The American economist Henry George championed the cause
of commons in the 19th century through his original approach of
inclusive property rights particularly in his work on Progress and
Poverty(1879). Georgean analysis on distribution of wealth starts with three dimensions
of land, capital and labour and converges
into two dimensions of land on the one side and labour and capital on the other
side finally leading to a win-win solution.
According to Henry George, labour and capital have
usually been put in quite opposing positions relegating landowners to the
background for preparing a base for trade cycles through land speculation in
collusion with exploitative capital. But this leads to wasteful exclusive
property rights in favor of landowners with appropriation of all surplus as
rent after paying minimum level of wages and interest. This surplus as rent is
in addition to high speculative land value—both unearned whereas productive and
exchange efforts with the help of labor
and capital are subjected to all sorts of direct & indirect taxation. Land
which is a free gift of nature for the whole humanity has been subjected to
monopolization through exclusive private property rights laws, wars, freehold
leases and so on. In this way, George and Drake (2006, p. 127) feel,
‘….labor and capital do not have opposing interests, as is popularly believed.
In reality, the struggle is between labor and capital, on one side, and
landownership on the other.’
Milton Friedman (http://www.wealthandwant.com/themes/Friedman.html accessed November 14,
2010.) himself agrees with Henry George
that his land tax is potentially beneficial because unlike other taxes, land
taxes do not impose an excess burden on the economy, and thus stimulate more
rapid economic growth. Herbert A. Simon (2010) in his Autobiography also
extends his support to George’s approach to taxation. From Paul Samuelson to
Joseph Stiglitz, it has many supporters in the economists’ fraternity. (Singh,
2014) In an open letter to the then Russian President Mikhail Gorbachev at the
very start of Perestroika, signed by 30 noted American & European economists
on November 7, 1990 including four Nobel economists—Franco Modigliani, James
Tobin, Robert Solow and William Vickrey had expressed their joint support to
this approach and persuaded Gorbachev not to blindly adopt features of their
economies that keep them from being as prosperous as they might be and
emphasized social collection of the rent of land and natural resources. They
mentioned,
‘It is important that the rent of land be retained
as a source of government revenue. While the governments of developed nations
with market economies collect some of the rent of land in taxes, they do not
collect nearly as much as they could, and they therefore make unnecessarily
great use of taxes that impede their economies — taxes on such things as
incomes, sales and the value of capital……Users of land should not be allowed to
acquire rights of indefinite duration for single payments. For efficiency, for
adequate revenue and for justice, every user of land should be required to make
an annual payment to the local government, equal to the current rental value of
the land that he or she prevents others from using.’ (the complete letter is available on www.wealthandwant.com)
The contents of this concise letter provide a good policy direction to any
economy in transition as are the current economies of the Eastern Europe.
Modern-day environmentalists have agreed with his
idea of the earth as the common property of humanity – and some have endorsed
the idea of ecological tax reform, including substantial taxes or fees on
pollution as a replacement for "command and control" regulation.
Though George’s analysis is more than hundred years old,
its modern version {passing through modififications by Bob Drake, Robert Schalkenbach, Robert V.
Andelson, Michael Hudson, M. Mason Gaffney(2008), Fred Harrison, J. W. Smith (2008)
and the US based Institute for Economy Democracy(IED)} is more interesting.
Supporting application of this approach in India,
journalist Navin Singh (2014) writes, ‘It will end speculative land hoarding
and bring down prices for the end-user…It will free a lot of undeveloped land
close to cities, which can be developed by state or private players….This will
provide the government revenues to develop urban infrastructure. Mining
companies, which find it more profitable to squat on natural reserves sensing a
rise in mineral prices,…will have to mine it to earn revenue to pay tax, or
choose to return it to the government. Unused prime urban land, of closed mills
for example, will be promptly returned to the government for the same reason.’
A synergy of the associative approaches of Henry Georgists and Progressive
Socialism can develop miraculous
understanding and impact. Georgism provides a solid background for
understanding the Progressive Socialism (or Progressive Utilization
Theory-PROUT) and Progressive Socialism provides a better, more balanced and
richer interpretation to Georgism. Both are complementary and not conflicting.
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