Spencer Heath Archive

Item 1421

Carbon of a letter from Heath to A. Laurence Smith, 1108 Van Dyke Avenue, Detroit, Michigan

July 26, 1943

Dear Mr. Smith:

     Let me congratulate you on your break away from the blind dogmatism that has driven so many little Henry Georges into bitter belligerence or cynical misanthropy.

     Their irrationality rests mainly on the naive assump­tion that persons who as owners make contracts in respect to the free use or ownership of land do not thereby per­form any distributive services and that therefore they should be deprived by force of the social recompense that the open market awards to them for this distributive serv­ice by the social technique of contract and consent. Thus they deny the right of the social body to purchase these services at a voluntary price and thus to escape arbitrary state distribution of its sites and resources by a political instead of a social technique. They would deprive the social body of all its peaceable and voluntary jurisdiction over its sites and resources and hand them over to the essentially totalitarian state — all in the name of justice, freedom, human progress and emancipation. They believe in free (untaxed) trade in goods and also in services, but not free trade in land nor in the serv­ices of owners that alone constitute the social and non-political distribution and administration of land. Self-hypnotized into the idea that free trade in land is a monopoly of land, they cry blindly for state intervention, with no thought of the inevitably consequent iron-clad monopolization of all desirable sites and resources in the hands of its political agents and beneficiaries.

     Henry George embraced Liberty for his goddess, human freedom, non-coercion for his ideal. But he did not “wholly trust her.”  He accepted the expediency of war, so it be war to prevent war, and he proposed taxation to abolish taxes, force to abolish force. He affirmed a benign, non­violent social order separate and distinct from and older than the political governments that originate in conquest and impose the mass slavery of tribute – and taxation. But, sharing the darkness of his predecessors, he had only vague knowledge of the underlying social order and its autonomous processes and no understanding at all of its basic institution of property in land. He did not know that the public relations between men with respect to land must be determined by the social process of free contract and common consent and that land is social-ized only so far as it is treated as private property and thereby becomes subject to peaceable and voluntary disposi­tion and distribution under the social law of custom by free contract and common consent.

     Governments (political) violate property; they do not create or maintain it. Property is established spontan­eously by the custom of the social order so that men may practice social — which means contractual — relations.

     The tax or tribute technique of governments impairs and finally destroys property rights and with them the whole field of freedom through voluntary — that is, contractual — relations. Henry George did not know that contract and consent is the only free relationship — in any active and practicing sense of that word — nor that contracts can be made only with respect to such things as can be and actually are owned. He thought ownership (of land) not essential but inimical to free relationships. When he cited a leasehold as use without ownership he overlooked that ownership was what made the leasehold possible — that it was predicated on ownership. It was by false analogy that he supposed a tenant could be a free-holder under the dictate, under the monopoly power, of any poli­tical state. He knew not that land owners, under a dele­gation of social authority, distribute sites and resources by a social process, and that for this service so performed they receive only such recompense (in rents) as the community desires and the open market therefore awards.

     As to artificial things, George upheld their owner­ship under social authority and their distribution by the social process of free contract and exchange. And he did not challenge the legitimacy of recompense to their owners for such contractual distribution, over and above all recom­pense for any and all labor in physically producing them. He called this contractual distribution the “productivity of exchange” and he hailed it as a new discovery of his. But he did not follow up the idea (although he left six full pages for the purpose) and did not discover that his “productivity of exchange” is equally applicable to the social and contractual (as opposed to anti-social or contra-social) distribution of land through the social owning of it — as opposed to a compulsive (political) dominance over it, and thus over victims inhabiting it.

     Henry George did not realize that none but owners (directly or through agents) can exchange, that none but owners can distribute without discrimination, and that the productivity of exchange is simply the recompense for a social distributive service, above and apart from the serv­ices of mere physical production. Though he recognized the importance of a contractual, as opposed to a violent or arbitrary, distribution of artificial things, he was still blind to the necessity for a similar distribution of natural things. He thought that because sites and re­sources have no original production cost their owners should not be allowed to have the recompense that the open market freely awards for a social and peaceable distribu­tion of them into the hands of those who, because they can use them most productively, can therefore pay the highest prices or rents.

     Because he had no clear knowledge of ownership in the functional sense as the basis of contract and there­fore of social distribution by exchange, Henry George understood only a physical basis and little or nothing of the social or distributive basis of ownership and exchange. His dictum that all wealth is the result of labor applied to land denotes only a physical rela­tionship between a man and his natural environment. All social relationships are between men, and not between men on the one side and nature on the other. Society deals not with labor as such, but only with such labor as induces a voluntary measured recompense and is there­fore properly called services. Nor does it deal with wealth, merely as wealth, but only in terms of the ex­changeable labor, namely, services incorporated in it and of which it is only a vehicle of exchange for other serv­ices, whether these others be incorporated in any form of wealth or not. The corrected statement, having an economic or social context would be:

All values are measures of services in terms of their exchangeableness for other services.

All values are the result of exchangeable labor — services — being performed.

It is immaterial to what physical things (if any) such labor is applied.

As to natural, unchanged, physical things, the services may consist only in the exchanging of them – changing the ownership of them, distributing them.

Value appertains not to material objects but to services.

Value may appertain to physical services in­corporated in material objects plus also the services performed in exchanging (distributing) them, or it may appertain to the latter alone.

The values that appertain to services performed by exchanging natural things in situ, distributing them, are called land values.

     Henry George saw only dimly that the value (exchangeableness) of wealth is only the value of the services incorporated in it. And he saw even more dimly that the services of owners in effecting a social (not physical) distribution of it creates, frequently if not generally, more value than all the precedent services of physical production. While it is true that in his last writings he made many references to the productivity of exchange and even stated that, “the essential idea of wealth is really that of service embodied in material form,” still he was, in general, so limited to physical conceptions — land, labor and wealth — which, standing alone, have no social reference or exchange significance, and so bound was he by his implacable early prejudice against property in land, it was not easy for him to grasp the importance, the utter necessity, of the property and exchange technique with reference to natural as well as to artificial things. He could not discover that all free community life depends wholly upon the adoption and practice of social or contractual exchange services not only with reference to things having labor (physical services) incorporated in them, but so much the more with reference to the social distribution of the physical environment itself, entirely apart from any labor or improvement ex­pended upon it.

     The basic self-deception of Henry George was that land, being physically limited and incapable of being increased, its ownership was therefore a monopoly. But he proposed to tax and destroy not land ownership but land value, the creation of which he insisted was not limited but, on the contrary, tended to increase above all other values. He gave no heed to the competition between land owners for tenants and purchasers. He knew that, apart from tax­ation, all products and services — property of all kinds — are distributed by the free contracts of the open market, but he chose to disregard this, so far as land and rent or land value is concerned. He went so far as to imagine and invent an arbitrary distribution of total production, independent of voluntary market processes, under which rent takes the major portion by some hypothetical monopoly power and leaves but an ever-dwindling pittance for wages and interest. He assumes this strangle-hold of rent on production and then, begging the question, assumes to “prove” this assumption by showing that wages and interest are then necessarily limited to the little that remains. He so far ignores the free exchange system of distribution as seemingly to urge and even pretend to an “algebraic” demonstration that of the total wealth produced (he doesn’t bother to consider services) the portion going as rent is taken under some arbitrary priority and sinister technique other than free contract and exchange and thereby taken in such constantly increasing amount as to leave but a slave’s portion for wages and interest. He completely and avowedly disregards the ever-increasing seizures by govern­ment and lays all such odium on land owners alone. This he pretentiously “proves” by his pitiful “algebraic” irrelevancy that when a total sum is divided into three parts and one part is withdrawn, then only the other two will remain — the whole being the sum of its parts — as though that axiom had any bearing on the rightness of the division or in any way determined the relative or respective magnitudes.

     To say, (leaving taxation all out of account),

Production equals Rent plus Wages plus Interest, therefore Production minus Rent equals Wages plus Interest,

is the same as to say,

Six equals Two plus Two plus Two, therefore Six minus Two equals Two plus Two

or, for an unequal division,

Six equals One plus Two plus Three, therefore Six minus Three equals One Plus Two.

The “algebraic” symbols are, of course, but a gro­tesque camouflage of the nonsensical irrelevancy — a tour de force in self-deception.

     Such is the naked logic on which rests the whole assault of Henry George against the basic institution of any population that has a permanent abode through property in land and thereby the foundation of a social system of distribution and exchange. Instead of mak­ing any attempt to understand the institution, learn of its vast importance and essentiality, and discover its mighty potentialities when rightly understood to emancipate and nobly serve mankind, Henry George pro­posed to destroy it by the same state-confiscation that the Marxian would-be despots propose for all kinds of social-ized property — that is, the pro­perty that is owned for the use and benefit of others through the free relations of contract and exchange. In this he abandoned all his rhetorical devotion to freedom and free relations and in his proposed practice reverted to a single and invidious one of the “schemes of taxation which drain the wages of labor and the earnings of capital as the vampire bat is said to suck the life-blood of its-victim.”

     His vision of Liberty was as partial as his trust in her. Though her ways are none but the ways of freedom and peace, her feet only in the places of voluntary ex­change, of free contractual relations, of administration without compulsions, service without servitude or sub­mission, he called on her not for enlightenment but to play the authority of force under the forms of officialdom, panoply of government, tyranny and war.

     For my part, I profoundly distrust force (except against individual or organized aggressors) in any form. I have tried to investigate, discover, understand, believ­ing that right thinking — clear thinking — illumination of the mind alone, and no fervor of the heart or spleen, can claim the happy heritage of peace and freedom that awaits mankind.

     A great man’s memory is honored in the following and the spreading of his light; in the cherishing of his darkness he is but poorly served. The great contribution of Henry George was the idea that rent and rent alone should be the recompense for public services. His darkness was in his ignorance (and ours) that rent is always payment for services — primarily for the public service of distributing all community locations, benefits, and advantages that are not made unavailable and canceled out by the disservices (seizures and coercions) of the political state.

     Henry George only stirred a surface above and below which were greater heights and deeper depths than he ever dreamed. For he looked not to the Golden Rule of Exchange for the benefit of all but to force — the crude force of government — for the salvation instead of enslavement of men. His implacable prejudice against the social (contractual) holding and distribution of land blinded him to the beauty of owner-administration over community property (for the benefit of non-owning users) and to the practical application of his own social ideals. Not knowing that rent is ever and always the natural social recompense for community services as performed by community owners, he could have no vision of their services being expanded by them and further extended into public affairs so as to transform rulership by force into protection against force and public disservices by seizures, into community services by contract and consent. Lacking this vision, this understanding of the basic functioning and the next-impending natural development of the social organism, he urged that the state still further invade the social organ­ization, — that it destroy voluntary rent (as such) by confiscating it and thereby degrading it to the level of political loot. He saw that freedom of exchange (distri­bution) would raise rent but not that the taxation of rent would abolish it — would turn rent into tribute — and let fall all distribution of community services and advantages (if any) into bureaucratic and political hands.

     It is for us to discover that Liberty and Prosperity are to be attained not by any anti-social coercion by the political state but in that practice and perfection of the democracy of the market and its extension through land ownership into the social and non-political (non-coercive) administration of community property and public affairs.

     The enclosed printed matter sets out the non-violent, socially legitimate, and practical means for bringing into effect the Philosophy of Freedom that Henry George in all his ethical and poetic generalities proclaimed — the means for attaining, without violence and under the sound motivation of profit from expanded services, all the ideal ends he cherished in his heart and his poetic fancy dreamed.

Sincerely,