A valuable and timely contribition to COUNTERPUNCH from professor David D’Amato.

Dear Sunday Age Letters Editor _______________ (9 May 2022)

Joanna Wriedt’s Letter “When did it go so wrong” (Sunday Age 8 May) concerning the grand dream that was once Canberra demands a serious answer. The national capital received its name officially on 12 March 1913 during what has become known as the Progressive Era. As political corruption and real estate speculation were not welcome following the 1893-97 depression, the Australian Capital Territory was founded on a leasehold system of land tenure. In 1969, however, Prime Minister John Gorton decided to abolish collection of ACT land rent.

The federal tax office had been founded to administer the 1910 land tax which ran in conjunction with land taxes at state and local government levels as the major source of Australian revenue. This changed with the introduction of income taxes.

In a 33 minute parliamentary speech on 24 February 1953, Labor Party leader Arthur Calwell vehemently attacked Prime Minister Menzies’ for having abolished the federal land tax the previous year, saying “We have always believed in the land tax, and when happy days come again we shall restore the measure, imposing the tax to the statute book of this country.”

But, no, in 1963 the Labor Party’s new national secretary Cyril Wyndham decided to write the land tax out of the ALP’s 1964 policy platform without the mandatory party vote. 

And so it was that from 1964 at national level both major parties had agreed that there should be no federal land tax to keep a lid on the property speculation and political corruption in which Australia has since become engaged.  

Bryan Kavanagh

How appropriate that Zoe Daniel the independent aspirant for the federal seat of Goldstein favours land tax and capital gains tax on home sales.

Hardly likely policies to be promoted in a nation seemingly inextricably wedded to property spec?

Policies necessary for the financial salvation of Australia, however.

Vida Goldstein would be proud of you, Zoe!

Henry George and the Catholic Church

By John Young

1. GEORGE AND PRIVATE PROPERTY

The danger of people misunderstanding Henry George’s “remedy” was brought home to me when I caught a taxi in connection with some Georgist business and the driver asked me what the Georgist movement is about. I thought my brief explanation of the land question was clear, so I was startled when the driver’s comments showed me that he thought I was advocating the nationalization of land.

This same misunderstanding lies at the heart of the opposition of some Catholic authorities to George’s economics. It helps explain why Cardinal Simeoni in Rome was concerned about Dr Edward McGlynn’s crusade for Georgism, and why Michael Corrigan, Archbishop of New York, demanded that McGlynn cease these activities. This misunderstanding is relevant to the famous section of Pope Leo XIII’s encyclical Rerum Novarum, published in 1891,which has so often been seen as a condemnation of George’s land philosophy.

It is important to clarify the matter because a misunderstanding here can lead to a rejection of George through a fear that his position, if accepted, would mean that the State would own all the land and the citizens would be mere tenants. Surely we have enough government encroachments on our liberty already!

The famous American theologian and orator Archbishop Fulton Sheen, although not speaking of George, expressed this concern by saying that if the government owned all the means of production we would have only one employer, and if the government owned all the land we would have only one landlord.

People with diverse views about religion will object to land socialism, and may therefore not give George a hearing. But in particular, those Catholics who wish to follow the guidance of the Popes, and who believe Leo XIII ruled against George’s key proposition, may dismiss George without further inquiry. Or their commitment to him may leave them uneasy.

An article of mine appeared in the New South Wales Georgist journal Good Government some years ago, in which I argued that there is no conflict between papal teaching and Henry George’s position. A correspondent wrote in, expressing her gratitude for the explanation, and saying that it was like a millstone being removed from her neck! She had strongly promoted Georgism, but with a troubled conscience, because she is a Catholic and thought Leo XIII had made George off limits for Catholics.

Actually, very few Catholics know much about Rerum Novarum: 1891 was a long time ago. But the issue of an alleged conflict is kept alive, unfortunately, by some committed Georgists. An illustration of this occurred at the International Union for Land Value Taxation conference at Brighton in 1997, when a subcommittee was formed to prepare a letter to be sent to Rome asking the Pope to consider Henry George’s economics. The draft letter also urged the Pope to reverse the teaching of Leo XIII.

I objected, saying there was no conflict between our position and that of Leo. I don’t know whether other members of the subcommittee were convinced, but at any rate there was enough uncertainty for them to agree to delete the request for a reversal of Rome’s stance.

In this article I want to look first at the question: Did the encyclical Rerum Novarum condemn George’s central proposition? Then I will argue that George’s economic philosophy as a whole is in harmony with, and extends, traditional Judeo-Christian thought on social questions, especially as found in the social documents of the Catholic Church from Leo XIII to the present. Finally, I will argue that George’s position on land rent is implicit in Catholic social doctrine, although most exponents of that doctrine have failed to see this.

If there is indeed the common ground that I maintain, great potential exists for cooperation between Georgists and the Christian churches.

Some readers will be sceptical. After all, it will be pointed out, George stated often, and unequivocally, that land should not be private property; it should be common property. Pope Leo XIII said the opposite: he devotes a long section of Rerum Novarum to the defence of private property in land.[1] Arguing against socialism Leo says: “Man should not only possess the fruits of the earth, but also the very soil, inasmuch as from the produce of the earth he has to lay by provision for the future.”[2]

So George says land must not be private property; Leo says land must be private property. If that’s not a contradiction, what is? Aristotle reminds us that it is impossible to believe the same thing both is and is not at the same time!

There’s certainly a contradiction if both men are using the expression “private property” in the same sense. But are they?

George maintained that in things produced by labour there is an absolute right of ownership, except in cases of life and death. This right, he says, is “unlimited, save in cases when the dictate of self-preservation terminates all other rights”.[3] It is a right derived from labour, and based ultimately on a man’s right to himself. “As a man belongs to himself, so his labor, when put in concrete form, belongs to him. And for this reason, that which a man makes or produces is his own, as against all the world to enjoy or to destroy, to use, to exchange, or to give.”[4]

To illustrate his position George imagines travellers in the desert, some of whom had provided themselves with vessels of water, while others had neglected to do so. The latter, “…though they might ask water from the provident in charity, could not demand it in right.”[5]

The right to land is in a different category, because land is created by God, not produced by human labour. The exclusive possession of land is merely to secure the “exclusive ownership of the products of labour; and it can never be rightfully carried so far as to impair or deny this. While anyone may hold exclusive possession of land so far as it does not interfere with the equal rights of others, he can rightfully hold it no farther”[6].

Now, if we look at what official documents of the Catholic Church say about property we find that they see all property rights as relative, not absolute. The Pastoral Constitution on the Church in the Modern World, issued in 1965 by the Second Vatican Council, expressed the traditional Catholic position about property. Starting from the premise that “God intended the earth with everything contained in it for the use of all human beings…” it argues that private property must be so used that it benefits others.[7]

The Constitution states that “If one is in extreme necessity, he has the right to procure for himself what he needs out of the riches of others”[8]. A footnote refers to an article in the Summa Theologiae of St Thomas Aquinas, where Aquinas says that in cases of necessity it is morally lawful to take the property of others. He denies that this is theft (morally speaking), by the person in extreme need, because “that which he takes for the support of his life becomes his own property by reason of that need”[9].

It “becomes his own property.” That statement expresses the way Catholic authorities understand the concept of private property – not just property in land, but all property. It is essentially relative to the needs of others; it is never absolute.

Hence there is no conflict between George’s statement that land should not be private property and Leo XIII’s defence of private property in land, because George is speaking of an absolute right (subject only to a life and death situation), whereas Leo is defending a relative right – a right compatible with the public appropriation of rent.

In 1991 Pope John Paul II issued the encyclical Centesimus Annus to commemorate the centenary of Rerum Novarum, and he notes that the amount of space Leo devoted to the question of private property shows the importance he attached to it. John Paul II then adds: “The Pope is well aware that private property is not an absolute value, nor does he fail to proclaim the necessary complementary principles, such as the universal destination of the earth’s goods[10].

One reason George has been misunderstood is his peculiar use of the term “common property”. Robert V. Andelson rightly sees it as a terminological idiosyncrasy. Andelson continues: “‘We must make land common property’ has hung from the beginning around the neck of the movement he created, notwithstanding that even as he used the phrase he took pains to explain that by ‘common property’ he meant something very different from what it is ordinarily understood to mean.”[11]

George saw rent as belonging to the community – as common; so the slogan “land should be common property” refers to the value arising from land rather than the land itself. As he expressed it in his address in Metropolitan Hall, San Francisco, February 4, 1890: “We do not propose a tax upon land, as people who misapprehend us constantly say…we propose a tax upon land values, or what in the terminology of political economy is termed rent …”[12]

George’s position can be put this way: The right to private property is absolute (excepting a life and death situation). But the right to land is not absolute. Therefore land is not private property.

By contrast, the Popes and Christian tradition see all property rights as relative to the good of people other than the owner; and private property in that sense applies to the possession of land.

The following objection will be raised against my claim that no contradiction exists between the positions of George and Pope Leo. If I am right, how can we explain the opposition from high-ranking Catholic prelates, notably Cardinal Simeoni in Rome and Archbishop Corrigan in New York? Didn’t Rome instruct Corrigan to excommunicate Dr Edward McGlynn for promoting George’s ideas? Didn’t the Congregation of the Index state that Progress and Poverty was “worthy of condemnation”?

The answer is that they misunderstood George because of the differing senses of the term “private property”. It is worth noting, too, that George expressed himself very badly at times. In Progress and Poverty he states that by appropriating rent, “…the State may become the universal landlord without calling herself so…”[13] In The Land Question (first called The Irish Land Question) he speaks of “converting all occupiers into tenants of the State, by appropriating rent”.[14]These expressions can easily, although wrongly, be taken as meaning land nationalization.

Regarding Dr McGlynn, the crucial reason for his excommunication was his defiance of ecclesiastical authority by refusing to go to Rome to explain his position. In a telegram to Cardinal Simeoni in Rome, quoted by John Molony, he stated: “I shall never retract the doctrines I have taught; I shall not come to Rome: I will make no recourse nor have anything to do with your tribunal before which I have no case to answer. I revoke and repudiate everything that my officious friends may have tried to do for me in this matter.”[15]

Eventually he was exonerated by the Pope’s representative Archbishop Satolli who declared, in agreement with the four professors at the Catholic University of America who examined McGlynn’s statement, that there was no conflict between McGlynn’s land philosophy and the teaching of the Catholic Church.[16]

The unanimous verdict of Satolli and the four professors carries great weight. It was in response to a statement by McGlynn which expresses the Georgist position clearly and uncompromisingly[17], and it was a verdict likely to upset powerful churchmen, including Corrigan in New York and Simeoni in Rome. It would not have been lightly made.

A further objection to my claim is that George himself saw Pope Leo’s teaching as aimed at him, a view backed up by what Cardinal Manning, the Archbishop of Westminster, said to Henry George Junior. As the latter relates, writing in the third person: “In London, Cardinal Manning told Mr George’s eldest son, who chanced to be there, that the Pope’s letter aimed at the Henry George teachings; although he intimated that between the postulates and the deduction Henry George could drive a coach and four. Mr George wrote to his son: ‘for my part, I regard the encyclical letter as aimed at us, and at us alone, almost’”[18].

Reply. Cardinal Manning’s reference to the “coach and four” indicates, surely, that he saw no contradiction between the encyclical and George’s position. That was also the view, from the first, of Catholic friends of George, as his son states in a footnote to the above quote. As for George himself, he changed his opinion later.

In 1893, in a letter to the New York Sun, he declared that the encyclical “…is evidently to be understood not as disapproving the ‘single tax’, but as disapproving of the grotesque misrepresentations of it that were evidently at first presented to the Pope”[19]. What he failed to see was that his own terminology was a major factor in the misunderstanding. The statement, which became a slogan with George, that “land should be common property” conveyed the false impression that George advocated land nationalization.

The misunderstanding of what he really meant led theologians in Rome and some of the American bishops to ask Pope Leo, while the encyclical was being prepared, to make it clear that there should be private property in land. That such representations were made is shown by John Molony in his book The Worker Question. He concludes that concern about the stand of George and McGlynn made “…some modest stimulus to the actual timing of the document [the Encyclical], as well as a certain tone to the way in which it upheld the right to private property…”[20]

John Molony’s book is a study of Rerum Novarum, using documents in the Vatican archives.

It seems clear, therefore, that the emphasis the Pope gave to the question of property in land was because of Henry George. But it resulted from a misunderstanding: it refuted land nationalization; it did not address George’s site revenue position.

Few Catholics today have any knowledge of Henry George or any awareness of the controversy we are discussing. And those who do are often vague about it. As one man said to me when I mentioned George: “He had some trouble with the bishops”. He wasn’t sure what the trouble was, but he knew there had been something.

On the occasions when a definite charge is made, it is that George advocated State ownership of land. Of course, he is attacked on various grounds; but the claim that a contradiction exists between George and official Catholic teaching, when this is specified, is that Leo XIII’s condemnation of land socialism is a condemnation of George’s teaching.

An understanding of what he really proposed (plus an understanding of the two differing concepts of private property) leaves no grounds for asserting an opposition between the teaching of the Catholic Church and George’s land philosophy. Let us recall what his “remedy” is, as he states it in The Condition of Labor.

“We propose leaving land in the private possession of individuals, with full liberty on their part to give, sell, or bequeath it, simply to levy on it for public purposes a tax that shall equal the annual value of the land itself, irrespective of the use made of it or the improvements on it.”[21]In other words, the value attaching to a piece of land because of its location and natural advantages would be taken annually by the government, leaving the value of the improvements in private hands.

There is no conflict whatever between this proposal and the teachings of the Catholic Church, whether in Rerum Novarum or anywhere else.

2. GEORGE AND CHRISTIANITY

Let us now glance at several points of contact between Henry George’s thought and principles advocated by Christianity.

Natural law.

Belief in a natural law embracing the whole human race and every period of time antedates Christianity. Aristotle, writing in the fourth century BC, speaks of it. “Universal law is the law of nature. For there really is, as everyone to some extent divines, a natural justice and injustice that is binding on all men…”[22] It is eloquently described by Cicero in the last century BC. “It is not permitted to try to alter this law or to derogate from it, and it is not possible to abrogate it. We cannot be freed from this law by senate or populace, and we need not seek anyone else to explain or interpret it; and there will not be a different law of Rome, a different law of Athens, or different laws now and different laws in time to come…”[23]

The concept of natural law was elaborated by Christian writers from the early centuries onwards and particularly by St Thomas Aquinas in the thirteenth century. He states that “…the whole community of the universe is governed by Divine Reason”.[24] He goes on to argue that all things participate in this Divine governance, and that man participates in a special way, because he possesses reason. The natural law in man “…is nothing else than the rational creature’s participation of the eternal law”.[25]

Henry George saw human law as judged by a higher and immutable law. “Natural laws…belong to the natural order of things; to that order in which and by which not only man himself but all that is, exists…they are expressions, not of the mutable will of man, but of the immutable will of God.”[26]

A corollary: fundamental economic laws are moral or ethical laws. In his work The Reduction to Iniquity, in which he replies to the Duke of Argyll, George argues that there is an essential unity in the moral conceptions of different peoples throughout history, and that this indicates a moral compass given by the Creator to guide us to the highest good.[27] He continues: “I am willing to submit every question of political economy to the test of ethics.” A little later he speaks of “…that moral law which is before and above all human laws, and by which all human laws are to be judged”.[28] The person as central.

Christianity sees the human person as having unique value, and as a being that must never be used as a mere means to an end. Society, including the economic order, is for the sake of the persons who compose it. The economy itself, which is about earning a living, is for the sake of higher pursuits; pursuits which require leisure from the labour involved in supplying our material needs. Ultimately, each person is destined for life beyond the grave.

Henry George insisted on all of this. Man’s mental equipment, he says, makes him vastly superior to the other animals – makes him “…the lord and master of them all…”[29] It is a difference in kind, not of degree, and “…justifies the declaration of the Hebrew Scripture, that man is created in the likeness of the All-Maker”.

The economy is the means of getting a living, but human life is for higher things, and ultimately for an existence after death. “What then is the meaning of life – of life absolutely and inevitably bounded by death? To me it seems intelligible only as the avenue and vestibule to another life.”[30] Against privilege.

Christianity, from the very beginning, has endorsed the insistence of the Old Testament prophets that it is wrong for the powerful to oppress the weak. In the New Testament the Epistle of St James criticizes those who gave the best places in the church assemblies to the rich, while relegating the poor to the worst seats.[31]Later the early Christian writers strongly condemned unjust privileges claimed by the rich and powerful. Today there are frequent references in Christian literature to an “option for the poor”.

Here again there is agreement between the Christian Churches and Henry George. He saw all persons as essentially equal, and injustice arising from violation of natural laws.

He makes a fundamental distinction between value from production and value from obligation. The latter, he says, consists in “…the power of one individual to demand exertion from another individual…”[32]. It does not increase wealth; it simply distributes it differently. It is usually unjust, as in the value of a slave in a slave market. This distinction – between value from production and value from obligation – is one of George’s most important distinctions, and is implicit in the advocacy of the churches for social justice; yet moralists usually do not see it clearly. Self interest.

The Scriptural injunction, “love your neighbour as yourself”[33]rules out selfishness, but implies a balanced love of self – love of self is given as the benchmark for love of neighbour. But problems come when we try to reconcile the two in our economic activities. Adam Smith’s concept of the invisible hand, with self-interest driving the market, is alleged by some people to be a canonization of selfishness. The Christian believer may be unable to reconcile the altruism required by his faith with the self-interest that is alleged to propel the economy.

George is dead against the theory of selfishness as the prime motive in economic matters. He writes: “Shortsighted is the philosophy that counts on selfishness as the master motive of human action…It is not selfishness that enriches the annals of every people with heroes and saints…It was not selfishness that turned Gautama’s back to his royal home or bade the Maid of Orleans lift the sword from the altar…”[34]He quotes Plutarch: “The soul has a principle of kindness in itself…”

The true basic principle of political economy, George insists, is the desire to save effort. Book I, chapter 12 of The Science of Political Economy examines that principle and argues against the prevalent idea that selfishness is the driving force behind economic activity.

He stresses also the essential place of cooperation in the working of the economy, especially a spontaneous cooperation arising from man’s social nature. To attempt to achieve this form of cooperation by external direction is the fallacy of socialism. On the contrary, a division of labour grows up naturally in a society where men are left free.[35] Competition and free trade

The Popes have insisted on the principle of subsidiarity: the thesis that what can be done in society by a lesser association should not be done by a higher one. For instance, if individual initiative is able to provide a service, the provision of that service should not be undertaken by the State. If local government can do a job, a higher level of government should not take on that task.

A corollary is that competition should be allowed to operate, because it arises spontaneously unless interfered with – whether the interference is from governments or from powerful non-government sources.

In his encyclical Centesimus Annus Pope John Paul II saw the market economy, or free economy, as the right model. Putting the question whether capitalism should be the model for third world countries to follow, he answers: “If by ‘capitalism’ is meant an economic system which recognizes the fundamental and positive role of business, the market, private property and the resulting responsibility for the means of production, as well as free human creativity in the economic sector, then the answer is certainly in the affirmative, even though it would perhaps be more appropriate to speak of a ‘business economy’, ‘market economy’ or simply ‘free economy’”[36]. But he adds that there must be a strong juridical framework which places the system at the service of human freedom.

John Paul II also observed that poor countries which isolate themselves from the international community have suffered stagnation, while those that have involved themselves in the international community have prospered. “It seems therefore that the chief problem is that of gaining fair access to the international market…”[37]

All this is in accord with George’s economic thought. He advocated as much freedom as is compatible with the rights of others, while rejecting the extreme liberalism that would prevent the State from intervening to protect the weak. His book Protection or Free Trade argues forcefully against protectionism. Malthusianism.

Is population control by governments needed to reduce poverty? The official position of the Catholic Church is that children are a blessing, and that ways must be found to reduce poverty which do not involve population control. The view of Thomas Malthus and more recent modifications of his claims are seen as mistaken.

George devotes four chapters of Progress and Poverty to a critique of Malthusianism, reaching conclusions in perfect harmony with the Catholic standpoint.

He argues that Malthusianism derives its apparent cogency from the false belief that wages depend upon the ratio between the number of labourers and the amount of capital devoted to the employment of labour – a claim he had refuted earlier.

Answering the claim that population, unless checked, increases faster than food production, George shows that plant and animal life tend to increase much faster than human life, even without special effort on man’s part. But because man is a producer of food the difference is greater still. “Both the jayhawk and the man eat chickens, but the more jayhawks the fewer chickens, while the more men the more chickens.”[38]

He shows also that poverty tends to lead people to have more children. The tendency to increase “…is strong where a greater population would give increased comfort, and where the perpetuity of the race is threatened by the mortality induced by adverse conditions; but weakens just as the higher development of the individual becomes possible and the perpetuity of the race is assured.”

George argues that, “…other things being equal, the greater the population, the greater the comfort which an equitable distribution of wealth would give to each individual”.[39]

Malthus turned out to be wrong, but dire predictions are still made about the threat of overpopulation. In his book The Population Bomb, published in 1968, Paul R. Ehrlich predicted a grim future if population increase was not drastically curtailed. By the end of the 1970’s, he said, the most optimistic scenario was one where famine and food riots would sweep Asia, there would be famine and plague in the Arab world, famine and local warfare would afflict Africa and South America, there would be moderate food rationing in the United States.[40] That was Ehrlich’s most optimistic forecast for ten years ahead of his book’s publication!

Of course, he was hopelessly wrong; and today, with a world population of seven billion, the quality of life is continuing to improve.

The analysis made by George is very relevant today, even though the population theory proposed by Malthus is advanced only in a modified form, because George goes to the heart of the alleged problem of overpopulation.

More generally, the economic philosophy of Henry George shows the working of natural moral laws in society, and that prosperity depends on observing those laws, while poverty is inevitable when they are violated. The overcoming of poverty would allow the flourishing of the better qualities and higher powers of human nature.[41] In agreement with this, Pope Pius XI called for all to be provided with the wealth that nature, technology and economic organization can furnish, thus advancing people to “…that happier and fuller condition of life which, when it is wisely cared for, is not only no hindrance to virtue, but helps it greatly”.[42]

3. GEORGE’S “REMEDY” IS IMPLICIT IN CATHOLIC SOCIAL TEACHING

I want to argue here that Henry George’s position on economic rent is not only compatible with the social doctrine found in official documents of the Catholic Church, but is demanded by that doctrine. It is foreshadowed in the Bible and in the early Christian writers, and is implied in the Catholic Church’s criticism of usury.

Jewish laws recorded in the Old Testament provided a safeguard against the alienation of each family’s land, a process that could have led to a landless proletariat. It was laid down that in the jubilee year (each fiftieth year) a family would return to its land. When land was sold the price was to take into account the number of years remaining before the next jubilee year.[43]God tells the people: “The land shall not be sold in perpetuity, for the land is mine.”[44]

The Book of Isaiah condemns land grabbers: “Woe to those who join house to house, who add field to field, until there is no more room.”[45]

St Ambrose, in the fourth century AD, says to the rich man: “For what has been given as common for the use of all, you appropriate to yourself alone. The earth belongs to all, not to the rich; but fewer are they who do not use what belongs to all than those who do.”[46]

In the same century St Basil the Great speaks similarly, using an illustration that Henry George repeats.[47] He addresses the rich man: “You are like one occupying a place in a theatre who should prohibit others from entering, treating that as one’s own which was designed for the common use of all. Such are the rich. Because they were first to occupy common goods, they take these goods as their own.”[48]

Similar sentiments are expressed by other early Christian writers, showing a view of material things as not exclusively one’s own. In particular, as illustrated by the above quotes, land was seen as God’s gift to the whole human race, not something to which some people have an exclusive right.

In the thirteenth century an answer given by St Thomas Aquinas about taxation has an affinity with George’s position. The Duchess of Brabant, daughter of King Louis IX of France, submitted a question to Aquinas about the morality of taxation. He replied that the sovereign’s land should be the primary source of funds, and that only if these proved inadequate should other sources of revenue be ulitised.[49]

Pope John Paul, in the encyclical Centesimus Annus, commemorating the centenary of Rerum Novarum, speaks of the universal destination of the world’s goods. “God gave the earth to the whole human race for the sustenance of all its members, without excluding or favouring anyone.”[50] He goes on to say that the individual “…makes part of the earth his own, precisely the part he has acquired through work; this is the origin of individual property”.

He clearly does not see this appropriation of part of the earth as an absolute form of ownership (a notion excluded in any case by the Catholic Church’s denial that there can be absolute ownership of anything), for he continues: “Obviously he also has the responsibility not to hinder others from having their own part of God’s gift; indeed, he must cooperate with others so that together all can dominate the earth.”

The principle here laid down by John Paul II – the earth is a gift from God, and no one must be excluded – leads logically to George’s solution, although the Pope doesn’t draw that conclusion, and doubtless did not see the implication.

In past centuries the churches, Catholic and Protestant, have strongly opposed usury. It is a word used in various senses, for instance, excessive interest, but it has a specific meaning which was defined in these words by the Fifth Lateran Council in 1515: “This is the proper interpretation of usury: when gain and increase is sought from the use of a thing which is nonproductive, and with no labour, no expense and no risk”.[51]To seek payment for such a thing is to demand something for nothing.

Leo XIII, deploring the wretched state of so many working people, saw usury as one of the causes. “The mischief has been increased by rapacious usury, which, although more than once condemned by the Church, is nevertheless, under a different guise, but with like injustice, still practiced by grasping and covetous men.”[52]

The appropriation of site rent by landowners is not usury, but can rightly be called its first cousin. In common with usury, it is taking what one has not earned, and which belongs elsewhere. It has the effect of imposing burdens on others, to the unwarranted advantage of the landowner.

It follows, therefore, that the principle involved in the condemnation of usury implies that the appropriation of site rent by those who have not earned it should also be condemned. This is relevant to Pope Leo XIII’s observation, in criticizing socialism, that “…it is just and right that the results of labor should belong to those who have bestowed their labor”. [53]

Looking at the response of Catholic authors writing in the context of their Church’s social justice statements, we find little appreciation of the view I have just outlined: most pay little attention, if any, to Georgism, while those who do discuss it are usually either opposed to it or ambivalent.

John Molony, in his study of the background to Rerum Novarum (from which I have quoted above) shows no sympathy with Georgism and seems to concur with the view that Dr McGlynn was unorthodox in his land philosophy – he notes that McGlynn was reinstated, but fails to state that Archbishop Satolli declared there was nothing unorthodox in McGlynn’s position. All he can manage in reference to the reinstatement is this sentence: “McGlynn made his peace with the Church in later years.”[54]

Johannes Messner, in his work Social Ethics, deals extensively with the economy seen from a natural law perspective, but in the whole 1000 pages he mentions George only once. In that one sentence he refers to George’s proposed single tax on land values, then immediately goes on to speak of other taxes.[55]

But George has been enthusiastically supported by some writers in the Catholic tradition who have understood him. One of these, Bishop Thomas Nulty, Bishop of Meath in Ireland, wrote a long letter to the clergy and lay people of his diocese in which he advocated George’s “remedy” apparently before he had even heard of George. This work, Back to the Land, was written in 1881, and sets out clearly the natural law basis, and the biblical basis, for possession of land, with land rent going to the government.[56]

On a personal note: an eminent Georgist in Sydney, Dr H. G. Pearce, taught Georgist economics for many years from about 1950 at the Aquinas Academy, which was run by a Catholic priest, Dr Austin Woodbury SM, who accepted and promoted Georgism. It was through Dr Pearce’s course that I became a Georgist.

SUMMING UP

There is no conflict between the teachings of the Catholic Church and George’s land philosophy. There is, however, a conflict about the nature of private property, for the Catholic Church rejects the absolute right to property which George held. But that does not affect the general agreement between Catholic social teaching and the Georgist system of economics.

Further, Catholic social teaching needs to be developed much more fully than has been the case to date, and that development can only occur through the appropriation of Henry George’s insights – and not just on the land question. (The full scope of his economic principles is often neglected even by Georgists.)

If this appropriation takes place, scholars in the Catholic tradition will see the beauty of a sane economic order, with wealth divided into wages as the return for work, interest as the reward for capital investment and socially generated land rent providing for public services: all this determined by genuine competition. They will gain a clearer understanding of the harmony between true self-interest and the common good, and between capital and labour. They will see clearly what genuine competition is, whether within a nation or between the nations of the world.

I personally think that this appropriation of Henry George’s insights will come eventually. Georgists can help it come sooner rather than later. Certainly if this does happen, a tremendous impetus will be given to a wide acceptance of a sane economic system. Think of the impact worldwide if a papal encyclical on social questions incorporated George’s economic philosophy!

………………………………………………………………………………………………..

[1] See especially nn. 4 to 14 of Rerum Novarum.

[2] Rerum Novarum, n. 7.

[3] George, The Condition of Labor (Henry George Foundation of Great Britain, 1930), p. 6.

[4] George, Progress and Poverty, book VII, chapter 1 (Robert Schalkenbach Foundation, 1971), p. 334.

[5] George, The Condition of Labor, p. 42.

[6] Ibid., p. 6f.

[7] Pastoral Constitution on the Church in the Modern World, n. 69.

[8] Ibid.

[9] Aquinas, Summa Theologiae, II-II, q. 66, a. 7.

[10] Pope John Paul II, Centesimus Annus, n. 6.

[11] Andelson, article Neo-Georgism, in Critics of Henry George (Associated University Presses, New Jersey, 1979), p. 387.

[12] George, Justice the Object – Taxation the Means (Robert Schalkenbach Foundation, New York), p. 8.

[13] George, Progress and Poverty, book 8, chapter 2, p. 406.

[14] George, The Land Question (Robert Schalkenbach Foundation, New York, 1982), p. 54.

[15] Molony, The Worker Question (Collins Dove, Victoria, Australia, 1991), p. 58.

[16] Barker, Henry George (Robert Schalkenbach Foundation, 1991 edition), p. 576.

[17] Stephen Bell, in his biography of McGlynn, Rebel, Priest and Prophet (Robert Schalkenbach Foundation, New York, 1968 reprint)    gives the full text of McGlynn’s statement on pages 226-231.

[18] Henry George Junior, The Life of Henry George (Robert Schalkenbach Foundation, 1960), p. 565.

[19] New York Sun, January, 1893.

[20] Molony, The Worker Question, p. 109.

[21] George, The Condition of Labor, p.9.

[22] Aristotle, Rhetoric, book I, chapter 13, 1373b, 6-8.

[23] Cicero, The Republic, book III, section 33.

[24] St Thomas Aquinas, Summa Theologiae, I-II, q. 91, a. 1.

[25] Ibid., a. 2.

[26] George, The Science of Political Economy (Henry George Foundation of Great Britain, 1932),    book I, chapter 8, p. 51.

[27] George, The Reduction to Iniquity (Robert Schalkenbach Foundation, 1982), p. 45.

[28] Ibid., p. 46.

[29] George, The Science of Political Economy, book I, chapter 2, p. 14.

[30] George, Progress and Poverty, conclusion, p. 563.

[31] James 2:2ff.

[32] George, The Science of Political Economy, book II, chapter 14, p. 208.

[33] Leviticus 19:18; Matthew 19:19.

[34] George, Progress and Poverty, book IX, chapter 4, p. 462.

[35] George, The Science of Political Economy, book III, chapter 10.

[36] John Paul II, Centesimus Annus, n. 42.

[37] Ibid., n. 33.

[38] George, Progress and Poverty, book II, chapter 3, p. 131.

[39] Ibid., p. 141.

[40] Ehrlich, The Population Bomb (Ballantine Books, New York, 1968), chapter 2.

[41] Cf. Poverty and Poverty, conclusion, p. 560.

[42] Pius XI, encyclical Quadragesimo Anno, 1931, n. 75.

[43] Leviticus 25.

[44] Ibid., verse 23.

[45] Isaiah 5:8.

[46] St Ambrose, De Nabuthe, PL 14:747.

[47] George, Progress and Poverty, book VII, chapter 1, p.344.

[48] St Basil the Great, Homilia in illud Lucae, PG 31, 276.

[49] Aquinas, Ad Ducissam Brabantiae (Marietta, 1954), Opuscula Phil., pp. 249-252.

[50] John Paul II, Centesimus Annus, n.31.

[51] Denzinger-Schonmetzer,1442.

[52] Leo XIII, Rerum Novarum, n. 3.

[53] Ibid. n. 10.

[54] Molony, p. 59.

[55] Messner, Social Ethics (Herder, 1965), p. 690.

[56] Nulty, Back to the Land (Henry George Foundation of Australia, 1939 edition).

Land is pretty important. All wars are fought over land and territory.

So, I put this forward as the possible truth about inflation.

Bryan Kavanagh’s theory of inflation

1. Taxes and land prices generate inflation which is passed on in prices.
2. Public capture of land rent does not create inflation.
3. The Consumer Price Index does not measure the inflation from taxes and land prices.
4. Hidden inflation from taxes and land prices continues to rise until it can no longer.
5. A deflation eventually sets in to wipe out land price inflation.
6. This generates devastating financial crashes and social problems.
7. As recovery from the process takes place, taxes remain on incomes and goods and services instead of on land values.
8. The cycle of the tax regime inflating land prices is repeated.

Many blame money and debt as the generators of inflation, without bothering to concern themselves on what the debt was incurred and the money spent.

Beneficiaries from the pathological inflationary/deflationary cycle (“the natural business cycle”) are the few extraordinarily large owners of land values (not land areas). In the economics sense, ‘land’ includes all natural resources (land, mining, oil, electromagnetic spectrum, aircraft slots, &c.)

Inflation is a terribly big price to pay for obeisance to big land owners, particularly when the word ‘owner’ is said to come from the Middle English ‘owerner’: he who owes the rent.

Maybe we need to understand the near-uselessness of CPI as a measure of inflation? Real inflation is generated from the private capitalisation of land rent, land having no cost of production.

The RBA increased the cash rate today.

Will the incoming government also try to decrease the budget deficit?

If so, that will be the perfect combination to help develop the financial collapse we’re about to experience from the real estate bubble anyway.

No, financial commentators; it was not a necessary action. It will worsen Australia’s increasing poor socio-economic circumstances.

The politics of atrophy ensures that Australians and their incoming government aren’t ready for the steps that need to be taken.

There are politico-economic reasons why I’m a permabear. We’re constantly stuffing up macro-prudential lending because we’re in serfdom to the FIRE sector.

We’ve been told to think about “housing affordability” but it’s really about the affordability of land.

Except for Henry VIII’s extravagance, land prices wouldn’t have existed!

Economists keep telling us that land prices are high because of “excessive demand” but this shows that supply and demand affects land rent, not land price: –

Just look at Australia’s land price increases since 1984! That’s why women must go out to work too early after the birth of their children.

After 30 years of “Life Matters”, Geraldine Doogue was getting pretty close to the truth of the matter this morning!

Anyway, forget about taxing land values instead of incomes: you women had better just get out there to work! No UBI for you!

“But it wouldn’t be capitalism if we collected land rent instead of income taxes!” Yes it would. We made a pretty good effort during the Progressive Era when most taxes were levied on land values – until Neoclassical Economists lied to us that there was “No longer enough rent“.

That’s BS of course, because all taxes and their excess burden come out of rent anyway (ATCOR and EBCOR), so there’s always enough rent to be taxed away to rid us of inflation!

https://www.realestate.com.au/news/jenkins-familys-huge-payday-for-apple-orchard-in-wantirna-south/

Cross-posted from “Unlearning Economics“.

How refreshing to hear Dr Cameron Murray’s insights into ‘property’! It makes a mockery of economists’ idea suggesting we would reduce property prices if we were to rezone more land.

Pull up a seat and pour yourself a cuppa to hear an analysis that challenges often held misconceptions. It is worth listening right through if you want to learn how backward what is dished up to us as how finance and economics works really is.

(The story of the Singaporean social worker who had to come to Australia for a job because there was no homelessness in Singapore was particularly instructive!)