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 think that ultimately Marx would be unpersuaded to change his view even if he agreed that there was a significant difference between land and capital. To him, as far as my understanding goes, capitalists and monopolists are ultimately pursuing the same ends. The only difference is that one provides value to society (which the working class might not be able to access) and the other collects off of rent. Capitalists would probably desire to transform into monopolists and pursue protections (what we would call corporate welfare or government capture today) to further their exploitation. It's also worth noting that Marx did read Progress and Poverty but was unimpressed.
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.
Yeah. People are afraid of a fringe ideology but it's time to start wearing it on our shoulders as people are looking for an alternative to monopoly capitalism
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these concepts has progressed quite a bit in the last 150 years, and a lot of the terminology and theories are simply out of date.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.
This is written for the introductory audience. If this was a policy paper for experts to read, I'd agree picking the modern terms would be better. But this article is to introduce people to Henry George's ideas so I will use Henry George's terms. This article is political and the terms of monopoly, rent, and unearned income need to be put into common political parlance that people who aren't experts can understand. Experts already know about the LVT and the dead weight loss. Again, this article is political and introductory, not for policy analysts and professional economists. I think we're restricting ourselves if we use butchered and overcomplicated orthodox neoclassical terms to explain subversive classical liberal ideas.
I think that ultimately Marx would be unpersuaded to change his view even if he agreed that there was a significant difference between land and capital. To him, as far as my understanding goes, capitalists and monopolists are ultimately pursuing the same ends. The only difference is that one provides value to society (which the working class might not be able to access) and the other collects off of rent. Capitalists would probably desire to transform into monopolists and pursue protections (what we would call corporate welfare or government capture today) to further their exploitation. It's also worth noting that Marx did read Progress and Poverty but was unimpressed.
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.
Yeah. People are afraid of a fringe ideology but it's time to start wearing it on our shoulders as people are looking for an alternative to monopoly capitalism
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.
This is written for the introductory audience. If this was a policy paper for experts to read, I'd agree picking the modern terms would be better. But this article is to introduce people to Henry George's ideas so I will use Henry George's terms. This article is political and the terms of monopoly, rent, and unearned income need to be put into common political parlance that people who aren't experts can understand. Experts already know about the LVT and the dead weight loss. Again, this article is political and introductory, not for policy analysts and professional economists. I think we're restricting ourselves if we use butchered and overcomplicated orthodox neoclassical terms to explain subversive classical liberal ideas.