The argument in ten steps
Progress and Poverty runs to more than 500 pages, but its case is a chain of ten links, one for each Book. Read this in five minutes, then follow any step into the chapters where George makes it.
The question Why does poverty grow alongside progress?
By 1879 the world had steam power, railroads and the telegraph, and could produce more than ever before. Yet want was deepest in the richest, busiest cities. George sets out to find the cause, testing even the accepted economics of his day from first principles.
“This association of poverty with progress is the great enigma of our times.”
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Book I Wages come from work, not from a fund
Economists of the day said wages are paid out of a fixed pool of capital, so more workers must mean lower pay. George shows that workers produce the value of their wages before they are paid. Capital helps labor produce, but it does not feed or pay it, so a shortage of capital cannot explain poverty.
The common view of George’s day treated wages as a fixed pie handed out in advance. George argues the pie is baked by the workers themselves, so more workers need not mean less for each. George’s illustration, I.1 ¶17 “That wages, instead of being drawn from capital, are in reality drawn from the product of the labor for which they are paid.”
Read it: I.1 The Current Doctrine of Wages—Its Insufficiency, I.3 Wages Not Drawn from Capital, but Produced by the Labor
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Book II Population is not the problem
The other standard explanation came from Malthus: people multiply faster than food, so poverty is nature's doing. George argues the reverse. More people, dividing up the work, produce more for each person, not less. The famines Malthus's followers point to trace back to bad government, war and crushing rents.
“I assert that in any given state of civilization a greater number of people can collectively be better provided for than a smaller.”
Read it: II.2 Inferences from Facts, II.4 Disproof of the Malthusian Theory
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Book III Rent takes the gains
Everything produced is split three ways: rent to landowners, wages to labor and interest to capital. Rent is set by how much better a site is than the best land anyone can use for free, and wages and interest get what is left. So when output rises and wages do not, rent has taken the difference.
RentWages and interestNot yet needed
Wages and interest: 25 on every plot in use. Rent takes 23% of all that is produced.
Each bar is a plot of land, best on the left. The poorest land in use sets the margin: what labor and capital earn there, they earn everywhere. Everything above the line is rent. George’s illustration, III.6 ¶30 Show as a table
State Margin Rent’s share of produce Margin at 25 25 23% “The increase of rent explains why wages and interest do not increase.”
Read it: III.2 Rent and the Law of Rent, III.6 Wages and the Law of Wages, III.8 The Statics of the Problem Thus Explained
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Book IV Progress drives rent up faster than output
Three forces push rent up as society advances. Growing population crowds onto valuable sites. Better technology raises the demand for land. Above all, owners hold land idle while they wait for its price to rise, which pushes everyone else onto poorer land than they need to use.
RentWages and interestNot yet needed
Wages and interest: 30 on every plot in use. Rent takes 14% of all that is produced.
Wages and interest: 29 on every plot in use. Rent takes 16% of all that is produced.
Wages and interest: 28 on every plot in use. Rent takes 18% of all that is produced.
Wages and interest: 27 on every plot in use. Rent takes 19% of all that is produced.
Wages and interest: 26 on every plot in use. Rent takes 21% of all that is produced.
Wages and interest: 25 on every plot in use. Rent takes 23% of all that is produced.
Wages and interest: 24 on every plot in use. Rent takes 25% of all that is produced.
Wages and interest: 23 on every plot in use. Rent takes 27% of all that is produced.
Wages and interest: 22 on every plot in use. Rent takes 29% of all that is produced.
Wages and interest: 21 on every plot in use. Rent takes 31% of all that is produced.
Wages and interest: 20 on every plot in use. Rent takes 33% of all that is produced.
Wages and interest: 19 on every plot in use. Rent takes 36% of all that is produced.
Wages and interest: 18 on every plot in use. Rent takes 38% of all that is produced.
As poorer land is brought into use, the margin falls. Rent grows on every better plot, and the share left for wages and interest shrinks, though the whole produce has grown. George’s illustration, IV.2 ¶1 Show as a table
State Margin Rent’s share of produce Margin at 30 30 14% Margin at 29 29 16% Margin at 28 28 18% Margin at 27 27 19% Margin at 26 26 21% Margin at 25 25 23% Margin at 24 24 25% Margin at 23 23 27% Margin at 22 22 29% Margin at 21 21 31% Margin at 20 20 33% Margin at 19 19 36% Margin at 18 18 38% “We have now seen that while advancing population tends to advance rent, so all the causes that in a progressive state of society operate to increase the productive power of labor tend, also, to advance rent, and not to advance wages or interest.”
Read it: IV.2 The Effect of Increase of Population upon the Distribution of Wealth, IV.4 Effect of the Expectation Raised by Material Progress
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Book V This explains slumps and lasting poverty
Speculation runs land prices ahead of what production can pay. Production stalls, and the stoppage spreads through trade: the boom and bust. And because rent grows faster than productive power, wages stay pinned near a bare living however rich society becomes.
RentWages and interestNot yet neededHeld for a higher price
Wages and interest: 18 on every plot in use. Rent takes 38% of all that is produced.
Wages and interest: 17 on every plot in use. Rent takes 43% of all that is produced.
George’s example: owners expecting rents to rise ask 3 for land of 20, 2 for 19 and 1 for 18, and keep it idle until they get it. Labor is pushed onto land of 17, below the margin production needs. George’s illustration, IV.4 ¶11 Show as a table
State Margin Rent’s share of produce Land used as needed 18 38% Land held for a higher price 17 43% “The reason why, in spite of the increase of productive power, wages constantly tend to a minimum which will give but a bare living, is that, with increase in productive power, rent tends to even greater increase, thus producing a constant tendency to the forcing down of wages.”
Read it: V.1 The Primary Cause of Recurring Paroxysms of Industrial Depression, V.2 The Persistence of Poverty Amid Advancing Wealth
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Book VI Only one remedy reaches the cause
George tests the popular remedies: cheaper government, education and thrift, unions, co-operatives, regulation, and breaking up large estates. Each fails or helps only a few while land stays private, because rent absorbs whatever they gain. The remedy has to go to the root.
“We must make land common property.”
Read it: VI.1 Insufficiency of Remedies Currently Advocated, VI.2 The True Remedy
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Book VII The remedy is just
People rightly own what they make with their labor. Nobody made land, so no one can rightly own it to the exclusion of others. Land titles rest on force and law, not on labor. Owners should keep their buildings and improvements, but they have no fair claim to compensation for the rent.
“The equal right of all men to the use of land is as clear as their equal right to breathe the air—it is a right proclaimed by the fact of their existence.”
Read it: VII.1 The Injustice of Private Property in Land, VII.3 Claim of Land Owners to Compensation
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Book VIII Do it through taxation
No one has to be bought out or evicted. Leave land titles where they are, abolish every tax except one on land values, and raise that tax until it collects the rent. George argues it is the best tax there is: it does not discourage production, it is cheap to collect and hard to evade, and it falls on value the community creates.
TaxedUntaxed
Taxes on wages, buildings and trade fall on what people make, and discourage making it. George moves the whole burden onto the one thing nobody made. George’s illustration, VIII.2 ¶19 “It is not necessary to confiscate land; it is only necessary to confiscate rent.”
Read it: VIII.2 How Equal Rights to the Land May Be Asserted and Secured, VIII.3 The Proposition Tried by the Canons of Taxation
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Book IX What would change
Lifting taxes off work and building would free production. Idle land would have to be used or sold, since holding it empty would cost as much as using it. Wages and interest would rise, fortunes built on land would shrink, and as want disappeared, so would much of the greed that the fear of want breeds.
“To abolish these taxes would be to lift the whole enormous weight of taxation from productive industry.”
Read it: IX.1 Of the Effect upon the Production of Wealth, IX.4 Of the Changes That Would Be Wrought in Social Organization and Social Life
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Book X Why it matters for civilization
Civilizations advance when people work together as equals and decline as inequality grows. George argues that private ownership of land is the root inequality. He warns that modern civilization is heading where earlier ones went unless the cause is removed.
“Thus association in equality is the law of progress.”
Read it: X.3 The Law of Human Progress, X.4 How Modern Civilization May Decline
The conclusion And for the individual
George ends on a personal note. The inquiry convinced him that poverty is not built into the order of things, and that economic law and moral law point the same way. That revived his hope that human life has a meaning beyond this one.
“But out of this inquiry has come to me something I did not think to find, and a faith that was dead revives.”
The steps are written for this site as a guide to George’s argument. The quotations are his own words, each linked to the paragraph it comes from.