Henry George and the Crisis of Inequality

Edward T. O’Donnell, “Henry George & The Crisis of Inequality: Progress and Poverty in the Gilded Age” Columbia Univ. Press, 2015, 282 pp.

This is a book about Henry George’s classic “Progress and Poverty”, essentially covering the labor movement during the gilded age (1865-1900), as represented by labor conflicts in New York City.  This topic is timely as we seem to be entering a new gilded age with the wide disparity reemerging between the haves and have-nots.  At least currently the have-nots do not have the Catholic Church and Tammany hall in opposition to them.

The gilded age saw an explosion of industry industrial output and national wealth matched by an equal explosion in rising poverty and worker unrest.  Henry George (1839-1897) published Progress and Poverty (1879), a radical critique of laissez-faire capitalism and its threat to the nation’s republican traditions.  He addressed the question of, Why did industrial progress seem to increase poverty and social inequality rather than diminish it, His answer was land monopoly.  Large corporations, Wall Street wizards, and land speculators, he argued, had seized control of the most basic resource needed for economic success and upward mobility.  George also made the point that while a laissez-faire economy and minimalist government, while appropriate for the agrarian economy of the Founding Fathers’ generation, spelled doom for the modern American republic in the age of industry and large corporations.  In other words, Henry George played a key role in promoting the idea that some level of government intervention in the economy--what the next generation of reformers would call "progressivism"--was necessary for the maintenance of 

America's republican society and its revered principles of equality and the common good.

Progress and Poverty was read by more Americans than any book on economics in the nation’s history.  In clear prose that combined strands of republicanism, evangelical Christianity, and economic theory, George outlined the fundamental problem posed by industrial capitalism—the increase of poverty and inequality amidst great wealth—and offered a compelling remedy: the single tax.  A significant majority of Americans came to embrace the radical idea that the state must actively promote equal opportunity via market intervention and social reform to defend republican ideals and institutions in the face of a grasping, monopolizing capitalist system.  (pg. 274)

Note: The Vatican placed George’s works on its Index of Forbidden Works in February 1889.  New York Arch-Bishop Corrigan also excommunicated Father McGlynn (1887) for his outspoken support of George, Pope Leo XIII approved.  Pope Leo XIII issued the encyclical Rerum Novarum in 1891 supportive of moderate social reform, including participation by Catholics in labor unions and lifted Father McGlynn’s excommunication, but it did little to heal the divisions of labor toward the church.

My Notes:

Pg. xviii:  The Gilded Age (1865-1900) was marked by spectacular advances in industrial output and technological innovation that transformed the US from a predominantly agricultural nation ranking well behind England, Germany, and France to the world’s most formidable industrial power. 

Pg. xxv:  Today there is a keen awareness of the eerie similarities between the US of today and that of the gilded age.  The nation then and now was consumed with intense debates over wealth inequality, labor unions, immigration, terrorism, women’s rights, family values, money in politics, voter eligibility, Wall Street recklessness, political polarization and paralysis, religion vs. secularism, individualism vs. the common good, free market capitalism vs. regulation, and wars of choice vs. diplomacy.  During the gilded age in 1890 the top 1 percent of Americans owned 51 percent of all wealth, while the lower 44 percent owned just 1.2 percent.  By 1979, income and inheritance taxes reduced the 1 percent’s share to 20.5 percent.  But the trend has shifted back toward increased wealth and income inequality after 1980.  By 2010, the top 1 percent owned 35.4 percent of all wealth.

Pg. 35:  The Long Depression lasted from 1873 to 1898 and constituted the longest period of sustained deflation in American history.  These years also marked a sudden and dramatic shift in the national economy from one centered on small proprietary capitalist enterprises (small shops and farms) to one dominated by corporations. 

Pg. 45:  George’s book challenged the Classical economists ‘iron law of wages’ that dictated that wages always fell to the lowest level at which a laborer could subsist.  The productivity of an individual worker bore little relation to the reward he or she would receive for their toil. 

Pg. 47:  To explain his theory, George briefly defined his terms.  Production consisted of three elements: land, labor, and capital.  All wealth produced must be distributed among them—to landowners, to laborers and to capitalists.  This distribution occurred through three basic mechanisms: rent (to the landowner), wages (to the laborer), and interest (to the capitalist).

Pg. 63:  The two central pronouncements in George’s book—that public policy in the age of industry must protect and promote republican equality and that the state, as opposed to the market alone, must play the key role in securing this end—aligned precisely with the two underlying ideas of progressivism.  So when Progress and Poverty became an unprecedented bestseller in the 1880s, it became the era’s first major work read by a wide audience that waged a republican assault on laissez-faire. 

Pg. 88:  The panic of 1873 and the resulting depression precipitated a downward spiral of wages (to about half the average paid in 1873) and pitted workers against each other in intense competition for what few jobs were available. 

Pg. 91:  The gilded age created an ideological shift among middle and upper-class Americans to turn from traditional republican values of mutuality, obligation, and the common good to a laissez-faire republicanism celebrating individualism, freedom of contract, and private property rights. 

Pg. 99:  In Ireland during the gilded age, 70 percent of the land was owned by only two-thousand families while three million tenants did not own any at all.

Pg. 101:  Prior to the 1870s, the Irish in the US were on the wrong side of many of the main social reform movements of mid-nineteenth century America.  When native-born Americans embraced temperance, the Irish drank.  As the antislavery movement gained; popularity, it was often the Irish who led mobs against abolitionist speakers.  As Americans embraced efforts to spread fee public education for all, the Irish set about building an alternative parochial school system. 

Pg. 171:  On May 4, 1886 an explosion at a Chicago labor rally organized by anarchists in Haymarket Square unleashed a furious wave of anti-labor rhetoric and action that damaged the labor movement for decades to come.  The bombing and subsequent panic left seven policemen dead.