Henry George, Ireland & the tyranny of rent

The Week in Housing 10/06/22

If you to talk to people interested in Irish housing for long enough, at some point the Kenny report will be brought up. Published in 1973, it aimed to tackle land speculation by taxing uplift in land values and windfall gains following re-zoning. This idea, which has been partially resurrected under Housing for All, never gained any traction until quite recently (see this piece on it by Padraic Kenna and this piece by Peter McVerry from last year; TASC also looked at land speculation in their recent report). Underlying the policy, however, is a much older and once incredibly influential political economy theory of land and land value.

Pretty much every classical political economist, from Ricardo to Mill, bemoaned the ability of landowners to extract an ‘unearned increment’ from the mere ownership of land. But it was Henry George who raised this idea into a revolutionary cause, and spent much of his life as an activist, journalist and intellectual fighting for it. George was enormously well known in the late-19th century. It is often said that his magnum opus, Progress and Poverty, was the most widely read book of his time, other than the Holy Bible. A recent thread on Twitter (it’s unrolled here and well worth reading) highlights George’s popularity and influence: an estimated 200,000 people attended his funeral in New York. To this day, it is the second largest funeral in the history of the US.

George argued that the accumulation of wealth via ownership of land was illegitimate and inefficient, and that it constrained productive economic activity, such as industry and labour. His ideas were gradually side-lined from mainstream economics, but also by left-wing economics and political economy, which became almost exclusively focused on labour as the 20th century progressed.

From an Irish perspective, what is perhaps most remarkable is that the relatively brief period in which Henry George was one of the most influential thinkers in the English speaking world, i.e. following the publication of Progress and Poverty in 1879, happened to coincide with the Irish Land Wars. Most interestingly of all, Henry George was very much a part of the Land War, as discussed below.

Today, Henry George is enjoying something of a revival as we try to get to grips with housing, land markets and the concentration of real estate ownership. ‘Rack-renting’, the issue at the heart of the Land War, is back with a bang, as is the related social and political tension between tenants and owners of property.

George is best known for the idea of  a Land Value Tax. LTV is based on the idea that the supply of land is fixed and that public investment in infrastructure is reflected in increased land prices. The latter should thus be taxed to finance public investment and to prevent unearned accumulation of wealth via ownership of land. LTV still has many supporters today, and indeed George believed it would suffice as the only form of taxation, thus reducing the burden on labour and capital. To my mind, however, the most interesting aspect of George’s work is his critique of land value itself (rather than LTV as a remedy).

There are many interesting aspects of this critique. These include:

·         Land is a natural resource. It is not the product of labour nor investment. It was the later political economist Karl Polanyi called a ‘fictitious commodity’. It should therefore be seen as a kind of ‘commons’;

·         Ownership of land is monopolistic, or at least quasi-monopolistic. All human activity must take place somewhere. We do not have the option of not being physically present somewhere, i.e. we cannot chose to not consume land. Moreover, each parcel of land is relatively unique and local, and therefore competition between land is limited (hence monopolistic).

·         Increased value of land (as opposed to property on land), arises primarily from increased public investment and population growth. Therefore, the landowner has no legitimate basis for enjoying this ‘unearned increment’.

·         Relatedly, wealth accumulation through land ownership is a form of appropriation, barely distinguishable from theft, and the relationship between landowners and tenants is one of inequality, power and exploitation.

Returning to the Irish context, it is perhaps unsurprising that George’s ideas would be readily taken up by some of those involved in the Land War. This is particularly the case given that George was able to develop a critique of landlordism that drew on a classical political economy framework, i.e. the hegemonic economic approach of his time.

Michael Davitt, upon his release from prison, travelled to New York in 1880. There, he met George, read Progress and Poverty, and became an enthusiastic Georgist. His ideas did differ from George’s in that he was notably more radical, in particular rather than solely taxing land, ‘The state… under Davitt’s system, would be the direct owner and indeed overall manager of all holdings’ (McBride, 2006).

George’s involvement in the Land War went beyond his influence on Davitt. Indeed, he wrote a book/pamphlet about it in 1881, The Irish Land Question: What it Involves and How Alone it Can Be Settled:

“In it he showed that in order to relieve Ireland of the horror of rack-renting and to give the benefits of their labour to the Irish people, it was necessary to take the annual rental value of the land alone for community needs, using the new source of revenue to relieve industry… from taxation. Under such a system the labourer would get what he created; no one would have an advantage as a mere landholder” (de Mille, 1944)

Interestingly, George highlighted the fact that the ‘Irish land question’ was in fact a universal issue of political economy. He wrote:

“What is involved in this Irish Land Question is not a mere local matter between Irish landlords and Irish tenants, but the great social problem of modern civilization. What is arraigned in the arraignment of the claims of Irish landlords is nothing less than the wide-spread institution of private property in land”.

A review of the book in the New York Times enthused: ‘One rises from a reading of this weighty pamphlet with a conviction of the justice of the theory advocated and with admiration for the clearness with which it is stated by Mr. Henry George’ (cited in de Mille, 1944).

George also travelled to Ireland during the Land War, in 1881/82. He gave talks as well as writing about the Land War for the US newspaper The Irish World. Obviously, no one can truly claim their place in Irish political history until they have been arrested by the British. Henry George was duly arrested while travelling from Dublin to the West of Ireland. In a letter, he noted that:

‘The charge against me was being a stranger and a dangerous character who had conspired with certain other persons to prevent the payment of rent’

What a great reason to be arrested! He was released a few days later and the whole affair was seen internationally as an embarrassment to the British Government, and helped to further promote George’s work.

It’s hard to know what relevance all of this has for today. However, amid all the doom and gloom around the housing crisis in Ireland and internationally, and the endless wrangling over policy fixes, I find that there is something inspiring in the coming together of George’s radical political economy and the struggle of tenants against the tyranny of rent. Perhaps, indeed, we should be thinking more radically today about the injustice involved in the concentration of ownership of residential property, and the transfer of rent that takes place each month from the pockets of low and middle-income households to those of generally better off households and corporations.

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This piece is based on the following sources:

de Mille, A. G. (1944). Henry George: The Fight for Irish Freedom. The American Journal of Economics and Sociology, 3(2), 251-272.

George, H. (1881). The Irish land question. D. Appleton.

George, H. (1911). Progress and poverty (Vol. 560). London: JM Dent.

McBride, T. (2006). John Ferguson, Michael Davitt and Henry George—Land for the People. Irish Studies Review, 14(4), 421-430.

Sheppard, B. 2014. ‘Progress and Poverty’: Henry George and Land reform in Ireland. The Irish Story, URL: https://www.theirishstory.com/2014/08/24/progress-and-poverty-henry-george-and-land-reform-in-modern-ireland/#.YozVwajMKUk

Events

Just one event this week - the Northern Ireland Federation of Housing Associations is holding their annual conference next week, register and find out more here. Remember, if you have a housing related event you’d like me to share here just send on the details.

What I’m reading

As it happens, the Guardian had a recent editorial on land value tax. In synch with this week’s historical focus, I came across this 2020 New Yorker article recently, which looks at Catherine Bauer, a housing activist and thinker from the depression era who ‘wanted to cancel the rent’. The Reboot Republic podcast had an interview with Leilani Farha from The Shift about her new initiative, which involves a series of proposals around definancialization of housing. You can read the proposals here.