RENT AND SOCIETY, a Course; Giles, Campton _RENT AND SOCIETY, a Course

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Prepared by the Australian School of Social Science
P.O. Box 443, Enfield, NSW, 2136
Tel. (02) 9744 8815, (02) 9746 5154; Fax (02) 9744 3804

In the very first session it was said that there was nothing wrong with the economy. But if that is true then what can we say about this story from present-day Brazil?

The hut is sinking in the mud near the bridge over the River Guaibe in Porto Alegre, Brazil. A woman social worker is welcomed by five children, the eldest about eight years old. The parents have gone out foraging in the garbage heaps. Noticing how poorly the children look, the social worker asks them whether they have eaten recently. 'Yes, miss, yesterday Mummy made little cakes from wet newspaper.' 'What? Little cakes from what?' asks the woman. 'Mummy takes a sheet of newspaper, makes it into a ball and soaks it in water and when it is nice and soft kneads it into little cakes. We eat them, drink some water and feel nice and full inside.'
      p. 137, A Fate Worse Than Debt (Susan George)....
How easy it is to think that situations like this one are in the nature of things. Nonetheless, despite appearances, human society is vast and finely organised. Let us try to represent this order by a diagram.

Theories, opinions, beliefs,
traditions and customs etc.
(Man-made World)

RENT AND SOCIETY, a Course; Giles, Campton_ RENT AND SOCIETY, a Course

What does this diagram suggest to us?...

This diagram gives us a vantage point from which to view the only too obvious flaws in the world we live in. It is also highly practical, in that it helps us to organise our observations and experience. It is worth remembering.

It will help to reinforce this perspective if we compare it to that vision of society written by Thomas Jefferson into the American Declaration of Independence in 1776, and that of the French revolutionaries in 1789 in the Declaration of the Rights of Man and of the Citizen.


We hold these truths to be self-evident - that all men are created equal; that they are endowed by their Creator with certain unalienable rights; that among these are life, liberty, and the pursuit of happiness; that, to secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed; that, whenever any form of government becomes destructive of these ends , it is the ri ght of the peop le to alter or to ab oli sh it, an d to institute a new government, laying its foundations on such principles, and organising its powers in such form, as shall seem to them most likely to effect their safety and happiness.


The representatives of the people of France, formed into a National Assembly, considering that ignorance, neglect, or contempt of human rights are the sole causes of public misfortunes and corruptions of government, have resolved to set forth, in a solemn declaration, those natural, imprescriptible and inalienabale rights, [and do] recognize and declare, in the presence of the Supreme Being, and with the hope of His blessing and favour, the following sacred rights of men and of citizens:

I. Men are born and always continue free and equal in respect of their rights. Civil distinctions, therefore, can only be founded on public utility.

II. The end of all political associations is the preservation of the natural and imprescriptible rights of man, and these rights are liberty, property, security, and resistance of oppression.

What similarities do you notice between the diagram and these documents?...

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GOVERNMENT stands midway as it were between the man-made world and the laws of nature and ethical principles which give direction and vision to human society. Government can be a bridge or a barrier to the higher levels of human society. We can suggest this idea of a barrier by a dotted line between GOVERNMENT and the lower levels of the diagram. Until now whom of us would have considered that the abhorrent situation we heard about at the start of this session is the result of an idea?

Government is more than Parliament; it encompasses all the ideas and institutions which guide or influence social actions. These actions may be guided by true beliefs, right opinions and good laws. But, again, just as easily they may issue from the dominion of false beliefs, wrong opinions, and bad laws. Let us stop here to ask how we can tell the difference. False opinions do not stand up and declare themselves. We must discriminate. But how?

The object of government is the true or substantial happiness of society. Thus we see that false opinions are present by the most ordinary test of their physical and social effects upon the happiness of ordinary people. Another test, though less reliable, is the degree of consistency between our social practices and our ideals, or vision of society which has come down to us in our traditions and beliefs.

Have we observed the effects of false ideas or noted any inconsistency between our social practices and our ideals?

But, how do we tell that there is social retrogression? Towards the end of Progress and Poverty Henry George gives a most interesting account of this problem. We cannot read all of what he says (you may read it for yourself in Book X Ch. 4) but here is one extract.

Yet to hint to-day that our civilisation may possibly be tending to decline, seems like the wildness of pessimism. The special tendencies to which I have alluded are obvious to thinking men, but with the majority of thinking men as with the great masses, the belief in substantial progress is yet deep and strong - a fundamental belief which admits not the shadow of a doubt.

But any one who will think over the matter will see that this must necessarily be the case where advance gradually passes into retrogression. For in social development, as in everything el se, motion tends to pers ist in straight lines, and therefore, where there has been a previous advance, it is extremely difficult to recognise decline, even when it has fully commenced; there is an almost irresistible tendency to believe that the forward movement which has been advance, and is still going on, is still advance. The web of beliefs, customs, laws, institutions, and habits of thought, which each community is constantly spinning, and which produces in the individual environed by it all the differences of national character, is never unravelled.


That is to say, in the decline of civilisation, communities do not go down by the same paths that they came up. For instance, the decline of civilisation as manifested in government would not take us back from republicanism to constitutional monarchy, and thence to the feudal system, it would take us to imperatorship and anarchy.

And how the retrogression of civilisation, following a period of advance, may be so gradual as to attract no attention at the time; nay, how that decline must necessarily, by the great majority of men, be mistaken for advance, is easily seen.

What would we like to say about George's reason for his opinion that retrogression or the dominance of false ideas is hard to discern?

A little further on there is a reminder of land monopoly as the tap root as it were of this social retrogression. He says, "Everywhere is it evident that the tendency to inequality, which is the necessary result of material progress where land is monopolised, cannot go much further without carrying our civilization into that downward path which is so easy to enter and so hard to abandon."

In the second half we shall consider what we are able to do to change the retrogressive tendency in our society.

If the problem is false ideas then the key to progress is understanding. But what is it that we must enquire into?

Taking another look at our diagram we can see that in one sense GOVERNMENT stands under the higher levels of human society. Understanding is not primarily being able to describe the manifold details by which our society is presently organised, and which exist in our man-made world. Understanding is of natural laws and ethical precepts which give direction to human society....

What have we understood about these higher levels of society from our course? What better way is there to answer this question than by coming back to where we started, to the statement with which this course began.

"This is the law of rent: As individuals come together in communities, and society grows, integrating more and more its individual members, and making general interests and general conditions of more and more relative importance, there arises, over and above the value which individuals can create for themselves, a value which is created by the community as a whole, and which, attaching to land, becomes tangible, definite and capable of computation and represents in tangible form what society as a whole contributes to production, as distinguished from what is contributed by individual exertion.

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By virtue of natural law in those aspects which it is the purpose of the science we call political economy to discover - as it is the purpose of the sciences which we call chemistry and astronomy to discover other aspects of natural law - all social advance necessarily contributes to the increase of this common value; to the growth of this common fund.

~"Here is a provision made by natural law for the increasing needs of social growth; here is an adaptation of nature by virtue of which the natural progress of society is a progress toward equality, not toward inequality; a centripetal force tending to unity, growing out of and ever balancing a centrifugal force tending to diversity. Here is a fund belonging to society as a whole from which, without the degradation of alms, private or public, provision can be made for the weak, the helpless, the aged; from which provision can be made for the common wants of all as a matter of common right to each, and by the utilization of which society, as it advances, may pass, by natural methods and easy stages, from a rude association for purposes of defence and police, into a cooperative association, in which combined power guided by combined intelligence can give to each more than his own exertions multiplied manyfold could produce...."

Let us summarise what Henry George glimpsed on his leisurely ride into the countryside around San Francisco. He saw into the way the institution of private property in land distorted wealth in a materially progressive society.

Where private property in land exists

1. i Progress makes the owners of land wealthy without necessarily advancing the wages of producers.
ii Progress of itself creates social inequality.

2. In that social inequality is an obstacle to progress, material progress must in time be socially destructive

3. Progress gives rise to land speculation, and

4. In that land speculation increases rent faster than production it discourages production and, when very vigorous, causes industrial depression.

5. The tendencies to inequality and economic depression can be arrested by taking rent as revenue....


Man is a social animal. He lives by cooperation. George saw that the law of true progress was "co-operation in equality".

What chance have George's insights of ever being widely accepted?

From one viewpoint site revenue has a better chance of success than other reforms Many issues today rest upon different values and opinions which cannot be quantified. Take as examples differences of opinion about the family and changing sex roles, or about immigration and multiculturalism. As against the vagueness and complexity of those issues the idea of site revenue is at least simple, also, it concerns the issue of poverty, which everyone agrees in condemning; and its tendencies may be investigated by economic argument and roughly quantified. Do we agree with this assessment?

In addition to this, a sound case can be put against even the most telling objection to it.

Let us take some positive tendencies of this reform which are capable of rational argument and quantification. It is said in favour of site revenue that it cannot be evaded and that it is relatively simply administered. Now, not only are these claims examinable, they can be quantified. It is possible to work out the costs of our present taxes, and to estimate the cost of annual valuations of land including resources

It is said that taxes discourage production but that site revenue encourages production, for example, by the reduction of land prices and reduction of mortgages and interest rates. Both these claims are capable of rational argument and quantification.

Finally, it is possible to meet the most telling arguments against site revenue. Take the argument that site revenue involves the confiscation of savings. This argument may be put as the elderly widow or widower, or a retired couple, living on a valuable piece of land, perhaps a waterside block. Site revenue it is argued will impoverish them or drive them from their homes. The same argument can be put as the middle-aged couple busy storing away their savings in real estate. In both cases people have made investments in good faith and will lose them because of site revenue.

This argument has been approached in several ways. One way has been to remind those of this opinion that site revenue is after all only a charge for benefits to land which all who receive them should pay. Another way has been to point out the unceasing harm that private property in land is doing to the general population, even to elderly widows and persons of middle age. Why, it is asked, should one favour one group above others?

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But is it necessary to choose between the interests of different social classes? The assumption behind the argument being put is that a substantial amount of site revenue will be adopted tomorrow and confiscate the savings of many thousands of people. But site revenue will not be adopted tomorrow. If history is examined it is seen that any great reform advances from discussion groups (which is of course what we are!), to social movements, and then further to political parties led by charismatic figures, and finally to decisive events. Such a reform process generally takes one or more generations.

One sign of its advance will be falling land values, a clear warning not to buy property but to lease it. In fact, as public decisions go, the ordinary person will know far sooner and far more about the likely consequences of site revenue than about most other public decisions. What is your opinion?...

Because of the severe and early disturbance to the land market which site revenue will bring, a preliminary step towards site revenue should be the reform of the way land is valued from using land price as the "tax" base to the use of annual land values or site rent. This is an issue which you might examine at a later time. ...

Obviously, too, any increase in site revenue will have to be balanced by a decrease in taxes, and by legislative changes which allow this to be done. Such legislative changes could well be hampered by constitutional problems. "Taxing" rent rather than earnings, for example, must mean the progressive abolition of personal and company income tax. But these are federal taxes, whilst land tax is imposed by the states. It is simpler, therefore, first to replace state taxes by site revenue. This may be a useful goal since its benefits to one state may well convince others to undertake the same reform. What do you think are the prospects of site revenue? ...

Perhaps we are in danger of losing perspective. Rights presuppose duties. The equal right to land and the exclusive right to our earnings presuppose the duty not to steal economic rent. But if what we have seen is correct our society is founded upon the theft of economic rent. And this injustice is well protected by a web of illusions about the nature of the world we live in.

Acceptance may follow understanding; but so may ignorance. Ignorance is the more or less conscious effort not to know something. Motivated by self-interest or apathy it is more easy to accept our "rights" than to accept our duties, even if those "rights" we enjoy are at the expense of the welfare of others. Those illusory or false rights are the last great defence which ignorance rears against justice. Unfortunately our society teems with them. ...


Q.1 What "vision" of the world and the economy does the story at.the beginning of this Part project?

Q.2 What vision of society is implicit in the diagram of human society and in the two extracts which follow it?

Q.3 Why does George believe that social advance may turn into social retrogression without being recognised? (See extract from Progress and Poverty p.4)

Q.4 Despite the strengths of the case for site revenue why is it argued that one should be cautious about its chances of being accepted? What else could you add here? (p. 10)

(To be continued)

AUTHOR, AUTHOR!!! Care to contact the Sydney people who run this course? Write to the ASSOCIATION FOR GOOD GOVERNMENT, PO Box 443, Enfield, NSW, 2136, Australia.

Australian School of Social Science..Australian School of Social Science, Sydney, New South Wales

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Georgists worldwide invite you to work towards a Pattern for a Better World, and study Georgist Policy, by selecting from Graham Hart's other writings, and our 22 October 1996 leaflet on the King Street Land Tax Increase, or even the prophetic statements of CLYDE CAMERON, former Federal Minister, in Revenue that is not a Tax, whose 1989 words are just as true today as then. If interested in ELECTIONS look at "You Don't Have to Vote" by Eileen Bennett.

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(This document scanned at Tax Reform Australia, Melbourne, November 1996, and put on WWW 20 December 1996; last revised 23 January 1998)
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