Opponents of LVT often accuse its supporters of being socialists or even Marxists, even though LVT is also supported by many Libertarians1 considered to be on the right of the political spectrum. Certainly, any study of the history of LVT shows that it has tended to be supported by those on the left rather than the right. Indeed, in the UK, the Conservatives have always opposed any moves towards land reform, whether through a tax or some form of betterment capture. But to say that Henry George’s land value tax is ‘socialist’ or ‘marxist’ is surely misleading. The fact that George advocated the socialisation of the economic rent of land does not make him a socialist. Whatever his relationship with the United Labour Party of New York during his bid for mayor in 1886, in an article the following year, ‘Socialism and the New Party’,2 he states:
‘There are a large number of us who are Not socialists…’
It’s worth noting this before going on to discuss the relationship between Marx and George, who were writing their theories at about the same time.
Marx’s views on the economic rent of land are to be found mainly in Volume 3 of Capital, which was drafted by Marx in his Economic Manuscript of 1864–1865 – to be later edited by Engels. These early writings show that he was largely in agreement with the views on land expressed by Adam Smith and David Ricardo and also the idea of using the rent of land for public purposes, although he falls short of suggesting that this rent should be collected by means of a tax. But by 1881, two years after the publication of George’s Progress and Poverty, Marx appears to have turned against the idea of the collection of the rent of land, at least by means of a tax, as proposed by George.
Here is a chronological sequence of the main events:
Karl Marx: b.1818, d.1883. Henry George: b.1839. d.1897
1848, Marx: The Communist Manifesto published in German (written in collaboration with Friedrich Engels)
1849, Marx: Settles in London and begins to write Capital in German
1850, Marx: The Communist Manifesto published in English
1867, Marx: Capital Volume 1 published in German
1871, George: Our Land and Land Policy published
1879, George: Progress and Poverty published
1885, Marx: Capital Volume 2 published in German*
1886, Marx: Capital Volume 1 published in English
1894, Marx: Capital Volume 3 published in German*
1909, Marx: Capital Volumes 2 and 3 published in English
* Compiled and published by Engels after Marx’s death
George had a consistent view of the economic rent of land throughout his career, first expressed in Our land and Land Policy of 1871 and subsequently expanded in Progress and Poverty in 1879. By contrast, over his career, Marx’s view on the same issue appears obscure and to vary, even to be contradictory, at least where the issue of taxation is concerned. Marx was very much aware of the works of Adam Smith and the differential rent theory of David Ricardo and appears to be generally in agreement with them both on their views about the rent of land. In an 11-page statement in his first manuscript, written in 1844, Rent of Land.3 The first line is a quote from the French economist Jean-Baptiste Say – ‘Landlord’s right has its origin in robbery’ – a sentiment that would later be endorsed by Henry George in Progress and Poverty.4
Marx then goes on to quote extensively from Adam Smith: 26 lengthy quotations that occupy almost the whole of the first seven pages, but nowhere does he mention the most pertinent statement on land rent that Smith made, that:
‘Ground rents and the ordinary rent of land are, therefore, perhaps, the species of revenue which can best bear to have a peculiar tax imposed on them.’ 5
This statement naturally brought in the subject of taxation. Perhaps the nearest that Marx gets to some implication of a land tax is in the Communist Manifesto, where certain reformist measures are stipulated, the first of which is:
‘Abolition of property in land and application of all rents of land to public purposes.’6
There is no explanation of how this rent is to be collected.
Compared to his extensive writings on almost every aspect of economics, in Capital, Marx has surprisingly little to say about tax. In an article written for Brill academic publishers, the author David Ireland notes that the Marxist scholar David Harvey says of Marx that ‘taxation remains an empty box in his theorising’.7 However, on the same page Ireland also says:
‘the tax policies of Marx and Engels have been neglected because they are primarily to be found in their journalism and letters’
Another explanation for this apparent neglect is that true Marxists believe that the state ownership of the means of production (and therefore the produce) would mean that all revenues would flow naturally to the state and render taxation unnecessary.
The above examples seem to indicate Marx’s early support for an idea that was later to become more clearly expressed and popularised by Henry George with his publication of Progress and Poverty and which became known as Georgism. So why, in his later writings, did Marx appear to turn against George’s idea of the collection of the rent of land by means of a tax? In a letter to Friedrich Adolph Sorge, written in 1881,8 Marx vehemently attacks George and his apparently pseudo socialist ideas:
‘Theoretically the man is utterly backward! He understands nothing about the nature of surplus value…’
‘His fundamental dogma is that everything would be all right if ground rent were paid to the state. (You will find payment of this kind among the transitional measures included in the Communist Manifesto too.)’
In the same letter Marx expands on his criticism of George as belonging to a group of false socialists, and presents George’s ideas as supporting capitalism:
‘All these “socialists” since Collins 9 have this much in common, that they leave wage labour and therefore capitalist production in existence and try to bamboozle themselves or the world into believing that if rent were transformed into a state tax all the evils of capitalist production would disappear of themselves. The whole thing is therefore simply an attempt, decked out with socialism, to save capitalist domination and indeed to establish it afresh on an even wider basis than its present one.’
He then makes a personal attack on George:
‘He also has the repulsive presumption and arrogance which is displayed by all panacea-mongers without exception.’
He relents slightly with the comment:
‘On the other hand, George’s book…is significant because it is a first, if unsuccessful, attempt at emancipation from the orthodox political economy.’
Probably the most well-known comment made by Marx on George’s ideas – that the proposed land value tax was ‘The capitalist’s last ditch’ – was never actually written anywhere by Marx but was simply reported by the English Marxist, H M Hyndman, as a comment that Marx made, after having read a copy of Progress and Poverty.10
So, it’s clear that by 1881 Marx is, to say the least, antipathetic to George’s theories, which seems curious in light of his earlier views on Smith and Ricardo. Marx had the advantage of George in that he was fluent in English as well as German and so would have been able to read Our Land and Land Policy and Progress and Poverty when they were first published, whereas George, unless he were fluent in German, would only have had access to The Communist Manifesto. George would have known nothing of Marx’s earlier manuscripts. Likewise, with Capital Volume.1, which was not published in English until 1886, at a time when George was fully engaged in his bid to be mayor of New York. In any case Volumes 1 and 2 of Capital have little to say about the rent of land. Up until George’s death in 1897 the manifesto remained, for him, the best source, in English, indicating the Marxist view of land rent. Although Volume 3 of Capital was drafted between 1864 and 1865 it was not published, in German, until 1894 (1909 in English) by which time, amongst anglophones at least, the views about Marxism had largely hardened around the ideas expressed in Volume 1.
An article by F C R Douglas, written for Land and Liberty in 1939,11 reveals that Marx had more to say about ground rent in Volume 3 than in either of the previous Volumes. He notes that Volume 1 was published in 1867 and that:
‘Most of those who profess to be Marxians base themselves on that or on popular summaries of it and are unacquainted with the third volume.’
This is perhaps not surprising as Volumes 2 and 3 were not published in English until 1909. Douglas’ article shows that, in Volume 3, many of Marx’s views appear to anticipate those of George, who expressed similar ideas in 1871 in Our Land and Land Policy. Douglas goes on to say:
‘It appears that Marx considered every form of exploitation is based, not merely historically, but as a living fact upon land monopoly. This is not a mere chance remark, for the same thing is said over and over again: “The private ownership of land, and with it the expropriation of the direct producers from the land – the private property of some, which implies lack of property on the part of others – is the basis of the capitalist mode of production.” ’
And, echoing Ricardo, that ground-rent arises:
“when two equal quantities of capital and labour are employed on equal quantities of land with unequal results.”
Prior to the publication of Progress and Poverty, it isn’t clear whether George was conversant with Marx’s views other than through The Communist Manifesto,which had been published in English in 1850. In 1883, in a letter written at the time of Marx’s funeral, George wrote:
‘I never had the good fortune to meet Karl Marx, nor have I been able to read his works, which are untranslated into English. I am consequently incompetent to speak with precision of his views. As I understand them, there are several important points on which I differ from them. But no difference of opinion can lessen the esteem which I feel for the man who so steadfastly, so patiently, and so self-sacrificingly laboured for the freedom of the oppressed and the elevation of the downtrodden.’ 12
But by 1884, presumably by then being better informed on the Marxists, or the German socialists as he termed them, in a letter to Hyndman he wrote that Marx:
‘lacked analytical power and logical habits of thought. He certainly seems to me a most superficial thinker’
Also, in 1887, in his article Socialism and the New Party, he wrote:
‘German socialism is so confused and confusing in its terminology, so illogical in its methods…’ ‘Nothing could better show the incoherence of socialism than its failure to give any definite meaning to the term which it most frequently uses and lays most stress upon; Capital…’
And:
‘The utter impracticability and essential childishness of such a scheme as this is largely disguised to the believers in socialism by a curious pretence of scientific research and generalisation, and much reference to the doctrine of evolution.’
In 1890 he wrote that Marx, ‘Was the prince of muddleheads.’ 13
It’s curious that these two profound thinkers of 19th century economics who had the same ultimate aim – the relief from poverty of the oppressed – and who came so close in their respective analyses, based on the fundamental importance of land, should become mutually antagonistic. But their backgrounds were quite different.
George was born and raised in Philadelphia, the son of a publisher and printer, a product of the emerging American middle class. Perhaps a typical American of his time, he sought experience of the world and was in turn a merchant seaman, typesetter, journalist and politician. In the early years he certainly experienced poverty and had great difficulty in finding employment, but through perseverance and hard work overcame his difficulties and became famous within his lifetime: the iconic American story. Many thousands attended his funeral in 1897.
Marx, usually seen as the champion of the poor and oppressed, was, ironically, a product of the haute-bourgeoisie he professed to despise. His father was a well-to-do lawyer who had sufficient funds to send the young Karl to two different universities. Marx was awarded his PhD. in 1841. His wife, Jenny, was the daughter of Baron von Westphalen, a civil servant and member of the nobility. In the early years Marx was supported financially by his family and from what he could earn as a part-time journalist. In 1849 he moved with his family to London where his circumstances became much reduced. During this difficult period he was assisted financially by his friend and collaborator Friedrich Engels whose wealthy family owned cotton mills in Germany and England. Engels worked for many years as supervisor in one of his father’s mills and witnessed first-hand the abject poverty of the mill workers of Salford and Manchester. He described all this in his book The Condition of the Working Class in England, a work that greatly influenced Marx and cemented their relationship. But the ‘poverty’ experienced by Marx was relative. In the background was always the last resort of family wealth, mainly through his wife, or the financial support of Engels. In a sense his poverty was chosen, unlike the grinding poverty of the mill workers of Salford and Manchester, who had no choice. Marx was very much a theoretician. Both Marx and Engels have to be admired as men of principle who turned their backs on bourgeois comforts for the sake of their beliefs. Whether right or wrong, it would be left to posterity to decide.
Observations and conclusions
In doing the research for this article I was made aware of something quite surprising. In an article written by Darren Iverson for the Merion West news magazine, When Marx Attacked the Single Tax, he states:
‘For Marx, land had no special theoretical place; it was one form of capital, a means of production.’ 14
In other words, Marx’s view of the status of land was, paradoxically, the same as that of the arch-opponents of Marxism, the neoclassical economists who arose at the end of the 19th century and who have dominated economic thinking throughout the 20th century up to the present day. The erroneous idea they share is that land is just another form of capital, which is quite contrary to the position of Henry George, who understood the importance of land as one of the three factors of wealth creation within the basic triad of land, labour and capital.
It is understandable that the wealthy landowning capitalists should wish to hide the significance of land for this would enable them to gain the benefit of the rent of land disguised as the legitimate interest on capital.
In his book The Corruption of Economics, Prof. Mason Gaffney reveals how neoclassical economics originated in the USA in the 1890s, specifically as a counter to the growing Georgist movement at that time.15 Gaffney described how university placements were created by wealthy landowning benefactors to promote this deception, maintained subsequently through the neoclassical economic doctrine. It’s surprising to me that Marx did not anticipate this. Perhaps it is here that we can explain to some extent not only the origin of the basic disagreement between Marx and George but also the rejection of the Georgist proposition by the economic and political establishment for the last 150 years.
I have to admit that Marx’s writings have for me, as for many others, been difficult to penetrate and I have had to rely on various expert interpretations and the accounts of Marxist scholars. One of these, David Harvey, wrote a book in 1982, The Limits to Capital 16 in which he attempts to explain the complex theories of Marx in terms the lay reader may understand, without compromising the principles involved. He states that this is largely a problem of presentation. In his introduction I was somewhat reassured to read:
‘Marx tried to deal with the problem in the opening chapters of Capital by fashioning a language of such density and utter abstraction that most ordinary mortals are left quite bewildered, at least on first reading.’
Whether or not they agreed, both the supporters and the opponents of Henry George at least had a fairly clear idea of his theories. The same cannot be said of Marx. To this day even avowed Marxists spend much time discussing and often disagreeing over what Marx was trying to say. To complicate matters, Volumes 2 and 3 of Capital were subject to considerable editing by Engels, leading some Marxists to say the published texts did not represent the true ideas of Marx. Also, where Volume 3 is concerned, the original basis was drafted by Marx in his Economic Manuscript of 1864–1865. This text was heavily edited by Engels over a period of 11 years and published as Capital Volume 3 in 1894. The first publication of Marx’s original unabridged text was not until 1992. The first translation into English by Ben Fowkes was not until 2015 – in a book edited by Fred Moseley entitled Marx’s Economic Manuscript of 1864–1865.17 In the Introduction Moseley states:
‘…what a daunting task Engels faced in editing Marx’s manuscript’ but also:
‘when Engels started this very difficult project he appears to have had very little knowledge and overall understanding of Marx’s book 3.’
Harvey is very honest in pointing out some of the shortcomings in Marx’s treatment of the rent of land. Here are some of the observations he makes which may throw some light on the basic Marx/George disagreement over the issue of land. In chapter 11 entitled The Theory of Rent, on page 330, he says in the opening paragraph:
‘Rent, it is fair to say, troubled Marx deeply.’ ‘His writings on the subject, all of which were published posthumously, are for the most part tentative thoughts set down in the process of discovery. As such they often appear contradictory.’
Harvey shows that Marx acknowledged the two aspects of rent payments. The first being for the use of improvements – houses, shops, factories etc – which can be seen as the interest return on capital investments. The second being the rental payment for the use of the unimproved land itself which Henry George, of course, laid great stress upon. It is this latter aspect of rent that was problematic for Marx. Harvey goes on to say:
‘The part of rent that poses the problem is the pure payment of raw land, independent of the improvements thereon. This component Marx refers to as ground-rent.’
Also:
‘His dilemmas here can in part be traced back to his perpetual jousting with classical political economy.’
The classical economists Smith, Ricardo, Mill (and later George) clearly accepted the separate returns to labour, capital and land that Marx denied. On page 332 Harvey points out some apparent contradictions in Marx’s view of land – where Marx appears to diminish the economic importance of the landowner as being subsumed by that of the capitalist – with the following statements:
‘landed property differs from other kinds of property in that it appears superfluous and harmful at a certain stage of development, even from the point of view of the capitalist mode of production’
And:
‘the circumstances under which the capitalist has in turn to share a part of the… surplus value which he has captured with a third, non-working person, are only of secondary importance…’ ‘The total separation of the landowner from control over the land is one of the great achievements of the capitalist mode of production’
Also, surprisingly, that ground-rent is:
‘that form in which property in land… produces value’
And, even more surprisingly, that:
‘…here then, we have all three classes – wage labourers, industrial capitalists, and landowners constituting together, and in their mutual opposition, the framework of modern society.’
Harvey then expresses his own frustration with Marx:
‘It seems passing strange to be told, at the end of a work that has built an interpretation of the dynamics of capitalism on the basis of the class relation between capital and labour, that in fact three classes constitute the framework of modern society.’
Finally, on page 333, Harvey shows that Marx reverts to his original scepticism in saying that it is:
‘…natural for producers to feel completely at home in the estranged and irrational forms of capital-interest, land-rent, labour-wages, since these are precisely the forms of illusion in which they move about and find their daily occupation’.
Having read these pages several times over I’m still not sure what it was that Marx believed, and I get the sense that neither did Harvey. I admit my own knowledge of Marxism is very limited and confined only to the concerns of land and taxation, which is my main interest. But I feel that, on the issue of land, Marx created his own problems with his rejection of the classical position and his insistence that only two economic classes were important: the capitalists and the proletariat. His demonisation of the capitalists as the source of all economic evils was surely exaggerated, and I feel that his over-obsession with capitalism18perhaps clouded his judgement on other aspects of economics.
Where the rent of land is concerned, it is notable that Marx only seems concerned with agricultural land. He does not appear to recognise the importance of urban land and the significance of location in the creation of high land values and therefore high ground-rents. The fact that the differentials of land value, due to fertility within an agricultural system, are insignificant compared to those created through fortuitous location within an urban situation, seems to have escaped Marx.
On page 340 Harvey notes:
‘the use value of a particular location cannot be understood independently of the variegated needs of a whole host of activities with which Marx was only peripherally concerned, and which he therefore excluded from his analysis’
Also, in a footnote:
‘What a genuinely Marxist approach to location theory would look like has yet to be worked out.’
In a discussion of problems arising from the investment of capital, Harvey notes that:
‘Marx bypasses all such difficulties by eliminating the question of location and concentrating solely on differentials in fertility as these affect agriculture only.’
In a discussion of land monopoly determining the level of rents, he notes Marx as saying: ‘the monopoly price creates the rent.’ He also notes:
‘Marx did not, evidently, think this kind of monopoly rent would be very widespread in agriculture but suggests that, in densely populated areas, house and land rents may be explicable only in these terms.’
Is this a veiled recognition of urban location values?
On the issue of land-price manipulation (which we may recognise in the current phenomenon of land banking) Harvey notes that Marx perceived that the landlords:
‘…can, and frequently do, artificially withdraw land from production and so raise the rents on the remainder.’
Which seems to show Marx coinciding with the Georgist view of land speculation although, on the next page, Harvey says that:
‘we should note the important role played by speculation in land rents (of all sorts). But Marx eliminates speculation (Capital, Volume 3, p. 776) as well as location and competition of different uses from the picture.’
On page 367 he comments:
‘Marx did not undertake any detailed analysis of land markets. He gave priority to constructing the theory of ground-rent because this was where he considered the real theoretical challenge lay.’
Harvey then explains:
‘The theory of ground-rent resolves the problem of how land, which is not a product of human labour, can have a price and exchange as a commodity. Ground-rent, capitalized as the interest on some imaginary capital, constitutes the ‘value’ of the land. What is bought and sold is not the land, but title to the ground-rent yielded by it. (my emphasis) The money laid out is equivalent to an interest-bearing investment. The buyer acquires a claim upon anticipated future revenues, a claim upon the future fruits of labour.’
On the issue of speculation, he says:
‘Changing anticipations of future rents, tied to both future capital flows and future labour, likewise affect land and property prices. For this reason, even unused land can acquire a price (Capital, Volume 3, p. 669). The speculative element is always present in land trading.’
He continues:
‘…though Marx in general excludes speculation from his purview. He does, however, take up one interesting example. In the case of house building in rapidly growing cities, he notes, the profit from building is extremely small and “the main profit comes from raising the ground-rent”, so that it is the “ground-rent, and not the house, which is the actual object of building speculation” (Capital, Volume 3, pp. 774-6; vol. 2, p. 234). The holders of land by no means assume a passive stance in this case. They play an active role in creating conditions that permit future rents to be appropriated. The advance of capital and the application of labour in the present ensures an increase in future rents.’
‘This case is of more general significance than Marx appears to have realized. By actively pursuing the appropriation of values, landholders can force production on the land into new configurations and even push surplus value production on a scale and with an intensity that might not otherwise occur. In so doing, of course, they condemn future labour to ever increasing levels of exploitation in the name of the land itself.’
Finally, on page 369, Harvey comments:
‘Speculation in land may be necessary to capitalism, but speculative orgies periodically become a quagmire of destruction for capital itself.’
The last of these quagmires occurred in 2008. According to the 18-year cycle theory,18 the next one is due in 2026-7. It remains to be seen if this comes about, but if it does it’s unlikely the ghosts of either Marx or George would be surprised.
References:
1. Fred Foldvary, PhD, article in Progress on-line magazine https://www.progress.org/articles/geo-libertarianism-gets-criticized
2. Henry George article, Socialism and the New Party, 1887 https://cooperative-individualism.org/george-henry_socialism-and-the-new-party-1887.htm
3. Karl Marx, Economic and Philosophic Manuscripts of 1844. Rent of Land, p.20. https://www.marxists.org/archive/marx/works/download/pdf/Economic-Philosophic-Manuscripts-1844.pdf Note: Marx’s manuscripts are a series of unfinished notes, written in 1844, which remained unknown to the general public until compiled and first published, in German in 1932. The first English edition was not published until 1956.
4. Henry George, Progress and Poverty (1879), Cosimo Inc. New York, p.259.
5. Adam Smith, The Wealth of Nations, Books 4 & 5, part 2, article 1, p.436. Penguin Classics,1999
6. Karl Marx and Friedrich Engels, The Communist Manifesto, Penguin Classics, 1967, part 2, p.104
7. David Ireland, What Marxist Tax Policies Actually Look Like, article on the Brill academic publisher’s website, p.1. https://brill.com/view/journals/hima/27/2/article-p188_6.xml
8. Letter from Marx to Friedrich Adolf Sorge, In Hoboken. London 20 June 1881, abstract. https://www.marxists.org/archive/marx/works/1881/letters/81_06_20.htm
9. A Belgian former Hussar officer of Napoleon’s army and member of the Rational Collectivist group which supported George’s ideas.
10. John Haynes Holmes, Henry George and Karl Marx; A Plutarchian Experiment, 1947, The American Journal of Economics and Sociology. https://www.jstor.org/stable/3483796
11. FCR Douglas, Karl Marx on the Rent of Land, Land and Liberty magazine,1939, pp.30-32 https://cooperative-individualism.org/douglas-francis_karl-marx-on-the-rent-of-land-1939-feb.pdf Note: Douglas’ article refers to the first English version of Capital, Volume 3, Translator, Ernest Untermann, Publisher, Charles H. Kerr & Co. Chicago, 1909. https://archive.org/details/capitalcritiqueo02marx/page/722/mode/2up
12. Henry George’s Letter at the Funeral of Karl Marx, Georgist Journal; https://georgistjournal.org/2012/09/25/henry-georges-letter-at-the-funeral-of-karl-marx
13. J H Holmes , ‘Henry George and Karl Marx…’ https://www.jstor.org/stable/3483796
14. Darren Iverson, When Marx attacked the Single Tax, Merion West, on-line political newsmagazine. p.3 https://merionwest.com/2019/06/02/through-letters-the-gap-between-henry-george-and-karl-marx/
15. Mason Gaffney et al., The Corruption of Economics, p.29, Shepheard-Walwyn publishers. https://masongaffney.org/publications/K1Neo-classical_Stratagem.CV.pdf
16. Prof. David Harvey, The Limits to Capital, Basil Blackwell Publishers Ltd, Oxford, England,1982. Note: Harvey’s book refers to the 1967 edition of Capital by International Publishers of New York, USA
17. Marx’s Economic Manuscript of 1864–1865. Edited by Fred Moseley, 2015: https://brill.com/edcollbook/title/21230
18. Marx does not appear to have employed the word ‘capitalism’ in the first German edition of Capital Volume 1, but it does appear in later translations into English. It also appears in the German editions of Volumes 2 and 3 (edited by Engels) and elsewhere in Marx’s early writings. In Volume1, In lieu of ‘capitalism’, Marx appears to prefer the phrase ‘capitalist mode of production’. https://skeptics.stackexchange.com/questions/47854/did-marx-use-the-word-capitalism
19. Refer to Graduate Rags to Riches website: https://www.gradragstoriches.co.uk/post/the-18-year-property-cycle-predicts-a-2027-housing-crash