Henry George was a prominent political economist who gained significant popularity with the book Progress and Poverty. A person with substantial knowledge of economic literature would appreciate his book. The author is centrally concerned with the reason developing countries still live at higher poverty levels. In the first chapter (par. 1), he states that “We are investigating and reviewing how currently accepted theories attempt to explain it. We want to discover why poverty persists despite the increasing wealth.” George wrote the book following his recognition that poverty is the central puzzle of the 20th century. It attempts to answer why the wealth accumulated in various states does not serve the whole population.
In summary, George (2006) identified the conventional production factors, including labor, land, and capital. He posits that economics focus on two factors, namely money and employment, disregarding natural resources. The two areas of focus, however, are insignificant without the latter, where they are engaged. The neglected factor of production allows people to generate wealth using labor and capital. Perhaps the book suggests that the primary cause of wealth disparity is unequal land ownership distribution.
The author asserts that imposing taxes on land values is necessary to mitigate the partial distribution of resources. George (2006) does not advocate for land seizing and individual possession. He opposes authorities that rent natural resources, offering the rights to utilize a property that the beneficiary did not create. Therefore, tax imposition on leased but not individually owned land is appropriate to reduce inequality in its distribution. George’s (2006) allegation is correct because leasing or seizing denies the owner an opportunity to utilize land in a way that could create other resources to reduce poverty. Most people who rent land belong to high-income classes, which will enable them to accumulate more wealth than the owner.
Furter, George discovered in the first chapter that many theorists had contradicted the fact that capital accumulation precedes the employment of labor. They claim that activity is limited by capital, which is only possible in an advanced economy where complex production techniques are utilized. For instance, Thomas Malthus is a theorist that exemplifies many learners who embrace the theory of wages, which is presumptive. George (2006) claims that ideas on salaries were never examined adequately. According to Malthus, a population tends to grow faster than the available resources can sustain it (George, 2006). Ricardo is another theorist who postulated significant ideas concerning rent. He states that capital and labor can yield diminishing returns to some point. According to George (2006), the idea explains the highly sophisticated and advanced societies, not permitting investigation of other production factors. Therefore, Malthusian, Ricardo, and Georgian theories are fundamental in answering the question of poverty in current economic situations.
The author seems to oppose Malthusian ideologies because they deflect the need for reform and contain inequality. Georgian objection to Malthus is justified from the perspective of today’s societies. He says, “I assert that a larger population can collectively produce more than smaller ones. Poverty is caused neither by many people in a community nor any limitation of nature, but by social injustice. Other things being equal, everyone would receive greater comfort under equitable wealth distribution” (George, 2006, chapter 9. Par. 2). His allegation is true because most societies are impoverished due to illegal wealth accumulation in their leaders’ hands. They set wrong priorities, which consider non-urgent issues, leaving poverty unaddressed.
Each society should not overlook the developments of a simple setting because the complex ones are an elaboration of them (Kerr, 2019). The principle employed in advanced production cases such as division of labor and sophisticated equipment should not abolish or reverse the older ones. Progress and poverty portray the fundamental opinion for which a political economy is established. It emphasizes George’s leading idea that the primary cause of economic pitfalls is private ownership of rent. The optimal remedy for this vice is to impose a single land tax. The system reveals how George treats the Malthusian law of diminishing returns, the relationship between wages and capital, as well as interest.
Several states exemplify George’s positions on the affairs of a political economy. For instance, China and India have dense populations, but their economies are growing sustainably. George asserts more inhabitants do not cause poverty but other factors that prevent the social organization from utilizing the natural resources and labor to secure their returns. Usually, an increasing number of people means more workforce to work in natural developments for subsistence (Masaki, 2021). For this reason, George asserts that everything that furnishes the means of subsistence can multiply, meaning each person should optimize the productive power to mitigate poverty.
Interestingly, George’s reasoning is somehow inconsistent. Given favorable conditions, natural resources such as plants and animals can increase more rapidly than human beings can. However, they can reach a point where they have pressed their means of subsistence, setting a similar limit for humankind (George, 2006). Human beings can multiply for a certain period and become unsustainable on the land they could utilize to create wealth. Thus, George’s allegation is inconsistent with nature because the number of living organisms can increase to the extent that they exert pressure on the available resources for subsistence.
In contrast, Progress and Poverty portray Malthus thinking that more wealth leads to a larger population. George contradicts this when he states, “Given more food and better conditions, animals and vegetables can only multiply — but humans will develop. In one case, the expansive force can only extend in greater numbers. In the other, it will tend to extend existence into higher forms and wider powers” (George, 2006, Chapter 8, par. 16). The author implies that the possibility of a population rising becomes weak at some point, just like a person’s limited development. George’s treatment of the law of diminishing demand for land is interesting because the rule is instrumental in demonstrating how rental increase follows a rise in population density. The author argues that the more the people, the larger the pressure exerted on subsistence means.
Further, George presents his ideology as though it assigns soil’s declining productivity to capital and labor. The author seems to reject the law by alleging that the scientific rules of permanence of matter and energy conservation for fertility domains are indestructible. However, factors such as the natural causes of soil erosion and earth movements contribute to land destruction, which is considered subsistence production. Soil conservation against erosion factors renders it fertile and productive to yield diminishing returns, which occur above specific points of tenure with intensive capital and labor. This allegation is meaningless to George’s (2006) economic law, and he quotes that more people cannot be sustainable in a civilized economy as fewer ones can be. The tightness and scarcity of natural resources pose adverse penalties to overpopulation. According to the author, in a state of equality, population exponential should make all individuals rich but not poor.
In support of George’s allegation, developed nations such as the United States (US), England, and the United Kingdom are instrumental. The author’s assertion that a state of civilization should better provide for more people is depicted as the two superpowers have witnessed better living conditions with increasing populations over the years (Obeng-Odoom, 2017). The country has seen significant improvements in technology, education, and healthcare over the past centuries. The author acknowledges that population rise is related to per-capita increase. In the real sense, per-capita production improvements have facilitated inhabitants’ multiplication without decreasing their living standards.
Further, the author posits that rent and not labor receives intensive production of material progress. Additionally, capital and work do not present interests as conventionally thought (George, 2006). People struggle in a political economy because advancements in rent reduce wages. The author asks what keeps rent changing and the forces necessary to distribute rent in production. Other theorists focused on population growth, which is characterized by imperfect land tenure. George (2006) asserts that this statement does not consider rental increment during substantial progress. Other factors exist to cause higher leasing prices, and they can be identified by tracing the wealth distribution lines. The main changes that George (2006) notes contribute to economic progress include denser populations, improvised production and exchange channels, and expansion of knowledge, policies, and code of conduct.
George’s book reveals that the author was keen on explaining contemporary crises. However, his presentation of the industrial depression lacks depth if it should be used to describe economic facts. For instance, hypothesizing land increases rent and eventually reduces wages and interests. Capitalists and workers would naturally object to this theory, interfering with production, and leading to industrial crises related to under-utilization and over-production. George’s (2006) allegation means land speculation increases natural resources’ value, leading to huge rents. However, leasing prices determine the land’s value and not the latter determining rent. The only situation that causes hire charges to increase due to speculation is when land is unused or poses economic effects on the diminished demand. This comment explains the reason landowners would lease land if they do not utilize or sell it. Thus, natural resource speculation differs from commodity speculation. The same case applies when sellers with large quantities of produce hoard products to force prices in the future. George meant that everyone who buys items hoping to earn profit later might rent it at present.
Moreover, the author concludes that private resource ownership is a tremendous economic evil that societies should eliminate as far as possible. It is also possible that a few localities exist where land speculation leads to the non-utilization of capital and labor, which may be employed in other forms. An individual cannot find enough explanation for turmoil in limited conditions. George (2006) does not consider that during an economic depression, capitalists and property owners are proactive in generating wealth from their resources. Thus, other individuals would not conclude that capital does not lock out labor and land. The author does not prove that landowners can lockout capital and labor either during or before industrial crises. Overall, entrepreneurs usually possess as many natural resources as they require to run their businesses; hence, it is impossible to experience a lockout.
In the ninth chapter, the author asserts that societies would notice a single tax’s advantages by taking intensive consideration. Other taxes hamper various businesses and industrial progress. Thus, banning them is necessary to enable sustainable production (George, 2006; Kerr, 2019). As a result, land values would rise further, creating enormous surpluses for standard courses in an economy. Additionally, the author posits that contemporary taxation methods are unfavorable, costing more to acquire commodities via a customhouse as opposed to moving them around the world. Such systems penalize industries and hamper skill development. George’s (2006) allegation is true, especially in the context of an international organization. The hosting state requires compliance with various tax laws and liabilities, which significantly reduces investment return, discouraging foreign investors.
The author found that eliminating rent would have tremendous effects on production, wealth distribution, as well as individuals and classes. He is considerate to all members of society, low and high-income earners. Rent confiscation and tax imposition on land would balance the interests of entrepreneurs and property owners (Macfarlane, 2018). Individuals with extensive grounds will also benefit because production will increase, creating a fair social condition. It is also notable that small landholders and low-income earners will reap huge returns. George is right in his allegations because, under normal circumstances, a proportional tax rate does not affect wealth distribution in an economy. Regressive levies pose huge burdens on low-class individuals, alleviating income disparity (Obeng-Odoom, 2021). Thus, George’s claim on progressively taxing lands can result in the actualization of egalitarian objectives and improve equality.
The tenth chapter of George’s book focuses on the cause of human development. He posits that people cannot be traced in lower conditions than older generations still existing today. Additionally, there is no relationship between humans and animals, as other theorists put it. This allegation is questionable, and perhaps it is true because the theories of human progress are based on presumptions, not facts, which George (2006) states. He notes that there are no animals using clothes, preparing meals, expressing themselves in articulate languages, and making weapons as human beings do. An individual’s physical ability could not allow them to exist without the mentioned basic skills. Therefore, it is justifiable that human beings did not originate from primates, but social factors have transformed their identities through interaction and cooperation.
Conclusively, George aimed to analyze the existence of poverty and inequality despite industrial development. He posits that economists’ focus on labor and capital overlooks land, which is the primary factor of production, which should improve economic conditions. According to George, a great mistake is unforgettable, and he warns people against the measures that do not resolve inequality. The author spent most of his life fostering land value tax, although his theory was never actualized in most states. His ideas on land reform would minimize unjust land grabbing and avail areas for home building. They would also reduce land speculation and hoarding among politicians to ensure that town centers grow under appropriate management to support equality. George argues that progressive taxation on land is necessary to resolve inequality in wealth distribution.
References
George, H. (2006). Progress and Poverty (modern edition). (C. Cobb, Ed.). Bob Drake.
Kerr, G. (2019). Private economic liberty and the idea of quasi-private ownership. In Raisons Politiques, 73(1), 103-117.
Macfarlane, L. (2018). Why the distribution of wealth has more to do with power than productivity. UCL Institute for Innovation and Public Purpose.
Masaki, T. (2021). Franklin Obeng-Odoom, Property, institutions, and social stratification in Africa, Cambridge University Press.Evolutionary and Institutional Economics Review, 1, 1-9.
Obeng-Odoom, F. (2017). Defending cities for people, not for profit (review of the city as commons). Urbani Izziv, 28(2), 159-161.