What is Georgism?

Brendan McGuigan

Georgism is an economic ideal which holds that common holdings, such as land and natural resources, should belong to all people. Unlike many forms of communalism, however, Georgism still allows for widespread private property and capitalism, the difference being that ownership is only allowed on things created by an individual. Thus, since land is within the natural sphere, it could not be used for private gain, although structures built on the land could be rented or otherwise used for private gain.

Natural resources, such as timber, would remain in the common under Georgism.
Natural resources, such as timber, would remain in the common under Georgism.

Georgism was formulated as a full theory by Henry George, an American economist in the 19th century. Although many others dealt with similar ideas, including John Locke, Adam Smith, William Penn, Thomas Paine, and John Stuart Mill, Henry George was the first to lay it out in a comprehensive format and agitate for a gradualist shift to Georgism. Some advocates of his theories prefer the term Geoism instead, leaving the prefix to be ambiguous as to whether it refers to him or to land itself.

Environmentalists often embrace Georgism, since it might lead to better stewardship of the land.
Environmentalists often embrace Georgism, since it might lead to better stewardship of the land.

While a system like Georgism could, in theory, be realized by having the state seize all land and charge rent on it, Georgism advocates a system in which private land ownership is still allowed. The difference is that rent is collected on that land, in the form of a land value tax, giving a base revenue equal to the annual value of the unimproved land to the government. Improvements, such as buildings, can therefore still be profited by, retaining an impetus for landowners to build rentals or industry.

Georgism can be argued for in two main ways: via economics or via environmentalism. The economic argument for Georgism shows that with a sufficient land value tax, governments could abolish all other forms of taxation, and still pull in enough revenue to survive. Georgism is therefore sometimes also known as the single tax, since it removes income, sales, and other forms of tax burden. Some notable economists, including Milton Friedman, have been supporters of some of the ideas of Georgism, noting that taxation of land doesn’t artificially manipulate the economy in the way other taxes can, so that a single tax could actually lead to an improved free market.

Environmentalists also often embrace the ideas of Georgism as it appeals to those who believe the land belongs to all in common any way. Without an incentive to own massive tracts of land to exploit personally, Georgism could lead to better stewarding of land. Additionally, since Georgism includes all other natural resources, such as timber, oil, coal, and fisheries, these resources would also become a common. In many ways, the implementation of Georgism would appear to solve the Tragedy of the Commons, in which individuals acting for their own benefit end up damaging the larger resource pool.

Georgism has been tried in a number of countries and localities, both historically and in the modern era. One of the most famous regions that has a heavy land value tax is Hong Kong. The island is able to generate more than a third of its total revenue simply through land value tax, allowing the government to have large budget surpluses while keeping taxation on income and trade quite low.

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