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I wrote in a previous article about James Carville’s campaign mantra, “It’s the economy, stupid,” which helped refocus political discourse on the real kitchen table issues that matter most to voters. I wrote “it's the land, stupid” to focus on land rent as the core problem with the economy. While I still believe it is the land, I think we can narrow it down to a more specific concept that needs some explaining: “It’s the monopoly, stupid.”
Henry George, the 19th-century economist and author of Progress and Poverty, warned us about the dangers of conflating legitimate profits from capital with the unearned income of monopolies. George wrote that what is often confused as capital, such as stocks and bonds which only represent debts and not real capital, are forms of unearned income. Earned income is only derived from real physical and mental exertion (labor) or real physical material used in production (capital). This confusion has obscured the true cause of inequality: economic rent, the unearned income derived from monopolistic control over land, natural resources, and government granted privileges.
The Marxist-Georgist Difference
Karl Marx saw capitalism as inherently exploitative, blaming the profit motive for wealth concentration and worker exploitation. But Georgists argue the issue is not capital itself; it’s the monopolistic extraction of rent. Capitalists, in the classical sense, provide the material wealth necessary for production and earn profits (or “interest”) for their contributions. This profit incentivizes innovation, real investment, and industrial rather than just financial economic growth. Working class people need access to their own capital as well. Marxists critique the entire concept of private property, confusing land and capital as the same factor of production. But as we've long discussed, land is naturally occuring and capital requires the input of human labor to exist.
Monopolists, however, operate differently than capitalists. They extract rents by withholding resources, restricting supply, and exploiting privileges, rather than by creating wealth. Landlords, for instance, constrict the housing supply, driving rents ever higher. Banks create artificial scarcity in the supply of loanable funds through the government-granted monopolistic control of credit. Even the American Medical Association limits the supply of certified doctors, inflating healthcare costs. Other natural monopolies such as power and water utilities are needed to be publicly owned cooperatives because leaving them privatized would drive up energy and water costs. Private monopolists siphon wealth from society without contributing to its production. Their gains are economic rents, or profits that come not from creating, but from controlling and restricting.
Monopolies Are Why the Rent is Too Damn High
To understand monopolies, we must understand the concept of economic rent. Unlike wages (compensation for labor) or legitimate profits (returns on capital), rents are income derived from ownership or control of a scarce non-reproducible resource. This includes insurance monopolies and patent monopolies like pharmaceutical companies denying competitors access to medicine recipes and production rights. Monopolies come in many ways:
Natural monopolies control resources like land, electricity and transportation that have high fixed costs and other barriers to entry for new businesses.
Artificial monopolies are granted by government privilege, like patents or exclusive contracts. Private, for-profit weapons manufacturers in the military industrial complex are rent seeking monopolists.
Monopsonies dominate as buyers, squeezing suppliers (e.g., Amazon’s treatment of small vendors, and grocery store conglomerates short changing small farmers).
Oligopolies are markets dominated by a handful of large corporations that give the illusion of competition but implicitly collude to share power and profits.
Contrary to popular belief, monopolies don’t need to own entire markets to wield outsized power. Whether through outright dominance, price-fixing, or restricting supply, monopolists concentrate control over markets that should be competitive.
Monopoly is “The Landlord’s Game”
The board game Monopoly was originally designed to teach this lesson. Lizzie Magie’s The Landlord’s Game aimed to illustrate how land speculation and rent-seeking create inequality. Ironically, Hasbro’s monopoly on the game’s intellectual property erased its radical origins, turning it into a celebration of capitalism gone awry. The history of Monopoly is a metaphor for how monopolists hide in plain sight, like a chameleon, under the banners of both free market capitalism and government intervention.
The Blind Spots of Left and Right
Monopolies thrive in part because of ideological blind spots on both the left and right. To socialists and anti-capitalists, monopolies are the natural outcome of unfettered free markets and private property, and there is a logic to this. To conservatives and libertarians, monopolies result from government overreach. Both perspectives are partially true, but they’re like the analogy of the blind monks describing an elephant: each sees only part of the whole.
The reality is that monopolies emerge when markets are manipulated, either through private hoarding of land and resources or public policies that entrench privilege. A truly free market cannot exist without addressing these distortions.
The Georgist Solution
The taxing and nationalization of monopolies are essential to restoring competition and fairness in the market. Henry George’s land value tax (LVT) is one way to ensure that monopolies, if they must exist, serve the public good. By taxing economic rents and leaving wages and capital profits untaxed, an LVT encourages productive use of resources while funding public needs without penalizing workers or producers.
Both progressives and libertarians should recognize that monopolies stifle the freedom they cherish. A Georgist approach allows markets to flourish by ensuring that land and resources, our shared inheritance, benefit everyone, not just a privileged few.
It’s time to move beyond ideological silos and recognize that monopolies, whether private or public, must be held accountable. If they are to exist, they must serve the public interest. Only then can workers, innovators, and real capitalists pursue their interests in a truly free market.
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The Homeless Economist is a publication for all things land and real estate: property taxes💸 housing markets 🏘️ Georgism 🔰 economic development 🏗️ city planning 🏙️ and the environment 🌱.
Are you familiar with BIG by Matt stoller? A blog about all ongoing antitrust litigation. He’s written about Georgism once, but never mentioned it again (I believe). Drives me nuts.
Henry George never defined what he meant by "monopoly" in Progress and Poverty as far as I can tell. He was certainly not using it in the way we use the word today. He seems to have used the word monopoly to mean "the right to exclusive use of something that give the right holder access to economic rent". But even then, the phrase "economic rent" didn't even hold the same meaning at the time as it does today.
It needs to be understood that the understanding of these concepts has progressed quite a bit in the last 150 years, and a lot of the terminology and theories are simply out of date.
To start, that article defines monopoly in a completely different way from its modern usage. So all the modern economic theory about how monopolies work simply doesn't apply to the stuff that article talks about. And yet the author is conflating these incompatible definitions of monopoly together. This does not lend itself to a good understanding of the subject.
When talking about monopolies, the real important thing is economic rent, and when talking about that, the real important thing is "unearned income". But what does "unearned" mean? Vaguely it means income gotten without producing something of value to take it from, meaning you're taking it from others rather than producing it.
The appropriate concept that allows us to talk about these things is the concept of externalities. So instead of talking about these phrases that have multiple conflicting defintions, we can talk about externalities which has a very clear and precise definition: costs and benefits to a 3rd party caused by the action of a 1st party (specifically ones that don't result solely from supply and demand changing prices).
Land does have externalities. An empty plot will accrue value as the city builds up around it, without the owner doing any work at all. This is very clearly unearned income. The owner produces nothing, but gains wealth. This wealth is taken from the work of the surrouding community.
Natural monopolies in the modern sense do not operate like this. Monopolies take production inputs and produce something of higher value than those inputs. They then sell that to customers who value that product more than the money they give the monopoly. The monopoly IS producing something of value, and the customer is also getting something of value. The only difference between a monopoly and a company in perfect competition is that the monopoly keeps far more of the surplus (the additional value that the monopoly created). Regardless of your moral stance on whether the monopoly should be able to keep the surplus that they created, it should be very clear that these are not externalities. There is no 3rd party being benefited or harmed. The monopoly and each of its buyers are all first parties to these transactions.
The terms being used of monopoly and economic rent are not being used in intuitive ways, not being used in the ways that people are used to them being used. This is bad communication. I fear Georgism will not succeed if our community insists on using outdated terminology and outdated adjacent theories to advoate for land value tax and the single tax. Marxists, communists, and socialists continue to persistently use outdated terminology to talk about the perils of "capitalism" (the outdated definition), and we can all see how well they're succeeding at propagating their ideas.
I don't want Georgism to fall to the same fate. I ask that people advocate their Georgists friends to be much more precise in their discussions and to choose MODERN terminology that is far more likely to be understood than the terminology Henry George used in the mid 1800s.