Spencer Heath Archive

Item 1309

Carbon copy of a letter from The Science of Society, Roadsend Gardens, Elkridge, Maryland, to Mr. Frank Chodorov, Henry George School of Social Science, 30 East 29th Street, New York, New York

June 19, 1940?

 

 

Dear Mr. Chodorov:

Let me congratulate you on the publication of your excellent letter recently in the Wall Street Journal.

This paper has a sober, sensible and moderately enlightened editorial policy. Their special articles by Thomas F. Woodlock in his column headed, “Thinking it Over,” are always of a high order from a widely read and versatile mind. One of the vice presidents of the U. S. Trust Company has several times suggested that I should meet him because of the similarity of his thinking to mine.

I notice you refer to the School as an institution “for the propagation of Henry George’s doctrines.” It has been wisely observed that the purpose of propaganda is always to induce or influence action. Education looks to the “awakening of thought and the progress of ideas,” illumination of the mind through enlargement of its conceptions and their continual extension. Right thinking is always followed by right action. This action is automatic, once the thinking is right. Right action, therefore, need be our least and last concern.

This, however, does not prevent us from knowing what right action is and how right actions are performed. Those actions are right which yield profits and satisfactions either directly of themselves or contribute to that result in their general context. In the social realm, the realm of associative relationships, those things are right which convey services to others in such manner that equivalent services are received in exchange. Such things are not only right, they are real, in the sense that they are abiding and permanent, so far as their own nature is concerned, and not self limiting, as wrong things are.

The reason men practice exchange is because each man finds greater satisfactions in the many things that many men can do for him than in the very few things that he can do for himself. Production for use is primitive and barbaric; production for exchange (for profit or recompense) is social and civilized. The motivation of exchange is mutual profit.

Without exchange of services men are either primitive or enslaved. Men are limited; the energy they devote to the service of each other cannot be perverted and diverted into oppression or war. The energy given to trading cannot be expended in raiding, but all energy must be expended in some form. The function of society, of all social processes and relationships, is to liberate. Freedom is a social product. Civilized man has no freedom but comes to him by reason of the services he gives and the services he gets by exchange. Freedom of exchange, therefore, is the highest, the most inclusive, freedom that man can desire.

The limited freedom of exchange that men now have comes to them through the services performed by the social functionaries whom society charges with the function of distributing its territory and resources by a process of exchange into the hands and secure possession of those who can use them most productively. The performance of. this distributive service is limited to so much of the territory and resources as can be profitably or efficiently employed under the existing limitations and restrictions imposed by government upon the freedom of exchange — upon the freedom to employ one another by exchange of goods and services. But this distributive service performed by exchange for an equivalent called rent does give to all persons, without favor or discrimination and upon equal terms, access and possession of so much of the territory and resources as they can profitably use. In a highly productive community this distributive service upon the territory is of high value and is so recompensed. Without it, possession would have to be held by force against force and therefore without security, or, if the distribution were by government officers other than owners acting in a free market, the allocation and possession of sites and resources would have to be upon political considerations involving favor and discrimination and therefore ultimate monopoly to political privileges, whatever the form of the government might be.

Since the members of a community cannot have freedom of exchange either without security of possession or under monopoly of its basic resources, it must be clear that they obtain their present limited freedom of exchange from the services performed in the proprietary administration and distribution of land that they now enjoy. The rent they pay is the market price of the services that give them their present limited freedom of exchange. But they need far more freedom than they have now. They need freedom from the compulsive taxation that penalizes all their exchanges, demoralizes their plans and is spent to enforce many other restrictions upon them. In consequence, not only their labor and their capital, but the very land itself and its resources are largely idle, unused and unemployed. The members of the community are in sore need of more freedom; more freedom to exchange and thus to employ themselves, their capital and their natural resources in the service of each other.

This is the light that needs only to be seen: What men live by is the services they give each other, using material things only as an aid. What men need is more services, and especially do they need the kind of services that will give them more freedom to exchange. None but proprietors can exchange property outright or its use for limited terms. None but political persons can penalize exchange.

When men have more freedom to exchange they will give each other more services and create more wealth and values of every kind. But they can obtain this greater freedom of exchange only by (having performed for them) an extension of the community services by which they obtain such freedom of exchange that they now have. These present proprietary services, as we have seen, give them peaceable security of possession and immunity from political discrimination in the allocation of community resources, but these merely distributive services do not give the members of the community any protection against the ravages of taxation which “now hampers every wheel of exchange.” The service the productive community now so sadly needs is, “To abolish all taxation save that on land values.” This is the formula into which Henry George cast the proposition made to the French land owners by the Physiocrats for the salvation and restoration of their rents and values. This is the proposition of public service to mankind as to which, in the words of Henry George, “there are few of the classes most to be benefitted by it, who at first, or even for a long time afterward, see its full significance and power.” “This is the secret which would transform the little village into the great city. With all the burdens removed which now oppress industry and hamper exchange, the production of wealth would go on with a rapidity now undreamed of. This, in its turn, would lead to an increase in the value of land. — a new surplus which society might take for general purposes.” Here George clearly recognizes that the public or community service that shall abolish taxation and thus liberate exchange will result not alone in a vast increase in the wealth and values flowing from private services but that out of this will arise also an increase in rent and the value of land. Unlike the Physiocrats, his intellectual eyes were not open to the relationship between this public service of liberating exchange and its natural and appropriate reward in higher rents and values. He assumed that this great public service could spring from the public itself or through governmental coercion administered by politicians without any restraint or supervision by the public proprietors and without any participation by them either in the service or in its rewards.

All organized services, private or public, are performed by the aid of capital goods and facilities; private services by the aid of private capital, and public services by the aid of the public capital, this latter consisting of all public improvements and other property in common or community use. Organized private services are always performed by the owners of the private capital either directly or through their supervised agents and employes and the services and/or commodities are delivered to the patrons of the enterprise by the technique of voluntary exchange. Private services cannot be successfully performed by private servants unless they are supervised (and paid) by the owners of the private capital that is placed in these servants’ hands. It is the same with public services in which all the public capital is involved. They can be successful only so far as they are performed by the public proprietors and by public employes acting under their supervision and control. The total ground rent received represents the gross sales of public services in any community and the net ground rent remaining after payment of all labor and capital charges is the recompense to the public owners for their administrative and supervisory services. It is because this fundamental organization of the community services, of the owners, servants and capital, is not clearly seen that so much confusion arises.

The practical proposal of Henry George to abolish all taxation is a call to public service, but it has not been addressed to the public proprietors. On the con­trary, it has been unthinkingly assumed that proprietors are superfluous and even injurious and that they must be eliminated — much as communists and such persons assume that the proprietors of private enterprises are super­fluous and must be expropriated and “liquidated” at whatever cost.

There has been and still is too much foggy assumption regarding George’s proposition and entirely too little analysis of it. As often happens with intuitive minds, his conclusion was sounder than his argument and he builded better than he knew, yet he urged those who were to follow him to build further and better than he. Now that his dialectic is silent and the moralistic conflicts that beset him and his more emotional adherents have all been resolved, his practical proposition can be found basically in accord with the universal principle under which socialized men serve each the others by exchange and all successful business is carried on with profit and success to all concerned. It can be seen to integrate harmoniously with a universal system of exchange inclusive of all public as well as all private services. And it involves nothing less than the entire transformation of political government by force into the proprietary and essentially democratic administration of public capital and services on the principle of contract and voluntary exchange for value received. It discloses a system of relationships, of natural law in the social world, inviting the oldest, most official and most influential class in any community to an extension of service that will liberate the full productive powers of the population and yield to themselves the most magnificent profits and returns. Like other great discoveries it needs only the light, only to be understood, not by all men, but by a sufficient competent company of those whose property and circumstance is such that they can utilize it in the service of all and be rewarded by all. Long enough and in vain have the followers of Henry George resisted intellectual progress and discovery and indulged themselves with emotional urge and moralistic appeals looking to destructive action and reform. “Until there be correct thought, there cannot be right action; and when there is correct thought, right action will follow.”