Progress and Poverty

Posted on March 23, 2017

Jan van Eijck

This post is a plug for an important but almost forgotten book.

Progress and Poverty (1879) is a book about political economy written by American social theorist and activist Henry George (1839-1897). George was a self made man. He started out as a printer and journalist in San Francisco, and slowly transformed himself into a writer, philosopher, economist and political activist. He died in New York, from a stroke caused by the strain of his attempt to become major of the city. At the time of his death he was immensely popular: his funeral was a public event that drew tens of thousands of people, according to commentators either the largest funeral crowd in the history of New York, or at least the largest since the funeral of Abraham Lincoln. And now he is almost forgotten. And this is a great pity, for what he has to say should be of great concern to all of us.

The main message of Progress and Poverty is that economic value derived from land and natural resources should belong equally to all members of society. People should own the value they produce themselves, but the value of land and resources is not something that people produce, but a gift of nature. The gifts of nature are a collective gift to humanity, they belong to all. So signs like the following are in need of explanation.

How has it come about that what originally belonged to all of us was partitioned into pieces of private property? How can this be justified? This is a philosophical question, of course, but is also a matter of immense urgence, as resources of nature that used to be common property, and that should be common property, get appropriated by big corporations. See the story of bottled water and the battle of bottled water.

The motto of the book:


This should include all of us.

Progress and Poverty sold millions of copies worldwide; from its date of first publication until well into the 1930s there has been a steady interest in the book. As an example of its immense popularity, there exist two translations in Dutch. I own a copy of the second Dutch version, from 1938, translated (and revised) by Harm Kolthek, a member of the Socialische Partij (the then revolutionary socialist party) who had been a member of parliament from 1918 until 1922. Interestingly, Kolthek’s background was not dissimilar from that of George. Kolthek had started out as a printer, then became a journalist, and he ended as a politician. Kolthek clearly believed that the book of Henry George could also shed light on the troubled state of the world in 1938.

Progress and Poverty was once well known. Lev Tolstoy famously said about George: “People do not disagree with the teaching of George, they simply do not know it. He who becomes acquainted with it cannot but agree.” Other endorsers were Winston Churchill, John Dewey and Albert Einstein. With my enthousiasm for the book I am surely in good company.

As to the reasons why Progress and Poverty seems to have lost its place in modern academic curricula, one can only guess. My best bet is that it has to do with the atrophy of the discipline of economics caused by its divorce from politic questions and political philosophy. Economics is not a natural science. Economics studies, or should study, how we organize and should organize our collective livelihoods. It has a normative element that is of the essence. It is a part of political philosophy. Mistaking it for natural science causes the degradation to the shallow rubbish that you can read nowadays in American neoclassical economics textbooks.

Neoclassical economics is a formal treatment of what goes on when people work, interact and exchange. The basic axioms for this are:

Only the first of these axioms is reasonable, depending on how one interprets rational preferences. If you define rationality as acting so as to maximize personal utility then the whole theory becomes vacuous, of course. But the blatantly false assumption is the third one. People do not act independently, and more often than not they interact with others on the basis of limited information or false beliefs.

I happen to know some game theory, and I love game theory for its formal beauty and for its perspective on rational behaviour. But any attempt to reduce economics to game theory or to any other mathematical theory is deeply misguided. Formal approaches like game theory provide tools for modelling, no more nor less. In order to decide whether a proposed model is appropriate to describe the essence of a political-economic situation one needs a broader perspective. One needs to understand the socio-political context. And one cannot avoid to question notions like property or natural right.

When I recommended Progress and Poverty during my opening talk of the workshop for Rohit Parikh, there was one single person in the (otherwise well-informed) audience who knew the book, and who was delighted with my praise of it. This was Yannis Tziligakis, who happens to be connected to the Henry George School of Social Science. What a coincidence he was there, for the Henry George School of Social Science is surely an interesting institute, but it is a niche outside academia.

Progress and Poverty can be read as one big plea for land value tax or natural resources tax. The book argues that what we take from nature should be taxed, and labour that creates new commodities from those gifts of nature need not. Google for Georgism, Henry George Theorem, single tax movement. Next, read the Wikipedia entry on Progress and Poverty. Next, read this book! It is a delight, for Henry George sure knew how to write. It may cause a fundamental change of your perspective on the connections between economics and politics. And indeed, that would be a good thing, for we urgently need more people with enlightened views on important societal issues. Here is a link to your free copy.

If reading is not your thing (as seems to be the case with our current POTUS), then you might wish to instruct yourself by following the online basic introduction to economic theory and to Henry George’s principles. This is an online course offered for free by the Henry George School of Social Science.

Next, read up on the way money functions in our society, and on the design flaws of our money system. I have some book recommendations there too, but they will have to wait for another occasion.