The document below was written by Google's Gemini after I gave it the entire text of Henry George's Progress and Poverty. I asked it to write a shorter book in a more modern writing style. I think it succeeded at one of those tasks.
The original text consists of 43 chapters spread over 10 "books", plus an introduction and a conclusion. I instructed Gemini there was no need to mimic the structure of the original, but for the most part it decided that each chapter it output would correspond to one of the original books.
If you prefer a medium size version (72 pages), written by a human, and published in 1928, consider John Dewey's The Essence of Progress and Poverty.
See also: a visualization of Ricardo's law of rent
The last century has seen a huge increase in our ability to produce wealth. We've harnessed steam and electricity, developed new processes and machines, and made trade easier than ever before. This has made labor more effective.
At the start of this era, we naturally expected that these new inventions would make life easier for workers and eliminate poverty. It seemed obvious that the ability to produce so much wealth would lift everyone out of want.
It's easy to imagine how a person from the 18th century might have viewed the future. They would have seen steamships replacing sailing ships, trains replacing wagons, and reapers replacing scythes. They would have marveled at the power of machines and the speed of factories. They would have expected these advances to create a world where no one had to struggle for basic needs. They would have imagined that this abundance would lead to a golden age of harmony and peace.
But this dream has not come true. Instead, we are faced with industrial depressions, unemployment, and widespread poverty. This is happening in countries with different governments, different economic systems, and different populations. It suggests that there's a common cause behind these problems, a cause closely tied to material progress itself.
The problem is this: wherever material progress is most advanced, we also see the deepest poverty, the fiercest competition for survival, and the most unemployment. People migrate from old countries to new ones in search of better wages and more opportunities. It seems that the very conditions we strive for—closer settlements, better technology, greater wealth—also bring about greater poverty.
This connection between progress and poverty is the great puzzle of our time. It's the central problem that creates so many social, industrial, and political difficulties. Unless we can solve this riddle, progress will be neither real nor permanent. It will simply widen the gap between the rich and the poor, making the struggle for existence more intense.
Many different explanations for this problem have been offered. Some say it's caused by over-consumption, others by over-production. Some blame wars, others blame technology. But these varying theories only show that we haven't yet found the true answer.
The science of political economy should be able to provide a solution to this problem. Political economy isn't just a set of rules; it's a way of understanding how the world works. It seeks to understand cause and effect, and its foundation is the simple truth that people seek to satisfy their desires with the least effort.
In the following chapters, I will use this method to examine the problem of poverty and progress. I will try to find the laws that link these two seemingly opposite forces. I believe that in understanding this connection we can find the cause of industrial depressions and the key to a better future.
Let's focus on the core of the problem: Why, despite our increased ability to produce wealth, do wages remain so low? The standard explanation is that wages are determined by the ratio of workers to the capital used to employ them. It's thought that wages will always tend to a minimum because the number of workers tends to increase faster than capital.
This theory is widely accepted. It's been endorsed by many economists and is taught in universities. It even seems to fit with some common ideas about economics. Many people believe that the total amount of money available for wages is fixed. They think that if more people are competing for jobs, wages must go down.
However, this theory doesn't match the facts. If wages depend on the ratio of labor to capital, then capital should be abundant where wages are high, and scarce where wages are low. But the opposite is true. Interest rates, which reflect the availability of capital, are high when wages are high, and low when wages are low.
For example, in new countries where wages are high, interest rates are also high. And when wages fall, interest rates also tend to fall. This correlation between wages and interest shows that they are not opposing forces, but rather linked together.
Economists like Mill, Fawcett, and Price have tried to explain the higher wages in new countries by saying that production is greater there. But this explanation is inconsistent with their theory of wages. They are making the ratio of production, not capital, the determiner of wages.
Even a writer as logical as Professor Cairnes tried to fix this inconsistency. He argued that in new countries a larger proportion of capital is used for wages. However, this doesn't explain why wages and interest rise and fall together within the same country.
The current theory of wages is based on the idea that wages come from capital. It assumes that capital must be accumulated before labor can be employed. This leads to the conclusion that industry is limited by the amount of capital available.
But what if this idea is wrong? What if wages are not drawn from capital, but rather from the product of the labor itself? This is the proposition I want to prove: Wages are drawn from the product of the labor for which they are paid, not from existing capital.
At first, this may seem like a minor point. But the distinction between these two ideas has huge consequences. The idea that wages are drawn from capital is used to justify theories about the relationship between capital and labor. It leads to beliefs that industry is limited by capital, that every increase in capital creates jobs, and many other ideas that shape our thinking.
Therefore, it's crucial to understand the difference between these two concepts. If I can prove that wages are actually drawn from the product of labor, then the foundation of the current economic theory crumbles.
The current theory assumes that wages are paid with money that the employer already has. However, in many cases, wages are paid before the product is sold. It's inferred that, therefore, industry is limited by capital; labor cannot be employed until capital has been accumulated.
But if you stop and think about this, it becomes obviously wrong. Capital is simply stored-up labor. The idea that labor cannot be employed until the results of labor are saved is absurd.
We need to look at production as a whole. Each individual who participates in production is, in effect, doing the same thing as the first humans did when they gathered berries or hunted. They are trying to satisfy their needs by using their abilities. They exchange the fruits of their labor for the fruits of others. That which he receives, he in reality produces. When a man digs roots and exchanges them for meat, he's effectively producing that meat as much as the man who hunted it. Earning is making.
When we look at things this way, we see that wages are not advances of capital, but the earnings of labor. They represent a share of the wealth created by that labor. When a laborer receives money, he is simply receiving a draft on the general stock of wealth. He can use it to get whatever he desires from that stock. The money doesn't represent capital advanced for his maintenance; it represents the wealth his labor has already added to the general stock.
It's clear enough if we look at simple cases of production. But to fully counter the idea that wages are drawn from capital, we need to examine it from all sides, starting with the facts.
The current theory of wages is supported by the idea that population tends to increase faster than the means of subsistence. This idea, known as the Malthusian theory, is that population increases geometrically (2, 4, 8, 16, etc.), while subsistence increases arithmetically (1, 2, 3, 4, etc.) Thus, population will inevitably outgrow its food supply, leading to poverty and misery.
This theory is widely accepted, and it's used as the foundation for many economic and social ideas. However, it seems to me that this theory is not supported by the facts.
Malthus based his theory on the idea that population will double every twenty-five years. But this assumption is not backed by facts. The growth of the American colonies, which was the basis for Malthus' assumption, was unusual and is not repeated in other places. Even Malthus' supporter, John Stuart Mill, admitted that this was "an unlucky attempt to give precision to things that do not admit of it."
The core of the Malthusian theory is that population tends to increase faster than the ability to provide food. This is the assumption that needs to be examined.
The facts that are often cited to support this theory do not prove that population tends to increase faster than subsistence. They only show that in certain circumstances, where people struggle to survive, they tend to reproduce at a high rate.
But it does not follow that this tendency would exist if everyone had enough to eat. It's like saying that because a starving man will eat anything he can find, this proves that all people, even those with plenty of food, will always overeat.
It's also important to remember that in the most developed countries, we see an inverse relationship between wealth and birth rates. As wealth goes up, birth rates tend to come down.
Besides, is there really evidence that the population has increased faster than our capacity for subsistence? No!
Looking back at history, we can see that populations have risen and fallen over time. Sometimes they have become more dense and sometimes less dense. But we don't see an overall consistent upward trend. The earth isn't completely filled with people, and throughout history there have been many instances of large areas being depopulated.
Moreover, if human beings are destined to overpopulate the earth as the Malthusian theory proposes, then you would think that all of history's great religions and moral systems would advise against reproduction. Instead, most of them encourage it.
The truth is, there is no reason to believe that population tends to increase faster than the means of subsistence. This idea is a mere assumption based on a superficial view of things.
Let's look at what Malthus himself says, and at the examples he gives. The "Essay on Population" starts with the absurd assumption of arithmetical and geometrical ratios. Then, it goes on to argue for a tax on importing food and a bounty on exporting food, ideas that have now been proven wrong. And throughout the book are examples of Malthus' faulty logic.
Malthus spends most of his book trying to prove that population always tends to press against the limits of subsistence. But he does this by citing examples of human misery that do not actually prove his case. For example, he discusses the poverty and suffering caused by war, famine, and disease, but these aren't caused by overpopulation. They are caused by human actions, and they would exist even if there were fewer people.
Take the example of India. In India, there is often famine and poverty. But this is not because the land can't support the population. It is because of "the avarice and extortion of various governments." The cause of the problem is not that people have overpopulated their natural resources. It's the lack of security that exists among the population.
In Ireland we also see people struggling with poverty and famine, but this is not because the population is too high for the resources there. Ireland, when its population was at its highest, actually exported food. What it suffered from was the brutal oppression of the landlords. It is not the scarcity of resources which causes the misery, but the fact that people are stripped of the produce of their labor.
The same is true in China. Its population may be very dense in some areas, but this is not the cause of their problems. The people are poor and hungry because they are suffering under "a succession of squeezings" by the government, insecure property rights, and limited exchange.
All these examples prove something very different from what Malthus claimed. They show that when people lack security and are exploited, they are driven to poverty and starvation, even when the natural resources are plentiful. It's the rapacity of man, not the limits of nature, which creates misery.
It's also worth noting that there are some simple ways to increase production if it becomes necessary. There is no evidence that population has reached the point where the earth's ability to produce wealth has been exhausted. We have not reached the limit of space nor of subsistence.
So we see that neither facts nor analogies support the idea that population tends to increase faster than the means of subsistence. We need to look elsewhere for an explanation of why poverty exists amid progress.
We've seen that poverty isn't caused by a lack of capital or by overpopulation. This means that we need to look at the laws that govern how wealth is distributed.
The basic factors in producing wealth are land, labor, and capital. The output of their combination must be divided amongst them. The share going to the owners of land is rent. The share that goes to labor is wages, and the share that goes to capital is interest.
Unfortunately, political economy doesn't use these terms very clearly. The word "profits" is often used in place of interest. Profits, in this common usage, actually includes wages of the manager, compensation for risk, and the return for the use of capital. This is why it's important to be clear about what we mean by these terms.
The standard works of political economy don't properly relate these different aspects of distribution to each other. They're all presented separately, not as interconnected parts of a whole. For example, current thought holds that:
There is no relationship between these laws. They aren't measuring the same thing, and they're based on different ideas. This is because the current political economy fails to grasp how these laws actually connect to one another.
The fact is, the laws of distribution should be related to each other, since they describe the way that a whole is divided into its parts. If one part is increased, that must either decrease one or both of the other parts. But the current economic theory doesn't fit together in this way. This means we must look deeper and start by examining each component of distribution in depth.
We need to fix our understanding of what rent, wages, and interest really are. Land, labor, and capital are the three factors of production. Land includes all natural resources and opportunities. Labor includes all human exertion. Capital is all wealth that is used to generate more wealth. Rent is what's paid for the use of natural resources. Wages are the rewards for exertion, and interest is the return for the use of capital.
Before we proceed further, let's remember that "wages," "wealth," and "capital" are not concrete things but abstract terms. They should represent their entire classes. They also should be thought of in terms of their exchangeability.
We must also note that the idea that wages are drawn from capital is a common and narrow way of looking at the term. We have to remember that wages include all the earnings of labor, regardless of whether they're paid by an employer.
Let's start by looking at wages in their simplest form, when a laborer is his own employer, and takes directly the produce of his labor. In this case, it's obvious that wages are not drawn from capital but are the result of that labor. The eggs I collect or the shoes I make are my wages. My capital might be my leather and my tools, but I'm not drawing on this to obtain my wages.
Even when a laborer works for an employer, the same principle applies when wages are paid in kind. If I hire a man to pick berries and pay him with the berries he picks, it is clear that wages come from the labor for which they are paid.
It's only when we get to the usual way of paying wages—with money—that people think they're paid by existing capital. However, the money is simply a way of giving the worker a share of the wealth their labor has created. The man who works to produce something receives his wages in exchange for what he has done.
The argument that wages are drawn from capital is based on the idea that labor can't be exerted without food, clothing, etc., which are said to be supplied by capital. But this relies on a tricky definition of capital, and confuses capital that is intended for direct consumption with capital that is meant for further production.
The truth is that labor precedes wages, not the other way around. Payment of wages always implies prior work. And the rendering of work always implies the creation of value, which may or may not be capital depending upon whether it is meant for consumption or for further exchange. The employer receives this value before he pays out the wages. In fact, the employer returns to the laborer only a small portion of the capital his labor has created. The rest is the employer's profit.
Therefore, wages are not advances of capital. They are paid out of the product of the labor.
Now that we have a better understanding of wages, let's examine the other two factors that make up the distribution of wealth: rent and interest. First, let's clarify what we mean by these terms.
In common language, "rent" can mean payment for using anything. However, in political economy, "rent" has a more specific meaning. It refers only to the payment made for the use of land or other natural resources. When we talk about the rent of a farm or a house, we need to separate the payment for the land from the payment for the buildings and other improvements. Payments for improvements are more properly considered interest, as they are payments for the use of capital.
Also, rent doesn't always mean a payment from a tenant to a landlord. When an owner uses their own land, they still receive economic rent in the form of the extra value they get from the land. Rent is the value that comes from having exclusive rights to use land, a natural resource. Land itself may or may not be productive, but the land still has value and can command rent.
Rent is not the result of productivity. It's the result of a lack of competition for natural resources. If there is plenty of land for everyone, it will have no value. It is only when someone is willing to pay for the right to use it that it has a value.
Land rent is, in short, the price of monopoly. It is how owners take the share of the wealth that is created through others' labor. How much rent a landowner can command depends on the value of their land as compared with other, freely available land. This "law of rent" describes how rent is determined. It is simple: rent is the excess produce of land over that which the same labor can secure from the least productive land in use.
This law of rent has been recognized by many, and is largely agreed on by economists. But the most important implications are often overlooked. It shows how rent determines what is left for wages and interest, not the other way around. This can be stated as a formula: what is taken by rent cannot be taken by wages or interest.
Now that we have a good understanding of rent, let's look at interest. Interest is the return for the use of capital. But it's important to distinguish interest from what is commonly called interest, which often includes compensation for risk, or profit. Interest is, in its pure form, simply payment for the use of capital.
Why should interest exist at all? Why should borrowers pay back more than they borrowed? Some say that interest is a reward for abstinence. But simply choosing not to use something doesn't produce anything on its own.
Others say that lending capital is a service to the borrower. But the borrower is also performing a service for the lender by keeping that capital safe, maintained and ready for use. The return of the loan should be seen as a full repayment.
This may seem logical if you only think about things like money. But not all capital is like money. Consider other forms of capital. For instance, wine will improve with age. Bees will create more bees and honey. Animals will reproduce, and seeds will grow into crops. In all these cases the use of time brings an increase.
This increase is a result of the active power of nature, the principle of growth and reproduction. And this power of increase will attach itself to all capital by the process of exchange. That is, the return of a loan will include the lender's share of the benefit from the element of time. It is this general averaging of benefits which causes interest to exist. This is why a plane (which is normally a non-productive tool) will command interest, just as bees or cattle or wine do.
The borrower gets the use of a tool to help him produce wealth, and the lender receives a share of the wealth created by the power of the tool over time. Thus, in the case of a plane, the lender is due more than just the return of the plane. Time, as it goes on, gives an added value.
However, there are certain exceptions that need to be noted. Money which is locked up and not put to use won't increase. Wealth that is used to make objects that are simply for gratification or consumption will not lead to interest. But money lent or wealth devoted to production will.
Therefore, we may see that interest is not an arbitrary thing. It is a natural thing; it is not the result of a particular organization of society, but the laws of the universe. It is the power of increase in capital, produced by the lapse of time, that is the fundamental cause of interest.
By understanding the root cause of rent and interest we can now move to determining their laws.
We've now established the laws of distribution: rent, wages, and interest. We've seen that wages are not drawn from capital but are produced by labor. We've also seen that the Malthusian theory of population is not supported by facts.
This brings us to the heart of the matter: what happens to wealth distribution as material progress occurs? It's a key point to remember: Material progress increases society's productive power. This is undeniable. It's also undeniable that despite this increase in productive power, wages remain low, and there is an increased contrast between wealth and poverty.
Let's explore the effects of material progress in different conditions, first looking at the effect of increased population, then at improvements in the arts.
Ricardo believed that increasing populations caused rent to increase as cultivation had to move to less productive lands. This is a true tendency, but it isn't the entire picture. The idea that increasing population always leads to greater difficulty in getting subsistence is false. In truth, human association can make labor more efficient. The more people who are working together, the more efficient production becomes.
And as a community grows, its members are drawn together for mutual support and exchange. This process also brings out latent qualities and powers in the land. Where many work together and a web of trade and interaction is woven, the land becomes more productive. A small patch of land in a densely populated city becomes more valuable than many acres on the open frontier.
So, in reality, increases in population make land more productive than it would otherwise be. And while it may be true that the population will drive cultivation to more marginal lands, at the same time the production of land already in cultivation is increased as a result of this population growth.
Therefore, the effect of population growth on the distribution of wealth is that while wages may fall in proportion to the produce, rent increases, both as a proportion of the produce and in its absolute value.
Now let's look at the effects of improvements in the arts. We know that they increase the efficiency of labor by allowing the same amount of work to produce more, or to get more done with less effort. In a society without desire for more goods, improvements would simply mean that people would work less. But with man, no sooner are his animal needs satisfied than new needs arise. The effect of labor-saving technologies is to increase the total amount of wealth produced and this, like the growth of population, ultimately leads to increases in land value. This is because any increase in wealth will be used to satisfy the desires of men, which always include the desire for land.
This principle is true, whether the improvement is in agriculture, manufacturing, or transportation. Whatever makes labor more productive, increases the demand for land and therefore its value, and consequently increases rent. Because land is a fixed resource that is not created by labor, its price only reflects its ability to command a portion of the products of labor, and not the labor itself.
With all these improvements, you would expect wages to increase. But wages actually remain stagnant. In some areas, they even decrease. The problem is that all of the wealth created is being absorbed by rent. That is, material progress tends to increase rent and not wages.
To illustrate, let's suppose that all taxes are taken off everything except for land. In such a situation, those who hold land would still want to extract as much rent as they could. The effect would be that some land would not be used and productive power would be wasted.
This is what is happening today, as the expectation of ever-increasing land values keeps much of the land in the world from being put to use, and pushes production to more and more costly sites. All the new inventions and innovations are simply pushing up land values, they're not raising wages. The problem is with the land system itself and how it has been allowed to develop.
Therefore, we can see that the cause which associates poverty with progress is the cause which associates the advance of rent with the advance of productive power. Land is the key to the distribution of wealth.
We have now identified the cause of poverty amidst progress. It's not lack of capital or overpopulation, but the fact that private property in land allows the benefits of progress to be captured by landowners in the form of rent. The tendency of material progress to always increase rent is what keeps wages low.
The solution to this problem is simple, but radical: We must make land common property.
This may sound like a very difficult and complicated undertaking, but really, it's not. It just means that the community, not private individuals, should benefit from the value of land, and that all individuals should have an equal right to it.
To do this, we don't need to seize land or change its owners. We only need to redirect how it is taxed. In other words: We must abolish all taxation save that upon land values.
Currently, we tax everything from products and buildings to business profits and personal income. These taxes add to costs, discourage production, make prices artificially high, and make it more difficult for everyone to gain a living. But we can abolish all of these taxes and instead take all the public revenues from the rent of land.
This would have a number of advantages. It would be the fairest way to raise public revenue. The value of land is not created by any individual; it is created by society as a whole. It is therefore only fair that the value of land should be appropriated by society.
A tax on land would also be the cheapest and most efficient way of raising revenue, since land cannot be hidden or carried off. The collection mechanism is already in place for the small tax that already falls on land, so there would be no need for new bureacracies.
The collection mechanism would also be certain. Once the value of a plot of land is determined, it can not change. The revenue produced from a tax on that land would therefore be certain, and not like taxes which are arbitrarily applied.
The tax on land would also bear equally on all landowners. It would not place a heavier burden on one person as compared with another. It would also encourage the use of land. Owners of land could not just hold it and wait for prices to rise. They would have to use the land or sell it.
With this one simple step, we would achieve a number of goals. Production would be stimulated, while monopolies of land would be broken up. The earnings of labor and capital would be increased, while all taxes that now weigh down production would be gone.
And we would not need to seize anyone's land; the people who currently hold title to the land can continue to call it their own. We are only taking the power of their title: the ability to collect the unearned income of rent, which is an exploitation of the natural resources meant for all.
I am proposing that we take the kernel while leaving the shell. Let those who hold land continue to hold it. Let them continue to buy and sell, and devise and bequeath it, if they so desire. But let us take by taxation that value which attaches to the land itself. That is the essence of what I propose.
It is a method which is so logical and simple that it's obvious once you see it. It's not about new taxes but a new form of taxation that gets rid of all other taxes and puts the burden of funding government where it rightfully belongs—on the value of land, a common resource.
This is the remedy. And as we will see, it is simple enough to be easily applied.
The idea of abolishing private property in land will naturally bring up the question of justice. Is it right to take away what some people consider to be their property?
Justice is a fundamental human value. We recognize that every person has the right to themselves, to the use of their own abilities, and to the fruits of their own labor. Therefore, what a person makes or produces is rightfully theirs, to use, exchange, or give away as they choose. This right is clear and consistent with justice, and it doesn't infringe on the rights of anyone else.
But what about land? Land is not the product of human labor. It is a part of nature, and we all have an equal right to it. Therefore, to recognize exclusive ownership of land is to deny the right of property in the products of labor. The rights of labor can't be enjoyed without the right to the use of land.
The right to the produce of labor is not the same as the right to exclusive possession of land. When one person owns land, they have the power to demand a share of the wealth produced by others, thus denying the right of the producers to the results of their labor.
So, there's a fundamental difference between property that comes from labor and property in land. Property in land is not based on any natural right. Therefore, a system of exclusive property in land is necessarily a denial of justice.
Nature doesn't give one person the right to more land than another. We are all here with the equal permission of the Creator, and we should all have an equal right to the use of what nature offers. Any system that denies this equal right is a violation of justice. The right of any one to the ownership of land is not superior to the right of another.
This is not just a theoretical idea. It's a practical truth that affects real lives. When land is owned by a few, those few have the power to control those who need land for work or for survival. This has always been the case.
If we look at history, it's clear that private property in land has led to the enslavement of people throughout the ages. From the serfs of Europe to the chattel slaves of the South, all forms of slavery have been the result of land ownership, by which some people are given power over the very means of survival of others.
To make this idea even more clear, let's look at the United States. While we pride ourselves on the fact that we've abolished slavery, the fact remains that large amounts of people are economically bound to their masters by their lack of access to natural resources. It seems we have only traded one form of slavery for another.
In the past, some argued that slavery was right, because some people were better than others. In the same way, some people say that private property in land is right, because those who own land are smarter or more productive. However, neither of these arguments stands to scrutiny, because they both are violations of natural justice.
It's easy to confuse wealth that is created through labor with that which is gained by land ownership, but the two are completely different. Land has no inherent value, and it is only through the actions of communities that land acquires value.
To make sure we understand, consider the process of land ownership in the United States. Our legal system is based on titles that can ultimately be traced back to the conquerors of native people, treaties with native people, or grants from monarchs. But even in these instances, what can be said of the moral validity of such claims? At the heart of every land title lies some act of force or fraud. These titles ultimately rest on a claim of power, not right.
Private property in land is not only unjust; it's also unnatural. Land is not a product of human labor, and therefore, cannot be rightfully owned by individuals. The value that land possesses is not the result of any individual's actions, but of the growth and actions of the community as a whole.
We can trace this idea throughout history, as cultures everywhere have seen the use of land as a common right. So how do we reconcile the need for security with a recognition of the right to common ownership? It's simple. The answer is to secure to every individual the produce of their labor but to collect rent for the community's benefit. This is what I mean by abolishing private property in land.
We've established that private property in land is unjust and is the cause of poverty amid progress. Now, let's look at how to make land common property.
We could do this by simply abolishing all private land titles, declaring all land public property, and renting it to the highest bidders. This would ensure that land is used by those who can make the most out of it, and also satisfy our need for a just system of equal access to natural resources. But such a system has its drawbacks. It would be disruptive, it would create needless bureaucracy, and it would have the appearance of a great transfer of wealth.
Instead, I propose that we do what we need to do in a more subtle and peaceful way. Let the current owners retain their land. Let them keep their deeds and their titles and continue to buy and sell land as they please. We can leave them the shell while we take the kernel. It's not necessary to confiscate the land; it's only necessary to confiscate the rent.
It's also not necessary for the state to become a universal landlord. It can still continue to rent out land if that's what people want, but the state can also allow individuals to rent land directly as long as rent is taken from its value.
To do this, we simply need to change our tax system. We need to abolish all taxes except for a tax on the value of land. We must also take rent for the public good.
We already take some rent through existing land taxes. We just need to expand this system. As society progresses and rent increases, we can increase the amount demanded in taxation. When the value of land surpasses the present government revenues, the amount taken in taxation can be increased proportionally.
This may seem difficult, but the mechanics of it are simple. This system could use all existing systems of tax collection. In fact, we can eliminate layers of bureaucracy through simply eliminating all other forms of taxation. We must focus upon this simple change.
This method of tax collection is the simplest, most efficient, and most just way to raise public revenue. It would conform to the best principles of taxation:
These are not just theoretical ideas; they are principles that are rooted in human nature. When the price of land is high, it acts to choke off growth. To fix this problem, the most logical and effective solution is to put taxation upon land values.
We are, in effect, putting up the use of the land to the highest bidder. Because the demand for land fixes its value, if we make the owners pay a tax that amounts to that value, it's essentially the same as taking that land for common use.
By making land more available we will foster improvements. The owners of land will have to make use of it or lose its value. So the effect of a tax on land values is not to prevent production, but to stimulate it. And, with all the barriers to production lifted, an enormous increase in wealth production would result.
And so, by using this simple device—placing all taxes upon the value of land—we can eliminate poverty and all the social evils that spring from it.
What would be the practical effects of replacing all taxes with a tax on land values? While it's easy to see how it would increase production, it's also important to understand its impact on the distribution of wealth, and consequently on social life.
The first and most obvious effect is that it would abolish the tax burden on all producers. All the taxes that now fall on labor, capital, and improvements would be eliminated. The farmer would no longer pay taxes on his crops, his stock, or his barn. The merchant would no longer pay taxes on his goods, his store, or his sales. The builder would no longer pay taxes on the houses he builds or the materials he uses. All taxes that weigh down production would be abolished.
But the impact goes much deeper than that. It would also equalize the distribution of wealth. The great cause of inequality, private ownership of land, would be broken. When rent goes into the public treasury instead of private pockets, the very force that now produces inequality would, in its turn, produce equality.
In this way society would become naturally divided into two distinct portions. One part would be what remains to labor and capital— the returns for the use of their abilities and what they produce. This amount, and its distribution, would be guided by the laws of free exchange and free competition. The other portion would go into the public treasury to be used for the good of all society.
Think of the implications of this. How many people are held back from labor and from the chance to use their gifts by the fear of poverty, or by the lack of money to access opportunities? With opportunities so widely expanded, that vast reservoir of human potential would be released. The natural result would be an enormous increase in the production of wealth.
And not only would production increase, but all the wastage that is caused by the unequal distribution of wealth would be eliminated. The vast amount of wealth that we spend to combat poverty through institutions, and which wealthy people waste in extravagance and corruption, could be applied to more productive or ennobling purposes.
Imagine the difference in a world where people no longer worried about basic necessities. Every person would have the power and the incentive to reach their fullest potential.
And consider how greatly this would lessen the incentive to acquire fortunes that are disproportionately large and do not stem from a natural source. To accumulate wealth far beyond what is necessary for a full and rounded life would no longer be a means to an end, but rather an obsession to which only those who were incapable of understanding real sources of value would be prone.
The wealth that individuals could get would be, therefore, simply what they could create. There would be no further incentive to struggle for more than is needed. Wealth would be the reward of production, not of acquisition of privilege. In such a world, there would be no such thing as a billionaire, as the power of appropriation of unearned value would be gone.
The result would be not just a more equal distribution of wealth, but also a more equitable distribution of power. At the present, we allow the ownership of land to put power into the hands of a few and to make it an instrument of oppression and exploitation. With land no longer able to be used in this way, the root of a great deal of injustice would be removed.
This does not mean that everybody would be the same, but it does mean that all people would be able to develop their talents and abilities to their fullest capacity. No one would be held back because they lacked the basic requirements of life. No one would be forced into lives of drudgery because of poverty.
The increase in production would be accompanied by an increase in wealth. That wealth would be shared throughout the community, with each member getting their fair reward for their efforts. This would bring peace and plenty to society.
But even more important would be the changes that would take place in human nature. People would naturally care more about public affairs, because every member of the community would have a personal stake in the well-being of the community. This change would take place in the very way society is structured and people are motivated.
Therefore, it's not just the material wealth that would be expanded. There would be a new and more powerful incentive to mental and moral development, in a society where every man would feel as a king who is entitled to what he has earned. Such a society would, I believe, experience a great release of human potential.
We now see people desperately struggling to achieve wealth. The motive for these desperate efforts is not the possession of wealth itself, but the power and social status that great wealth conveys. This will change when the conditions that create this desire for power are removed. People would then seek the respect and approbation of their fellows in other modes than by the acquisition and display of wealth.
Then, in every pursuit, would the better qualities of human nature have play. Instead of the greed and envy and fear that are now the mainsprings of human action, there would be a new incentive: the desire to excel, to improve, to add to the comfort and happiness of human beings. What now becomes the source of so much evil would become the source of so much good, and society would no longer be a congeries of warring atoms, but a living thing, instinct with the spirit of justice and of love.
It is hard to imagine the changes that would take place when society no longer had to deal with the problems caused by poverty. The mind would be released from the cares and anxieties of a constant struggle for mere survival, and the powers of humanity would be devoted to higher aims.
Having explored the remedies for poverty, it's time to look at the larger question: What is the law of human progress?
Current thought often sees progress as a slow, steady march of improvement, driven by the "survival of the fittest" and the passing down of traits through generations. But, if this were true, we wouldn't see the rise and fall of civilizations that we've observed throughout history. There have been civilizations that started, thrived and then died. Something about them held back their progress.
So, it's clear that the current theory fails to account for the stagnation and decline that every civilization has experienced. If progress were a constant, natural process, then it would not be interrupted. Instead, it seems that progress always follows a pattern. Civilizations advance, reach a peak, then decline and fall.
The truth is, progress does not result from changes in the nature of man, but rather from the conditions under which we live. The law of progress is that we move forward when we come closer together, and when we distribute wealth and power fairly.
To better understand this, let's look at what I call "the incentives to progress." There are three basic human desires which impel us to improve: the desire to satisfy our basic needs, the desire to understand, and the desire to help others. All of these are powerful forces, but they can be held back, distorted, and misdirected by the conditions we create.
Mind is the engine of progress. We can improve our situation only by using our minds to better understand and utilize the world around us, and by creating better methods and social arrangements. It follows that what really matters is how much mental power is available for the purpose of advancing progress. We must not waste our mental power on non-productive purposes.
These non-productive uses of mental power can be classified as "maintenance" and "conflict". By maintenance I mean the effort required to support our existence, and by conflict, I mean all forms of struggle, whether military or economic.
To understand the laws of social progress, we must understand how association, which is the basis of all human progress, and equality, which prevents the waste of energy through friction and conflict, are brought together and work in harmony.
Association allows people to specialize and use their particular talents to produce more. It also allows people to share and learn from the knowledge and experiences of others. Equality, on the other hand, prevents the abuse of power and resources, and ensures that everyone has a fair chance to achieve their full potential.
The ideal is to create a society in which people work together in peace, and in which all benefit from the fruits of progress. When people are separated from each other by barriers of hatred or injustice, they tend to stagnate. When people are combined in equality, they tend to flourish.
When we look back at history, we see that civilizations have risen wherever people have been brought into peaceful association, and have fallen whenever their social structures have promoted inequality. The Roman Empire thrived when its citizens were free and equal. It declined and fell when its social system became based on slavery and the concentration of wealth. And the story of Rome is only one of many that follows the same pattern.
The most important thing to remember is that man does not improve without progress in social organization, even with intellectual progress. Therefore, if we want to improve society, we must look to our organization. We must do as nature does when she builds organisms by first creating organs before placing them into operation.
The problem with our civilization today is that we haven't fully established true equality, and our progress is constantly being checked by the unequal distribution of wealth and power. The great obstacle to progress lies in the fact that the ownership of land allows a few to monopolize the gains of progress and to deprive the masses of the fruits of their labor. We see in our own time and in every developed society a constant tendency to the concentration of wealth and power in the hands of a few.
The forces that have brought our civilization to such heights are also the forces which, if misdirected, will ultimately destroy it. What's needed is the application of the simple law of justice which calls for a more equal distribution of wealth.
We must work to eliminate the root cause of our social problems, private property in land. By doing so, we will create a truly free and prosperous society, not just for ourselves, but for all of humanity.
We've now reached the end of our exploration of the problem of poverty amid progress. We've identified its root cause and its cure. But these questions lead us to an even deeper question: What is the purpose of individual life?
The problem of social life is a human problem, but it's not the only problem there is. We can also ask what is the purpose of individual life, why do we live, and how should we live our lives? What does this mean for us as individuals?
It seems clear to me that a life lived in injustice has no meaning, and a life that is devoted to the struggle for wealth is nothing more than a distraction. The desire for a life that is something more than material existence is strong and universal. Yet for so many in this modern age it is being pushed away by a worldview that denies the existence of the spirit, or the eternal value of life. We can see the problems of injustice which are holding us back, but we also see the lack of meaning which comes when justice is taken away. It is difficult to hold onto hope for anything beyond this life in an age when so many of our most trusted thinkers are unable to accept the idea of a soul or anything beyond material existence.
But this journey of our inquiry has led me to a more hopeful conclusion. We've seen that the laws of economics are not in conflict with the desires of our hearts, that want and misery are not natural laws, but the results of human ignorance and injustice. And we've seen that the remedy for these problems is not just a better way to organize society, but a way to give meaning to individual lives.
We have seen how the denial of justice distorts our desires, causing us to seek wealth above all things, and to trample on the rights of our fellow humans. But when we understand the true laws of distribution, we realize that it is not through greed that human nature is fulfilled, but through the exercise of our natural gifts and the recognition of our interdependence.
We have seen that while the present theories of social progress lead us to a dead end, there is another path to progress, one which leads towards higher development. This is not a road that we can travel through mere instinct, but one that we must tread with knowledge and with care, mindful of the dangers that exist on both sides.
I believe the root of despair lies in our loss of faith in any sort of life beyond what we can see with our eyes and touch with our hands. The belief that all ends with this life causes people to seek wealth with a desperation that leads to the destruction of both their souls and the societies they live in.
But the truth is, if we really believe that this life is all there is, then it becomes impossible to reconcile the idea of an all-powerful and all-loving creator. Why would such a being allow so much want and misery? Why would our lives be so short and seemingly pointless?
We live in a universe of law, and if we carefully follow it we can reach higher states. This applies to both social and individual life. Our economic laws, if they are true, are not in conflict with spiritual laws, and neither are the laws that govern the individual life in conflict with the laws of the world that surrounds us.
When we finally understand that our lives do not begin or end at the moment of our birth and our death; when we finally come to realize that this life is simply the avenue and vestibule to another life— only then, can we see the full purpose and meaning of our existence.
Then the long procession of generations that has moved, and still is moving, across the face of this earth, will no longer seem like a meaningless waste of effort or an endless chain of meaningless suffering.
But, if our inquiry has done this; if it has enabled some among those who may read it to feel that there is a meaning to their lives, and that they are a part of a higher purpose, then it will have served a greater purpose than any that I have had in mind while writing it.
For, as says the great German, "to do what is perfectly just, is to take the most effective means of serving God." And that Truth is as fully apparent in the world that lies about us as it is in the world which we can see only with the spiritual eye, and to this, I, in ending my task, must leave the reader to reflect upon.