Arts and Crafts Utopia

How we live, and how we might live.

Tag: unearned increment

Henry George and Silicon Valley

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…

Henry George and William Morris

Henry George - Progress and PovertyThe Journal of the Craftsman Farms Foundation has published a short article I wrote, “The Aesthetics of Social Reform: Henry George and William Morris” in their latest issue, adapted from a talk I gave at the Craftsman Farms Emerging Scholars Symposium back in fall 2013.  The topic is Morris’s increasing disenchantment with Henry George’s Single Tax plan as a panacea to solve society’s ills. I focus on the difference between unearned increment (George’s theory of rentier exploitation) and surplus value (Marx’s theory of capitalist exploitation) to help account for why Morris threw his lot in with Marx, not George. In Morris’s view, George’s study, Progress and Poverty (1879), for all its merits, ultimately  failed to account for why poverty persisted (even thrived) in the most advanced civilizations — a problem that persists to this day.

Here’s the PDF: Craftsman Farms – George and Morris

Here’s the first few paragraphs:

It is difficult now to grasp the magnitude of Henry George’s influence in the late 19th and early 20th centuries. Currently gathering dust in libraries, George’s 1879 book, Progress and Poverty, was a sensation in its day; the 3 million copies sold in the United States made it one of the century’s bestselling books, inspiring a quasi-religious following (“Georgists”) and a political movement. An early version of the board game Monopoly was invented to introduce players to George’s ideas.

William Morris, the British poet-craftsman-socialist, was initially a George enthusiast. The American economist had made a triumphant tour of England in 1882, and Morris admired his trenchant attacks on competitive capitalism and industrial society. Yet throughout the course of the 1880s, as Morris became a more active and committed socialist, his attitude towards George markedly soured. Morris went from thinking of George as a prophet of socialism to one of its most insidious enemies; private admiration curdled into public opposition. For Ruth Kinna, author of William Morris: The Art of Socialism (2002), “Morris’s disenchantment with George’s work marked the first major shift in his thinking.”

What was this shift? To measure Morris’s about-face regarding George, we have to measure the distance he traveled from enthusiasm to eventual disappointment. Whatever his conclusions, Morris at least thought George was asking the right questions. How can it be, George wondered, that: “Where the conditions to which material progress everywhere tends are most fully realized—that is to say, where population is densest, wealth greatest, and the machinery of production and exchange most highly developed—we find the deepest poverty, the sharpest struggle for existence, and the most enforced idleness.”