Stop conflating gentrification with investment: A Critique
Thanksgiving charity for all
Original Post
Murray Rothbard, an American economist whose work ranges from the elaboration of certain aspects of the so-called Austrian theory of economics in his expansive Man, Economy, and State, to the history of economic thought (Economic Thought Before Adam Smith & Classical Economics), to an analysis of money and banking (A History of Money and Banking in the United States, The Mystery of Banking, & The Case Against the Fed), to For A New Liberty: A Libertarian Manifesto, the title of which speaks for itself, yes, the prolific Murray Rothbard, in this last mentioned book, wrote a critique of Georgism that we shall quote at length before pointing out other flaws in your post.
To understand Rothbard’s critique, we must provide something that is glaringly absent in your analysis, namely, the historical context of Georgism within the realm of ideas. To sketch this context, Rothbard turns briefly to Locke’s Second Treatise:
“. . . every man has a property in his own person. This nobody has any right to but himself. The labour of his body and the work of his hands, we may say, are properly his. Whatsoever, then, he removes out of the state that nature hath provided and left it in, he hath mixed his labour with it, and joined it to something that is his own, and thereby makes it his property. It being by him removed from the common state nature placed it in, it hath by this labour something annexed to it that excludes the common right of other men. For this labour being the unquestionable property of the labourer, no man but he can have a right to what that is once joined to.
He that is nourished by the acorns he picked up under an oak, or the apples he gathered from the trees in the wood, has certainly appropriated them to himself. Nobody can deny but the nourishment is his. I ask then, when did they begin to be his? When he digested? or when he ate? or when he boiled? or when he brought them home? or when he picked them up? And ‘tis plain, if the first gathering made them not his, nothing else could. That labour put a distinction between them and common. That added something to them more than Nature, the common mother of all, had done, and so they became his private right. And will any one say he had no right to those acorns or apples he thus appropriated because he had not the consent of all mankind to make them his? Was it a robbery thus to assume to himself what belonged to all in common? If such a consent as that was necessary, man had starved, notwithstanding the plenty God had given him. . . . Thus, the grass my horse has bit, the turfs my servant has cut, and the ore I have digged in my place, where I have a right to them in common with others, become my property without the assignation or consent of any body. The labour that was mine, removing them out of that common state they were in, hath fixed my property in them.
By making an explicit consent of every commoner necessary to any one’s appropriating to himself any part of what is given in common, children or servants could not cut the meat which their father or master had provided for them in common without assigning to every one his peculiar part. Though the water running in the fountain be every one’s, yet who can doubt but that in the pitcher is his only who drew it out? His labour hath taken it out of the hands of Nature where it was common . . . and hath thereby appropriated it to himself.
Thus the law of reason makes the deer that Indian’s who killed it; ‘tis allowed to be his goods who hath bestowed his labour upon it, though, before, it was the common right of every one. And amongst those who are counted the civilized part of mankind . . . this original law of nature for the beginning of property, in what was before common, still takes place, and by virtue thereof, what fish any one catches in the ocean, that great and still remaining common of mankind; or what ambergris any one takes up here is by the labour that removes it out of that common state nature left it in, made his property who takes that pains about it.”
Turning now to Rothbard’s critique of Georgism:
“If every man owns his own person and therefore his own labor, and if by extension he owns whatever property he has “created” or gathered out of the previously unused, unowned, “state of nature,” then what of the last great question: the right to own or control the earth itself? In short, if the gatherer has the right to own the acorns or berries he picks, or the farmer the right to own his crop of wheat or peaches, who has the right to own the land on which these things have grown? It is at this point that Henry George and his followers, who have gone all the way so far with the libertarians, leave the track and deny the individual’s right to own the piece of land itself, the ground on which these activities have taken place. The Georgists argue that, while every man should own the goods which he produces or creates, since Nature or God created the land itself, no individual has the right to assume ownership of that land. Yet, if the land is to be used at all as a resource in any sort of efficient manner, it must be owned or controlled by someone or some group, and we are again faced with our three alternatives: either the land belongs to the first user, the man who first brings it into production; or it belongs to a group of others; or it belongs to the world as a whole, with every individual owning a quotal part of every acre of land. George’s option for the last solution hardly solves his moral problem: If the land itself should belong to God or Nature, then why as it more moral for every acre in the world to be owned by the world as a whole, than to concede individual ownership? In practice, again, it is obviously impossible for every person in the world to exercise effective ownership of his four-billionth portion (if the world population is, say, four billion) of every piece of the world’s land surface. In practice, of course, a small oligarchy would do the controlling and owning, and not the world as a whole.
But apart from these difficulties in the Georgist position, the natural-rights justification for the ownership of ground land is the same as the justification for the original ownership of all other property. For, as we have seen, no producer really “creates” matter; he takes nature-given matter and transforms it by his labor energy in accordance with his ideas and vision. But this is precisely what the pioneer—the “homesteader”— does when he brings previously unused land into his own private ownership. Just as the man who makes steel out of iron ore transforms that ore out of his know-how and with his energy, and just as the man who takes the iron out of the ground does the same, so does the homesteader who clears, fences, cultivates, or builds upon the land. The homesteader, too, has transformed the character of the nature-given soil by his labor and his personality. The homesteader is just as legitimately the owner of the property as the sculptor or the manufacturer; he is just as much a “producer” as the others.
Furthermore, if the original land is nature- or God-given then so are the people’s talents, health, and beauty. And just as all these attributes are given to specific individuals and not to “society,” so then are land and natural resources. All of these resources are given to individuals and not to “society,” which is an abstraction that does not actually exist. There is no existing entity called “society”; there are only interacting individuals. To say that “society” should own land or any other property in common, then, must mean that a group of oligarchs—in practice, government bureaucrats—should own the property, and at the expense of expropriating the creator or the homesteader who had originally brought this product into existence.
Moreover, no one can produce anything without the cooperation of original land, if only as standing room. No man can produce or create anything by his labor alone; he must have the cooperation of land and other natural raw materials.
Man comes into the world with just himself and the world around him—the land and natural resources given him by nature. He takes these resources and transforms them by his labor and mind and energy into goods more useful to man. Therefore, if an individual cannot own original land, neither can he in the full sense own any of the fruits of his labor. The farmer cannot own his wheat crop if he cannot own the land on which the wheat grows. Now that his labor has been inextricably mixed with the land, he cannot be deprived of one without being deprived of the other.
Moreover, if a producer is not entitled to the fruits of his labor, who is? It is difficult to see why a newborn Pakistani baby should have a moral claim to a quotal share of ownership of a piece of Iowa land that someone has just transformed into a wheatfield—and vice versa of course for an Iowan baby and a Pakistani farm. Land in its original state is unused and unowned. Georgists and other land communalists may claim that the whole world population really “owns” it, but if no one has yet used it, it is in the real sense owned and controlled by no one. The pioneer, the homesteader, the first user and transformer of this land, is the man who first brings this simple valueless thing into production and social use. It is difficult to see the morality of depriving him of ownership in favor of people who have never gotten within a thousand miles of the land, and who may not even know of the existence of the property over which they are supposed to have a claim.
The moral, natural-rights issue involved here is even clearer if we consider the case of animals. Animals are “economic land,” since they are original nature-given resources. Yet will anyone deny full title to a horse to the man who finds and domesticates it—is this any different from the acorns and berries that are generally conceded to the gatherer? Yet in land, too, some homesteader takes the previously “wild,” undomesticated land, and “tames” it by putting it to productive use. Mixing his labor with land sites should give him just as clear a title as in the case of animals. As Locke declared: ‘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.’” (For A New Liberty, p. 40-43)
He goes on from there, but enough has been said thus far to underscore one simple fact: your invocation of Georgism is, to put it mildly, a sham: it lacks historical context; relies on unexamined assumptions about human nature, thereby ignoring the all-too-obvious economic tradeoffs; and, so far as we can tell, amounts to little more than a disjointed and awkward attempt at adoxography.
Besides these, your treatment of the topic in question, namely land ownership, suffers from another fatal defect, one that can be grasped most clearly by considering the following statement by Mill:
“…on every subject on which difference of opinion is possible, the truth depends on a balance to be struck between two sets of conflicting reasons. Even in natural philosophy, there is always some other explanation possible of the same facts; some geocentric theory instead of heliocentric, some phlogiston instead of oxygen; and it has to be shown why that other theory cannot be the true one: and until this is shown, and until we know how it is shown, we do not understand the grounds of our opinion.
But when we turn to subjects infinitely more complicated, to morals, religion, politics, social relations, and the business of life, threefourths of the arguments for every disputed opinion consist in dispelling the appearances which favour some opinion different from it. The greatest orator, save one, of antiquity, has left it on record that he always studied his adversary’s case with as great, if not still greater, intensity than even his own. What Cicero practised as the means of forensic success requires to be imitated by all who study any subject in order to arrive at the truth. He who knows only his own side of the case, knows little of that. His reasons may be good, and no one may have been able to refute them. But if he is equally unable to refute the reasons on the opposite side; if he does not so much as know what they are, he has no ground for preferring either opinion. The rational position for him would be suspension of judgment, and unless he contents himself with that, he is either led by authority, or adopts, like the generality of the world, the side to which he feels most inclination. Nor is it enough that he should hear the arguments of adversaries from his own teachers, presented as they state them, and accompanied by what they offer as refutations. That is not the way to do justice to the arguments, or bring them into real contact with his own mind. He must be able to hear them from persons who actually believe them; who defend them in earnest, and do their very utmost for them. He must know them in their most plausible and persuasive form; he must feel the whole force of the difficulty which the true view of the subject has to encounter and dispose of; else he will never really possess himself of the portion of truth which meets and removes that difficulty.
Ninety-nine in a hundred of what are called educated men are in this condition; even of those who can argue fluently for their opinions. Their conclusion may be true, but it might be false for anything they know: they have never thrown themselves into the mental position of those who think differently from them, and considered what such persons may have to say; and consequently they do not, in any proper sense of the word, know the doctrine which they themselves profess.” (On Liberty, p. 66-68)
Building on this, and applying it to our theme, consider as well the following remarks from Fustel de Colanges in his work The Origin of Property in Land:
“The study of economic history is altogether indispensable, if we are ever to have anything more than a superficial conception of the evolution of society. But it must be thorough; and we must not be overhasty in proclaiming large results. And although a principal motive for such inquiry will be the hope of obtaining some light on the direction in which change is likely to take place in the future, it will be wise for some time to come for students resolutely to turn away their eyes from current controversies. There is a sufficient lesson in the topic we have been considering. The history of the mark has served Mr. George as a basis for the contention that the common ownership of land is the only natural condition of things; to Sir Henry Maine it has suggested the precisely opposite conclusion that the whole movement of civilization has been from common ownership to private. Such arguments are alike worthless, if the mark never existed.” (p. xliii-xliv)
And, later, to underscore the point:
“And this is not all. Supposing that there could be found in the whole of Greek literature two or three, or even eleven, quotations, which seemed to imply community in land [as M. Viollet, following Maurer, contends], it would still be the duty of every serious historian to look at the evidence on the other side; to search, that is, for other passages or other facts which point to an opposite conclusion.” (p. 94)
Now, we ask, just where is this type of scholarship in your analysis? Where is the nuance? The discussion of historically relevant information that might, just might, point to an opposite conclusion? Is there no longer a need to rise to the occasion? Does integrity not demand it? Can ignoring synderesis truly nullify its capacity? All puzzling questions.
What is not puzzling, nay, what is clear and unmistakeable, is that the above quotes sufficiently call into question Georgism’s relevance and value, to say nothing your credibility as a “liberal” scholar, but let us move on in our critique to really hammer this point. You write:
“Henry George, an American economist whose work revolves around the role of land ownership in perpetuating inequality, wrote that the very concept of land ownership could be defending [sic] only by “confounding in the popular mind the distinction between property in land and property in things that are the result of labor.” The reverse, however, is also true: the negative effects of property in land can also be used to tar the every [sic] existence of capital property. The discourse around gentrification is a good example. The overwhelming majority of people understand the problem around gentrification to be that marginalized communities are displaced by rising rents. Even a free-market supporter would have a hard time arguing there is no external harm done by this process, even if the capitalist logic is sound. However, there seems to be little agreement on what precisely constitutes ‘gentrification’ for purposes of definition. Much of the ire around gentrification is directed at new building or transit projects, which are seen as increasing rents and thus driving out existing residents.”
Like de Colanges’ work referenced above, our point in what follows is not to combat any theory you may or may not be proposing (though unspoken, the inference is that you find communal ownership of land preferable, or, dare we say, most equitable), again:
“The object of this cold and tedious procedure is not that of proving whether the theory is true or false…I am going to discuss not the theory itself, but the garb of learning in which it has been presented.” (p. 3)
A cold and tedious procedure to be sure, but we must work through the negative to comprehend the whole. So, let us begin again:
P1 “The reverse, however, is also true: the negative effects of property in land can also be used to tar the every existence of capital property.”
Though we are baffled as to why, evidently it must be said that those of us who scoff at George’s warning (against people who, in their advocacy for private property ownership in land, are “confounding in the popular mind the distinction between property in land and property in things that are the result of labor”), are dubious of P1. Consider that in saying “The reverse, however, is also true”, the “also” implies that George’s statement is true. But, you see, that’s a problem, since it’s merely an assertion, one whose validity just happens to be something in need of demonstration. That is to say, George’s assertion is not self-evidently true. (Cf. Aristotle’s Rhetoric if you are unfamiliar with this distinction).
But even if we grant George’s position for the sake of argument, still, P1 does not necessarily follow, and therefore must also be argued for. Yet no argument is provided, nor is there a clear explanation of your terms. For example, what are these unnamed “negative effects of property in land”, and what is signified by the metaphor “to tar the very existence of capital property”? An observant reader is bound to be woefully disappointed as you blow past all of these scholarly niceties on your way to the next set of bold assertions:
“The discourse around gentrification is a good example. The overwhelming majority of people understand the problem around gentrification to be that marginalized communities are displaced by rising rents. Even a free-market supporter would have a hard time arguing there is no external harm done by this process, even if the capitalist logic is sound.”
A good example of what, exactly? Of “the negative effects of property in land” that is “also be[ing] used to tar the very existence of capital property”? How does the discourse around gentrification exemplify this? You begin by asserting what “the overwhelming majority of people” think about gentrification. If statistics even exist on such a sublime question, your account ignores them. But that’s no matter. Anyway, it was only a segue, a ploy, a ruse to display virtue. For who is not touched by the outpouring of compassionate discourse by virtuous liberals to these “marginalized communities”, these displaced victims of gentrification (=rising rents)? Who counts as “marginalized”? What does it mean to live on “the margin”? On “the margin” of what, specifically? A large family? A church community? “Society”? (p. 41) Where is that, exactly? Skid row? (p. 101) Perhaps we’ll never know. But, once again, it doesn’t matter. What matters is the harm. What harm? Why, the “external harm” that even a capitalist must acknowledge. But, are we talking about “external harm” in Mill’s sense (p. 26-27), or some other sense? Who can say? Besides, these are trivial matters. Behold: we are witnessing a genuflection, a sacrament, a sin offering to the god of wokeness. And, however conceived, the external harm, now noted, momentarily assuages “the guilt of the liberal” (p. 179) and signals allyship (p. 144).
“However, there seems to be little agreement on what precisely constitutes ‘gentrification’ for purposes of definition. Much of the ire around gentrification is directed at new building or transit projects, which are seen as increasing rents and thus driving out existing residents.”
The prospect of a definition dangles before us, but the bait seems to have slipped the hook. Gentrification may not mean rising rents after all. Who knows what it means? Evidently there is “little agreement”, but does it even matter? We suppose it depends on our aim. If our aim is clear and concise language, then sure, definitions are, like an anchor to a seaman, nice things to keep handy. But if our aim is obscurity and befuddlement, then definitions become stumbling blocks. “For inconsistent and slovenly thought can abide indefinitely in error without feeling any discomfort,” at least, according to Barfield. (p. 57) Another prig! Pardon the digression. Where were we? Oh yes, the ire, the positive ire around gentrification, or much of it anyway, is evidently directed at new building or transit projects. Would you have guessed it? Not property taxes, rent control laws, zoning requirements, or “open space”, no, no, none of these. It is new building or transit projects that are supposed to be at the bottom of these increasing rents and the driving out of existing residents. And who is making such suppositions? An army of straw-men, to be sure, but no one with a name.
Still, we’re assured, scholars know better:
“However, this is likely an example of George’s ‘confounding’ issue. The problem is not, really, the new bus line or condos - the problem is the impact they have on current land values. Blocking the investment of new capital is ineffective at slowing this process - one need only look to examples like Haight-Ashbury in San Francisco. In this famous neighborhood, density has been limited to moderate levels through zoning, and height restrictions and historical preservation have kept the neighborhood’s built environment remarkably similar to its famous 1960s and 1970s days. Nonetheless, the Haight has still lost a major portion of its Black community and has become a notable wealthy enclave. Cities attempting to stop gentrification often try to halt the most visible sign of it - the expenditure of new capital to upgrade private housing stocks, or new business openings - but this rarely has the desired impact, because it conflates capital with land.”
Is it rude to point out that there is plenty of noise here but no signal? Yes, a lot of window dressing masking a non sequitur. Lipstick on a pig, in plain English. Tell us, how does a city’s attempt to stop gentrification (through market interference), whether or not it is successful, conflate capital with land? Is this self-evident? Perhaps we’re simply too dense to see the argument. Here let’s examine it, one more time, together:
“Henry George wrote over a century ago, but he was no stranger to what would later be termed gentrification; he describes San Francisco anticipating the completion of the transcontinental railroad:
“…we were all — all of us, rich and poor — hoping for the development of California, proud of her future greatness, looking forward to the time when San Francisco was to be one of the great capitals of the world; looking forward to the time when this great empire of the West was to count her population by millions, and underneath it all came to me what that miner said: What about the masses of the people?”
As George saw it, the fundamental problem was that any new increase in wealth, whether due to capital investment, better governance, agglomeration, or any other cause, would fundamentally be eaten up by rising land values. The only answer as George saw it was to better distribute the rents earned by landowners. Other tactics - like increased construction, investment in social housing, and the like - may be able to prevent immediate displacement of communities, but the root problem is going to come down to the issue of land ownership - and confusing that with other forms of capital is helpful to no one.”
Are you still with us? Did you see it? The clincher? The QED? Neither did we. Just more noise lending dubious credence to a litany of assertions. To what end? This much, and only this much, is crystal clear: the “only answer” to rising land values is “to better distribute the rents earned by landowners”. Don’t ask why the land values went up. Inflation is a normal economic phenomenon managed by our wise central bankers over at the privately controlled Federal Reserve bank, there is no need to look into their activities. Land prices go up. It happens all the time. Raise taxes, redistribute wealth, impose rent controls, problem solved! Still not understanding the process? Oh, that’s because you’re still confusing land ownership with ownership of other forms of capital. You silly goose!