In demolishing  Nobel Prize winner Robert Lucas in “Can we avoid another financial crisis?“,  Professor Steve Keen says: This [the aggregation of all microeconomic demand into the macro-economy] is valid if you aggregate all wage earners into a group called ‘Workers’, all profit earners into a group called ‘Capitalists’, and all rent earners into a group called ‘Bankers’ …. [p.28].

Keen makes the point that it’s impossible simply to aggregate all micro-demand into the macro-economy without a proviso reflecting the differential natures of demand. Let’s not quibble with Keen that rent can be ‘earned’, but move to Henry George’s elaboration of oppositional demand. And that opposition is not between labour and capital,Thomas Piketty: banking rentierism is the issue.

George made the very telling distinction that land rent has first claim on all income, and being unearned by its very nature, it must be captured to the public purse if we are to avoid economic depression. This is because the incomes of labour and capital actually rise and fall together, in inverse relationship to privatised rent/land price. Were we to capture rent/unearned income–in order to generate real wealth and prosperity–we’d soon come to learn there is no necessary ‘business cycle’.  Banks may not be impressed, however!

Any person who is able to appreciate the validity of George’s argument is indeed worthy of the name ‘economist’.  In Georgist circles, this insight became known as ‘seeing the cat’. For the vast majority of ‘economists’, therefore, the appellation, in Donald Trump terms, is a ‘fake’ one. Apologies to all you non-Georgist professional ‘economists’ out there!

Do you see the cat?

Leave a Reply