The Economics of Henry George

Considering this book’s title, it is appropriate to ask: Why might one call Henry George America’s greatest early economist? Why is rehabilitation necessary? And, how has rehabilitation been happening? These questions will be addressed and the attempt made to demonstrate that George was indeed the greatest of America’s early economists. Unfortunately, Alfred Nobel’s dynamite idea of a lucrative prize for scientific contributions didn’t begin to affect economics until 1968, so George passed away far too early to have received the prize for economics. Since the Nobel Prize is not given posthumously, we have no conclusive evidence that he was the greatest. The best one can do is to offer inductive evidence of his greatness, presenting facts and anecdotes that seem impressive. For George there are many of these, and we will encounter a good number in the pages that follow.

Academic economists usually pursue studies in the field after encountering as a student a university economics class that appealed to them. From there they develop a more specialized interest in one of the formal “fields” of economics, which ultimately becomes their chosen specialty for research and publication.

This chapter reviews Henry George’s theory of distribution from the perspective of his magnum opus, Progress and Poverty. This work is not only good reading, it had a powerful impact on the economic/social discussions of his time and produced echoes that linger to the present. It was not, of course, a work that provided him admission to the economics establishment of his day. At the time, economists were less inclined to find redeeming qualities to his theories than contemporary economists are.

George recognized the importance of the question of international trade for the study of economics. He took a strong position on the issue of free trade early in his career and defended it vigorously. Strong arguments for free trade and an attack on protectionism were the main thrust of his book Protection or Free Trade: An Examination of the Tariff Question, with Especial Regard to the Interests of Labor, published in 1886. This publication represents an important contribution to economics, for the profession has informally adopted and long advocated free trade on the basis of argumentation by great economists such as Adam Smith, David Ricardo, and many others in the mainstream, including, of course, Henry George.

In California, George had the opportunity to observe firsthand over a period of several years the role of land in the economic development of the state, especially in the area around San Francisco. His observations led him to theorize and write about the role of land in the economic development of the nation. His first attempt in this regard resulted in the publishing of his early work Our Land and Land Policy in 1871.

There was a time when Henry George was not merely one of the most widely read American economists, he was also one of the country’s most widely read authors in general. Many of his contemporary economists would have been inclined to consider him a political journalist rather than an economist. His most famous work, Progress and Poverty, had gained a wide, general readership both in and beyond the United States,1 although it was a scholarly work more serious than today’s trade books written by economists cum political commentators.