I’ve done some research and writing on once-popular but now obscure economist, Henry George (particularly his influence on Arts and Crafts colony, Rose Valley). I wrote a short article for the Craftsman newsletter about William Morris’s revealing transition from George fan to harsh critic. But I was resigned to the fact that George’s bestselling 1879 book, Progress and Poverty, is now largely gathering dust on library bookshelves.

George might be having a brief reappearance in the spotlight, however, thanks to a Vanity Fair article discussing George’s relevance to new forms of “unproductive capitalism” such as the finance industry. It’s an intriguing argument. George posited the theory of unearned increment: Land was once held in common, the shared property of all, but over time fewer and fewer people owned land. For these land monopolists, speculating on the ever-increasing value of real estate, “labor” consisted entirely of collecting higher and higher rent, or “unearned increment.” Workers who did not own land had only their own labor to sell. As rents increased, small businesses could no longer afford to lease real estate. That left industrial corporations and conglomerates with the power to monopolize available land.

George’s solution had the advantage of elegant simplicity: only one tax (his famous “Single Tax”) would be necessary to level the playing field. Land (not the means of production) would become the common property of the state. If the government imposed a single tax on unearned increment, the burden would be on the landowners to make their land productive, to produce wealth enough to offset the single tax and still make a profit. Equal access to land would enable laborers to become self-sufficient while employers (land owning capitalists) would have to raise wages to meet the demand for maximizing land value.

What does this have to do with Silicon Valley? Author Michael Kinsley provocatively draws a comparison between “unearned increment” and new finance industries where money begets money:

You’ve got to think of “land” as a metaphor for all unproductive forms of capitalism. Much of the financial industry, for example: hedge funds, private equity, I.P.O.’s and I.R.A.’s. Some might defend finance as an industry that makes the making of what other industries make more efficient. But when you read that Goldman Sachs is getting some enormous fee for fuck-all or that two companies are merging that unmerged a few years ago and will unmerge again in a few years, you gotta wonder.

Take a look at the Forbes 400 list. The No. 1 slot has been occupied for many years by Bill Gates, co-founder of Microsoft. As it happens, Microsoft and Gates are a notable exception: Gates grew rich the traditional way, producing real products that people were willing to pay for. But, as Forbes admits, 93 of the Forbes 400 made their money by just playing with money: “All together this group is worth a combined $491 billion—20% of the Forbes 400’s total $2.4 trillion net worth.”

See the rest of the article here…