John Kenneth Galbraith

Frank Stilwell and Kirrily Jordan: The Political Economy of Land: Putting Henry George in His Place

Enthusiastic proponents of Henry George’s ideas have often presented them as a panacea for the economic, social and environmental problems that beset contemporary society. Indeed, the Georgist analysis does have much to offer. By more adequately addressing land as a unique economic, social and ecological resource, it can help to reveal underlying causes of currently pressing issues such as declining housing affordability, growing economic inequality, and environmental decay.

The Georgist land tax ‘remedy’ can also play an important role in the redress of these problems. However, there are limitations to the modern application of George’s ideas, as outlined in this article. While a uniform land tax is a necessary component in addressing contemporary political economic problems, it is not sufficient. It needs to be set in the context of a broader political economic analysis and policy program, also addressing public housing, urban and regional policies, environmental taxes and regulations, ‘floors and ceilings’ to limit income inequalities and macroeconomic stabilisation.

While the Georgist analysis redresses the general neglect of land in modern economic orthodoxy, it is important not to go too far to the other extreme. In other words, the important emphasis on land should not come at the expense of attention to problems associated with labour and capital and to the complex forms of government policy necessary for the balancing of contemporary economic, social and ecological concerns. The Georgist analysis needs to be integrated into a comprehensive political economic analysis of contemporary capitalism.

So what does ‘putting Henry George in his place’ entail? It means recognising the political economic importance of land and the potential social gains from the extension of land taxation. Equally, it means recognising the necessity of relating Georgist ideas and policy prescriptions to a broader canvas of modern political economy, including the analytical traditions associated with Karl Marx, J. M. Keynes, and J. K. Galbraith, and modern environmental economics. Henry George’s place is in good company. read the whole article

Peter Barnes: Capitalism 3.0 — Chapter 2: A Short History of Capitalism (pages 15-32)

Sometime around 1950, capitalism entered a new phase. Until then, poverty was a widely shared American experience. Wages were low, hours were long, and unemployment was a wolf at almost every door. In the 1930s, it reached 25 percent.

This changed in the period following World War II. In 1958, economist John Kenneth Galbraith wrote a best-seller called The Affluent Society in which he noted that scarcity of goods was now a thing of the past for a majority of Americans. “The ordinary individual has access to amenities — foods, entertainment, personal transportation and plumbing — in which not even the rich rejoiced a century ago,” Galbraith observed. “So great has been the change that many of the desires of the individual are no longer even evident to him. They become so only as they are synthesized, elaborated, and nurtured by advertising and salesmanship, and these, in turn, have become among our most important and talented professions.”

This was a major phase change for capitalism. Before, people wanted more goods than the economy could provide. Demand, in other words, exceeded supply, and we lived in what might be called shortage capitalism. We could also call it Capitalism 1.0.

After the change, we shifted into surplus capitalism, or what I call Capitalism 2.0. In this version, there’s no limit to what corporations can produce; their problem is finding buyers. A sizeable chunk of GDP is spent to make people want this unneeded output. And credit is lavishly extended so they can buy it.

This historic shift can be described another way. A century ago, our chief scarcity was goods. It thus made sense to sacrifice other things in pursuit of goods, and capitalism was masterful at doing this. Today we’re waist-deep in thneeds, and our scarcities are different. Among the middle classes, the top scarcities, I’d say, are time, companionship, and community (see figure 2.2). Among the poor, there remains a lack of goods, but that lack isn’t due to a shortage of production capacity — it’s due to the poor’s inability to pay. The critical scarcity here, in other words, is income. ... read the whole chapter