rural land. In fact hisattentionwasfocusedonthetensoftrillionsofdollarsworthofurbanlandthatderives itsvaluefromlocation.)Yet, forGeorge,wise taxpolicywasmerely a vehicle to break the stranglehold of speculative ownership thateffectivelylimits theopportunitytoearnadecent livingandparticipate inpubliclife.Perhaps the image that best capturesGeorge’s ultimate intention is the

finalsceneinapopularsciencefictionfilm,whentheheroisabletorestoretheoxygensupplytothesurfaceofaplanet so that peoplewill no longer be enslaved by theman holding theoxygenmonopoly.FreeingpeoplefromtheoppressionofmonopolypowerinanyformwasHenryGeorge’sgreatdream.ThosewhohaveconceivedofGeorgeasbeingconcernedonlywithtaxpolicyshouldcloselyreadthelastthirdofProgressandPoverty,whichrevealshislargervisionofjusticeandgenuinefreedom.Progress and Poverty stands the test of time. It contains profound

economic analysis, penetrating social philosophy, and apractical guide topublicpolicy.Thosewho read it todaywill find inGeorge’sworkagreatsourceofvisionandinspiration.CliffCobbRobertSchalkenbachFoundation


Editor’sPreface

Thosewho firstpickup thisbookare likely to share someconcernabouttheproblemofpoverty; thosewho finish itmayalso find somecause forhope.ForthegreatgiftthatHenryGeorgegavetheworldwasasystematicexplanation—logicalandconsistent—ofwhywealthisnotdistributedfairlyamongthosewhoproduceit.Buthedidnotstopthere—healsogaveusasimpleyetfarreachingplanforacure.Itwas,andstillis,aplanforpeace,prosperity,equality,andjustice.ProgressandPoverty is anenduringclassic. Ithasbeen translated into

dozensoflanguages;millionsofcopieshavebeendistributedworldwide.Why, then, theneedforamodernedition,andanabridgedoneat that?

Simplyput,HenryGeorge,likemanylate19thcenturyauthors,wroteinastyle that modern readers may find unduly complex. As editor, I haveendeavoredtobreaklongandintricatesentencesintoshorterones,creatingwhatIcalla“thoughtbythoughttranslation.”Furthermore,referencestohistory,mythology,andliteraturethatdonot

advance the central argument have been removed. Genderbalancedlanguage has also been incorporated. However, I have not attempted toupdatefinancialstatisticsortechnologicalexamples.I prepared this edition in two distinct stages: modernization and

condensation.Ihavesoughttoensurethatnothingofsubstancewasleftout.In modernizing the text, I reduced the average sentence length and

increasedthenumberofsentences.Sentenceswereshortenedbyaboutonethird. For example, one passage showed a decline in average sentencelength from twentyeight words to nineteen words. By comparison, theaverage sentence in Timemagazine was fifteen words in 1974, perhapsfewertoday.Bysimplifyinglanguage,Ireducedthenumberofsyllablesperhundred

wordsbyabouttenpercent,toabout1.7syllablesperword.Thenumberofsentencesperhundredwordswasincreasedbyfiftypercent.The combined effect of these changes transformed the text from one

comprehensibletoonlyasmallfractionofthepopulationtoonethatcanbeeasilyreadbyahighschoolsenior.AnearlytestIperformedshowedthatstudentswere able to read themodernized text about twentyfive percent


faster than the original, even before condensation. Although no formaltesting for comprehension was done, anecdotal reports indicate thatcomprehensionwasgreatlyimproved.In the second stage, I condensed the modernized text by rewriting

sentencesusingsimpler language,removingmultipleexampleswhereonewould suffice, and generally editing for brevity. Although I occasionallyrearranged sentences for clarity and continuity, keepingGeorge’s originalthesis intact was of utmost importance. In doing this, I followed theexpositionasHenryGeorgepresented it. I endeavored to removewhat isexcessiveand retainwhat is essential. In theend, this edition is less thanhalfthesizeoftheoriginal.Thisprojecthasbeenacollectiveendeavor.Manypeoplecontributedto

thevariousdrafts,startingwiththoseteachersandstudentsattheHenryGeorgeSchoolsinChicago,NewYork,andPhiladelphiawhoprovidedsuggestionsandencouragement.Many thanks to Terry Topczewski, Bob Jene, the late Roy Corr, and

ChuckMetalitz for their help and encouragement at various stages;WynAchenbaum,HerbBarry,CliffCobb,GeorgeCollins,JoshFarley,DamonGross, Heather Remoff, and Tom Smith of the Robert SchalkenbachFoundationboardfortheireditorialreviews;andGeorgeM.Menninger,Jr.,JohnKuchta,ScottWalton,SueWalton,BruceOatman,andSteveZarlengafor their moral support. Particular thanks to Lindy Davies and MarkSullivan for their assistance in the final stages of editing and textpreparation. Thanks also to theRobert Schalkenbach Foundation and theCenterfortheStudyofEconomicsforinstitutionalsupport.Finally,specialthanksmustgotomywife(andgreatjazzsinger)Spider

Saloff.Withoutherloveandsupport,noneoftherestwouldhavemattered.BobDrakeHenryGeorgeSchoolofChicagoApril15,2006


PrefacetotheFourthEdition

In1871,IfirstpublishedtheseideasinapamphletentitledOurLandandLand Policy. Over time, I became even more convinced of their truth.Seeing that many misconceptions blocked their recognition, a fullerexplanation seemed necessary. Still, it was impossible to answer all thequestions as fully as they deserve. I have tried to establish generalprinciples,trustingreaderstoextendtheirapplication.While this book may be best appreciated by those familiar with

economics, no previous study is needed to understand its argument or tojudge itsconclusions. Ihaverelieduponfactsofcommonknowledgeandcommon observation, which readers can verify for themselves. They canalsodecidewhetherthereasoningisvalid.I set out to discover why wages tend to a bare minimum despite

increasingproductivepower.Thecurrenttheoryofwages,Ifound,isbasedon a misconception [namely, that wages are paid from capital]. In truth,wagesareproducedbythelaborforwhichtheyarepaid.Therefore,otherthingsbeingequal,wagesshouldincreasewiththenumberoflaborers.This immediately confronts the influential Malthusian doctrine that

population tends to increase faster than subsistence. Examination showsthat this theoryhasno real support.Whenbrought toadecisive test, it isutterlydisproved.Sincethesetheoriescannotexplaintheconnectionbetweenprogressand

poverty,thesolutionmustlieinthethreelawsgoverningthedistributionofwealth.Theselawsshouldcorrelatewitheachother,yeteconomistsfailtoshowthis.Anexaminationofterminologyrevealstheconfusionofthoughtthatpermitsthisdiscrepancy.To work out these laws, I first take up the law of rent. Although

economists correctly understand this law, they fail to appreciate itsimplications.Forwhatever determines thepart of production that goes tolandowners must necessarily determine what is left over for labor andcapital.Nonetheless, I independentlydeduce the lawof interest and the lawof

wages.Investigationshowsthatinterestandwagesrisetogetherwhenrentfalls,andfalltogetherwhenrentrises.Therefore,rent,wages,andinterest


are all determined by the margin of production, the point in productionwhererentbegins.Ialsopointoutasourceofmuchconfusion:mistakingtheprofitsofmonopolyforthelegitimateearningsofcapital.Thelawsofdistributionarethusbroughtintoharmony.Thefactthatrent

alwaysincreaseswithmaterialprogressexplainswhywagesandinterestdonot.The question is, what causes rent to increase? Population growth not

only lowers themarginofproduction, it also increasesproductivity.Bothfactors increase the proportion of income taken by rent, reducing theproportion of wages and interest. Yet, technological and organizationalimprovements lead to the same results. Evenwith a constant population,thesealonewouldproduceall theeffectsMalthusattributes topopulationgrowth—aslongaslandisheldasprivateproperty.Further,progressinevitablycausesacontinuous,speculativeincreasein

landvaluesiflandisprivateproperty.Thisdrivesrentupandwagesdown.Italsoproducesperiodicindustrialdepressions.Thisanalysispointstoaremedy,althougharadicalone.Butisthereany

other?Examiningothermeasuresadvocated to raisewagesmerelyprovesour conclusion. Nothing short of making land common property canpermanentlyrelievepoverty.Thequestionofjusticenaturallyarises,soInextexaminethenatureand

basis of property. There is a fundamental and irreconcilable differencebetweenpropertyintheproductsoflaborandpropertyinland.Onehasanatural basis, the other none. Recognizing property in land inherentlydeniestherighttopropertyproducedbylabor.Landownershavenoclaimtocompensationifsocietychoosestoresume

itsnaturalrights.Privatepropertyinlandalwayshasled—andalwaysmustlead—to the enslavement of workers as development proceeds. In theUnitedStates,wearealreadybeginningtofeeltheeffectsofacceptingthiserroneousanddestructiveprinciple.Asapracticalmatter,privateownershipof land isnotnecessary for its

use or improvement. In fact, it entails enormous waste. Recognizing thecommonrighttolanddoesnotrequireanyshockordispossession.Itcanbereached by the simple and easy method of taxing only land values. Theprinciplesoftaxationshowthatthisisthebestmeansofraisingrevenue.


Whatwouldbetheeffectsofthisproposedchange?Itwouldenormouslyincreaseproduction.Itwouldsecurejusticeindistribution.Itwouldbenefitallclasses.Anditwouldmakepossibleahigherandnoblercivilization.The inquiry now rises to a wider field. My conclusions assert certain

laws. If these are really natural laws, theymust be apparent in universalhistory.Asafinaltest,therefore,Imustworkoutthelawofhumanprogress.Investigation reveals that differences in civilization are not due to

differences in individuals or races, but rather to differences in socialorganization. Progress is always kindled by association. And civilizationalwaysdeclinesasinequalitydevelops.Even now, in modern civilization, the causes that have destroyed all

previouscivilizationsarebeginningtoappear.Politicaldemocracy,withouteconomicopportunity,willdevolveintoanarchyanddespotism.Butthelawofsociallifeagreeswiththegreatmorallawofjustice.This

showshowdeclinemaybepreventedandagranderadvancebegun.IfIhavecorrectlysolvedthegreatproblemsIsetouttoinvestigate,my

conclusions completely change the character of political economy. Theygiveitthecoherenceandcertaintyofatruescience.Andtheybringitintosympathywith the aspirations of humanity, fromwhich it has long beenestranged.What Ihavedone in thisbook is tounite the truthperceivedbySmith

and Ricardowith the truth perceived by Proudhon and Lassalle.* I haveshownthatlaissezfaire—initsfull,truemeaning—opensthewayforustorealizethenobledreamsofsocialism.ThisworkwaswrittenbetweenAugust,1877,andMarch,1879.Sinceits

publication, events have shown these views to be correct. The Irish landmovement,especially,showsthepressingnatureoftheproblem.

*AdamSmith(17231790),DavidRicardo(17721823),PierreJosephProudhon(18091865), andFerdinandLassalle (18251864).The first twowereclassical economists; thelattertwoweresocialistreformers.


Therehasbeennothinginthecriticismsreceivedtoinducemetochangeormodify these views. In fact, I have yet to see an objection that was notalready answered in the book itself. Except for correcting some verbalerrors and adding this preface, this edition is the same as the previousones.*

HenryGeorgeNewYork,November,1880Modernizedandabridged,2006

*Georgesubsequentlymadeonemodification,regardingpatentsandcopyrights.


To those who, seeing the vice and misery that spring from the unequaldistributionofwealth andprivilege, feel thepossibilityof a higher socialstateandwouldstriveforitsattainment.

SanFrancisco,March,1879


IntroductionTheProblemofPovertyAmidProgress

Thenineteenthcenturysawanenormousincreaseintheabilitytoproducewealth. Steam and electricity, mechanization, specialization, and newbusinessmethodsgreatlyincreasedthepoweroflabor.Who could have foreseen the steamship, the railroad, the tractor? Or

factoriesweavingclothfaster thanhundredsofweavers?Whocouldhaveheard the throb of engines more powerful than all the beasts of burdencombined? Or envisioned the immense effort saved by improvements intransportation,communication,andcommerce?Surely, these new powers would elevate society from its foundations,

liftingthepoorestaboveworryforthematerialneedsoflife.Imaginethesenew machines relieving human toil, muscles of iron making the poorestworker’s life a holiday, giving our nobler impulses room to grow.Givensuch bountifulmaterial conditions, surelywe could anticipate the goldenage long dreamed of. How could there be greed when everyone hadenough? How could things that arise from poverty—crime, ignorance,brutality—existwhenpovertyhadvanished?Suchwerethedreamsbornofthiswonderfulcenturyofprogress.

True, thereweredisappointments.Discoveryupondiscovery, inventionafterinventionstilldidnotlessenthe toil of thosewhomost need relief or bring plenty to the poor.But itseemedthereweresomanythingsthatcouldbeblamedforthisfailurethatourfaithhashardlyweakened.Surelywewouldovercomethesedifficultiesintime.Yetwemustnowfacefactswecannotmistake.Allover theworld,we

hear complaints of industrial depression: labor condemned to involuntaryidleness; capital going towaste; fear and hardship hauntingworkers. Allthisdull,deadeningpain, thiskeen,maddeninganguish, is summedup inthefamiliarphrase“hardtimes.”Thissituationcanhardlybeaccountedforbylocalcauses.Itiscommon

to communitieswithwidely differing circumstances, political institutions,financial systems, population densities, and social organization. There iseconomicdistressundertyrannies,butalsowherepowerisinthehandsof


the people.Distresswhereprotective tariffs hamper trade, but alsowheretradeisnearlyfree.Distressincountrieswithpapermoney,andincountrieswithgoldandsilvercurrencies.Beneathallthis,wecaninferacommoncause.Itiseitherwhatwecall

materialprogress,orsomethingcloselyconnectedwithit.Whatwecallanindustrialdepressionismerelyanintensificationofphenomenathatalwaysaccompany material progress. They show themselves more clearly andmorestronglyasprogressgoeson.Wheredowefindthedeepestpoverty,thehardeststruggleforexistence,

the greatest enforced idleness?Why, wherever material progress is mostadvanced.Thatistosay,wherepopulationisdensest,wealthgreatest,andproduction and exchange most highly developed. In older countries,destitutionisfoundamidthegreatestabundance.Conversely,workersemigratetonewercountriesseekinghigherwages.

Capital also flows there seeking higher interest. They go wherematerialprogress is still in earlier stages. The older countries, where materialprogresshasreacheditslaterstages,iswherepovertyoccurs.Go to a new communitywhere the race of progress is just beginning,

whereproductionandexchangearestillrudeandinefficient.Thebesthousemaybeonlyalogcabin;therichestpersonmustworkeveryday.Thereisnot enoughwealth to enable anyclass to live in ease and luxury.Noonemakesaneasyliving,orevenaverygoodone—yeteveryonecanmakealiving.Whileyouwon’tfindwealthandallitseffects,neitherwillyoufindbeggars. No one willing and able to work lives in fear of want. Thoughthereisnoluxury,thereisnopoverty.Butjustwhentheystarttoachievetheconditionscivilizedcommunities

strivefor,povertytakesadarkerturn.Thisoccursassavingsinproductionand exchange are made possible by denser settlement, closer connectionwith the rest of the world, and laborsaving machinery. It occurs just aswealth consequently increases. (And wealth increases not only in theaggregate,butinproportiontopopulation.)Now,somewillfindlivingbetterandeasier—butotherswillfindithard

togetalivingatall.Beggarsandprisonsarethemarkofprogressassurelyaselegantmansions,bulgingwarehouses,andmagnificentchurches.Unpleasant as it may be to admit, it is at last becoming evident that

progresshasnotendencytoreducepoverty.Thegreatfactis,poverty,with


allitsills,appearswheneverprogressreachesacertainstage.Povertyis,insomeway,producedbyprogressitself.Progress simply widens the gulf between rich and poor. It makes the

struggle for existence more intense. Wherever these forces are at work,largeclassesaremaintainedoncharity.Yes,incertainways,thepoorestnowenjoywhattherichestcouldnota

centuryago.Butthisdoesnotdemonstrateanimprovement—notsolongastheabilitytoobtainthenecessitiesoflifehasnotincreased.Abeggarinthecity may enjoy many things that a backwoods farmer cannot. But thecondition of the beggar is not better than that of an independent farmer.Whatwecallprogressdoesnotimprovetheconditionofthelowestclassintheessentialsofhealthy,happyhumanlife.Infact,ittendstodepresstheirconditionevenmore.Thesenewforcesdonotactonsocietyfromunderneath.Rather,itisas

thoughanimmensewedgeisbeingdriventhroughthemiddle.Thoseaboveitareelevated,butthosebelowarecrushed.Wherethepoorhavelongexisted,thiseffectisnolongerobvious.When

thelowestclasscanbarelylive,itisimpossibletogetanylower:thenextstepisoutofexistencealtogether.ThishasbeenthecaseforalongtimeinmanypartsofEurope.Butwherenewsettlementsadvancetotheconditionofolderones,weseethatmaterialprogressnotonlyfailstorelievepoverty,itactuallyproducesit.In the United States, it is obvious that squalor andmisery increase as

villages grow into cities. Poverty is most apparent in older and richerregions. Ifpoverty is lessdeep inSanFrancisco thanNewYork, is itnotbecauseitlagsbehind?WhocandoubtthatwhenitreachesthepointwhereNewYorkisnow,therewillalsoberaggedchildreninthestreets?So long as the increased wealth that progress brings goes to building

greatfortunesandincreasingluxury,progressisnotreal.Whenthecontrastbetween the haves and havenots grows ever sharper, progress cannot bepermanent. To educate people condemned to poverty only makes themrestless. To base a state with glaring social inequalities on politicalinstitutionswherepeoplearesupposedtobeequalistostandapyramidonitshead.Eventually,itwillfall.Thisrelationofpovertytoprogressisthegreatquestionofourtime.Itis

theriddlethattheSphinx*ofFateputstous.Ifwedonotanswercorrectly,


wewillbedestroyed.Asimportantasthisquestionis,wehavenoanswerthataccountsforthe

factsorprovidesacure.Expertsbreak intoananarchyofopinion,andpeopleacceptmisguided

ideas. They are led to believe that there is a necessary conflict betweencapital and labor; that machinery is an evil; that competition must berestrained;orthatitisthedutyofgovernmenttoprovidecapitalorfurnishwork. Such ideas are fraught with danger, for they allow charlatans anddemagoguestocontrolthemasses.

But these ideas cannot be successfully challenged until politicaleconomygivessomeanswertothegreatquestion.Politicaleconomyisnotasetofdogmas.Itistheexplanationofacertainset of facts and their mutual relationships. Its deductions follow frompremises we all recognize. In fact, we base the reasoning and actions ofeverydaylifeonthem.Thesepremisescanbereducedtoanexpressionassimpleandbasicas thephysical law that says:motion follows the lineofleastresistance.

*TheSphinxwasacreatureinGreekmythologywhochallengedtravelerswithariddle.Iftheycouldnotanswercorrectly,itdevouredthem.Politicaleconomyproceedsfromthefollowingsimpleaxiom:

Peopleseektosatisfytheirdesireswiththeleastexertion.Theprocessthenconsistssimplyofidentificationandseparation.Inthis

sense it is as exact a science as geometry. Its conclusions, when valid,shouldbejustasapparent.Now, in political economy we cannot test theories by artificially

producing combinations or conditions, as other sciences can. Yetwe canapply tests that are no less conclusive. This can be done by comparingsocietiesinwhichdifferentconditionsexist.Or,wecantestvarioustheoriesin our imagination—by separating, combining, adding, or eliminatingforcesorfactorsofknowndirection.Properlydone,suchaninvestigationshouldyieldaconclusionthatwill

correlatewitheveryothertruth.Everyeffecthasacause;everyfactimpliesaprecedingfact.In the following pages, Iwill use thesemethods to discoverwhat law

connects poverty with progress. I believe this law will also explain the


recurringcyclesofindustrialandcommercialdepression,whichnowseemsounexplainable.Current political economy cannot explain why poverty persists in the

midstofincreasingwealth.Itteachesonlyunrelatedanddisjointedtheories.Itseemstome,thisisnotduetoanyinabilityofthescience.Rather,theremust be some false step in its premises, or someoverlooked factor in itsestimates.

Suchmistakesaregenerallyconcealedbyrespectpaidto authority.Therefore, Iwill takenothing for granted.Accepted theorieswillbetested;establishedfactswillbefreshlyquestioned.Iwillnotshrinkfromanyconclusion,butpromisetofollowthetruthwhereveritmaylead.What the outcomeproves to be is not our affair. If the conclusionswe

reach run counter to our prejudices, let us not flinch. If they challengeinstitutionsthathavelongbeenregardedaswiseandnatural,letusnotturnback.


FirstPart:WagesandCapital


Chapter1:WhyTraditionalTheoriesofWagesareWrong

First,let’sclearlydefinetheproblemweareinvestigatingandreviewhowcurrentlyacceptedtheoriesattempttoexplainit.Wewanttodiscoverwhypovertypersistsdespiteincreasingwealth.Itisuniversallyrecognizedthatwagestendtowardaminimumlevel.Whatevercausesthismustalsocausethepersistenceofpoverty.Solet’sframeourinquirylikethis:Whydowagestendtodecreasetosubsistencelevel,evenasproductive

powerincreases?Currenttheoryerroneouslyattemptstoexplainsitthus:(a)wagesareset

by the ratio between the number of workers and the amount of capitalavailable for labor; (b) population is presumed to increase faster than theincrease in capital; (c) therefore, wages always move toward the lowestlevelworkerswill tolerate.That is,wagesare equal to capitaldividedbypopulation.Increasingpopulationisheldincheckonlybythelimitationsofwages, so even if capital increases toward infinity, there will be noimprovement.InplainEnglish,currenttheoryincorrectlyclaimsthatwagescannotrise

fasterthanthepopulationamongwhichcapitalmustbedivided.Onlylowwageswillslowthepopulationgrowthofworkers.This doctrine, though false, is virtually undisputed; it is endorsed by

notedeconomistsandtaughtingreatuniversities.Itispopularamongthosenot clever enough to have theories of their own, asmaybe seen daily innewspapercolumnsandlegislativedebates.Thegeneralpublicholdsevencruder forms. Why—despite obvious inconsistencies and fallacies—dopeople cling to protectionist views? They accept themistaken belief thateachcommunityhasonlyafixedamountofwagesavailable,andthatthiswouldbefurtherdividedamong“foreigncompetition.”Thismisconceptionis the basis ofmost other failed attempts to increase the workers’ share,suchasrestrictingcompetitionorabolishinginterest.

Yet, despite being so widely held, this theory simply does not fit thefacts.Ifwagesaresetbytheratiobetweenlaborandcapital,thentherelative

abundanceofonemustmeanalackoftheother.Now,ifcapitalisnotused


for wages, it can be invested elsewhere. So the current interest rate is arelativelygoodmeasureofwhethercapitalisscarceorabundant.According to this theory, then, high wages (scarce labor) must be

accompanied by low interest (abundant capital). In the reverse case, lowwages (abundant labor) must be accompanied by high interest (scarcecapital).Butwecan see that, in fact, theopposite is true: Interest ishighwhen

wagesarehigh. Interest is lowwhenwagesare low.Wherever laborgoesseekinghigherwages,capitalalsoflowsseekinghigherinterest.Whenevertherehasbeenageneralriseorfallinwages,therehasbeenasimilarriseorfallininterestatthesametime.Wages are usually higher in new countries (where capital is relatively

scarce) than in old countries (where capital is relatively abundant). BothwagesandinteresthavebeenhigherintheUnitedStatesthaninEngland,and in the Pacific rather than in the Atlantic States. In California, whenwages were higher than anywhere else in the world, interest was alsohigher.Later,wagesandinterestinCaliforniawentdowntogether.Consider the economics of “good times” and “hard times.” A brisk

demand for labor (and good wages) is always accompanied by a briskdemandforcapital(andhighinterestrates).However,whenjobsarescarceand wages slump, there is always an accumulation of capital seekinginvestmentatlowrates.Itistruethatratesmaybehighduringcommercialpanics.However,this

isnotproperlycalledahighrateofinterest.Rather,itisarateofinsuranceagainstrisk.Thepresentdepression(1879)hasseenunemploymentandlowerwages.

Ithasalso seen theaccumulationofunusedcapital in all thegreat cities,withnominalinterestonsafeinvestments.Theseareallwellknownfacts.Theydopointtoarelationshipbetween

wages and interest—but it is a relationof conjunction, not of opposition.There isnoexplanationof theseconditions that isconsistentwithcurrenttheory.How, then, could such a theory arise? Why was it accepted by

economistsfromAdamSmithtothepresent?Ifweexaminethereasoningsupporting this theory, it becomes clear that it is not an induction fromobservedfacts.Rather,itisadeductionfromapreviouslyassumedtheory.


Specifically, it has already been assumed that wages are drawn fromcapital.If capital is the source of wages, it logically follows that total wages

must be limited by the capital devoted to wages. Hence, the amountindividual laborers can receivemust be determined by the ratio betweentheirnumberandtheamountofcapitalavailable.Thisreasoningprocessislogicallyvalid.However,aswehaveseen,the

conclusion drawn from it does not fit the observed facts. Therefore, theproblemmustbeinthepremise.Iamawarethattheideathatwagesaredrawnfromcapitalisoneofthe

most fundamental and widely accepted theorems of current politicaleconomy,acceptedasaxiomaticbyallthegreateconomists.Nevertheless,IthinkIcandemonstratethatthisisafundamentalerror.Itformsthebasisofa long series of errors that distort the practical conclusions drawn fromthem.

ThepropositionIintendtoproveisthis:Wages are not drawn from capital.On the contrary, wages are drawn

fromtheproductofthelaborforwhichtheyarepaid.*Now,while current theory sayswages are drawn from capital, it also

sayscapitalisreimbursedfromproduction.

*For simplicity,George restricts his analysis here to theproductionof physicalwealth.Wages for services, the use of labor to satisfy desires directly, are not advanced fromcapital,butfromwealthdevotedtoconsumption.Soatfirstglancethismayappeartobeadistinctionwithoutadifference.

Ifthisweremerelyachangeinterminology,anydiscussionwouldonlyaddto themeaninglesspetty arguments that comprise somuchof economics.But it will become apparent that this is much more than a formaldistinction. Indeed, all the current theories regarding the relationbetweencapitalandlaborarebuiltonthisdifference.Doctrinesdeducedfromitareregardedasaxiomatic;theylimitanddirecttheablestmindsindiscussingissuesofmomentousimportance.Amongthebeliefsbasedontheassumptionthatwagesaredrawndirectly

fromcapital—notfromtheproductoflabor—arethefollowing:industryislimited by capital; labor canonly be employed as capital is accumulated;every increase of capital enables additional employment; conversion of


circulating capital into fixed capital reduces the fund available to labor;morelaborerscanbeemployedatlowwagesthanathighwages;profitsarehighwhenwagesarelow;profitsarelowwhenwagesarehigh.In short, almost all the important theories of current political economy

are based on the erroneous assumption that labor is paid out of existingcapital before any product is produced. I maintain, on the contrary, thatwages are drawn directly from the product of labor. They do not—eventemporarily—comeclosetorelyingonexistingcapital.If I can prove this, then all those other theories are left without any

supportandmustbediscarded—includingall theoriesbasedon thebeliefthat the supply of wages is fixed. For such reasoning holds that as thenumberofworkersincreases,thesharetoeachmustdiminish.

Onthisfoundation,currenteconomistshavebuiltavast superstructure of related theories. But in truth, this foundation hasmerelybeentakenforgranted.Nottheslightestattempthasbeenmadetodistinguishwhetherornotitisbasedonfact.It is inferred that wages are drawn from preexisting capital because

wagesaregenerallypaid inmoney.Inmanycases,wagesarepaidbeforethe product is fully completed or useful. From this it is concluded thatindustryis limitedbycapital.Thatis, that laborcannotbeemployeduntilcapitalhasbeenaccumulated;andthen,onlytotheextentofsuchcapital.Yetinthesamebooksholdingthesetheories,wefindthecontradiction.

First they claim, without reservation, that capital limits labor. Then theystate that capital is stored up or accumulated labor. If we substitute thisdefinitionforthewordcapital,thepropositionrefutesitself.Thatis,itsayslaborcannotbeemployeduntiltheresultsoflaborhavebeenaccumulated.Thisispatentlyabsurd.Butwecannotendtheargumentwiththisreductioadabsurdumalone, for other explanations are likely to be tried. PerhapsDivineProvidenceprovidedthecapitalthatallowedthefirstlabortobegin?More likely, the proposition would be said to refer to more advancedsocietieswherecomplexproductionmethodsareused.However,thereisafundamentaltruthinalleconomicreasoningthatwe

must firmly grasp and never let go of. Modern society, though highlydeveloped,isonlyanelaborationofthesimplestsociety.Principlesthatareobvious in simple relationships are not reversed or abolished in more


complex ones. The same principles are merely disguised by the use ofsophisticatedtoolsandthedivisionoflabor.The modern grist mill, with all its complicated machinery, is only a

meansofgrindingcorn.Factoryworkersmayrunmachines,printlabels,orkeep books. Yet, they are really devoting their labor to the same task:preparing food. The modern mill serves the same purpose as an ancientstone mortar unearthed by archeologists. Both the ancient and modernworkersareattemptingtosatisfytheirdesiresbyexertinglaboronnaturalresources.Modern economy is a vast and intricate network of production and

exchange, with complex operations infinitely subdivided into specializedfunctions.Yetlookingatproductionasawhole,weseeitisthecooperationofalltosatisfythedesiresofeach.Keepingthisinmind,weseeclearlythattherewardeachobtains,thoughengagedindiversetasks,comestrulyanddirectlyfromnatureastheresultofthatparticularexertion.Itisnodifferentfromtheeffortsoftheveryfirsthuman.Consider theexampleofaprimitivefishingvillage.Underthesimplest

conditions,theyallcatchtheirownfishanddigtheirownbait.Soon,theyrealize the advantageof a divisionof labor.Sonowonepersondigsbaitwhiletheothersgooutfishing.Itisobviousatthispointthattheonewhodigs bait is, in reality, doing asmuch toward catching fish as thosewhoactuallytakeinthecatch.Next the advantages of canoes are discovered. Instead of each person

buildingacanoe,onlyonestaysbehindtomakeandrepaircanoesfortheothers. In reality, the canoemaker is devoting labor to catching fish asmuch as those actually fishing. The fish eaten each night are as much aproduct of the labor of the canoemaker as they are of the labor of thosefishing.As thedivisionof laborcontinues,we find thatonegroup fishes,another hunts, a third picks berries, a fourth gathers fruit, a fifth makestools,asixthbuildshuts,andaseventhpreparesclothing.Division of labor, when fairly established, benefits all by common

pursuit. It is used instead of individuals attempting to satisfy all of theirwantsbydirectlyresortingtonatureontheirown.Astheyexchangewitheachothertheproductoftheirlaborfortheproductsofothers’labor,theyarereallyapplyingtheirownlabortotheproductionofthethingstheyuse—just as if each person had made each item alone. They are, in effect,


satisfying their own particular desires by the exertion of their ownindividual powers. That is to say, they genuinely produce whatever theyreceive.These principles are obvious in simple society. If we follow them

throughthecomplexitiesofwhatwecallcivilization,wecanclearlyseethesameprinciples.Ineverycasewherelaborisexchangedforcommodities,productionactuallyprecedesenjoyment.Suchwagesarenottheadvanceofcapital.Someone’s labor has contributed to the general stock of wealth. He

receivesinreturnadraftagainstthisgeneralstock.Hemayusethatdraftinany particular form that will best satisfy his desires. Though the moneyitselfmayhavebeenprintedbeforehislabor,itisreallyanexchangeoftheproductsofhislaborfortheproductsofothers’labor.Theimportantpointis that neither themoney, nor the particular items he chooses to buy, areadvancesofcapital.Onthecontrary,moneyismerelyadraftthatrepresentsthewealthhislaborhasalreadyaddedtothegeneralstock.Keepingtheseprinciplesinmind,wecanseethesametruthinavariety

ofexamples.Anengineercoopedupinsomedingyofficedrawingplansforagreat turbine is, inreality,devotingher labor to theproductionofbreadandmeat.She is doing so just as truly as if shewereharvestinggrain inCaliforniaorswingingalariatonthepampasofArgentina.Sheisastrulymaking her own clothes as if she were shearing sheep in Australia orweaving cloth in a factory. She is effectively producing thewine for herdinnerjustasthoughshehadgatheredthegrapesinFrance.Aminer,diggingsilverorethousandsoffeetunderground,is,byvirtue

ofathousandexchanges,ineffectharvestingcropsinthevalleyorfishingin the arctic; picking coffee in Honduras and cutting sugar in Hawaii;gatheringcottonfromGeorgiaandweaving it inManchester;orpluckingfruitintheorchardsofCalifornia.Thewageshereceivesfor theweekaremerelycertificates toshowthe

worldthathehasdonethesethings.Themoneyhereceivesinreturnforhislabor is only the first in a long series of exchanges. These transmute hislaborintothoseparticularthingsforwhichhehasreallybeenlaboring.All this is clear when we look at it this way. But the fallacy remains

firmlyentrenchedinmanyhidingplaces.Torevealit,wemustnowchangeourinvestigationfromthedeductivetotheinductive.Ourconclusionshave


beenobviouswhenwebeganwithgeneralprinciplesanddeducedspecificexamples.Letusnowseeifwearriveatthesameconclusionsinductively—thatis,byexaminingspecificfactsandtracingtheirrelationsintogeneralprinciples.


Chapter2DefiningTerms

Beforeproceedingfurther,wemustdefineourtermssothateachmeaningremainsconsistent.Otherwise,ourreasoningwillbevagueandambiguous.Many eminent authors have stressed the importance of clear and precisedefinitions.Icannotaddtothis,excepttopointoutthemanyexamplesofthesesameauthorsfallingintotheverytraptheywarnagainst.Certain words—such as wealth, capital, rent, and wages—require a

much more specific meaning in economic reasoning than they do ineveryday speech. Unfortunately, even among economists, there is noagreementon themeaningof these terms.Differentwritersgivedifferentmeaningstothesameterm.Evenworse,oneauthorwillusethesametermindifferentsenses.Nothingshowstheimportanceofpreciselanguagelikethespectacleofthebrightestthinkersbasingimportantconclusionsonthesamewordusedindifferentsenses.IwillstrivetostateclearlywhatImeanbyanytermofimportance—and

to use it only in that sense. Further, Iwill conform to common usage asmuchaspossible,ratherthanassignarbitrarymeaningsorcoinnewterms.Thereadershouldkeepthesedefinitionsinmind,forotherwiseIcannotbeproperly understood. My desire is to fix the meaning plainly enough toexpressmythoughtsclearly.Now,we had been discussingwhetherwages are, in fact, drawn from

capital.Solet’sstartbydefiningwagesandcapital.Economistshavegivena sufficiently definitemeaning towages. However, capital will require adetailed explanation, since it has been used ambiguously by manyeconomists.In common conversation, wages mean compensation paid to someone

hired to render services. The habit of applying it solely to compensationpaidformanuallaborfurthernarrowsitsuse.Wedonotspeak,ofthewagesofprofessionalsormanagers,butoftheirfees,commissions,orsalaries.So,thecommonmeaningofwagesiscompensationformanuallabor.But in political economy, thewordwages has amuchwidermeaning.

Economists speak of three factors of production: land, labor, and capital.Laborincludesallhumanexertionintheproductionofwealth.Wagesare


the portion of production that goes to labor. Therefore, the term wagesincludesallrewardsforsuchexertion.In theeconomicsenseof the term,noneof thedistinctionsofcommon

speechapply.Itdoesnotmatterwhatkindoflaboritis.Nordoesitmatterwhethertherewardforlaborisreceivedfromanemployerornot.Wages,intheeconomicsense,simplymeansthereturnfortheexertionoflabor.Itisdistinguishedfromthereturnfortheuseofcapital(interest),andfromthereturnfortheuseofland(rent).Thewagesofhuntersarethegametheykill;thewagesoffishermen,the

fishtheycatch.Farmersgetwagesfromtheircrops.Inaddition,iftheyusetheir own capital and their own land, part of the cropwill be consideredinterest, part rent.Gold panned by selfemployed prospectors is asmuchtheirwagesasmoneypaidtohiredminers.And,asAdamSmithnoted,thehigh profits of retail storekeepers are in large part wages—that is,compensationfortheirlabor,notjustfortheircapital.Inshort,whateverisreceivedastheresultorrewardofexertioniswages.

Thisisallweneedtoknowfornow,butitisimportanttokeepitinmind.Instandardeconomicstexts,thistermisusedmoreorlessclearly—atfirst.Sadly,thiscleardefinitionisfrequentlyignoredlateron.Theideaofcapital,ontheotherhand,issobesetwithambiguitiesthatit

isdifficulttodetermineapreciseuseoftheterm.Ingeneraldiscourse,allsortsofthingsthathaveavalue,orwillyieldareturn,arevaguelyspokenofascapital.Economiststhemselvesusetheterminsomanysensesthatithardlyhasanyfixedmeaning.*I could go on for pages citing contradictory—and selfcontradictory—

definitionsfromotherauthors,butthiswouldonlyborethereader.Youcanfind further illustration of the confusion among economists and learnedprofessorsinanylibrary,wheretheirworksarearrangedsidebyside.Whatnamewecallsomethingisnottheissuehere.Thepointistouseit

to alwaysmean the same thing—and nothing else.Most people, in fact,understandwhatcapitaliswellenough—untiltheybegintodefineit.Eveneconomistsuse the term in the same sense—ineverycaseexcept in theirown definitions and the reasoning based on them. They apply theirparticular definition to set up the premise of their reasoning. But whenconclusions are drawn, capital is always used—or at least alwaysunderstood—inoneparticularsense.


Thiscommonlyunderstoodsenseseparatescapital fromlandandlabor,theotherfactorsofproduction.Italsoseparatesitfromsimilarthingsusedforgratification.

*Curiousreadersmayfindexamplesintheoriginaltext.The common meaning of capital is, simply put, wealth devoted toproducingmorewealth.AdamSmithcorrectlyexpressesthiscommonideawhenhesays:“Thatpartofaman’sstockwhichbeexpectstoaffordhimrevenue iscalledhiscapital.”Thecapitalofacommunity is therefore thesum of such individual stocks. Said another way, it is the part of theaggregatestockthatisexpectedtoprocuremorewealth.Politicalandsocialwritersareevenmorestrikingthaneconomiconesin

theirfailuretousecapitalasanexactterm.Theirdifficultiesarisefromtwofacts.First, therearecertain things that—toan individual—areequivalentto possessing capital. However, they are not part of the capital of thecommunity.Second,thingsofthesamekindmay—ormaynot—becapital,dependingonwhattheyareusedfor.Keepingthesepointsinmind,wecanusethetermcapitalinaclearand

constantmanner,without anyambiguityor confusion.Ourdefinitionwillenableustosaywhatthingsarecapitalandwhatarenot.Thethreefactorsof production are land, labor, and capital. The term capital is used incontradistinctiontolandandlabor.Therefore,nothingproperlyincludedaseitherlandorlaborcanbecalledcapital.The term land does not simply mean the surface of the earth as

distinguished fromairandwater—it includesallnaturalmaterials, forces,and opportunities. It is the whole material universe outside of humansthemselves. Only by access to land, from which their very bodies aredrawn,canpeopleuseorcomeincontactwithnature.

Therefore,nothingfreelysuppliedbynaturecanbeproperlyclassedascapital.Considerafertilefield,arichveinofore,orafallingstream,whichcan

supplypower.Thesemaygivetheowneradvantagesthatareequivalenttopossessingcapital.However,callingthemcapitalwouldendthedistinctionbetweenlandandcapital.Itwouldmakethetermsmeaninglessinrelationtoeachother.


Similarly,thetermlaborincludesallhumanexertion.Sohumanpowerscannever be properly classed as capital.This, of course, applieswhethertheyarenaturaloracquiredpowers.Incommonparlance,weoftenspeakofsomeone’sknowledge,skill,orindustryashisorhercapital.Thislanguageis obviously metaphorical. We cannot use it in reasoning that requiresexactness.Suchqualitiesmay increase income, justascapitalwould.Thecommunitymayincreaseitsproductionbyincreasesinknowledge,skill,orindustry.The effect may be the same as an increase of capital. However, the

increase inproduction isdue to the increasedpowerof labor,notcapital.Increasedvelocitymaygivetheimpactofacannonballthesameeffectasincreasedweight.Nevertheless,weightisonethingandvelocityanother.

Therefore,capitalmustexcludeeverythingthatmaybeincludedaslandorlabor.Thisleavesonlythingsthatareneitherlandnorlabor.Thesethingshave resulted from theunionof the twooriginal factorsofproduction. Inotherwords,nothingcanbecapitalthatisnotwealth.Manyoftheambiguitiesaboutcapitalderivefromambiguitiesintheuse

of the inclusive term wealth. In common use, wealth means anythinghaving an exchange value.When used as an economic term, however, itmustbelimitedtoamuchmoredefinitemeaning.Ifwe take intoaccount theconceptofcollectiveorgeneralwealth,we

see thatmany thingswe commonly callwealth are not so at all. Instead,they represent the power to obtain wealth in transactions betweenindividuals (or groups). That is, they have an exchange value. However,their increase or decrease does not affect the sum of wealth in thecommunity.Therefore,theyarenottrulywealth.Someexamplesarestocks,bonds,mortgages,promissorynotes,orother

certificatesfortransferringwealth.Neithercanslavesbeconsideredwealth.Their economic value merely represents the power of one class toappropriate the earnings of another. Lands or other natural opportunitiesobtainexchangevalueonlyfromconsenttoanexclusiverighttousethem.Thismerelyrepresentsthepowergiventolandownerstodemandashareofthewealthproducedbythosewhousethem.Increaseintheamountofbonds,mortgages,ornotescannotincreasethe

wealthofthecommunity,sincethatcommunityincludesthosewhopayaswellasthosewhoreceive.Slaverydoesnotincreasethewealthofapeople,


for what the masters gain the enslaved lose. Rising land values do notincreasethecommonwealth,aswhateverlandownersgainbyhigherprices,tenantsorpurchasersloseinpayingthem.All this relative wealth is undistinguished from actual wealth in

legislation and law, aswell as common thought and speech.Yetwith thedestructionofnothingmorethanafewdropsofinkandapieceofpaper,allthis“wealth”couldbeutterlyannihilated.Byanactof law,debtsmaybecanceled, slaves emancipated, land made common property. Yet theaggregate wealth would not be diminished at all—for what some wouldloseotherswould gain. Wealth was not created when Queen Elizabeth graced herfavorite courtiers with profitable monopolies, nor when Boris GodunovdeclaredRussianpeasantstobeproperty.The termwealth,when used in political economy, does not include all

thingshavinganexchangevalue.Itincludesonlythosethingsthatincreasetheaggregatewealthwhenproducedordecrease itwhendestroyed. Ifweconsiderwhat these things are andwhat their nature is, wewill have nodifficultydefiningwealth.Wespeakofacommunityincreasingitswealth.Forinstance,wesaythat

England increased its wealth under Queen Victoria, or that California iswealthierthanwhenitbelongedtoMexico.Bysayingthis,wedonotmeanthereismorelandornaturalresources.Wedonotmeansomepeopleowemoredebts toothers.Nordowemean therearemorepeople.Toexpressthatidea,wespeakofanincreaseinpopulation—notwealth.Whatwereallymeanistherewasanincreaseofcertaintangiblegoods—

thingsthathaveanactual,notmerelyarelative,value.Wemeanbuildings,cattle, tools, machinery, agricultural and mineral products, manufacturedgoods, ships, wagons, furniture, and the like. More of such things is anincreaseinwealth;lessofthemisadecreaseinwealth.Wewouldsaythecommunitywiththemostofsuchthings,inproportiontoitspopulation,isthewealthiest.What is the common characteristic of these things?They all consist of

naturalsubstances thathavebeenadaptedbyhuman labor forhumanuse.Wealth, then,may be defined as natural products that have been secured,moved,combined,separated,orinotherwaysmodifiedbyhumanexertionto fit them for thegratificationofhumandesires.Theirvaluedependson


theamountoflaborthat,onaverage,wouldberequiredtoproducethingsoflikekind.Inotherwords,itislaborimpresseduponmattersoastostoreupthepowerofhumanlabortosatisfyhumandesires,astheheatofthesunisstoredincoal.Wealth is not the sole object of labor, for labor is also expended to

directly satisfy human desires.Wealth is the result of what wemay callproductivelabor—thatis, laborthatgivesvaluetomaterialthings.Wealthdoes not include anything nature supplies without human labor. Yet theresult of labor is not wealth unless it produces a tangible product thatsatisfieshumandesires.Capitaliswealthdevotedtoacertainpurpose.Therefore,nothingcanbe

consideredcapitalthatdoesnotfitwithinthedefinitionofwealth.Butthoughallcapitaliswealth,allwealthisnotcapital.Capitalisonlya

particular part of wealth—that part devoted to aid production. We mustdrawalinebetweenwealththatiscapitalandwealththatisnotcapital.Ifwekeepthisinmind,wecaneliminatemisconceptionsthathaveledevengiftedthinkersintoamazeofcontradiction.Theproblem,itseemstome,isthattheideaofwhatcapitalishasbeen

deduced from somepreconceived ideaofwhat capitaldoes.Logicwoulddictate first determiningwhat something is, then observingwhat it does.Instead,thefunctionsofcapitalhavefirstbeenassumed.Thenadefinitionisfittedtoincludeeverythingthatdoes,ormayperform,thosefunctions.Let us adopt the natural order and ascertain what capital is before

declaringwhat it does. The term in general is well understood; we needonlymaketheedgessharpandclear.Ifactualarticlesofwealthwereshowntoadozenintelligentpeoplewhohadneverreadalineofeconomics,itisdoubtfulthattheywoulddisagreeatallaboutwhatwascapitalornot.Noonewouldthinkofcountingascapitalsomeone’swig,orthecigarin

themouthofasmoker,orthetoyachildplayswith.Butwewouldcount,withouthesitation,awigforsaleinastore,thestockofatobacconist,orthegoodsinthetoystore.Acoatmadeforsalewouldbeaccountedcapital;butnot the coat a tailor made to wear. Food used in a restaurant would becapital; but not food in a pantry. Part of a crop held for seed or sale, orgiven as wages, would be capital; the part used by the farmer’s familywouldnot.


I thinkwewouldagreewithAdamSmith thatcapital is“thatpartofaman’s stockwhich he expects to yield him a revenue.”As examples, helists:♦machinesandinstrumentsoftradethataidorlessen

labor;♦buildingsusedintrade,suchasshops,farmhouses,

etc.(butnotdwellings);improvementsoflandforagriculturalpurposes;goodsforsale,fromwhichproducersanddealers

expecttoderiveaprofit;♦rawmaterialsandpartiallymanufacturedarticlesstill

inthehandsofproducersordealers;♦completedarticlesstillinthehandsofproducersor

dealers.*Ifwe lookforwhatdistinguishescapital in this list,wewillnot find it

amongthecharacterorcapabilitiesofthe

* Smith’s original list included two items that do not fit under George’s definition ofcapital.Seeoriginaltext.

items(thoughvainattemptshavebeenmadetodoso).Thekey,itseemstome,iswhetherornottheitemisinthepossessionof

theconsumer.Wealthyettobeexchangediscapital.Wealthinthehandsoftheconsumerisnot.Hence,we can define capital aswealth in the course of exchange.We

must understand here that exchange does not meanmerely passing fromhandtohand—italsoincludestheincreaseinwealthfromthereproductiveortransformativeforcesofnature.Usingthisdefinition,wecanincludeallthethingsthatcapitalproperlyincludes,andeliminateallitdoesnot.Thisdefinitionincludesalltoolsthatarereallycapital.Forwhatmakesa

toolcapitaliswhetheritsusesorservicesaretobeexchangedornot.Thus,thelatheusedtomakethingsforexchangeiscapital;onekeptasahobbyisnot.Wealth used in the construction of a railroad, a theater, or a hotel iswealthinthecourseofexchange.Theexchangedoesnotoccurallatonce,but little by little, with an indefinite number of people—yet there is an


exchange.The consumers are not the owners, but rather the patronswhousethesefacilities.This definition is consistent with the idea that capital is that part of

wealth devoted to production of more wealth. But to say production ismerely “making things” is too narrow an understanding of the term.Productionalsoincludesbringingthingstotheconsumer.Storekeepersareas much producers as farmers or manufacturers. The stock in a store iscapital,anditisasmuchdevotedtoproductionasthecapitaloftheothers.We are not yet concerned with the functions of capital. That will be

easier to determine later. Nor is the definition itself important. I am notwritingatextbook;I am trying to discover the laws governing a great social problem. Mypurposeherehasbeentohelpthereaderformaclearideaofwhatthingsaremeantwhenwespeakofcapital.In ending this chapter, letme notewhat is often forgotten. Terms like

wealth,capital,andwages,asusedinpoliticaleconomy,areabstractterms.Nothingcanbestatedordeniedabout themunless itapplies to thewholeclass of things they represent. The idea of wealth involves the idea ofexchangeability. To possess a given amount of wealth is potentially topossess any or all types of wealth that would be equivalent to it inexchange.Ofcourse,thesameistrueofcapital.The failure tobear this inmindhas allowed fallacies,whichotherwise

wouldbetransparentlies,topassforobvioustruths.


Chapter3WagesAreProducedByLabor,NotDrawnFromCapital

The importanceofdefiningour termscanbeseenatonce in thischapter.Whenpeoplesaywagesaredrawnfromcapital, theyareobviouslyusingwagesintheeverydaysense,forgettingtheeconomicmeaning.Whenworkerstaketheirrewarddirectlyfromtheproductoftheirlabor,

theirwages clearly are not drawn fromcapital. If I go out andpickwildberries,thewagesformylaboraretheberries.Surelynoonewillarguethatwagesaredrawnfromcapitalinsuchacase—thereisnocapitalinvolved!If I work a piece of leather into a pair of shoes, those shoes are my

wages,theresultofmylabor.Theyarenotdrawnfromcapital,myownoranyoneelse’s.Theyarebroughtintoexistencebymyeffort,andmycapitalis not lessened at all—not even for a moment. At the start, my capitalconsistsof leather, thread, and soon.As Iwork,value is steadily added.Whentheshoesarefinished,Istillhavemycapital,plusthedifferenceinvalue between the original material and the shoes. This additional valuebecomesmywages.Adam Smith recognized that wages are the product of labor in such

simple cases. His chapter on wages begins: “The produce of laborconstitutesthenaturalrecompenseorwagesoflabor.Inthatoriginalstateof things which precedes both the appropriation of land and theaccumulationof stock, thewholeproduceof laborbelongs to the laborer.Hehasneitherlandlordnormastertosharewithhim.”IfSmithhadtracedthisobvioustruththroughmorecomplicatedformsof

production—recognizingwagesas theproductof labor,with landlordandmastermerely sharers—political economywould be very different today,notamessofcontradictionsandabsurdities.Instead,herecognizeditonlymomentarilyandabandoneditimmediately—restartinghisinquiryfromthepointofviewofthebusinessownerprovidingwagesfromhercapital.LetuspickupthecluewhereAdamSmithdroppedit.Proceedingstep

by step, we will see whether these relationships, obvious in simpleexamples,stillholdtrueinthemostcomplexformsofproduction.


In the“original stateof things,”aswehave seen, theentireproductoflaborbelongstotheworker.Nextinsimplicityarecaseswherewagesarepaidinkind.Thatistosay,workers’wagescomefromthethingsproducedby their labor,even though theymaybeworking foranotherorusing thecapitalofanother.Clearly, thesewagesaredrawnfromtheproductof thelabor, not from capital. Let’s say I hire workers to pick berries or makeshoes.Ithenpaythemfromtheberriesorshoes.Therecanbenoquestionthat the sourceof theirwages is the same labor forwhich they arebeingpaid.Take the next step where wages are estimated in kind, but paid in an

equivalentvalueofsomethingelse.Forinstance,thecustomonAmericanwhalingshipsistopayeachcrewmemberaproportionofthecatch.Attheendofasuccessfulcruise,ashipcarriesthewagesofhercrewinherhold,alongwiththeowner’sprofitsandreimbursementforstoresusedduringthevoyage. The oil and bone the crew have caught are their wages. Cananythingbeclearerthanthatthesehavenotbeendrawnfromcapital?Theyaretheproductoftheirlabor.Thisfactisnotchangedorobscuredintheleastwhenthecrewispaidin

cash. This is simply a matter of convenience: the value of each share isestimated at market price, instead of dividing the actual oil and bone.Moneyisjusttheequivalentoftheirrealwages:theoilandbone.Innowayisthereanyadvanceofcapitalinsuchpayment.Theobligationtopaythewhalersdoesnotaccrueuntilthevalueofthecatch,fromwhichwagesareto be paid, is brought into port.When the owner takes money from hercapitaltopaythecrew,sheaddstheoilandbonetohercapital.Sofar, therecanbenodispute.Letusnowtakeanotherstep: theusual

methodofemployinglaborbypayingwages.Acompanyhiresworkerstostayonanislandgatheringeggs,whicharesenttoSanFranciscoeveryfewdaystobesold.Attheendoftheseason,theworkersarepaidasetwageincash.Now,theownerscouldpaythemaportionoftheeggs,asisdoneinotherhatcheries.Theyprobablywould,iftherewereuncertaintyabouttheoutcome.Butsincetheyknowsomanyeggswillbegatheredbysomuchlabor,itismoreconvenienttopayfixedwages.Thiscashmerelyrepresentstheeggs—for thesaleofeggsproduces thecash topay thewages.Thesewagesaretheproductofthelaborforwhichtheyarepaid—justastheeggs


would be to workers who gathered them for themselves without theinterventionofanemployer.

Inthesecases,weseethatwagesinmoneyarethesameaswagesinkind.Isthisnottrueofallcasesinwhichwagesarepaidforproductive labor? Isn’t the fundcreatedby labor really the fund fromwhichwagesarepaid?Now,theargumentmaybemadethat thoseworkingfor themselvesget

nothingifsomedisasterspoilsthework;butthoseworkingforanemployergettheirwagesanyhow.Thisisnotarealdistinction,however.Generally,any disaster that prevents an employer from benefiting from labor alsoprevents the employer from payingwages.On thewhole, labor done forfixed wages produces more than the amount of the wages. Otherwise,employerscouldnotmakeanyprofit.Productionisthesourceofwages.Wagescomefromthefruitsoflabor—

not the advance of capital. Labor always precedes wages. This is truewhetherwagesarereceivedfromanemployer,orwagesaretakendirectlyfrom the efforts of the workers. Wages paid by an employer imply thepreviousrenderingoflaborbytheemployeeforthebenefitoftheemployer.Thisistruewhetherpaidbytheday,week,ormonth,orevenbythepiece.Though it is obvious the way I have explained it, many important

deductions are based on the opposite position. How can it be consideredplausible thatwages are drawn from capital? It beginswith the assertionthat labor cannotoperateunless capital supplies itwithmaintenance.Theunwary reader agrees that labormust have food and clothing in order towork.Havingbeentoldthatsuchitemsarecapital,thereaderthenacceptstheconclusionthatcapitalisrequiredbeforelaborcanbeapplied.Fromthismisdirection,itappearstobeanobviousdeductionthatindustryislimitedbycapital.Thatistosay,thatthedemandforlabordependsonthesupplyof capital. Hence, it appears to follow that wages are set by the ratiobetweenthenumberoflaborerslookingforemploymentandtheamountofcapitalavailabletohirethem.Afallacyexistsinthisreasoningthathasentangledsomeofthebrightest

minds in a web of their own spinning. But I think our discussion in theprevious chapterwill enableus to spot the error. It is theuseof the termcapitalintwodifferentsenses.


The primary proposition is that capital is required for labor. Here“capital” is understood as including all food, clothing, shelter, and so on.Whereasinthedeductionsdrawnfromit,capitalisusedinitscommonandlegitimatemeaning.Thatis:wealthdevotedtoprocuringmorewealth.Thisdoes not includewealth used for the immediate gratification of desire. Itmeanswealthinthehandsofemployersasdistinguishedfromlaborers.Sotosaythatworkerscannotworkwithoutfoodandclothingdoesnot

mean that only those who first receive breakfast and clothes from anemployermaywork.The fact is that laborers generally furnish their ownbreakfastsandtheirownclothes.Further,capitalistsarenevercompelledtomake advances to labor beforework begins (though in exceptional casestheymaychoosetodoso).Ofalltheunemployedlaborintheworldtoday,there isprobablynot a singleonewhocouldnotbehiredwithoutpayingwagesinadvance.Manywouldgladlywaituntiltheendofthemonthtobepaid,manymoreuntiltheendoftheweek,asmostworkersusuallydo.Theprecise timeis immaterial.Theessentialpoint is thatwagesarepaidaftertheperformanceoflabor.Wages always imply the previous rendering of labor. And what does

“renderingoflabor”imply?Theproductionofwealth.Ifthiswealthistobeusedinexchangeorinproduction,thenitiscapital.Therefore,thepaymentof capital inwages presupposes some production of capital—by the verylaborforwhichthosewagesarepaid.Since theemployergenerallymakesaprofit in this transaction,paying

wages is merely returning part of the capital received from labor. Theemployeegetspartofthecapitallaborhasproduced.How can it be said thatwages are advanced by capital or drawn from

preexisting capital? The value paid in wages is an exchange for valuecreatedbylabor.Andtheemployeralwaysgetsthecapitalcreatedbylaborbeforepayingoutcapitalinwages.Atwhatpoint,then,iscapitallessened,eventemporarily?NotethatIrefertolaborasproducingcapitalforsimplicity’ssake.Labor

always produces either wealth (which may or may not be capital) orservices.Onlyinanexceptionalcaseofmisadventureisnothingproduced.Now, sometimes labor is performed simply for the satisfaction of theemployer.Forexample,gettingone’sshoesshined.Suchwagesarenotpaidfromcapital,butfromwealthdevotedtoconsumption.Evenifsuchfunds


wereonceconsideredcapital,theynolongerare.Bytheveryact,theypassfromthecategoryofcapitaltothatofwealthusedforgratification.Itisthesameaswhenatobacconisttakescigarsfromthestockforsaleandpocketsthemforpersonaluse.Let’s testour reasoningagainst the facts.Consideramanufacturerwho

producesfinishedproductsfromrawmaterials,sayclothfromcotton.Thecompanypaysitsworkersweekly,asisthecustom.BeforeworkbeginsonMonday morning, we take an inventory of their capital. It consists ofbuildings,machinery,rawmaterials,moneyonhand,andfinishedproductsinstock.Afterworkhasendedfortheweekandwagespaid,wetakeanewinventory. For the sake of simplicity, we will assume that nothing wasboughtorsoldduringthatweek.Let us look at their capital now.Therewill be lessmoney, since some

waspaidoutinwages.Therewillbelessrawmaterial,lesscoal,andsoon.Adeductionforwearandtearmustbemadefromthevalueofthebuildingsandmachinery.But if thebusiness isprofitable, asmostare, the itemsoffinishedproductswillmorethancompensateforthesecosts.Therewillbeanetincreaseofcapital.Obviously, then,wageswere not drawn from capital. They came from

thevaluecreatedbylaboritself.Therewasnomoreanadvanceofcapitalthanifsomeonehiredworkerstodigclamsandpaidthemwiththeclamstheydug.Theirwagesweretrulytheproductoftheirlabor.Thesameas,inAdam Smith’s words, “before the appropriation of land and theaccumulationofstock.”This situation is similar to thatofbankdepositors:After theyhaveput

money in, they can take money out. By withdrawing what they havepreviouslyputin,thebankdepositorsdonotlessenthecapitalofthebank.Likewise, by receiving wages, the worker does not lessen, eventemporarily, the capital of the employer. Nor does the worker lessen thetotalcapitalofthecommunity.Itistrueworkersgenerallyarenotpaidinthesamekindofwealththey

havecreated.Likewise,banksdonotgivedepositorsthesamebillsorcoinstheydeposited—instead,theyreceiveitinanequivalentform.Werightlysaythebankgivesdepositorsthemoneytheypaidin.Sowearejustifiedinsayingworkersreceiveinwagesthewealththeycreatedwiththeirlabor.


This universal truth is often obscured becausewe confusewealthwithmoney,duetoourhabitofestimatingcapitalintermsofmoney.Moneyisageneralmediumof exchange, the common flow throughwhichwealth istransformedfromoneformtoanother.Difficulties in exchanging wealth generally show up on the side of

reducingwealth tomoney.Moneymayeasilybeexchangedforanyotherformofwealth.Yetsometimesitismoredifficulttoexchangeaparticularformofwealthformoney.Thereasonissimple:therearemorewhowanttomakesomeexchangeofwealththantherearethosewhowanttomakeaparticularexchange.Employerswhopaywages inmoneysometimes find itdifficult to turn

their products back into money quickly. They are spoken of as “havingexhausted”or“advanced”theircapitalinwages.Yetthemoneypaidoutinwages has, in fact, been exchanged for an increase in the value of theirproducts. (Only inexceptionalcases is thevaluecreatedby the labor lessthanwagespaid.)

The capital theyhadbefore inmoney, theynowhave ingoods. It hasbeenchangedinform—butnotlessened.Now, in some cases production may require months or years, during

whichnoreturnisreceived.Meanwhile,wagesmustbepaid.Suchcases—wherewagesarepaidbeforethedesiredresultsarecompleted—arealwaysgivenasexamplesofwagesadvancedfromcapital.Well,letussee.In agriculture, for instance, harvesting must be preceded by several

monthsofplowingandsowing.Similarly,intheconstructionofbuildings,ships,railroads,andsoon,ownerscannotexpectanimmediatereturn.Theymustwait,sometimesformanyyears.Inthesecases,itiseasytojumptothe conclusion that wages are advanced by capital—if fundamentalprinciplesareforgotten.ButifIhavemademyselfclear,thereaderwillnotbefooled.Asimpleanalysiswillshowthatsuchinstancesarenoexceptionto the rule. The fundamental principle is clear whether the product isfinishedbeforeorafterwagesarepaid.Let’ssayIgotoabrokertoexchangesilverforgold.AsIgivethemmy

silver, theyhandmetheequivalent ingold(minuscommission).Doesthebroker advanceanycapital?Certainlynot!What theyhadbefore ingold,theynowhaveinsilver(plusprofit!).Sincetheyreceivedthesilverbefore


paying out the gold, they did not—even for an instant—advance anycapital.The operation of the broker is exactly analogous to the cases we are

considering.Laborisrenderedandvalueiscreatedbeforewagesarepaid.Creatingvaluedoesnotdependonfinishingtheproduct—ittakesplaceateverystageof theprocess. It is the immediate resultof theapplicationoflabor.Nomatterhowlongtheprocess, laboralwaysaddscapitalbeforeittakes it in wages. The owner merely exchanges one form of capital foranother.Considerablacksmithhiredtomakesimplepickaxes.Clearly,thesmith

addspickstotheemployer’scapitalbeforetakingmoneyfromthatcapitalinwages.Butwhataboutaboilermakerworkingonagreatship?Onemaybecompletedinafewminutes,theothernotforyears.Yetbothareitemsofwealth,articlesofproduction.Eachday’sworkproduceswealthandaddscapital.Inthesteamshipasinthepick,itisnotthelastblow(anymorethanthe first) that creates the value of the finished product. Value is createdcontinuously—itistheimmediateresultoftheexertionoflabor.Weseethisquiteclearlywhendifferentpartsoftheprocessarecarried

outbydifferentproducers.Herewecustomarilyestimatethevalueoflaborinvariouspreparatory stages.Amoment’s reflectionwill show this tobethecaseinthevastmajorityofproducts.Takeabuilding,abook,oraloafofbread.Thefinishedproductswerenotproducedinoneoperationorbyonesetofproducers.Inclearlydefinedsteps,wecaneasilydistinguishthedifferent stages of creation and the value of materials. At each step, wehabituallyestimatethecreationofvalueandtheadditiontocapital.The bread from the baker’s oven has a certain value. But this is

composed, in part, of the value of the flour from which the dough wasmade. This, again, is composed of the value of the wheat and the valuegivenbymilling.Andsoon.Production isnotcompleteuntil the finishedproduct is in thehandsof

the consumer. Not, for example, when a crop of cotton is gathered; norwhenit isginned;normadeintoyarn;norevenintocloth.Theprocessisfinishedonlywhentheconsumerreceivesthefinishedcoatorshirtordress.Yet at each step, it is clear there is the creation of value—an addition tocapital.


Itmaytakeyearstobuildaship—butvalueiscreateddaybyday,hourbyhour, from theverystart.Thevalueof the finishedship is the sumofthese increments. No capital is advanced in paying wages during thebuilding,becauselaborproducesmorecapitalthanispaidback.Clearly,ifsomeoneaskedtobuyapartiallycompletedship,theownerwouldexpecttomakeaprofitatanystageofconstruction.Likewise,acompany’sstockdoes not lose value as capital in one form (wages paid) is graduallychangedintocapitalinanotherform(theship).Onthecontrary,onaverageitsvalueprobablyincreasesasworkprogresses.This isobvious inagriculturealso.Value isnotcreatedallatonce,but

stepbystepduringthewholeprocess.Aplowedfieldwillbringmorethananunplowedone;asownfieldmorethanonemerelyplowed.Theharvestismerelytheconclusion.Orchardsandvineyardsbringpricesproportionatetotheirage,eventhoughtoonewtobearfruit.Likewise,horsesandcattleincreaseinvalueastheymature.Wedonotalwaysdiscernthisincreaseinvalue, except at theusualpointsof exchange.Yet itmostdefinitely takesplaceeverytimelaborisexerted.Hence,wheneverlaborisrenderedbeforewagesarepaid,theadvanceof

capitalisreallymadebytheworker—nottheowner.Theadvanceisfromtheworkertotheemployer—notfromtheemployertotheemployed.Yet,youmayprotest,“Surelyinthecaseswehaveconsidered,capitalis

required!” Certainly. I do not dispute that. But it is not needed to makeadvancestolabor.Itisrequiredforquiteanotherpurpose,asweshallsee.SupposeIhireworkerstocutwood.IfIpayinkind,withaportionofthe

wood, it isclearnocapital isrequiredtopaywages.But it isofteneasierandmoreprofitabletosellonelargepilethanseveralsmallerones.Soformutualconvenience,Ipaywagesincashinsteadofwood.IfIcanexchangethewoodformoneybeforewagesaredue,Istilldonotneedanycapital.ItisonlywhenImustwaittoaccumulateaparticularquantityofwood

that any capital is required. Such quantitymight be needed before I canmakeanyexchange;ormerelybeforeIcangetthetermsIwant.Eventhen,IwillnotneedcapitalifIcanmakeapartialortentativeexchangebyborrowingagainstthewood.IwillneedcapitalonlyifIcannot—orchoosetonot—sellthewoodor

borrow against it. In other words, I will need capital only if I insist on


accumulating a large stock of wood. Clearly, I need this capital only toaccumulateastockofproduct—notforpayingwages.

Consider something more complicated, like cutting a runnel. If theworkmencouldbepaidinpiecesoftunnel,nocapitalforwageswouldberequired.Indeed,thiscouldbedoneeasilybypayingtheminstockofthecompany.Itisonlywhenthebackerswishtoaccumulatecapitalintheformofacompletedtunnelthattheyneedcapital.Let’sreturntoourinitialexampleofametalsbroker.Surelytheycannot

carryontheirbusinesswithoutcapital.Buttheydonotneedittomakeanyadvanceofcapitaltomewhentheytakemysilverandhandmebackgold.Theyneeditbecausethenatureoftheirbusinessrequireskeepingacertainamount of capital on hand, so they are prepared to make the type ofexchangethecustomerdesires.Weshallfinditthesameineverytypeofproduction.Capitalisrequired

onlywhenproductionisstoredup.Producersneverneedcapitaltoemploylabor. When they need capital, it is as merchants or speculators in theproductsoflabor.Thatis,inordertoaccumulatesuchproducts.Torecapitulate:Peoplewhoworkfor themselvesget theirwagesin the

thingstheyproduce,as theyproducethem.Theyexchangethisvalueintootherformswhenevertheyselltheseproducts.Thepeoplewhoworkforanotherandarepaidinmoney,workundera

contract of exchange. They, too, create their wages as they render theirlabor.Buttheyonlycollectthematstatedtimes,instatedamounts,andinadifferent form. In performing the labor, they are advancing on thisexchange.When theyget theirwages, theexchange iscompleted.Duringthetimetheyareearningwages,theworkersareadvancingcapitaltotheiremployer.Atnotime(unlesswagesarepaidbeforeworkisstarted)istheemployeradvancingcapitaltothem.Whethertheemployerchoosestoexchangetheoutputimmediatelyorto

keepitforawhileinnowayaltersthecharacterofthetransaction.Itmattersnomorethanthefinaldispositionoftheproductbytheultimateconsumer,whomaybe somewhere on another continent at the endof a long series,perhapshundreds,ofexchanges.


Chapter4WorkersNotSupportedByCapital

ButONEDOUBTmaylinger.Afarmercannoteatafurrow;norcanahalfbuilt loom weave clothes. John Stuart Mill asserted that people aremaintained“notbytheproduceofpresentlabor,butofpast.”Or,asanotherpopular text put it, many months elapse between sowing the seed andbakingthebread.*An assumption is made in these passages that appears selfevident.

Namely, that labormust subsist on capital produced by prior labor. Thisthought runs through the entire fabric of political economy. A relatedproposition is regarded as equally axiomatic. That is, that “populationregulatesitselfbythefundswhicharetoemployit,and,therefore,alwaysincreasesordiminisheswiththeincreaseordiminutionofcapital.”**Thisassumption,inturn,furtherinfluenceseconomicreasoning.Onreflection,however,weseethesepropositionsarenotselfevident—

theyareabsurd!Theyrequiretheassumptionthatlaborcannotbeexerteduntil the products of labor are saved. This puts the product before theproducer.

*MillicentGarrettFawcett(18471929),PoliticalEconomyforBeginners,Chap.III.** David Ricardo (17721832),Principles of Political Economy,Chap. II. The idea iscommoninmanyworks.Tosayapeopleeatbreakfastbeforegoingtoworkisnottosaythatthey

cannot go towork unless an employer provides breakfast. People do notdecide to eat or fast based on whether or not they propose to engage inproductivelabor.Theyeatbecausetheyarehungry.Thepropositionthatpresentlabormustbemaintainedbypastproduction

is true only in the sense that lunch provides the fuel for the afternoon’swork,orthatbeforeyoueatarabbit,itmustbecaughtandcooked.Clearlythis isnot thesense inwhich theproposal isused ineconomicreasoning.That sense is that a stock to support workers must already exist beforecarryingoutanyeffortthatdoesnotimmediatelyyieldwealthavailableforsubsistence.Letusseeifthisistrue.DidRobinsonCrusoe,*shipwreckedonanisland,havetoaccumulatea

stockoffoodbeforehebegantobuildhiscanoe?Notatall.Heneededonly


to spend part of his time getting food, and part of his time building thecanoe.Supposeahundredpeoplelandedinanewcountry.Wouldtheyhaveto

accumulate a season’s worth of provisions before they could begin tocultivatethesoil?Obviouslynot.Whatisrequiredisthatpartofthegroupfindenoughfish,game,andberriestosupportthemall.Andthat, throughmutualselfinterestorcommondesire, thosegatheringfoodin thepresentarewillingtoexchangeitwiththosewhoseeffortsaredirectedtowardtheharvestinthefuture.Whatistrueinthesecasesistrueinall.Producingthingsthatcannotbe

used immediately does not require the previous production ofwealth formaintainingworkersduringproduction.

*Heroofthenovelpublishedin1719byDanielDefoe(16601731),Englishwriter.Allthatisnecessaryis,withinthecircleofexchange,thecontemporaneousproductionof sufficient subsistence—assuming awillingness to tradeonefortheother.As a matter of fact, isn’t it true that, under normal circumstances,

consumption is supported by contemporaneous production? Imagine awealthyidlerwholivesonaninheritanceanddoesnoproductiveworkatall.Doesheliveonwealthaccumulatedinthepast?Onhistablearefresheggs,butter,andmilk;meatfromthebutcher;vegetablesfromthegarden.Inshort,hardlyanythinghasnotrecentlyleftthehandofproductivelabor,exceptperhapssomeoldbottlesofwine.Whatthismaninherited—andwhatheliveson—isnotactuallywealthat

all. It is only the power to command wealth, as others produce it. Hissustenance is clearly taken from productive labor going on around him.(Rememberwemustincludetransportersanddistributors,aswellasthoseinthefirststagesofproduction.)Londoncontainsmorewealththanthesamesizespacealmostanywhere

else.Yet if productive labor inLondonwere to stop completely,within afewmonthshardlyanyonewouldbe leftalive. It is thedaily laborof thecommunitythatsuppliesitsdailybread.Workersengagedinlongtermendeavorsaresupportedbyotherworkers

producing sustenance. They engage in their respective worksimultaneously.Tobuildamodernpublicprojecttakingyearstocomplete,


the government does not appropriate wealth already produced. It useswealthyettobeproduced—tobetakenintaxesfromproducersastheworkprogresses.

There may be a thousand intermediate exchanges in the circle ofexchange between two parties. A mechanic wants food, clothing, andshelterforherfamily.Howdoesherworkonanenginesecuretheseitems?Reduced to its most basic terms, the transaction really amounts to anexchangeoflaborbetweenherselfandtheproducersofthoseitems.Whatcausesamechanictoworkonanengine?Someonewiththepower

to give her what she wants is willing to exchange those things for anengine. In other words, there exists a demand for an engine from thoseproducingbread,meat,andsoon.Or,onestepremoved,thereisademandfor an engine from others who are producing still other things that arewantedbythoseproducingbread,meat,etc.Reversely,thedemandofthemechanicforbreadandmeatdirectsanequivalentamountoflabortowardthe production of those things. Thus, her labor produces, implicitly, thethingsshespendsherwageon.Toputthisinformalterms:The demand for consumption determines the direction inwhich labor

willbeexpendedinproduction.Allthecomplexitiesofoursubjectdisappearinlightofthissimpleand

obviousprinciple.Wesee therealobjectsandrewardsof laborwithin theintricacies ofmodern production.We reach the same conclusionswe didfromobservingthesimplerformsofproductionandexchangeinprimitivesociety.Weseethatnow,asthen,eachlaboreristryingtoobtain,byhisorherwork,thesatisfactionofhisorherowndesires.Theminutedivisionoflaborassignseachworkeronlyasmallpart—or

perhapsnothingatall—ofproducingtheparticularthingshedesires.Evenso,inhelpingtoproducewhatotherswant,heisdirectingtheirlabortoproducethethingshewants.Ineffect,heisproducingthemhimself.Thuswe see that, nomatterwhat is taken or consumed byworkers in

returnfortheirlabor,thereisnoadvanceofcapital.If Ihavemadeknivesandboughtwheat, Ihavesimplyexchangedone

fortheother.Ihaveaddedknivestotheexistingstockofwealthandtakenwheat from it. It cannot even be said that I have lessened the stock of


wheat.Forbyaddingknivestotheexchangeablestockofwealthandtakingout wheat, I have directed other labor—at the end of a long series ofexchanges—toproducemorewheat.Justthesameasthewheatgrower,byputtinginwheatanddemandingknives,guidedotherstoproduceknives.So farmers tend their fields,manymonths from harvest. Yet, by their

exertion in plowing, they are producing the food they eat and thewagestheyreceive.Forthoughplowingisonlypartofproducingacrop,it isasnecessary a part as the harvesting. By the assurance it gives of a futurecrop, it releases other items from the general stock, which is constantlyheld.Thesethenbecomethesubsistenceandwagesoftheplowman.Thisisnotmerelytheoreticallytrue.Itisliterallyandpracticallytrue.Theseriesofexchangesthatuniteproductionandconsumptionmaybe

likenedtoacurvedpipefilledwithwater.Ifaquantityofwaterispouredinat one end, a like quantity is released at the other. It is not the identicalwater,butisitsequivalent.Andsothosewhodotheworkofproductionputinwhattheytakeout.

What they receive in subsistence and wages is but the product of theirlabor.


Chapter5TheTrueFunctionsofCapital

We have seen that capital is not required to pay wages or support laborduringproduction.What,then,arethetruefunctionsofcapital?Capital, aswediscovered, iswealthused toprocuremorewealth.This

we distinguish from wealth used to directly satisfy human desires.Therefore,capitalmayalsobedefinedaswealthinthecourseofexchange.Capitalincreasesthepoweroflabortoproducewealthinthreeways:(1)byapplyinglaborinmoreeffectiveways(e.g.,diggingwithaspade

insteadofbyhand;orshippingbysteamshipinsteadrowingaboat).(2)bytakingadvantageof the reproductive forcesofnature (e.g.,growingmorecrops by sowing or more animals by breeding). (3) by permitting thedivision of labor. (This increases human efficiency by utilizing uniquecapabilities,acquiringspecialskills,andreducingwaste.Thisallowspeopleto produce each form of wealth where it is most favorable, by takingadvantageofsoil,climate,andlocation.)Therawmaterialthatlaborconvertsintowealthisnotcapital.Rather,it

ismaterial supplied by nature. Therefore, capital does not limit industry.Theonlythingthatlimitsindustryisaccesstonaturalmaterials.Itisclear,however,thatcapitalmaylimittheformor

theproductivenessof industry—by limiting the tools and the division oflaborrequiredforcertainmethodsofproduction.Withoutthefactory,therecan be no factory worker; without the plow, no plowman. Without theexchange of great capital, the many special forms of industry concernedwithexchangeswouldbeimpossible.The tools available also limit productiveness. Does the farmer have

enoughcapitalforaplow,ormustsheuseaspade?Mustthemechanicuseonlyahammer,ortheweaverahandloom?Capitalforthebesttoolscanmultiplyproductionbytenfold.Advanced civilization requires the minute subdivision of labor. The

modernworker can exchange her laborwith that of those around her, oreven around the world. To do this, there must be stocks of goods inwarehouses,stores,andships.Byanalogy,foracitydwellertodrawaglass


ofwater,theremustbemillionsofgallonsstoredinreservoirsandmovingthroughmilesofpipe.Buttosaythatcapitalmaylimittheformandproductivenessofindustry

isaverydifferentthingfromsayingthatcapitaldoeslimitindustry.Wecan,ofcourse,imagineacommunityinwhichlackofcapitalwould

be the only obstacle to increased productiveness of labor. But the onlyexamplesthatoccurtomearethewholesaledestructionofcapitalbywar,fire,ornaturaldisaster.Orpossibly,thefreshsettlementofcivilizedpeopleinanewland.Yetithaslongbeenknownthatcapitalisquicklyreplenishedafterwar,and thatanewcommunityswiftlymakesneededcapital.Otherthan such rare and passing conditions, I am unable to think of any othercaseswheretheproductivenessoflaborisreallylimitedbylackofcapital.Theremaybeindividualsinacommunitywhocannotapplytheirlaborasefficiently as they would like because they lack capital. Yet, so long asthereissufficientcapitalinthecommunityatlarge,thereallimitationisnotcapital,butitsproperdistribution.Indeed, even the limitation of form or productiveness may be more

theoretical than real. It is often said that poor countries need capital fordevelopment. But behind this “need”, can’t we perceive a greater want?One that includes—but is not the same as—lack of capital. Is it not theabusesofgovernment, theinsecurityofproperty,andtheignoranceof thepeople thatprevent theaccumulationanduseof capital?Badgovernmentmaystealcapitalbelongingtoworkers.Itmayseizewealththatproducerswould use for improvements. The real limitation ismisgovernment. Thesamewith ignorance, custom, or other conditions that hamper the use ofcapital.Thereallimitationsarethesethings,notthelackofcapital—whichwouldnotbeusedevenifplacedthere.GivingacircularsawtoaTerradelFueganoralocomotivetoaBedouin

nomadwouldnotaddtotheirefficiency.TheApacheandtheSiouxarenotkeptfromfarmingbywantofcapital.Ifprovidedwithseedsandtools,theystill would not use them productively—not until they chose to stop theirwandering lifestyle and learned to cultivate the soil. They have certainitems they are accustomed to using as their capital. Any wealth beyondthesewouldbeeitherconsumedorlefttowaste.IfallthecapitalinLondonweregiventothemintheirpresentcondition, itwouldsimplyceasetobe


capital.Theywoulduseonlyaninfinitesimalpartofittoassisttheminthehunt.

Yetanycapitaltheydodesire,theymanagetoget,sometimesdespitegreatdifficulties.Thesewild tribeshuntand fightwiththebestweapons thatourfactoriesproduce,keepingupwithall the latestimprovements.Itisonlyastheyadoptourcivilizationthattheyseekotherformsofcapital.Otherwise,suchthingswouldnotbeofanyusetothem.InthereignofGeorgeIV,missionariesbroughtaNewZealandchieftain,

called Hongi, to England. His noble appearance and beautiful tattooingattracted much attention. When he was to return to his people, he waspresented with a considerable stock of tools, implements, and seeds—thoughtful gifts from the monarch and some religious societies. Thegratefulchiefdidindeedusethiscapitaltoproducefood—butinamannerhis English benefactors could scarcely imagine. Returning throughAustralia,heexchangedhisoriginalcapitalforarmsandammunition.Oncehome,hewagedwaronanothertribewithsuchsuccessthat,afterthefirstbattle, threehundredprisonerswerecookedandeaten.Nowadays,Maorishave adopted European habits and stopped their warfare. Many of themhaveamassedconsiderablecapitalandputittogooduse.Itwould also be amistake to attribute the simple economies found in

newcommunitiessolelytotheneedforcapital.Theserudeandinefficientmodes of production and exchange require little capital. But when theconditions of such communities are considered,we find that they are, inreality,themosteffective.A modern printing press could produce thousands of pages, while a

Franklinpressmightmanageonlyahundred.Yettoprintasmalleditionofa country newspaper, the oldfashioned press is by far themore efficientmachine.Tooccasionallycarrytwoorthreepassengers,acanoeisabettermeans than a steamboat. And putting a great stock of goods into abackwoodsstorewouldbeawasteofcapital.Generally, itwill be found that thesemethods result not somuch from

lack of capital, as from inability to employ it profitably. Nomatter howmuchwateryoupourinabucket,itcanneverholdmorethanabucketful.These observations lead us irresistibly to some practical conclusions,

whichjustifythegreatpainswehavetakentomakesureofthem.Ifwagescomefromlabor,andnotcapital, thenthecurrenttheoriesareinvalid.We


mustdisregardall remediesbasedon them,whether theyareproposedbyworkers or professors of economics. Poverty cannot be alleviated byincreasingcapitalorby restricting thenumberofworkers. Ifeachworkercreates his or her ownwages, thenwages cannot be diminished bymoreworkers.Onthecontrary,labor’sefficiencyclearlyincreaseswhentherearemoreproducers.Otherthingsbeingequal,themorelabor,thehigherwagesshouldbe.But the necessary proviso is “things being equal.” This brings us to a

questionthatmustbedisposedofbeforewecanproceed:Dotheproductivepowers of nature decrease as greater demands are made by a growingpopulation?


SecondPart:PopulationandSubsistence


Chapter6TheTheoryofPopulationAccordingtoMalthus

Itissurprisingthatsomanyeducatedthinkerscouldhaveacceptedatheoryofwagesthatouranalysishasshowntobeutterlybaseless.Theexplanationfor this baffling fact can be found in the general acceptance of anothertheory. The theory of wages was never adequately examined because itseemed selfevident in the minds of economists when backed by theMalthusiantheory.This theory—published in 1798 by Rev. Thomas Malthus—postulates

that population naturally tends to increase faster than nature can providesubsistence. The two doctrines, fitted together, frame the answer to theproblemofpovertygivenbycurrenteconomicthought.Both theories derive additional support from a principle in Ricardo’s

theoryofrent.Namely,thatpastacertainpoint,applyingcapitalandlaborto landyields a diminishing return.Together, these ideas provide a likelyexplanation for the phenomena of a highly organized, advanced society.Thishaspreventedcloserinvestigation.MalthusbasedhistheoryonthegrowthoftheNorthAmericancolonies.

This, he concluded, showed that population naturally tended to doubleeverytwentyfiveyears.Thus,populationwouldincreaseatageometricalratio. Meanwhile, subsistence from land, under the most favorablecircumstances, could not possibly increase faster than in an arithmeticalratio.Thatis,toincreasethesameamounteverytwentyfiveyears.Inotherwords, population increases as 1, 2, 4, 8; while subsistence increases as1,2,3,4.“The necessary effects of these two different rates of increase, when

brought together,” Mr. Malthus naively goes on to say, “will be verystriking.”Heconcludesthatattheendofonlythefirstcentury,twothirdsof the populationwill be “totally unprovided for”;while in two thousandyears,“thedifferencewouldbealmostincalculable.”Sucharesult is,ofcourse,preventedby thephysical fact thatnomore

people can exist than can find food. Hence, Malthus concludes that thetendency of population to indefinite increase may be held back by twomeans. Population may be limited by “moral restraint” [i.e., sexual


abstinence]. Otherwise, various causes of increasedmortalitywill do thejob. He calls restraints on propagation the “preventive check.” Increasedmortalityhenamesthe“positivecheck.”This is the famous Malthusian doctrine, as promulgated by Malthus

himself inhisEssayonPopulation.The fallacious reasoning inassuminggeometricalandarithmeticalratesofincrease,ishardlyworthdiscussing.Itmerelyprovidesahighsoundingformulathatcarriesfarmoreweightwithmany people than the clearest reasoning. But this assumption is notessential. It is expressly repudiated by some who otherwise accept thedoctrine.Regardless,theessenceofMalthusiantheoryisthatpopulationtendsto

increase faster than the food supply. Malthus claims that populationconstantlytendstowardsincrease.Unlessrestrained,itwillultimatelypressagainstthelimitsofsubsistence,althoughsuchlimitsareelastic,notfixed.Nonetheless,itbecomesincreasinglydifficulttoproducesubsistence.Thus,whenever growth, over time, is unchecked by conscious restraint,populationwillbekeptincheckbyacorrespondingdegreeofdeprivation.Malthus unashamedlymakes vice and suffering the necessary result of

natural instinctandaffection.Despitebeingsillyandoffensive,aswellasrepugnant to our sense of a harmonious nature, it has withstood therefutationsanddenunciations,thesarcasm,ridicule,andsentimentdirectedagainst it. It demands recognition even from thosewhodonot believe it.Todayitstandsasanacceptedtruth(thoughIwillshowitisfalse).The reasons for its acceptance are not hard to find. It appears to be

backed by an indisputable mathematical truth—that a continuouslyincreasing populationmust eventually exceed the capacity of the earth tofurnish food, or even standing room. It is supported by analogies in theanimal and vegetable kingdoms, where life beats wastefully against thebarriersholdingdifferentspeciesincheck.Manyobviousfactsseemtocorroborateit.Forinstance,theprevalence

of poverty, vice, and misery amid dense populations. In addition, thegeneral effect of material progress is to increase population withoutrelievingpoverty. It ispointedout thatpopulationgrowsrapidly innewlysettledcounties. Itslowsinmoredenselysettledones,apparentlybecauseofmortalityamongthosecondemnedtopoverty.


Malthusian theory furnishes a general principle to explain these facts.Moreover,itaccountsfortheminawaythatharmonizeswiththedoctrinethat wages are drawn from capital—and with all the principles deducedfromit.Currentwagetheorysaysthatwagesfallasmoreworkerscompelafiner division of capital. Malthusian theory claims poverty arises asincreasedpopulationforcesfurtherdivisionofsubsistence.Itrequireslittleto make the two propositions as identical formally as they already aresubstantially.Merely identify capitalwith subsistence, and the number ofworkers with population. This identification is already made in currenteconomicwriting,wherethetermsareofteninterchanged.Ricardofurnishedadditionalsupportafewyearslater,bycorrectingthe

mistake Adam Smith had made regarding the nature and cause of rent.Ricardo showed that rent increases as a growing population extendscultivationtolessandlessproductiveland.This formeda triplecombinationof interlocking theories.Theprevious

doctrineofwagesand thesubsequentdoctrineof rentcanbeseen, in thisview,asspecialexamplesofthegeneralprincipleoftheMalthusiantheoryof population.Wages fall and rents risewith increasing population.Bothshowthepressureofpopulationagainstsubsistence.Toa factoryworker, theobviouscauseof lowwagesand lackofwork

appearstobetoomuchcompetition.Andinthesqualidghettos,whatseemsclearerthanthattherearetoomanypeople?Wemayalsonotethat,inourpresent state of society, most workers appear to depend upon a separateclassofcapitalistsforemployment.Undertheseconditions,wemaypardonthemasses—whorarelybothertoseparatetherealfromtheapparent.But the real reason for the triumph of the theory is that it does not

threatenanyvestedrightorantagonizeanypowerfulinterest.Malthuswaseminently reassuring to the classes who wield the power of wealth and,thus,largelydominatethought.TheFrenchRevolutionhadarousedintensefear.Atatimewhenoldsupportswerefallingaway,histheorycametotherescue.Itsavedthespecialprivilegesbywhichonlyafewmonopolizesomuchofthisworld.Itproclaimedanaturalcauseforwantandmisery.Malthus’purposewas

to justify existing inequality by shifting the responsibility from humaninstitutionstothelawsoftheCreator.Forifthosethingswereattributedtopolitical institutions, they would condemn every government. Instead, he


providedaphilosophy toshield therichfromtheunpleasant imageof thepoor; to shelter selfishness from question by interposing an inevitablenecessity.Poverty,want,andstarvationarenottheresultofgreedorsocialmaladjustment, it said.Theyare the inevitable resultofuniversal laws,ascertain as gravity.Even if the richwere todivide theirwealth among thepoor, nothing would be gained. Population would increase until it againpressed the limitsof subsistence.Anyequality thatmight resultwouldbeonlycommonmisery.Thus,anyreformthatmightinterferewiththeinterestsofanypowerful

classisdiscouragedashopeless.Nothingcanreallybedone,individuallyorsocially, to reduce poverty. This theory, while exploiting the erroneousthoughtsofthepoor,justifiesthegreedoftherichandtheselfishnessofthepowerful.Suchatheorywillspreadquicklyandstrikedeeproots.Recently,thistheoryhasreceivednewsupportfromDarwin’stheoryontheoriginofspecies.Malthusian theory seemsbut the application to human societyof“survival of the fittest.” Only “the struggle for existence,” cruel andremorseless, has differentiated humans from monkeys, and made ourcenturysucceedthestoneage.*Thusseeminglyproved,linked,andbuttressed,Malthusiantheoryisnow

generally accepted as an unquestionable truth: Poverty is due to thepressureofpopulationagainstsubsistence.Orinitsotherform,thenumberoflaborerswillalwaysincreaseuntilwagesarereducedtotheminimumofsurvival.Allsocialphenomenaarenowtobeexplainedinthislight—asforyears

theheavenswereexplainedbysupposingtheearthwasatthecenteroftheuniverse. If authority were the only consideration, argument would befutile. This theory has received almost universal acceptance in theintellectual world, endorsed by economists and statesmen, historians andscientists, psychologists and clergy, conservatives and radicals. It is held,and habitually reasoned from, by many who have never even heard ofMalthus,andhaven’ttheslightestideawhathistheoryis.Nevertheless,uponourinvestigation,thesupportingargumentsforwage

theory evaporated. So too, I believe, will vanish the grounds for thisdoctrine,whichisitstwin.*ThedebatebetweenDarwin’stheoryand“SocialDarwinism”hasgoneonintothe21stcentury.


Chapter7Malthusvs.Facts

Despite its endorsement by respected authorities, I believe we will findMalthusian theory utterly without support when we apply the test ofstraightforward analysis. Factsmarshaled in support do not prove it, andanalogies do not uphold it. Further, there are facts that conclusivelydisprove it. There is no justification in experience or analogy for theassumptionthatthereisanytendencyforpopulationtoincreasefasterthanthefoodsupply.The facts cited to support the Malthusian theory are taken from new

countries where population is sparse, or among the poor classes in oldcountrieswherewealthisdistributedunequally.Inthesecases,humanlifeisoccupiedwith thephysicalnecessitiesofexistence.Reproductionundersuchconditionsisatahighrate,which,if itweretogounchecked,mighteventually exceed subsistence. But it is not legitimate to infer thatreproduction would continue at the same rate under conditions wherepopulationwassufficientlydenseandwealthwasdistributedevenly.Theseconditions would lift the whole community above a mere struggle forexistence. Nor can one assume that such a community is impossiblebecausepopulationgrowthwouldcausepoverty.Thisisobviouslycircularreasoning, as it assumes the very point at issue. To prove thatoverpopulation causes poverty, onewould need to show that there are noothercausesthatcouldaccountforit.Withthepresentstateofgovernment,thisisclearlyimpossible.This is abundantly shown inMalthus’Essay onPopulation itself.This

famousbookisspokenofmoreoftenthanread.Thecontrastbetweenthemerits of the book itself and the effect it produced is one of the mostremarkableinthehistoryofliterature.Hisotherworks,thoughwrittenafterhebecamefamous,hadnoinfluence.Theyaretreatedwithcontempt,evenbythosewhoconsiderhistheoryagreatdiscovery.Malthus begins with the assumption that population increases in a

geometricalratio,whilesubsistencecanincreaseinanarithmeticalratioatbest.Thatisnomorevalidthantoassertthanthat,becauseapuppydoubledthe length of its tail while adding so many pounds of weight, there is


therefore a geometric progression of tail length and an arithmeticalprogression ofweight.We can imagine Jonathan Swift, the great satirist,describing the logical inference from such an assumption.Hemight havethesagesofapreviouslydoglessislanddeducingfromthesetworatiosthe“verystrikingconsequence”thatbythetimethedoggrewtofiftypoundsitstailwouldbeoveramilelong!This,ofcourse,thiswouldbeextremelydifficulttowag.Hence,theymustrecommendthe“prudentialcheck”ofabandage as the only alternative to the “positive check” of constantamputations.Aftercommencingwithsuchanabsurdity,theRev.Malthuscontinuesto

showthemostridiculousincapacityforlogicalthought.Themainbodyofthebookisactuallyarefutationoftheverytheoryitadvances.Hisreviewofwhathecallspositivecheckssimplyshowsthattheeffectsheattributesto overpopulation actually arise from other causes. He cites cases fromaround the world where vice and misery restrain population by limitingmarriagesorshorteninglifespan.Notinasinglecase,however,canthisbetracedtoanactualincreaseinthenumberofmouthsoverthepoweroftheaccompanyinghands to feed them. In every case, vice andmisery springeitherfromignoranceandgreed,orfrombadgovernment,unjust laws,orwar.NorhaswhatMalthusfailed toshowbeenshownbyanyonesince.We

maysearchtheglobeandsiftthroughhistoryinvainforanyinstanceofaconsiderablecountryinwhichpovertyandwantcanbefairlyattributedtothepressureofanincreasingpopulation.Whateverdangersmaybepossiblein human increase, they have never yet appeared. While this time maycome,itneveryethasafflictedmankind.Historically,populationhasdeclinedasoftenas increased.Ithasebbed

and flowed, while its centers have changed. Regions once holding greatpopulationsarenowdeserted,andtheircultivatedfieldsturnedtojungle.

New nations have arisen and others declined. Sparse regions havebecomepopulous anddense ones receded.But as far back aswe cango,withoutmerelyguessing,thereisnothingtoshowcontinuousincrease.Weareapttolosesightofthisfactaswecountourincreasingmillions.Asyet,the principle of population has not been strong enough to fully settle theworld.Whethertheaggregatepopulationoftheearthin1879isgreaterthan


at anyprevious time,wecanonlyguess.Comparedwith its capacities tosupporthumanlife,theearthasawholeisstillsparselypopulated.Anotherbroad,general fact isobvious.Malthusasserts that thenatural

tendency of population to outrun subsistence is a universal law. If so, itshould be as obvious as any other natural law, and as universallyrecognized.Why,then,dowefindnoinjunctiontolimitpopulationamongthecodes

of the Jews,Egyptians,Hindus, orChinese?Nor among any peoplewhohavehaddensepopulations?Onthecontrary, thewisdomof theagesandthereligionsoftheworldhavealwaysinstilledtheveryoppositeidea:“Befruitfulandmultiply.”IfthetendencytoreproduceisasstrongasMalthussupposes,thenhow

isitthatfamilylinessooftenbecomeextinct?Thisoccurseveninfamilieswherewantisunknown.InanaristocracysuchasEngland,hereditarytitlesand possession offer every advantage.Yet theHouse ofLords is kept upoverthecenturiesonlybythecreationofnewtitles.Tofindthesingleexampleofafamilythathassurvivedanygreatlapse

oftime,wemustgotoimmutableChina.There,descendantsofConfuciusstill enjoy peculiar privileges and consideration. Taking the presumptionthat population tends to double every twentyfive years, his lineage after2,150 years should include 859,559,193,106,709,670,198,710,528 souls.Yet, instead of any such unimaginable number, his descendants numberabout22,000total.Thisisquiteadiscrepancy!Further, an increase of descendants does not mean an increase of

population.Thiswould only happen if all the breedingwere in the samefamily.Mr. andMrs. Smith have a son and a daughter, who eachmarrysomeone else’s child. Each has two children. Thus,Mr. andMrs. Smithhave four grandchildren. Yet each generation is no larger than the other.While there are now four grandchildren, each child would have fourgrandparents.Supposingthisprocessweretogoonandon.Thelineofdescentmight

spreadouttothousands,evenmillions.Butineachgeneration,therewouldbe no more individuals than in any previous generation. The web ofgenerations is like latticework or the diagonal threads in cloth.Commencing at any point at the top, the eye follows lines that divergewidely at the bottom; but beginning at any point at the bottom, the lines


divergeinthesamewaytothetop.Howmanychildrenawomanmayhaveisvariable.Butthatshehadtwoparentsiscertain!Andthatthesealsohadtwo parents each is also certain. Follow this geometrical progressionthrougha fewgenerationsandsee if itdoesnot lead toquiteas“strikingconsequences”asMr.Malthus’peoplingofthesolarsystems.But let us now advance to specific cases. I assert that examples

commonly cited as instances of overpopulation will not bear up underinvestigation. India, China, and Ireland furnish the strongest of these. Ineach, great numbers have died of starvation, while entire classes werereducedtoabjectmiseryorcompelledtoemigrate.Butisthisreallyduetooverpopulation?Comparingtotalpopulationwithtotalarea,IndiaandChinaarefarfrom

being themost densely populated countries of theworld. The populationdensities [in1873]of IndiaandChinawere132and119persquaremile,respectively. Compare this to England (442), Belgium (441), Italy (234),andJapan(233).Thetotalpopulationoftheworldwasestimatedtobejustunder1.4billion,foranaverageof26.64persquaremile.

BothIndiaandChinahavelargeareasnotfullyused,orevenunused.There isnodoubt that theycouldsupportamuchgreaterpopulation—and in greater comfort. Labor is crude and inefficient.Meanwhile,greatnatural resourcesgountapped.Thisdoesnotarise fromanyinnatedeficiencyintheirpeople.Theydevisedtherudimentsofmanymodern inventionswhile our ancestorswere stillwandering savages.Theproblemarises from the formwhich socialorganizationhas taken inbothcountries. This has shackled productive power and robbed industry of itsreward.In India, from time immemorial, working classes have been ground

down by extortion and oppression into a condition of hopeless, andhelpless, degradation. For ages, peasants considered themselves happy iftheycouldkeepenoughtosupportlifeandsaveseedforthenextcrop.Allthewealth that couldbewrung from thepeoplewas in thepossessionofprinces, who were little better than thieves. Some they gave to theirfavorites; the rest theywasted in useless luxury. Religion, reduced to anelaborateandterriblesuperstition,tyrannizedtheirmindsasphysicalforcedidtheirbodies.


Capitalcouldnotbeaccumulatedsafelynorusedtoassistproductiontoanysignificantextent.Under theseconditions,onlyarts thatministered toostentation and luxury could advance. Elephants of the rajah blazedwithgold of exquisite workmanship; umbrellas symbolizing his regal powerglittered with gems. But the plow of the ryot (peasant) was only asharpened stick. Tools were of the poorest and rudest description.Commercecouldonlybecarriedonbystealth.It is clear that this tyranny and insecurity produced the want and

starvationofIndia.Populationdidnotproducewant,andwanttyranny.AsachaplainwiththeEastIndiaCompanyin1796noted:“WhenwereflectuponthegreatfertilityofHindostan, it isamazingto

considerthefrequencyoffamine.Itisevidentlynotowingtoanysterilityof soil or climate; the evilmust be traced to some political cause, and itrequiresbut littlepenetration todiscover it in theavariceandextortionofthe various governments. The great spur to industry, that of security, istaken away.Hence noman raisesmore grain than is barely sufficient forhimself,andthefirstunfavorableseasonproducesafamine.”ThegoodReverendthengoesontodescribethemiseryofthepeasantin

gloomy detail. The continuous violence produced a state under which“neither commerce nor the arts could prosper, nor agriculture assume theappearance of a system.” This merciless rapacity would have producedwantandfamineevenifthepopulationwerebutonetoasquaremileandthelandaGardenofEden.British rule replaced this with a power even worse. “They had been

accustomed to liveunder tyranny,butnever tyranny like this,” theBritishhistorianMacaulay*explained.“Itresembledthegovernmentofevilgenii,ratherthanthegovernmentofhumantyrants.”An enormous sumwasdrained away toEngland every year in various

guises.TheeffectofEnglishlawwastoputapotentinstrumentofplunderin the hands of native money lenders. Its rigid rules were mysteriousproceedingstothenatives.AccordingtoFlorenceNightingale,thefamoushumanitarian,terriblefamineswerecausedbytaxation,whichtooktheverymeansofcultivationfromfarmers.

* Lord Thomas Macaulay (18001859), English historian, in his essay on Lord Clive(17251774),theBritishgeneralwholedtheconquestofIndia.


They were reduced to actual slavery as “the consequences of our own[British]laws.”Eveninfaminestrickendistricts,foodwasexportedtopaytaxes.In India now, as in times past, only the most superficial view can

attributestarvationandwanttothepressureofpopulationontheabilityofland toproducesubsistence.Vastareasare stilluncultivated,vastmineralresourcesuntouched.Ifthefarmerscouldkeepsomecapital,industrycouldrevive and take on more productive forms, which would undoubtedlysupport a much greater population. The limit of the soil to furnishsubsistencecertainlyhasnotbeenreached.ItisclearthatthetruecauseofpovertyinIndiahasbeen,andcontinues

tobe,thegreedofman—notthedeficiencyofnature.WhatistrueofIndiaistrueofChina.AsdenselypopulatedasChinais

inmanyparts, the extremepoverty of the lower classes is not caused byoverpopulation.Rather, it is causedby factors similar to thoseatwork inIndia.Insecurity prevails, production faces great disadvantages, and trade is

restricted.Government isa seriesofextortions.Capital is safeonlywhensomeone has been paid off. Goods are transported mainly on men’sshoulders.TheChinese junkmust be constructed so it is unusable on theseas. And piracy is such a regular trade that robbers often march inregiments.Under these conditions, poverty would prevail and any crop failure

would result in famine, no matter how sparse the population. China isobviously capable of supporting amuch greater population. All travelerstestifytothegreatextent of uncultivated land, while immense mineral deposits existuntouched.Neither in India nor China, therefore, can poverty and starvation be

chargedtothepressureofpopulationagainstsubsistence.Millionsarenotkept on the verge of starvation (and occasionally pushed beyond it) bydense population—but rather by causes that prevent the naturaldevelopment of social organization and keep labor from getting its fullreturn.Letme be clearly understood. I do notmean only that India orChina

could maintain a greater population with a more highly developed


civilization.Malthusian doctrine does not deny that increased productionwouldpermitagreaterpopulationtofindsubsistence.But the essence of that theory is that whatever the capacity for

production, the natural tendency of population is to press beyond it. Thisproduces that degree of vice and misery necessary to prevent furtherincrease.Soasproductivepowerincreases,populationwillcorrespondinglyincrease.Andinalittletime,thiswillproducethesameresultsasbefore.I assert that nowhere is there an example thatwill support this theory.

Nowherecanpovertyproperlybeattributedtopopulationpressingagainstthepower toprocuresubsistenceusing the thenexistingdegreeofhumanknowledge. In every case, the vice and misery generally attributed tooverpopulationcanbetracedtowarfare,tyranny,andoppression.Thesearethe true causes that deny security, which is essential to production, andpreventknowledgefrombeingproperlyutilized.Laterwewilldiscoverwhypopulationincreasedoesnotproducewant.

Fornow,weareonlyconcernedwiththefactthatithasnotyetdonesoanywhere.This fact is obvious with regard to India and China. It also will be

obvious wherever we track the true causes of results that, on superficialview,areoftenassumedtocomefromoverpopulation.Ireland,ofallEuropeancountries, furnishes thegreat stockexampleof

allegedoverpopulation.ItisconstantlyreferredtoasademonstrationoftheMalthusian theory worked out under the eyes of the civilized world.Proponents cite the extreme poverty of the peasantry, the lowwages, theIrishfamine,andIrishemigration.Idoubtifwecouldfindamorestrikingexampleofhowapreacceptedtheoryhasthepowertoblindpeopletothefacts.Thetruthisobvious.Irelandhasneverhadapopulationitcouldnothave

maintainedinamplecomfort,giventhenaturalstateofthecountryandthecurrentstateoftechnologicaldevelopment.Itistrue,alargeproportionhasbarelyexisted,clothedinrags,withonlypotatoesforfood.Whenthepotatoblightcame,theydiedbythethousands.Didsomanyliveinmiserybecauseoftheinabilityofthesoiltosupport

them?Isthiswhytheystarvedonthefailureofasinglecrop?Onthecontrary,itwasthesameremorselessgreedthatrobbedtheIndian

ryot of the fruits of his labor and left him to starvewhere nature offered


plenty.Nomercilessbandittiplunderedthelandextortingtaxes,asinAsia.But the laborer was stripped just as effectively by a merciless horde oflandlords. The soil had been divided among them as their absolutepossession, regardless of the rights of those who lived upon it. Mostfarmers dared not make improvements, even if the exorbitant rents leftanything over. For to do sowould only have led to a further increase inrent. So labor was inefficient and wasteful. It was applied aimlessly,whereas had there been any security for its fruits, it would have beenappliedcontinually.Evenundertheseconditions,itisamatteroffactthatIrelanddidsupport

eightmillionplus.Forwhenherpopulationwasatitshighest,Irelandwasstillafoodexportingcountry.Evenduringthefamine,grain,meat,butter,and cheese destined for export were carted past trenches piled with thedead. So far as the people of Irelandwere concerned, this foodmight aswellhavebeenburnedorneverevenproduced.Itwentnotasanexchange,but as a tribute. The rent of absentee landlords was wrung from theproducersbythosewhoinnowaycontributedtoproduction.Whatifthisfoodhadbeenlefttothosewhoraisedit?Whatiftheywere

able tokeepanduse thecapitalproducedby their labor?What ifsecurityhad stimulated industry and more economical production? There wouldhavebeenenoughtosupportthelargestpopulationIrelandeverhad,andinbounteous comfort.Thepotatoblightmight have come andgonewithoutdeprivingevenasinglehumanbeingofafullmeal.ItwasnottheimprudenceofIrishpeasants,asEnglisheconomistscoldly

say,thatmadethepotatothestapleoftheirfood.Irishemigrantsdonotliveupon the potato when they can get other things. Certainly in the UnitedStates,theprudenceoftheIrishcharactertosavesomethingforarainydayis remarkable. The Irish peasants lived on potatoes because rack rentsstrippedthemofeverythingelse.ThetruthisthatthepovertyandmiseryofIrelandhaveneverbeenfairlyattributabletooverpopulation.Writing this chapter, I have been looking over the literature of Irish

misery. It is difficult to speak in civil terms about the complacencywithwhich Irishwant and suffering is attributed to overpopulation. I knowofnothingtomakethebloodboilmorethanthegrasping,grindingtyrannytowhich theIrishpeoplehavebeensubjected. It is this,notany inabilityofthelandtosupportitspopulation,thatcausedIrishpovertyandfamine.


No matter how sparse the population or what the natural resources,povertyandstarvationare inevitableconsequenceswhen theproducersofwealthareforcedtoworkunderconditionsthatdeprivethemofhope,selfrespect, energy, and thrift. They are inevitable when absentee landlordsdrain away,without return, at least a fourth of the harvest. In addition, astarving industry must support resident landlords, with their horses andhounds,agentsandjobbers,middlemenandbailiffs,aswellasanarmyofpolicemen and soldiers to hunt down any opposition to the iniquitoussystem.Isitnotblasphemytoblamethismiseryonnaturallawratherthanonhumangreed?What is true in these threecaseswillbe found true inallcases—ifwe

examinethefacts.Asfarasourknowledgegoes,wemaysafelysaytherehas never been a case in which the pressure of population againstsubsistence has caused poverty—or even a decrease in the production offoodperperson.OverpopulationisnomorethecauseofthefaminesofIndia,China,and

Ireland than it is of the famines of sparsely populated Brazil. And thelimitationsofNaturearenomoretoblameforpovertythantheyareforthemillionsslainbyGenghisKhan.


Chapter8Malthusvs.Analogies

Attempts to support the Malthusian theory with analogies are just asinconclusiveasthosewhichusefacts.The strength of the reproductive force in the animal and vegetable

kingdoms is constantly cited, from Malthus to current textbooks. Forinstance, if protected from their natural enemies, a single pair of salmonmight fill theentireocean,orapairof rabbitsoverrunacontinent.Manyplantsscatterseedsbythehundreds,andsomeinsectsdepositeggsbythethousands. Each species constantly tends to press against the limits ofsubsistence,andwhennotlimitedbyitsenemies,apparentlydoesso.These examples attempt to prove that human population also tends to

press against subsistence. Unless restrained by other means, this mustnecessarilyresultinlowwagesandpoverty.Andifthatisnotenough,thenactualstarvationwillkeepitwithinthelimitsofsubsistence.

Butisthisanalogyvalid?The human food supply is drawn from the animal and vegetable

kingdoms.Thereproductiveforceinthevegetableandanimalkingdomsisgreater thanamonghumans.Hence, thisanalogysimplyprovesthepowerof subsistence to increase faster than population. All of the things thatfurnish human subsistence have the power to multiply many fold,sometimesamillionfold.Meanwhile,humanity is merely doubling (even according to Malthus). Doesn’t thisshow that even if human beings increase to the full extent of theirreproductivepower,populationcanneverexceedsubsistence?There isoneadditional fact.Theactual limit toeachspecies lies in the

existenceofotherspecies:itsrivals,itsenemies,oritsfood.Humans, however, can extend the conditions that normally limit those

species giving our sustenance. (In some cases, our mere appearance willaccomplish this.) The reproductive forces of these species then begin toworkinserviceofhumans.Thisincreasecontinuesatapacethatourownpowersof increasecannot rival. Ifweshoothawks,birdswill increase; ifwetrapfoxes,rabbitswillmultiply.


Thisdistinctionbetweenhumansandallotherformsoflifedestroystheanalogy. Of all living things, only humans can manipulate reproductiveforcesstrongerthantheirowntosupplythemselveswithfood.Bird,insect,beast, and fish take onlywhat they find.They increase at the expense oftheir food. But the increase of humans will increase their food. Thepopulationof theUnitedStates,oncesmall, isnowfortyfivemillion.Yetthereismuchmorefoodpercapita.It isnot the increaseof food thathascaused the increaseofhumans—

rather,theincreaseofhumanshasbroughtaboutanincreaseoffood.Thereismorefoodsimplybecausetherearemorepeople.Thisisthedifference:Both humans and hawks eat chickens—but the more hawks, the fewerchickens;whilethemorehumans,themorechickens.Moreover,humansubsistenceinanyparticularplaceisnotboundbythe

physical limit of that place, but of the globe. Fifty square miles, usingpresentagriculturalpractices,willyieldsubsistenceforonlyafewthousandpeople. Yet over three million people reside in London—and theirsubsistence increases as population increases. So far as the limit ofsubsistence is concerned,Londonmay grow to a hundredmillion or fivehundredmillion.Foritdrawsuponthewholeglobeforsubsistence.Itslimitisthelimitoftheglobetofurnishfoodforitsinhabitants.ButanotherideaarisesthatgivesMalthusgreatsupport:thediminishing

productivenessofland.Beyondacertainpoint,sotheargumentgoes,landyields less and less to additional labor and capital.Otherwise, a growingpopulationwouldnotextendcultivationtoadditionalland.Acknowledgingthis appears to involve accepting the doctrine that a growing populationincreasesthedifficultyofobtainingsubsistence.Butifweanalyzethisproposition,weseethatitdependsonanimplied

qualification.Itistrueinarelativecontext,butnotwhentakenabsolutely.Productionandconsumptionareonly relative terms.Speakingabsolutely,people neither produce nor consume. They cannot exhaust or lessen thepowersofnature.Ifthewholehumanraceweretoworkforever,theycouldnotmaketheEarthoneatomheavierorlighter.Norcouldtheyaugmentordiminishtheforcesthatproduceallmotionandsustainalllife.*Watertakenfromtheoceanmusteventuallyreturntotheocean.Sotoo,

the foodwe take fromnature is, from themomentwe take it,on itswaybacktothosesamereservoirs.


*GeorgewaswritingbeforeEinsteinshowedthatmattercouldbeconvertedintoenergy.Modernphysicsspeaksoftheconservationofmatter/energy,whichstillsupportsGeorge’spoint.Whatwe draw from a limited extent of landmay temporarily reduce theproductivenessofthatland.Butthereturnwillgotootherland.Life does not use up the forces that maintain life. We come into the

materialuniversebringingnothing;wetakenothingawaywhenwedepart.Thehumanbeing, inphysical terms, is just a transitory formofmatter, achangingmodeofmotion.Fromthis,itfollowsthatthelimittopopulationcanbeonlythelimitof

space—that the human race may not increase its numbers beyond thepossibility of finding elbow room. Remote and shadowy as it is, thispossibilityiswhatmakesMalthus’theoryappearselfevident.Butthereisstillanotherdifference:Humansaretheonlyanimalswhose

desiresincreaseastheyarefed—theonlyanimalthatisneversatisfied.Thewantsofeveryother living thingare fixed.Theoxof todayaspires tonomorethantheoxthathumansfirstyoked.Theonlyusetheycanmakeofadditionalsupplies,oradditionalopportunities,istomultiply.Butnotsohumans.Nosoonerareouranimalwantssatisfied thannew

wants arise. The beast never goes further, but humans have just set theirfootonthefirststepofaninfiniteprogression.Once the demand for quantity is satisfied, we seek quality. As human

power to gratify our wants increases, our aspirations grow. At the lowerlevels of desire, we seekmerely to satisfy our senses.Moving to higherformsofdesire,humansawaken toother things.Webrave thedesert andthepolarsea,butnotforfood;wewanttoknowhowtheearthwasformedandhowlifearose.Wetoiltosatisfyahungernoanimalhasfelt,athirstnobeastcanknow.Givenmorefoodandbetterconditions,animalsandvegetablescanonly

multiply—but humanswill develop. In the one case, the expansive forcecan only extend in greater numbers. In the other, it will tend to extendexistenceintohigherformsandwiderpowers.None of this supports Malthus’ theory. Facts do not uphold it, and

analogydoesnotsupportit.Itisapurefigmentoftheimagination,likethepreconceptionsthatkeptpeoplefromrecognizingthattheearthwasroundandmovedaroundthesun.


Thistheoryofpopulationisasunfoundedasifwemadeanassumptionaboutthegrowthofababyfromtherateofitsearlymonths.Sayitweighedtenpoundsatbirthandtwentypoundsateightmonths.Fromthis,wemightcalculatea resultquiteas strikingas thatofMr.Malthus.By this logic itwouldbethesizeofanelephantattwelve,andatthirtywouldweighoverabilliontons.The fact is, there is no more reason to worry about the pressure of

populationuponsubsistencethanthereistoworryabouttherapidgrowthof a baby. We are no more justified in assuming that overpopulationproducespovertythanweareinassumingthatgravitymusthurlthemoontotheearthandtheearthintothesun.Malthusassertedwhathecalledpositiveandprudentialchecks.Athird

check comes into play with the development of intellect and increasedstandardsofliving.Thisisindicatedbymanywellknownfacts.Thebirthrateisloweramongclasseswhosewealthhasbroughtleisure,comfort,andafullerlife.Itishigheramongthepoorwho,thoughinthemidstofwealth,aredeprivedofitsadvantages,andthusarereducedtoananimalexistence.Itisalsohigherinnewsettlements.*This shows the real lawof population.The tendency to increase is not

uniform. It is strong where a larger population would allow greaterprogress.Itisalsostrongwheredangerousconditionsthreatenthesurvivalof the race. It weakens as higher development becomes possible, andsurvival is assured. In otherwords, the lawof population conformswith,andissubordinateto,thelawofintellectualdevelopment.Anydifficultyprovidingforanincreasingpopulationarisesnotfromthe

laws of nature, but from socialmaladjustments.These arewhat condemnpeopletowantinthemidstofwealth.Inthelasttwochapters,wehavesupportedanegative.Thatis,wehave

shown thatMalthusian theory is not proved by the reasoning set forth todefend it. The next chapter will take the affirmative and show that it isactuallydisprovedbythefacts.*This insight is referred to today as the “demographic shift,” and is extensivelydocumented.Inadditiontothecorrelationofimprovedlivingstandardswithlowerfertility,modern researchershave found thatbettereducatedwomen tend tohave fewerchildren,evenwhentheirincomesdonotactuallyincrease.


Chapter9MalthusianTheoryDisproved

Facts are the supreme and final test. Thewide acceptance ofMalthusiantheory is a remarkable example of how easily we can ignore facts whenblinded by a preaccepted theory. The question is whether an increasingpopulationnecessarilytendstoreducewagesandcausepoverty.Thisisthesameasaskingwhetheritreducestheamountofwealthagivenamountoflaborcanproduce.The accepted theory says that greater demands upon nature produce

diminishingresults.Thatis,lesswillbeproducedproportionaltoadditionaleffort.Doubling laborwillnotdoubleoutput.Thus,agrowingpopulationmust reducewages and deepen poverty. JohnStuartMill claimed a largepopulationcanneverbeprovidedforaswellasasmallerone.AllthisIdeny.Infact,Iassertthattheveryoppositeistrue.I assert that a larger population can collectively produce more than a

smallerone(inanygivenstateofdevelopment).I assert that poverty is not caused by overpopulation. It is caused by

socialinjustice,notbyanylimitationofnature.I assert that in the natural order of things, a growing population can

producemorethanisrequiredtoprovidefortheincreasednumbers.I assert that, other things being equal, each individual would receive

greatercomfortinalargerpopulation—underanequitabledistributionofwealth.

I assert that in a state of equality, the natural increase of populationwouldconstantlytendtomakeeveryindividualricherinsteadofpoorer.

Thus taking issuewith this theory, I submit thequestion to the test offacts.ButImustfirstwarnthereadernottoconfusetheissue,asevenwriters

ofgreatreputationhavedone.Forthequestionoffactintowhichthisissueresolvesitself isnot,whatsizepopulationproducesthemostsubsistence?Ratheritis,whatsizepopulationhasthegreatestpowertoproducewealth?Power toproducewealth inany form is the sameaspower toproduce

subsistence.Likewise,consumptionofwealthinanyformisequivalentto


consumptionofsubsistence.Forinstance,Imaychoosetobuyfoodorcigarsorjewelry.Byspending

onanyparticularitem,Itherebydirectlabortoproducethatitem.Wemaysayasetofdiamondshasavalueequaltosomanybarrelsofflour.Inotherwords, it takes (on average) the same amount of labor to produce thosediamonds as it would to produce so much flour. So giving my wifediamonds is as much an exertion of subsistenceproducing power as if Iloadedherwithsomanybarrelsofflourasanextravagantdisplay.

Similarly, a race horse requires care and labor enough formanyworkhorses.A regiment of soldiers diverts labor that could otherwise producesubsistenceforthousandsofpeople.Thus,thepowerofanypopulationtoproducethenecessitiesoflifeisnot

to be measured only by the necessities actually produced. Rather, it ismeasured by the total expenditure of power in all forms of production.Therefore we must ask, does the relative power of producing wealthdecreasewithanincreasingpopulation?There is no need for abstract reasoning; the question is one of simple

fact.Andthefactsaresoobviousthatitisonlynecessarytocallattentiontothem.In modern times, we have seen many communities increase their

population—and advance even more rapidly in wealth. Compare anycommunitieshavingsimilarpeopleinasimilarstageofdevelopment.Isn’tthemost densely populated community also the richest?Aren’t themoredenselypopulatedEasternstatesricherinproportiontopopulationthanthemoresparselypopulatedWesternorSouthernstates?Isn’tEngland,wherepopulationisevendenser,alsoricherinproportion?Wherewillyoufindwealthmostlavishlydevotedtononproductiveuses,

such as extravagant buildings, fine furniture, gardens, and yachts? It iswhere population is dense rather than sparse. Where will you find thegreatest proportion of those supported by the general production,withoutproductive labor on their part?By this Imean the range of gentlemenofleisure,thieves,policemen,servants,lawyers,peopleofletters,andthelike.It is where population is thick rather than thin. In which direction doescapital for investment flow? It flows fromdensely populated countries tosparseones.


Undeniably, wealth is greatest where population is densest. Therefore,the amount of wealth produced by a given amount of labor increases aspopulationincreases.Thisisapparentwhereverwelook.Let’sexamineaparticularcase:California.At firstglance, thisappears

tobeperhaps thebestexample supportingMalthus.Whilepopulationhasincreased,wages have decreased. In addition, its natural productivity hasobviouslylessened.ThewaveofimmigrationthatpouredintoCaliforniawiththediscovery

of gold found a country where nature was in the most generous mood.Primitive tools could easily extract gold from rivers where glitteringdepositshadbeenbuiltupover thousandsofyears.Theplainswerealivewithcountlessherdsofhorsesandcattle,andsoilwasbeing tilledfor thefirst time. Amid this abundance, wages and interest were higher thananywhereelseintheworld.Thisvirginprofusionhasbeensteadilyerodingunderthedemandsofan

increasingpopulation.Miningnowrequireselaboratemachineryandgreatskill.Cattlearebroughtinbyrail.Somelandnowinusewouldbarelyyieldacropwithoutirrigation.Duringthistime,wagesandinteresthavesteadilydeclined.Peoplewillnowworkaweekforwhattheyoncegotperday.But is this cause and effect? Are wages lower because the reduced

productivenessofnaturemeanslaboryieldslesswealth?Onthecontrary!Thepowerof labor toproducewealth inCalifornia in1879 is not less

than in1849—it isgreater.During theseyears, theefficiencyof laborhasincreased in many ways—by roads, harbors, steamboats, telegraphs, andmachineryofallkinds;byacloserconnectionwith the restof theworld;andbycountlesseconomiesresultingfromalargerpopulation.Noonewhoconsidersthiscandoubtanincreaseinproductiveness.The

return that labor receives fromnature is,on thewhole,muchgreaternowthanitwasinthedaysofunminedmineralsandvirginsoil.Theincreaseinhumanpowerhasmorethancompensatedforthedeclineinnaturalfactors.In fact, consumptionofwealth, compared to thenumberof laborers, is

muchgreaternowthanitwasthen.Backthen,populationconsistedalmostexclusivelyofworkingmen.Nowtherearemanywomenandchildrenwhomust also be supported. Others who do not produce wealth have alsoincreased in greater proportion. Luxury has grown far more than wages


have fallen.Thebesthousesoncewereshanties;now therearemansions.Therichestthenwouldseemlittlebetterthanpauperstoday.Inshort,thereisstrikingandconclusiveevidencethattheproductionand

consumption of wealth has increased faster than population. If any classgetsless,itisforonereasononly—becausethedistributionofwealthhasbecomemoreunequal.Thesame thing isobviouswhereverwe look.The richestcountriesare

not those where nature is most prolific, but those where labor is mostefficient. Not Mexico, but Massachusetts. Not Brazil, but Britain. Otherthingsbeingequal,countrieswiththedensestpopulationdevotethelargestproportionofproductiontoluxuryandthesupportofnonproducers.Theyarethecountrieswherecapitaloverflows.Inemergency,suchaswar,theycan stand the greatest drain. Though a much smaller proportion of thepopulationisengagedinproductivelabor,amuchlargersurplusisavailableforpurposesotherthansupplyingphysicalneeds.On the other hand, in a new country thewhole availableworkforce is

involvedinproduction.Therearenopaupersorbeggars.Neitherarethereidle rich, norwhole classeswhose labor is devoted toministering to theconvenienceorcapriceoftherich.Thereisnoliteraryorscientificclass,nocriminalclass,andnoclassmaintainedtoguardagainstthem.Yet,evenwiththewholecommunitydevotedtoproduction,thereisno

consumption ofwealth as in the old country. The condition of the lowerclasses, however, is better. Everyone can earn a living. Yet no one getsmuchmore.Few, ifany,can live inanything thatwouldbecalled luxury(or even comfort). In the older country, consumption of wealth inproportion to population is greater. At the same time, the proportion oflabor devoted to the production of wealth is less. In other words, fewerlaborersproducemorewealth.

Let us consider one last argument. Could the greater wealth of oldercountries be due to the accumulation of wealth, not greater productivepower?Thetruthis,wealthcanbeaccumulatedonlytoasmalldegree.Wealth

consistsofthematerialuniversetransformedbylaborintodesirableforms.Assuch,itconstantlytendstorevertbacktoitsoriginalstate.Somewealthwilllastonlyafewhours,othersfordays,months,orevenafewyears.But


there are really very few forms of wealth that can be passed from onegenerationtoanother.Takewealthinsomeofitsmostusefulandseeminglypermanentforms:

ships,houses,machinery.Unlesslaborisconstantlyappliedtopreserveandrepairthem,theywillquicklybecomeuseless.Iflaborweretostopinanycommunity, wealth would vanish. When labor starts again, wealth willreappear almost immediately. It is like the jet of a fountain that vanisheswhentheflowofwaterisshutoff.

Thisisclearwherewarordisasterhassweptawaywealth—but left the population unimpaired. London has no less wealthtoday because ofTheGreat Fire (1666).NorChicago because of its fire(1871).Onthosefiresweptacres,magnificentbuildings,overflowingwithgoods,havearisen.Avisitor,unawareofhistory,wouldneverdreamthesestatelyavenueslayblackandbareafewshortyearsago.Thissameprincipleisobviousineverynewcity—namely,thatwealthis

constantly recreated. No onewho has seenMelbourne or San Franciscocan doubt that if the population of England were transported to NewZealand—leavingallaccumulatedwealthbehind—itwouldsoonbeasrichasEnglandisnow.Conversely, ifEnglandwerereducedtothesparsenessofNewZealand, theywould soon be as poor—despite their accumulatedwealth. Wealth from generations past can no more account for presentconsumptionthanlastyear’sdinnerscangivestrengthtoday.Insum,agrowingpopulationmeansanincrease—notadecrease—inthe

average production ofwealth.The reason for this is obvious. It so vastlyincreasesthepowerofthehumanfactorthatitmorethancompensatesforany reduction in thenatural factor.Twentypeopleworking together, evenwherenatureisscant,canproducemorethantwentytimesthewealthoneperson canproducewherenature is bountiful.Thedenser thepopulation,thefinerthedivisionoflabor,andthegreatertheeconomiesofproductionanddistribution.ThusweseethattheveryreverseofMalthusiandoctrineistrue.Inany

givenstateofcivilization,agreaternumberofpeoplecanproducealargerproportionateamountofwealththancanasmallernumber.Cananythingbeclearer?Theweaknessofnaturalforcesisnotthecause

ofpovertyfesteringinthecentersofcivilization.Considerthosecountrieswhere poverty is deepest. If their productive forceswere fully employed,


theycould clearlyprovideenough for all.Theycouldnotmerelyprovidecomfort, but luxury. Industrial paralysis and depression obviously do notarise from lack of productive power.Whatever the trouble may be, it isclearlynotalackofabilitytoproducewealth.Povertyappearswhereproductivepower isgreatest and theproduction

ofwealth is largest.This is theenigma thatperplexes thecivilizedworld,the puzzle we are trying to unravel. It is obvious thatMalthusian theorycannot explain it. That theory is utterly inconsistent with all the facts. ItgratuitouslyattributestothelawsofGodresultsthatspringfromthesocialmaladjustments of humans. But we have yet to find exactly what doesproducepovertyamidadvancingwealth.


ThirdPart:TheLawsofDistribution


Chapter10TheNecessaryRelationoftheLawsofDistribution

Ourprecedingexaminationhasshownthat thecurrentexplanationfor thepersistenceofpovertydespiteincreasingwealthisnoexplanationatall.Butbydemolishingit,wehavemadethefactsappearevenmoreinexplicable.We have, in short, proved that wages should be highest where they areactuallylowest.At least we have discoveredwhere it is useless to look. The cause of

povertyisnotlackofcapital.Norisitthelimitationofnature.Inshort,itisnotfoundinlawsgoverningtheproductionofwealth.Therefore,wemustexaminethelawsgoverningitsdistribution.First,let’soutlinethedistributionofwealth.Sinceland,labor,andcapital

jointoproducewealth,theoutputmustthenbedividedamongthesethree.To discover the cause of poverty, we will have to find the law thatdetermineswhatpartisdistributedtolabor(wages).Thentomakesurethislawiscorrect,wemustalsofindthe lawsfixingwhatpartgoes tocapital(interest)andwhatparttolandowners(rent).Producingisnotsimplymakingthings—italsoincludesincreasingtheir

value by transporting or exchanging them. Wealth is produced by thecommercial community, just as it is by the agricultural ormanufacturingcommunity.Ineachcase,someofitwillgototheownersofcapital,sometolaborers,andsometotheownersofland.Additionally, since capital is constantly consumed and constantly

replaced,aportionofthewealthproducedgoestowardthereplacementofcapital.Itisnotnecessarytotakethisreplacementofcapitalintoaccount,however. It is eliminated by considering capital as continuous. Wehabituallydothis,bothinspeakingandthinkingofit.The produce of the community is the general fund that supports all

consumption.Thetermrefers towealthproducedbeyondwhat isrequiredto replace any capital consumed in theprocess.Therefore, interestmeanswhatgoestocapitalafteritsreplacementormaintenance.Furthermore, some of the wealth produced is taken by government in

taxes(except inthemostprimitivecommunities).Again,forourpurposesindeterminingthelawsofdistribution,wemayconsidertaxationeitheras


not existing or as reducing output by that amount. Certain forms ofmonopoly exercise powers analogous to taxation, and may be treatedlikewise.(Wewilldiscuss theseinChapter13.)Afterwehavediscoveredthelawsofdistribution,wecanthenseewhateffecttaxationhasupontheprocess.Economistsdonotunderstandtheselawscorrectly,aswemayseeinany

standard text. In all these works, we are told that the three factors ofproduction are land, labor, and capital, and that the entire output isdistributedtotheircorrespondingparts.Therefore, three termsareneeded.Eachshouldclearlyexpressoneparttotheexclusionoftheothers.Rent isdefinedclearlyenoughas thepart thatgoes toownersof land.

Thetermwagesisalsodefinedclearlyenoughasthepartthatisthereturnto labor. The third term, then, should express the return for the use ofcapital.But here, we find a problem. In standard economics books, there is a

puzzling ambiguity and confusion. The term that comes closest toexclusively expressing the idea of return to capital is interest. Interestimpliesthereturnfortheuseofcapital,exclusiveofanylaborinitsuseormanagement,andalsoexclusiveofrisk.Note that theword profits simplymeanswhat is received in excess of

what isexpended.Suchreceiptsmay includerentand interestandwages,including compensation for risk.* Therefore, profits cannot be used tosignifythesharegoingtocapital—asdistinctfromthatgoingtolaborandto landowners. The term has no place in discussing the distribution ofwealthbetweenthethreefactorsofproduction,unlessextremeviolenceisdonetoitsmeaning.Tospeakofthedistributionofwealthinto“rent,wages,andprofits”islikedividingmankindinto“men,women,andhumanbeings.”Yet,totheutterbewilderment of the reader, this is what is done in all standard works.Undoubtedly, thousandshavevainlypuzzledoverthisconfusionofterms,andabandoned theirefforts indespair.Believing thefaultcouldnotbe insuchgreat thinkers, theyassumed itmustbe theirownstupidity.ReadingJohn Stuart Mill, you can see this confusion exemplified by the mostlogical of English economists—in amannermore striking than I care tocharacterize.


*Today,someattributerisktakingtoadistinctfactor,called“entrepreneurism”.Georgedefinedlaborasallhumanexertioninproduction,whethermentalorphysical.Notext, tomyknowledge,bringstheselawstogethersothereadercan

recognizetheirrelationtoeachother.Instead,eachisenvelopedinamassof reflections and dissertations. The reason is not far to seek: Bringingtogether the threelawsofdistribution,as theyarenowtaught,showsataglancethattheylacknecessaryrelation.The laws of distribution are obviously laws of proportion. They must

relatetoeachothersothatgivenanytwo,thethirdmaybeinferred.Tosaythatonepartofthewholeisincreasedistosaythatoneorbothoftheotherpartsmustbedecreased(orviceversa).SayTom,Dick,andHarryarebusinesspartners.Theagreementsetting

the share of one also sets the shares of the other two, either jointly orseparately. If Tom gets thirty percent, that leaves seventy percent to bedividedbetweenDickandHarry.IfTomgetsthirtypercentandHarryfiftypercent,thatfixesDick’sshareattwentypercent.Butinstandardeconomictexts,thereisnosuchrelationamongthelaws

ofdistributionofwealth.Ifwefishtheselawsoutandbringthemtogether,wefindthemstatedasfollows:Wages are determined by the ratio between capital available for labor

andthenumberseekingemployment.Rentisdeterminedbythemarginofproduction.Thatis,rentequalsthe

amountofproduce inexcessofwhatcouldbeproducedfromthepoorestlandinusewiththesameamountoflaborandcapital.

Interestisdeterminedbythedemandsofborrowersandthesupplyofcapitalfromlenders.Or, ifwe takewhat is given as the law of profits, it is determined by

wages,fallingaswagesriseandrisingaswagesfall.(WhatMillcalls“thecostoflabortothecapitalist.”)Bringing these together, we immediately see a problem: They lack

relationtoeachother,whichthetruelawsofdistributionmusthave.Sincetheydonotcorrelate,atleasttwoofthethreemustbewrong.We must then seek the true laws of distribution that divide what is

producedintowages,rent,andinterest.Theproofthatwehavefoundthemwillbeintheircorrelation.

Torecapitulatewhatwehavediscoveredinourinvestigation:


Land, labor,andcapitalare thefactorsofproduction.Landincludesallnaturalopportunitiesorforces.Laborincludesallhumanexertion.Capitalincludesallwealthusedtoproducemorewealth.Theoutputisdistributedinreturnstothesethreefactors.Rentisthatpart

thatgoestoownersoflandaspaymentfortheuseofnaturalopportunities.Wagesarethatpartthatconstitutestherewardforhumanexertion.Interestisthatpartthatconstitutesthereturnfortheuseofcapital.Thesetermsmutuallyexcludeeachother.Theincomeofanyindividual

maybemadeup fromanyone, two, or all three of these sources.But todiscoverthelawsofdistributionwemustkeepthemseparate.Ithinktheerrorofpoliticaleconomyhasnowbeenabundantlyrevealed,

andcanbetracedtoanerroneousviewpoint.Weliveinasocietywherecapitalistsgenerallyrentlandandhirelabor.

Theythusseemtobetheinitiatorsorfirstmoversinproduction.Livingandmakingobservationsinthisstate,thegreatdevelopersofeconomicsciencewereledtolookoncapitalastheprimefactorinproduction.Theysawlandas its instrument,and laboras itsagentor tool.This isapparentoneverypage.Itisintheformandcourseoftheirreasoning,inthecharacteroftheirillustrations, and even in their choice of terms.Everywhere capital is thestartingpoint,andthecapitalistthecentralfigure.This goes so far that both Smith and Ricardo use the term “natural

wages”toexpresstheminimumonwhichlaborerscanlive.Onthecontrary,unlessinjusticeisnatural,everythingalaborerproduces

should be his natural wages. This habit of looking on capital as theemployer of labor began when Adam Smith, in his first book, left theviewpointthat“theproduceoflaborconstitutesthenaturalrecompenseorwagesoflabor.”Instead,headoptedtheviewinwhichcapitalisconsideredasemployinglaborandpayingwages.Butwhenweconsidertheoriginandnaturalsequenceofthings,wesee

thatthisreversesthenaturalorderofthings.Capitaldoesnotcomefirst,itcomeslast.Capitalisnottheemployeroflabor—itis,inreality,employedbylabor.Thematterthatlaborconvertsintowealthcomesonlyfromland.There

mustbelandbeforelaborcanbeexerted.Andlabormustbeexertedbeforecapital can be produced. Capital is a result of labor, a form of labor, asubdivisionofthegeneralterm.Itisonlystoreduplabor,usedbylaborto


assist it in further production. Labor is the active and initial force.Therefore, labor is theemployerofcapital,notviceversa—and it isevenpossibleforlabortoproducewealthwithoutbeingaidedbycapital.

Sothenaturalorderisthis:land,labor,capital.Insteadofusingcapitalasourinitialpoint,weshouldstartfromland.


Chapter11TheLawOfRent

Rent, in theeconomicsense, is thepartof theproduce thataccrues to theownersofland(orothernaturalcapabilities)byvirtueofownership.This differs from the everyday meaning in several respects. Common

speechmixespaymentsforuseofimprovementswithpaymentsforuseofbare land. When we speak of renting a house (or farm or factory), wecombine the price for using land with the price for using buildings,machinery,fixtures,etc.Butintheeconomicsense,rentmeansonlywhatispaidforusingland.Wemustexcludepaymentsfortheuseofanyproductof human exertion.Anythingpaid for buildingsor other improvements iscompensationfortheuseofcapital.Thisisproperlycalledinterest.But the economicmeaning is broader in a different sense. In common

speech,wespeakofrentonlywhentheownerandtheuseraretwodifferentpeople.Yetintheeconomicsense,thereisrentevenwhenthesamepersonis both. In this case, rent iswhat shemight get if she rented the land tosomeone else. Or, to look at it anotherway, the return for her labor andcapital(i.e.,herwagesandinterest)isthepartofherincomeequaltowhatshewouldmakeifshehadtorenttheland,insteadofowningit.

Rentisalsoexpressedinthesellingpriceofland.Thisprice is payment for the right to perpetual use. In otherwords, it is rentcapitalized. If I buy land and hold it until I can sell it for more, I willbecomerich—notfromwagesformylabornorinterestformycapital—butmerelybyrisingrents.Rent, in short, is theshareofwealthgiven to landownersbecause they

haveanexclusiverighttotheuseofthosenaturalcapabilities.Wherever land has an exchange value, there is rent in the economic

meaningoftheterm.Ifinuse,thereisactualrent.Iflandisnotinusebutstillhasavalue, there ispotential rent. It is thiscapacityofyielding rentthatgiveslanditsvalue.Untilownershipconferssomeadvantage, landhasnovalue.Therefore,

landvaluedoesnotarisefromitsproductivenessorusefulness.Nomatterwhatitscapabilities,landhasnovalueuntilsomeoneiswillingtopayfortheprivilegeofusingit.


Rentdoesnot,inanyway,representanyaidoradvantagetoproduction.Rentissimplythepowertotakepartoftheresultsofproduction.Furthermore,theamountanyonewillpayforlanddoesnotdependonits

capacity. Rather, it depends on its capacity compared to land that isavailableforfree.Evenverygoodlandhasnovalueaslongasotherland,just as good, is available without cost. But as soon as this other land isappropriated—andthebestlandnowavailablefornothingisinferior(eitherinfertility,location,orsomeotherquality)—thenmylandwillhavevalueand will begin to yield rent. Now, suppose my land becomes lessproductive.TherentIcangetmightstillincrease!Rentwillincreaseiftheproductivenessoflandavailablewithoutchargedecreasesevenmore.Rent, in short, is the price of monopoly. It arises from individual

ownership of the natural elements—which human exertion can neitherproducenorincrease.Ifonepersonownedallthelandinacommunity,heorshecoulddemand

anypricedesiredforitsuse.Aslongasthatownershipwasacknowledged,the others would have no alternative (except death or emigration). This,indeed,hasbeenthecasemanytimesinthepast.Inmodern society, land isusuallyownedby toomanydifferentpeople

forthepricetobefixedbywhim.Whileownerstrytogetalltheycan,thereisalimittowhattheycanobtain.Thismarketprice(ormarketrent)varieswithdifferentlandsandatdifferenttimes.The lawof rent, then,will be the lawor relation that determineswhat

rent or price an owner can get under free competition. (To discover theprinciples of political economy,wemust always assume free competitionamongallparties.)Fortunately,economistsagreeon thispoint. It isanaccepteddictumof

politicaleconomy,withtheselfevidentcharacterofageometricaxiom.Ofcourse, in all the nonsense printed as economics in its present disjointedcondition,itwouldbehardtofindanythingthathasnotbeendisputed.Yetalleconomicwritersregardedasauthoritiesendorsethislaw.OftencalledRicardo’slawofrent,*ithasbeenexhaustivelyexplainedbyallleadingeconomistsafterhim.Itappliesnotonlytofarmland,buttolandused for other purposes, and to all natural agencies, such as mines,fisheries,etc.Itsays:


*DavidRicardo(17721823)Englisheconomist.Althoughnotthefirsttostatethelawofrent,hebroughtitintoprominence.

Therentof landisdeterminedbytheexcessof itsproductionoverthatwhich the same application can secure from the least productive land inuse.The effect of competition is to take the lowest reward forwhich labor

and capitalwill engage in production andmake that thehighest they canclaim.Inotherwords,ownersofmoreproductivelandareabletoseize,inrent, everything above what labor and capital can obtain from the leastproductivelandinuse.Wecansaythesamethinginaslightlydifferentform:Landownerscan

claim everything above what the same application of labor and capitalcould secure in the least productive occupation in which they can freelyengage. Since any occupation requires the use of land, this amounts topreciselythesamething.Furthermore,all thingsconsidered,landswillbeused until the poorest return equals the lowest compensation in otherpursuits.For instance, if farming paid more, clearly some labor and capital

engagedinotherpursuitswouldturntoagriculture.Thiswillcontinueuntilthe yield to labor and capital in both pursuits reaches the same level, allthingsconsidered.Theprocessmaybedrivenbyextendingcultivation toinferiorland.Ortherelativevalueofmanufacturedproductsmayincreaseasproductionslows.Infact,bothprocessesmaybeatwork.Regardless,thefinalpointatwhichmanufacturingisstillcarriedonwillalsobethepointtowhichcultivationisextended.The lawof rent is, in fact,adeduction fromthe lawofcompetition. In

thefinalanalysis,itrestsonaprincipleasfundamentaltopoliticaleconomyasthelawofgravityistophysics.Namely,thatpeopleseektogratifytheirdesireswiththeleastexertion.EversinceRicardo,thebasiclawitselfhasbeenclearlyunderstoodand

recognized— but its corollaries have not. Yet these are as plain as thesimplest geometry. Wealth is divided among rent, wages, and interest.Therefore,thelawofrentisnecessarilythelawofwagesandinteresttakentogether.

Inalgebraicform:


Production=Rent+Wages+Interest.ProductionRent=Wages+Interest.

Thus, wages and interest do not depend on what labor and capitalproduce—theydependonwhatisleftafterrentistakenout.Nomatterhowmuchtheymightactuallyproduce,theyreceiveonlywhattheycouldgetonland available without rent—on the least productive land in use.Landowners takeeverythingelse.Hence,nomatterhowmuchproductivepower increases,neitherwagesnor interestcan rise if the increase in rentkeepspacewithit.Recognizing this simple relationship immediately illuminateswhat had

seemedinexplicable.Increasingrentisthekeythatexplainswhywagesandinterestfailtoincreasewithgreaterproductivity.Thewealth produced in every community is divided into two parts by

whatmaybecalledtherentline—thatis,bythereturnthatlaborandcapitalcouldobtain fromnaturalopportunitiesavailablewithout rent.Wagesandinterestarepaidfrombelowthisline.Everythingaboveitgoestorent.Thus,where land values are low,wages and interest are high—even if

relatively littlewealth isproduced.Wesee this innewcountries. Inoldercountries,alargeramountofwealthmaybeproduced.Yetwherethevalueoflandishigh,wagesandinterestarelow.Productive power is increasing in all developing countries—butwages

and interest do not follow. Rather, they are controlled by how rent isaffected. Wages and interest can increase only when land values do notincreaseasquicklyasproductivity.

Allofthisisdemonstratedinactualfact.


Chapter12TheCauseofInterest

Wehavedeterminedthelawofrentanditsnecessarycorollaries.Still,let’sseek each law separately and independently—without deduction from thelawofrent.Ifwediscoverthemindependently—andfindtheycorrelate—then our conclusions will be certain. To start, let’s examine the generalsubjectofinterest.I have alreadywarned of confusing profits with interest. Additionally,

the economic meaning differs from common usage. Interest properlyincludesallreturnsfortheuseofcapital—notjustpaymentsfromborrowertolender.Further, the economicmeaning excludes compensation for risk—which

makes up a great part of what is commonly called interest. Butcompensationforriskismerelyanequalizationofreturnbetweendifferentuses of capital.Wewant to discoverwhat determines the general rate ofinterestproper.Ratesalsovaryconsiderablyindifferentcountriesandatdifferenttimes.

Interest generally has been higher in the United States than in England.Indeed, it has longbeenwell known that interest tends to sinkas societyprogresses.What can bind these variations together and reveal their cause? It is

obvious that current explanations run counter to facts. It is easily provedthatinterestdoesnotdependonproductiveness,forinterestislowestwherelaborandcapitalaremostproductive.Nordoesinterestvaryinverselywithwages. The fact is, interest is high when and where wages are high.Likewise,lowinterestandlowwagesarefoundtogether.Soletusbeginatthebeginning.Evenattheriskofdigressing,wemust

establish the cause of interest before considering its law. In otherwords,why should borrowers pay back more than they received from lenders?Whyshouldtherebeinterestatall?The standard texts all claim interest is a reward for abstinence. But

abstinence is a passive quality, not an active one. Abstinence in itselfproducesnothing.Sowhyshouldpartofanythingproducedbegivenforit?IfIburymymoneyforayear,IhaveexercisedasmuchabstinenceasifI


hadloanedit.Yetwhenloaned,Iexpectittobereturnedwithanadditionalsumasinterest.SomemaysayIprovideaservicetotheborrowerbylendingmycapital.

Buttheborroweralsodoesmeaservicebykeepingitsafely.Undersomeconditions, such a service may be very valuable. Many forms of capitalmustbeconstantlymaintained,anoneroustaskifthereisnoimmediateusefor them. The secure preservation, themaintenance, or the restoration ofcapitalisanoffsettoitsuse.Soisn’tthedebtdischargedwhenthecapitalisreturned?Accumulationisthepurposeofabstinence.Itcandonomore.Infact,by

itself,itcan’tevendothis.Thinkhowmuchwealthwoulddisappearinjustafewyearsifwesimplyabstainedfromusingit!Bastiat*andmanyotherssaythebasisofinterestis

“thepowerwhich exists in tools to increase theproductivenessof labor.”Clearly,however,thisisnotthebasisinjusticeorinfact.Afallacyallowsittopassasconclusivetothosewhodonotstoptoanalyzeit.It is truethattools increase labor’sproductivepower.Themistake lies inassumingthattheloantransfersthispower.Thisisreallynotinvolved.

* Frederic Bastiat (18011850), French economist, gave a wellknown illustration ofinterestinvolvingtheloanofacarpenter’splane.George’sanalysisofthefallaciesinthisillustrationissomewhatcomplex.Itisnotnecessaryforourdiscussionhere.Theessentialthingloanedisnottheincreasedpowerthatlaboracquires.

To suppose this, we would have to assume that such things were tradesecretsorpatentrights.Insuchcase,theillustrationwouldbecomeoneofmonopoly, not capital. The essential thing loaned is this: the use of theconcrete results of the effort expended in producing the tools—not theprivilegeofapplyinglaborinamoreeffectiveway.If interestwere based on increased productiveness, the rate of interest

wouldincreasewithtechnology.Thisisnotso.NordoIexpecttopaymoretoborrowafiftydollarsewingmachinethantoborrowfiftydollars’worthofneedles.NorifIborrowasteamengineratherthanapileofbricks.Capital,likewealth,isinterchangeable.Itisnotoneparticularthing—it

is anythingwithin thecircleof exchange.Moreover, tools andmachinerydonotaddtothereproductivepowerofcapital—theyaddtotheproductivepoweroflabor.


Now,considerforamomentaworldinwhichwealthconsistedonlyofinert matter, and production was only working this inert matter intodifferentshapes.Suchthingshavenoreproductivepoweroftheirown.IfIputawayhammersorbarrelsormoney,theywillnotincrease.

Butsuppose,instead,Iputawaywine.Attheendof a year, the wine will have improved in quality and its value will begreater.OrsupposeIreleaseaswarmofbees.Attheendofayear,Iwillhavemore bees, aswell as the honey they havemade.Or suppose I putcattleoutontherange.Attheendoftheyear,Iwill,onaverage,alsohaveanincrease.What provides the increase in these cases is something distinct and

separate from labor.Though it generally requires labor tomakeuseof it,wecanreadilydistinguishitfromlabor.Itistheactivepowerofnature—theprincipleofgrowth,or reproduction,which characterizes all formsofwhatwecalllife.Itseemstomethatthisisthetruecauseofinterest—thatis,theincrease

ofcapitaloverandabovethatduetolabor.Certainpowersinnature—withaforceindependentofourownefforts—helpusturnmatterintoformswedesire.Inotherwords,theyaidusinproducingwealth.Bothtypesofthingsareincludedinthetermswealthandcapital—things

thathavenoinnatepowerofincrease,andthingsthatyieldoverandabovewhat can be attributed to labor.With inanimate things, labor alone is theefficientcause.When laborstops,allproductionstops.But in theseothermodes, time is an element.The seed growswhether the farmer sleeps orworks.Furthermore, there are also variations in the powers of nature and of

people. Through exchange, these variations can be used to obtain anincreaseinnetoutput.Thissomewhatresemblestheincreaseproducedbythevitalforcesofnature.For instance, in one place a given amount of labor will secure either

whatwemaycall200unitsofvegetablefoodor100unitsofanimalfood.Inanotherplace,theconditions are reversed: The same amount of labor will produce 100 ofvegetableor200ofanimalfood.Therelativevalueofanimaltovegetablefoodwillbetwotooneinonelocation,butonetotwointheother.Ifequalamountsarerequired,thesameamountoflaborineitherplacewillsecure


150 units of both. But suppose in one place labor is used to procurevegetables,whileintheothertoprocureanimalfood.Thenanexchangeismade in thequantity required.Thus, thepeople of eachplace—with thesame amount of labor—will acquire 200 of both (less the losses andexpensesofexchange).Ineachplace,theproductthatisexchangedbringsbackanincrease.Since wealth is interchangeable, it necessarily involves an average

betweenalltypesofwealth.Soanyspecialadvantagethataccruesfromthepossessionofanyoneparticulartypemustbeaveragedwithallothers.Forno onewould keep capital in one formwhen it could be changed into amoreadvantageousform.So,inanycircleofexchange,thepowerofincreasethatnaturegivesto

someformsofcapitalmustbeaveragedwithallformsofcapital.Thereby,thosewholendmoneyorbricksarenotdeprivedofthepowertoobtainanincrease.Theywillgetthesameasiftheyhadlent(orused)anequivalentamountofcapitalinaformcapableofincrease.This general averaging—or “pooling” of advantages— inevitably takes

place wherever society carries on different modes of productionsimultaneously. Thus, all types ofwealthmaintain similar advantages. Inthefinalanalysis, theadvantagegivenby timecomesfromthegenerativeforceofnatureandfromthevaryingpowersofnatureandofpeople.Ifthequalityandcapacityofmattereverywherewereuniform,andifproductivepowerexistedonlyinhumans,thentherewouldbenointerest.IfIhaveathousanddollars,Icancertainlyloanitoutatinterest.Butthat

doesnotarisebecausethosewithoutfundswouldgladlypaymefortheuseof it. Rather, it comes from the fact that capital, which my moneyrepresents, has the power to yield an increase. The price something willbringdoesnotdependsomuchonwhatthebuyerwouldbewillingtogiveratherthangowithoutit—itdependsonwhatthesellercangetotherwise.Interestisnotapaymentmadefortheuseofcapital—itisareturnaccruingfromtheincreaseofcapital.Inshort,then,whenweanalyzeproduction,itfallsintothreemodes:ADAPTING—Changingnaturalproducts,informorplace,tofitthemtosatisfyhumandesire.


GROWING—Utilizingthevitalforcesofnature,asinraisingvegetablesoranimals.

EXCHANGING—Increasing the general sum of wealth by exploitinglocal variations in the forces of nature, or variations among humanforcesduetosituation,occupation,orcharacter.

Inadapting,capitalgains itsbenefit in itsuse. Ingrowing, thebenefitsarisenot fromusebut fromincrease. Inexchanging,capital isexchangedrather thanused.Thebenefit is in the increase,orgreatervalue,of thingsreceivedinreturn.Essentially,benefitsarisingfromusegotolabor;thosefromincreasegotocapital.Butthedivisionoflaborandtheinterchangeabilityofwealthcompelan

averagingofbenefits.Forneitherlabornorcapitalwillpursueanymethodofproductionwhileanotherisavailableofferingagreaterreturn.Wecan say this anotherway. In adapting, laborwill not get thewhole

return—butlessenoughtogivecapitaltheincreaseitcouldhavegottenintheothermodes.Likewise,capital in thesecondand thirdmodeswillnotget thewhole increase—but lessenough togive labor the reward it couldhavegottenfromthefirstmode.Thus,interestspringsfromthepowerofincreasegiventocapitalbythe

reproductive forces of nature, or by the analogous capacity of exchange.This isnot arbitrary, it isnatural. It isnot the resultof aparticular socialorganization,butoflawsoftheuniverse.


Chapter13FalseInterest

TheBELIEFthat interest isaformofrobbery is, Iampersuaded, largelydue toafailure todiscriminatebetweenwhat is reallycapitalandwhat isnot.True interest is often confusedwith revenue from sourcesother thanuseofcapital.Incommonspeech,wecallanyonea“capitalist”whomakesmoney independentof labor.Further, anything received fromanykindofinvestment is labeledinterest.Beforewedecidewhether laborandcapitalreally are in conflictwe should clear up somemisconceptions thatmightcloudourjudgment.An enormous part ofwhat is commonly called capital is actually land

value—itisnotcapitalatall.Rentisnottheearningsofcapital,andmustbecarefullyseparatedfrominterest.Additionally,what areproperly termed“wagesof superintendence”are

oftenconfusedwith theearningsof capital.This includes incomederivedfromsuchpersonalqualitiesasskill,tact,andorganizationalability.Stocks and bonds constitute another large part of what is commonly

called capital. These are not capital either— they are simply evidence ofindebtedness. Always remember that nothing can be capital that is notwealth.Itmustconsistofactual,tangiblethingsthatsatisfyhumandesires.Theycannotbethespontaneousofferingsofnature.Andtheymustfulfillourdesiresbythemselves,directlyorindirectly,butnotbyproxy.Thus, a government bond is not capital—nor does it even represent

capital.Anycapitaloncereceivedforithasbeenshotfromcannonsorusedtokeepmenmarchinganddrilling.Thebondcannotrepresentcapitalthathasbeendestroyed.Itissimplyadeclarationthat,sometimeinthefuture,the government will take, by taxation, so much wealth from the generalstock then existing among the people. This it will turn over to thebondholderswhenthebondmatures.Meanwhile,fromtimetotime,itwilltake,bytaxation,acertainamounttogiveasinterest.Theamountwillbeenoughtomakeupwhateverincreasethebondholderswouldhavereceivedif they had kept the original capital. Immense sums are taken from theproductionofeverymoderncountry topay interestonpublicdebt.Thesearenottheearningsorincreaseofcapital.Theyarenoteveninterest,inthe


strictsenseoftheterm.Theyaretaxesleviedonlaborandcapital—leavinglessforwagesandlessfortrueinterest.Butsupposethebondswereissuedfordeepeningariverbedorerecting

alighthouse?Or,tomodifytheillustration,supposetheywereissuedbyarailroad company? These may be considered evidence of ownership ofcapital.Butonlysofarastheyrepresentrealcapital—existingandappliedtoproductiveuses—andnotbondsissuedinexcessofactualcapitalused.Alltoooften,certificatesareissuedfortwo,three,orevententimesthe

amountofactualcapitalused.Theexcess(overwhatisdueasinterestontherealcapitalinvested)isregularlypaidoutas“interest”ordividendsonthis fictitious amount. Large sums are also absorbed bymanagement andneveraccountedfor.Allthisistakenfromtheaggregateproductionofthecommunity—butnotforservicesrenderedbycapital.There is anotherelementcontributing to theprofitsweare speakingof

here.Thatelementismonopoly.Whenthekinggrantedhisminion theexclusiveprivilege tomakegold

thread,thehandsomeincomeenjoyedasaresultdidnotarisefrominterestoncapital invested inmanufacturing.Nordid itcomefromthe talentandskill of those who actually did the work. It came from an exclusiveprivilege.Itwas,inreality,thepowertolevyatax(forprivateenjoyment)onallusersofsuchthread.Muchof theprofits commonly confusedwith earningsof capital come

fromasimilarsource.Receiptsfrompatentsgrantedtoencourageinventionare clearly attributable to this source. So are returns from monopoliescreated by protective tariffs under the pretense of encouraging homeindustry.But there is another formofmonopoly, farmore general and farmore

insidious.Theaccumulationoflargeamountsofcapitalunderconsolidatedcontrolcreatesanewkindofpower—essentiallydifferentfromthepowerofincrease.Increaseisconstructiveinitsnature.Powerfromaccumulationis destructive. It is often exercised with reckless disregard, not only toindustrybuttothepersonalrightsofindividuals.Arailroadapproachesasmalltownasarobberapproacheshisvictim.*

“Agreetoourtermsorwewillbypassyourtown”isaseffectiveathreatas“yourmoneyoryourlife.”


* Nowadays, this could describe the way that “bigbox” retail stores approachcommunities.As robbers unite to plunder and divide the spoils, the trunk lines of

railroads unite to raise rates and pool their earnings. The public is thenforcedtopaythecostofthewholemaneuver,asthevanquishedareforcedtopaythecostoftheirownenslavementbyaconqueringarmy.Profitsproperlyduetotheelementsofriskarealsofrequentlymislabeled

interest.Somepeopleacquirewealthby takingchances inventureswheremost suffer losses. There aremany such forms of speculation, especiallythatmethodofgamblingknownasthestockmarket.Nerve,judgment,andpossessionofcapitalgiveanadvantage.Also,thoseskillsknownastheartsoftheconfidenceman.But,justasatagamingtable,whateveronepersongainssomeoneelsemustlose.Everyone knows the tyranny and greed with which capital, when

concentrated in large amounts, is frequently wielded to corrupt, rob, anddestroy.WhatIwishtocallthereader’sattentiontohereisthis:These profits should not be confused with the legitimate returns of

capitalasanagentofproduction.Anyanalysiswillshowthatmuchofwhatis commonly confused with interest is really the result of the power ofconcentrated capital. For the most part, this should be attributed to badlegislation,blindadherencetoancientcustoms,andsuperstitiousreverenceforlegaltechnicalities.Examinethegreatfortunessaidtoexemplifytheaccumulativepowerof

capital: theRothschilds, theVanderbilts, theAstors.Theyhavebeenbuiltup,toagreaterorlesserdegree,bythemeanswehavebeenreviewing—notby interest.Whenwe find thegeneral cause that tends to concentratewealth, and thus power, in advancing communities, we will have thesolutiontoourproblem.


Chapter14TheLawOfInterest

Wemaynowseekthelawofinterest,recallingtwothings:Capitaldoesnotemploy labor; labor employs capital. Capital is not a fixed quantity; theamountcanbeincreasedordecreased.Capital is simply wealth applied in a certain way— wealth being the

larger category. Therefore, capital can be increased (1) by applyingmorelabor to itsproduction;or(2)byconvertingwealth intocapital.Likewise,capital can be decreased (1) by applying less labor; or (2) by convertingcapitalbackintowealth.Under free conditions, the maximum that can be given for the use of

capital is the increase it will bring. Above this, borrowing capital wouldinvolvea loss.Theminimumis the replacementofcapital,orelsecapitalcouldnotbemaintained.Interestwillvarybetweenthesetwopoints.Wemust repeat: themaximumisnot fixed—assomewriterscarelessly

state—by the increased efficiency capital gives to labor. Rather, themaximumissetbytheaveragepowerofincreasethatbelongstocapitalingeneral.Thepowerofapplyingitselfinadvantageousformsisapoweroflabor.

Capital,ascapital,cannotclaimnorshareinthis.Indiansusingonlysticksandstonesmightkillonebuffaloaweek.Yetwithbowsandarrows, theymaykilloneeveryday.Butthetribe’sweaponmakerwouldnotclaimsixout of seven buffaloes. Neither will capital invested in a woolen factoryentitle the owner to the difference between the output of the factory andwhatcouldbemadewithaspinningwheel.Themarchofknowledgehasmadetheseadvantagesacommonpropertyandpoweroflabor.Weestablished(inchapter12)thatthecauseofinterestisthevitalforces

ofnaturethatgiveanadvantagetotheelementoftime.Andthisshouldsetthemaximum rate of interest.But the reproductive force of nature variesenormously.Forinstance,ifIraiserabbitsandyouraisehorses,myrabbitswill multiply faster than your horses. But my capital will not increasefaster!Theeffectofthevaryingrateswillbetolowerthevalueofrabbitscompared tohorses.Thus,differencesarebrought toauniform level thatdeterminestheaverageincreaseofcapital.


Whatever this point, itmust be such that the reward to capital and thereward to laborwill be equal.That is to say, thenormalpoint of interestwillgiveanequallyattractiveresultfortheexertionorsacrificeinvolved.For labor and capital are merely different forms of the same thing—

human exertion. Capital is produced by labor. It is labor impressed uponmatter.Thislaborhasbeenstoreduptobereleasedasneeded—astheheatofthesunisstoredincoal.Capitalcanbeusedonlybybeingconsumed.Inorder for it to be maintained, labor must produce it in proportion to itsconsumptioninaidinglabor.Therefore,capitalusedinproductionissimplyamodeoflabor.Underfreecompetition,aprincipleoperatestomaintainthisequilibrium

betweenwagesand interest.Thisprinciple is:Peopleseek togratify theirdesireswiththeleastexertion.The natural relation between interest and wages is an equilibrium at

which both will represent equal return for equal exertion. Although thismaybestatedinaformthatsuggestsopposition,thisisonlyinappearance.For each gets only what they add to the common fund. Increasing theportionofonedoesnotdecreasewhattheotherreceives.Weare,ofcourse,speakingofthegeneralrateofwagesandthegeneral

rate of interest. In a particular case or a particular occupation, thisequilibriummay be impeded.But itwill act quickly between the generalrate ofwages and the general rate of interest. A particular situationmayhaveacleanlinebetweenlaborandthosewhofurnishcapital.Yetevenincommunitieswhere this distinction is the sharpest, the two shadeoff intoeachotherbyimperceptiblegradations,untiltheymeetinthesamepersons.Here,theinteractionthatrestoresequilibriumgoesonwithoutobstruction.Furthermore, remember that capital is only a portion of wealth. It is

distinguished fromwealth only by the purpose it is used for. Hence, thewhole body of wealth has an equalizing effect. This operates like aflywheel: taking up capital when there is excess, and giving it out againwhen there is lack. A jeweler may wear her diamonds while she isoverstocked,butreturnsthemtotheshowcasewhenstockislow.Ifinterestrises above the equilibrium with wages, it produces two results: It willdirect labor to produce capital. It will also direct wealth to be used ascapital. Meanwhile, if wages rise above the equilibrium, that will alsoproducetworesults:Laborwillturnawayfromproducingcapital.Andthe


proportionofwealthusedascapitalwillbereduced,assomewillnowbedivertedtononproductiveuses.Thus, there is a certain relation between wages and interest, which

changesslowly,ifatall.Hence,interestmustriseorfallwithwages.Toillustrate:Thepriceofflourisdeterminedbythepriceofwheatand

costofmilling.Evenoverlongintervals,thecostofmillinghardlyvaries.But the price ofwheat varies greatly and frequently.Hence,we correctlysaythatthepriceofflourisgovernedbythepriceofwheat.To put this in the same form as the preceding discussion: The cost of

millingfixesacertainrelationbetweenthevalueofwheatandthevalueofflour. This ratio is constantly maintained by the interaction between thedemand for flourand the supplyofwheat.Hence, thepriceof flourmustriseandfallwiththepriceofwheat.Wecanleavetheconnectinglink,theprice of wheat, to inference. We would then say that the price of flourdependsuponthecharacteroftheseasons,wars,etc.Inthesameway,wecanputthelawofinterestinaformthatconnectsit

directly with the law of rent. The general rate of interest, then, will bedeterminedbythereturntocapitalonthepoorestlandfreelyavailable.Thatis to say, the return from thebest landopen to itwithout thepaymentofrent.Thelawofinterest,therefore,isshowntobeacorollaryofthelawofrent.We can prove this conclusion another way. If we were to eliminate

wages,wecouldplainlyseethatinterestmustdecreaseasrentincreases.Ofcourse,todothiswemustimagineaplacewhereproductionoccurswithoutlabor.Housesgrowfromseeds,andajackknifethrownonthegroundbearsacropofassortedcutlery.*

*Amodernreadermightimaginealandofrobotsinthenearfuture.Capitalistsherewouldkeepallthewealthproducedfromtheircapital—

butonly as longasnoneof itwasdemanded in rent.When rent arose, itwouldcomefromtheirinterest.Asrentincreased,thereturntotheownersof capitalmust necessarily decrease. If this placewere an island, interestwouldfalltojustaboveitsminimum(merereplacement)assoonascapitalreached the limit of the island to support it. Landowners would receivealmosttheentireoutput—fortheonlyalternativewouldbeforcapitaliststothrowtheircapitalintothesea.


This,insum,isthelawofinterest:The relation betweenwages and interest is determined by the average

power of increase that attaches to capital from its use in reproductivemodes.Asrentarises,interestwillfallaswagesfall,orwillbedeterminedbythemarginofproduction.In truth, the principal distribution of wealth is into two—not three—

parts.Capitalissimplyaformoflabor.Itsdistinctionisasubdivision,likedividing labor into skilledandunskilled.That is to say,wealth isdividedbetween the possessors of two factors: (1) natural substances and forces,and (2)humanexertion.For allwealth isproducedby theunionof thesetwofactors.


Chapter15TheLawOfWages

Thereisnocommonrateofwagesinthesamesenseasthecommonrateofinterest, which is relatively specific at any given time and place.Wagesvarywithindividualabilities.Associetybecomesmorecomplex,therearealso large variations among occupations. Nevertheless, there is a certaingeneralrelationbetweenallwages.Thisconcept—thatwagesarehigherorloweratonetimeorplacethananother—isquiteclear.Sowagesmustriseandfallaccordingtosomelaw.There isa lawasbasic topoliticaleconomyas the lawofgravity is to

physics.Thefundamentalprincipleofhumanactionisthis:

Peopleseektogratifytheirdesireswiththeleastexertion.Clearly,thisprinciplewilltend,throughcompetition,tobalancerewards

for equal exertion under similar circumstances. When people work forthemselves, this operates largely through price fluctuations. The sametendencygovernsrelationshipsbetweenthosewhoworkforthemselvesandthosewhoworkforothers.Givenfreeconditions,noonewouldworkforsomeoneelseiftheycouldmakethesameamountworkingforthemselves.But output does not depend only on the intensity or quality of labor.

Wealth is theproductof twofactors—landand labor.Agivenamountoflabor yields various results, depending on the powers of the naturalopportunities to which it is applied. This is easily seen in fundamentaloccupations, which still form the base of production—even in the mosthighlydevelopedsocieties.Peoplewillnotworkatalowerpointwhileahigheroneisavailable.So,

the highest point of natural productiveness availablewill be same as thelowest point at which production continues. This is called themargin ofproduction.Wages will be set by the output at the most productive point open to

labor.Theywillriseorfallasthispointrisesorfalls.To illustrate, consider a simple society in which each person is self

employed. Let’s say some hunt, some fish, some farm. At first, all landbeing used yields a similar return for similar effort. Allowing for


differencesofease, risk,andsoon,wageswillbeapproximatelyequal ineach.Thatis,equalexertionswillyieldequalresultsforhunting,fishing,orfarming. Wages will be the total production of labor. (Remember, eventhoughtherearenoemployersyet,therearestillwages—thatis,thereturnfor labor.But no onewouldwork for someone else, at this stage, unlesstheyreceivedthefull,averageresultsoflabor.)Timepasses.Cultivationnowoccursonlandofdifferentquality.Wages

willnolongerbeasbefore—thefull,averageproductionoflabor.Instead,wageswillbetheaverageatthemarginofproduction—thepointoflowestreturn.Sincepeopleseektosatisfytheirdesireswiththeleastexertion,thispointwillyieldareturntolaborequivalenttotheaveragereturninhuntingandfishing.This equalization in return will be brought about by prices. Labor no

longeryieldsequalreturnsforequalexertion.Thoseworkingsuperiorlandget greater results, for the same exertion, than those on inferior land.Wages,however,arestillequal.Theexcessreceivedfromsuperiorlandis,in reality, properly called rent. If land has been subjected to individualownership,thisiswhatgivesitvalue.Circumstanceshavechanged.Tohireothers,anemployerneedpayonly

what the labor yields at the lowest point of cultivation. If themargin ofproductionsinkslower,wageswillalsodrop.Ifitshouldrise,wagesmustalsorise.We have deduced the law of wages from an obvious and universal

principle—that people will seek to satisfy their wants with the leastexertion.Wagesdependonthemarginofproduction.Theywillbegreaterorlessdependingonwhatlaborcangetfromthebestnaturalopportunitiesavailabletoit.We deduced this from simple states. If we examine the complex

phenomenaofhighlycivilizedsocieties,thesamelawapplies.Wagesdifferwidely in these societies, but they still bear a fairly definite and obviousrelationshiptoeachother.Ofcourse,thisrelationisnotinvariable.Awellknownentertainermay

earnmanytimesthewagesofthebestmechanic,yetatsomeothertimethesameentertainermaybarelycommandthepayofafootman.Somejobspayhighwagesinbigcities,whileinasmalltownthepayislow.Weneednotdwell onwhat causeswages to vary among different jobs.This has been


admirably explained by Adam Smith and the economists who followedhim.*Theyhaveworkedout thedetailsquitewell—evenif theyfailed tocomprehendthemainlaw.

*AdamSmithhassummarizedthesecircumstances.Theyinclude:thedifficultyofthejobitself; thedifficultyandexpenseof training; theconstancyofemployment; thedegreeofresponsibility;andtheprobabilityofsuccess.ThelastisanalogoustotheelementofriskinprofitsItaccountsforthehighwagesofsuccessfuldoctors,lawyers,actors,etc.It is perfectly correct to say that wages of different occupations vary

according to supply and demand. Demand means the request that thecommunitymakesforparticularservices.Supplyistherelativeamountoflaboravailabletoperformthoseparticularservices.However,whenwehear(asweoftendo)thatthegeneralrateofwagesis

determined by supply and demand, those words are meaningless. Forsupplyanddemandcanonlyberelativeterms.Demandforlaborcanonlymean that someproduct of labor is offered in exchange for (other) labor.Likewise,thesupplyoflaborcanonlymeanlaborofferedinexchangefortheproductsoflabor.Thus,supplyisdemand,anddemandissupply.Inthewholecommunity,

theymust be coextensivewith each other.Wages can never permanentlyexceedtheproductionoflabor.Thehighwagesofsomeoccupationsresemblelotteryprizes,wherethe

greatgainofoneistakenfromthelossesofmanyothers.Thisaccountsforthehighwagesofsuccessfuldoctors,lawyers,actors,andthelike.Itisalsolargely true of wages of superintendence inmercantile pursuits, for overninetypercentofsuchfirmsultimatelyfail.Greater abilities or skill, whether natural or acquired, command (on

average) greater wages. These qualities are essentially analogous todifferencesinstrengthorquicknessinmanuallabor.Higherwages,paidtothosewhocandomore,arebasedonthewagesofthosewhocanonlydoan average amount. So wages in occupations requiring superior abilitiesmust depend on common wages paid for ordinary abilities. In theseoccupations,thedemandismoreuniformandthereisthegreatestfreedomtoengageinthem.These gradations of wages shade into each other by imperceptible

degrees.Ineachoccupation,therearethosewhocombineitwithothers,oralternatebetweenfields.Allmechanicscouldworkas laborers,andmany


laborers could easily becomemechanics.Mechanics generally earnmorethanlaborers.Still, therearealwayssomemechanicswhodonotmakeasmuchassomelaborers.Thebestpaidlawyersreceivemuchhigherwagesthan the best paid clerks.Yet, the best paid clerksmakemore than somelawyers. In fact, the worst paid clerks make more than the worst paidlawyers.Meanwhile,youngpeoplecomingintotheranksaredrawntothestrongestincentiveandleastobstruction.Thus,thedifferencesbetweenoccupationsaresofinelybalancedthatthe

slightestchangeisenoughtoguidetheir laborinonedirectionoranother.Experienceshowsthatthisequilibriumwillbemaintainedeveninthefaceof artificial barriers. They may interfere with this interaction, but theycannotpreventit.Theyoperateonlyasdams,whichpileupthewaterofastreamaboveitsnaturallevel,butcannotpreventitsoverflow.Thus, it isevident thatwages inall stratamustultimatelydependupon

wagesinthelowestandwideststratum.Thegeneralrateofwageswillriseor fall as the lowest wages rise or fall. The primary and fundamentaloccupations,onwhichall theothersarebuilt,arethosethatobtainwealthdirectlyfromnature.Hencethelawofwagesapplyingtothoseoccupationsmustbethegeneral lawofwages.Andwagesinsuchoccupationsclearlydepend upon what labor can produce at the lowest point of naturalproductivenesstowhichitisregularlyapplied.Therefore:Wagesdependuponthemarginofproduction.Thatis,wagesdependon

the yield labor can obtain at the highest point of natural productivenessopentoitwithoutthepaymentofrent.

Ourdemonstrationiscomplete.Thelawjustobtainedisidenticaltotheone we deduced as a corollary of the law of rent. It also harmonizescompletelywith the lawof interest. It conformswithuniversal facts, andexplainsphenomenathatseemunrelatedandcontradictorywithoutit.Specifically, it explains these four conditions:Where land is free and

labor works without capital, the entire output will go to labor as wages.Wherelandisfreeandlaborisassistedbycapital,wageswillconsistofthewholeproduce lesswhat isnecessary to induce thestoringupof laborascapital.Where land issubject toownershipandrentarises,wageswillbefixed by what labor could secure from the highest natural opportunitiesopen to itwithout paying rent (i.e., themargin of production).Where all


natural opportunities are monopolized, wages may be forced bycompetitionamonglaborerstotheminimumatwhichtheywillconsenttoreproduce.Clearly,themargincannotfallbelowthepointofsurvival.Torecap:ThelawofwagesisacorollaryofRicardo’slawofrent.Like

it,thelawofwagescontainsitsownproof,andisselfevidentassoonasitisstated.Itisonlytheapplicationofthecentraltruththatisthefoundationof economic reasoning—namely, that people seek to satisfy their desireswith the leastexertion.All thingsconsidered, theaveragepersonwillnotwork for an employer for less than can be earned in selfemployment.Neitherwillapersonchooseselfemploymentforlessthancouldbeearnedworkingforanemployer.Hence,thereturnlaborcangetfromfreenaturalopportunitiesmustset thewagesforlaboringeneral.Saidanotherway,thelineofrentisthenecessarymeasureofthelineofwages.In fact, recognizing the law of rent depends upon accepting (often

unconsciously) the law of wages. What makes it clear that land of aparticular quality will yield rent equal to its surplus over the leastproductivelandinuse?Becauseweknowthatownersofbetterlandcangetotherstoworkforthembypayingwhatworkerscangetonpoorerland.Thelawofwagesissoobviousthatitisoftenunderstoodwithoutbeing

recognized.Peoplewhodonottroublethemselvesaboutpoliticaleconomygrasp it in its simpler forms, just as those unconcernedwith the laws ofgravitationknowthataheavybodyfallstotheearth.Itdoesnotrequireaphilosopher to see that the general rate of wages would rise if naturalopportunities were available where workers could earn more than thelowest wages. Even the most ignorant placer miners of early Californiaknewthatastheseminesgaveoutorweremonopolized,wageswouldfall.Itrequiresnofinespuntheorytoexplainwhywagesaresohighrelative

to production in new countries where land is not yet monopolized. Thecauseisonthesurface.Noonewillworkforanotherfor less thancanbeearnedthroughselfemployment—suchasgoingnearbyandindependentlyoperatingafarm.Itisonlyaslandbecomesmonopolized,andthesenaturalopportunities are shut off, that laborers are forced to compete with eachotherforwork.Itthenbecomespossibleforafarmertohirehandstodothework—while the farmer lives on the difference betweenwhat their laborproducesandtheirwages.


AdamSmithhimselfsawthecauseofhighwageswhere landwasstillopen to settlement. Unfortunately, he failed to appreciate the importanceand the connection of the fact. In theCauses of the Prosperity of NewColonies,hereports:Everycolonistgetsmorelandthanhecanpossiblycultivate.Hehasnorent and scarce any taxes to pay. He is eager, therefore, to collectlaborers fromeveryquarterand topay them themost liberalwages.But these liberalwages, joined to the plenty and cheapness of land,soon make these laborers leave him in order to become landlordsthemselves, and to reward with equal liberality other laborers whosoonleavethemforthesamereasontheylefttheirfirstmasters.*ItisimpossibletoreadtheworksofAdamSmithandothereconomists

withoutseeinghow,overandoveragain,theystumbleoverthelawofwageswithoutrecognizingit.Ifitwereadog,itwouldbitethem!Indeed,itisdifficulttoresistthenotionthatsomeofthemactuallysawit,butwereafraidofitslogicalconclusions.Toanagethathasrejectedit,agreattruthisnotawordofpeace,butasword!Before closing this chapter, let me remind the reader that I am not

using the word wages in the sense of a quantity, but in that of aproportion.WhenIsay thatwagesfallasrent rises, Idonotmeanthatthe quantity of wealth laborers receive as wages is necessarily less. Imeanthattheproportionitbearstotheentireoutputisless.Thediminishwhilethequantityremainsthesame,orevenincreases.*Chap.VII,BookIV,WealthofNations.proportionmayFor example, suppose themargin of production declines. (Wewill say

from25to20.)Asrentsincreasebythisdifference,theproportiongiveninwagesmust decrease to the same extent. In themeantime, the productivepoweroflaborhasincreased.Technologymayhaveadvanced,orincreasingpopulationmaymakepossiblegreatereconomiesofscale.Thesameeffortatpoint20nowproducesasmuchwealthaspoint25usedto.Thequantityofwagesremainsthesame,thoughtheproportionhasdecreased.

This relative fall of wages will not be noticed in the comforts of thelaborers. It will be seen only in the increased value of land—and in thegreaterincomeandextravaganceoftherentreceivingclass.


Chapter16CorrelatingTheLawsofDistribution

Theconclusionswehavereachedonthelawsgoverningthedistributionofwealthrecastalargeandimportantpartofthescienceofpoliticaleconomy,as presently taught. They overthrow some of itsmost elaborate theories,andshednewlightonsomeof itsmost importantproblems.Yet indoingthis, we have not advanced a single fundamental principle that is notalreadyrecognized.True,wehavesubstitutedanewlawofwagesandanewlawofinterest

for those now taught. But these laws are necessary deductions from themostfundamentallaw:thatpeopleseektogratifytheirdesireswiththeleastexertion.Whenviewedinrelationtooneofthefactorsofproduction,thisbecomesthelawofrent.Ricardo’s statement of the law of rent has been accepted by every

reputableeconomistsincehisday.Likeanaxiomofgeometry,itonlyneedsto be understood to be accepted. The laws of interest and ofwages, as Ihave stated them, are necessary deductions from the law of rent. Inrecognizingthelawofrent,theytoomustberecognized.Fordiscerningthelawofrentclearlyrestsonrecognizingthisfact:Competitionpreventsthereturntolaborandcapitalfrombeinggreaterthanwhatcouldbeproducedonthepoorestlandinuse.Onceweseethis,weseewhattheowneroflandwill be able to claim as rent—everything that exceeds what an equalamountoflaborandcapitalcouldproduceonthepoorestlandinuse.The laws of distribution, aswe now understand, clearly correlatewith

eachother.Thisisinstrikingcontrasttothelackofharmonyofthosegivenbycurrentpoliticaleconomy.Letusstatethemsidebyside:

TheCurrentStatement:RENTdependsonthemarginofproduction,risingasitfallsandfallingasitrises.

WAGESdependupontheratiobetweenthenumberoflaborersandtheamountofcapitaldevotedtotheiremployment.

INTEREST depends upon the equation between the supply of anddemandforcapital. (Or,as isstatedofprofits, interestdependsupon


“thecostoflabor”,risingaswagesfallandfallingaswagesrise.)

TheTrueStatement:RENT depends on the margin of production—rising as it falls, andfallingasitrises.

WAGES depend on the margin of production—falling as it falls, andrisingasitrises.

INTEREST depends on the margin of production—falling as it falls,andrisingasitrises.(Itsratiowithwagesbeingfixedbythenetpowerofincreasethatattachestocapital.)

Intheircurrentform,thelawsofdistributionhavenomutualrelationandnocommoncenter.Theyarenot correlatingdivisionsof awhole.Rather,theyaremeasuresofdifferentqualities.Inthestatementwehavegiven,all thelawsspringfromasinglepoint.

They support and supplement each other. Together they form correlatingdivisionsofacompletewhole.


Chapter17TheProblemExplained

We have now obtained a clear, simple, and consistent theory of thedistribution of wealth. It accords with both basic principles and existingfacts.Onceunderstood,itisselfevident.Theold theoryofwageshad thesupportof thehighestauthorities,and

wasfirmlyrootedincommonprejudices.Untilitwasprovengroundless,itprevented any other theory from even being considered. Similarly, thetheory that the earth was the center of the universe prevented anyconsiderationthattheearthcircledthesun.Thereis,infact,astrikingresemblancebetweenthescienceofpolitical

economy,ascurrently taught,andastronomyprior toCopernicus.As theyattempttoexplainsocialphenomena,economistsemploydevicesthatmaywell be compared to the elaborate system of cycles and epicyclesconstructedbythelearnedpeopleofthepast.Theytriedtomakecelestialphenomenafitthedogmasofauthorityandtheprimitiveperceptionsoftheuneducated. But as these elaborate theories could not explain observedphenomena,asimplertheoryfinallysupplantedthem.At this point the parallel ceases. The thought that our solid earth is

whirlingthroughspaceis,atfirst,jarringtooursensibilities.ButthetruthIwish tomake clear is seen naturally. It has been recognized early on byeverysociety.Itisobscuredonlybythecomplexitiesofcivilization,thedistortionsof

selfishinterests,andthefalseturnstakenbyintellectualspeculation.Itisatheory that will give political economy the simplicity and harmony thatCopernicantheorygaveastronomy.To recognize it, we need only return to first principles and simple

perceptions.Nothing can be clearer than thatwages fail to increasewithincreasingproductivepower,andthatthisisduetorisingrent.Three thingsunite inproduction: land, labor, andcapital.Threeparties

divide the output: landowner, laborer, and capitalist. If the laborer andcapitalist get nomore as production increases, it is a necessary inferencethatthelandownertakesthegain.


Thefactsagreewiththisinference.Neitherwagesnorinterestkeepstepwith material progress. Yet rising rents and land values invariablyaccompanyadvancement.Indeed,theyarethemarkofprogress!Increasingrentexplainswhywagesandinterestdonotincrease.Thesamecausethatgivesmoretothelandowneralsodeniesittothelaborerandcapitalist.Wages and interest are higher in new countries than in old. The

difference is not due to nature, but to the fact that land is cheaper.Consequently,asmallerproportionistakenbyrent.Wagesandinterestarenot determined by total production, but by net production—after rent hasbeen taken out.Wages and interest are not set by the productiveness oflabor,butbythevalueofland.Whereverthevalueoflandisrelativelylow,wagesandinterestarerelativelyhigh.Wherelandisrelativelyhigh,wagesandinterestarerelativelylow.

Whensocietyisinitsearlieststages,alllaborisapplieddirectly to the land.Allwagesarepaid from itsproduction. It isobviousthatifthelandownertakesalargershare,theworkergetsasmallerone.Butinmodernproduction,laborisappliedaftermaterialshavebeenseparatedfromtheland,andexchangeplaysafargreaterrole.Thesecomplexitiesmaydisguisethefacts,buttheydonotalterthem.All

productionisstilltheunionoflandandlabor.Rentcannotincreaseexceptattheexpenseofwagesandinterest.Therentonlandinamanufacturingorcommercial city lessens the amount available to divide as wages andinterestamongthoseengagedintheproductionandexchangeofwealthinthatplace.Toseehumanbeingsintheirmosthopelesscondition,donotgoto theunfencedprairiesor the logcabinsof thebackwoodswhere land isworthnothing.Go,instead,tothegreatcities,whereowningalittlepatchofgroundisworthafortune.It is a universal fact—seen everywhere—that the contrast between

wealthandwantgrowsasthevalueoflandincreases.Thegreatestluxuryand themostpatheticdestitutionexist sideby sidewhere landvaluesarehighest.Inshort,thevalueoflanddependsentirelyonthepowerthatownership

gives to appropriate the wealth created by labor. Land value alwaysincreasesattheexpenseoflabor.Thereasongreaterproductivepowerdoesnotincreasewagesisbecauseitincreasesthevalueofland.Rentswallowsupthewholegain.


Thatiswhypovertyaccompaniesprogress.


FourthPart:TheEffectofMaterialProgressontheDistributionofWealth


Chapter18DynamicForcesNotYetExplored

Wehave reached a conclusion of great significance.Wehave shown thatrent—not labor—receives the increased production of material progress.Further,wehaveseenthatlaborandcapitaldonothaveopposinginterests,asispopularlybelieved.Inreality,thestruggleisbetweenlaborandcapital,ononeside,andlandownershipontheother.Butwehavenotfullysolvedtheproblem.Weknowwagesremainlow

becauserentadvances.Still,thatislikesayingasteamboatmovesbecauseitswheelsturn.Thefurtherquestionis,whatcausesrenttoadvance?Whatis the force or necessity that distributes an increasing proportion ofproductionasrent?Ricardo and others focused only on population growth, which forces

cultivationofpoorerlands.Butthisprincipledoesnotfullyaccountfortheincrease of rent asmaterial progress goes on.Nor are all the conclusionsdrawnfromitvalid.Thereareothercausesthatconspiretoraiserent.Ifwetracetheeffectofprogressonthedistributionofwealth,wewillseewhattheseareandhowtheyoperate.Threechangescontributetomaterialprogress:(1)increasedpopulation;

(2) improvements in production and exchange; and (3) improvements inknowledge, education, government, police, and ethics (to the extent theyincreasethepowertoproducewealth).The latter two have essentially the same economic effect, so we can

considerthemtogether.Butfirst,wewillconsidertheeffectsofincreasingpopulationbyitself.


Chapter19PopulationGrowthandtheDistributionofWealth

How does a growing population increase rent? Current thought says ahigher demand for subsistence forces production to inferior land. Forexample,ifthemarginofproductionistheplacewheretheaveragelaborercan produce 30, then on all landswheremore than 30 is produced, therewill be rent. A growing population requires additional supplies, whichcannot be obtained without extending cultivation. This causes lands thatwereformerlyfreetobearrent.Saythemarginisextendedto20.Alllandbetween20and30willacquirevalueandyieldrent.Alllandover30willincreaseinvalueandbearhigherrent.AsexplainedbyRicardo(andlatereconomists), this inability to procure more food except at a greater costaccountsfortheincreaseinrent.Iwill show, later, that rentwould increaseeven ifpopulation remained

steady.Butfirst,wemustclearupthemisconceptionthatusingpoorerlandproduces less aggregate production, proportional to labor expended. Forincreasedpopulation—ofitself,andwithoutanytechnologicaladvances—makespossibleanincreaseintheproductivepoweroflabor.Allthingsbeingequal,thelaborofahundredpeoplewillproducemuch

more thanonehundred times the laborofoneperson.And the laborofathousand,muchmore than ten times the labor of a hundred.With everyadditional person, there is a morethanproportionate addition to theproductive power of labor. As population increases, naturally lessproductive land may be used—but without any reduction in the averageproduction of wealth per worker. There will be no decrease even at thelowest point. If population doubles, land of only 20 (as per our earlierexample)may yield asmuch as land of 30 could before, given the sameamountoflabor.Foritmustnotbeforgotten(althoughitoftenis)thattheproductiveness

ofeitherlandorlaborisnotmeasuredbyanyonething—butbyallthingswe desire. A settler may raise as much corn a hundred miles from thenearesthouseasonlandnearacity.Butinthecity,onecouldmakeasgoodaliving,withthesameeffort,onmuchpoorerland(oronequallandafterpaying high rent). This is because labor becomes more effective in the


midstofalargepopulation.Not,perhaps,intheproductionofcorn,butinthe production of wealth. That is, in the ability to obtain the goods andservicesthataretherealobjectoflabor.Agrowingpopulationincreasestheeffectivenessoflaborbypermitting

greater economies.Morewealth can be producedwith the same effort. Itincreasesproductivitynotonlyonthenewerland,butonallthebetterlandalreadyinuse.If productivity rose faster than the need for less productive land, the

averageproductionofwealthwouldincrease.Thus,theminimumreturntolaborwouldincrease,althoughrentwouldstillrise.Inotherwords,wageswouldriseasaquantity—butfallasaproportion.

Ifproductivityjustcompensatedforthediminishingproductivenessofadditionalland,averageproductionwouldstill increase.Rent would increase (as the margin fell), without reducing wages as aquantity.Finally,asgrowthforcedevenpoorerqualitylandintouse,thedifference

might be so great that even the increased power of labor could notcompensate for it.Theminimumreturn to laborwouldbe reduced.Rentswouldrise,whilewageswouldfall,bothasaproportionandaquantity.Butevenhere,averageproductionwill still increase (unless thequality

oflandfallsfarmoreprecipitouslythanhaseverhappened).Remember,theincreaseofpopulation,whichcompelstheuseofinferiorland,increasestheeffectiveness of labor at the same time. This increase affects all labor.Therefore, the gains on superior land will more than compensate fordiminishedproductiononthelowestquality.In short, the aggregate production of wealth, compared with the

aggregateexpenditureoflabor,willbegreater—butitsdistributionwillbemoreunequal.Rentwillincrease.Wagesmayormaynotfallasaquantity.Butwages—asaproportion—willfall.Increasingpopulationseldomcan—and probably never does—reduce the aggregate production of wealthcomparedtotheaggregateexpenditureoflabor.Onthecontrary,agreaterpopulationincreaseswealth—andfrequentlyincreasesitgreatly.Butit isamistaketothinkthatloweringthemarginistheonlyprocess

that increases rent. Greater density raises rent without reference to thenaturalqualitiesofland.Theenhancedpowersofcooperationandexchangethat comewith a larger population are equivalent to a greater capacity to


produce wealth. Indeed, I think we can say without metaphor that theyactuallyincreasethecapacityofland.Improved tools ormethods give greater results to the same amount of

labor.This is, ineffect,equivalent toan increase in thenaturalpowersofland.ButIdonotmeantosaythepowerthatcomeswithlargerpopulationismerelylikethis.Rather,itbringsoutagreaterpowerinlabor—andthispowerislocalizedoncertainland.Itdoesnotbelongtolaboringeneral,butonly to labor exerted on particular land. It resides in land as much asphysical qualities such as soil, climate, mineral deposits, or naturalsituation.Likethese,thispowerpasseswithpossessionoftheland.Consider an improvement in cultivation (or tools or machinery) that

allowstwocropsayearinsteadofone.Clearly,theeffectisthesameasifthe fertility of that land were doubled. But such improvements can beappliedtoanyland,whileincreasedfertilityaffectsonlythatland.Inlargepart,theincreasedproductivityarisingfrompopulationcanbeutilizedonlyoncertainland.

TheUnboundedSavannah*Imagine avast, unbounded savanna, stretchingoff in endless sameness

tillthetravelertiresofthemonotony.Thefirstfamilyofsettlersapproachesand cannot tell where to settle—every acre seems as good as any other.There is no difference in location, fertility, or water. Perplexed by thisembarrassment of riches, they stop somewhere, anywhere, and makethemselvesahome.The soil is virgin and rich, the game abundant, the streams flashwith

trout.What they have wouldmake them rich—if only they were amongothers.Instead,theyareverypoor.

*Thisfamousnarrativeofasociety’sdevelopmenthasoftenbeenexcerpted.Asavannahisagrassyplain.To say nothing of their mental cravings, which would lead them to

welcomethesorriestofstrangers,theylaborunderallthedisadvantagesofsolitude. For any work requiring a union of strength, they are limited totheir own family. Though they have cattle, they cannot often have freshmeat—to get a steak, they must kill a whole steer. They are their ownblacksmith,carpenter,andcobbler;jacksofalltradesandmastersofnone.


Theirchildrencanhavenoschooling,unlesstheypaythefullsalaryofateacher.Anything theycannotproduce, theymustbuy inquantity tokeeponhand—orgowithout.Fortheycannotconstantlyleaveworkandmakealong journey to civilization. When forced to do so, getting medicine orreplacingabrokentoolmaycosttheirlaborandtheuseoftheirhorsesforseveraldays.Undersuchcircumstances,thoughnatureisprolific,thefamilyispoor.It

is an easy matter to get enough to eat. But beyond that, their labor cansatisfyonlythesimplestwantsintherudestway.Soon,though,otherimmigrantsarrive.Thougheveryacreisstillasgood

aseveryother,thereisnodoubtwheretosettle.Thelandmaybethesame,but one place is clearly better than any other.And that iswhere there isalreadyasettler,andtheymayhaveaneighbor.

Conditions improve immediately for the earlier pioneers.Many thingsthat were once impossible are now practical—for two families can helpeachotherdothingsonecouldneverdo.Asothersarrive,theyareguidedbythesameattraction,untilthereareascoreofneighborsaroundourfirst.Labor now has an effectiveness that it could never approach in the

solitary state. If heavy work is to be done, the community—workingtogether—accomplishinadaywhatwouldhaverequiredyearsalone.Thereisfreshmeatallthetime.Whenonebutchersasteer,theothersshareinit,returningthefavorintheirturn.Togethertheyhireaschoolmaster.Alltheirchildrenaretaughtforafractionofwhatitwouldhavecostthefirstsettler.And it becomes easy to send to the nearest town, for someone is alwaysgoing.Butthereislessneedforsuchjourneys.Ablacksmithandawheelwrightsoonsetupshop.Nowoursettlerscan

have their tools repaired for a small part of the labor it formerly cost.Astore opens, and they can getwhat theywant,when theywant it.Apostofficesoongivesregularcommunicationwiththerestoftheworld.Occasionally, a passing lecturer opens up a glimpse of the world of

science,art,orliterature.Andfinallycomesthecircus,talkedofformonthsbefore. Children, whose horizon had been only the prairie, now visit therealmsofimagination:princesandprincesses,lionsandtigers,camelsandelephants.Gotoouroriginalsettlersnowandmakethisoffer:“Youhaveplantedso

manyacres,builtawell,abarn,ahouse.Yourlaborhasaddedthismuch


valuetothisfarm.Butafterfarmingforafewyears,yourlanditselfisnotquiteasgood.Still,Iwillgiveyouthefullvalueofallyourimprovements—ifyouwillgowithyourfamilyintothewildernessagain.”Theywould laugh at you. The land yields nomorewheat or potatoes

thanbefore—but itdoesyieldfarmoreof thenecessitiesandcomfortsoflife.Laborbringsnomorecropsthanbefore—yetitbringsfarmoreofalltheotherthingsforwhichpeoplework.Thepresenceofothers—thegrowthofpopulation—hasraisedtheproductivenessoflaborintheseotherthings.This added productivity confers superiority over land of equal naturalqualitywheretherearenosettlers.If, however, there is a continuous stretch of equal land over which

population is now spreading, it will not be necessary to go into thewilderness. A newcomer could settle just beyond the others, and get theadvantageofproximitytothem.Thevalueorrentoflandwillthendependontheadvantageithas:theadvantageofbeingatthecenterofpopulationoverbeingattheedge.As population continues to grow, so do the economies its increase

permits. In effect, these add to the productiveness of the land. Our firstsettler’slandisnowthecenterofpopulation.Thestore,theblacksmith,thewheelwrighthave setupnearby.Avillagearises, becoming the centerofexchangeforthewholedistrict.This landhasnogreateragriculturalproductiveness than ithadat first.

Yet it now begins to develop productiveness of a higher kind. Laborexpendedinraisingcropswillyieldnomoreofthosethanatfirst.Butlaborwill yield much greater returns in specialized branches of production—whereproximity toothers is required.Thefarmermaygofurtheron,andfind land yielding as great a harvest. But what of the manufacturer, thestorekeeper, theprofessional?Their laborhere,at thecenterofexchange,givesamuchgreaterreturnthanlaborexpendedevenashortdistanceawayfromit.All this difference in productiveness, the landowner can claim. Our

pioneers can sell a few building lots at prices they would not bring forfarming, even if the fertility were multiplied many times over.With theproceeds,theybuildfinehousesandfurnishthemhandsomely.Ortostatethetransactioninitslowest terms: thosewhowish to use this landwill build and furnish the


houses for them. They do this on the condition that the landowners willallowtheworkerstoavailthemselvesofthesuperiorproductivenessofthisland—productivenessgivensolelybytheincreaseinpopulation.Thetowngrowsintoacity:aSt.Louis,aChicago,aSanFrancisco.Its

populationgivesgreaterandgreaterutilitytotheland—andmoreandmorewealth to itsowners.Production isperformedonagrand scale,using thelatest machinery. The division of labor becomes extremely minute,wonderfully multiplying efficiency. Exchanges are of such volume andrapidity that they entail a minimum of friction and loss. This land nowoffers enormous advantages for the application of labor. Instead of onepersonfarmingafewacres,thousandsworkinbuildingswithfloorsstackeduponeachother.All these advantages attach to the land.On this land—andnoother—

they can be utilized. For here is the center of population: the focus ofexchange,themarketplace,theworkshopofindustry.Densityofpopulationhasgiventhislandproductivepowerequivalenttomultiplyingitsoriginalfertilityathousandfold.Rent—which measures the difference between this added productivity

andthatoftheleastproductivelandinuse—hasincreasedaccordingly.Our settlers—or whoever has the rights to the land— are now

millionaires.LikeRipVanWinkle,theymayhavelaindownandslept.Buttheyarestillrich—notfromanythingtheyhavedone,butfromtheincreaseofpopulation.

Nothinghaschangedinthelanditself.Itisthesamelandthatonce,whenourfirstsettlercameuponit,hadnovalueatall.Thevastdifference inproductiveness,whichcauses rents to rise, isnotdue tousing inferior land. Rather, it is more the result of the increasedproductiveness that population gives to land already in use. This is howpopulation acts to increase rent—as those living in an advancing countrycansee if theywill just lookaround.Theprocess isgoingonbefore theireyes.Themost valuable lands on earth, those with the highest rent, are not

thosewiththehighestnaturalfertility.Rather,theyarelandsgivenagreaterusefulnessbypopulationdensity.We sail through space as if on awellprovisioned ship.* If food above

deck seems to grow scarce,we simplyopen a hatch—and there is a new


supply.Andaverygreatcommandoverotherscomestothosewho,asthehatchesareopened,arepermittedtosay:“Thisismine!”*Thismaybetheearliestmentionof“SpaceshipEarth”!


Chapter20TechnologyandtheDistributionofWealth

I intend to show that improvedmethodsofproductionandexchangewillalso increase rent, regardless of population.When this is established,wewill have explained why material progress lowers wages and producespoverty.Notheoryofpressureagainstthemeansofsubsistenceisneeded,andMalthus’s theory—and all doctrines related to it—will be completelydisproved.Inventions and increased productivity save labor. The same results are

produced with less labor—or greater results are produced with the samelabor. If all material desires were satisfied, laborsaving improvementswould simply reduce the amount of labor expended. But such a societycannotbefoundanywhere.Apersonisnotanox,lyingdowntochewitscud when it has had its fill. A person is more like a leech—constantlyaskingformore.Demanddoesnotincreaseonlywhenpopulationdoes.Itgrows—ineach

individual—withthepowerofobtainingthethingsdesired,andwitheveryopportunity for additional gratification. This being the case, the effect oflaborsavingimprovementswillbetoincreasetheproductionofwealth.Now, to produce wealth, two things are required: labor and land.

Therefore, the effect of laborsaving improvements will be to extend thedemandforland.Sotheprimaryeffectoflaborsavingimprovementsistoincreasethepowerof labor. But the secondary effect is to extend themargin of production.Andtheendresultistoincreaserent.This shows that effects attributed to population are really due to

technological progress. It also explains the otherwise perplexing fact thatlaborsavingmachineryfailstobenefitworkers.Yet, to fully grasp this, it is necessary to keep one thing inmind—the

interchangeability of wealth. I mention this again, because it is sopersistentlyforgotten.Thepossessionorproductionofanyformofwealthis—ineffect—thepossessionorproductionofanyotherformofwealthforwhich itcanbeexchanged. Ifyoukeep thisclearly inmind,youwill see


thatallimprovementstendtoincreaserent.Notonlyimprovementsapplieddirectlytoland—butallimprovementsthatinanywaysavelabor.It is only because of the division of labor that any individual applies

effortexclusivelytotheproductionofonlyoneformofwealth.Anincreaseinthepowerofproducingonethingaddstothepowerofobtainingothers.Icannot thinkofanyformofwealth thatwouldnotshowan increased

demandbecauseoflaborsavedintheproductionofotherforms.Coffinsarecitedasexampleswheredemand isnot likely to increase.But this is trueonly inquantity. Increasedpowerof supply leads toademand for fanciercoffins.Ineconomic reasoning it is frequently—buterroneously—assumed that

the demand for food is limited. It is fixed only in having a definiteminimum; less than a certain amountwill not keep a human being alive.Butbeyondthis,thefoodahumanbeingcanusemaybeincreasedalmostinfinitely.AdamSmithandRicardohavesaidthedesireforfoodislimitedbythe

capacityof thehumanstomach.Clearly, this is trueonly in thesense thatwhen a person’s belly is filled, hunger is satisfied.But demands for foodhave no such limit. The stomach of a king can digest no more than thestomachofapeasant.Yetasmallplotofgroundsupportsthepeasant,whilethousands of acres supply the demands of the king. Besides his ownwastefuluseofthefinestqualityfood,herequiresimmensesuppliesforhisservants,horses,anddogs.And so every improvement or invention that gives labor the power to

produce more wealth, no matter what it may be, causes an increaseddemand for land and its products. Progress thus tends to force down themarginofproduction,thesameasthedemandofalargerpopulationwould.Thisbeingthecase,everylaborsavinginventionhasatendencytoincreaserent.This is truewhether it isa tractor,a telegraph,orasewingmachine.Therewillbeagreaterproductionofwealth—butlandownerswillgetthewholebenefit.I do not mean to say that the change in the margin would always

correspond exactly with the increase in production. Nor do I mean theprocesswouldhaveclearlydefinedsteps.Inanyparticularcase,themarginmay either lag behind or exceed the increase in productivity. Nor is itpreciselytruethatalllaborsetfreewillseekemployment.Somewillpass


from the ranks of the productive to the unproductive, and become idlers.Observationshowsthatthissegmenttendstoincreasewiththeprogressofsociety.AllIwishtomakeclearisthatevenwithoutanyincreaseinpopulation,

theprogressofinventionconstantlytendstogiveagreaterproportionoftheproduction to landowners.Therefore, a smaller and smaller share goes tolaborandcapital.Sincewecanassignnolimitstotheprogressofinvention,neithercanweofferany limits to the increaseofrent—shortof theentireoutput.Ifwealthcouldbeobtainedwithoutlabor,therewouldbenouseforeither labor or capital.Norwould there be anypossibleway either coulddemand any share of the wealth produced. If anybody but landownerscontinuedtoexist,itwouldbeattheirwhimormercy—perhapsmaintainedfortheiramusement,oraspaupersbytheircharity.Thisscenariomayseemveryremote,ifnotimpossibletoattain.Yetitis

apoint towardswhichthemarchofinventionis tendingeveryday.InthegreatmachineworkedwheatfieldsofDakota,onemayrideformilesandmiles throughwaving grainwithout seeing a single dwelling.The tractorandreapingmachinearecreating,inthemodernworld,Romanlatifundia*—the great estates of ancient Italy created by the influx of slaves fromforeignwars.Tomanyapoorpersonforcedoutofahome,itmayseemasthoughtheselaborsavinginventionsareacurse.Of course, in the preceding, I have spoken about inventions and

improvementswhentheyaregenerallydiffused.Sometimesaninventionorimprovementisusedbysofewthattheyderiveaspecialadvantagefromit.It ishardlynecessary tosay that, to theextent it isaspecialadvantage, itdoesnotaffectthegeneraldistributionofwealth.

*Latifundiawerelargeestatescreatedwhenthewealthydisplacedsmallerfarmers.TheseonceindependentfarmerswerethenforcedtojointhepoormassesinRome,orselltheirlivesforfoodinthearmy.The special profits arising from these situations are oftenmistaken for

theprofitsofcapital—buttheyarereallythereturnsofmonopoly.*Improvements that directly expand productive power are not the only

onesthatincreaserent.Advancesingovernment,manners,andmoralsthatindirectly increase productivity are also included. Considered asmaterialforces, the effect of all these is to increase productive power. Like


improvements in the productive arts, their benefit is ultimatelymonopolizedbylandowners.A notable instance of this is England’s abolition of laws protecting

certaintrades.TheresultingfreetradehasenormouslyincreasedthewealthofGreat Britain—but it has not reduced poverty. It has simply increasedrent. And if the corrupt governments of our great American cities weremadeintomodelsofpurityandthrift,itwouldnotraisewagesorinterest.Itwouldsimplyincreasethevalueofland.*AsexplainedinChapter13.


Chapter21Speculation

There isanothercause,notyetmentioned, thatmustbeconsideredbeforewecanfullyexplaintheimpactofprogressonthedistributionofwealth.Itistheconfidentexpectationthatlandvalueswillincreaseinthefuture.Thesteady increase of rent in all growing countries leads to speculation—holdingonto land for ahigherprice than itwouldotherwisebringat thattime.We have thus far allowed an assumption that is generally made in

explainingthetheoryofrent.Thatis, that theactualmarginofproductionalways coincides with what may be termed the necessary margin ofproduction.We have assumed that cultivation extends to less productivepoints only as it becomes necessary to do so—and that more productivepoints are fully utilized. This is probably the case in stable or slowlydevelopingcommunities.Butwithrapidadvancement,theswiftandsteadyincreaseofrentgivesconfidencetocalculationsoffurtherincrease.Itleadsto landbeingwithheld fromuse, as higher prices are expected.Thus, themarginofproductionisforcedoutfartherthanrequiredbythenecessitiesofproduction.Aslandownersconfidentlyexpectrentstoincreasefurther,theydemandmorerentthanthelandwouldprovideundercurrentconditions.

Settlerswilltakemorelandthantheycanuse,ifpossible, in the belief that itwill soon become valuable.As they do, themargin is carried to evenmore remote points. It is alsowell known thatprivatemineral land isoftenwithheld fromuse,whilepoorerdepositsareworked.Innewstates,itiscommontofindindividualswhoarecalled“landpoor.” They persist in holding land they cannot use themselves. Theyendure poverty, sometimes almost to deprivation, instead of selling theirland.Or,theyofferitatpriceswherenooneelsecoulduseitprofitably.The same thingmay be seen in every rapidly growing city. If superior

landwerealwaysfullyusedbeforeresortingtoinferiorland,novacantlotswouldbeleftasacityextended.Norwouldwefindmiserableshantiesinthe midst of costly buildings. Though some of these lots are extremelyvaluable,theyarewithheldfromtheirfullestuse,oranyuseatall.Instead,theownersprefer towait for a higherprice than they could currentlyget


fromthosewhoarewilling to improve them.Theyexpect,ofcourse, thatlandvalueswillincrease.Theresultoflandbeingwithheldisthatthemarginofthecityispushed

awaysomuchfartherfromthecenter.Theactualmarginofbuilding isatthe limits of the city. This corresponds to the margin of production inagriculture.Butwewillnotfindlandavailableatitsvalueforagriculturalpurposes, as we would if rent were determined simply by presentrequirements. Instead,we find—fora longdistancebeyond thecity—thatlandbearsaspeculativevalue.Thisisbaseduponthebeliefthatitwillberequiredforurbanpurposesinthefuture.Toreachthepointatwhichlandcanbepurchasedatapricenotbaseduponurbanrent,wemustgoveryfarbeyondtheactualmarginofurbanuse.Wemayconceiveofspeculationasextendingthemarginofproduction.

Or,wecanlookatitascarryingtherentlinepastthemarginofproduction.Howeverweview it, the influenceof speculationon increasing rent is animportant fact. It cannot be ignored in any complete theory of thedistribution of wealth in progressive countries. Speculation is the force,arising frommaterial progress, that constantly tends to increase rent in agreaterratiothanprogressincreasesproduction.Asmaterialprogressgoeson and productive power increases, speculation thus constantly tends toreducewages—notmerelyrelatively,butabsolutely.We see this process operating full force in land speculation manias,

which mark the growth of new communities. These are abnormal andsporadicmanifestations, yet it is undeniable that the same cause operatessteadily,withgreaterorlessintensity,inallprogressivesocieties.Withcommodities,risingpriceswilldrawforthadditionalsupplies.This

cannot limit the speculative advance in land values, however. Land is afixedquantity,whichhumanactioncanneitherincreasenordecrease.There is, nevertheless, a limit to the price of land. It is set by the

minimum that labor and capital require to engage in production. Hence,speculationcannothavethesamescopetoadvancerentincountrieswherewages and interest are already near theminimum, as it does in countrieswheretheyareconsiderablyaboveit.Still, in all progressive countries, there is a constant tendency for the

speculativeadvanceof rent toexceed the limitatwhichproductionstops.


This, I think, is shown by recurring seasons of industrial paralysis (i.e.,recessions)—themattertowhichweturninthenextchapter.


FifthPart:TheProblemSolved


Chapter22TheRootCauseofRecessions

Wehavecompletedourlonginquiry,andnowwecancompiletheresults.We will begin with depressions and recessions, which affect every

modernsociety.Wehaveshownhowlandspeculationinflateslandvalues,reduceswagesandinterest,andtherebychecksproduction.Thereareotherreasonsaswell,suchas:thecomplexityandinterdependenceofproduction;problemswithmoneyandcredit;theartificialbarriersofprotectivetariffs.Nonetheless,itisclearthatlandspeculationistheprimarycauseproducingrecessions.Wecanseethiseitherbyconsideringprinciplesorbyobservingphenomena.As population grows and technology advances, land values rise. This

steady increase leads to speculation, as future increases are anticipated.Landvaluesarecarriedbeyondthepointatwhichlaborandcapitalwouldreceivetheircustomaryreturns.Production,therefore,beginstostop.

Productionneednotdecreaseabsolutely—itmaysimply fail to increase proportionately. In other words, new labor andcapitalcannotfindemploymentattheusualrates.Stoppingproductionatsomepointsmustnecessarilyaffectotherpoints

of the industrial network. Demand is interrupted, checking productionelsewhere. Paralysis spreads through all the interlaced industry andcommerce. The same events can seem to show either overproduction oroverconsumption—dependingonone’spointofview.Theperiodofdepressionwillcontinueuntil:(1)thespeculativeadvance

in rents is lost;or (2) the increasedefficiencyof labor (due topopulationgrowthand/orimprovedtechnology)allowsthenormalrentlinetoovertakethe speculative rent line; or (3) labor and capital arewilling towork forsmaller returns. Most likely, all three will cooperate to produce a newequilibrium*. Production resumes in full. After rents begin to advanceagain, speculation returns; production is checked; and the same cyclerepeatsitself.Modern civilization is characterized by an elaborate and complicated

system of production.Moreover, there is no such thing as a distinct andindependent industrial community. We should not expect to see cause


followed by effect as clearly as we would in a simpler society.Nevertheless, the phenomena actually observed clearly correspond withwhatwehaveinferred.Deductionshowshowtheactualphenomenaresultfromthebasicprinciple.

*It isalsopossiblefortheseforcestomoveindifferentdirectionsatthesametime.Forexample,inthe1990s,thespeculativeadvanceofrentscontinuedapace,butwasoffsetbyincreasedproductivityduetotechnologicaladvancements.Ifwereversetheprocess,itisjustaseasytouseinductiontofollowthe

phenomena and arrive at the principle. Depressions and recessions arealways preceded by periods of activity and speculation. Some connectionbetween the two is generally acknowledged. Depression is seen as areaction to speculation, as this morning’s hangover is a reaction to lastnight’sdebauch.Therearetwoschoolsofthoughtastohowthisoccurs.Theschoolofoverproductionsaysproductionhasexceededthedemand

forconsumption.Theypointoutunsoldgoods,factoriesworkinghalftime,moneylyingidle,andworkerswithoutjobs.The school of overconsumption points to the very same things as

evidencethatdemandhasstopped.This,theysay,isbecausepeople,madeextravagant by fictitious prosperity, have lived beyond their means. Thepinchwasnotfeltatthetime,muchasspendthriftsdonotnoticethelossoftheir fortunes while squandering them. Now they must retrench andconsumeless.Each of these theories expresses one side, but fails to comprehend the

full truth. Each is equally preposterous as an explanation of observedphenomena.Peoplewantmorewealththantheycanget.Thebasisofwealthislabor.

Howcantherebeoverproductionaslongaspeoplearewillingtogivetheirlabor in return for things? Likewise, when workers and machinery areforced to stand idle, how can one claim overconsumption? The desire toconsume coexists with the willingness to produce. So industrial andcommercial paralysis cannot be attributed to either overproduction oroverconsumption.Clearly,thetroubleisthatproductionandconsumptioncannotmeetand

satisfyeachother.This,itiscommonlyagreed,arisesfromspeculation.Butspeculation in the products of labor simply tends to equalize supply and


demand.Itsteadiestheinterplayofproductionandconsumption,muchlikeaflywheelinamachine.Thishasbeenwellshown,andsparesmetheneedtoillustrateit.Therefore, the problem must be speculation in things that are not the

productoflabor.Yetitmustbethingsneededforproduction.Andfinally,itmustbethingsoffixedquantity.

Thecauseofrecurringrecessionsmustbespeculationinland.This process is obvious in the United States. During each period of

industrialactivity,landvaluesrosesteadily,culminatinginspeculationthatdrove them up in great jumps. Thiswas invariably followed by a partialcessation of production, reducing effective demand as a correlative. Acommercial crash generally accompanied this. A period of comparativestagnation followed, during which equilibrium was slowly reestablished.Thenthesamecyclebeganagain.Incommonparlance,wesay“buyershavenomoney.”But this ignores

the fact thatmoney isonlyamediumofexchange.All trade is really theexchange of commodities for other commodities.What wouldbe buyersreallylackisnotmoney—itiscommoditiestheycanturnintomoney.Salesmaydeclineandmanufacturingordersfalloff,yetawidespreaddesireforthese thingsremains.Thissimplyshowsthat thesupplyofother things—whichwouldbeexchangedfortheminthecourseoftrade—hasdeclined.Reducedconsumerdemandisjustaresultofdecreasedproduction.

Thisisseenquiteclearlyinmilltownswhenworkersare thrown out of work. Sinceworkers have nomeans to purchasewhatthey desire, storekeepers are left with excess stock. They must thendischargesomeoftheirclerks.Thedecreaseddemandleavesmanufacturerswithanoverstock,andforcesthemtodischargetheirworkersinthesameway.Somewhere—anditmaybeattheotherendoftheworld—acheckinproductionhasproducedacheckindemand.Demandislessenedwithoutwantbeingsatisfied.Peoplewantthingsas

much as ever. But they do not have as much to give for them. Theobstruction then spreads through the whole framework of industry andexchange.Sincetheindustrialpyramidclearlyrestsonland,someobstaclemustbe

preventing labor from expending itself on land. That obstacle is the


speculative advance in land values. It is, in fact, a lockout of labor andcapitalbylandowners.Thoughhabithasmadeususedtoit,itisastrangeand unnatural thing that people, who are willing to work to satisfy theirwants,cannotfindtheopportunitytodoso.We speak of the supply of labor and the demand for labor.Obviously,

thesearerelativeterms.Laboriswhatproduceswealth.Sothedemandforlabor always exists—for people always want things that labor alone canprovide.Wespeakofa lackof jobs,butclearly it isnotwork that isshort.The

supply of labor cannot be too great, nor the demand for labor too small,when people still want those things that labor produces. Trace thisinactivityfrompointtopoint,andyouwillfindthatunemploymentinonetrade is caused by unemployment in another. This cannot arise from toolargeasupplyoflaborortoosmallademandforlabor.The real trouble must be that supply is somehow prevented from

satisfying demand. Somewhere, there is an obstacle keeping labor fromproducingthethingsthatlaborerswant.Putafewofthevastarmyofunemployedonanislandcutofffromall

the advantages of a civilized community, without the cooperation andmachinerythatmultiplyproductivity.Usingonlytheirownhands,theycanfeedthemselves—butwhereproductivepowerisatitshighest,theycannot.Isthisnotbecausetheyhaveaccesstonatureinonecase,butaredenieditintheother?Theonlythingthatcanexplainwhypeopleareforcedtostandidlewhentheywouldwillinglyworktosupplytheirwantsis that laborisdeniedaccesstoland.When we speak of labor creating wealth, we speak metaphorically.

Peoplecreatenothing.Ifthewholehumanraceworkedforever,itcouldnotcreatethetiniestspeckofdustfloatinginasunbeam.Inproducingwealth,labor merely manipulates preexisting matter into desired forms by usingnaturalforces.Therefore,labormusthaveaccesstothismatterandtothoseforcestoproducewealth.Thatistosay,theymusthaveaccesstoland.Landisthesourceofallwealth.Itisthesubstancetowhichlaborgives

form.When labor cannot satisfy its wants, can there be any other causethanthatlaborisdeniedaccesstoland?Thefoundationoftheindustrialstructureisland.Hatmakers,opticians,

andcraftsmenarenotthepioneersofnewsettlements.Minersdidnotgoto


California because shoemakers, tailors, and printers were there. Rather,thosetradesfollowedtheminers.Thestorekeeperdoesnotbringthefarmer,ratherthefarmerbringsthestorekeeper.Itisnotthegrowthofthecitythatdevelopsthecountry,butthedevelopmentofthecountrythatraisesthecity.Therefore,whenpeopleofalltradescannotfindopportunitytowork,the

difficulty must arise in the occupations that create demand for all otheremployment.Itmustbebecauselaborisshutoutfromland.IngreatcitieslikePhiladelphiaorLondonorNewYork,itmayrequirea

graspofbasicprinciplestoseethis.Butelsewhere,industrialdevelopmenthas not become so elaborate—nor has the chain of exchange become sowidelyseparated.There,onehasonlytolookattheobviousfacts.SanFranciscoranksamong thegreatcitiesof theworld, thoughbarely

thirtyyearsold.Yetcertainsymptomsarealreadybeginning toappear. Inolder countries, these are taken as evidence of overpopulation. But it isabsurdtotalkofexcesspopulationinastate*withgreaternaturalresourcesthanFrance,butlessthanamillionpeople.Still,unemploymenthasbeengrowingforanumberofyears.Whenthe

harvest season opens, theworkers go trooping out; when it is over, theycome back again to the city. Clearly, there are unemployed in the citybecausetheycannotfindemploymentinthecountry.Itisnotthatallthelandisinuse.WithinafewmilesofSanFranciscois

enoughunused land to employeveryonewhowantswork. Idonotmeanthateveryonecould—orshould—becomeafarmerifgiventhechance.Butenoughwoulddosotogiveemploymenttotherest.What prevents labor from using this land? Simply that land has been

monopolized.Itisheldatspeculativeprices,basednotonpresentvalue,buton value that will come with future population growth. This speculativeadvanceisheldwithgreattenacityindevelopingcommunities.

*Californiain1879Owners hold on as long as they can, believing pricesmust eventually

rise.Thus, the speculative advance in rent outran the normal advance.

Production was checked, and demand decreased. Labor and capital wereturnedawayfromoccupationsdirectlyconcernedwithland.Sotheyglutted


thosewhere landisa lessapparentelement.This ishow,for instance, therapidexpansionofrailroadswasrelatedtothesucceedingdepression.It may seem as if I have overlooked one thing in saying the primary

cause of depressions is land speculation. Such a cause should operateprogressively; it should resemble a pressure, not a blow. Yet industrialdepressionsseemtocomeonsuddenly.Letmeofferanexplanationforthis.Exchangelinksallformsofindustry

into one interdependent organization. For exchanges to bemade betweenproducersfarremovedbyspaceandtime,largestocksmustbekeptinstoreandintransit.(Thisisthegreatfunctionofcapital,inadditiontosupplyingtoolsandseed.)Theseexchangesaremadelargelyoncredit:theadvanceismadeononesidebeforethereturnisreceivedontheother.As a rule, these advances aremade frommore developed industries to

fundamentalones.Nativeswho tradecoconuts for trinketsget their returnimmediately.Merchants, on the contrary, let out their goods a longwhilebeforegettingareturn.Farmersselltheircropsforcashassoonastheyareharvested.Manufacturersmustkeeplargestocks,shipgoodslongdistances,andgenerallyselloninstallments.Thus, advances and credits are generally from what we may call

secondarytoprimaryindustries.Itfollowsthatanychecktoproductionthatproceeds from the primary will not immediately manifest itself in thesecondary. The system is, as it were, an elastic connection: it will giveconsiderablybeforebreaking.Butwhenitbreaks,itbreakswithasnap.Letme illustratewhat Imeananotherway.Apyramid is composedof

layers, with the bottom layer supporting the rest. If we could somehowmake this bottom layer gradually smaller, the upper partwould retain itsformforsometime.Eventually,gravitywouldovercometheadhesivenessof thematerial.At this point, itwouldnot diminishgradually, butwouldbreakoffsuddenly,inlargepieces.The industrialorganizationmaybe likened tosuchapyramid.Aseach

formofindustrydevelops,throughthedivisionoflabor,itrisesoutoftheothers.Ultimately,everythingrestsuponland.Forwithoutland,laborisaspowerlessasapersonwouldbeinthevoidofspace.Wehavenowexplainedthemaincauseandgeneralcourseofrecurring

paroxysms of industrial depression, which are a conspicuous feature ofmodern life. Political economy can only—and need only—deal with


general tendencies. The exact character of the phenomena cannot bepredicted,becausetheactionsandreactionsaretoodiverse.Weknowthatifatreeiscut,itwillfall.Buttheprecisedirectionwillbedeterminedbytheinclinationofthetrunk,thespreadofthebranches,theimpactoftheblows,thedirectionandforceofthewind,andsoon.Ihavegivenacausethatclearlyexplainsthemainfeaturesofrecessions.

This is in striking contrast to the contradictory—and selfcontradictory—attemptsbasedoncurrenttheories.Itisclearthataspeculativeadvanceinland values invariably precedes each recession. That these are cause andeffect isobvious toanyonewhoconsiders thenecessary relationbetweenlandandlabor.Therecessionrunsitscourseandanewequilibriumisestablishedasthe

normalrentlineandthespeculativerentlinearebeingbroughttogetherbythreefactors:(1)Thefallofspeculativelandvalues,asshownbyreducedrentsandshrinkageofrealestatevalues inmajorcities.(2)Theincreasedefficiencyoflaborarisingfrompopulationgrowthandnewtechnology.(3)Theloweringofcustomarystandardsofwagesandinterest.Whenequilibriumisreestablished,renewedactivitywillsetin.Thiswill

againresultinaspeculativeadvanceoflandvalues.Butwagesandinterestwillnotrecovertheirlostground.Thenetresultofallthesedisturbancesisthegradualforcingofwagesandinteresttowardtheirminimum.


Chapter23ThePersistenceofPovertyDespiteIncreasingWealth

Thegreatproblemissolved.Weareabletoexplainsocialphenomenathathaveappalledphilanthropistsandperplexedstatesmenalloverthecivilizedworld.Wehavefoundthereasonwhywagesconstantlytendtoaminimum,givingbutabareliving,despiteincreaseinproductivepower:As productive power increases, rent tends to increase even more—

constantlyforcingdownwages.Advancing civilization tends to increase the power of human labor to

satisfyhumandesires.Weshouldbeabletoeliminatepoverty.Butworkerscannot reap thesebenefitsbecause theyare intercepted.Land isnecessaryto labor. When it has been reduced to private ownership, the increasedproductivity of labor only increases rent. Thus, all the advantages ofprogressgotothosewhoownland.Wagesdonotincrease—wagescannotincrease.Themorelaborproduces,themoreitmustpayfortheopportunitytomakeanythingatall.Mere laborers, therefore,havenomore interest inprogress thanCuban

slaveshaveinhighersugarprices.Higherpricesmayspurtheirmasterstodrive themharder.Likewise,a free laborermaybeworseoffwithgreaterproductivity.Steadilyrisingrentsgeneratespeculation.Theeffectsoffutureimprovements are discounted by even higher rents. This tends to drivewages down to the point of slavery, atwhich theworker can barely live.Theworkerisrobbedofallthebenefitsofincreasedproductivepower.These improvements also cause a further subdivision of labor. The

efficiencyofthewholebodyoflaborersisincreased,butattheexpenseofthe independenceof itsconstituents. Individualworkersknowonlya tinypartofthevariousprocessesrequiredtosupplyeventhecommonestwants.A primitive tribe may not produce much wealth, but all members are

capableofanindependentlife.Eachsharesalltheknowledgepossessedbythe tribe. They know the habits of animals, birds, and fishes. They canmaketheirownshelter,clothing,andweapons.Inshort,theyareallcapableof supplying their own wants. The independence of all of the membersmakesthemfreecontractingpartiesintheirrelationswiththecommunity.


Compare this savage with workers in the lowest ranks of civilizedsociety.Theirlivesarespentinproducingjustonethingor,morelikely,thesmallestpartofonething.Theycannotevenmakewhatisrequiredfortheirwork;theyusetoolstheycanneverhopetoown.Compelledtooppressiveandconstantlabor,theygetnomorethanthesavage:thebarenecessariesoflife.Yettheylosetheindependencethesavagekeeps.Modernworkersaremerelinksinanenormouschainofproducersand

consumers. The very power of exerting their labor to satisfy their needspasses from their control. The worse their position in society, the moredependentthey are on society. Their power may be taken away by the actions ofothers.Orevenbygeneralcauses,overwhichtheyhavenomoreinfluencethantheyhaveoverthemotionofthestars.Undersuchcircumstances,peopleloseanessentialquality:thepowerof

modifyingandcontrollingtheircondition.Theybecomeslaves,machines,commodities.Insomerespects,theyarelowerthananimals.Iamnosentimentaladmirerofthesavagestate.Idonotgetmyideasof

naturefromRousseau.Iamawareof itsmaterialandmental lack, its lowand narrow range. I believe that civilization is the natural destiny ofhumanity,theelevationandrefinementofourpowers.Nevertheless,noonewhofacesthefactscanavoidtheconclusionthat—

in the heart of our civilization— there are large classes that even thesorriest savagewould notwant to trade placeswith.Given the choice ofbeingbornanAustralianaborigine,anarcticEskimo,oramongthelowestclassesinahighlycivilizedcountrysuchasGreatBritain,onewouldmakeaninfinitelybetterchoiceinselectingthelotofthesavage.Thosecondemnedtowantinthemidstofwealthsufferallthehardships

ofsavages,withoutthesenseofpersonalfreedom.Iftheirhorizoniswider,it is only to see the blessings they cannot enjoy. I challenge anyone toproduceanauthenticaccountofprimitivelifecitingthedegradationwefindinofficialdocumentsregardingtheconditionoftheworkingpoorinhighlycivilizedcountries.I have outlined a simple theory that recognizes the most obvious

relations.Itexplainstheconjunctionofpovertywithwealth;oflowwageswith high productivity; of degradation amid enlightenment; of virtualslavery inpolitical liberty. It flowsfromageneralandunchanging law. It


showsthesequenceandrelationbetweenphenomenathatareseparateandcontradictorywithoutthistheory.Itexplainswhyinterestandwagesarehigherinnewcommunities,even

though theproduction is less. It explainswhy improvements that increasethe productive power of labor and capital do not increase the reward ofeither.Itshowsthatwhatiscommonlycalledaconflictbetweenlaborandcapital is, in fact, a harmony of interests between them. It proves thefallaciesofprotectionism,whileshowingwhyfreetradefailstobenefittheworkingclass.Itexplainswhywantincreaseswithabundance,andwhywealthtendsto

greater and greater concentration. It explains periodic recessions anddepressions—and why large numbers of potential producers stand idle,withouttheabsurdassumptionthatthereistoolittleworktodoortoomanyhands to do it. It explains the negative impact of machinery, withoutdenying the natural advantages it gives. It explainswhy vice andmiseryappear among dense populations, without attributing to the laws of Godthose defects arising only from the shortsighted and selfish decrees ofhumans.Thisisanexplanationinaccordancewithallthefacts.Lookattheworld

today.The sameconditions exist indifferent countries—regardlessof thetype of government, industries, tariffs, or currency. But everywhere youfindpovertyinthemidstofwealth,youwillfindthatlandismonopolized.Insteadofbeingtreatedas thecommonpropertyofall thepeople, landistreatedastheprivatepropertyofindividuals.Andbeforelaborisallowedtouseit,largesumsareextortedfromtheearningsoflabor.Comparedifferentcountries.Youwillseethatitisnottheabundanceof

capital, nor the productiveness of labor, that makes wages high or low.Rather,wagesvarywiththeextenttowhichthosewhomonopolizelandcanlevytributeintheformofrent.It iswellknown,evenamongthemost ignorant, thatnewcountriesare

alwaysbetterforworkersthanrichcountries.Innewcountries,althoughthetotal amountofwealth is small, land is cheap.Whereas in rich countries,landiscostly.Whereverrentisrelativelylow,youwillfindwagesrelativelyhigh. Wherever rent is high, wages are low. As land values increase,povertydeepensandbeggarsappear.Inthenewsettlements,wherelandischeap, any inequalities in condition are very slight. In great cities,where


landissovaluableitismeasuredbythefoot,youwillfindtheextremesofpovertyandluxury.Thedisparitybetween the twoextremesof thesocial scalemayalways

bemeasuredbythepriceofland.LandismorevaluableinNewYorkthanSanFrancisco;and inNewYork, thesqualorandmiserywouldmake theSanFranciscanstandaghast.LandismorevaluableinLondonthaninNewYork; and in London, the squalor and destitution is worse than in NewYork.The same relation is obvious if you compare the same country in

different times.Theenormous increase in theefficiencyof laborhasonlyaddedtorent.TherentofagriculturallandinEnglandismanytimesgreaterthan itwas500years ago.*Yetwages,measuredas aproportionof totalproduction,havedecreasedeverywhere.

*Prof.JamesRogers(18231900)estimatedtheincreaseinrentatfourteentimes,ifmeasuredinwheat,or120timesifmeasuredinmoney.The Black Death brought a great rise in wages in England in the

fourteenth century. There can be no doubt that such an awful decline inpopulation decreased the effective power of labor. However, lesscompetition for land lowered rent toanevengreater extent.Thisallowedwages to rise somuch that landholders enactedpenal laws tokeep themdown.Thereverseeffectfollowedthemonopolizationoflandduringthereign

of Henry VIII. The commons were enclosed, and church lands dividedamongparasiteswhowerethusenabledtofoundnoblefamilies.Theresultwas the sameas froma speculative increase in landvalues.According tononeotherthanMalthus,aworkerinthereignofHenryVIIwouldgethalfabushelofwheatforaboutoneday’scommonlabor.ByendofElizabeth’sreign,itwouldtakethreedaysoflabortopurchasethesameamount.Therapidmonopolization of land carried the speculative rent line beyond thenormal rent line, and produced tramps and paupers.We have lately seensimilareffectsfromsimilarcausesintheUnitedStates.Wemayaswellcitehistoricalillustrationsoftheattractionofgravity;the

principleisjustasuniversalandjustasobvious.Rentmustreducewages.This is as clear as an equation: the larger the subtractor, the smaller theremainder.


The truth is selfevident. Put this question to anyone capable ofconsecutivethought:“Suppose some land should arise from theEnglishChannel. This land

willremainunappropriated—likethecommonsthatoncecomprisedapartofEngland.Anunlimitednumberofworkerscanhavefreeaccesstoit.Here,acommonlaborercouldmaketenshillingsaday.WhatwouldbetheeffectuponwagesinEngland?”They would at once tell you that common wages throughout England

mustsoonrisetotenshillingsaday.Ask,“Whatwouldbetheeffectonrents?”Afteramoment’sreflection,theywouldtellyou,“Rentsmustfall.”Iftheythoughtoutthenextstep,theywouldtellyouthatallthiswould

happenwithoutmuchlaborbeingdivertedtothenewnaturalopportunities.Norwouldtheformsanddirectionofindustrychangemuch.Theonlylosswould be the kind of production that now yields, to labor and landlordtogether,lessthanlaborcouldsecureonthenewopportunities.

Thegreatriseinwageswouldbeattheexpenseofrent.Next takesomehardheadedbusinessownerswhohaveno theories,but

know how tomakemoney. Say to them: “Here is a little village. In tenyears,itwillbeagreatcity.Therailroadandtheelectriclightarecoming;itwillsoonaboundwithallthemachineryandimprovementsthatenormouslymultiplytheeffectivepoweroflabor.”Nowask:“Willinterestbeanyhigher?”“No!”“Willthewagesofcommonlaborbeanyhigher?”“No,”theywilltellyou.“Onthecontrary,chancesaretheywillbelower.

It will not be easier for a mere laborer to make an independent living;chancesareitwillbeharder.”“What,then,willbehigher?”youask.“Rent,andthevalueofland!”“ThenwhatshouldIdo?”youbeg.“Getyourselfapieceofground,andholdontoit.”Ifyoutaketheiradviceunderthesecircumstances,youneeddonothing

more.Youmaysitdownandsmokeyourpipe;youmayliearoundlikeanidler; you may go up in a balloon, or down a hole in the ground. Yet


withoutdoingonestrokeofwork,withoutaddingoneiotatothewealthofthecommunity—intenyearsyouwillberich!Inthenewcityyoumayhavealuxuriousmansion.Butamongitspublic

buildings,willbeanalmshouse.In all our long investigation, we have been advancing to this simple

truth:Land is required for the exertion of labor in the production ofwealth.

Therefore, tocontrol thelandis tocommandall thefruitsof labor,exceptonlyenoughtoenablelabortocontinuetoexist.Wehavebeenadvancingasthroughenemycountry,inwhicheverystep

mustbesecured,everypositionfortified,andeverybypathexplored.Thissimpletruth,anditsapplicationtosocialandpoliticalproblems,ishiddenfromthemasses—hiddenpartlybyitsverysimplicity.Andingreaterpartbywidespread fallaciesanderroneoushabitsof thought.These leadus tolookineverydirectionbuttherightoneforanexplanationoftheevilsthatoppressandthreatenthecivilizedworld.Inbackoftheseelaboratefallaciesandmisleadingtheoriesisanactive,

energeticpower.This is thepower thatwrites lawsandmolds thought. Itoperates ineverycountry,nomatterwhat itspolitical formsmaybe. It isthepowerofavastanddominantfinancialinterest.But this truth is so simple and clear, that to fully see it once is to

recognize it always. There are pictures that, though looked at again andagain,presentonlyaconfusedpattern of lines. Or, perhaps they seem to be only a landscape, trees, orsomethingofthekind.Then,attentioniscalledtothefactthatthesethingsmake up a face or a figure.Once this relation is recognized, it is alwaysclear.Itissointhiscase.In the lightof this truth,allsocial factsgroupthemselves inanorderly

relation. Themost diverse phenomena are seen to spring from one greatprinciple. It is not the relations of capital and labor, not the pressure ofpopulation against subsistence, that explains the unequal development ofsociety.

Thegreatcauseofinequalityinthedistributionofwealthisinequalityintheownershipofland.


Ownership of land is the great fundamental fact that ultimatelydetermines the social, the political, and consequently the intellectual andmoralconditionofapeople.Anditmustbeso.Forlandisthehomeofhumans,thestorehousewemustdrawuponfor

all our needs. Land is thematerial towhichwemust apply our labor tosupplyallourdesires.Eventheproductsoftheseacannotbetaken,orthelightofthesunenjoyed,oranyoftheforcesofnatureutilized,withouttheuseoflandoritsproducts.On land we are born, from it we live, to it we return again. We are

childrenof the soil as truly as abladeofgrassor the flowerof the field.Take away from people all that belongs to land, and they are butdisembodiedspirits.Materialprogresscannotridusofourdependenceonland;itcanonlyaddtoourpowertoproducewealthfromland.Hence, when land is monopolized, progress might go on to infinity

withoutincreasingwagesorimprovingtheconditionofthosewhohaveonlytheirlabor.Itcanonlyaddtothevalueoflandandthepoweritspossessiongives.Everywhere, in all times, among all peoples, possession of land is the

baseof aristocracy, the foundationofgreat fortunes, the sourceofpower.AstheBrahminssaid,agesago:“Towhomsoeverthesoilatanytimebelongs,tohimbelongthefruitsof

it.Whiteparasolsandelephantsmadwithpridearetheflowersofagrantofland.”


SixthPart:TheRemedy


Chapter24IneffectiveRemedies

Our conclusions point to a solution. It is so radical that it will not beconsidered if we believe less drastic measures might work. Yet it is sosimple that its effectiveness will be discounted until more elaboratemeasures are evaluated. Let us review current proposals to relieve socialdistress.Forconvenience,wemaygroupthemintosixcategories:1.Moreefficientgovernment

2.Bettereducationandworkhabits3.Unionsorassociations4.Cooperation5.Governmentregulation6.Redistributionofland

1.MoreefficientgovernmentSocial distress is largely attributed to the immense burdens of

government:hugedebts,militaryestablishments,andgeneralextravagance(whichisespeciallycharacteristicoflargecities).Wemustalsoincludetherobberyofprotectivetariffs,whichtakeadollarormoreoutofthepocketsofconsumersforeveryquartertheyputinthetreasury.The connection between these immense sums, taken from the people,

and theprivationsof the lowerclasses seemsobvious.Fromasuperficialviewpoint,wemightnaturallysupposethatreducingthisenormousburdenwouldmakeiteasier for thepoor tomakea living.However,consideringtheeconomicprincipleswehaveidentified,wecanseethatthiswouldnotbetheeffect.Reducingtaxestakenfromproductionwouldbeequivalenttoincreasing

productivity.Itwould,ineffect,addtotheproductivepoweroflabor—justasincreasingpopulationandtechnologicalimprovementsdo.Asitdoesinthosecases,anyadvantagewouldgotolandlordsinhigherrents.Thegreatadvancesofpowerandmachineryhavenotalleviatedpoverty—theyhaveonlyincreasedrent.Andsowouldthis.Iwillnotdisputethatifthesethingscouldbedonesuddenly,withoutthe

destructionofarevolution,theremightbeatemporaryimprovementinthe


condition of the lowest classes. Unfortunately, such reform is clearlyimpossible.Yetevenifitwerepossible,anytemporaryimprovementwouldultimately be swallowed up by increased land values. Ultimately, theconditionofthosewholivebytheirlaborwouldnotbeimproved.Adimconsciousnessof this isbeginning topervade themasses,and it

constitutes a grave political difficulty closing in around the Americanrepublic. Those with nothing but their labor care little about theextravaganceofgovernment.Many—especiallyinthecities—aredisposedto look upon it as a good thing, “furnishing employment” and “puttingmoney in circulation.” “Boss Tweed”* robbed New York as a guerrillachief might a captured town. He was one of the new banditti graspingcontrol of government in all our cities. His thievery was notorious, hisspoils blazoned in big diamonds and lavish personal expenditure. Yet hewasundoubtedlypopularwithamajorityofthevoters.Letmebeclearlyunderstood.Iamnotsayingeconomyingovernmentis

notdesirable.Iamsimplysayingthatreducingthecostofgovernmentwillhavenodirecteffectoneliminatingpovertyorincreasingwages—as longaslandismonopolized.Nonetheless,everyeffortshouldbemadetoreduceuselessexpenditures.

The more complex and extravagant government becomes, the more itbecomes a power distinct from, and independent of, the people.We facemomentousproblems,yetthemostimportantquestionsofgovernmentarebarely considered. The average American voter has prejudices, partyfeelings,andgeneralnotionsofacertainkind.Butheorshegivesasmuchthought to the fundamental questions of government as a streetcar horsegivestotheprofitsoftheline.Werethisnotthecase,somanyhoaryabusescouldnothavesurvived,norsomanynewonesbeenadded.Anythingthattendstomakegovernmentsimpleandinexpensivetendsto

put it under control of the people. But no reduction in the expenses ofgovernmentcan,ofitself,cureormitigatetheevilsarisingfromaconstanttendencytowardunequaldistributionofwealth.

*WilliamMarcyTweed(18231878),politicalleaderoftheinfamousTammanyHall,anorganization that stolemillions from the citizens ofNewYorkCity.Tweed held severalpublicoffices,anddiedinprison.2.Bettereducationandworkhabits


Many believe that poverty is due to lack of industry, frugality, andintelligence. This soothes any sense of responsibility and flatters by itssuggestion of superiority. They attribute their better circumstances tosuperior industry and superior intelligence—to say nothing of a superiorlackofconscience,whichisoftenthedeterminingqualityofamillionaire.Yet anyone who has grasped the laws determining the distribution of

wealth,whichwediscoveredinpreviouschapters,willseethemistake.Itistruethatanyoneofseveralcompetitorsmaywinarace,butitisimpossiblethateveryonecan.Thisbeingthecase,industry,skill,frugality,andintelligencecanhelpthe

individualonlyinsofarastheyaresuperiortothegenerallevel.Justasinarace, speedbenefits a runneronly if it exceeds thatof thecompetitors. Ifonepersonworksharderorwithsuperiorskillorintelligencethanordinarypeople,thatpersonwillgetahead.Butiftheaverageisbroughtuptothishigherpoint, theextraeffortwillbringonlyaveragewages.Togetahead,onemustthenworkharderstill.For once land acquires value, wages do not depend upon the real

earningsorproductoflabor—theydependonwhatisleftafterrentistakenout.Whenalllandismonopolized,rentwilldrivewagesdowntothepointatwhichthepoorestclasswillconsenttoliveandreproduce.Life might be more comfortable for many poor families if they were

taughttopreparecheapdishes.Butiftheworkingclassgenerallycametolive like that, wages would ultimately fall proportionally. If Americanworkers came down to the Chinese standard of living, they wouldultimately come down to theChinese standard ofwages. The potatowasintroduced into Ireland to improve the condition of the poor by loweringtheir costof living.Theactual resultwas to raise rents and lowerwages.When the potato blight came, the population had already reduced itsstandardofcomfortsolowthatthenextstepwasstarvation.So if one individual works longer, that one may earn more. But the

wagesofallcannotbeincreasedthisway.Itiswellknownthatoccupationswithlongerhoursdonothavehigherwages.Infact,thelongertheworkingday, the more helpless the laborer generally becomes. Likewise, inindustries where it has become common for a wife and children tosupplementearnings,thewagesofawholefamilyrarelyexceedthatofanindividual in other occupations. Bohemian cigar makers of New York


employ men, women, and children in their tenements. They have thusreducedwagestolessthantheChineseweregettinginSanFrancisco.Thesegeneralfactsarewellknown,andarefullyrecognizedinstandard

economics texts. However, they are explained away by the Malthusiantheoryof the supposed tendencyofpopulation tomultiply to the limit ofsubsistence. The true explanation, as I have sufficiently shown, is in thetendencyofrenttoreducewages.Astotheeffectsofeducation,itmaybeespeciallyworthwhiletosaya

few words, for there is a prevailing tendency to attribute some magicalinfluencetoit.Collegegraduatesoftenthinknobetter,andsometimesnotas well, as those who have never been to college. Be this as it may,educationcanoperateonwagesonlyby increasing theeffectivepoweroflabor.(Atleastuntilitenablesthemassestodiscoverandremovethetruecauseofunequaldistributionofwealth.)Education,therefore,hasthesameeffectasincreasedskillorindustry.It

canraisethewagesofanindividualonlyinsofarasitrendersonesuperiorto others.When reading andwritingwere rare accomplishments, a clerkcommandedhighwages.Nowthat theyarenearlyuniversal, theygivenoadvantage.TheChinesearevirtuallyallliterate;yetwagesinChinaarethelowestpossible.The diffusion of intelligence cannot raise wages generally, nor in any

wayimprovetheconditionofthelowestclass.Onesenatorcalledthemthe“mudsills”ofsociety:thosewhomustrestonthesoil,nomatterhowhighthesuperstructureisbuilt.Theonlyhopeofeducationisthatitmaymakepeoplediscontentedwith a state that condemnsproducers to a lifeof toilwhilenonproducerslollinluxury.Noincrease in thepowerof laborcan increasegeneralwages—solong

as rent swallows up all the gain. This is not merely a deduction fromprinciples;itisafactprovenbyexperience.Thegrowthofknowledgeandtheprogressofinventionhavemultipliedtheeffectivepoweroflaboroverandoveragainwithoutincreasingwages.Itistruethatgreaterprudenceandhigherintelligenceareassociatedwith

bettermaterial conditions.But this is the effect, not the cause.Whereverconditionshaveimproved,improvementinpersonalqualitieshasfollowed.Wherever conditions have worsened, these qualities have decayed. Yet,


nowheredowefindthatincreasedindustry,skill,prudence,orintelligencehaveimprovedconditionsamongthosecondemnedtotoilforabareliving.Qualitiesthatraisepeopleaboveanimalsaresuperimposedonthosethey

share with animals. Only when we are relieved from the wants of ouranimalnaturecanourintellectualandmoralnaturegrow.Condemnpeopletodrudgeryforthenecessitiesofananimalexistence,andtheywilldoonlywhattheyareforcedtodo.Improvementsmaynotshowimmediately.Increasedwagesmayfirstbe

taken out in idleness and dissipation. But ultimately they will bringindustry,skill,intelligence,andthrift.Ifwecomparedifferentcountries,ordifferent classes in the same country, or different periods for the samepeople,we find an invariable result: personal qualities appear asmaterialconditionsareimproved.Tomakepeople industrious,prudent,skillful,andintelligent, theymust

berelievedfromwant.Ifyouwouldhaveaslaveshowthevirtuesofafreeperson,youmustfirstmaketheslavefree.3.UnionsorassociationsThelawsofdistributionshowthatcombinationsofworkersactuallycan

advancewages—andnotat theexpenseofotherworkers,asissometimesclaimed;norattheexpenseofcapital,asisgenerallybelieved.Ultimately,it is at the expense of rent. Themisconceptions arise from the erroneousideathatwagesaredrawnfromcapital.Unionshavesecuredhigherwagesinparticulartradeswithoutlowering

wages in other trades or reducing the rate of profits. Wages affect anemployer in comparison to other employers. The first employer whosucceedsinreducingwagesgainsanadvantage;thefirstcompelledtopaymore is put at a disadvantage. But the differential ends when thecompetitors are also included in the change. Any gain or loss is purelyrelative,anddisappearswhenthewholecommunityisconsidered.

Ifthechangeinwagescreatesachangeinrelativedemand, then capital fixed in machinery, buildings, or other things maybecomemore(orless)profitable.Butanewequilibriumissoonreached.Ifthereistoolittlecapitalinacertainform,thetendencytoassumethatformsoon brings it up to the required amount. If there is too much, reducedproductionsoonrestoresthelevel.


Achange inwages inanyparticularoccupationmaycauseachange inthe relative demand for labor—but it cannot produce a change in totaldemand. Suppose a union raises wages in a particular industry in onecountry. Meanwhile, wages go down in the same industry in anothercountry. If the change is great enough, part of the demand in the firstcountrywillnowbesuppliedbyimportsfromthesecond.Higher importsof one kind cause a corresponding decrease in imports of other kinds, orelse a corresponding increase in exports. For one country can obtain theproducts of another country only by exchanging the products of its ownlaborandcapital.Ifallwagesinanyparticularcountryweredoubled,thatcountrywould

continuetoexportandimportthesamethings,andinthesameproportions.Exchangeisdeterminedbytherelative,nottheabsolute,costofproduction.If wages in some industries doubled while others increased less, therewouldbeachange in theproportionof thevarious things imported.Still,therewouldbenochangeintheproportionbetweenexportsandimports.Therefore,most of theobjections to tradeunions are groundless.Their

successcannotreduceotherwages,nordecreasetheprofitsofcapital,norinjure national prosperity. Nevertheless, the difficulties confrontingeffective combinations of workers are so great that the good they canaccomplish is limited. In addition, there are inherent disadvantages in theprocess.Allanyunionhasdoneistoraisewagesinaparticularoccupation.Thisisataskthatgrowsindifficulty.Aswagesofanyparticularkindriseabovethenormallevelofotherwages, thereisastrongtendencytobringthemback.Forinstance,sayaunioncanraisewagesfortypesettersbytenpercent.

Immediately, relative supply and demand are affected. On the one hand,therewillbe lessdemandfor typesetting.On theother,higherwageswilltend to increase the number of typesetters. This occurs inways even thestrongestcombinationcannotprevent.Iftheincreaseweretwentypercent,thesetendencieswouldbestrongerstill.Asapracticalmatter,unionscandorelativelylittletoraisewages,even

when supporting each other. They do not affect the lower strata ofunorganizedlaborers,whoneedhelpthemost.Andthosewagesultimatelydetermine all above them.The effective approachwould be by a generalcombination including workers of all kinds. Unfortunately, such a


combination is practically impossible.The difficulties of combination arehard enough in the smallest and most highly paid trades. They becomegreateraswegodowntheindustrialscale.Theonlymethodunionshave,thestrike,isastruggleofendurance.And

do not forget who is really pitted against whom. It is not labor againstcapital; it is labor on one side, and landowners on the other. For wagescannot increase unless rent decreases. But landowners can sit and wait.While landowners are inconvenienced, capital is destroyed, and laborersstarve.Land is absolutelynecessary forproduction. It is certain to increase in

valueinallgrowingcountries.Thesefactsaloneproduceamonglandowners—withoutanyformalalliance—thesame effect that the most rigorous federation of workers or capitalistswould.Thestruggleofenduranceinvolvedinastrikeisreallywhatithasoftenbeencomparedto:war.Likeallwar,itreduceswealth.Likewar,theorganization for a strike must be tyrannical. Those who would fight forfreedomgiveuptheirpersonalfreedomonenteringthearmy.Theybecomeamerecoginagreatmachine.Soitmustbewithworkerswhoorganizeforastrike.Unionsare,therefore,necessarilydestructiveoftheverythingsthatworkersseektogainthroughthem:wealthandfreedom.4.CooperationIt has become the fashion to preach cooperation as a remedy for the

grievances of theworking class. Since these evils do not arise from anyconflict between labor and capital, cooperation cannot raise wages norrelievepoverty.Two kinds of proposals have been made: cooperation in supply and

cooperationinproduction.Cooperationinsupplyissimplyadevicetosavelaborandeliminaterisk.Nomatterhowmanymiddlemeniteliminates, itonlyreducesthecostofexchange.Itseffectupondistributionisthesameasimprovementsand inventions.Thesehavewonderfully facilitated trade inmoderntimes—yettheeffectisonlytoincreaserent.Cooperation in production is simply the substitution of proportional

wagesforfixedwages.Thereareoccasionalinstancesofthisinalmostalloccupations. Sometimes management is left to the workers, and thecapitalistonlytakesafixedproportionofnetproduction.Allthatisclaimedforcooperation inproduction is that itmakes theworkermoreactiveand


industrious. Inotherwords, it increases theefficiencyof labor. Itseffect,therefore,isinthesamedirectionasotherformsofmaterialprogress.Itcanproduceonlythesameresult—higherrent.Itisstrikingproofofhowbasicprinciplesareignoredthatcooperationis

proposedasameansofraisingwagesandrelievingpoverty.Itcanhavenosuchgeneraltendency.Imaginethatcooperationofsupplyandcooperationof production replaced present methods. Cooperative stores connectproducerandconsumerwithaminimumofexpense.Cooperativefactories,farms,andminesabolishcapitalistemployerswhopayfixedwages.Allthisgreatlyincreasestheefficiencyoflabor.Whatofit?Itbecomes

possible to produce the same amount of wealth with less labor.Consequently,ownersofland—thesourceofallwealth—couldcommandagreateramountfortheuseoftheirland.Thisisnotjusttheory;itisprovenby facts. Experience has shown that improvements in the methods andmachinery of production and exchange have no tendency to improve theconditionofthelowestclass.Wagesarelowerandpovertyisdeeperwheretrade goes on at the least cost, and where production has the besttechnology.Theadvantageonlyaddstorent.Butwhatiftherewerecooperationbetweenproducersandlandowners?

That would simply amount to the payment of rent in kind. Call itcooperation, ifyouchoose,but the termswouldstillbe fixedby the lawsthat determine rent. Wherever land is monopolized, any increase inproductive power simply gives landowners the power to demand a largershare.Nonetheless, in many instances where it has been tried, it seems that

cooperation has noticeably improved the condition of those immediatelyengagedinit.Thisisduetothefactthatthesecasesareisolated.Industryorskillmayimprovetheconditionofthosewhopossesstheminsuperiordegree. When these improvements become widespread, however, theycease to have the same effect. Likewise, onemay benefit from a specialadvantageinprocuringsuppliesoraspecialefficiencygiventosomelabor.But thesebenefitswouldbe lost as soonas the improvementsbecame soprevalentastoaffectthegeneralrelationshipsofdistribution.Increasedproductivepowerdoesnotaddtotherewardoflabor.Thisis

not because of competition, but because competition is onesided. Therecan be no productionwithout land—and land ismonopolized. Producers


mustcompeteforitsuse,andthisforceswagestoaminimum.Itgivesallthe advantage of increasing productive power to landowners—in higherrents and increased land values. Destroy thismonopoly, and competitionwould accomplishwhat cooperation attempts: giving everyonewhat theyfairly earn. Destroy this monopoly, and industry must become thecooperationofequals.5.GovernmentRegulationSpace will not permit a detailed examination of proposals to alleviate

poverty by government regulation of industry and accumulation. In theirmostcomprehensiveforms,wegenerallycallthesemethodssocialism.Noris analysis necessary, for the same defects apply to all of them. Theysubstitutegovernmentalcontrolforthefreedomofindividualaction.Theyattempt to secureby restraintwhat canbetterbe securedby freedom.Weshouldnotresorttothemifwecanachievethesameendsanyotherway.For instance, a graduated income tax aims to mitigate the immense

concentrationofwealth.Theendisgood;butlookatthemeansrequired.Itemploysalargenumberofofficialswithinquisitorialpowers.Therearetemptationstobribery,perjury,andallothermeans of evasion, which beget a demoralization of opinion. It puts apremium upon unscrupulousness and a tax upon conscience. Finally, inproportion to accomplishing its effect, it weakens the incentive toaccumulatewealth,oneofthedrivingforcesofindustrialprogress.Iftheseelaborateschemesforregulatingeverythingandfindingaplace

for everybody could be carried out, we would have a state of societyresembling that of ancient Peru. Modern society cannot successfullyattemptsocialisminanythingapproachingsuchaform.Theonlyforcethathaseverprovedeffectiveforit,astrongreligiousfaith,growsfaintereveryday.Wehavepassedoutofthesocialismofthetribalstate.Wecannotenterit again, except by retrogression thatwould involve anarchy and perhapsbarbarism.Theidealofsocialismisgrandandnoble.Iamconvinceditispossibleto

achieve.Butsuchastateofsocietycannotbemanufactured—itmustgrow.Societyisanorganism,notamachine.Itcanliveonlybytheindividuallifeofitsparts.Inthefreeandnaturaldevelopmentofallitsparts,theharmonyofthewholewillbesecured.Allthatisnecessaryis“LandandLiberty.”*6.RedistributionofLand


Many suspect that possession of land is somehow connected with oursocialproblems.Mostpropositionslooktowardamoregeneraldivisionofland.Someseektorestrictthesizeofindividualholdings.Grantstoassistinthesettlementofpubliclandshaveevenbeensuggested.

*MottoofRussianrevolutionaries,calledNihilists,in1878.Suchmeasureswouldmerelyallowownershipof land tomorequickly

assumetheformtowhichittends.Ownership in Great Britain and the United States has been steadily

concentrating. While statistical tables are sometimes quoted to show adecrease in the average size of holdings, ownership of landmay still beconcentrating.As land passes to more intense use, the size of holdings tends to

diminish. A stock range becomes a large farm, a small farm becomes avegetable garden, a patch of land too small for even this makes a largepropertyinthecity.Thus,growingpopulationnaturallyreducesthesizeofholdings by putting lands to higher ormore intense uses. This process isveryconspicuousinnewcountries.Averageholdingsofoneacreinacitymayshowamuchgreaterconcentrationofownershipthanaverageholdingsof640acresinanewtownship.Irefertothistoshowthefallacyofassertionsthatlandmonopolyisan

evilthatwillcureitself.Onthecontrary,itisobviousthattheproportionoflandownerstothewholepopulationisconstantlydecreasing.We clearly see a strong tendency toward concentration in agriculture.

Small farms are being combined into larger ones.Only a few years ago,320acreswouldhavemadealargefarmanywhere.InCaliforniatherearenow farms up to sixty thousand acres, while Dakota farms embrace ahundredthousandacres.Thereasonisobvious.Theuseofmachinerycausesageneraltendency

towardslargescaleproduction.Agricultureisbeginningtoexhibitthesametrendthatreplacedindependenthandweaverswithfactories.Therefore,anymeasure that merely allows a greater subdivision of land would beineffective.Further, anymeasure to force itwould reduceproductivity. Iflandcanbecultivatedmorecheaplyinlargeparcels,restrictingownershiptosmalloneswillreducetheaggregateproductionofwealth.


Therefore, any effort to achieve a fairer division of wealth by suchrestrictions is subject to the drawback that it lessens the amount to bedivided.Itwouldbelikethestoryofthemonkeydividingcheesebetweencats,whoequalizedmattersbytakingabiteoffthebiggestpiece.Afurtherand fatal objection is that restriction will not secure the only end worthaiming at: a fair division. It will not reduce rent. Therefore it cannotincreasewages.Itmaymakethecomfortableclasseslarger,butitwillnotimprove the conditionof the lowest class.Thus, subdivisionof landdoesnothingtocuretheevilsoflandmonopoly.Itmayevendiscourageadoptionof more sweeping measures. It strengthens the existing system byinterestingalargernumberofpeopleinitsmaintenance.Let us abandon all attempts to eliminate landmonopoly by restricting

ownership.Anequaldistributionof landis impossible.Yetanythingshortof thatwouldbeonlyarelief,notacure.Indeed, itwouldbearelief thatwouldpreventtheadoptionofacure.Norisanyremedyworthconsideringthatdoesnotflowwiththenatural

direction of social development. There can be no mistaking thatconcentration is theorderofdevelopment.Theconcentrationofpeople inlarge cities, of handicrafts in large factories, of transportation by railroadandsteamshiplines,andofagriculturaloperationsinlargefields,allaffirmthis.To successfully resist this trendwewouldhave tobanish steamandelectricityfromhumanservice.


Chapter25TheTrueRemedy

Wehavetracedtheunequaldistributionofwealth,thecurseandmenaceofmoderncivilization,totheinstitutionofprivatepropertyinland.Aslongasthisinstitutionexists,noincreaseinproductionwillpermanentlybenefitthemasses. On the contrary, any improvements must depress their conditionfurther. We have examined the remedies currently proposed to relievepoverty and improve the distribution of wealth, and found them allineffectiveor impractical.Povertydeepensaswealthincreases;wagesfallwhileproductivitygrows.Allbecauseland,thesourceofallwealthandthefieldofalllabor,ismonopolized.Deduction and induction have brought us to the same truth: Unequal

ownership of land causes unequal distribution of wealth. And becauseunequalownershipoflandisinseperablefromtherecognitionofindividualpropertyinland,itnecessarilyfollowsthatthereisonlyoneremedyfortheunjustdistributionofwealth:

Wemustmakelandcommonproperty.Butthisisatruththatwillarousethemostbitterantagonism,giventhe

present state of society. It must fight its way, inch by inch. It will benecessarytomeettheobjectionsofthosewho,evenwhenforcedtoadmitthistruth,willcontendthatitcannotbepracticallyapplied.Indoingthisweshallbringourpreviousreasoningtoanewandcrucialtest.Justaswetestaddition by subtraction andmultiplication by division, sowe canwe testourconclusionsbytheadequacyofourremedy.Ifitispractical,itprovesourconclusionsarecorrect.Thelawsoftheuniverseareharmonious.Iftheremedytowhichwehave

been led is the true one, it must be consistent with justice; it must bepractical in application; it must accord with the tendencies of socialdevelopment;anditmustharmonizewithotherreforms.

AllthisIproposetoshow.Thelawsoftheuniversedonotdenythenaturalaspirationsofthehuman

heart. The progress of society can be toward equality, not inequality.Economic law will prove the perceptions of Marcus Aurelius: “We are


made for cooperation—like feet, likehands, like eyelids, like the rowsoftheupperandlowerteeth.”Editor’snote:In thechapters thatfollowtheboldandcontroversialstatement,“Wemustmakelandcommonproperty,”Georgeshowshowhismethodofdoingsowouldsecuretolabor and capital the private possession of land and ownership of the improvementsthereon.


SeventhPart:JusticeoftheRemedy


Chapter26TheInjusticeofPrivatePropertyInLand

Justice is fundamental to the human mind, though often warped bysuperstition, habit, and selfishness. When I propose to abolish privatepropertyinland,thefirstquestiontobeaskedisthatofjustice.Onlywhatisjustcanbewise;onlywhatisrightwillendure.Ibowtothisdemandandaccept this test. If private property in land is just, thenwhat I propose isfalse.Ifprivatepropertyinlandisunjust,thenmyremedyistrue.Whatconstitutestherightfulbasisofproperty?Whatallowssomeoneto

justlysay,“Thisismine!”?Isitnot,primarily,therightofapersontoone’sownself?Totheuseofone’sownpowers?Toenjoythefruitsofone’sownlabor? Each person is a definite, coherent, independent whole. Eachparticularpairofhandsobeysaparticularbrainandisrelatedtoaparticularbody.Andthisalonejustifiesindividualownership.As each person belongs to himself or herself, so labor belongs to the

individualwhenputinconcreteform.Forthisreason,whatsomeonemakesor produces belongs to that person—even against the claim of thewholeworld.Itisthatperson’sproperty,touseorenjoy,giveorexchange,orevendestroy.Nooneelsecanrightfullyclaimit.Andthisrighttotheexclusivepossession and enjoymentwrongs no one else.Thus, there is a clear andindisputable title to everything produced by human exertion. It descendsfromtheoriginalproducer,inwhomitisvestedbynaturallaw.The pen that I write with is justly mine. No other human being can

rightfullylayclaimtoit,forinmeisthetitleoftheproducerswhomadeit.It has becomemine because itwas transferred tome by the stationer, towhomitwastransferredbytheimporter,whoobtainedtheexclusiverightto itby transfer fromthemanufacturer.By thesameprocessofpurchase,themanufactureracquiredthevestedrightsofthosewhodugthematerialfromthegroundandshapeditintoapen.Thus,myexclusiverightofownershipinthepenspringsfromthenatural

rightofindividualstotheuseoftheirownfaculties—thesourcefromwhichallideasofexclusiveownershiparise.Itisnotonlytheoriginalsource,itistheonlysource.


Natureacknowledgesnoownershiporcontrolexistinginhumans,excepttheresultsoflabor.Isthereanyotherwaytoaffectmaterialthingsexceptbyexertingthepowerofone’sownfaculties?Allpeopleexistinnatureonequalfootingandhaveequalrights.Naturerecognizesnoclaimbutlabor—andwithoutrespect towhoclaimsit.Whenapirateshipspreadsitssails,windfillsthem;asitwouldthoseofamissionary.FishwillbitewhetherthelineleadstoagoodchildwhogoestoSundayschoolorabadoneplayingtruant.Thesunshinesandtherainfallsonthejustandunjustalike.ThelawsofnaturearethedecreesoftheCreator.Theyrecognizenoright

butlabor.Asnaturegivesonlytolabor,theexertionoflaborinproductionistheonlytitletoexclusivepossession.Thisrightofownershipspringingfromlaborexcludesthepossibilityof

anyotherrightofownership.Apersonisrightfullyentitledtotheproductofhisorherlabor(orthelaborofsomeoneelsefromwhomtherighthasbeenreceived).Itisproductionthatgivestheproducertherighttoexclusivepossession

and enjoyment. If so, there can be no right to exclusive possession ofanythingthatisnottheproductoflabor.Therefore,privatepropertyinlandiswrong.Therighttotheproductoflaborcannotbeenjoyedwithouttherightto

freeuseoftheopportunitiesofferedbynature.Toadmitarighttopropertyinnatureistodenytherightofpropertyastheproductoflabor.Whennonproducerscanclaimaportionofthewealthcreatedbyproducers—asrent—then the right of producers to the fruits of their labor is denied to thatextent.There is no escape from this position. To affirm that someone can

rightfully claim exclusive ownership of his or her own labor—whenembodied inmaterial things—is todeny thatanyonecan rightfullyclaimexclusive ownership in land. Property in land is a claim having nojustification in nature—it is a claim founded in the way societies areorganized.Whatkeepsusfromrecognizingtheinjusticeofprivatepropertyinland?

Byhabit,weincludeallthingsmadesubjecttoownershipinonecategory—whichwe call “property.” The only distinctions are drawn by lawyers,who distinguish only personal property from real estate—thingsmovablefrom things immovable. The real and natural distinction, however, is


betweentheproductoflaborandthefreeofferingsofnature.Inthetermsofpolitical economy, betweenwealth and land.To class them together is toconfuseallthoughtregardingjusticeorinjustice,rightorwrong.Ahouseandthelotonwhichitstandsareclassedtogetherbylawyersas

realestate.Yetinnatureandrelationstheydifferwidely.Oneisproducedbyhumanlabor(wealth).Theotherisapartofnature(land).The essential characteristic of wealth is that it embodies labor. It is

brought into being by human exertion. Its existence or nonexistence, itsincrease or decrease, depends on humans. The essential characteristic ofland is that it does not embody labor. It exists irrespective of humanexertion,andirrespectiveofpeople.Itisthefield,orenvironment,inwhichpeople find themselves; the storehouse from which their needs must besupplied;therawmaterialonwhich—andtheforceswithwhich—theycanact.The moment this distinction is recognized, we see that the sanction

natural justice gives to one kind of property is denied to the other. Therightfulness of property that is the product of labor implies thewrongfulness of the individual ownership of land.The recognition of theformerplacesallpeopleuponequalterms,andgivesthemtheduerewardof their labor.Whereas the recognition of the latter is to deny the equalrightsofpeople.Itallowsthosewhodonotworktotakethenaturalrewardof those who do. Whatever may be said for the institution of privatepropertyinland,itclearlycannotbedefendedonthegroundsofjustice.Theequalrightofallpeopletotheuseoflandisasclearastheirequal

right to breathe the air—a right proclaimed by the very fact of theirexistence.We cannot suppose that somepeople have a right to be in thisworldandothersdonot.IfweareallherebypermissionoftheCreator,weareallherewithanequaltitletothebountyofnature.This is a right that is natural and inalienable. It is a right that vests in

everyhumanbeingwhoenterstheworld.Duringeachperson’sstayintheworlditcanbelimitedonlybytheequalrightsofothers.Ifallpeoplelivingweretounitetograntawaytheirequalrights,theycouldnotgrantawaytherightsof thosewhofollowthem.Havewemadetheearth, thatweshoulddetermine therightsof thosewhocomeafterus?Nomatterhowlongtheclaim, nor how many pieces of paper are issued, there is no right thatnaturaljusticerecognizestogiveonepersonpossessionoflandthatisnot


equally the rightofallotherpeople.Thesmallest infantborn in themostsqualid room of themostmiserable tenement acquires, at themoment ofbirth,aright to landequal tomillionaires.Andthatchild isrobbedif thatrightisdenied.Our previous conclusions were irresistible in and of themselves. They

now stand confirmed by the highest and final test. Translated fromeconomicsintoethics,theyshowthatthesourceofincreasingmiseryamidprogress is a great fundamental wrong: the appropriation of land as theexclusivepropertyofsome.Foritislandonwhich—andfromwhich—allpeoplemustlive.Fromthisfundamentalinjusticeflowalltheinjusticesthatendangermodern development. They condemn the producer ofwealth topoverty,whilepamperingthenonproducerinluxury.There is nothing strange or inexplicable in the phenomena now

perplexingtheworld.Itisnotthatmaterialprogressisnotinitselfagoodthing.Itisnotthatnaturehasproducedchildrenithasfailedtoprovidefor.ItisnotthattheCreatorhasleftinjusticeinnaturallaws,suchthatmaterialprogressshouldbringsuchbitterfruits.Itisnotduetoanylackofnature—buttohumaninjustice.Viceandmisery,povertyandpauperism,arenotthelegitimateresultsof

growing population and industrial development. They follow them onlybecause land is treated as private property. They are the direct andnecessary result of violating the supreme law of justice— giving to theexclusivepossessionofafew,whatnaturehasprovidedforall.Since labor cannot produce wealth without using land, denying equal

right to use land is, necessarily, denying the right of labor to its ownproduct. If one person controls the land onwhich othersmust labor, thatpersoncanappropriatetheproductoftheirlaborasthepriceofpermissionto labor. This violates the fundamental law of nature: that a person’senjoymentofthefruitsofnaturerequiresthatperson’sexertion.Theunjustdistributionofwealthstemmingfromthisfundamentalwrong

is separating modern society into the very rich and the very poor. Thecontinuousincreaseofrentisthepricelaborisforcedtopayfortheuseofland.Itstripsthemanyofwealththeyjustlyearn,andheapsitinthehandsof a fewwho do nothing to earn it. The few receive without producing,while others produce without receiving. One is unjustly enriched—theothersarerobbed.


Whyshouldthosewhosufferfromthisinjusticehesitateforonemomenttosweepitaway?Whyshouldlandholdersbepermittedtoreapwhattheyhavenotsown?Consider for a moment the utter absurdity by which we gravely pass

down titlesgiving the right to exclusivepossessionof the earth, and thusabsolute dominion over others. In California, land titles go back, to thegovernmentofMexico,whichtookthemfromtheSpanishKing,whotookthemfromthePope.ThePope,byastrokeofthepen,dividedlands—yettobediscovered!—betweenSpainandPortugal.Inaword,ownershipoflandrestsuponconquest.Everywhere, thereis

notarightthatbinds,butaforcethatcompels.Andwhenatitlerestsonlyon force, no complaint can bemadewhen force annuls it.Whenever thepeople,havingthepower,choosetoannulthosetitles,noobjectioncanbemade in the name of justice. People have had the power to take or holdexclusivepossessionofportionsoftheearth’ssurface.Butwhenandwheredidthereeverexistthehumanbeingwhohadsucharight?The right to exclusive ownership of anything of human production is

clear.Nomatterhowmanyhands it haspassed through, at thebeginningtherewashumanlabor.Someoneproducedorprocureditbyexertion,thusgaining clear title to it against all the rest ofmankind.That person couldjustlypassitfromonetoanotherbysaleorgift.Butattheendofwhatstringoftransfersorgrantscanwefind,oreven

suppose, a similar title to any part of the material universe? Toimprovements,suchanoriginaltitlecanbeshown.Butthisisatitleonlytothe improvements, and not to the land itself. If I clear a forest, drain aswamp, or fill a bog, all I can justly claim is the value given by theseexertions.Itgivesmenorighttothelanditself.Ihavenoclaimother thanmyequalsharewitheveryothermemberof thecommunitytowardthevalueaddedbythegrowthofthecommunity.But it will be said: There are improvements that, in time, become

indistinguishable from the land itself. Very well, then the title to theimprovements becomes blendedwith the title to the land. The individualrightislostinthecommonright.Itisthegreaterthatswallowsuptheless;not the less that swallows up the greater. Nature does not proceed fromhumans,buthumansfromnature.Anditisintothebosomofnaturethatweandallourworksmustreturnagain.


Still, itwill be said:Everyonehas a right to theuse andenjoymentofnature. Inorder togain the full benefit of labor applied to land, apersonmusthavetheexclusiverighttoitsuse.Thereisnodifficulty,however,indeterminingwheretheindividualrightendsandthecommonrightbegins.A delicate and exact test is supplied by value. With its aid, there is nodifficulty in determining and securing the exact rights of each, and theequalrightsofall.Thiscanbedetermined,nomatterhowdensepopulationbecomes.Thevalueof land, aswehave seen, is thepriceofmonopoly. It is the

relative, not the absolute, capability of land that determines its value.Nomatterwhat its intrinsicqualitiesmaybe, land that isnobetter thanotherlandthatcanbehadforfreecanhavenovalue.Thevalueoflandalwaysmeasures thedifferencebetween it and thebest land thatmaybehad forfree.Thus, thevalueof landexpresses, inexactand tangible form, the right

the community has in land held by an individual. And rent, therefore,expresses the exact amount an individual should pay the community tosatisfytheequalrightsofallothermembers.Wenowhaveamethodtoreconcile thestabilityof tenure, requiredfor

improvement,withafullandcompleterecognitionoftheequalrightsofalltotheuseofland.Wecanconcedetheundisturbeduseoflandtopriorityofpossession—ifwecollectrentforthebenefitofthecommunity.What of the deduction of a complete and exclusive individual right to

land from priority of occupation? That is, if possible, the most absurdground on which land ownership can be defended. How can order ofoccupationgive exclusive andperpetual title to the surfaceof aglobeonwhich countless generations succeed each other! Did the last generationhave any better right to the use of this world than we? Or those of ahundredyearsago?Orofathousandyearsago?Doesthefirstpersontoarriveatabanquetacquiretherighttoturnback

all the chairs and claim that no other guests can eat the foodunless theyagreetothefirstperson’sterms?Doesthefirstpersonwithaticketat thetheaterhavetherighttoshutthedoorsandhavetheperformancegoonforhimorheralone?Doesthefirstpassengerwhoentersarailroadcarobtainthe right to scatter baggage over all the seats and force all subsequentpassengerstostand?


These cases are perfectly analogous.We arrive andwe depart.We areguests at a banquet continually spread, spectators and participants in anentertainmentwherethereisroomforallwhocome.Wearepassengersonan orbwhirling through space. Our rights to take and possess cannot beexclusive. They must be bounded, everywhere, by the equal rights ofothers.Apassengerinarailroadcarmayspreadbaggagearoundonlyuntilother

passengers come in. So may settlers take and use as much land as theychoose,untilitisneededbyothers.Thisfactisshownbylandacquiringavalue when the initial right must be curtailed by the equal rights of theothers. But no priority of appropriation can give a right thatwill bar theequal rights of others. If this were not the case, then—by priority ofappropriation— one person could acquire the exclusive right to a wholetownship, a whole state, a whole continent. If one could concentrate theindividualrightstothewholesurfaceoftheglobe,thatpersonaloneofalltheteemingbillionswouldhavetherighttolive,andcouldexpelalltherestoftheinhabitants.Inpointoffact,thisabsurdsuppositionactuallydoesoccur,thoughona

smaller scale. Iwill refer toBritainonlybecause landownership ismoreconcentrated there, and it affords a striking illustration of what privateproperty in landnecessarily involves.But it is trueeverywhere, includingtheUnitedStates.TheterritoriallordsofGreatBritainhave,overandoveragain, expelled the native population from large areas. People, whoseancestorshadlivedonthelandfromtimeimmemorial,havebeenforcedtoemigrate, becomepaupers, or starve.Thevast bodyof theBritish peopleand their subjects are forced to pay enormous sums to a few—for theprivilege of being permitted to live on the land they so fondly call theirown.


Chapter27TheEnslavementofLabor

Aschattelslavery,theowningofpeople,isunjust—soprivateownershipofland is unjust. Ownership of land always gives ownership of people. Towhatdegree,ismeasuredbytheneedforland.Whenstarvationistheonlyalternative, the ownership of people involved in the ownership of landbecomesabsolute.Thisissimplythelawofrentindifferentform.Place one hundred people on an island fromwhich there is no escape.

Makeoneofthemtheabsoluteowneroftheothers—ortheabsoluteownerof thesoil. Itwillmakenodifference—either toowneror to theothers—which one you choose. Either way, one individual will be the absolutemasteroftheotherninetynine.Denyingpermissiontothemtoliveontheislandwouldforcethemintothesea.Thesamecausemustoperate,inthesamewayandtothesameend,even

on a larger scale and through more complex relations.When people arecompelledtoliveon—andfrom—landtreatedastheexclusivepropertyofothers,theultimateresultistheenslavementofworkers.Thoughlessdirectandlessobvious,relationswilltendtothesamestateasonourhypotheticalisland.Aspopulationincreasesandproductivityimproves,wemovetowardthesameabsolutemasteryoflandlordsandthesameabjecthelplessnessoflabor.Rentwilladvance;wageswillfall.Landownerscontinuallyincreasetheirshareofthetotalproduction,whilelabor’sshareconstantlydeclines.To the extent that moving to cheaper land becomes difficult or

impossible,workerswillbereducedtoabareliving—nomatterwhattheyproduce. Where land is monopolized, they will live as virtual slaves.Despite enormous increase in productive power, wages in the lower andwider layersof industry tend—everywhere—to thewagesof slavery (i.e.,justenoughtomaintaintheminworkingcondition).There is nothing strange in this fact. Owning the land onwhich—and

fromwhich—peoplemust live isvirtually the sameasowning thepeoplethemselves.Inacceptingtherightofsomeindividualstotheexclusiveuseandenjoymentof the earth,wecondemnothers to slavery.Wedo this asfully and as completely as though we had formally made them chattelslaves.


Insimplesocieties,productionislargelythedirectapplicationoflabortothesoil.There,slavery is theobviousresultofa fewhavinganexclusiveright to the soil fromwhich allmust live.This is plainly seen in variousformsofserfdom.Chattelslaveryoriginatedinthecaptureofprisonersinwar. Though it has existed to some extent in every part of the globe, itseffects have been trivial compared to the slavery that originates in theappropriationofland.Whereversocietyhasreachedacertainpointofdevelopment,weseethe

generalsubjectionofthemanybythefew—theresultoftheappropriationoflandasindividualproperty.Ownershipoflandgivesabsolutepoweroverpeoplewhocannotliveexceptbyusingit.Thosewhopossessthelandaremastersofthepeoplewhodwelluponit.The ideaof individualownershipnaturallyandjustlyattaches to things

of human production. But when it is extended to land, the rest is just amatterof time.The strongandcunningeasily acquire a superior share inthis species of property. For it is to be had, not by production, but byappropriation.Inbecominglordsoftheland,theynecessarilybecomelordsofotherpeople.Ownership of land is the basis of aristocracy. It was not nobility that

gaveland,but thepossessionof landthatgavenobility.All theenormousprivilegesofthenobilityofmedievalEuropeflowedfromtheirpositionastheownersofthesoil.Thissimpleprincipleofownershipproducedthelordononeside,andthevassalontheother.Onehavingalltherights,theothernone.Thesamecausehasenslaved themassesofworkers ineveryage. It is

stillactinginthecivilizedworldtoday.Wemaysaythatpersonalliberty—freedomtomoveabout—isuniversallyacknowledged.IntheUnitedStatesand most civilized countries, political and legal inequality have beenabolished.Yetthegreatestcauseofinequalityremains—revealingitselfintheunequaldistributionofwealth.Theessenceofslaveryisthateverythingworkersproduceistakenfrom

them,exceptenoughtosupportabareexistence.Underexistingconditions,the lowestwagesof free labor invariably tend toward this samestate.Nomatter how much productivity increases, rent steadily swallows up thewhole gain (or even more).Thus, the condition of the masses in every


civilized country is tending toward virtual slavery—under the forms offreedom.

Ofallkindsofslavery,thisisprobablythemostcruelandrelentless.Laborersarerobbedoftheirproductionandforcedtotoilformere subsistence. But their taskmasters assume the form of inescapabledemands.Itdoesnotseemtobeonehumanbeingwhodrivesanother,but“the inevitable laws of supply and demand.” And for this, no one inparticularisresponsible.Eventheselfishinterestthatpromptedthemastertolookafterthewellbeingofhisslavesislost.Laborhasbecomeacommodity,andtheworkeramachine.Thereareno

mastersandslaves,noownersandowned—onlybuyersandsellers.When Southern slaveholders saw the condition of the free poor in

civilized countries, it is no wonder they easily persuaded themselves toacceptslavery.TherecanbenodoubtthatSouthernfieldhandswere(asaclass)betterfed,betterlodged,andbetterclothedthanagriculturallaborersinEngland.IntheSouthduringslavery,itwouldhavebeenscandalousformasters to force their slaves to live andwork under conditions that largeclasses of free white men and women did in Northern cities. If publicopinion had not restrained them, their own selfish interest inmaintainingthehealthandstrengthoftheirslaveswouldhave.Isitanywonderthatdemandstoabolishslaveryseemedhypocriticalto

slaveholders?And now that slavery has been abolished, the planters findthey have sustained no loss. Ownership of the land—onwhich the freedslavesmustlive—givesthemalmostasmuchcontroloflaborasbefore.Yettheyarerelievedofsomeveryexpensiveresponsibilities.As population increases and land becomesmore valuable, the planters

will get a greater share (proportionately) of the earnings of their laborersthan theydidunder slavery.Of course, laborwill get a smaller share.Atleast slaves got enough to keep them in good physical health. But incountriessuchasEngland,therearelargeclassesoflaborerswhodonotgeteventhat.These modifying influences are lost in the complicated processes of

modern production, where serfdom assumes a less obvious form. Thosewhose labor is appropriated and those who appropriate it are widelyseparated through many intermediate gradations. This makes relations


betweenmembersofthetwoclassesindirectandgeneral,whilebeforetheyweredirectandparticular.Thatsuchconditionsarenotmorecommonhereisduetothegreatextent

of fertile land available on this continent. This has not only provided anescapevalvefortheoldersectionsoftheUnion,ithasgreatlyrelievedthepressure in Europe. But this avenue of relief cannot last forever. It isalreadyclosingupfast.Asitcloses,thepressuremustbecomegreater.Theworkingclassisbeingdrivenintothishelpless,hopelesspovertyby

a force like a resistless and unpitying machine. It drives people to actsbarbarians would refuse. The Boston collar manufacturer who pays hisworkers twocentsanhourmaysympathizewith theircondition.But, likethem,heisgovernedbythelawofcompetition.Hisbusinesscannotsurviveifhepaysmore.Andsoitgoes,throughalltheintermediategradations.Itseemstobetheinexorablelawsofsupplyanddemandthatforcesthelowerclassesintotheslaveryofpoverty.Andanindividualcannomoredisputethispowerthanthewindsandtides.

But in reality, it is the same cause that always has, and alwaysmust,resultinslavery:Themonopolizationbysomeofwhatnaturemeantforall.As longaswe recognizeprivateproperty in land,ourboasted freedom

will inevitably involve slavery. Until it is abolished, Declarations ofIndependenceandActsofEmancipationareinvain.Solongasonepersoncanclaimexclusiveownershipofland—fromwhichotherpeoplemustlive—slaverywillexist. Indeed,asmaterialprogressgrows, itmustgrowanddeepen.


Chapter28AreLandownersEntitledtoCompensation?

There can be no escape from this truth: There can be no honest title toexclusivepossessionof theearth.Privateproperty in land isabold,bare,enormous wrong—like chattel slavery. The majority of people do notrecognizethis,simplybecausethemajorityofpeopledonotthink.Tothem,whatever is, is right. It continues to appear so until its injustice has beenpointedout repeatedly. Ingeneral, theyare ready tocrucifywhoever firstattemptsthis.Yetitisimpossibletothinkatallabouttheproductionanddistributionof

wealth, without seeing that property in land is a fundamentally differentthing from property in objects of human production. Furthermore, ourexaminationhasalsoshownthatprivatepropertyinlandcannotbejustifiedon thegroundsofutility.On thecontrary, it is thegreat causeofpovertyand misery. Expediency, therefore, joins justice in demanding that weabolishit.Thisinstitutionhasnostrongergroundthanameremunicipalregulation.

Sowhatreasoncantherebeforhesitation?One worry—even among those who clearly see that land, by right, is

commonproperty—isthis:Restoringcommonrightstolandappearstobeaninjusticetothosewhohavepurchaseditwiththeirrightfulwealth.Landbeing treated as private property for so long, they have based theircalculations upon its permanence. So, it is said, justice requires that wecompensatetheownersifweabolishit.Theessentialdefectinthisliesintheimpossibilityofbridgingtheradical

differencebetweenrightandwrong.For the interestsof landholders tobeconserved, the interests and rights of others must be disregarded. Iflandholderslosenothingoftheirspecialprivileges,thepeopleatlargecangainnothing.Buyingindividualpropertyrightswouldonlygivelandholdersaclaimof

the same kind and amount that their possession of land now gives them,only in another form. Through taxation, it would give them the sameproportionoftheearningsoflaborandcapitalthattheynowappropriatein


rent. The unjust advantage of landowners would be preserved, while theunjustdisadvantageofotherswouldbecontinued.Yeteventhisdiscussionisahopefulsign.Criesforjusticearetimidand

humble when first protesting a timehonored wrong. We have beeneducated to look upon the “vested rights” of landowners with all thesuperstitiousreverencethatancientEgyptianslookeduponthecrocodile.Butideasgrowwhentimesareripe,eventhoughtheirfirstappearances

areinsignificant.TheantislaverymovementintheUnitedStatesbeganwithtalk of compensating owners. But when four million slaves wereemancipated,theownersgotnocompensation.Nordidtheyclamorforany.One day, the people of England or theUnited Stateswill be sufficientlyarousedtotheinjusticeanddisadvantagesofindividualownershipoflandto reclaim it. And they will not trouble themselves about compensatinglandowners.Norshouldtherebeanyconcern.Howabsurd!Ifthelandofanycountry

belongstothepeopleofthatcountry,whatright—inmoralityorjustice—do landowners have to compensation? If the land belongs to the people,whyshouldtheypayitsvaluefortheirownland?Herbert Spencer once wrote,* “Had we to deal with the parties who

originallyrobbedthehumanraceofitsheritage,wemightmakeshortworkofthematter.”Whynotmakeshortworkofitanyhow?Forthisrobberyisnotliketherobberyofahorseorsomemoney.That

theft ceaseswith theact.This is a continuous robbery thatgoesoneveryhourofeveryday.Itisatolllevieduponlaborconstantlyandcontinuously.Itisnotmerelyarobberyinthepast—itisarobberyinthepresent.Andarobbery that deprives the newborn of their birthright. Why should wehesitatetomakeshortworkofsuchasystem?JustbecauseIwasrobbedyesterdayandthedaybeforeandthedaybeforethat,mustIallowmyselftoberobbedtodayandtomorrowaswell?Isthereanyreasontoconcludethattherobberhasacquiredavestedrighttorobme?Iflandbelongstothepeople,whycontinuetopermitlandownerstotakerent?Andwhycompensatetheminanymannerfortheir“loss”ofrent?

* Herbert Spencer (18201903), English philosopher, Social Statics, page 142. Thisreferenceisfromtheeditionpublished—withhisconsent—from1864to1892.Thereafter,


herepudiatedit,andissuedaneweditionthateliminatedallreferencesdeclaringpropertyin land to be unjust. Henry George addressed Spencer’s reversal in a later book, APerplexedPhilosopher.Considerwhat rent really is. It representsavaluecreatedby thewhole

community.Itdoesnotarisespontaneouslyfromtheland.Norisitduetoanythingthatlandownershavedone.Letlandownershave,ifyouplease,everythinglandwouldgivethem—

intheabsenceoftherestofthecommunity.Butrentisthecreationofthewholecommunity.Soitnecessarilybelongstothewholecommunity.Supposewewere to try thecaseusingcommon law—whichhasbeen

built by and for landowners. What does the law allow someone whoinnocentlybuyslandlaterjudgedtobelongtoanother?Nothingatall.That fact that one purchased in good faith gives no right or claim

whatsoever.Thelawsimplysays:“ThelandbelongstoA,letthesheriffputhim in possession!” It gives no claim to the innocent purchaser of awrongfultitle,andallowsnocompensation.Not only this, but it takes all improvements made in good faith. The

buyersmayhavepaidahighprice,makingeveryefforttoseethatthetitleisgood.Theymayhaveheldundisturbedpossessionforyears,withouthintof an adverse claimant. They may have even erected buildings morevaluablethanthelanditself.Yetcleverlawyersmayfindatechnicalflawinthepapers.Ortheymay

huntupsomeforgottenheirwhoneverdreamedofsuchrights.Then,notonlytheland,butalltheimprovementsmaybetakenaway.And there is evenmore!According to common law, after surrendering

thelandandgivinguptheimprovements,thebuyersmaybecalledupontoaccountforall theprofitsderivedfromuseof the landduringthe timeofpossession.Thesedictates of justice havebeen formulated into lawby landowners

themselves.TheyareappliedeverydayinAmericanandEnglishcourts.Ifweweretoapplythemtothecaseof“ThePeoplevs.TheLandowners,”wewouldnotthinkofgivinglandholdersanycompensation.Indeed,wewouldtakealltheimprovementsandwhateverelsetheymayhaveaswell.ButIdonotpropose togo that far. It issufficient if thepeopleresume

ownership of the land.Let the landowners retain their improvements andpersonalpropertyinsecurepossession.


Bythismeasureofjustice,therewouldbenooppressionandnoinjurytoanyclass.Thegreatcauseof theunequaldistributionofwealthwouldbeswept away. And with it, the suffering, degradation, and waste that itentails. All would share in the general prosperity. The gain of smalllandholders would be enormous; that of large landholders would still bereal.For inwelcomingjustice,peaceandplentywill follow—bringinggood

not just to some, but to all. For justice itself is the highest and truestexpediency.Howtruethisis,weshallshortlysee.


Chapter29HistoryofLandasPrivateProperty

Anycustomthathasexistedforalongtimeseemsnaturalandnecessarytous.Thisismerelyhabit.Nonetheless,this,morethananythingelse,keepsus from realizing the basic injustice of private property in land—andpreventsusfromconsideringanyproposaltoabolishit.Wearesousedtotreating landas individualproperty that thevastmajorityofpeopleneverthink of questioning it. It is thoroughly recognized in our laws,manners,andcustoms.Mostpeopleeventhinkitisrequiredfortheuseofland.Theyareunable

to conceive of society as possible without reducing land to privatepossession.Thefirststepinimprovinglandistofindanowner.Aperson’slandislookedonaspropertytosell,lease,give,orbequeath—thesameashouses,cattle,goods,orfurniture.The“sacrednessofproperty”hasbeenpreached so constantly—especially by the “conservators of ancientbarbarism,” as Voltaire called lawyers—that most people view privateownership of land as the very foundation of civilization. They fancyreturninglandtocommonownershipassomewildfantasy—oranattempttoreturnsocietytobarbarism.Evenifitweretrue—whichitisnot—thatlandhadalwaysbeentreated

as private property, this would not prove the justice or necessity ofcontinuingtotreatitassuch.Theuniversalexistenceofslaverywasonceaffirmed.Yetthatdidnotproveitjustornecessary.Notlongago,monarchyseemedallbutuniversal.Notonlykings,but themajorityof theirsubjects, reallybelieved thatnocountrycould survivewithoutaking.YetFrance, to saynothingofAmerica,getsalongquitewellwithoutaking.AndtheQueenofEnglandhasasmuchpowertogoverntherealmasthewoodenfigureheadofashiphastodetermineitscourse.Buttheassumptionthatlandhadalwaysbeentreatedasprivateproperty

is not true. On the contrary, the common right to land has always beenrecognizedastheprimaryright.Privateownershiphasappearedonlyastheresultofusurpation—thatis,beingseizedbyforce.


Theprimaryandpersistentperceptionofmankindisthateveryonehasanequalrighttoland.Theopinionthatprivatepropertyinlandisnecessarytosocietyisacomparativelymodernidea,asartificialandasbaselessasthedivinerightofkings.It isonlytheresultofanignorancethatcannotlookbeyonditsimmediatesurroundings.History,research,andtheobservationsof travelers prove thatwherever human society has formed, the commonrightofpeopletousetheearthhasbeenrecognized.Unrestrictedindividualownershiphasneverbeen freely adopted. It has alwaysbeenborn inwarand conquest—and in the selfish use the cunning havemade of law andsuperstition.Whereverwe can trace the early history of society— in Europe,Asia,

Africa, America, and Polynesia—land was once considered commonproperty.Allmembers of the community had equal rights to the use andenjoymentofthelandofthecommunity.This recognition of the common right to land did not prevent the full

recognitionoftheexclusiverighttotheproducts of labor. Nor was it abandoned when the development ofagriculture imposed the necessity of recognizing exclusive possession ofland—tosecuretheresultsoflaborexpendedincultivatingit.How, then,hasprivateownershipof landbecomesowidespread?Why

wastheoriginalideaofequalrightssupplantedbytheideaofexclusiveandunequalrights?Thecausesarethesameonesthatledtotheestablishmentof privileged classes. We can summarize them briefly: (1) Theconcentration of power in the hands of chieftains and the military. (2)Conquest that reduces the conquered to slavery and divides their lands,withadisproportionatesharegoingtothechiefs.(3)Thedifferentiationandinfluenceofapriestlyclass.(4)Thedifferentiationandinfluenceofaclassofprofessionallawyers.The interests of priests and lawyerswere served by the substitution of

exclusivepropertyinplaceofcommonland.InEuropelawyershavebeenespecially effective in destroying all vestiges of the ancient tenure bysubstitutingRomanlaw—exclusiveownership.Unfortunately, inequality, once produced, always tends toward greater

inequality.Thisstruggle—betweenequalrightstothesoilandthetendencytomonopolizeit inindividualpossession—causedtheinternalconflictsof


ancient Greece and Rome. But the final triumph of the tendency towardownershipeventuallydestroyedboth.Bythepowerwithwhichthegreatattractstheless,smallfamilyestates

became part of the great estates—the latifundia—of enormously richpatricians. The former owners were forced into slave gangs, or becamevirtualserfs.Othersfledtothecities,swellingtheranksoftheproletariat,whohadnothingtosellbuttheirvotes.Asaresult,populationdeclined,artsank,theintellectweakened,andoncesplendidcivilizationsbecameemptyshells.The hardy virtues born of personal independence died out, while

exhaustiveagricultureimpoverishedthesoil.Atlengththebarbariansbrokethrough; a civilization once proud was left in ruins. During Rome’sgrandeur, such a fatewouldhave seemedas impossible as it seems tousnow that the Comanches could conquer the United States or LaplandersdesolateEurope.Thefundamentalcausewastenureofland.Ontheonehand,denialofthe

commonrighttolandresultedindecay;ontheother,equalitygavestrength.Every family in the German villages was entitled to an equal share ofcommon land. This impressed a remarkable character on the individual,which explains how small bands of barbarians overran a great empire.Romeperishedfrom“thefailureofthecropofmen.”After theRoman Empire fell, the idea of common rightswas blended

withtheideaofexclusiveproperty.Thefeudalsystemwastheresult.But side by side and underneath the feudal system, a more primitive

organizationrevived.Basedonthecommonrightsofcultivators,ithaslefttracesalloverEurope,andstillsurvivesinmanyplaces.Feudalism clearly recognized—in theory at least—that land belongs to

societyatlarge,nottotheindividual.Afief(afeudalestate)wasessentiallya trust to which certain obligations attached. The sovereign was,theoretically, the representative of the collective power and rights of thewholepeople.Though landwasgranted to individualpossession, specificduties were required. Through these, some equivalent to the benefitsreceivedfromthecommonrightwasrenderedbacktothecommonwealth.Under the feudal scheme, crown lands supported public expenditures.

Churchlandsdefrayedthecostofpublicworshipandinstruction,aswellas


careforthesickanddestitute.Themilitarytenantwasunderobligationtoraiseacertainforcewhenneeded.These duties were a rude and inefficient recognition— but

unquestionably still a recognition—of a fact obvious to the naturalperceptions of all men: Land is not individual property, but commonproperty.Amid the feudal system therewere communitieswho tilled the soil as

commonproperty,thoughsubjecttofeudaldues.Ofcoursethelords,iftheyhadthepower,claimedprettymuchalltheythoughtworthclaiming.Yettheideaof common rightwas strong enough to attach itself, by custom, to aconsiderablepartoftheland.ThecommonsmusthavebeenaverylargeproportionofmostEuropean

countriesinthosetimes.Aftercenturiesofappropriationbythearistocracy,Francestillretainsalmosttenmillionacresofcommunalland.InEngland,while over eightmillion acres have been enclosed since 1710, some twomillionacresstillremainascommons,thoughmostlyworthlesssoil.But these are not the only things that prove the universality and

persistence of a common right to the soil. There are also the veryinstitutionsunderwhichmoderncivilizationhasdeveloped.Certainthingspersist in our legal systems that point to this common right, though theyhave lost their original meaning. For instance, the doctrine of eminentdomain arises from nothing but the recognition of the sovereign orgovernment as representing the collective rights of the people. Legalterminology also distinguishes between real and personal property. Thisverydifferenceisthesurvivalofaprimitivedistinctionbetweenwhatwasoriginally looked on as common property andwhat, from its nature,wasalwaysconsideredtheexclusivepropertyoftheindividual.The general course of development of modern civilization since the

feudal period has subverted the natural and primary ideas of collectiveownership of the soil. Paradoxical as it may appear, the emergence ofliberty from feudal bonds has been accompanied by a tendency toward aformof landownership thatenslaves theworkingclass.This isbeingfeltalloverthecivilizedworld.Politicaleconomistsmistakeitforthepressureofnaturallaws,whileworkersmistakeitfortheoppressionofcapital.ItisclearthatinGreatBritaintoday,therightofthepeopleasawholeto

thesoiloftheirnativecountryismuchlessfullyacknowledgedthanitwas


infeudaltimes.Thecommons,oncesoextensive,largelycontributedtotheindependence and support of the lower classes. Today, all but a smallremnantofworthless landhasbeenappropriated for individualownershipandenclosed.Mostcrownlandshavepassedintoprivatepossession.NowtheBritishworkingmanmust pay to support the royal family and all thepettyprincelingswhomarryintoit.A smaller proportion of the people now own the land. And their

ownershipismuchmoreabsolute.Thirtythousandpeoplehavelegalpowerto expel thewholepopulation from fivesixthsof theBritish Islands.ThevastmajorityoftheBritishpeoplehavenorightwhatsoevertotheirnativeland,excepttowalkthestreets.Thereason,Itakeit,thattheideaofprivatepropertyinlandhasgrown

alongsidetheideaofpersonalfreedomisthis:Intheprogressofcivilization,thegrosserformsofsupremacyconnected

with landownershipweredropped,or abolished,orbecame lessobvious.Parliamentarygovernment gradually stripped thegreat lords of individualimportance and repressed their most striking abuses. As this happened,attentionwasdiverted from themore insidious—but reallymorepotent—formsofdomination.Meanwhile, there was a steady progression of legal ideas drawn from

Roman law, thegreat storehouseofmodern jurisprudence.This tended tolevelthenaturaldistinctionbetweenpropertyinlandandpropertyinotherthings.Landownerswerethenabletoputpropertyinlandonthesamebasisasotherproperty.Moreover, the political power of land barons was not broken by the

revolt of those classes who could clearly feel the injustice of landownership. What broke their power was the growth of the artisan andtrading classes. But the relation between their wages and rent is not asobvious.Theseclassesdevelopedunderasystemofguildsandcorporations.AsI

explained previously, trade unions and monopolies enabled them tosomewhat fence themselvesoff from thegeneral lawofwages.But thoseweremore easilymaintained then than now, when population is steadilybecoming more mobile due to improved transportation, education, andaccesstocurrentnews.


Theseclassesdidnot see—andstilldonot see—that land tenure is thefundamental fact that ultimately determines the conditions of industrial,social,andpoliticallife.Andsothetendencyhasbeentoassimilatetheideaofpropertyinlandwiththatofpropertyinthingsofhumanproduction.TheoriginallandholdersofEnglandgottheirlandontermsthatrequired

them to provide military defense and meet other conditions, whichamountedtoaconsiderablepartoftheirrent.Hadtheformoffeudalduessimplybeenchangedintoonesbetteradaptedtothechangedtimes,Englishwars need never have incurred a single pound of debt.English labor andcapital need not have been taxed a single farthing. All this would havecome from rent. But since that time, landholders have appropriated it tothemselves.What if landholders had been kept to this contract?What if any land

enclosed required similar terms? There would be no need for customsduties,excise,license,orincometaxes.Theincomeaccruingtothenationfrom these landowners would meet all present expenditures and, inaddition, leavea largesurplus.Thiscouldbeusedforanypurposeaidingthecomfortorwellbeingofthepeopleasawhole.Looking back, wherever there is light to guide us, we see that people

recognized the common ownership in land in their earliest perceptions.Privatepropertyinlandisausurpation,acreationofforceandfraud.


Chapter30HistoryofPropertyinLandintheUnitedStates

In earlier stages of civilization, land was always regarded as commonproperty.Turningfromthedimpast toourowntimes,wesee thatpeoplestill instinctivelyrecognizeequalrights tothebountyofnature—ifplacedunder circumstances where the influence of education and habit areweakened.ThediscoveryofgoldinCaliforniabroughtdiversepeopletogetherina

new country. Probably not one in a thousand had ever dreamed of anydistinctionbetweenlandandwealth.Theyhadlongbeenusedtothinkingof land as individual property. Thingsmight have been different had thelandbeenagriculturalorgrazingorforestland;orhaditsvaluecomefromits location for commercial purposes. Then, theywould have applied thelandsystemtheyhadbeenusedto,andreducedit toprivateownershipinlargetracts.But herewas landwhere gold could be had simply bywashing it out.

Thisnoveltybrokethroughtheirhabitualideas,andtheywerethrownbackuponfirstprinciples.Bycommonconsent,itwasdeclaredthatgoldbearinglandshouldremaincommonproperty.Noonecouldtakemorethancouldreasonablybemined,norholditforlongerthanitwasbeingused.Titletothelandremainedwiththegovernment.Noindividualcouldacquiremorethanapossessoryclaim.Miners in eachdistrict established the sizeof an individual claim,plus

theamountofworkrequiredtoconstituteuse.Ifthisworkwerenotdone,any one could relocate on the ground. The essential idea was to preventmonopoly.No onewas allowed to play “dog in themanger,” and hinder,forestall, or lock up natural resources. Labor was acknowledged as thecreatorofwealth,anditsrewardwassecured.Asplacerminingdeclined, the familiar ideaofprivateproperty finally

prevailed.Alawwaspassedtopermittheownershipofminerallands.Theonlyeffectwas to lockupopportunities. Itgaveowners thepower tosaythatnooneelsemayusewhat theydonotusethemselves.Inmanycasesmining land was withheld from use for speculative purposes—just asvaluablebuildinglotsandagriculturallandare.


If the first English settlers inNorthAmerica had found circumstancesthatcalledtheirattentionanewtothequestionoflandownership,theynodoubt would have reverted to first principles. For they reverted to firstprinciplesinmattersofgovernment.Justasaristocracyandmonarchywererejected, so too, individual ownership of landwould have been rejected.But in the country fromwhich they came, this system had not yet fullydevelopeditself.Norhaditseffectsbeenfullyfelt.In the new country, an immense continent invited settlement. The

questionofthejusticeinprivatepropertyinlanddidnotarise.Atfirst,noharmseemeddonebytreatinglandasproperty.Inanewcountry,equalityseemedsufficientlyassuredifnoonetooklandtotheexclusionoftherest.Andtherewasplentyoflandleftforothers.Theproblemsstemmingfromindividualownershipoflandhadnotyetappeared.In the South, where settlement had an aristocratic character, land was

carved into large estates. The natural complement of this was theintroductionof slavery.But inNewEngland, the first settlers divided theland as their ancestors had divided Britain twelve centuries before. Theheadofeachfamilywasgivenhistownlotandhisseedlot.Beyondtheselay the freecommons.Englishkingsattempted tocreategreatproprietorsbyhugelandgrants.Settlerssawtheinjusticeofthisattemptedmonopoly,and no one got much from these grants. However, because land was soabundant,attentionwasnotcalled to the injustice in individualownershipofland.Butevenwhentractsaresmall,thismustinvolvemonopolywhenlandbecomesscarce.Soitcametopassthatthegreatrepublicofthemodernworldadoptedan

institution that destroyed the republics of antiquity. They proclaimed theinalienablerightofallpeople to life, liberty,andthepursuitofhappiness.Yet they accepted without question a principle that ultimately denies theequalrighttolifeandliberty—bydenyingequalandinalienablerighttothesoil.At the cost of a bloodywar, they abolished chattel slavery.Yet theyallowedamorewidespreadanddangerousformofslaverytotakeroot.Thecontinentseemedsowide,sovast.Theunsettledlandpreventedthe

fulleffectofprivateappropriation frombeing felt,even inoldersections.Besides,whyshouldn’tsometakemorelandthantheycoulduse—evenifthisforcedthosewhoneededitlatertopaythemfortheprivilegeofusing


it?Whyshoulditseemunjust,whenothersintheirturnmightdothesamethingbygoingfartheron?But worse, the fortunes resulting from appropriation of land were

heraldedasprizesof labor—when, in reality, theyhavebeendrawn fromlevies upon the wages of labor. Our landed aristocracy is in its firstgeneration in the newer states, and to a considerable degree, even in theolder states. Those who profit by the increase in land values have beenlargelypeoplewhobeganlifewithoutacent.Theirgreatfortunesseem,tothem and to many others, the best proof that existing social conditionsrewardprudence,foresight,industry,andthrift.Whereasthetruthis,thesefortunesareonlythegainsofmonopoly.They

are necessarily made at the expense of labor. The fact that those thusenriched started as laborers hides this. Every ticketholder in a lotterydelightsintheimaginationatthemagnitudeoftheprizes.Thissamefeelinghaspreventedeven thepoor fromquarrelingwithasystemthathasmademanypoorpeoplerich.Inshort,theAmericanpeoplehavefailedtoseetheessentialinjusticeof

privatepropertyinland,becausetheyhavenotyetfeltitsfulleffects.Weare insulated by the vast extent of land not yet reduced to privatepossession,theenormouscommontowhichtheenergeticalwaysturned.This great public domain is the key fact that has formed our national

character and coloredour thought. It is not thatwehave rejected a titledaristocracy;northatweelectourofficials;northatourlawsareinthenameof the people instead of a prince; nor that our judges do notwearwigs.NoneofthesearewhywehaveavoidedtheillsoftheeffetedespotismoftheOldWorld.Whence comes our general intelligence, our comfort, our active

invention,andourpowerofadaptationandassimilation?Andfurther,ourfree, independentspirit, theenergyandhopefulness thathavemarkedourpeople? They are not causes—they are results. They have sprung fromunfencedland.Ourvastpublicdomainhasbeen the force that transformsunambitious

EuropeanpeasantsintoselfreliantWesternfarmers.Eventhosedwellingincrowdedcitiesgainaconsciousnessoffreedomfromit.Itisawellspringofhope even to those who never take refuge in it. As children grow toadulthood in Europe, they find all the best seats at the banquet of life


marked “taken.” Theymust struggle with each other for the crumbs thatfall, without one chance in a thousand of finding a seat. In America,whatevertheircondition,therehasalwaysbeentheconsciousnessthatthepublicdomainlaybeforethem.Theknowledgeofthisfacthaspenetratedourwholenationallife,bothin

actingandreacting.Itgivesusgenerosityandindependence,elasticityandambition.AllthatweareproudofintheAmericancharacter,allthatmakesourconditionsandinstitutionsbetterthanthoseofoldercountries,maybetracedtothisfact:LandhasalwaysbeencheapintheUnitedStates,becausenewsoilhas

beenopentothesettler.But now our advance has reached the Pacific. The public domain is

almostgone.Itsinfluenceisalreadyrapidlyfailing;itsinfluencewillsoonend.Therepublichasentereduponanewera—inwhichthemonopolyoflandwillshowitselfwithacceleratingeffect.Idonotmeantosaythattherewillbenopublicdomain.Foralongtime

tocome,therewillbemillionsofacresofpubliclandscarriedonthebooks.Butwhat remains are the greatmountain ranges, sterile deserts, and highplains fit only forgrazing.California appears,onpaper, tohave themostlandavailable.Yetmuchofthisiscoveredbyrailroadgrants.Someisheld,but not yet reported by survey. Much is monopolized by locations thatcontrolthewater.Asamatteroffact,itisdifficulttopointtoanypartofthestatewhere settlers can take up a farm.Weary of the quest, they end upbuyinglandorrentingitonshares.ThereisnoscarcityoflandinCalifornia—butappropriationhasgottenaheadof the settlers, andmanages tokeepahead.There is no question the United States can support a population of

hundredsofmillions.Butinviewofsuchanincrease,whatbecomesofthepublicdomain?Inaveryshorttime,allusefullandwillhaveanowner.We are making the land of a whole people the exclusive property of

some. The evil effects of this process will not wait until the finalappropriationofthepublicdomaintoshowthemselves.Itisnotnecessarytocontemplate them in the future;wemay see them in thepresent.Theyhavegrownwithourgrowth,andarestillincreasing.We plow new fields and build new cities. We cross the land with

railroads and lace the air with telegraph wires. We build schools and


colleges,andaddinventionafterinvention.Yet it becomes no easier for the masses to make a living—on the

contrary, it is becoming harder. The wealthy become wealthier; the poorbecomemoredependent.Thegulfbetweenbossandworkergrowswider.Socialcontrastsbecomesharperandbeggarsarecommon.Wecallourselvesthemostprogressivepeopleonearth.Butwhatisthe

goalofourprogress,iftheseareitsfruits?Thesearetheresultsofprivatepropertyinland.Theyaretheeffectsofa

principle that must act with ever increasing force. It is not that laborershave increased faster than capital. It is not that population is pressingagainstsubsistence.It isnotthatmachineryhasmadeworkscarce.Noristhereisanyrealantagonismbetweenlaborandcapital.Itissimplythatlandisbecomingmorevaluable.Andthetermsonwhich

laborcanobtainaccess tonaturalopportunities—whichaloneenable it toproduce—arebecomingharderandharder.Thepublicdomainisrecedingandnarrowing,whilepropertyinlandis

concentrating.Theproportionofpeoplewithno legal right to the landonwhich they live grows steadily larger. The scale of cultivation recalls thelatifundia that destroyed Rome. In California, a large proportion offarmlandisrented—atratesfromonefourthtoevenonehalfthecrop.Lowerwages,hardtimes,increasingpovertyaresimplytheresultsofthe

natural laws we have traced—laws as universal and as irresistible asgravitation.We did not establish a republic when we set forth inalienable human

rights.Weshallneverestablisharepublicuntilwecarryoutthatdeclaration—bygivingthepoorestchildbornamongusanequalrighttothesoil!WedidnotabolishslaverywiththeFourteenthAmendment.Toabolish

slaverywemustabolishexclusiveownershipofland!Unlesswecomebacktofirstprinciples,unlesswerecognizeournatural

perceptionsofjustice,unlessweacknowledgetheequalrightofalltoland—our free institutions will be in vain. And all our discoveries andinventionswillonlyaddtotheforcethatpressesthemassesdown.


EighthPart:ApplicationoftheRemedy


Chapter31PrivatePropertyinLandisInconsistentwiththeBestUseofLand

Whenweconfusetheaccidentalwiththeessential,theresultisadelusion.Itisadelusionthatlandmustbeprivatepropertytobeusedeffectively.Itisafurtherdelusionthatmakinglandcommonproperty—asitoncewasinthepast—would destroy civilization and reduce us to barbarism. Lawmakershave done their best to expand this delusion, while economists havegenerallyconsentedtoit.Astory*tellshowtheChineseaccidentallydiscoveredroastpork,aftera

hutcaughtfire.Foralongtime,thestorygoes,theythoughtyoumustburndownahouse tocookapig.Finally,asagearose toshowthepeople thiswasnotnecessary.Butitdoesnottakeasagetoseethatabsoluteownershipoflandisnot

requiredtomakeimprovements—onlysecurityforthoseimprovements.Thisisobvioustoanyonewholooks.Privatepropertyinlandisascrude,

wasteful, and uncertain a device for securing improvement, as burningdownahouseisforroastingapig.

*ByCharlesLamb(17751834),Englishauthor.ButwedonothavetheexcuseLamb’scharactershad,fortheyhadnever

heardofapigbeingroastedexceptwhenahouseburned.Tous,however,itisquitecommonforlandtobeimprovedbythosewho

donot own it.Most ofLondon is built on leasedground.Tenant farmerscultivate thebulkof land inGreatBritain. In theUnitedStates, the samesystemisprevalent.If rentwerecollectedby thegovernment,wouldn’t landbeused to the

sameextentasnow—whenrentgoestoprivateindividuals?Wouldn’tlandbe improvedaswellandas securelyasnow?Ofcourse!Treating landascommonpropertyinnowayinterfereswithitsproperuse.What is necessary is not private ownership, but security of

improvements.Itisonlynecessarytotellsomeone“whateveryourlabororcapital produces on this land is yours”—not “this land is yours.”People


sowonlytoreap;theybuildtoliveinhouses.Thesearethenaturalrewardsoftheirlabor.Owninglandhasnothingtodowithit.It was for security that landholders surrendered ownership to feudal

lords.When a landlord pledged not to claim rent for twenty years, Irishpeasantsturnedabarrenmountainintolushgardens.Onthemerepromiseof a fixed ground rent for a term of years, the most costly buildings inLondonandNewYorkareerectedon leasedground.* If thosewhomakesuchimprovementsareguaranteedsecurity,wemaysafelyabolishprivatepropertyinland.

* For instance, Rockefeller Center, The Empire State Building, and The World TradeCenterwerebuiltonleasedland.Thecompleterecognitionofcommonrightstolandneednotinterfere,in

any way, with the complete recognition of individual rights toimprovementsorproduction.Twopeoplemayownashipwithoutsawingitinhalf.Arailwaymayhavethousandsofshareholders,yetrunaswellasunderasingleowner.Everythingcouldgoonexactlyas itdoesnow—andstill recognize the

common right to land—simply by appropriating rent for the commonbenefit.InthecenterofSanFranciscothereisalotinwhichthecommonrights

of thepeopleare still legally recognized. It isnotcutup into tinypieces;norisitunused.Itiscoveredwithfinebuildings,whicharethepropertyofprivateindividuals.Theystandthereinperfectsecurity.Theonlydifferencebetween this lot and those around it is this: Its rent goes to the commonschool fund—while the other rent goes into private pockets. What is topreventthelandofthewholecountrybeingheldbythepeopleinthesamemanner?Consider those conditions commonly thought to demand private

ownership.Itwouldbedifficulttofindaplacewheretheseexistinhigherdegree than certain islands in theAleutianArchipelago ofAlaska,whicharethebreedinggroundsofthefurseal.Topreventtheirutterdestruction,theharvest of fursmust be carefullymanaged.Forwithout this resource,theislandsareofnouse.Ifsuchafisherywereopentoanyone,itwouldbeintheinterestofeach

partytokillasmanyastheycouldatonce,withoutreferencetothefuture.


Inafewseasonsitwouldbeutterlydestroyed,asfisheriesinotheroceanshavebeen.

Butdespitethisdanger,itisnotnecessarytomaketheseislandsprivateproperty.Instead,theislandshavebeenleasedoutandhave already added over two million dollars to the national treasury—without diminishing their value. Under the careful management of theAlaskaFurCompany,thesealshaveincreased,notdecreased.TheseislandsarestillthecommonpropertyofthepeopleoftheUnited

States.Yet for far lessconvincing reasons, thegreatpublicdomainof theAmerican people has beenmade into private property as fast as anybodycouldtakeit.Farfromprivatepropertybeingnecessaryfortheproperuseofland,the

contrary is true.Treating landasprivateproperty, inactual fact,stands inthewayofitsproperuse.Iflandweretreatedaspublicproperty,itwouldbeusedandimprovedas

soon as there was need. But as private property, an individual owner isallowedtopreventothersfromusingwhattheownercannot—orwillnot—use.Large tractsarekept idleat thecapriceof theowner,heldoutofusewaitingforhigherprices.Meanwhile,othersareforcedtouseplaceswheretheir laborwillbe far lessproductive. Ineverycity,valuable lotsmaybeseen vacant for this reason. This means of using land is as wasteful,unnecessary,anduncertainasburningdownhousestoroastpigs.If the best use of land is the test, then private property in land is

condemned—asitiscondemnedbyeveryotherconsideration.


Chapter32SecuringEqualRightsToLand

Wehaveweighedeveryobjectionandfoundnothing—ineitherjusticeorefficiency—todeterusfrommakinglandcommonpropertybyconfiscatingrent.Butthequestionofmethodremains:Howshallwedoit?We could simply abolish private titles and declare all land public

property. Then, lease lots to the highest bidders, under conditionsguaranteeingtherighttoimprovements.Thiswouldgiveacomplexsocietythesameequalityofrightsachievedinsimplercommunitiesthroughequalsharesofland.Andbyleasinglandtowhoevercouldobtainthemostfromit,wewouldsecurethegreatestproduction.Butsuchaplan,thoughperfectlyfeasible,isnotthebestoption.Rather,I

proposetoaccomplishthesameresultsinasimpler,easier,andquieterway.To formally confiscate all land would involve a needless shock, and

would require a needless extension of government. Both can be avoided.Greatchangesarebestbroughtaboutunderoldforms.Whennaturemakesahigherform,ittakesaloweroneanddevelopsit.This,too,isthelawofsocialgrowth.Letusworkwithit.Idonotpropose topurchaseorconfiscateprivateproperty in land.Let

thosewhonowholdlandretainpossession,iftheywant.Theymaybuyandsellorbequeathit.Letthemevencontinuetocallit“their”land.Wemaysafelyleavethem

theshell,ifwetakethekernel.

Itisnotnecessarytoconfiscateland—onlytoconfiscaterent.Takingrentforpublicusedoesnotrequirethatthestateleaseland;that

would risk favoritism, collusion, and corruption. No new governmentagencyneedbecreated;themachineryalreadyexists.Insteadofextendingit,allwehavetodoistosimplifyandreduceit.Governmentalreadytakessomerentintaxation.Withafewchangesin

our tax laws, we could take almost all. Letting owners keep a smallpercentagewouldcostmuchlessthanrentingthroughastateagency.Usingtheexistingmachineryofgovernment,wemayassertthecommonrighttolandwithoutanyshock.


Therefore, I propose that we appropriate land rent for public use,throughtaxation.Thissimpleyeteffectivesolutionwillraisewages,increasetheearnings

ofcapital,eliminatepoverty,reducecrime,andprovidefullemployment.Itwill unleash human power and elevate society. In its form, ownership oflandwould remain just as it is now.Noowner need be dispossessed.Norestrictionneedbeplacedupontheamountoflandanyonecouldhold.If rent were taken by the state in taxes, then land would really be

commonproperty—nomatterinwhosenameorinwhatparcelsitwasheld.Everymemberofthecommunitywouldparticipateintheadvantagesofitsownership.Landvaluesincreaseaspopulationgrowsandprogressadvances.Inany

civilizedcountry,thisisenoughtobearallgovernmentexpenses.Inbetterdeveloped countries, it is much more than enough. In fact, when rentexceedscurrentgovernment revenues, itwill benecessary to actually increase theland tax to absorb excess rent. Taxation of rent would increase as weabolishothertaxes.So,wemayputourpropositionintopracticalformbyproposing:

Toabolishalltaxes—exceptonlandvalues.Thisis thefirststepinthepracticalstruggle.Experiencehastaughtme

that wherever this idea is considered, it makes headway. But few whowouldbenefitmostfromitseeitsfullsignificanceandpower.Itisdifficultforworkingmentogiveupthenotionthatthereissomebasicantagonismbetweencapitalandlabor.Itisdifficultforsmallfarmersandhomesteaderstogetovertheideathatthisplanwouldundulytaxthem.Itisdifficultforbothclassestoletgooftheideathatexemptingcapitalfromtaxationwouldbenefitonlytherich.A great wrong always dies hard. These erroneous ideas spring from

confusedthought.Butbehindignoranceandprejudice,thereisapowerfulinterest—onethathasdominatedliterature,education,andpublicopinion.Thegreatwrongthatcondemnsmillionstopovertywillnotdiewithoutabitterstruggle.


Chapter33TheCanonsofTaxation

Thebestmeansofraisingpublicrevenueswillbeonethatmeetstheseconditions:1. It shouldbear as lightly aspossibleonproduction—least impeding thegrowth of the general fund, from which taxes must be paid and thecommunitymaintained.2.Itshouldbeeasilyandcheaplycollected,andit

shouldfallasdirectlyaspossibleontheultimatepayers—takingaslittleaspossiblefromthepeoplebeyondwhatityieldsthegovernment.

3.Itshouldbecertain—offeringtheleastopportunityforabuseandcorruption,andtheleasttemptation

forevasion.4.Itshouldbearequally—givingnooneanadvan

tage,norputtinganotheratadisadvantage.Letusconsiderwhatformoftaxationbestfitstheseconditions.

1.TheEffectofTaxesonProductionItisobviousthatalltaxescomefromtheproductoflandandlabor.There

is no source of wealth other than the union of human exertion with thematerials and forces of nature. But equal taxes may have very differenteffectsonproduction,dependingonhowtheyareimposed.

Taxes that reduce the rewards of producers lessen the incentive toproduce.Taxesbasedontheuseofanyofthethreefactorsofproduction—land, labor, or capital—inevitably discourage production. Such taxesintroduceartificialobstaclestothecreationofwealth.Themethod of taxation is, in fact, just as important as the amount. A

small burden poorly placedmay hinder a horse that could easily carry amuchlargerloadproperlyadjusted.Similarly,taxesmayimpoverishpeopleanddestroytheirpowertoproducewealth.Yetthesameamountoftaxes,iflevied anotherway, couldbebornewith ease.A taxondate trees caused


Egyptian farmers to cut down their trees; but twice the tax, imposed onland,hadnosuchresult.Now,taxesonlaborasitisexerted,onwealthasitisusedascapital,or

onlandasit isdevelopedwillclearlydiscourageproduction—muchmorethantaxesleviedonlaborerswhethertheyworkorplay,onwealthwhetherusedproductivelyorfruitlessly,oronlandwhethercultivatedorleftidle.To a greater or lesser degree, impediments to production are

characteristic of most taxes modern governments use to raise revenue.Manykindsofproductionandexchangeareseriouslycrippledbytaxesthatdivert industry from more productive to less productive forms. Theseinclude all taxes on manufacturing, all taxes on commerce, all taxes oncapital, and all taxes on improvements.All such taxes tend to reduce theproduction ofwealth. Their tendency is the same as the Egyptian tax ondatetrees,thoughtheireffectmaynotbeseenasclearly.Theyshouldneverbeusedwhenitispossibletousemeansthatdonotcheckproduction.Thegreatclassoftaxesthatdonotinterferewithproductionaretaxeson

monopolies.Theprofitofmonopolyisinitselfataxonproduction.Taxingitwouldsimplydivertintopubliccofferswhatproducersmustpayanyway.There are various sorts of monopolies. Some businesses are, in their

nature,monopolies.Thesearegenerallytheproperfunctionofgovernment.Delivering the mail, for example. For the same reason, railroads shouldbelongtothepublic,asroadsdo.Patentandcopyrightlawscreatetemporarymonopolies.Thoughthetwo

are often confused, they are not alike.* Indeed, they are essentiallydifferent. Copyright does not prevent others from using facts, ideas,knowledge,laws,orcombinationsforsimilarproductions.Itonlyprohibitsusing the identical form. That is, it protects the actual labor expended inproducing thework. It doesnot interferewith the similar rightof anyoneelsetodolikewise.Itrests,therefore,uponournatural,moralrighttoenjoytheproductsofourownexertion—anditwouldbeunjustandunwisetotaxthem.The patent, on the other hand, prohibits anyone from doing a similar

thing.Therefore, it is an interferencewith the equal liberty onwhich therightofownershiprests.EveryonehasamoralrighttothinkwhatIthink,or to perceive what I perceive, or to do what I do. It does not matterwhethersomeonegetsthehintfrommeorindependentlyofme.


Discoverycangivenorightofownership.Whateverisdiscoveredmusthavealreadybeentheretobediscovered.

*Georgesaidthathefellintothiserrorhimselfinthefirsteditionofthisbook.Hesubsequentlyacknowledgedandcorrectedit.If someonemakes awheelbarrow, abookor apicture, the inventorhas amoral right to that particular product, but no right to prevent others frommaking similar things.Though suchaprohibition is intended to stimulatediscoveryandinvention,inthelongrunitactuallydiscouragesthem.Finally,therearealsoonerousmonopoliesresultingfromtheaggregation

ofcapitalincertainbusinesses.(SeeChapter20.)Itwouldbemuchbettertoabolishsuchmonopoliesthantotrytotaxthereturnsoftheirmonopoly.Butalltheseothermonopoliesaretrivialcomparedwiththemonopolyof

land.Thevalueoflandexpressesamonopoly,pureandsimple.Thevalueofarailroadoratelegraphline,orthepriceofgasorapatentmedicinemaypartlyexpressthecostofmonopoly.Butitalsoexpressestheeffortoflaborandcapital.Ontheotherhand,thevalueoflanddoesnotincludelabororcapitalatall.Itexpressesnothingbuttheadvantageofappropriation.Itis,ineveryrespect,tailoredfortaxation.Ataxonland(unlessitexceedsactualrent)cannotcheckproductionin

theslightestdegree—unliketaxesoncommodities,orexchange,orcapital,oranyof thetoolsorprocessesofproduction.Thevalueof landdoesnotexpress the reward of production. It is not like the value of cattle, crops,buildings,oranyofthethingscalledpersonalpropertyandimprovements.Landvalueexpresses theexchangevalueofmonopoly. It isnot inany

waythecreationof the individualwhoowns the land. It iscreatedby thegrowthofthecommunity.

Hence,thecommunitycantakeitallwithoutreducingthe incentive to improvement, and without decreasing the production ofwealth.Takingtheentirerentintaxeswillnotreducethewagesoflabororthe reward of capital one iota. Nor will it increase the price of a singlecommodity.Itwillnotmakeproductionmoredifficultinanyway.But there is more than this. Taxes on land actually tend to increase

production—by destroying speculative rent, which impedes productionwhenvaluablelandiswithheldfromuse.Industrialdepressionsoriginatein


speculative land values. They then propagate themselves over the wholecivilizedworld,paralyzingindustry.Takingrentforpublicusethroughtaxationwouldpreventallthis.Ifland

were taxednear its rentalvalue,noonecouldafford toholdunused land.This land would be made available to those who would use it.Consequently, labor and capital could producemuchmorewith the sameexertion.Withregardtoproduction,ataxonlandvalueisthebesttaxthatcanbe

imposed. Tax manufacturing, and you inhibit manufacturing. Taximprovements, and you lessen improvement. Tax commerce, and youprevent exchange.Taxcapital, andyoudrive it away.But take thewholevalueoflandintaxation,andtheonlyeffectwillbetostimulateindustry,opennewopportunities,andincreasetheproductionofwealth.

2.EaseandCostofCollectionOf all taxes, a tax on land is the easiest and cheapest to collect. Land

cannotbehiddenor carriedoff. Itsvaluecanbeeasilydetermined.Oncetheassessmentismade,nothingbutareceiverisrequiredforcollection.

Themachineryforthatpurposealreadyexists.Partofpublicrevenuecurrentlycomesfromtaxesonland.Wecouldjustaseasilycollect all the rent as apartof it.Substituting this single tax for all othertaxes would save the entire cost of collecting them. What an enormoussavingthismightbecanbeinferredbyobservingthehordeofofficialsnowengaged in thisendeavor.Thissavingwouldgreatly reduce thedifferencebetweenwhattaxationnowcoststhepeopleandtherevenueityieldstothegovernment.But a land taxwould reduce thisdifference in anevenmore important

way.Ataxonlandispaiddirectlybythoseonwhomitfans.Itdoesnotaddtoprices.Incontrast, taxesonthingsofvariablequantityareshiftedfromsellertobuyerinthecourseofexchange,andtheyincreaseastheygo.Ataxonmoneyloanedhasoftenbeenattempted.Inthiscase,thelender

will simply charge the tax to the borrower. The borrower must pay theincreaseornotgettheloan.Iftheborrowerusesitinbusiness,thetaxmustberegainedfromcustomers.Otherwisethebusinessbecomesunprofitable.Ifwetaxbuildings,thetenantsmustfinallypayit.Constructionwillstop

untilrentsriseenoughtopaytheregularprofitandthetaxbesides.


Ifwetaxgoods,manufacturersorimporterswillchargehigherpricestowholesalers, wholesalers to retailers, and retailers to consumers. The taxultimatelyfallsonconsumers,whopaynotonlythetaxitself—butaprofitonitateachstepoftheprocess.Eachdealerrequiresprofitoncapitaladvancedtopaytaxes,asmuchas

profitoncapitaladvancedtopayforgoods.For instance, an importer in San Francisco sells Manila cigars to

wholesalers for $70 a thousand. The cigars cost $14, while the customsdutyadds$56.Dealersmustmakeaprofitnotjuston$14(therealcostofthecigars),butonthe$70theymustshellout(costplusduty).Inthiswayalltaxesthataddtopricesareshiftedfromhandtohand.Theyincreaseastheygo,until theyultimately reston theconsumer—whoendsuppayingmuchmorethanwhatisreceivedbythegovernment.Taxes raise prices by increasing the cost of production. This, in turn,

reduces supply. But land is not something made by human production.Taxesonrent,therefore,cannotchecksupply.Thoughtaxinglandmakeslandownerspaymore,itgivesthemnopower

toobtainmore.Forthereisnowaythiscanreducethesupplyofland.Onthecontrary,itforcesthosewhoholdlandonspeculationtosellorrentforwhat they canget.A land tax increases competition amongowners.Thislowersthepriceofland.Thus,inallrespects,ataxonlandvaluesisthecheapestwaybywhicha

largerevenuecanberaised.Itgivesgovernmentthelargestnetrevenueinproportiontotheamounttakenfromthepeople.

3.CertaintyofCollectionCertainty is an important element in taxation. Collection provides

opportunitiesforcorruptionononeside,andevasionorfraudontheother.Thebulkofourrevenuesarecollectedbymethodstobecondemnedonthisground,ifonnoother.In earlier days, coasts were lined with one army of people trying to

prevent smuggling, and another engaged in evading them. Clearly, themaintenanceofbothgroupshadtocomefromtheproductionoflaborandcapital. The expenses and profits of smugglers, as well as the pay andbribesofcustomofficers,constitutedataxupontheindustryofthenation.Andthiswasinadditiontowhatwasreceivedbythegovernment!


Wecanalsoincludeallinducementstoassessors,andmoneysexpendedelectingpliableofficialstoprocurefavorableactsordecisions.Anddonotforget all theexpensesof legalproceedingsandpunishments,notonly tothegovernmentbuttothoseprosecuted.Theseevasionstakesomuchfromthegeneralfundofwealth,withoutaddingtorevenue.Yet this is the least part of the cost. Taxes that lack the element of

certainty have the most terrible effect upon public morals. Our revenuelawsmight aswellbeentitled, “Acts topromote thecorruptionofpublicofficials,tosuppresshonestyandencouragefraud,topromoteperjury,andtodivorcelawfromjustice.”Thisistheirtruecharacter,andtheysucceedadmirably.Butweneednotresorttoarbitraryassessments.Ataxonlandvaluesis

theleastarbitraryoftaxes,andpossessesthehighestdegreeofcertainty.Itmay be assessed and collected with precision because of the immovableandunconcealablenatureoflanditself.Taxeson landmaybe collected to the last cent.Thoughassessmentof

land is now often unequal, assessment of personal property is far moreuneven. Inequalities arise mostly from taxing improvements along withland. Ifall taxeswereplacedon landvalues, regardlessof improvements,thedesignoftaxationwouldbesimpleandclear.Itwouldbeopentopublicobservation.Assessmentcouldbemadewith thecertaintyof a real estateagentdeterminingthepriceasellercangetforalot.4.EqualityThecommonideathatoursystemoftaxingeverythingvainlyattemptsto

carryoutisthis:Citizensshouldpaytaxesinproportiontotheirmeans,orin proportion to their incomes. But even ignoring all the insurmountablepracticaldifficultiesof taxationaccordingtomeans, it isclear that justicecannotbeattainedthroughthis.

LetusturntoNatureandreadthemandatesofjusticeinitslaws.Naturegivestolabor,andtolaboralone.EveninaGardenofEden,peoplewouldstarvewithoutexertion.Now,taketwopeopleofequalincomes.Onegetsincome from labor; the other, from the rent of land. Is it just that theyshouldcontributeequallytotheexpensesofthestate?Certainlynot.Theworker’sincomerepresentswealthcreatedandaddedtothegeneral

wealth of the state. The landowners income represents onlywealth taken


fromthegeneralstock,withnothinggiveninreturn.Theworker’srighttoincome comes from the justification of Nature, which returns wealth tolabor.Thelandowner’sclaimisamerefictitiousright,createdbymunicipalregulation.ItisunknownandunrecognizedbyNature.Itisamonopolyofnatural opportunities—gifts that Nature offers impartially to all, and inwhichallhaveanequalbirthright.Value created and maintained by the community can justly be called

upontomeetcommunityexpenses.Whatkindsofvaluearethese?Onlythevalue of land. This value does not arise until a community is formed; itgrows as the community grows. It exists only as the community exists.Scatter the largestcommunity,and land,oncesovaluable,wouldhavenovalueatall.Witheveryincreaseofpopulation,thevalueoflandrises;witheverydecrease,itfalls.Ataxuponlandvaluesis,therefore,themostjustandequalofalltaxes.

It falls only on those who receive a unique and valuable benefit fromsociety.Anditfallsontheminproportiontothebenefittheyreceive.Itistakingbythecommunity,fortheuseofthecommunity,fromthevaluethatis the creation of the community. It is the application of the commonpropertytocommonuses.When all rent is taken by taxation for the needs of the community,

equalitywillbeattained.Nocitizenwillhaveanadvantageoveranyother,except through personal industry, skill, and intelligence. Peoplewill gainwhat they fairlyearn.Only then,andnotuntil then,will laborget its fullreward,andcapitalitsnaturalreturn.


Chapter34EndorsementsAndObjections

Eversince thenatureof rentand lawof rentwere firstdetermined,everycredibleeconomisthasacknowledged,expresslyor tacitly, thegroundsbywhichwehaveconcluded that a taxon landvalues is thebestmethodofraisingpublicrevenues.*David Ricardo says a tax on rentwould fall wholly on landlords, and

couldnotbeshiftedtoconsumers.Rentwouldnotbealteredbysuchatax,anditwouldnotdiscouragethecultivationoflandatthemargin.JohnMcCullochobjectstoalandtax.However,hebasesthissolelyon

the assumption that we cannot distinguish the value of land fromimprovements.Butsupposingwecould?Heagreeswecould then tax theentireamountpaidtolandlordsforpermissiontousethenaturalpowersofthesoil.Healsoagreestheycouldnotpassthisontoanyoneelse,andthatitwouldnotaffectprices.John Stuart Mill not only admits all this, but expressly declares the

expediencyandjusticeofataxonrent.Heaskswhatrightlandlordshavetoaccept riches that come to them from the general progress of society—withoutanywork,risk,orthriftontheirpart?

*We have paraphrased quotations found in the original text. These writers, all British,include: David Ricardo (17721823).John RamseyMcCulloch (17891864). John StuartMill(18061873).MillicentGarrettFawcett(18471929).Heproposes to takeall future increase,since theybelong tosocietyby

naturalright.MillicentFawcettsaysthatlandtaxisinthenatureofarentpaidbythe

landowner to the state. The “economic perfection” of this system isobvious,shenotes.Infact,theaccepteddoctrineofrentinvolvestheideathatrentshouldbe

the particular subject of taxation, both on grounds of practicality andjustice.Itmaybefound,inembryonicform,intheworksofalleconomistswhohaveacceptedRicardo’slawofrent.Whydidn’t they take theseprinciples to their inevitable conclusion, as

we have done? Apparently, there was an unwillingness to offend the


enormousinterestsinvolvedinprivateownershipofland.Inaddition,falsetheoriesaboutthecausesofpovertyhavedominatedeconomicthought.Buttherehasbeenoneschoolofeconomistswhoperceivedwhatisclear

toman’snaturalperceptionwhennot influencedbyhabit.Revenues fromcommon property— land—should be appropriated for common purposes.TheFrenchEconomistesorPhysiocrats*oftheeighteenthcenturyproposedwhat I have—to abolish all taxes except those on the value of land.Regrettably, the French Revolution overwhelmed their ideas just as theyweregainingstrengthamongthethinkingclasses.Without knowing anything of their doctrines, I have reached the same

conclusion,ongroundsthatcannotbequestioned.Theonlyobjectionfoundinstandardeconomicstextsactuallyconcedesitsadvantages.

* The Physiocrats were led by Francois Quesnay (16941774), and his student, RobertJacquesTurgot(17271781).Thatis,thedifficultyofseparatinglandfromimprovementsmightcause

ustotaxsomethingelsebesidesrent.Macaulay*onceremarkedthatifthelawofgravitywereunfavorableto

anysubstantialfinancialinterest,therewouldsoonbenolackofargumentsagainstit.Hereisanillustrationofthistruth!Assumethatitisimpossibletoperfectlyseparatethevalueoflandfrom

improvements. Is the fear of accidentally taxing some improvements anyreason tocontinue taxingall improvements?To taxvalues that labor andcapital have intimately combinedwith landmight discourage production.Howmuchgreaterdiscouragementmustcomefromtaxingnotonlythese,butallvaluesthatlaborandcapitalcreate?But, as a matter of fact, the value of land can always be readily

distinguishedfromthevalueofimprovements.IncountriesliketheUnitedStates much valuable land has never been improved. In many states,assessors regularly estimate the value of land and the value ofimprovementsseparately.Onlyafterwardare theyreunitedunder the term“realestate.”Where land has been occupied from time immemorial, there is still no

difficultydeterminingthevalueofbareland.Frequently,landisownedbyonepersonandbuildingsbyanother.Whenafiredestroysimprovements,aclear and definite value remains in the land. In the oldest country in the


world, no difficulty whatever can attend the separation. We need onlyseparate thevalueofclearlydistinguishable improvements,madewithinareasonable period of time, from the value of the land, should theimprovementsbedestroyed.

*ThomasMacaulay(18001859),Englishhistorian.This,manifestly,isallthatjusticeorpolicyrequires.Absolute accuracy is impossible under any system. Attempting to

separate everything thehuman racehas done fromwhat nature originallyprovided would be both absurd and impractical. In ancient times, theRomansmay have drained a swamp or terraced a hill. These are now asmuchapartofthenaturaladvantageoftheBritishIslesasthoughtheworkhadbeendonebyanearthquakeoraglacier.Afteracertainlapseoftime,thevalueofsuchpermanentimprovementswouldbeconsideredashavinglapsedintothatoftheland.Accordingly,theywouldbetaxedasland.But this could have no deterrent effect on such improvements. Such

works are frequently undertaken on land leased for a certain number ofyears.Thefactis,eachgenerationbuildsandimprovesforitself,notfortheremotefuture.Furthermore,eachgenerationisheirnotonlyto thenaturalpowersoftheearth,buttoallthatremainsoftheworkofpastgenerations.Anotherobjectionmaybethattaxationandrepresentationcannotsafely

be divorced. It may be desirable to combine political power with theconsciousnessofpublicburdens,butthepresentsystemcertainlydoesnotsecure it. Indirect taxes are mostly raised from those who pay little ornothing consciously. In our large cities, elections are decided by thingssimilartowhatinfluencedtheRomanmasses,whocaredaboutnothingbutbreadandcircuses.Substitutinga single land tax fornumerousotherswouldhardly lessen

thenumberofconscioustaxpayers.Instead,thedivisionoflandnowheldonspeculationwouldgreatlyincreasethenumber. Itwouldequalize thedistributionofwealth.Eventhepoorestwouldberaisedaboveabjectpoverty,whileovergrownfortuneswouldbecutdown.The dangerous classes politically are the very rich and very poor. A

persongainsinterestingovernmentfromfeelingpartofthecommunityanditsprosperity.


Butifthetaxonlandvaluesissobeneficial,whydoesgovernmentresorttosomanydifferentones?Theanswerisobvious!Ataxonlandvaluesistheonlytaxthatdoesnotdistributeitself—thatis,itcannotbepassedontoothers. It falls only on landowners. There is no way they can shift theburden toanyoneelse.Hence,a largeandpowerful interest isopposed totaxinglandvalues.Businesses do not oppose taxes they can easily shift from their own

shoulders. In fact, they frequently try to maintain them. So do otherpowerfulinterestswhomightprofitfromthehigherpricessuchtaxesbringabout.Amultitudeoftaxeshavebeenimposedwithaviewtowardprivateadvantage,ratherthanraisingrevenue.Theingenuityofpoliticianshasbeenappliedtodevisingtaxesthatdrain

thewagesof labor and the earningsof capital like avampire sucking theblood of its victim. Nearly all of these taxes are ultimately paid by thatindefinablebeing,“theconsumer.”Theycomeinsuchsmallamounts,andinsuchinsidiousways,thatwedonotnoticethem.The Civil War was the golden opportunity of these special interests.

Taxeswerepiledoneverypossiblething—notsomuchtoraiserevenueastoenableparticularclassestoparticipateintheadvantagesoftaxgatheringandtaxpocketing.For thisreason, thosetaxescostingpeople theleasthavebeeneasier to

abolishthanthosecostingthemost.Licensetaxesaregenerallyfavoredbythoseonwhomtheyare imposed.They tend tokeepothers fromenteringthebusiness.Largemanufacturersarefrequentlygratefulfortaxesongoodsfor similar reasons. This was seen in the opposition of distillers to thereduction of the whisky tax. Duties on imports tend to give certainproducersspecialadvantages.Inallsuchcases,specialinterestscapableofconcertedactionfavorthose

taxes.Butasolidandpowerfulinterestbitterlyopposestaxinglandvalues.Nonetheless,oncethetruthIamtryingtomakeclearisunderstoodbythemasses, a union of political forces strong enough to carry it into practicewillbecomepossible.


NinthPart:EffectsoftheRemedy


Chapter35TheEffectonProduction

Theadvantagesofasingletaxonlandbecomeincreasinglyclearthemorethey are considered. Abolishing other taxes would be like removing animmenseweight from a powerful spring. These taxes now hamper everytype of exchange and every form of industry.Remove these burdens andproductionwouldproceedatanunimaginablepace.This,initsturn,wouldfurtherincreaselandvalues,andcreateanevenbiggersurplusforcommonpurposes.Thepresentmethodoftaxationactslikeartificialmountainsanddeserts.

It costsmore to get goods through a custom house than it does to carrythemaroundtheworld.Itpenalizesindustryandskill.SupposeIworkhardtobuildagoodhouse,whileyouarecontenttolive

inahovel.Thetaxmanmakesmepayapenaltyeveryyearformyeffortbytaxingmemore. If I savewhile you squander, I am taxedwhile you areexempt.IfIbuildsomethinguseful,ImustpayformyindustryasifIhaddoneaninjurytothestate.IfIofferaservicetothepublic,Iamtaxedasthoughitwereapublicnuisance.We saywewant capital, but if I accumulate it I amchargedas though itwereaprivilege.The full burden of these taxes on production is realized only by those

who have attempted to follow our system of taxation through itsramifications. As I noted, the heaviest part of taxation falls in increasedprices. Abolishing these taxes would lift the whole enormous weight oftaxationfromproductiveindustry.Allwouldbefreetomakeorsave,tobuyorsell,withoutbeingfinedbytaxes.The state currently tells producers: “Themore you add to the general

wealth, themoreyouwillbe taxed.”Instead, thestateshouldsay:“Beasindustrious,thrifty,andenterprisingasyouchoose.Keepyourfullreward.Youwon’tbefinedforaddingtothecommunity’swealth.”Thewholecommunitywillgainbythis—forthereisanaturalrewardto

thecommunityaswell.Wecannotkeepthegoodwedo,anymorethantheharm.Everyproductiveenterpriseyieldscollateraladvantages,inaddition


towhatitreturnstothosewhoundertakeit.Buildingahouse,factory,ship,orrailroadbenefitsothersbesidesthosewhogetthedirectprofits.Let the individualproducerkeepall thedirectbenefitsof exertion.Let

theworkerhavethefullrewardoflabor.Givethecapitalist thefullreturnon capital. The more labor and capital produce, the larger the commonwealthinwhichallshare.This general gain is expressed in a definite and concrete form through

the value of land, or its rent. The state may take from this fund, whileleavinglaborandcapitaltheirfullreward.Andwithincreasedproduction,thisfundwouldincreasecommensurately.

Shiftingtheburdenoftaxation,fromproductionandexchangetolandvalue(orrent),wouldnotmerelygivenewstimulustotheproductionofwealth—itwouldopennewopportunities.Underthissystem,noonewouldhold landwithoutusing it.So landnowwithheld fromusewouldbethrownopentoimprovement.Thesellingpriceoflandwouldfall,andlandspeculationwouldreceive

its death blow. Land monopolization would no longer pay. Millions ofacres,whereothersarenowshutoutbyhighprices,wouldbeabandonedorsoldattrivialprices.This is true not only on the frontier, but in cities as well. The simple

deviceofplacingalltaxesonthevalueoflandwould,ineffect,putlandupforauctiontowhoeverwouldpaythehighestrenttothestate.Thedemandfor land determines its value. If taxes took almost all that value, anyoneholding landwithout using itwouldhave to paynearlywhat itwouldbeworthtoanyoneelsewhowantedtouseit.Thiswould apply not just to agricultural land, but to all land.Mineral

landwouldbethrownopen,too.Intheheartofthecity,noonecouldaffordto keep land from itsmost profitable use.On the outskirts, no one coulddemandmoreforlandthanwhatitscurrentpotentialusewouldwarrant.Everywhere land had attained a value, taxation would drive

improvement.Itwouldnotactasafineuponimprovement,asitdoesnow.Whoever planted an orchard, sowed a field, built a house, or erected afactory—nomatter how costly—would pay nomore in taxes than if theland were kept idle. The owner of a vacant city lot would pay for theprivilegeofkeepingotherpeopleoff.Itwouldcostasmuchtokeeparowoftumbledownshantiesasagrandhotelorgreatwarehouse.


Currently, everywhere labor is most productive, a bonusmust be paidbeforelaborcanbeexerted.Thiswouldbeeliminated.Farmerswouldnothave to mortgage their labor for years to obtain land to cultivate. Cityhomeownerswould not have to lay out asmuch for small lots as for thehouses built on them. A company building a factory would not have tospendagreatpartofitscapitalforasite.Plus,alltheothertaxesnowleviedonmachineryandimprovementswouldberemoved.Consider the effect of such a changeon the labormarket.Competition

would no longer be onesided. Workers now compete with each other,cuttingwagesdowntobaresubsistence.Instead,employerswouldhavetocompeteforlabor.Wageswouldrisetothefairearningsoflabor.Thegreatestofallcompetitorswouldhaveenteredintothelabormarket

—one whose demand cannot be satisfied until all desire is satisfied: thedemandoflaboritself.Employerswouldhavetobidnotonlyagainstotheremployers—allfeelingthestimulusofgreatertradeandincreasedprofits—but against the ability of laborers to become their own employers. Fornatural opportunities would now be opened to them by a tax preventingmonopolization.Naturalopportunitieswouldbefree to labor.Capitalandimprovements

would be exempt from tax. Exchange would be unhampered. Recurringdepressions would cease. Every wheel of production would be set inmotion.Demandwould keep pacewith supply, and supplywith demand.Tradewouldgrowineverydirection,andwealthincreaseoneveryhand.


Chapter36TheEffectonTheDistributionofWealth

The advantages of a tax on land values—great as they already appear—cannotbefullyappreciateduntilweconsidertheeffectonthedistributionofwealth.Allcivilizedcountrieshaveanunequaldistributionofwealththatgrows

steadily worse. The cause, we have found, is that ownership of landprovidesgreater andgreaterpower toappropriate thewealthproducedbylabor and capital as material progress goes on. We can counteract thistendencybyremovingalltaxesonlaborandcapital—andputtingthemonrent.Ifwewentsofarastotakealltherentintaxes,thecauseofinequalitywouldbetotallydestroyed.Wealthproduced ineverycommunitywouldbedivided into twoparts.

One part would be distributed to individual producers—as wages andinterest—accordingtowhateachhadcontributedtoproduction.Theotherpart—landrentcollectedastaxes—wouldgotothecommunityasawhole.Itwouldbedistributedaspublicbenefitstoallmembersofthatcommunity.And justlyso.Wagesand interest represent the resultof individualeffort.Landrent represents the increasedpower that thecommunity,asawhole,providestotheindividual.Rent, under this system, would promote equality, instead of causing

inequalityasitdoesnow.Tofullyunderstandthiseffect,let’sreviewsomeprincipleswehavealreadydetermined.Wages and interest are set by themargin of production—what can be

madeon landwithno rent.Laborandcapitalkeeponlywhat is leftafterrentandtaxes.Collectingrentthroughtaxeswouldvirtuallyabolishprivateownership in land, because it would destroy speculative monopolizationand reduce the price of land.Thiswould increasewages and interest, byopeningopportunitiesthatarenowmonopolized.Anewequilibriumwouldbeestablished,withwagesandinterestmuchhigher.Productivityincreaseswithpopulation,withlaborsavinginvention,with

improved methods of exchange. These benefits could no longer bemonopolized. Any increase in rent arising from these advances wouldbenefitthewholecommunity.Allwouldbericher,notjustoneclass.


Further,ifitwerepossibletocalculatethefullcostofpoverty,itwouldbeappalling.NewYorkCityalonespendsoversevenmilliondollarsayearoncharity.Yet spendingbygovernment,privatecharities, and individualscombinedismerelythesmallestitemintheaccount.Considerthefollowingitems:thelostearningsofwastedlabor;thesocialcostofrecklessandidlehabits; the appalling statistics on mortality, especially infant mortality,among the poor; the proliferation of liquor stores and bars as povertydeepens;thethieves,prostitutes,beggars,andtrampsbredbypoverty;andthecostofguardingsocietyagainstthem.These are just part of the full burden that unjust distribution ofwealth

places on the aggregate society. The ignorance and vice produced byinequalityshowthemselvesinthestupidityandcorruptionofgovernment,andthewasteofpublicfunds.Appropriatingrentforpublicpurposeswouldnotmerelystopwasteand

relieve society of these enormous losses. Wages would rise and newavenuesof employmentwouldappear.Furthermore, it iswellknown thatlabor ismostproductivewherewagesarehighest.Higherwages increaseselfrespect, hope, and energy. This is true the world over. Mind, notmuscle,isthegreatestagentofproduction.Thephysicalpowerevolvedinthe human frame is one of the weakest forces of nature. With humanintelligence,matterbecomesplastictohumanwill.Who can saywhat level the wealthproducing capacity of labormight

reach, if producers receive their fair share of its advantages? AmericaninventionandtheAmericanaptitudeforlaborsavingprocessesaretheresultofhigherwages.HadourproducersbeencondemnedtothelowrewardoftheEgyptianfellahorChinesecoolie,wewouldbedrawingwaterbyhandandtransportinggoodsonourshoulders.Increasing the reward of labor and capital would stimulate invention

even further. The harmful effects of laborsaving machinery on workerswoulddisappear.Currently,manypeopleregardautomationasacurse,notablessing.Byremovingthesedefects,everynewpowerwouldimprovetheconditionofall.ThesimpleplanoftaxationIproposewouldequalizethedistributionof

wealth,preventingwasteandincreasingproductivity.I shall not deny this may lessen the intensity with which wealth is

pursued.Itseemstomethatinasocietywherenoonefearspoverty,noone


wouldstruggleandstrainforgreatwealth,aspeopledonow.Certainlythespectacleofpeopleslavingawayforthesakeofdyingrichisunnaturalandabsurd.Inasocietywherefearofwanthadbeenremoved,wewouldview those who acquire more than they can use as we now look onsomeonewhowearsadozenhats.Thoughwemaylosethisincentive,wecansurelyspareit.Whateverits

functionmayhavebeeninanearlierstageofdevelopment,itisnotneedednow.Thedangers threateningourcivilizationdonotcomefromweaknessinproduction.Theycomefromtheunequaldistributionofwealth.


Chapter37TheEffectonIndividualsandClasses

Wewould confiscate rent byplacing taxesonlyon land.On first hearingthis, landholdersare likely tobealarmed; small farmersandhomeownerswill be told this would rob them of their hardearned property. But amoment’sreflectionwillshowsomethingdifferent.Everyonewhoseinterestasworkerand/orcapitalistexceedstheirinterest

as landownerwillgain.Evenlargelandholdersultimatelywillbenefit, forproductionwillincreasemuchmorethanthelosstoprivatelandownership.Thewhole communitywill share in these gains and in a healthier socialcondition.Itisobviousthatthosewholivebywages,ofheadorhand,willbenefit

greatly: laborers, clerks,mechanics, and professionals. Sowill thosewholive partly by wages and partly by earnings of capital: merchants,manufacturers, and traders; from the peddler to the steamship owner.Furthermore, we may include all those whose income comes frominvestmentsotherthanland.Consideramerchantorprofessionalwithahouseandlot.Shewillnotbe

harmed by our change, but will gain. The selling price of the lot willdiminish*—butitsusefulnesswillnot.

*The rent of land is capitalized into a selling price. As the community approachescollecting100%oftherent,thesellingpriceoflandwillapproachzero.It will serve her purposes as well as ever. The value of other lots

diminishinthesameratio,sosheretainsthesamesecurityofhavingalotasshehadbefore.Ifsheneedsalargerlot,orifherchildrenneedlots,shewillreaptheadvantage.Sheisnomorealoserthanifsheboughtapairofbootsthatlatersellforless.Thebootsarejustasuseful,andthenextpairwillbecheaper.Furthermore,thoughtaxesonlandwillbehigher,shewillbefreefrom

taxeson thehouseand improvements,onfurnitureandpersonalproperty,andonallsheandherfamilyeat,drink,andwear.Meanwhileherearningswill increase greatly because of higherwages, constant employment, andgreater trade.Her only losswould be if shewants to sell her lotwithoutgettinganother.Thisisasmalllosscomparedwithagreatgain.


Thesameistrueofthefarmer.Iamnotspeakingof“farmers”whonevertouchaplow;Imeanworkingfarmers.Ofeveryoneabovemere laborers,theyhavethemosttogainfromplacingalltaxesonlandvalues.Thismayseemcontradictoryuntilwefullyunderstandtheproposition.Farmers generally sense they don’t get as good a living as their hard

workoughttoearnthem.However,theymaynotbeabletotracethecause.Thefactis,taxation,asnowlevied,fallsonthemwithexceptionalseverity.All their improvementsare taxed:houses,barns, fences,crops,andstock.Theirpersonalpropertycannotbeconcealedorundervaluedaseasilyasthemore valuable kinds concentrated in cities. Not only are they taxed onpersonal property and improvements, which the owners of unused landescape;evenworse,theirlandisgenerallytaxedatahigherratethanlandheldonspeculation—simplybecauseitisimproved.A single tax on land values would fall hardest not on agricultural

districts,wherelandiscomparativelycheap,butontownsandcities,wherepricesarehigh.Taxes,beingleviedonthevalueofbareland,wouldfallasheavilyonunimprovedasimprovedland.Acreforacre,theimprovedandcultivated farm—with its buildings, fences, orchards, crops, and stock—would be taxed no more than unused land of equal quality. Thus,speculationwouldbereduced.Destroying speculative land values would tend to diffuse population

where it is too dense, and concentrate it where it is too sparse. Citytenementswould giveway to homeswith gardens. People in the countrywouldsharemoreoftheeconomiesandsociallifeofthecity.Working farmers are not just landowners—they are laborers and

capitalists,aswell.Theyearntheirlivingbytheirlaborandtheircapital.Tovarying degrees, this is true of all landholders. While some may not belaborers, itwouldbehard to findonewho is not a capitalist. Indeed, thegeneralruleis:thelargerthelandowner,thegreaterthecapitalist.Thisissotruethatthetwoareoftenconfusedincommonthought.Puttingalltaxesonlandwouldlargelyreduceallgreatfortunes,but itwouldhardlyleavetherichpenniless.Not only would wealth increase enormously—it would be equally

distributed.Thisdoesnotmeaneachindividualwouldgetthesameamount.That would not be equal distribution, since different individuals havedifferentpowersanddifferentdesires.Rather,wealthwouldbedistributed


in accordance to how much each contributed. This would vary with theindustry,skill,knowledge,orprudenceofeachindividual.Wealthwouldnolongerconcentrateinthosewhodonotproduce,taken

fromthosewhodo.Theidlerichwouldnolongerloungeinluxury,whilethosewhoactuallyproducesettleforthebarestnecessities.Anyinequalitiesthat continued to exist would be of natural causes. They would not beartificialinequalities,producedbydenialofnaturallaw.Thegreatcauseofinequality—monopolyofland—wouldbegone.


Chapter38ChangesinSociety

We propose to readjust the very foundation of society. Space does notpermit an elaborate discussionof all the changes thiswould bring about.Oncegeneralprinciplesareapplied,thedetailswillbeeasilyadjusted.Still,someofthemainfeaturesmeritmention.Most notably, government could be vastly simplified. We could

eliminateanimmenseandcomplicatednetworkofgovernmentalmachineryneeded to collect taxes, prevent and punish evasion, and check revenuefrommanydifferentsources.Asimilar savingwouldoccur in theadministrationof justice.Muchof

thebusinessofcivilcourtsarisesfromdisputesoverownershipofland.Ifalloccupantswere,essentially,rentpayingtenantsof thestate,suchcaseswouldcease.Withpovertyended,moralitywouldgrowstronger,reducingotherbusinessofthesecourts.Wages would rise and everyone would be able to make an easy and

comfortable living. This would immediately reduce, and soon eliminate,thieves, swindlers, and other criminals who arise from the unequaldistribution of wealth. This would lighten the administration of criminallaw, with all its paraphernalia of police, prisons, and penitentiaries. Weshouldeliminatenotonlymanyjudges,bailiffs,clerks,andjailers,butalsothe great host of lawyers now maintained at the expense of those whoactuallyproducewealth.Theywouldceasetobeadrainonthevitalforceand attention of society. Talent now wasted in legal subtleties would beturnedtohigherpursuits.Thelegislative,judicial,andexecutivefunctionsofgovernmentwouldbe

vastly simplified. Public debts and standing armies historically wereproducts of the change from feudal to allodial (i.e., private) land tenures.Oncewereverttotheideathatlandisthecommonrightofthepeopleofacountry, I do not think these would remain for long. Public debts couldreadilybepaidoff by a tax thatwouldnot lessen thewagesof labornorcheck production. As intelligence and independence grow among themasses,standingarmieswouldsoondisappear.


SocietywouldapproachtheidealofJeffersoniandemocracy;repressivegovernment would be abolished. Yet, at the same time and in the samedegree,itwouldbecomepossibletorealizethegoalsofsocialismwithoutcoercion. With many of its present operations simplified or eliminated,government could assume other functions that now demand recognition.Surplus revenue from land taxation would grow as material progressincreaseditsspeed,tendingtoincreaserent.Governmentwouldchangeitscharacter and become the administrator of a great cooperative society. Itwouldmerelybetheagencybywhichcommonpropertywasadministeredforcommonbenefit.Doesthisseemimpracticable?Considerthevastchangesinsociallifeif

labor kept its full reward. It would banish want and the fear of want.Everyonewouldhavefreedomtodevelopinnaturalharmony.Weareapttoassumethatgreedisthestrongesthumanmotiveandthat

fear of punishment is required to keep people honest. It seems selfishinterests are always stronger than common interests. Nothing could befurtherfromthetruth.Don’t these behaviors arise because of want? Poverty is the relentless

hellwaitingbeneathcivilizedsociety.Poverty isnot justdeprivation; it isshame and degradation. It is only natural that people shouldmake everyeffort to escape from this hell. People often do mean, greedy, graspingthingsintheefforttosavetheirfamilies,theirchildren,fromwant.Inthisstruggle,oneofthestrongestmotivesofhumanaction—thedesire

for approval—is sometimes distorted into themost abnormal forms. Thehungerfortherespect,admiration,orsympathyofourfellowsisinstinctiveand universal. It is seen everywhere. It is as powerful among the mostprimitive savages as it is among the most highly cultivated members ofpolished society. It triumphs over comfort, over pain, even over fear ofdeath.Itdictatesboththemosttrivialandthemostimportantactions.Peopleadmirewhat theydesire.Thestingofwant—or fearofwant—

makespeopleadmirerichesaboveallelse.Tobecomewealthyistobecomerespected,admired,andinfluential.Getmoney!Honestly,ifyoucan—butatanyrategetmoney.Thisisthe

lessonsocietydailyandhourlyexhorts.People instinctivelyadmirevirtueandtruth.Butpovertymakesthemadmirerichesevenmore.Itiswelltobehonestandjust,but thosewhogetamilliondollarsbyfraudandinjustice


havemoreadmirationandinfluencethanthosewhorefuseit.Theyareonthe listof“substantialcitizens,” soughtand flatteredbymenandwomen.Theymaybepatronsofarts,friendsoftherefined.Theiralmsmayfeedthepoor, help the struggling, and brighten desolate places.Noble institutionscommemoratetheirnames.Longaftertheyhaveaccumulatedenoughwealthtosatisfyeverydesire,

theygoonworking, scheming, and striving to addmore riches.Theyaredrivenby thedesire “tobe something.”This isnot from tyrannicalhabit,but from the subtler satisfactions riches give: power and influence, beinglookeduptoandrespected.Theirwealthnotonlyraisesthemabovewant,butmakesthempeopleofdistinctioninthecommunity.Thisiswhatmakestherichsoafraidtopartwithmoney,andsoanxioustogetmore.The change I have proposed would destroy the conditions that distort

theseimpulses.Itwouldtransmuteforcesthatnowdisintegratesocietyintoforces to unite it. Give labor its full earnings and expanded opportunity.Take,forthebenefitofthewholecommunity,thatwhichthegrowthofthecommunitycreates.Thenpovertywouldvanish.Production would be set free. People would worry about finding

employment no more than they worry about finding air to breathe. Theenormous increaseofwealthwouldgiveeven thepoorest amplecomfort.Themarchofscienceandinventionwouldbenefitall.Withfearofpovertygone,theadmirationofricheswoulddecay.People

wouldseektherespectandapprovaloftheirfellowsinwaysotherthantheacquisition and display of wealth. The skill, attention, and integrity nowusedforprivategainwouldbebroughttothemanagementofpublicaffairsandtheadministrationofcommonfunds.The prize of the ancientOlympic gameswas a simplewreath ofwild

olive. Yet it called forth the most strenuous effort. For a simple bit ofribbon,peoplehaveperformedservicesnomoneycouldbuy.Any philosophy based on selfishness as the master motive of human

actionisshortsighted.Itisblindtothefacts.Ifyouwanttomovepeopletoaction,towhatdoyouappeal?Nottotheirpockets,buttotheirpatriotism;nottoselfishness,buttosympathy.Wewillallgiveeverythingtopreserveourlives.Thatisselfinterest.Buttohigherimpulses,peoplewillgiveeventheirlives.


Callitreligion,patriotism,sympathy,loveofhumanity,orloveofGod.Callitwhatyouwill.Thereisaforcethatovercomesselfishnessanddrivesitout.Itisaforcebesidewhichallothersareweak.Anywherepeoplehaveeverlived,ithasshownitspower.Today,asever,theworldisfilledwithit.Thepersonwhohasneverseenorneverfeltitistobepitied.This forceof forcesnowgoes towaste, or it assumesperverted forms.

Wemayuseit,ifwebutchoose.Allwehavetodoisgiveitfreedomandscope.We aremade for cooperation, like rows of upper and lower teeth.One thing alone prevents harmonious social development: thewrong thatproducesinequality.Somesupposethatonlyimpracticabledreamerscouldenvisionasociety

where greed is banished, prisons stand empty, individual interest issubordinatedtogeneralinterest,andnoonewouldseektorobortooppressneighbors. Practical, levelheaded people,who pride themselves on seeingfacts as they are, have a hearty contempt for such dreamers. But thosepracticalpeople,thoughtheywritebooksandholdchairsatuniversities,donotthink.Amongthecompanyofwellbredmenandwomendiningtogetherthere

is no struggle for food, no attempt to get more than one’s neighbor, noattempttogorgeorsteal.On the contrary, each is anxious to help a neighbor before helpinghimself or herself, offering the best to others. Should anyone show theslightestinclinationtoactthepigorpilferer,thehoarderwouldfaceaswiftandheavypenaltyofsocialcontemptandostracism.Allthisissofamiliarthatitseemsthenaturalstateofthings.Yetitisno

morenaturaltobegreedyforwealththantobegreedyforfood.Peoplearegreedyforfoodwhentheyarenotassuredtherewillbeafairandequitabledistribution, which would give each enough. When these conditions areassured,theystopbeinggreedy.Insocietyaspresentlyconstituted,peoplearegreedyforwealthbecause

the conditions of distribution are so unjust. Instead of each being sure ofenough,manyarecondemned topoverty.This iswhatcauses the rat raceand the scramble for wealth. An equitable distribution of wealth wouldexempteveryonefromthisfear.Itwoulddestroygreedforwealth,asgreedforfoodisdestroyedinpolitesociety.


On crowded steamers, manners often differed between cabin andsteerage,illustratingthisprincipleofhumannature.Bothhadenoughfood.However, steeragehadno regulations to insureefficient service, somealsbecame a scramble. In cabin, on the contrary, eachwas assigned a place,andtherewasnofearofnotgettingenoughtoeat.Therewasnoscramblingand nowaste. The differencewas not in the character of the people, butsimply in the arrangements. A cabin passenger transferred to steeragewould participate in the greedy rush; a steerage passenger transferred tocabinwouldbecomerespectfulandpolite.

Thesamewouldoccurinsocietyingeneralifthepresent unjust systemwere replacedwith a fair distribution ofwealth. Incultivated and refined society, coarser passions are not held in check byforceorlaw,butbycommonopinionandmutualdesire.Ifthisispossibleforpartofacommunity,itispossibleforawholecommunity.Somesaytherewouldbenoincentivetoworkwithoutfearofpoverty;

peoplewouldsimplybecomeidlers.Thisistheoldslaveholders’argumentthat labormustbedrivenwith the lash.Nothing is further fromthe truth.Wantmightbebanished,butdesirewouldremain.Humansaremorethananimals: we are the unsatisfied animal. Each step we take kindles newdesires.Workitselfisnotrepugnanttohumans,onlyworkthatshowsnoresults.

To toil day after day and barely get the necessities of life, this is hardindeed.Butreleasedfromthisprison,peoplewouldworkharderandbetter.Were the lives of great people, like Benjamin Franklin orMichelangelo,idleones?Thefactis,workthatimprovestheconditionofhumanityisnotdonetoearnaliving.Inasocietywherepovertywaseliminated,suchworkwouldincreaseenormously.The waste ofmental power is the greatest of all the enormous wastes

resultingfromthepresentorganizationofsociety.Howinfinitesimalaretheforces that contribute to the advancement of civilization compared to theforcesthatliedormant!Consideringthegreatmassofpeople,howfewarethinkers,discoverers,inventors,organizers.Yetmanysuchpeopleareborn—it isconditions thatpermit so few todevelop.Whatwould their talentshavemattered,hadColumbusgoneintotheclergyinsteadofgoingtosea,or Shakespeare been apprenticed to a chimney sweep, or Isaac Newtonbecomeafarmer?


But,itwillbesaid,otherswouldhaveriseninstead.Andthisistrue.Itshowshowprolific humannature is.The commonworker is transformedinto the queen bee when needed. When circumstances are favorable, acommonpersonrisestothestatusofheroorleader,sageorsaint.Butforeveryonewhoattainsfullstature,howmanyarestuntedanddenied?How little does heredity count compared with conditions. Place an

EnglishinfantintheheartofChina,anditwillgrowupthesameasthosewho are native. The person would use the same speech, think the samethoughts, show the same tastes. Switch a countess with an infant in theslums.Wouldthebloodofahundredearlsgiveyouarefinedandculturedwoman?To remove the fear of want, to give to all classes comfort and

independence and opportunities for development—this would be likegiving water to a desert. Consider the possibilities if society gaveopportunitytoall.Factoryworkersarenowturnedintomachines;childrengrowupinsqualor,vice,andignorance.Theyneedbuttheopportunitytobring forth powers of the highest order. Talents now hidden, virtuesunsuspected,wouldcomeforthtomakehumanlifericher,fuller,happier.In our present state, even the fortunate few at the top of the social

pyramidmustsufferfromthewant,ignorance,anddegradationunderneath.ThechangeIproposewouldbenefiteveryone,eventhelargestlandholder.Wouldn’ttherichperson’schildrenbesaferpennilessinsuchasociety,thanwiththelargestfortuneinthisone?Ifsuchasocietyexisted,itwouldbeabargaintogainentrancebygivingupallpossessions.

Ihavenowtracedoursocialweaknessanddiseasetotheirsource.Ihaveshowntheremedy.Ihavecoveredeverypoint,andmeteveryobjection.Buttheproblemswehavebeenconsidering,greatastheyare,passintoproblemsgreaterstill.Theygotothegrandestproblemswithwhichthehumanmindcangrapple.Iamabouttoaskthereadertogowithmefurtherstill,intohigherfields.


TenthPart:TheLawofHumanProgress


Chapter39TheCauseofHumanProgress

Ifourconclusionsarecorrect, theywill fallundera largergeneralization.Wemayrephraseourquestion,then,fromabroaderperspective:

Whatisthelawofhumanprogress?Whether humans gradually developed from animals is not the question

here.Inferencecannotproceedfromtheunknowntotheknown.Howeverhumansmayhaveoriginated,wecanknowourspeciesonlyaswefind itnow.Thereisnotraceofhumansinanylowerstatethanthatofprimitivepeople still found today. No vestige remains of what bridged the chasmbetweenhumansandanimals.Between the lowest savage and the highest animal, there is an

irreconcilabledifference.Itisnotadifferenceofdegree,butofkind.Manyof the characteristics, actions, and emotions of humans are seen in loweranimals.But nomatter how lowon the scaleof humanity, nopersonhaseverbeenfoundwithouttheonecharacteristicofwhichanimalsshownotthe slightest trace. It is something clearly recognizable, yet almostundefinable.Somethingthatgiveshumansthepowerofimprovement—thatmakesustheprogressiveanimal.The beaver builds a dam, the bird a nest—but always on the same

models.Humandwellingspassfromrudehutstomagnificentmansions.Adogcan,toacertainextent,connectcauseandeffect,andlearnsometricks.Butthiscapacityhasnotincreasedinalltheagesithasbeendomesticated.Today’sdogisnosmarterthanthedogsofancientsavages.We know of no animal that uses clothes, cooks food, makes tools or

weapons, breeds other animals to eat, or has an articulate language.Humanslackingtheseskillshaveneverbeenfound.Infact,humanphysicalabilityissoinferiorthatthereisvirtuallynoplacewecouldexistwithoutthose skills. Humans everywhere, and at all times we know of, haveexhibitedthisfaculty—tosupplementwhatnaturehasdoneforusbywhatwedoforourselves.Butthedegreevariesgreatly.Betweenthesteamshipandacanoe,there

is an enormous difference. These variations cannot be attributed to


differences in original capacity. The most advanced today were savageswithinhistorictimes.Wealsoseewidedifferencesbetweenpeoplesofthesame stock.Neither can they be accounted for by differences in physicalenvironment. Inmanycases, the cradlesof learningarenowoccupiedbybarbarians.Yetgreatcitiesriseinafewyearsoverthehuntinggroundsofwildtribes.These differences are evidently connected with social development.

Beyondperhapsthesimplestrudiments,itbecomespossibleforhumanstoimprove only as we live with other people.We improve as we learn tocooperateinsociety.Alltheseimprovementsinhumanpowersandconditionswesummarizeintheterm“civilization.”But what is the law of this improvement?Which social arrangements

favoritandwhichdonot?Differentcommunitieshavearrivedatdifferentstagesofcivilization.Cansomecommonprincipleexplainthis?The prevailing belief is that civilizations progress by development or

evolution.Thatis,bythesurvivalofthefittestandhereditarytransmissionof acquired qualities. This explanation of progress is, I think, verymuchlike the view naturally taken by the wealthy regarding the unequaldistributionofwealth.Thereisplentyofmoneytobemadebythosewhohave the will and ability, they say; ignorance, idleness, or wastefulnesscreatesthedifferencebetweenrichandpoor.Sothecommonexplanationofdifferencesamongcivilizationsisoneof

differences in capacity. The more civilized races are superior races.CommonEnglishmenfelttheyhadanaturallysuperiorityoverfrogeatingFrenchmen. American opinion attributed their country’s success ininventionandmaterialcomfortto“Yankeeingenuity.”In thebeginningof this inquiry,weexamined—anddisproved—certain

economic theories that supported common opinion. This view sawcapitalists as paying wages, while competition reduced wages. Just asMalthusiantheorysupportedexistingprejudices,seeingprogressasgradualrace improvement harmonizes with common opinion. It gives coherenceand a scientific formula to opinions already prevailing. Its phenomenalspreadsinceDarwin*hasnotbeensomuchconquestasassimilation.

*CharlesDarwin(18091882),Britishnaturalist.HepublishedTheOriginofSpeciesin1859.


So this view now dominates thought: The struggle for existence, inproportiontoitsintensity,spurspeopletoneweffortsandinventions.Thecapacity for improvement is established by hereditary transmission, andspread as the most improved (i.e., best adapted) individuals survive topropagate.Similarly, thebestadaptedtribe,nation,orracesurvivesinthestruggle between social groups. This theory is now used to explain thedifferences in the relativeprogressof societies, aswell as thedifferencesbetween humans and animals. These phenomena are now explained asconfidentlyandaswidelyby this theoryas, a shortwhile ago, theywereexplainedbyspecialcreationanddivineintervention.Thepracticaleffectofthistheoryisasortofhopefulfatalism:progressis

the result of slow, steady, remorseless forces. War, slavery, tyranny,superstition,famine,andpovertyaretheimpellingcausesthatdrivehumanson. They work by eliminating poor types and extending the higher.Advancesarefixedbyhereditarytransmission.Thecurrentindividualistheresult of changes perpetuated through a long series of past individuals.Socialorganization then takes its formfromthe individualsofwhich it iscomposed. Philosophers may teach that this does not lessen the duty oftryingtoreformabuses.Butasgenerallyunderstood,theresultisfatalism.Why bother, since change can only occur through slow development ofman’snature?Yetwehave reachedapointwhereprogress seems tobenatural tous.

We look forwardconfidently togreater achievements.Someevenbelievepeoplemay someday travel to distant planets. This theory of progressionseemssonaturaltousamidanadvancingcivilization.But,withoutsoaringtothestars,ifwesimplylookaroundtheworld,we

areconfrontedwithanundeniablefact—stagnantcivilizations.Themajorityofthehumanracetodayhasnoideaofprogress.Theylook

tothepastasthetimeofhumanperfection.Wemayexplainthedifferencebetweensavageandcivilized,sayingsavagesarestillsopoorlydevelopedthat their progress is hardly apparent. But how shall we account forcivilizationsthatprogressedsofar—andthenstopped?Today’sWesterncivilizationisnotmoreadvancedthanIndiaandChina

due to a longer period of development.We are not, as itwere, adults ofnaturewhiletheyarechildren.Theywerecivilizedwhenweweresavages.


Theyhadgreatcities,powerfulgovernments,art,literature,andcommercewhenEuropeanswerelivinginhutsandskintents.Yetwhilewe progressed from this savage state tomodern civilization,

theystoodstill.Ifprogressistheresultofinevitablelawsthatpropelpeopleforward,howshallweaccountforthis?Thesearrestedcivilizationsstoppedwhen they were superior in many respects to sixteenth century Europe.Moreover,both received the infusionofnew ideas fromconquering raceswithdifferentcustomsandthought.Butitisnotsimplythatcurrenttheoryfailstoaccountforthesearrested

civilizations. It isnotmerely thatpeoplehavegone so faron thepathofprogress and then stopped. It is that people have gone so far—and thengoneback.Itisnotmerelyanisolatedcasethatthusconfrontsthetheory—itistheuniversalrule.Everycivilizationtheworldhaseverseenhashaditsperiodofvigorous

growth; of arrest and stagnation; then, decline and fall. True, our owncivilizationismoreadvanced and moves quicker than any preceding civilization. But so wasRoman civilization in its day. That proves nothing about its permanenceunlessitisbetterinwhatevercausedtheultimatefailureofitspredecessors.Intruth,nothingcouldbefurtherfromexplainingthefactsofuniversal

historythanthistheorythatcivilizationistheresultofnaturalselection.Itis inconsistentwith the fact that civilization has arisen at different times,and in different places, and has progressed at different rates. Ifimprovements were fixed in man’s nature, there might be occasionalinterruption,butingeneral,progresswouldbecontinuous.Advancewouldleadtoadvance,andcivilizationwoulddevelopintohighercivilization.Itisnotmerelythegeneralrule,but theuniversalrule, that thereverseis true.Theearthisthetombofthedeadempires.In every case, themore advanced civilization, supposedlymodified by

heredity, has been succeeded by a fresh race coming from a lower level.Thebarbariansofoneepochhavebeenthecivilizedpeopleofthenext.Ithasalwaysbeenthecasethat,undertheinfluencesofcivilization,peopleatfirst improve—and later degenerate. Every civilization that has beenoverwhelmedbybarbarianshasreallyperishedfrominternaldecay.Themomentthisuniversalfactisrecognized,iteliminatesthetheoryof

progressbyhereditarytransmission.Lookingoverthehistoryoftheworld,


advance does not coincide with heredity for any length of time. In anyparticularline,regressionalwaysseemstofollowadvance.Canwesaythereisanationalorracelife,asthereisanindividuallife?

Does every social group have, as it were, a certain amount of energy toexpend before it decays? Analogies are the most dangerous mode ofthought.Theymayconnectsimilarities,yetdisguiseorcoverupthetruth.Theaggregateforceofagroupisthesumofitsindividualcomponents.Acommunity cannot lose vital power unless the vital powers of itscomponents are lessened.As long asmembers are constantly reproducedwithallthefreshvigorofchildhood,acommunitycannotgrowoldbylossofitspowersasapersondoes.Yetwithinthisanalogylurksanobvioustruth.Theobstaclesthatfinally

bringprogresstoahaltareactuallyraisedbythecourseofprogressitself.The conditions that have destroyed all previous civilizations have beenconditionsproducedbythegrowthofcivilizationitself.


Chapter40DifferencesinCivilizations

To discover the law of human progress, we must first determine theessential nature of the differences between civilizations. Such greatdisparitiescannotbeexplainedbyinnatedifferencesintheindividualswhocompose these communities. True, there are natural differences andhereditarytransmissionofparticulartraits.Butthesearenothingcomparedtosocialinfluences.What is more ingrained than language? Nothing persists longer, nor

showsnationalityquicker.Itisourmediumofthought.Yetwearenotbornwithapredispositiontoanylanguage.Althoughourancestorshavespokenonelanguageforgenerations,childrenhearingadifferenttonguefrombirthwilllearnthatjustaseasily.Mannersandcustomsofnationorclassarealsomattersofeducationand

habit, not hereditary transmission. White infants captured and raised byIndiansdemonstratethis:TheybecomethoroughIndians.That thereverseisnotastrueofIndiansbroughtupbywhitesisduetothefactthattheyarenevertreatedpreciselythesameaswhitechildren.I once heard a highly intelligent Negro gentleman, Bishop Hillery,

remark: “Our children,when they are young, are fully as bright aswhitechildren, and learn as readily. But as soon as they get old enough toappreciatetheirstatus—torealizethattheyarelookeduponasbelongingtoan inferior race, and can never hope to be anything more than cooks,waiters, or something of that sort—they lose their ambition and cease tokeepup.”Conditions and surroundings profoundly modify human character.

Pauperswillraisepaupers,evenifthechildrenarenottheirown.Frequentcontactwithcriminalsmaymakecriminalsoutof thechildrenofvirtuousparents.Thosewholearntorelyoncharityinevitablylosetheselfrespectand independence necessary for selfreliance when the struggle is hard.Thus it is well known that charity often increases the demand for morecharity.Inanylargecommunity,diverseclassesandgroupsshowthesamekind

of differences as we see between different civilizations: differences in


knowledge, belief, customs, tastes, and speech. But these differences arecertainlynot innate.Nobaby is born aMethodist orCatholic, norwith aparticulardialectoraccent.Thesedifferencesarederivedfromassociationinthesegroups.This body of traditions, beliefs, customs, laws, habits and associations

arises in every community and surrounds every individual. This, nothereditary transmission,makes theEnglish different from theFrench, theAmericanfromtheChinese,andthecivilizedfromtheprimitive.Hereditymay develop or alter qualities—but much more so the physical than thementalcharacteristics.Even in our wildest state, human life is infinitely more complex than

animal life, for we are affected by an infinitely greater number ofinfluences.Amid these, the relative influence of heredity diminishes.Thephysical differences between races are hardly greater than between blackandwhitehorses.Ifthisistrueofourphysicalstructure,itmustbereflectedevenmoreinourmentalconstitution.Allourphysicalpartswebringwithusintotheworld,buttheminddevelopsafterward.WecannottellwhetherthemindofanewborninfantistobeEnglishorChinese,oreventhemindofacivilizedpersonorthemindofasavage.Thatdependsentirelyonthesocialenvironmentinwhichitisplaced.Supposeinfantsofhighlycivilizedparentsweretakentoanuninhabited

countryandsomehowkeptaliveuntiladulthood.Theywouldbethemosthelpless savages imaginable.Theywould need to discover fire, to inventthe simplest tools, and to construct a language. Just as children learn towalk,theywouldhavetostumbletheirwaytothesimplestknowledgethelowestculturenowpossesses.Nodoubt, theycoulddoall thesethingsintime.Thesepossibilitiesare

latent in thehumanmind,as thepowerofwalking is latent in thehumanframe.ButIdonotbelievetheywoulddothembetterorworse,orquickeror slower, than children of barbarians under the same conditions. Whatcouldmankindattainifeachgenerationwereseparatedfromthenextbyanintervaloftime,likeseventeenyearlocusts?Onlyonesuchintervalwouldsee the decline of mankind—not simply to savagery, but to a conditioncompared with which savagery, as we know it, would seem civilized.Conversely, if savage infants were placed in civilized homes, can wesuppose that they would show any difference growing up? (We must


assume in this experiment that they would be raised the same as otherchildren.) The great lesson thus learned is that “human nature is humannaturealltheworldover.”There isapeople, found inallpartsof theworld,who illustratewhich

traitsaretransmittedbyheredityandwhicharetransmittedbyassociation.TheJewshavemaintainedthepurityoftheirbloodmorescrupulously,andforafarlongertime,thananyEuropeanrace.Yet the only characteristic that can be attributed to this is physicalappearance. (And this is far less thanconventionally supposed, as anyonewho takes the trouble can see.) Although they have constantly marriedamong themselves, the Jews have everywhere been modified by theirsurroundings. English, Russian, Polish, German, andOriental Jews differfromeachother,inmanyrespects,asmuchasdotheotherpeopleofthosecountries.Yet they havemuch in common and have preserved their character no

matterwheretheyare.Thereasonisclear.TheHebrewreligionhasalwayspreserved thedistinctivenessof theHebrewrace.Certainly religion isnottransmittedbyheredity,butbyassociation.TheChinesehaveaverysetcharacter.YetinCaliforniatheyeasilyadopt

Americanmethodsofworking,trading,andusingmachinery.Theyhavenolack of flexibility or natural capacity. That they do not change in otherrespectsisduetotheChineseenvironmentthatstillpersistsandsurroundsthem.Coming fromChina, theyplan to return.Whilehere, they live inalittleChinaoftheirown,astheEnglishinIndiamaintainalittleEngland.Wenaturallyseektoassociatewiththosewhoshareourpeculiarities.Thuslanguage,religionandcustomtendtopersistanywhereindividualsarenotabsolutelyisolated.Moderncivilizationstandsfarabovethosewhohaveprecededus,andfar

aboveourlessadvancedcontemporaries.Butnotbecauseweareanytaller.Westandatopapyramid.Thecenturieshavebuiltastructuretosupportus.

Letmerepeat:Idonotmeanthatallpeoplepossessthesamementalcapacity,anymorethanImeantheyarephysicallyalike.Idonotdenytheinfluenceofheredityintransmittingmentalcharacteristics inthesameway,andpossiblytothesamedegree,asphysicalattributes.Butthe differences between communities in different places and at differenttimes—what we call differences in civilizations—are not differences that


resideinindividuals,butdifferencesthatbelongtotheirsocieties.Thatis,theyresultfromtheconditionsindividualsareexposedtoinsociety.Eachsociety,smallorgreat,weavesitselfawebofknowledge,beliefs,

customs,language,tastes,institutions,andlaws.(Moreprecisely,weshouldsay webs. For each community is made up of smaller societies, whichoverlap and intertwine each other.) Into this, the individual is received atbirthandcontinuestilldeath.Thisisthematrixinwhichmindunfolds,andfromwhich it takes its stamp.This is howcustoms, religions, prejudices,tastes, and languages develop and are perpetuated. This is how skill istransmittedandknowledgeisstored.Thediscoveriesofonetimearemadethecommonstockandsteppingstoneofthenext.Though this is often an obstacle to progress, it is also what makes

progresspossible.Itenablesaschoolboyinourtimetolearnmoreabouttheuniverseinafewhoursthantheancientastronomersknewafteralifetime.ItplacesanordinaryscientisttodayfarabovethelevelreachedbythegiantmindofAristotle.Thisistoacivilizationwhatmemoryistoanindividual.Ourwonderful arts, our farreaching science, ourmarvelous inventions—theyhavecomeaboutthroughthis.Humanprogressgoesonastheadvancesofonegenerationbecomethe

commonpropertyofthenext—andthestartingpointfornewones.


Chapter41TheLawofHumanProgress

What,then,isthelawofhumanprogress?Thislawnotonlydescribeshowcivilization advances—it must also account for arrested, decayed, anddestroyed civilizations. Since mankind presumably started with the samecapacities at the same time, it must explain the great disparity in socialdevelopment that now exists. It must account for regression, as well asprogression;fordifferentratesofprogress;andfortheburstsandstartsandhalts.Inshort,itmusttelluswhattheessentialconditionsofprogressare—andwhichsocialarrangementsadvanceitandwhichretardit.Itisnotdifficulttodiscoversuchalaw.Ifwesimplylook,wecanseeit.

Idonotpretendtogiveitscientificprecision,butmerelytopointitout.Desiresinherentinhumannaturearetheincentivestoprogress:tosatisfy

ourphysical, intellectual,andemotionalwants.Shortof infinity, theycanneverbesatisfied—fortheygrowastheyarefed.Mind is the instrument bywhich humanity advances.Through it, each

advance is retained and made higher ground for further advances. Thenarrow span of human life allows each individual to go only a shortdistance.Eachgeneration does little by itself.Yet succeedinggenerationsaddtothegainsoftheirancestors,andgraduallyelevatehumanity.Mentalpoweris,therefore,themotorofprogress.Civilizationsadvance

inproportiontothementalpowerexpendedinprogression—thatis,mentalpowerdevotedtotheextensionofknowledge,theimprovementofmethods,and thebettermentof social conditions.There is a limit to the amountofworkthatcanbedonewiththemind,justastherealimittotheworkthatcanbedonewiththebody.Therefore,thementalpowerthatcanbedevotedtoprogress isonlywhat is left over afterwhat is required forother, nonprogressivepurposes.These nonprogressive purposes,which consumemental power, can be

classified in two categories: maintenance and conflict. Maintenanceincludes not only supporting existence, but also keeping up socialconditionsandholdingadvancesalreadygained.Conflictincludesnotonlywar or preparation for war; it encompasses all mental power expendedseekinggratificationattheexpenseofothers,andresistingsuchaggression.


Ifwecomparesocietytoaboat,weseeitsprogressisnotbasedonthetotal exertion of the crew.Rather, it depends only on exertion devoted topropelling it. The total is reduced by any force expended on bailing, orfightingamongthemselves,orpullingindifferentdirections.Apersonlivingalonewouldneedallofhisorherpowersjusttomaintain

existence.Mentalpowerissetfreeforhigherusesonlywhenhumanbeingsassociate in communities. Improvement becomes possible when peoplecometogetherinpeacefulassociation.Thispermitsthedivisionoflabor—andalltheeconomiesthatcomefromcooperation.Thewiderandthecloserthe association, the greater the possibilities of improvement. Therefore,associationisthefirstessentialofprogress.Mentalpoweriswastedinconflicttotheextentmorallawisignored—

formoral lawgives each person equality of rights.The terms equality orjustice signify the same thing here: the recognition of moral law. Soequality,orjustice,isthesecondessentialofprogress.Association frees mental power for improvement. Equality keeps this

powerfromdissipatinginfruitlessstruggles.Wethusarriveatourlaw:

Associationinequalityisthelawofhumanprogress.Here,at last, is thelawthatcanexplainalldiversities,alladvances,all

halts,andallretrogressions.Peopleprogressbycooperatingwitheachotherto increase the mental power that may be devoted to improvement.However,asconflict isprovoked,orasinequality(ofpowerorcondition)develops,thistendencyislessened,checked,andfinallyreversed.Therateof developmentwill dependon the resistance itmeets.Obstaclesmaybeexternalandinternal.Inearlierstagesofcivilization,externalforcestendtobegreater.Internalobstaclesgrowmoreimportantinlaterstages.Humansaresocialanimals.Wedonotneed tobecaughtand tamed to

persuadeus to livewithothers.A family relationship is necessarydue toour utter helplessness at birth and our long period of immaturity. Weobserve that the family is wider, and in its extensions stronger, amongsimpler peoples. The first societies are families. They expand into tribes,still holding a mutual blood relationship. Even when they have becomegreatnations,theyclaimacommondescent.

Thefirstlimit,orresistance,toassociationcomesfrom


conditions of physical nature.These vary greatlywith location, andmustproduce corresponding differences in social progress. Climate, soil, andphysicalfeatureswilllargelydeterminepopulationgrowthandthecohesionofsocietyintheearlystages.Associationbringsonlyminorimprovementat first, especiallyunderdifficult conditions,orwheremountains,deserts,orseaisolatepeople.Ontherichplainsofwarmclimates,peoplecanexistwithmuchlesseffort.Morementalpowercanbedevotedtoimprovement.Hence,civilizationnaturallyfirstaroseinthegreatvalleysandtablelandswherewefinditsearliestmonuments.Diversityinnaturalconditionsproducesdiversityinsocialdevelopment.

Differences arise in language, custom, tradition, religion. Prejudice andanimosityarise.Warfarebecomesachronicandseeminglynaturalrelationofsocietiestoeachother.Powerisdepletedinattackordefense,inmutualslaughteranddestructionofwealth,or inwarlikepreparations.Protectivetariffsandstandingarmiesamongthecivilizedworldtodaybearwitnesstohowlongthesehostilitiespersist.Whensmall,separatedcommunitiesexistinastateofchronicwarfare,a

conquering tribe or nation may unite these smaller communities into alargerone, inwhich internalpeace ispreserved.Soconquestcanpromoteassociation,byliberatingmentalpowerfromthedemandsofconstantwar.But conquest is not the only civilizing force. While diversities of

climate, soil, and geography at first separate mankind, they also act toencourageexchange.Commercealsopromotescivilization.Itisinitselfaform of association or cooperation. It not only operates directly—it alsobuildsupinterestsopposedtowar.Itdispelsignorance,whichisthefertilemotherofprejudiceandhate.Andlikewisereligion.Thoughithassometimesdividedpeopleandled

towar, at other times it has promoted association. Commonworship hasoftenfurnishedthebasisofunion.ModernEuropeancivilizationarosefromthe triumph of Christianity over the barbarians. If the Church had notexistedwhentheRomanEmpirefell,Europewouldhavelackedanybondofassociation,andmighthavefallentoaprimitivecondition.Lookingoverhistory,weseecivilizationspringingupwhereverpeople

arebroughtintoassociation—anddisappearingasthisassociationisbrokenup. As people have been brought into closer and closer association andcooperation,progresshasgoneonwithgreaterandgreaterforce.


Butweshallneverunderstand thecourseof civilization, and itsvariedphenomena,without considering the internal resistances or counter forcesthatariseintheveryheartofadvancingsociety.Onlytheycanexplainhowacivilization,onceadequatelystarted,couldbedestroyedbybarbarians—orstopbyitself.Mentalpower,themotorofsocialprogress,issetfreebyassociation—or

perhaps“integration”maybeamoreaccurateterm.Inthisprocess,societybecomes more complex. Individuals become more dependent upon eachother.Occupationsandfunctionsarespecialized.Instead of each person attempting to supply allwants in isolation, the

varioustradesandindustriesareseparated.Onepersonacquiresskillinonething, and another in something else. The body of knowledge becomeslargerthananyonepersoncangrasp.Soitisseparatedintodifferentparts,whichdifferentindividualspursue.Governmentacquiresspecialfunctionsforpreservingorder,administeringjustice,andwagingwar.Evenreligiousceremoniespasstopeoplespeciallydevotedtothatpurpose.Eachmemberisthenvitallydependentontheothers.This process of integration, and the specialization of functions and

powers, is vulnerable to inequality. I do not mean that inequality is anecessary result of social growth. Rather, it is the constant tendency ofsocial growth—if it is not accompanied by certain changes in socialorganization.Thesechangesmustsecureequalityunderthenewconditionsthatgrowthproduces.To put it plainly, the force that halts progress evolves along with

progress. How does this operate? Let us recall two qualities of humannature:Oneisthepowerofhabit;theotheristhepossibilityofmentalandmoral decay.Because of our tendency to continue doing things the sameway, customs, laws, and methods persist long after they have lost theiroriginal usefulness. Decay allows the growth of institutions andways ofthinkingfromwhichpeople’snormaljudgmentswouldinstinctivelyrevolt.The growth and development of society makes each person more

dependenton thewhole. It lessens the influenceof individuals,evenovertheir own conditions, compared with the influence of society. But evenfurther,associationgivesrisetoacollectivepower.Thispowerisdifferentthanthesumofindividualpowers.Groupsexhibitactionsandimpulsesthatindividualswouldnotunderthesamecircumstances.Byanalogy,assimple


animalsbecomecomplex,apoweroftheintegratedwholearisesabovethatoftheparts.

Weobserved the samephenomenon inour inquiry into thenature andgrowthofrent.Wherepopulationissparse,landhasnovalue.Tothedegreethatpeoplecongregate,landvaluelandappearsandrises.Thisissomethingclearlydistinguishablefromvalueproducedbyindividualeffort.Itisavaluethatspringsfromassociation.Itincreases as association grows greater, and disappears as association isbrokenup.The same thing is true of power. As society grows, habit tends to

continueprevioussocialarrangements.Collectivepower,asitarises,lodgesin the hands of a portion of the community. This unequal distribution ofwealth and power, which grows as society advances, tends to producegreaterinequality.Thentheideaofjusticeisblurredbyhabitualtolerationofinjustice.Thewarchiefofabandofsavagesismerelyoneoftheirnumber;they

onlyfollowhimastheirbravest.Whenlargebodiesact together,personalselectionbecomesmoredifficult.Ablinderobedienceisnecessaryandcanbe enforced. As collective power grows, the ruler’s power to reward orpunish increases. From the necessities of war on a large scale, absolutepowerarises.Themassesarethenmereslavesoftheking’scaprice.And soof the specializationof function.When societyhas grown to a

certain point, a regular military force can be specialized. It is no longernecessary to summon every producer away fromwork in case of attack.This produces a manifest gain in productive power. But this inevitablyleadstotheconcentrationofpowerinthehandsofamilitaryclassortheirchiefs.Similarly,thepreservationofinternalorder,theadministrationofjustice,

the construction and care of public works, and, notably, the practice ofreligion,alltendtopasstospecialclasses.Anditistheirnaturetomagnifytheirfunctionandextendtheirpower.But the greatest cause of inequality is the natural monopoly given by

possessionofland.Theinitialunderstandingofpeoplealwaysseemstobethatlandiscommonproperty.Thisisrecognizedatfirstbysimplemethods,such as cultivating land in common or dividing it annually. Theseapproachesareonlycompatiblewithlowstagesofdevelopment.


The idea of property arises naturally regarding things of humanproduction. This idea is easily transferred to land. When population issparse,ownershipoflandmerelyensuresthattheduerewardoflaborgoesto the onewho uses and improves it.As population becomes dense, rentappears.Thisinstitutionultimatelyoperatestostriptheproducerofwagesearned.War and conquest tend to concentrate political power and lead to the

institutionofslavery.Theyalsonaturallyresultintheappropriationofland.A dominant class, who concentrate power in their own hands, will soonconcentrateownershipofland.Theytakelargeportionsofconqueredland,whiletheformerinhabitantsareforcedtofarmitastenantsorserfs.Somepublicdomainorcommonlandsremainforawhileinthenaturalcourseofdevelopment.Butthesearereadilyacquiredbythepowerful,asweseebymodernexamples.Onceinequality isestablished,ownershipof landtendstoconcentrateasdevelopmentgoeson.Wecannowexplainallthephenomenaofpetrifactionandretrogression

from the fact that inequality of wealth and power develops as socialdevelopment occurs. This finally counteracts the force by whichimprovements aremadeand society advances. Iwill simply set forth thisgeneralfacthere,becausetheparticularsequenceofeventswillvaryunderdifferentconditions.Thesetwoprinciples—associationandequality—canbeseenatworkin

the rise and spread, and then the decline and fall, of theRomanEmpire.Romearosefromtheassociationof independent farmersandfreecitizensof Italy. It gained fresh strength from conquests, which brought hostilenations into common relations. Yet the tendency to inequality hinderedprogress from the start, and it only increased with conquest. Inequalitydriedup the strengthanddestroyed thevigorof theRomanworld.Romerotted, declined, and fell. Long beforeVandal orGoth broke through thelegions,Romewasdeadattheheart.Great estates—“latifundia”—ruined Italy. The barbarism that

overwhelmed Rome came not fromwithout, but fromwithin. It was theinevitable product of a system that carved the provinces into estates forsenatorial families. Serfs and slaves replaced independent farmers.Government became dictatorship, patriotism became subservience. Viceswere openly displayed, literature sank, learning was forgotten. Fertile


districtsbecamewastelands,evenwithouttheravagesofwar.Everywhereinequalityproduceddecay:political,mental,moral,andmaterial.Moderncivilizationowesitssuperioritytothegrowthofequalityalong

withassociation.Twogreatcausescontributedtothis.First,powerwassplitinto numerous smaller centers. The second factor was the influence ofChristianity.Europe saw the association of peoples who had acquired, through

separation, distinctive social characteristics. This smaller organizationpreventedconcentrationofpowerandwealthinonecenter.Pettychiefsandfeudal lords grasped local sovereignty and held each other in check.Teutonic ideas of equalitywere a transforming influence, as theyworkedtheir way through the fabric of disconnected societies. Although Europewassplit intocountlessseparatedfragments, theideaofcloserassociationexisted in the recollections of a universal empire and in the claims of auniversalchurch.ItistrueChristianitywasdistortedbypercolatingthrougha rotting civilization.Yet the essential idea of equalitywas neverwhollydestroyed.Inaddition,twothingsofutmostimportancetothebuddingcivilization

occurred—thefirstwastheestablishmentofthepapacy;thesecondwasthecelibacy of the clergy. The papacy prevented spiritual power fromconcentratinginthesamelinesastemporalpower.Celibacypreventedtheestablishment of a priestly caste, during a time when power tended tohereditaryform.Inspiteofeverything, theChurchstillpromotedassociationandwasa

witness for the natural human equality. In common hands, the Churchplacedasignbeforewhichtheproudestknelt.Bishopsbecamepeersofthehighest nobles. Church edicts ran across political boundaries. The Popearbitratedbetweennationsandwashonoredbykings.The rise of European civilization is too vast a subject to give proper

perspectiveinafewparagraphs.Butallitsmainfeatures,andallitsdetails,illustrateonetruth:Progressoccurstotheextentthatsocietytendstowardcloser association and greater equality.Civilization is cooperation.Unionandlibertyareitsfactors.Moderncivilizationhasgonesomuchhigherthananybeforeduetothe

greatextensionofassociation—not just in largeranddensercommunities,butintheincreaseof


commerce,andthenumerousexchangesknittingeachcommunitytogether,and linking them with others far apart; and also in the growth ofinternational and municipal law, advances in security of property andperson, strides in individual liberty, and movement towards democraticgovernment.Inshort,ourcivilizationhasgonefartherinrecognizingequalrightstolife,liberty,andthepursuitofhappiness.Thespiritoffatalismpervadingcurrentliteraturefindsitfashionableto

speak of war and slavery as means of human progress. But war is theopposite of association. It can aid progress onlywhen it prevents furtherwar,orbreaksdownantisocialbarriers.As for slavery, I cannot see how it could ever have aided progress.

Freedomisthesynonymofequality,thestimulusandconditionofprogress.Slaveryneverdid, andnevercould, aid improvement.Slaverynecessarilyinvolves a waste of human power. This is true whether the communityconsistsofasinglemasterandasingleslave,orthousandsofmastersandmillions of slaves. Slave labor is less productive than free labor.Masterswastepowerholdingandwatching their slaves.Fromfirst to last, slaveryhashamperedandpreventedprogress—ashaseverydenialofequality.Slaverywas universal in the classicalworld. This is undoubtedlywhy

mentalactivitytherepolishedliteratureandrefinedart,butneverhitonanyof the great discoveries and inventions of modem civilization. Robbingworkers of the fruits of their labor stifles the spirit of invention. Itdiscourages the use of improvements, evenwhenmade.No slaveholdingpeople were ever an inventive people. Their upper classes may becomeluxuriousandpolished,butneverinventive.Thelawofhumanprogress,whatisitbutmorallaw?Politicaleconomy

andsocialsciencecanteachonlythesamesimpletruthsthatunderlieeveryreligion that has striven to formulate the spiritual yearnings of man.Civilizations advance as their social arrangements promote justice. Theyadvance as they acknowledge equality of human rights. They advance asthey insure liberty to each person, bounded only by the equal liberty ofeveryotherperson.Astheyfailinthese,advancingcivilizationscometoahaltandrecede.


Chapter42HowModernCivilizationMayDecline

OurCONCLUSIONS about the law of human progress agree completelywith our previous conclusions about the laws of political economy. Theyalsoshowthatmakinglandcommonproperty—bytaxingitsvalue—wouldgiveanenormousboost tocivilization.Furthermore,unlesswedoso,wewillregress.Every previous civilization has been destroyed by the unequal

distributionofwealthandpower.Ihavetracedthistendencytoitscause—andprovidedasimplewaytoremoveit.Iwillnowshowhow,ifthisisnotdone, modern civilization will decline to barbarism, as all previouscivilizationshave.History clearly shows these periods of decline, though they were not

recognizedattheirstart.WhenthefirstEmperorwaschangingRomefrombricktomarbleandextendingthefrontier,whowouldhavesaidRomewasenteringitsdecline?Yetsuchwasthecase.Our civilization appears to be advancing faster than ever. Yet anyone

wholookswillseethesamecausethatdoomedRomeisoperatingtoday—with increasing force.Themore advanced the community, thegreater theintensity.Wagesand interest fall,while rents rise.The richget richer, thepoorgrowhelpless,themiddleclassissweptaway.It is worthwhile to explain the process, sincemany people cannot see

howprogresscouldturnintoretreat.Theythinksuchathingisimpossible.Manyscoffat any implication thatwearenotprogressing inall respects.The conditions of social progress, we have found, are association andequality. The general tendency of modern development has indeed beentoward political and legal equality. We have abolished slavery, revokedhereditaryprivileges,institutedrepresentativegovernment,andrecognizedreligiousfreedom.Highandlow,weakandstronghavemoreequalsecurityin their person and property. There is freedom of movement andoccupation,ofspeechandofthepress.The initial effect of political equality is a more equal distribution of

wealth and power. While population is sparse, unequal distribution ofwealth is due mainly to inequality of personal rights. The inequality


resulting from private ownership of land shows itself only as materialprogressadvances.Political equalitydoesnot, in itself,prevent inequalityarising from private ownership of land. Furthermore, political equality—whencoexistingwithanincreasingtendencytowardunequaldistributionofwealth—willultimatelybegeteithertyrannyoranarchy.A representative government may become a dictatorship without

formallychanging itsconstitutionorabandoningpopularelections.Formsare nothing when substance has gone. And the forms of populargovernment are those fromwhich the substanceof freedommaygomosteasily.For theredespotismadvances in thenameof thepeople.Once thatsinglesourceofpowerissecured,everythingissecured.Anaristocracyofwealthwillneverstrugglewhileitcanbribeatyrant.Whenthedisparityofcondition increases,democraticelectionsmakeit

easy to seize the source of power. Many feel no connection with theconductofgovernment.Embitteredbypoverty,theyarereadytoselltheirvotestothehighestbidderorfollowthemostblatantdemagogue.Oneclasshas become too rich to be stripped of its luxuries, nomatter how publicaffairs are administered.Another class is so poor that promises of a fewdollarswilloutweighabstractconsiderationsonelectionday.Afewrollinwealth,while themany seethewith discontent at things they don’t knowhowtoremedy.Where there is anythingclose toequaldistributionofwealth, themore

democratic government is, the better it will be. Where there is grossinequality in the distribution of wealth, the opposite is true. The moredemocraticgovernmentis,theworseitwillbe.Togivethevotetopeoplewhomustbegorstealorstarve,towhomthechancetoworkisafavor—thisistoinvokedestruction.Toputpoliticalpowerinhandsembitteredanddegradedbypovertyistowreakhavoc.Hereditary succession (or even selection by lot) may, by accident,

occasionallyplacethewiseandjustinpower.Butinacorruptdemocracy,thetendencyisalwaystogivepowertotheworst.Honestyandpatriotismare a handicap, while dishonesty brings success. The best sink to thebottom,theworstfloattothetop.Thevileareoustedonlybytheviler.Nationalcharactergraduallyabsorbsthequalitiesthatwinpower.Inthe

long panorama of history,we see over and over that this transforms freepeople into slaves.Acorruptdemocraticgovernmentmust finallycorrupt


thepeople.Andwhenthepeoplebecomecorrupt,thereisnoresurrection.Life isgone,only thecarcass remains. It is leftbut for theplowsharesoffatetoburyitoutofsight.Unequaldistributionofwealthinevitablytransformspopulargovernment

intodespotism.Thisisnotathingofthefarfuture.IthasalreadybegunintheUnitedStates,and isproceedingrapidlybeforeourveryeyes.Menofthehighest ability andcharacter avoidpolitics.The techniqueofhandlersand hacks counts more than the reputations of statesmen. The power ofmoney is increasing,while voting is done recklessly. Political differencesarenolongerdifferencesofprinciple.Politicalpartiesarepassingintothecontrolofwhatmightbeconsideredoligarchiesanddictatorships.Modern growth is typified by the great city.Herewe find the greatest

wealth and the deepest poverty. And here popular government has mostclearlybrokendown.InallthegreatAmericancitiesoftoday,arulingclassisdefinedasclearlyasinthemostaristocraticcountries.Itsmembershavewholewardsintheirpockets,selectslatesfornominatingconventions,anddistributeoffices as theybargain together. “They toil not, neither do theyspin,”*yettheywearthefinestofraimentandspendmoneylavishly.Theyare men of power, whose favor the ambitious must court, and whosevengeancetheymustavoid.Who are these men? The wise, the learned, the good? No. They are

gamblers, fighters, or worse.Menwho havemade a trade of controllingvotes, andbuyingand sellingoffices and legislation.Through thesemen,richcorporationsandpowerful financial interestspack theSenateand thecourtswiththeirlackeys.Inmanyplacestoday,aWashington,aFranklin,oraJeffersoncouldnotevengetintothestatelegislature.

*Matthew6:28Theirverycharacterwouldbeaninsurmountabledisqualification.Intheoryweareintensedemocrats.Yetgrowingamongusisaclasswho

haveallthepowerofthearistocracy—withoutanyoftheirvirtues.Afewmencontrol thousandsofmilesof railroad,millionsofacresof land, andthelivelihoodofthousands.Theynamethegovernorsastheynameclerks,andchoosesenatorsastheychooseattorneys.TheirwillwithlegislaturesisassupremeasaFrenchking’s.


The development of industry and commerce—acting in a socialorganization where land is privately owned— threatens to force everyworker to seek a master. (Just as the collapse of the Roman Empirecompelledevery freeman to seeka feudal lord.) Industry takesona formwhere one is master, while many serve. If a person steals enough, thepunishmentwillonlyamounttolosingpartofthetheft.Andifathiefstealsafortune,colleagueswillgreettheembezzlerlikeaVikingreturningfrompillage.ThemostominouspoliticalsignintheUnitedStatestodayisthegrowing

complacencywith corruption.Many believe there is no honest person inpublicoffice;orworse,thatiftherewereone,heorshewouldbeafoolnottoseize theopportunities.Thepeople themselvesarebecomingcorrupted.Ourdemocraticgovernmentisrunningthecourseitmustinevitablyfollowunderconditionsproducingunequaldistributionofwealth.Where this will lead is clear. Contempt for law develops, and reform

becomeshopeless.Volcanicforcesfesteringamongthemasseswillexplodewhensomeaccidentgivesthemvent.Wherewillthenewbarbarianscomefrom?Gothroughthesqualidghettosofgreatcitiesandyoucanalreadyseethemgathering.*Hinting that our civilization may be in decline seems like wild

pessimism.Afundamentalbeliefinprogressremains.Butthiswillalwaysbe the case when advance gradually passes into retrogression. In socialdevelopment, as ineverythingelse,motion tends tocontinue ina straightline.Where there has been previous advance, it is extremely difficult torecognizedecline—evenafterithasbegun.Civilizations do not decline along the same paths they came up.

Government will not take us back from democracy to monarchy and tofeudalism. Itwill take us to dictatorship or anarchy.Religionwill not gobacktothefaithsofourforefathers,butintonewformsofsuperstition.The regression of civilization, after a period of advance, may be so

gradualthatitattractsnoattentionatthetime.Indeed,manymistakesuchadecline for advancement. As the arts decline, the change may beaccompanied by—or rather caused by—a change of taste. Artists whoquicklyadoptedthenewstylesareregarded—intheirday—assuperior.Asartandliteraturebecomemorelifeless,foolish,andstilted—conformingtochanging taste—thenew fashionwould regard its increasingweakness as


increasingstrengthandbeauty.Reallygoodwriterswouldnotfindreaders;theywouldberegardedasdull.

*TheBritish historianThomasMacaulay (18001859) predicted that after all the decentland had been claimed in the United States, poverty would reach the levels it did inEngland. The nation would then destroy itself through its own democratic institutions.“TheHuns andVandalswho ravaged theRomanempire came fromwithout; yourHunsandVandalswillhavebeenengenderedwithinyourowncountrybyyourowninstitutions[because]... There is nothing to stop you. Your constitution is all sail and no anchor.”(LettertoHenryS.Randall,biographerofThomasJefferson.)The prevailing taste becomes that of a less cultured class who regard

whattheylikeasthebestofitskind.Whethercurrenttrendsintasteandopinionindicateregressionisnotthe

point. Many other things beyond dispute indicate our civilization hasreached a critical point— unless a new start is made toward equality.Inequality is the necessary result of material progress wherever land ismonopolized.Inequalitycannotgomuchfurtherwithoutcarryingusintoadownwardspiralsoeasytostartandsohardtostop.Industrialdepressions,whichcauseasmuchwasteandsufferingaswar

orfamine,areliketwingesandshocksprecedingparalysis.Thestruggletosurviveisincreasinginintensity.Wemuststraineverynervetokeepfrombeingtroddenunderfootinthescrambleforwealth.Thissapstheenergytogainandmaintainimprovements.Diseasesfromrelatedcausesproliferate.In every civilized country, poverty, crime, insanity, and suicide areincreasing.Whenthetideturns,itdoesnothappenallatonce.Whenthesunpasses

noon,theheatofthedaycontinuestoincrease.Onecantellonlybythewaytheshadowsfall.Butassureasthetidemustturn,assureasthesettingsunbrings darkness, so sure is it that our civilization has begun to wane.Inventionmarcheson,ourcitiesexpand.Yetcivilizationhasbeguntowanewhen, in proportion to population, we have more prisons, more welfare,moremental illness.Societydoesnotdiefromtoptobottom;itdiesfrombottomtotop.But the decline of civilization looms far more palpable than any

statistics. There is a vague but general disappointment, an increasedbitterness,awidespread


feeling of unrest and brooding revolution. If this were accompanied bysomedefiniteideaofhowtoobtainrelief,itmightbeahopefulsign.Butitis not. Though we have been searching a long, long time, our power ofconnectingcausetoeffectseemsnotawhitimproved.Avastchangeinreligiousideasissweepingtheworldthatmayhavea

momentouseffect,whichonlythefuturecantell.Thisisnotachangeintheformofreligion—itisthenegationanddestructionoftheideasfromwhichreligion springs. Christianity is not simply shedding superstitions; it isdyingattheroot.Andnothingarisestotakeitsplace.The fundamental ideas of an intelligent creator and an afterlife are

quickly weakening in the general mind. Whether or not this may be anadvanceinitselfisnotthepoint.Theimportantpartreligionhasplayedinhistoryshowsthesignificanceofthechangenowgoingon.Unlesshumannature has suddenly changed its deepest characteristics, as shown by theuniversalhistoryofthehumanrace,themightiestactionsandreactionsarethusbeingprepared.Previously, such stages of thought have always marked periods of

transition. To a lesser degree, a similar state preceded the FrenchRevolution. But the closest parallel to the wreck of religious ideas nowgoing on is when ancient civilization began to pass from splendor todecline.Whatchangemaycome,nomortalcantell.Butthatsomegreatchange

mustcome,thoughtfulpeoplearebeginningtofeel.Thecivilizedworldistrembling on the verge of a great movement. Either it must be a leapupward, toadvancesyetundreamedof—oritwillbeaplungedownward,carryingusbacktowardbarbarism.


Chapter43TheCentralTruth

Oureconomicinquiryledustoacertaintruth.Thesametruthexplainstherise and fall of civilizations. Furthermore, it agrees with our deepseatedperceptionsofrelationandsequence,whichwecallmoralperceptions.The evils arising from the unequal and unjust distribution of wealth

becomemoreandmoreapparentasmoderncivilizationgoeson.Theyarenotsignsofprogress,buttendenciesthatwillbringprogresstoahalt.Theywillnotcure themselves.Unless theircause is removed, theywillexpanduntil they sweep us back into barbarism—the path every previouscivilizationhastaken.Butthistruthalsoshowsthattheseevilsarenotimposedbynaturallaws.

They arise solely from social maladjustments that ignore natural laws.Poverty,withalltheevilsthatflowfromit,springsfromadenialofjustice.Byallowinga few tomonopolizeopportunitiesnature freelyoffers toall,wehaveignoredthefundamentallawofjustice.Bysweepingawaythisinjustice—andassertingtherightsofallpeopleto

natural opportunities—we shall conform ourselves to this law. We shallremovethegreatcauseofunnaturalinequalityinthedistributionofwealthandpower.Weshallabolishpoverty; tame the ruthlesspassionsofgreed;and dry up the springs of vice and misery. We shall light the lamp ofknowledgeindarkplaces;givenewvigortoinventionandafreshimpulsetodiscovery;substitutepoliticalstrengthforpoliticalweakness;andmaketyrannyandanarchyimpossible.ThereformIhaveproposedwillmakeallotherreformseasier.Itagrees

with all that is desirable—politically, socially, or morally. It is simplycarrying out, in letter and spirit, the selfevident truths set forth in theDeclarationofIndependence:thatallpeoplearecreatedequal;thattheyareendowedbytheirCreatorwithcertainunalienablerights;thatamongthesearelife,liberty,andthepursuitofhappiness.These rights are denied when the equal right to land is denied—for

people can only live by using land. Equal political rights will notcompensate fordenyingequal rights to thegiftsofnature.Without equal


rights to land, political liberty is merely the right to compete foremploymentatstarvationwages.We honor liberty in name and form.We set up statues and sound her

praises.Butwehavenot fully trustedher.Andaswegrow,herdemandsgrow.Shewillhavenohalfservice.Forlibertymeansjustice,andjusticeisthenaturallaw.Some think liberty’s mission is accomplished when she has abolished

hereditary privileges and given the vote. They think she has no furtherrelationtotheeverydayaffairsoflife.Theyhavenotseenherrealgrandeur.Tothem,herpoetsseemdreamers,hermartyrsbutfools.Yetitisnotforanabstractionthatpeoplehavetoiledanddied.Ineveryage,thewitnessesoflibertyhavestoodforth.We speak as if libertywere one thing, and virtue,wealth, knowledge,

invention, and independencewere oth ers. But liberty is the source, themother,thenecessarycondition,ofallthese.Sheistovirtuewhatlightistocolor; towealthwhatsunshine is tograin; toknowledgewhateyesare tosight.In the history of every nation we may read the same truth. It is the

universallaw,thelessonofthecenturies.Ourprimarysocialorganizationisa denial of justice.Allowing one person to own the land—onwhich andfrom which others must live—makes them slaves. The degree, orproportion,ofslaveryincreasesasmaterialprogressgoeson.Thissubtlealchemyisextractingthefruitsoftheirlaborfromthemasses

ineverycivilizedcountry,inwaystheydonotrealize.Itinstitutesaharderandmorehopeless slavery inplaceof theone thathasbeendestroyed. Itbrings tyranny out of political freedom, and must soon transformdemocratic institutions into anarchy. This is what turns the blessings ofmaterial progress into a curse, what crowds human beings into squalidtenement houses, and fills the prisons and brothels. This iswhat plaguespeoplewithwantandconsumesthemwithgreed.Civilizationsobasedcannotcontinue.Theeternal lawsof theuniverse

forbidit.Theruinsofdeadempiressotestify.Justiceherselfdemandsthatwerightthiswrong.It is blasphemy to attribute the suffering andbrutality that comes from

povertytotheinscrutabledecreesofProvidence.ItisnottheAlmighty,butwe who are responsible for the vice and misery that fester amid our


civilization.TheCreatorshowersuswithgifts—morethanenoughforall.Butlikeswinescramblingforfood,wetreadtheminthemirewhileweteareachotherapart.Suppose atGod’s command, for every blade of grass that now grows,

twoshouldspringup.Andcropsincreaseahundredfold.Wouldpovertybereduced? No—any benefit that would accrue would be temporary. Themiraculousnewpowerscouldbeutilizedonlythroughland.Andwhilelandisprivateproperty,theclassesthatcurrentlymonopolizethebountyoftheCreatorwouldmonopolizeallthenewbounty.Landowners alone would benefit. Rents would increase, but wages

wouldstilltendtothestarvationpoint.This is not merely a deduction of political economy— it is a fact of

experience.Wehaveseenitwithourowneyes,inourowntimes.Theeffectofinventionandimprovementontheproductionofwealthhas

beenpreciselythesameasanincreaseinthefertilityofnature.Whathasbeentheresult?Simplythatlandownerstookallthegain.The

wonderfuldiscoveriesandinventionsofourcenturyhaveneitherincreasedwagesnorlightenedtoil.Theeffecthassimplybeentomakethefewricher—andthemanymorehelpless!CanthegiftsoftheCreatorbemisappropriatedwithimpunity?Canlabor

berobbedofitsearnings,whilegreedrollsinwealth?Isitrightthatmanyshouldwant,whilea fewareglutted?Turn tohistory!Oneverypageweread that such wrongs never go unpunished. The nemesis that followsinjusticeneverfaltersnorsleeps.Lookaroundtoday.Canthiscontinue?Thepillarsofstatetremble,and

thefoundationsofsocietyshudderfromforcespentupbeneath.Greatnewpowers,bornofprogress,haveenteredtheworld.Theywillcompelustoahigherplane,orelsetheywilloverwhelmus.The world is pulsing with unrest. There is an irreconcilable conflict

betweendemocratic ideas and thearistocraticorganizationof society.Wecannot permit people to vote, then force them to beg.We cannot go oneducatingthem,thenrefusingthemtherighttoearnaliving.Wecannotgoon chattering about inalienable human rights, then deny the inalienablerighttothebountyoftheCreator.Whilethereisstilltime,wemayturntojustice.Ifwedo,thedangersthat

threaten us will disappear. With want destroyed and greed transformed,


equalitywill taketheplaceofjealousyandfear.Thinkofthepowersnowwasted,thefieldsofknowledgeyettobeexplored,thepossibilitiesthatthewondrous inventions of this century only hint at. Who can presume theheightstowhichourcivilizationmaysoar?


Chapter44Conclusion:TheIndividualLife

My TASK IS DONE. Yet behind the problems of social life lies theproblemofindividuallife.Thisthoughtbroughtmecheerwhilewritingthisbook,anditmaybeofcheertothosewho,intheirheartofhearts,takeupthestruggle.ThetruthIhavetriedtoshowwillnotfindeasyacceptance.Ifthatwere

possible,itwouldhavebeenacceptedlongago,andneverobscured.Butitwill find friendswhowill suffer and toil for it; and ifneedbe,die for it.Thisisthepoweroftruth.Ultimately,itwillprevail.Butinourowntimesorevenwhenanymemoryofusremains,whoshallsay?Want and misery, ignorance and brutality are caused by unjust social

institutions.Thosewhotrytorightthemfindbitternessanddisappointment.Soithasbeeninthepast;soisitnow.Themostbitterthoughtisthattheeffort is hopeless, the sacrifice futile.This fear sometimes comes to eventhebestandbravest.Howfewofthosewhosowtheseedwillseeitgrow.Thestandardof truthandjusticehasbeenraisedmanytimes.Overand

over, it has been trampleddown, often in blood. If the forces opposed totruthwereweak,whywoulderrorsolongprevail?But for thosewhosee the truthandwould follow it, success isnot the

onlything.Liesandinjusticeoftenprovidethat!Mustnottruthandjusticehavesomethingtogivethatistheirown,byproperright?WhenIsetoutonthisinquiry,Ihadnotheorytosupport,noconclusions

toprove.Simplyseeingthesqualorandmiseryofagreatcityappalledandtormentedmesothatitwouldnotletmerest.Iconstantlywonderedwhatcauseditandhowitcouldbecured.Outofthis,somethingcametomethatIdidnotexpecttofind;afaiththatwasdeadhasbeenrevived.Ifweanalyze the ideas thathavedestroyed thehopeofanafterlife,we

shall not find their source in physical science. Rather, they stem fromcertainteachingsofpoliticalandsocialsciencethathavepermeatedthoughtin all directions. These have their root in three doctrines: First, thatpopulationislargerthanwecanprovidefor.Second,thatpoverty,vice,andmiseryaretheresultofnaturallaws—andareactuallythemeansbywhich


civilization advances. Third, that human progress occurs through slowgeneticchanges.Thesedoctrines,whichhavegenerallybeenacceptedastruth,reducethe

individual to insignificance. They destroy the idea that there can be anyregardforindividualexistenceintheorderingoftheuniverse.Orthattherecanbeanyrecognitionofwhatwewouldcallmoralqualities.Itisdifficulttoreconciletheconceptofhumanimmortalitywiththeidea

that nature constantly wastes people by bringing them into being wherethere is no room for them. It is impossible to reconcile the idea of anintelligent and beneficent Creator with the belief that wretchedness anddegradation, which are the lot of such a large proportion of humankind,result fromdivinedecrees.Finally, the idea that thehuman species is theresult of slow modifications perpetuated by heredity irresistibly suggeststheideathattheobjectofhumanexistenceisthelifeofthespecies,nottheindividual.Our investigation has shown that these doctrines are false. Population

does not tend to outrun subsistence. Poverty and human suffering do notspringfromnaturallaws;theycomefromtheignoranceandselfishnessofpeople. Human progress does not come from changes in the nature ofmankind. On the contrary, human nature, generally speaking, has alwaysbeenthesame.Political economy has been called the dismal science. As currently

taught, it is indeed hopeless and despairing. Yet, in its proper symmetry,politicaleconomyisradiantwithhope.When understood correctly, the laws governing the production and

distribution of wealth demonstrate that poverty and injustice are notinevitable.Onthecontrary,asocialstateispossibleinwhichpovertywouldbe unknown. Then, the higher qualities of human nature would have anopportunityforfulldevelopment.Socialdevelopmentisnotgovernedbydivineprovidencenormerciless

fate,butbynaturallaw.Humanwillisthegreatdeterminingfactor.Intheaggregate, thehumancondition iswhatwemakeof it.Economic lawandmoral law are essentially the same. The intellect grasps this truth aftertoilsomeeffort—butthemoralsensereachesitquicklybyintuition.Scienceshowsus theuniversalityof law.Thesamelawoperates in the

smallest divisions and in the immeasurable distances of space. An


astronomerfollowsamovingbodyuntilitdisappearsfromtherangeofthetelescope.Butthisismerelythevisiblepartofitsorbit.Beyondsight,thelaw still holds. Centuries later, the astronomer’s calculations are provencorrect.Ifwetracethelawsthatgovernlife inhumansociety,wefindtheyare

the same in the largest community as in the smallest.We find that whatseem to be, at first sight, divergences and exceptions are merelymanifestationsofthesameprinciples.Andwefindthateverywherewecantraceit,social lawrunsintoandconformswithmoral law.Inthelifeofacommunity,justiceinfalliblybringsitsreward,injusticeitspunishment.Butwecannotseethisinindividuallife.Humanprogressisnottheimprovementofhumannature.Theadvances

ofcivilizationarenotaccumulatedintheconstitutionofindividuals,butintheconstitutionofsociety.Theyarenotfixedandpermanent,butmaybelostatanytime.Whatthenisthemeaningoflifeinevitablyboundedbydeath?Tome,it

seems intelligible only as an avenue to another life. Its facts can beexplainedonlybyatheorythatmustbeexpressedinmythandsymbol.ThePrinceofLightstillbattlesthePowersofDarkness.Toanyonewhowillhearit, theclarionsofbattlecall.Strongsoulsand

high endeavor, the world needs them now. Though truth and right seemoftenoverwhelmed,wemaynot see it all. Shallwe say thatwhat passesfromoursightpassesintooblivion?Evenanimalshavesenseswedonot.Far,farbeyondourgrasp,eternallawsmustholdtheirsway.


AfterwordWhoWasHenryGeorge?

ByAgnesGeorgedeMille

Ahundred years ago a young unknown printer in San Franciscowrote abook he called Progress and Poverty.He wrote after his daily workinghours,intheonlyleisureopentohimforwriting.Hehadnorealtraininginpoliticaleconomy.IndeedhehadstoppedschoolingintheseventhgradeinhisnativePhiladelphia,andshippedbeforethemastasacabinboy,makinga complete voyage around the world. Three years later, he was halfwaythrough a second voyage as able seaman when he left the ship in SanFrancisco and went to work as a journeyman printer. After that he tookwhatever honest job came to hand. All he knew of economics were thebasicrulesofAdamSmith,DavidRicardo,andothereconomists,and thenewphilosophiesofHerbertSpencerandJohnStuartMill,muchofwhichhegleanedfromreadinginpubliclibrariesandfromhisownpainstakinglyamassedlibrary.MarxwasyettobetranslatedintoEnglish.George was endowed for his job. He was curious and he was alertly

attentivetoallthatwentonaroundhim.Hehadthatrarestofallattributesin the scholar and historian—that gift without which all education isuseless. He had mother wit. He read what he needed to read, and heunderstoodwhatheread.Andhewasfortunate;he livedandworkedinarapidlydevelopingsociety.Georgehadtheuniqueopportunityofstudyingthe formation of a civilization—the change of an encampment into athrivingmetropolis.Hesawacityoftentsandmudchangeintoafinetownofpavedstreetsanddecenthousing,with tramwaysandbuses.Andashesawthebeginningofwealth,henotedthefirstappearanceofpauperism.Hesawdegradationformingashesawtheadventofleisureandaffluence,andhefeltcompelledtodiscoverwhytheyaroseconcurrently.Theresultofhisinquiry,ProgressandPoverty,iswrittensimply,butso

beautifully that it has been compared to the very greatest works of theEnglish language.ButGeorgewas totallyunknown,andsonoonewouldprinthisbook.Heandhisfriends,alsoprinters,setthetypethemselvesandranoffanauthor’seditionwhicheventuallyfounditswayintothehandsof


a New York publisher, D. Appleton & Co. An English edition soonfollowed which aroused enormous interest. Alfred Russel Wallace, theEnglish scientist and writer, pronounced it “the most remarkable andimportantbookofthepresentcentury.”ItwasnotlongbeforeGeorgewasknowninternationally.Duringhislifetime,hebecamethethirdmostfamousmanintheUnited

States, only surpassed in public acclaim by Thomas Edison and MarkTwain.Georgewas translated intoalmostevery language thatknewprint,andsomeofthegreatest,mostinfluentialthinkersofhistimepaidtribute.LeoTolstoy’sappreciationstressedthe logicofGeorge’sexposition:“Thechief weapon against the teaching of Henry George was that which isalwaysusedagainstirrefutableandselfevidenttruths.Thismethod,whichisstillbeingappliedinrelationtoGeorge,wasthatofhushingup....PeopledonotarguewiththeteachingofGeorge,theysimplydonotknowit.”JohnDewey fervently stressed the originality of George’s work, stating that,“Henry George is one of a small number of definitely original socialphilosophersthattheworldhasproduced,”and“Itwouldrequirelessthanthefingersofthetwohandstoenumeratethosewho,fromPlatodown,rankwithHenryGeorgeamong theworld’s socialphilosophers.”AndBernardShaw,inalettertomymother,AnnaGeorge,yearslaterwrote,“Yourfatherfound me a literary dilettante and militant rationalist in religion, and abarrenrascalatthat.Byturningmymindtoeconomicshemadeamanofme....”Inevitablyhewasreviledaswellas idolized.Themenwhobelievedin

what he advocated called themselves disciples, and they were in factnothing less: working to the death, proclaiming, advocating, haranguing,and proselytizing the idea. But itwas not implemented by blood, aswascommunism, and so was not forced on people’s attention. Shortly afterGeorge’sdeath,itdroppedoutofthepoliticalfield.Onceabadgeofhonor,thetitle,“SingleTaxer,”cameintogeneraldisuse.ExceptinAustraliaandNew Zealand, Taiwan and Hong Kong and scattered cities around theworld, his plan of social action has been neglectedwhile those ofMarx,Keynes,GalbraithandFriedmanhavewongreatattention,andMarx’shasbeengivenpartialimplementation,foratime,atleast,inlargeareasoftheglobe.


Butnothingthathasbeentriedsatisfies.We,thepeople,arelockedinadeathgrappleandnothingourleadersoffer,orarewillingtooffer,mitigatesourtroubles.Georgesaid,“Thepeoplemustthinkbecausethepeoplealonecanact.”Wehavereached thedeplorablecircumstancewhere in largemeasurea

verypowerfulfewareinpossessionoftheearth’sresources,thelandanditsrichesandallthefranchisesandotherprivilegesthatyieldareturn.Thesepositionsaremaintainedvirtuallywithouttaxation;theyareimmunetothedemandsmadeonothers.Theverypoor,whohavenothing,aretheobjectof compulsory charity. And the rest—the workers, the middleclass, thebackboneofthecountry—aremadetosupportthelotbytheirlabor.We are taxed at every point of our lives, on everything we earn, on

everythingwesave,onmuchthatweinherit,onmuchthatwebuyateverystageofthemanufactureandonthefinalpurchase.Thetaxesarepunishing,crippling,demoralizing.Alsotheyare,toagreatextent,unnecessary.But our system, in which state and federal taxes are interlocked, is

deeplyentrenchedandhard tocorrect.Moreover, it survivesbecause it isbasedonbewilderment;itismaintainedinamannersobizarreandintricatethat it is impossible for the ordinary citizen to know what he owes hisgovernmentexceptwithhighlypaidhelp.Wesupportalargesectionofourgovernment (the InternalRevenueService) to prove thatwe are breakingourownlaws.Andwesupportalargeprofession(taxlawyers)toprotectusfrom our own employees. College courses are given to explain the taxformswhichwouldotherwisebequiteunintelligible.Allthisisgallinganddestructive,butitisstill,inameasure,superficial.

The great sinister fact, the one that we must live with, is that we areyieldingupsovereignty.Thenationisnolongercomprisedof thethirteenoriginalstates,norofthethirtysevenyoungersisterstates,butoftherealpowers: the cartels, the corporations. Owning the bulk of our productiveresources,theyaretheissueofthatconcentrationofownershipthatGeorgesawevolving,andwarnedagainst.ThesemultinationalsarenotAmericananymore.Transcendingnations,

theyservenottheircountry’sinterests,buttheirown.Theymanipulateourtax policies to help themselves. They determine our statecraft. They areautonomous. They do not need to coinmoney or raise armies. They useours.


And in opposition rise up the great labor unions. In themeantime, thebureaucracy, both federal and local, supported by the deadly opposingfactions,legislatethemselvesmountingpowerneveroriginallyintendedforourgovernmentandexertaubiquitousinfluencewhichcanbe,andoftenis,corrupt.Idonotwishtobemisunderstoodasfallingintothetrapofthesocialists

andcommunistswhocondemnallprivatelyownedbusiness, all factories,all machinery and organizations for producing wealth. There is nothingwrong with private corporations owning themeans of producing wealth.Georgistsbelieve inprivateenterprise,and in itsvirtuesand incentives toproduce at maximum efficiency. It is the insidious linking together ofspecialprivilege,theunjustoutrightprivateownershipofnaturalorpublicresources, monopolies, franchises, that produce unfair domination andautocracy.Themeansofproducingwealthdifferattheroot:someisthievedfrom

the people and some is honestly earned.George differentiated;Marx didnot. The consequences of our failure to discern lie at the heart of ourtrouble.Thisclowncivilizationisours.Wechosethisofourownfreewill,inour

ownfreedemocracy,withallthemeanstolegislateintelligentlyreadilyathand.Wechosethisbecauseitsuitedafewpeopletohaveusdoso.Theycountedonourmentalindolenceandwefreelyandobedientlyconformed.Wechosenottothink.HenryGeorgewasalucidvoice,directandbold,thatpointedoutbasic

truths, that cut through the confusionwhichdeveloped like rot.Each agehas known such diseases and each age has gone down for lack ofunderstanding.It isnotvalidtosaythatourtimesaremorecomplexthanagespastandthereforethesolutionmustbemorecomplex.Theproblemsare, on the whole, the same. The fact that we now have electricity andcomputersdoesnotinanywaycontrovertthefactthatwecansuccumbtotheinjusticesthattoppledRome.To avert such a calamity, to eliminate involuntary poverty and

unemployment, and to enable each individual to attain his maximumpotential,Georgewrotehisextraordinarytreatiseahundredyearsago.Hisideasstand:hewhomakesshouldhave;hewhosavesshouldenjoy,whatthecommunityproducesbelongstothecommunityforcommunaluses;and


God’searth,allofit,istherightofthepeoplewhoinhabittheearth.InthewordsofThomasJefferson,“Theearthbelongsinusufructtotheliving.”This is simple and this is unanswerable.The ramificationsmaynot be

simplebuttheydonotalterthefundamentallogic.There never has been a time in our history when we have needed so

sorely to hear good sense, to learn to define terms exactly, to drawreasonable conclusions. As George said, “The truth that I have tried tomake clearwill not find easy acceptance. If that couldbe, itwouldhavebeen accepted long ago. If that could be, it would never have beenobscured.”Weareonthebrink.ItispossibletohaveanotherDarkAges.Butin

Georgethereisavoiceofhope.AgnesGeorgedeMillewasthegranddaughterofHenryGeorge.FamousinherownrightasachoreographerandthefounderoftheAgnesdeMilleHeritageDanceTheater,shereceivedtheHandelMedallion,NewYork’shighestawardforachievementinthearts.Shewastheauthorofthirteenbooks.ThisessaywaspublishedastheprefacetothecentenaryeditionofProgressandPovertyin1979.


The Robert Schalkenbach Foundation (RSF)was founded in 1925 topromote and develop the ideas ofHenryGeorge and to keep them in thepublicdialogue.Georgeoffered a response to the ideological polarizationbetweencollectivismandindividualism,bypresentingasocialphilosophythatreconcilestheopposingfeaturesofcapitalismandsocialism.

RSFcarriesoutitsmissioninseveralways:1)bypublishingtheworksofHenryGeorgeanddistributingtheworksofrelatedauthors,2)byfundingresearch to extend the ideasofHenryGeorge innewcontexts, and3) byfundingadvocacyprojectsthatapplyhisprinciplestospecificsituations.

RSF encourages those who are familiar with Henry George’s ideas toapproach the foundation through a onepage query letter about potentialprojectsthatmightbeofmutualinterest.Pleasecheckourwebsiteforthemostrecentindicationofthekindsofprojectsthefoundationfunds.

RobertSchalkenbachFoundation90JohnStreet,Suite501NewYorkNY10038Tel:2126836424

Tollfree:8002699555Fax:2126836454www.schalkenbach.orgwww.progressandpoverty.orgwww.povertythinkagain.comwww.whyglobalpoverty.com


BooksbyHenryGeorge

PublishedbytheRobertSchalkenbachFoundation

ProgressandPoverty—AnInquiryIntotheCauseofIndustrialDepressionsandtheIncreaseofWantwiththeIncreaseofWealth...TheRemedyUnabridged,1992(orig.1879),616pp

ProtectionorFreeTrade—AnExaminationoftheTariffQuestion,withEspecialRegardtotheInterestsofLaborUnabridged,1980(orig.1886),335ppAbridged,2008(orig.1930),172pp.

SocialProblems1996(orig.1883),310pp

TheLandQuestion—ViewpointandCounterviewpointontheNeedforLandReform2009(orig.1884),328pp

APerplexedPhilosopher—AnExaminationofHerbertSpencer’sUtterancesontheLandQuestion1988(orig.1892),276pp

TheScienceofPoliticalEconomyUnabridged,1992(orig.1898),545pp.Abridged,2004,284pp.

OtherworksbyHenryGeorgeandrelatedauthorsarealsodistributedbytheFoundationand/orpublishedonitswebsite.Freecatalogueavailableonrequest,andonline.8002699555www.schalkenbach.org


ForFurtherExploration

TuitionfreecoursesontheeconomicsandsocialphilosophyofHenryGeorgeareofferedby:

HenryGeorgeSchoolofSocialScience,121East30thStreet,NewYorkNY10016.2128898020www.henrygeorgeschool.org

HenryGeorgeSchoolofPhiladelphia,413South10thStreet;Philadelphia,PA19147.2159224278www.geocities.com/henrygeorgeschool

HenryGeorgeSchoolofChicago,28EastJackson#1004,ChicagoIL60604.3123629302www.hgchicago.org

HenryGeorgeSchoolofLosAngeles,P.O.Box55,TujungaCA94105.818352[email protected]

HenryGeorgeSchoolofNorthernCalifornia,55NewMontgomeryStreet;SanFrancisco,CA94105.4155434294www.henrygeorgesf.org

Correspondencecourses(Internetorregularmail)basedontheworksofHenryGeorgeareofferedbytheHenryGeorgeInstitute,121East30thStreet,NewYork,NY10016www.henrygeorge.org

AworldwidelistofallGeorgistorganizations,withcontactinformation,isavailablefromtheCouncilofGeorgistOrganizations,P.O.Box57,EvanstonIL

60204www.progress.org/cgo



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