Georgism as a Historical Framework Part II
Georgist view of Conflict.
Georgist Analysis of Mixed Classes
Unfortunately, a Georgist account of historical conflict will be a bit more convoluted in many countries than the Marxist one. Unlike the clear-cut division between proletariat and bourgeoisie, a Georgist analysis must contend with the reality of the current historical moment. First, that it has been a deliberate policy to encourage workers of all-sorts to engage in petty rentierism through home ownership. The detritus of the previous jury-rigged solutions to the Land Monopoly have produced, as a matter of deliberate calculation, a muddled structure of land ownership that deliberately makes the interests of rentiers and the productive falsely appear inextricable. In the US this state of affairs is a result of deliberate policies like the Homestead Act, federal subsidies of mortgages, and tax incentives for homeownership. Though the vast majority of worker-homeowners would be better off in terms of their overall financial position1 if they had never been the victim of rentierism in the first place, calculating that on an individual level is nearly impossible. Conversely, the partial compensation that some of them have gotten in terms of being allowed to benefit from land appreciation is extremely tangible. This dichotomy means that rentierism has created a mass constituency for itself. Though a Marxist might term this “false consciousness” that term isn’t correct in this case as this class consciousness has some material basis; “mistaken consciousness” might be a better term (but someone ought to come up with something a bit more pithy).
The other part of this is that a similar condition exists in business. As many businesses own their own real estate, they also may participate in land rentierism (a good look at the structure of McDonald’s means that many of them are aware of how lucrative it is). Notwithstanding the McDonald’s example, in most cases it is a defensive strategy to keep from becoming the victim of rentierism. However, the effect is to create an interest in the preservation of the Land Monopoly by creating a tangible asset, held by many, whose value would be destroyed by Georgism.
Therefore, given our present arrangements, a Georgist theory of economic conflict, would be able to provide a clear insight into the playbook, activities, and results of rentierism and therefore provide strategic direction into how to counteract rentierism and prevent rentierist class-formation in the first place. In addition, an analysis of class dynamics would, ironically, encourage the formation of a “class consciousness” on the part of workers-homeowners and business-landholders. In both cases they must be educated to understand how much more rentierism has taken from them than it has given them. Furthermore, concrete proposals must be made to split their interests from those of the Land Monopoly and land speculators. Although George himself disagreed with compensation for landholders, the Land Monopoly simply must be deprived of its mass constituencies. It is difficult to see how this can be accomplished without compensation for the average single-family homeowner and some business landholders. A solid general theory would provide the outline of how all this should work, who is due compensation, and how the amount should be determined.
Someone steeped Marxism might suggest a strategy of waiting until every middle and mixed class is crushed as land ownership became the privilege of the favored few (as is already happening) and educating the growing class of utterly dispossessed masses of their plight until they launched their inevitable revolt. Afterall, the two mixed classes are in the process of being eliminated and a very healthy profit is being made doing so. Worker-homeowners may soon find themselves unable to afford to buy any sort of housing as they will be outbid by Wall Street, which has access to much cheaper financing. Additionally, as mentioned before, financiers are also making a very healthy take in separating businesses from their real estate and then using control of that real estate to ensure steadier and higher returns than mere operation of the business would yield. Therefore, the material conditions of immiseration of all except rentiers are certainly being created.
However, this strategy is risky and unappealing. For one thing, rentierism’s resurgence (among some other factors) has resulted in deindustrialization. Unlike Marx’s industrialized proletariat in physical possession of the means of effective rebellion, a future revolt of rentierism’s victims might have something more in common with the periodic peasant revolts of the middle ages. The win-loss record of those conflicts is not at all encouraging. For another, a conflict launched while there is still a well-heeled class of people who derived their wealth from productive work and investment disconnected from service to rentiers seems a much more advantageous position to be in (whatever one thinks of Peter Theil, this quote is worth thinking on). Finally, as Henry George himself predicted, a state of affairs where there are no classes left besides rentiers and their victims is more likely to result in total collapse than in successful revolution.
Political Consequences of Land Monopoly
Leaving aside the predictions and analysis of Marx, one finds more frighteningly edifying predictions from George. Despite his less developed theoretical grounding, George understood very well that allowing the existence of the Land Monopoly meant the institutionalization of corrupting rentierism in the government. In a speech made on July 4th 1877, George spoke of America’s future and his fears for it once the bounty distributed by the Homestead Act had run out:
That republican institutions would work well under the social conditions of the youth of the Republic—cheap land, high wages and little distinction between rich and poor—there was never any doubt, for they were working well before. Our Revolution was not a revolution in the full sense of the term, as was that great outburst of the spirit of freedom that followed it in France… The doubt about republican institutions is as to whether they will work when population becomes dense, wages low, and a great gulf separates rich and poor…the public domain fit for homes is almost gone…Then the influences that are at work to concentrate wealth in the hands of the few, and make dependence the lot of the many, will have free play.
The political consequences of the end of cheap land were foreseen with frightening clarity:
“Where there is universal suffrage, just as the disparity of condition increases, so does it become easy to seize the source of power, for the greater is the proportion of power in the hands of those who feel no direct interest in the conduct of the government, nay, who, made bitter by hardships, may even look upon profligate government with the sort of satisfaction we may imagine the proletarians and slaves of Rome to have felt as they saw a Caligula or Nero raging among the rich patricians…
Unscrupulousness commands success. The best gravitate to the bottom, the worst float to the top; and the vile can only be ousted by the viler. And as a corrupt government always tends to make the rich richer and the poor poorer, the fundamental cause of corruption is steadily aggravated, while as national character must gradually assimilate to the qualities that command power and consequently respect, that demoralization of opinion goes on which in the long panorama of history we may see over and over again, transmuting races of freemen into races of slaves…And as we see the gulf widening between rich and poor, may we not as plainly see the symptoms of political deterioration that in a republican government ‘must always accompany it”
Though George’s musings on history weren’t entirely systematic, one can discern the outlines of a comprehensive Georgist historical theory. It predicted not a revolution that ends history, but a repetitive historical cycle where the concentration of land leads to corruption, stagnation, poverty, and collapse. This state of collapse means that easy access to land may allow for a recovery, after which the cycle repeats. Therefore, the Land-driven business cycle that Hudson elucidates so clearly is scaled up into a full blown political-civilizational cycle.
Of course, George understood very well that the idea of progress being the cause of its own demise was baked into his theory:
“Not merely the general rule, but the universal rule, is the reverse of this. The earth is the tomb of the dead empires, no less than of dead men. Instead of progress fitting men for greater progress, every civilization that was in its own time as vigorous and advancing as ours is now, has of itself come to a stop. Over and over again, art has declined, learning sunk, power waned, population become sparse, until the people who had built great temples and mighty cities, turned rivers and pierced mountains, cultivated the earth like a garden and introduced the utmost refinement into the minute affairs of life, remained but in a remnant of squalid barbarians, who had lost even the memory of what their ancestors had done, and regarded the surviving fragments of their grandeur as the work of genii, or of the mighty race before the flood.” (Progress and Poverty Book X, Chapter I)
After disposing of the various confused, racially tinged and Lamarckian-adjacent theories that were unfortunately in vogue in his time, George gets the heart of the matter and clearly states exactly how Land Monopoly is the primary means by which civilization diminishes its own progress:
“I am merely attempting to set forth the general fact that as a social development goes on, inequality tends to establish itself, and not to point out the particular sequence, which must necessarily vary with different conditions. But this main fact makes intelligible all the phenomena of petrifaction and retrogression. The unequal distribution of the power and wealth gained by the integration of men in society tends to check, and finally to counterbalance, the force by which improvements are made and society advances. On the one side, the masses of the community are compelled to expend their mental powers in merely maintaining existence. On the other side, mental power is expended in keeping up and intensifying the system of inequality, in ostentation, luxury, and warfare. A community divided into a class that rules and a class that is ruled—into the very rich and the very poor, may “build like giants and finish like jewelers;” but it will be monuments of ruthless pride and barren vanity, or of a religion turned from its office of elevating man into an instrument for keeping him down. Invention may for awhile [sic] to some degree go on; but it will be the invention of refinements in luxury, not the inventions that relieve toil and increase power.” (Progress and Poverty Book X, Chapter I)
George, however, did not have the benefit we have of observing this process reach its maturity in an industrial age. In his time, what we know as the Rust Belt was still gleaming and shiny underneath the coal-dust air it produced. The process of industrialization and then ossification is now far advanced in so many countries that it should be possible to trace how various aspects of policy, as they relate to the Land Monopoly, contribute to the wealth and poverty of nations in the industrial era. The effects of land reform policies in industrialized countries like Taiwan and Japan can be evaluated in this regard and contrasted to countries like Britain which were once heavily industrialized but underwent no meaningful land reform. These observations can be incorporated into a general historical theory. Through these sorts of explorations the question can be answered: In an age of advancing technology, what allows for the development of a rentierist faction powerful enough to retard such progress? How does this faction operate? What prevents the formation of such a faction? As this theory is refined, hopefully, economics itself can decrease the hemming and hawing that has characterized economics thus far. A Georgist theory that strengthens the ability of economics in making predictions will fortify a Georgist political project. This, of course, necessarily means that the points that Hudson emphasizes regarding grounding Georgism in calculation are every bit as important as grounding it in narrative and history.
More precisely, anyone who has made most of their living through wages (or returns from productive investment) rather than rent would be made better off.