ANSWERS THAT ECONOMISTS HAVE CHOSEN TO IGNORE

Progress and Poverty : An Inquiry into the Cause of Industrial Depressions, and of Increase of Want with Increase of Wealth. The Remedy.

By Henry George, D. Appleton & Co., New York , 1879

Review by E. R. Taylor, The Californian, Vol. 1 February 1880 – No.2

Sydney Smith’s contemptuous question,” Who reads an American book?” has long since been satisfactorily answered in many branches of literature; but in that great field known as political economy we have, up to this time, produced nothing which has made a distinctive mark in the intellectual world. This is not to say that political economy has not been cultivated among us, or that many excellent books have not been written; but they have followed more or less closely European authorities, and been based upon European models, and there have been among them none that have taken rank with those original works that open controversies and lead thought. To say this, however, is to say nothing disparaging to American literature; for since we began to have a literature of our own, political economy has received no substantial change or improvement. Smith, Malthus, and Ricardo are the founders of political economy; and since the beginning of the century, all subsequent writers — though many of them have been men of great breadth and power—have but followed on their lines, though modifying somewhat here and elaborating some what there. And though, on the Continent, the old mercantile theory has been revamped, and Socialism reduced to something like a system, yet the divisions of opinion and schools of thought are essentially what they were when the nineteenth century was in its teens.

But here, if we mistake not, is one of those original works which open fresh discussions and draw new lines. And it is not merely an American book, but a California book. We do not merely mean that it is a book written in California by a Californian, but that it is distinctively and peculiarly Californian; for not only are its illustrations largely drawn from this coast, but the freshness of its views bespeak the study of social problems under the novel and , suggestive circumstances that have been presented in California.

Yet, although this is a California book, it is one which, we think, will attract wide attention ; for not merely are its attacks upon current doctrines too serious to be ignored, but it has in it elements which are likely to compel attention ; and the times are propitious for it. There is among thoughtful men, and especially in England, a growing feeling that there is something wrong with the current political economy, though precisely what has not yet been made clear; and there is in all countries an increasing number of active and more or less educated men who are bitterly restive under the existing social organization. Now, here comes a book which appeals to the first class, not only by pointing out certain fundamental errors which have vitiated economic reasoning, but by building up a theory that has all the charm of novelty, simplicity, and comprehensiveness; and which appeals to the second class by its fire and earnestness, by its thorough sympathy with their feelings and aspirations, and by the clearness and confidence with which it assumes to point out what hurts and what will help them. Numbers of volumes have been written by men of ability upon social grievances, the relations of labor and capital, etc.; but they have all insisted either that the working classes had no wrongs to right, or have prescribed for the amelioration of their condition what the working classes themselves consider as “goody goody” remedies. But here is a work of ability enough to command scientific respect, if not, indeed, to win a place in the front rank, and which is, at the same time, ablaze with the very fire of radicalism. Whether the theories which it lays down are right or wrong, they cannot be treated with contempt. Political economists cannot ignore a book which, even if it be erroneous, presents error in such a form that it is likely to become a new gospel in every radical club, and to find apostles in every knot of dissatisfied workingmen.

For our part, we do not propose in this article to pass judgment. For, while this is a book too coherent and consistent to admit a half-way opinion, it is, on the one hand, too able and plausible to be rashly condemned; on the other, too revolutionary to be rashly indorsed. Nor yet is it an easy matter to give anything like a fair account of a work which covers so wide a scope; discusses so many controverted questions; advances so many novel theories; and which is so compact in style and close in argument. This is emphatically a book which must be read to be understood, and which cannot be read without interest and profit, even to those who most widely differ from its conclusions, for it is throughout suggestive in the extreme.

In the introductory chapter, entitled “The Problem,” the failure of modern progress to eradicate poverty, the recurrence of industrial depressions, and the growing uneasiness with social conditions are vividly set forth, and the inquiry is thus proposed:

“I propose in the following pages to attempt to solve by the methods of political economy the great problem I have outlined. I propose to seek the law which associates poverty with progress, and increases want with advancing wealth; and I believe that in the explanation of this paradox we shall find the explanation of those recurring seasons of industrial and commercial paralysis which, viewed independent of their relations to more general phenomena, seem so inexplicable. Properly commenced and carefully pursued, such an investigation must yield a conclusion that will stand every test, and, as truth, will correlate with all other truth ; for in the sequence of phenomena there is no accident. Every effect has a cause, and every fact implies a preceding fact.

“That political economy, as at present taught, does not explain the persistence of poverty amid advancing wealth in a manner which accords with the deep-seated perceptions of men; that the unquestionable truths which it does teach are unrelated and disjointed; that it has failed to make the progress in popular thought that truth, even when unpleasant, must make; that, on the contrary, after a century of cultivation, during which it has engrossed the attention of some of the most subtle and powerful intellects, it should be spurned by the statesman, scouted by the masses, and relegated, in the opinion of many educated and thinking men, to the rank of a pseudo-science in which nothing is fixed or can be fixed—must, it seems to me, be due, not to any inability of the science, when properly pursued, but to some false step in its premises or overlooked factor in its estimates. And, as such mistakes are generally concealed by the respect paid to authority, I propose in this inquiry to take nothing for granted, but to bring even accepted theories to the test of first principles; and should they not stand the test, to freshly interrogate facts in the endeavor to discover their law.

“I propose to beg no question, to shrink from no conclusion; but to follow truth wherever it may lead. Upon us is the responsibility of seeking the law; for in the very heart of our civilization to-day women faint and little children moan. But what that law may prove to be is not our affair. If the conclusions that we reach run counter to our prejudices, let us not flinch; if they challenge institutions that have long been deemed wise and natural, let us not turn back.”

Following the introduction come ten books, each subdivided into chapters, which constitute the body of the work, and which are succeeded by a concluding chapter. With the first of these books begins the inquiry proper. The problem to be solved is reduced to this question: “Why, in spite of increase of productive power, do wages tend to a minimum which will give but a bare living?” and the answer of the current political economy, that it is because the increase in the number of laborers tends naturally to overtake the increase of the capital from which wages are paid, is taken up.

To the examination of that part of this answer which involves the genesis of wages the first book, entitled “Wages and Capital,” is devoted. Attention is first called to the fact that wages and interest do not rise and fall inversely, as this theory requires, but that, as we have seen in California, wages and interest rise together and fall together. The theory thus shaken, it is denied that wages are drawn from capital at all. The reasoning by which this assertion is maintained is a specimen of keen analysis, involving as it does the fixing with precision of the meaning of such terms as “wages,” “capital,” and “wealth,” which, as is shown by a comparison of their definitions, have hitherto been used by political economists in the most loose and contradictory way. Tracing the operations of production from their simplest to their most complex forms — from the gathering of shell-fish by a naked savage, to the building of a Great Eastern, or the cutting of a Sutro Tunnel — our author shows that as productive labor always gives an immediate and valuable result, while wages are not paid until after the rendering of labor, the real advance of capital is not from employer to employed, but from employed to employer, and that the true functions of capital are not to advance wages, or subsist laborers, but to furnish tools, seeds, etc., and to provide the wealth necessary to carry on exchanges, while wages come directly from the product of the labor. We have not space to follow the linked reasoning by which this conclusion is reached. The objections which naturally arise are one after the other met and disposed of; and paradoxical as the assertion that capital neither advances wages nor subsists laborers may sound, the reader is led to it by successive steps which seem like the simple presentation of obvious and indisputable truths. Though the doctrine has still in its favor the weight of authority, there has been of late a growing disposition among economists to question the existence of a definite wage fund, and Prof. F. A. Walker has even gone so far as to deny that in certain cases wages are drawn from capital; but no economist that we know of has hitherto dreamed of denying that capital is ever drawn on for wages, still less that it does not subsist laborers. Yet that Mr. George has conclusively proved these positions, and has, moreover, clearly traced the confusion of thought and language which has led to the adoption of theories which have maintained themselves from the time of Adam Smith to the present day, we think no careful reader of these five chapters will be likely to deny. In fact, so easy and clear is the argument, so naturally does one step seem to succeed the other, that the reader who is unacquainted with political economy, and does not realize that the very foundations of far-reaching theories are being undermined, is apt to think there is a needless elaboration of self-evident truth.

But the practical importance of the conclusion is at once obvious, for if wages are the direct product of labor, it follows that the mere increase of laborers cannot tend to their diminution, but that, on the contrary, as the efficiency of labor manifestly increases with the number of laborers, the more laborers, other things being equal, the higher should wages be.

This proviso “other things being equal” brings on, in the second book, the discussion of the famous Malthusian doctrine — the doctrine that population tends constantly to press against subsistence — a doctrine that is not merely one of the great cornerstones of current political economy, but which has powerfully influenced modern thought in all directions. We have not space even for a meagre outline of this highly interesting discussion, and can only say that the doctrine itself is first stated with fairness and force; then the facts which seem to prove it are explained away; the analogies which support it are subjected to a like analysis, and finally the doctrine is reduced to the assertion that productive power lessens with increase of population, and appeal is made to the fact that in all progressive countries wealth, or at least the power of producing wealth, always increases even faster than population.

But if the Malthusian theory be thus overthrown, the perplexities of the problem have been only increased. This is fully recognized by Mr. George, who says: “We have, in short, proved that wages ought to be highest when in point of fact they are lowest. Nevertheless, we have at least narrowed the field of inquiry, and shown that for the solution we seek we must look to the laws of distribution.” In the third book this subject is taken up. It is shown that the laws of rent, wages, and interest must necessarily correlate with each other, which, as taught by the current political economy, they fail to do, and the confusion in the use of terms by which this issue has hitherto been avoided is pointed out. Many a man who has vainly puzzled his brain over the textbooks, will see in this lucid examination that the fault has been, not in his own stupidity, but in the great economists themselves. After thus showing again that at least two of the three laws of distribution have hitherto been wrongly apprehended, our author proceeds to seek, independently, the true laws. As to rent, the law of Ricardo is accepted and explained; and it is pointed out, what preceding economists seem strangely enough to have overlooked, that this law necessarily involves the laws of wages and interest as its corollaries — that is to say, that the proportion of the produce taken by rent must necessarily determine the proportion left for wages and interest. But without resting on this deduction, the laws of interest and wages are separately sought from independent starting points. We have not space to follow, even in briefest outline, these interesting reasonings, which shed a clear light upon many of the perplexing problems which political economy has up to this time left in an unsatisfactory state, such as the real cause and justification of interest, the apparent conflict between capital and labor, the relation of wages in different forms and occupations, etc. But suffice it to say that they bring the laws of wages and interest to a common point, the margin of cultivation or production, where they correlate with the law of rent. Thus it is shown, as we have seen in California, that high rates of interest and high rates of wages accompany each other, and wages and interest fall together, and that, as the value of land increases, rent must take a greater and greater proportion of the produce, and interest and wages a smaller share.

Thus a theory has been set up which accounts, by the increase of rent or land values, for the persistence of poverty, and the tendency of wages to a minimum in advancing countries. But a question yet remains, “Why is it that material progress everywhere tends to the increase of rent?” This is examined in the fourth book. Material progress is decomposed into increase in population, and improvements in production. It is first shown that the effect of increase in population, the productive arts remaining stationary, must always be to increase rent, not merely from the cause heretofore pointed out by Ricardo and others, the forcing of production to lower levels, but still more powerfully from a cause upon which political economists have hitherto but lightly dwelt, the localizing of the increased power which comes from increased economies and division of labor. It is then shown that even if population remained stationary, the effect of labor-saving machinery and other improvements in production, of whatever kind, must likewise be to increase rent. And in the third place, it is pointed out that, from this tendency of material progress to increase rent, there must arise in every progressive country a confident expectation of future increase in land values, which, by causing speculation in land, drives up rent even faster than it would otherwise increase.

In the fifth book, entitled “The Problem Solved,” these conclusions are applied. From the speculative advance in land values, engendered by material progress, the phenomena of recurring commercial crises and industrial depressions are successively deduced, and then, reversing the process, the phenomena are traced up to this cause; while the necessary effect of material progress, where land has been appropriated, is used to account for low wages, poverty, and pauperism.

This closes what is really the first great division of the work. That it is a most important contribution to politico -economic literature no reader can fail to perceive. And it is this, not merely from the force, lucidity, and coherency of the argument, and the ease and grace of a style which carries the reader, without effort, into the heart of the most abstruse discussions, and proves that, even in its knottiest departments, political economy is not necessarily dry and tedious, but that there is completeness as well as strength. Theories heretofore sanctioned by the highest authority are not merely undermined, if not actually toppled over; but a theory is substituted upon which may be explained, not only all they explain, but a good deal more.

Had Mr. George stopped here, his work must have ultimately attracted wide attention among close thinkers. But not satisfied to treat the “burning questions” of political economy, he proceeds, in the sixth book, into the heart of what are fast becoming the “burning questions” of politics and common discussion.

Passing to the question of a remedy, it is contended that neither in education nor cooperation, neither in the projects of philanthropists, the combination of workingmen, nor the dreams of Socialists, is there any hope, as long as the tenure of land is untouched; and then, taking up projects for the restriction of ownership in land, it is contended that they also are impracticable and futile. There is no alternative, is the conclusion, but to utterly abolish private property in land.

In the seventh book the question of justice is broached, and it is argued that there can be no rightful individual title to land; that private property in land necessarily results in the enslavement of laborers; and that society may with justice assert the common right to land without compensating present holders. The growth of the idea of private property in land and of land tenures in the United States are also treated at length.

Having thus concluded that land ought to be made common property, the question of how is taken up in the eighth book, and it is proposed to accomplish this without violence or sudden change, by simply abolishing all taxes save upon land values, and with this single tax, confiscating rent, leaving every one free to get or hold what land he pleases. In this connection the whole subject of taxation is discussed, in a very clear and interesting chapter.

In the ninth book the effect of this remedy is considered in much detail, and a state of society is pictured in which there should be abundance and opportunity for all, and from which not merely poverty and ignorance, but greed and corruption, would disappear.

The inquiry at first proposed might here seem fairly to end. But in the tenth and last book a still wider field is opened with the question, “What is the law of human progress ?” and doctrines which are now backed by almost the whole weight of the scientific world, are attacked with the same force and audacity displayed in attacking, in previous books, the current teachings of political economists. The doctrine that the progress of mankind is by a gradual improvement in race character is impugned, on the ground that it will not explain historical facts — that the line of greatest improvement has never coincided, for any length of time, with any line of heredity, and that retrogression has heretofore always followed advance. It is further contended that differences in civilization nowhere show innate differences, but are solely due to differences of social environment. Then an effort is made to work out the law of human progress, on the theory that society will advance according to the mental power devoted to improvements, and that this will be greater or less, according to the mental power required for purposes of maintenance and conflict. Thus association is the first condition of human progress, and equality the second. And in the constant tendency to inequality, which arises in human association, we find the cause which has brought all previous civilizations to halt and retrogression. On this theory is explained, with an elaboration and ingenuity of which we can give no idea, why in some places civilization has advanced so far, and in others so little; the rise, character, and decline of ancient civilizations; the character, and course of the Greco-Roman civilization; and the rise and splendor of modern civilization.

And now the connection between all this speculation and the main purpose of the book begins to appear. The tendencies to the concentration of wealth and power which are so strongly manifesting themselves at the present day are, it is contended, the same tendencies to which the overthrow of all previous civilizations are traced, and, if permitted to run their course, must inevitably carry the modern world through anarchy back to barbarism. The chapter entitled, ” How Modern Civilization may Decline,” is one of the most impressive of an impressive book. It is contended that in the United States mere political equality is rapidly tending toward despotism and anarchy, and that, while on the surface everything seems to indicate further progress, there are many intimations that the deeper currents have already begun to set toward retrogression, and that the nineteenth century may to the future mark the climax of modern civilization. “The civilized world is trembling on the verge of a great movement. Either it must be a leap upward, which will open the way to advances yet undreamed of, or it must be a plunge downward, which will carry us back toward barbarism.”

And out of this idea of a struggle yet undecided, rises naturally the concluding chapter, which asserts the immortality of the human soul as the sequence of the social laws previously laid down, and the only explanation of the phenomena of human life.

This book, of which we have given a most unsatisfactory account—for it contains too much to be summarized, and is too unique to be characterized—is distinguished no less by the ease and elegance of its style than by the closeness and vigor of its reasoning. The argument, copiously illustrated as it is, is yet so well connected in all its parts, that the conclusion seems to follow as a matter of course. And in these days of muddy political economy, when the leaders of thought in this field are so widely at variance as to the economic cause or causes of the social evils that afflict us, and are likewise so variant as to the meaning of the terms which they habitually use, it is refreshing beyond measure to find not only an original economic thinker, but one, as well, who knows clearly and thoroughly what he pretends to know, and knows, besides, how to give clear and precise expression to his knowledge. In this respect the book before us deserves the highest consideration, and even if every proposition of the writer were to be refuted, the book would still possess great value for its exact expression of the terms with which political economy has to deal.

But there is something in the work which seems to us to breathe the air of truth—of a vitality which will seize upon the future. The writer himself, it is evident, is a man who loves the truth for the truth’s sake, and who hesitates not to follow whithersoever she may lead. He is imbued with profound convictions—convictions which have come to him, as is manifest on every page, from the most laborious investigation and the most earnest seeking. While he has manifestly read much, he has digested and assimilated it all, and has never permitted himself to be overawed by a great name. At every step he doubts; he asks himself: Can this be so? and never pushes on until he has satisfied himself whether it be so or not. And never does he, apparently, dismiss a subject until he has examined it on all sides and tested all its relations.

But with all the excellences which we have pointed out, there is one which is better far than all, and that is, the human sympathy which runs as a stream through the book from beginning to end—the deep feeling for those who suffer; the desire to lift them up, and to see dissipated and destroyed the dreadful poverty and distress that enshrouds society as a pall.

And in the concluding chapter, which nobly crowns a noble work, we have the hope of a life beyond, expressed in such eloquent and sympathetic phrase, that one’s pulse beats faster as one reads, and one feels that, after all, life is worth all it costs— that life is, indeed, worth living.

E.R. Taylor

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