Responding to C.H. Nightingale on Interest - What Henry George
[Reprinted from Land and Freedom, May-June
In your March-April issue, Mr. C. H. Nightingale has a letter in
which he complains that I am "never done attacking people."
I have long enjoyed the sport of backing down such criticisms by
opening the files of my papers to my critics and challenging them to
find a single case in which I have departed from my rule to confine my
criticism to principles and never to attack people.
In his letter, Mr. Nightingale undertakes to prove that, in the
period following the death of Henry George, the movement did make an
advance in the statement of economic truth, by repudiating George's
teachings on interest. To make his point, however, he was obliged to
misinterpret George by a misuse of a quotation from Book III, Chapter
3, Paragraph 16, of Progress and Poverty. That it is a misuse
will be seen from a reading of Paragraph 19, in the same chapter.
George drew no such distinction as Nightingale alleges between
interest on the "dead" capital and interest on "live"
capital. What George did assert is that because of the
interchangeability of the two forms of capital, the fact that Nature
pays interest on "live" capital compels the market to pay
interest on "dead" capital.
Mr. Nightingale thinks he has "floored" me, with "Euclidian
precision," in the round on land value. We who embrace the
concept of rent "out of the West" (as it has been termed in
the columns of LAND AND FREEDOM) contend that "land value"
is a myth, since land has no value; that the value of land (so-called)
is the value of the services available at the site; that the "investment
value of land" is not the value of land, but of the government's
license to collect rent at that point.
Here is the "Euclidian precision" with which Mr.
Nightingale imagines he has disposed of this "Western"
Brown goes to an island and makes a good living using a
portion of the land. Jones follows and finds he can make only a poor
living by using the other land available to him. The difference
between these two standards of living is RENT. Yet there is no
social service rendered at these locations.
Note that it is expressly stipulated that there is no social service
on the island. (Of course, with only two men there, no government
exists and hence, no governmental service.) Thus, Mr. Nightingale has
stipulated that there is no mail service, no police service, no
telephone or telegraph service, no freight service to and from the
island, no streets, no roads, no markets, no social dealings of any
kind. These are ruled out, because there is no social service there.
This means that these two men have no dealing with each other. This
means that no more of the product of the island is used than these men
can personally consume all the rest goes to waste.
Since Brown cannot possibly use all the produce of his part of the
island, he has no way to prevent Jones from sharing the productivity
of that better part, except to personally stand watch for that
purpose, since there is no police force. As Brown must sleep part of
the time, he cannot keep Jones off, even if he wishes to do so.
How, then, can Brown have a higher standard of living than Jones? How
could he have anything that Jones could not also have? The only way
would be for him to work better to be a better hunter, a better
farmer, a better tailor, a better craftsman. In that case, the
difference of their standards of living would be wages or both wages
and interest and not rent.