I have heard that Henry George wrote one of the biggest selling economics books in history (Progress and Poverty) and was so famous that 100,000 people attended his funeral, and yet his ideas about land are nowhere to be seen in most economics textbooks. Why is this? Were his ideas thoroughly rebutted?
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$\begingroup$ Georgist ideas find a little comeback in Glen E. Weyl's controversial book "Radical markets". $\endgroup$– BayesianMay 19, 2019 at 22:19
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3 Answers
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Henry George's economic theories and politics were influential enough around the turn of the last century to attract a significant number of opponents, who had vested interests in land speculation and rent-seeking in general. As such, they promoted an alternate formulation of economic theory that reduced/ignored the role of land as one of the primary factors of production. Most modern economic theory has been built on this new foundation, even though the original (largely political) reasons for doing so have long since been forgotten. So nowadays you find extremely convoluted definitions of "economic rent" that attempt to ignore the role of land, and conflation of George's ideas with communism or socialism or other inappropriate connections.
The bottom line is that most economists (and most people, period) know very little about the history of economic thought, and vastly underestimate the role that political posturing played in its early development. George's theories are the victim of his political popularity, and our modern theories of economics are all the worse off as a result.
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$\begingroup$ Interesting - I've heard similar things before - but all rather second or third hand... do you know of any articles that have actually documented the suppression of Georgist ideas? $\endgroup$– MickMay 20, 2019 at 19:55
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$\begingroup$ I'll do some more digging but Mason Gaffney has a good paper on Neo-classical Economics as a Stratagem against Henry George which is an excellent starting point. $\endgroup$ May 20, 2019 at 20:32
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If you're referring to a land-value tax, I'll just quote The Economist:
Other economists like it too. Adam Smith said “nothing could be more reasonable”; Milton Friedman termed it “the least bad tax”. Winston Churchill said scornfully that a landlord “contributes nothing to the process from which his own enrichment is derived”. The Organisation for Economic Cooperation and Development, a Paris-based thinktank for industrialised countries, supports the idea. So too did a recent working paper by the International Monetary Fund and the Mirrlees Review of British taxation by the Institute of Fiscal Studies. The mayor of New York City, Bill de Blasio, hopes that taxing vacant lots by value will help deal with urban blight in the Bronx and elsewhere.
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The idea has wide-ranging support among modern economists, and more than 30 countries have some form of land-value taxation, usually in harness with other property taxes, on buildings.
While the idea of a land-value tax certainly has its drawbacks, it's far from being discredited.
answered Nov 6, 2016 at 14:27
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$\begingroup$ +1 for interesting information - but it now makes it even more puzzling why it's not in the textbooks. $\endgroup$– MickNov 6, 2016 at 16:08
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I recommend this article by Josh Ryan-Collins:
How Land Disappeared from Economic Theory
https://evonomics.com/josh-ryan-collins-land-economic-theory/
Here is an extract. I recommend the entire article.
"The reasons for this may well be political. Mason Gaffney, an American land economist and scholar of Henry George, has argued that Bates Clark and his followers received substantial financial support from corporate and landed interests who were determined to prevent George’s theories gaining credibility out of concerns that their wealth would be wittled away via a land tax. In contrast, theories of land rent and taxation never found an academic home. In addition, George, primarily a campaigner and journalist, never managed to forge an allegiance with American socialists who were more focused on taxing the profits of the captains of industry and the financial sector."
