New Issue! Focus on Europe

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We have just sent our May/June 2017 issue to e-subscribers, and print subscribers should find the issue in their mailboxes soon. (Not a subscriber? You can subscribe online here.)

You can find the full table of contents for the issue here. Here is the page 2 editors’ note for the issue:

The Resistible Rise of the Far Right

We could be forgiven for feeling like we are living through a replay of history.

The last epic wave of capitalist globalization—whether we think of it as ending in 1914 or 1929—gave way to spasms of war, depression, and reaction. It’s not a coincidence that we see similar menaces again today, for key underlying factors leading into the two crisis periods are similar—the strength and directness of owning-class control over state policy, the growing concentration of income and wealth, and the defeat of working-class movements (especially due to their failure to overcome nationalistic impulses).

The articles in this issue tackle the current situation—the weaknesses of reformism today, the menace of far-right “populist” movements, and the necessity for clear alternative politics. Two focus on the United States; three, on Europe.

John Miller tackles the Border Adjustment Tax (BAT) proposal—a combination of import tax, export tax exemption, and corporate tax giveaway—championed by House Republicans. The design of the policy suggests a political aim, appealing to U.S. workers on the basis of “economic nationalism”—the view that U.S. workers are being ruined by foreign competition, that workers in China and Mexico are “stealing” their jobs, and that boosting the trade balance is good for jobs, the economy, and American “greatness.” But at its heart the big winners would be giant corporations—they would get a big export subsidy and an enormous corporate tax cut.

In this issue’s interview, UMass Amherst economist Gerald Epstein makes the case for a new critical response to the presidency of Trump and the menace of a “proto-fascist” regime. Progressive economists have become accustomed to doing garden-variety policy analysis: What will be the effects of a proposed policy on economic growth, employment, income inequality, and so on? “Trumponomics,” Epstein argues, calls for an approach more clearly focused on questions of political power. Progressives cannot be distracted by, say, the potential growth impact of increased infrastructure spending, when the real aim of the policy is to cement support for the proto-fascist regime.

John Weeks takes us across the Atlantic, to the UK and the situation in the wake of the Brexit vote. The result was fueled by a vile and mendacious xenophobia. It also, however, owed to the failure of “remain” proponents to make a case for what was good about the EU—protections for human rights and labor rights that restrain European capitalists. Always lukewarm toward the European project (except the supposed economic benefits), the Labour Party did little to combat the right-wing campaign against the “bureaucrats in Brussels.” With the Brexit result irreversible in the short run, Weeks argues, the task at hand is to muster resistance to a new business offensive against human rights and workers’ rights.

Marjolein van der Veen looks at the recent electoral outcome in the Netherlands, where the right-wing xenophobic-Islamophobic “Party for Freedom” finished second in a crowded field. Observers around the world, fearing that the country would be the next “domino” to fall to an ascendant far-right politics, may have breathed a sigh of relief. Van der Veen cautions, however, against a too-sanguine conclusion. The main outcomes were the collapse of the center-left Labor Party, punished by voters for its embrace of austerity policies, and the overall rightward shift of Dutch politics—a big business party being the election victor (in part due to embracing more anti-immigrant politics itself). The question now is how the left parties can confront racism and xenophobia and craft an appealing alternative program.

Finally, we have the concluding third installment of D&S co-editor Alejandro Reuss’ series on social democracy and the crisis of Europe: “Reform or Revolution?” Reuss both assesses the overall political trends of the European left—including cases where there are signs of a break from compromising “Third Way” politics and a revival of traditional social-democratic reformism. He does not, however, end there—pointing instead to the possibility of a new revolutionary anti-capitalist politics and a plausible vision for a new egalitarian, cooperative, democratic, and sustainable society.

All our authors call on us to remember that—while events today may echo those of the past and why we need to apply historical lessons to our present problems—we are not living through a replay of the past.

History does not follow a preset script. It is ever written anew, in words and in fire.

The Dissing of Henry George

By Polly Cleveland

 

My father, born in 1910, told me that when he was young every educated person read Progress and Poverty.

Henry George (1839–1897) was a journalist, self-educated economist and philosopher, and eventually prominent politician. In 1879 he published Progress and Poverty, which soon became a worldwide bestseller. George argued, in very brief, that the cause of growing inequality with growing wealth was unequal ownership of land (including all natural resources). His “remedy” was to shift all taxes onto land. George did not invent his analysis or remedy. Rather, he simply lifted ideas from the classical economists including Adam Smith, David Ricardo and John Stuart Mill. But unlike them, George passionately and successfully promoted the land value tax remedy—later known as “the single tax.”

George’s followers played a major role in the early 20th Century Progressive movement. Starting even before George’s death in 1897, in the midst of his second campaign for mayor of New York City, mayors and governors around the US began implementing land taxation. They did this mostly by raising the land component of the ordinary property tax while lowering the building component. In downtown Cleveland, a bronze statue of Tom L. Johnson, Mayor from 1901 to 1909, depicts him holding a copy of Progress and Poverty. California irrigation districts were financed by plain land taxes. Under Governor Al Smith, New York City buildings were exempt from tax from 1920 to 1932. Following the 1913 amendment to the Constitution to allow a national income tax, the tax itself was designed in 1916 by a Georgist Congressman, Warren Worth Bailey, to fall strictly on the very wealthy.

The robber barons were not amused. Holders of vast undeveloped lands, they resented the bull’s-eye painted on their backs. As Mason Gaffney has documented in “Neoclassical Economics As a Stratagem against Henry George”, John D. Rockefeller, Ezra Cornell and others funded departments of economics to refute George. Gaffney quotes Simon Patten, “Nothing pleases a…single taxer better than….to use the well-known economic theories…[therefore] economic doctrine must be recast.” (1908). John Bates Clark (1847-1938) at Columbia University, led the recasting effort. Clark claimed that inequality was justified, because “the share of wealth that falls to any producing agent tends, under natural law, to equal the amount that he creates. A man’s pay tends to equal the value of the product or fraction of a product that can be specifically imputed to him.” (1898). Here began a tradition, alive to this day, of treating George and his supporters as crackpots.

On the right, there were economists like Willford I. King (1880-1962), the founder of national income statistics, and a fanatic for U.S. racial purity. In a 1924 Journal of Political Economy article entitled “The Single-Tax Complex Analyzed”, King writes: “the single taxers are not merely advocates of an economic policy but … they are a religious cult and that their intense devotion to their creed has little connection with logic or reasoning.”

On the left, Marxists whistled the same tune, for a different reason: George after all had proposed to save capitalism by tax reform, making revolution impossible. Thus we find Robert Heilbroner devoting eight snarky pages of The Worldly Philosophers to George. He deems George “messianic” and “naïve” and calls his analysis “superficial and faulty”. (1986)

In the middle, there are serious economic historians like Mark Blaug. In Economic Theory in Retrospect (1996) he presents a jumble of mutually contradictory assertions in a two-page treatment, concluding with a snide run of alternative facts:

Be that as it may, Progress and Poverty, a wonderful example of old-style classical economics, was thirty years out of date the day it was published and the idea of confiscating the income of a leading social class was deeply shocking to a generation bred on Victorian pieties. In consequence, the concept of site value taxation was never seriously discussed, and to this day the only examples of it are to be found among local governments in the United States, Australia and New Zealand.

After he was invited to lecture in Australia, where George is still popular, Blaug published a kinder view of George in an obscure European journal. When I interviewed him in 2002 at his home in Leiden, he commented that “George is threatening to the powers that be,” making it “extremely tempting to put him down.” Also, “Economists don’t want to waste time looking at threatening ideas!” And finally, “There’s an aura of quackiness about George. It is a reputation that is extremely difficult to reverse.” (See my book chapter on Blaug, and my response to the commonest criticisms of George.)

But why the quackiness? Why not attack George the way opponents attacked Marx, as an alien threat? A colleague suggests it’s the hyper enthusiasm of George’s followers. I doubt it. Every intellectual leader has his or her groupies. Look at the followers of Ayn Rand! Rather, George was as American as apple pie. He appealed to the American sense of justice, he supported a reformed and fair capitalism, his remedy was easy to understand and apply, and he was immensely popular. You can’t dismiss a leader like that as an alien threat. But you can liken him to another familiar American figure: the snake oil salesman.

The latest attack on George happens right here in the January/February 2017 issue of Dollars & Sense. In a review of James Galbraith’s new book, Inequality, Steven Pressman condescendingly puts down the author’s case for land value taxation. Bob Heilbroner must be smiling up there.