A Dialogue on Political Economy - May 2012

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A fictional exchange of views by key historical figures, including Adam Smith, Henry George, Karl Marx and others.

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A Dialogue on Political Economy Written by Edward J. Dodson

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We will begin our discussion by asking Professor Robert Heilbroner to comment on what has been a very long and unsuccessful search for solutions to what he has described as "the Economic Problem." Professor Heilbroner?

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I would suggest to my colleagues that the trouble with economics is that it will not stand still. Issues change, ideas change, understanding changes. Even the past does not look exactly the same from one year to the next, and the present is apt to alter almost out of all recognition. Robert Heilbroner

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What then of science? Man masters material nature by studying her laws, and in conditions and powers that seemed most forbidding, has already found his richest storehouses and most powerful servants. The domain of law is not confined to physical nature. ... Henry George

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It just as certainly embraces the mental and moral universe, and social growth and social life have their laws as fixed as those of matter and of motion. Would we make social life healthy and happy, we must discover those laws, and seek our ends in accordance with them. Henry George

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However, even when a society has got upon the right track for the discovery of the natural laws of its movement it can neither clear by bold leaps, nor remove by legal enactments, the obstacles offered by the successive phases of its normal development. But it can shorten and lessen the birth-pangs. Karl Marx

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What is new in the world today and distinctive of our time is the conflict between those who think that, where our institutions are defective, the defects can be removed by institutional changes of one sort or another and those who despair of institutional change itself and who turn, in their desperation, to noninstitutional means of reaching the promised land of a better day. Mortimer J. Adler

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Noninstitutional means?

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Revolutionary violence. Mortimer J. Adler

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That Jefferson, like Locke, was very serious about the right of revolution is supported by his comment that the tree of liberty needs to be watered by the blood of patriots from time to time. Jacob Bronowski

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Jefferson’s perspective aside, heroic aspirations, devoted services, dauntless bravery, unsparing bloodshed are worse than useless when the combatants understand neither what is wrong nor how to set it right. George Bernard Shaw

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Such misunderstanding is nearly universal. That bourgeois society in the United States of the mid-nineteenth century was not yet developed far enough to make the class struggle obvious and comprehensible was most strikingly proved by Henry Carey, the only American economist of importance. All he proved was that he took the undeveloped social conditions of the United States to be normal social conditions. Karl Marx

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Does the history of uprisings against those who hold power reveal an explosion of dissent against economic deprivation, against political oppression, or both?

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Emperors go, but empires remain. And, as Karl Marx might agree, neither he nor Friedrich Engels in The Communist Manifesto [created] the revolutions in Europe; but they gave them the voice. It was the voice of insurrection. Jacob Bronowski

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Where the working class is not yet far enough advanced in its organization to undertake a decisive campaign against the political power of the ruling classes, it must at any rate be trained for this by continual agitation against, and a hostile attitude toward, the policies of the ruling classes. Otherwise, it remains a plaything in their hands. Karl Marx

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Yet, the revolutionary uprising you embraced had obvious points of vulnerability. There was the threat posed to it by reform, the possibility that the hardships of capitalism would be so mitigated that they would no longer arouse the revolutionary anger of the workers. Liberal reformers in the twentieth century were companionately in step with much of The Communist Manifesto. John Kenneth Galbraith

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Neither the liberal reformers nor those who embraced the perspectives offered by Herr Marx allowed themselves to see that his analysis is materially flawed because he fails to properly distinguish between ownership "classes" which are productive, and therefore advance the progress of society, and those which are nonproductive. … Henry George

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By its very nature ownership of capital must involve production in order to generate new wealth. Ownership of land, on the other hand, requires no such ownership activity, only the growth of the community. Henry George

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I do not relish the control of economic lives by vast corporations. To keep the benefits and check the power of these mastodons I would favor public ownership of natural resources, including the land and all its minerals, fuels, and other subsoil wealth. I know that capital, management, science, and machinery play a rising role, and labor a diminishing part, in production and distribution. Will Durant

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Mr. George does not see that if the State confiscated rent without being prepared to employ it instantly as capital in industry, production would cease and the country be starved. George Bernard Shaw

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Long before the period of Modern Industry, cooperation and the concentration of the instruments of labor in the hands of a few, gave rise, to great, sudden, and forcible revolutions in the modes of production, and consequentially, in the conditions of existence, and the means of employment of the rural populations. ... Karl Marx

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I concede to Mr. George that this contest at first took place more between the large and the small landed proprietors, than between capital and wage-labor; on the other hand, when the laborers are displaced by the instruments of labor, by sheep, horses, etc., in this case force is directly resorted to in the first instance as the prelude to the industrial revolution. The laborers are first driven from the land. Land grabbing on a great scale is the first step in creating a field for the establishment of agriculture on a great scale. Karl Marx

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What is certainly our historical experience is that as soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce, the wood of the forest, the grass of the field, and all the natural fruits of the earth, which, when land was in common, cost the labourer only the trouble of gathering them, come, even to him, to have an additional price fixed upon them. He must give up to the landlord a portion of what his labour either collects or produces. Adam Smith

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Where the land is concerned, we must identify the moral principles attached to our occupancy and use. God, who hath given the world to men in common, hath also given them reason to make use of it to the best advantage of life and convenience. The earth and all that is therein is given to men for the support and comfort of their being. John Locke

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I, too, believe that property in the soil is the natural foundation of power and authority. Three cases of soil ownership are supposable. First, if the prince own the land he will be absolute. All who cultivate the soil, holding it at this pleasure, must be subject to his will. ...

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Second, where the landed property is held by a few men the real power of the government will be in the hands of an aristocracy or nobility, whatever they are named. ...

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Third, if the lands are held and owned by the people and prevented from drifting into one or a few hands, the true power will rest with the people, and that government will, essentially, be a Democracy, whatever it may be called. Under such a constitution the people will constitute the State.

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It does not matter where you look or what examples you select, you will see that every form of enterprise, every step in material progress, is only undertaken after the land monopolist has skimmed the cream off for himself. And everywhere today the man or the public body that wishes to put land to its highest use is forced to pay a preliminary fine in land values to the man who is putting it to an inferior use, and in some cases to no use at all. ... Winston Churchill

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All comes back to the land value, and its owner for the time being is able to levy his toll upon all other forms of wealth and upon every form of industry. Winston Churchill

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The long-term effects are best illustrated by the constant existence of speculation where private ownership has been protected by the governing authority. Essentially, the influence of speculation in land in increasing rent is a great fact which cannot be ignored in any complete theory of the description of wealth in progressive countries. ... Henry George

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It is the force, evolved by material progress, which tends constantly to increase rent in a greater ratio than progress increases production, and thus constantly tends, as material progress goes on and productive power increases, to reduce wages, not relatively, but absolutely. Henry George

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As long as there is plenty of land for everybody private property in land works very well. But this state of things never lasts long with a growing population, because at last all the land gets taken up, and there is none left for the later comers. ... George Bernard Shaw

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Even long before this happens the best land is all take up, and later comers find that they can do as well by paying rent for the use of the best land as by owning poorer land themselves, the amount of rent being the difference between the yield of the poorer land and the better. At this point the owners of the best land can let their land; stop working; and live on the rent: that is, on the labor of others, or, as they call it, by owning. George Bernard Shaw

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I have argued that as much land as a man tills, plants, improves, cultivates, and can use the product of, so much is his property. He by his labour does, as it were, enclose it from the common. Such private enclosure is limited to conditions where there is still enough and as good left, and more than the yet unprovided could use. John Locke

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The balance of power in a society, accompanies the balance of property in land. The only possible way, then, of preserving the balance of power on the side of equal liberty and public virtue, is to make the acquisition of land easy to every member of society; to make a division of land into small quantities, so that the multitude may he possessed of landed estates. ...

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If the multitude is possessed of the balance of real estate, the multitude will take care of the liberty, virtue, and interest of the multitude, in all acts of government.

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But beyond this, it seems to me that those who look upon the small farmers of the United States as forming an impregnable bulwark to private property in land very much miscalculate. Henry George

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The free ownership of the peasant who farms his land himself is evidently the most normal form of landed property for small-scale cultivation. It is a necessary transition point in the development of agriculture itself. ... Karl Marx

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The causes of its decline show its limitations. The agricultural smallholding rules out the development of the productive powers of social labour, the social concentration of capitals, stock-raising on a large scale or the progressive application of science. Karl Marx

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The farmer who cultivates his own small farm with his own hands is a landowner, it is true, but he is in greater degree a laborer, and in his ownership of stock, improvements, tools, etc., a capitalist. It is from his labor, aided by this capital, rather than from any advantage represented by the value of his land, that he derives his living. His main interest is that of a producer, not that of a landowner. Henry George

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The economic anarchy of capitalist society as it exists today is, in my opinion, the real source of the evil. In so far as the labor contract is free, what the worker receives is determined not by the real value of the goods he produces, but by his minimum needs and by the capitalists’ requirements for labor power in relation to the number of workers competing for jobs. Albert Einstein

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Can the problem be solved? I think it can. With every technological advance, the increasing productiveness of capital instruments also makes the solution of the problem more feasible. ... Mortimer J. Adler

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That solution is based on principles of economic justice which not only respect property rights but also recognize that each person has a natural human right to participate in the production of wealth through the ownership and application of productive property to a degree sufficient to earn for that person a decent standard of living. Mortimer J. Adler

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Of one thing I feel certain: this same technical progress which, in itself, might relieve mankind of a great part of the labor necessary to its subsistence, is the main cause of our present misery. Albert Einstein

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The effect of all discoveries and inventions is to increase the power of labor in producing wealth. But none of them lessen, or can lessen the necessity for land. Until we can discover some way of making something out of nothing there is no possible discovery or invention which can lessen the dependence of labor upon land. ... Henry George

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And, this being the case, the effect of these labor-saving devices, land being the private property of some, would simply be to increase the proportion of the wealth produced that landowners could demand for the use of their land. Henry George

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We should note that the capitalized rent, the price of land, now becomes an important aspect; and that not only can the former rent-payer transform himself in this way into an independent peasant proprietor, but also urban and other holders of money can buy plots of land with a view to leasing them either to peasants or to capitalists, and enjoy the rent on their capital thus invested as a form of interest. Karl Marx

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If one man owned all the land accessible to any community, he would, of course, demand any price or condition for its use that he saw fit; and, as long as his ownership was acknowledged, the other members of the community would have but death or emigration as the alternative to submission to his terms. ... Henry George

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This has been the case in many communities; but in the modern form of society, the land is in the hands of too many different persons to permit the price which can be obtained for its use to be fixed by mere caprice or desire. Henry George

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In the settlement of America we have to observe how European life entered the continent, and how America modified that life and reacted on Europe. Who shall measure the effect on Europe of free land in America? America has given occasion for a new Migration of the Peoples comparable to the older one. Frederick Jackson Turner

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We should not ignore the fact that most of the major states of history owed their existence to conquest. The conquering peoples established themselves, legally and economically, as the privileged class of the conquered country. They seized for themselves a monopoly of the land ownership. Albert Einstein

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Ricardian landlords were also amply present in Ireland – or more often absent in England which was socially much more congenial and frequently also a safer place for a landlord to live. ... John Kenneth Galbraith

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As the Irish population expanded, so did the competition for land and so did the return that was extracted by the absentee landlords. Grain was grown to pay the rent; potatoes were grown to feed the people. Even when people starved, the grain was sold and the rent was paid. John Kenneth Galbraith

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To drop a man in the middle of the Atlantic Ocean and tell him he is at liberty to walk ashore, would not be more bitter irony than to place a man where all the land is appropriated as the property of other people and to tell him that he is a free man, at liberty to work for himself and to enjoy his own earnings. That is the situation in which our Irishman, and a worker nearly everywhere, finds himself. Henry George

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We may derive endless instruction from the economic analysis of the past. We observe that the invading barbarians found Rome weak because the agricultural population which had formerly supplied the legions with hardy and patriotic warriors fighting for land had been replaced by slaves laboring listlessly on vast farms owned by one man or a few. Will Durant

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Are the lessons to be learned by how the land was settled in North America different from those of the Old World, of Europe or Asia?

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When we consider the public domain from the point of view of the sale and disposal of the public lands of the United States the story is in sharp contrast with the European system of scientific administration. Efforts to make this domain a source of revenue, and to withhold it from emigrants in order that settlement might be compact, were in vain. Frederick Jackson Turner

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As population increased along the Atlantic coast, speculation in western lands was one of the leading activities of capitalists. Large areas had been bought outright for a few cents an acre and were being held for a rise in value. ... Charles A. Beard

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The chief obstacle in the way of the rapid appreciation of these land was the weakness of the national government which prevented the complete subjugation of the Indians, the destruction of old Indian claims, and the orderly settlement of the frontier. Charles A. Beard

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Most important during the period of settlement of America has been the fact that an area of free land was continually lain on the western border of the settled area. Whenever social conditions tended to crystallize in the East, whenever capital tended to press upon labor there was this gate of escape to the free conditions of the frontier. Frederick Jackson Turner

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Until the Civil War and even after, what distinguished the American scene was a spacious abundance, a prospect of income and opportunity for farmer and worker, as well as businessman and capitalist, unimaginable in England or on the Continent. … John Kenneth Galbraith

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If the worker could at any moment express his dissatisfaction by deserting to the frontier, there was not much foundation for a theory of wages. If farmers could own and farm their own land, there was no need for a theory of rent. John Kenneth Galbraith

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We had for our public domain the best part of an immense continent. It had been our boast that here every one who wished it could have a farm. We have not merely common schools, but high schools and universities, open to all who may choose to attend. Yet here the same social difficulties apparent on the other side of the Atlantic appeared. It is clear that our democracy is a vain pretense, our make-believe of equality a sham and a fraud. Henry George

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The relative equality of Americans before 1776 has been overwhelmed by a thousand forms of physical, mental, and economic differentiation, so that the gap between the wealthiest and the poorest is now greater than at any time since Imperial plutocratic Rome. Will Durant

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Unfortunately , the ordinary man is an Anarchist. He wants to do as he likes. He may want his neighbor to be governed, but he himself doesn’t want to be governed. He loathes tax collectors. This Anarchism has been at work in the world since the beginnings of civilization. George Bernard Shaw

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The organization of a civilized society supposes some impairment of individual rights, and some restraint of natural individual impulses and desires. Until human nature becomes perfect, such restraints are necessary; the problem is to keep them within the narrowist possible limits. Adam Smith

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Until we in some way make the land, what Nature intended it to be, common property, until we in some way secure to every child born among us his natural birthright, we have not established the Republic in any sense worthy of the name, and we cannot establish the Republic. Its foundations are quicksand. Henry George

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We know of five or six ancient civilizations which were just like our own civilization, having progressed in the same way, to the same artistic climaxes, the same capitalistic climaxes, the same democratic and feminist climaxes as we; and they all perished. George Bernard Shaw

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I believe a civilization is possible in which all could be civilized. But it must be a civilization based on justice and acknowledging the equal rights of all to natural opportunities. Henry George

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“It is a proposition too plain to require elucidation, wrote Richard Rush, Secretary of the Treasury, in his report of 1827, “that the creation of capital is retarded rather than accelerated by the diffusion of a thin population over a great surface of soil.” ... Frederick Jackson Turner

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Thirty years before Rush wrote these words Albert Gallatin declared in Congress that “if the cause of the happiness of this country were examined into, it would be found to arise as much from the great plenty of land in proportion to the inhabitants which their citizens enjoyed as from the wisdom of their political institutions. Frederick Jackson Turner

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Well, gentlemen, we have reached the end of our allotted time together. I thank you for your insightful contributions to this discussion.

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