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Socialism, Capitalism, and Geoism

by Lindy Davies

The word "Socialism" is much used and misused. It was coined around 1830 to indicate any doctrine that tries to rationally organize economic and social life. The American Heritage Dictionary offers two definitions:
1) "A social system in which the producers posess both political power and the means of producing and distributing goods." and
2) "In Marxist-Leninist theory, the building, under the dictatorship of the proletariat, of the material base for communism."
In its most frequently used sense, socialism is a system of social or governmental ownership and control of the means of production. Marxist theory teaches the coming of socialism through class struggle and revolution, in preparation for the final historical stage of "communism", in which all private property and other vestiges of capitalist production are abolished.

Socialism is usually discussed in opposition to "Capitalism". Normally that is taken to mean a system in which the factors are privately owned and economic decisions are made by a market that is free of government intervention.

In the hysterical political climate that characterized the cold war, the meanings of these terms tended to become squashed under the excessive ideological weight that they carried. Each "ism" became identified with the diabolical plot of an enemy. Meanwhile, their use to describe economic policies was by no means clear, as "free-market" economies developed more and more "socialistic" government programs -- and "socialist" economies granted more "market freedom" to producers. Eventually the terms came to have about as much descriptive clarity as the names "Red Sox" and "White Sox".

But the term "socialism" does mean something, and it is often identified with the quest for economic justice. The basic assumption underlying it is that the market place, under conditions of pure laissez-faire competition, is incapable of securing to society an equitable distribution of wealth. Socialists assert that if the market is left alone to decide who is to get how much of the world's goods, the result is a division of society into classes and the emergence of a struggle between the exploiting class and the enslaved working class. Competition becomes "cutthroat competition", fostering trusts, cartels and monopolies. Instead of making earnings proportional to service rendered, the market place gives the highest rewards to the most unscrupulous exploiters.

However, many are proud to rally behind the banner of "capitalism". They contend that free competition makes the fullest possible use of the gifts of nature and human ingenuity. When the admirable equilibrium of the market is upset by do-gooders trying to secure their idea of fairness, the result is unemployment, stagnation and corruption.

Capitalists and socialists may appear to disagree about everything -- but on one crucial point of political economy their views are uncannily similar. Both tend to lump land and capital under the single heading of "capital," and many even include money as capital. This confusion prevents socialists from seeing the possibility of a beneficial free market without the element of monopoly. And it prevents capitalists from seeing the fundamental role of the public sector in a just and prosperous market economy.

It may seem odd that both "capitalists" and "socialists" speak of the justice of their system and the vile in-justice of their opponents'. (Of course, the emotion behind such discussions is often heightened by a kind of home-team fervor.) Is there any universal standard of justice upon which economic policy can be based?

The answer lies in clarifying the question of the rightful basis (if there is one) of public vs. private ownership. For the thorough-going free-market capitalist, "public ownership" of anything is anathema: the community's interests are best served by the unhindered interactions of self-interested producers and traders. But the poverty, suffering and environmental destruction that come under such a "private property" regime cannot be denied. Because of this, the great bulk of social-policy debate revolves around how much of the efficiency of free enterprise must be traded for public interference, imposed in the name of equity. The question of the rightful balance between public and private control becomes one of expediency and political fashion, lacking any guiding principle. Indeed, modern "neoclassical economics" denies that any such principle exists.

For Henry George, however, the principle was clear. The value of natural opportunities belongs entirely to the community, and the production of wealth by labor, using capital, should be entirely unhindered by the penalty of taxation. For George, the most important question was not the amount of wealth that should be taken by the community, but the kind of wealth that should rightfully go to the community, because it is a value that the community has created.

In recent years, this understanding of the distinctive character of natural opportunity (land) as a factor of production has led to the coining of a new term: Geoism, indicating a philosophy based on the rightful understanding of the place of the Earth (Geo-) in economic life.

-- Lindy Davies, May 1999

What Folks Have Been Saying
Brilliant analysis. I'm not surprised folks have little to add! You might have pointed out that while Marx's first step for creating communism was to confiscate land's rental value, this was also considered, by they who coined the term, the primary necessity for establishing "laissez-faire." Even Adam Smith, the so-called "father of capitalism" recommended the land tax.

These sorts of facts are so numerous, most of both Left and Right-Wingers have either been shielded from the information or are intentionally misleading folks. Education and media companies, the very institutions one would normally consider responsible for informing the public of such a scandalous affair, are owned by land speculators. No wonder the public believes politics and economics are about labor vs. capital.

The degree to which control of "the news" determines public perception is apparent in Serbia right now. This is why so many people there think their leader is an OK guy. How different is it in the US? Not much, as the obvious need for such rants as these so thoroughly demonstrates..
Adam Monroe <Georgist@aol.com>
New York, NY USA - Saturday, May 29, 1999 at 01:48:37 (EDT)
Thanks a bunch, Adam! Your point about Adam Smith and Karl Marx is fascinating. I'd heard both of those facts, along the way, but I had never put them together the way you just did! So perhaps I could say, to our readers here in WebLand, that there is much more (insight) where that came from, in Understanding Economics!
- Saturday, May 29, 1999 at 13:48:42 (EDT)

 Hi! I am currently doing research on "TNCs and their role in poverty". I was wondering if you had any direct sources of information regarding this topic in text. Hopefully, this essay will be more than just that, but likely not. Nonetheless, I need as much help as I can get. Thanks -- Sincerely, Dave
dave leonard <daveleonard2@hotmail.com>
Baltimore, MD - Monday, May 31, 1999 at 13:58:12 (EDT)

Dave, you'll find some excellent material on international trade in this free economics textbook, The Science of Economics by Fred Foldvary. And for a clearer understanding of the underlying economic principles, why not try Henry George's Protection or Free Trade?
Lindy Davies
- Tuesday, June 01, 1999 at 14:06:22 (EDT)

The problem arises with the term fairness. The individuals point of view is determined by what he or she deems fair. This is why the conflict between various ideologies can never be reconciled.
charles reed <charlie3013@yahoo.com>
Ashtabula, OH us - Wednesday, June 02, 1999 at 17:31:01 (EDT)

Do you think so, Charles? That's a provocative position. It deserves to be hashed out, I'd say. Why not stop by at the Economic Justice Discussion Room and post thiese thoughts? You'll find plenty of thought-provoking viewpoints.
Lindy Davies
- Wednesday, June 02, 1999 at 19:31:27 (EDT)
Very good. Similar to my own views, that
(1) there is a distinct ideology based on land, as opposed to capital vs. labor, and
(2) that ideology includes the concepts of proper land stewardship, distribution, and cultivation, as a prerequisite for both economic freedom and social justice, and
(3) special privileges for none, and
(4) community is more than government, and won't function properly if land is not included.
The Agrarian <Bvd98@yahoo.com>
- Friday, June 04, 1999 at 00:55:04 (EDT)
The creation of value for land (as a natural opportunity) is subjective. Ecomonic constraints like, proximity to pockets of civilisation (villages/cities) often force most people to setup shop "where everybody else" stay, and that brings about a disparity in determining the value of land. Land closer to the city, though not very fertile, is tilled. And even if we were to use all the arable land, its not possible to distribute it equally amongst the society. (By virtue of that fact that all land is not equally fertile). Questions like, "What about our forest cover?", "What about water reserviours?" need to be answered. Its agreed that proper utilisation of land is a key to solving most of our economic problems, but, its definitely not a panacea. -Regards, Durvesh.
Durvesh Ganveer <dhurv@hotmail.com>
Bangalore, KA India - Sunday, June 06, 1999 at 23:05:27 (EDT)
The views expressed are very balanced, but how does one go about implementing this policy of Geoism without causing any upheaval in the current status quo?
Terrence Parris <terryparris@hotmail.com>
Troumaca, WI St Vincent & the Grenadines - Monday, June 07, 1999 at 22:34:06 (EDT)
My goodness, I would think that "a key to solving most of our economic problems" nearly qualifies as a panacea, doesn't it? Seriously, though: no Geoist claims that solving the land problem is the only thing that needs to be done -- but rather that no other essential reform will have lasting benefit until the land problem is solved. It bears on every other economic and political question.

Terrence -- that's a big question! Henry George said yes, it could indeed be implemented without disruption, simply by using the existing tax and assessment system. See here for quite a bit more detail on George's remedy. One wonders, though, whether today's "democratic" system is actually up to the task of responding to the people's will. In any case, the first step os to make people aware that a potential solution exists!
Lindy Davies <lindy@henrygeorge.org>
- Tuesday, June 08, 1999 at 08:59:29 (EDT)

Hi Lindy, Your "Third Way" is on the whole a very good piece. Let me make some suggestions for a possible future revision (at http://www.henrygeorge.org/rant.htm) . In order to avoid alienating potential Geo-Libertarians I think that you might mention:

1) In the rare cases where the Producers own their own "natural means of production," that the classically defined systems of Capitalism and Socialism are one and the same, that they intersect at a nexus of unusual and infrequent, but eminently possible conditions.

2) *Please* point out that under all but the most unusual condition I identified in 1) above, that what most Capitalist proponents advertize as "laissez-faire" market conditions really are *not* completely "laissez-faire" market conditions. Unless the very unusual case of 1) above is in effect, most so-called Capitalist systems have a partially hidden entitlement which is imposed by Government statute, fiscal/tax advantages and police enforcement. This entitlement allows private transfer subsidies from producers who do not own their own natural means of production to those who have gained governement mandated entitlements to the natural means of production. This type of entitlement is really a form of hidden Fascism by which a politically favored but technically private elite benefits from government sanctioned revenue flows from producers to entitled holders of natural "means of production."

3) The partially hidden entitlement is the legally brokered system of unlimited, unconditional land entitlement. This entitlement only results in legally enforceable transfer subsidies when a de facto condition of Land Monopoly occurs. The unusual, infrequent condition of 1) identified above is the condition where Land Monopoly does not exist in the local market. This condition occurs when there is an unsettled frontier nearby and Land is more plentiful than the Demand for it. This condition existed in various parts of North America as the Frontier advanced from the Eastern Seaboard Westward and inward.

4) Geoism is the nexus of classically defined Capitalism and Socialism; it is the very unusual subset of possible economic conditions where Capitalism and Socialism are the same. It is the market which is truly free of government enforced entitlements, where each and every individual in a community has the equal right and opportunity to access, use and hold an equal percapita value of the natural means of production for independent self support and self shelter. Geoism is the nexus subset of Capitalism where each and every individual has not only the right *to be,* but the right to be *somewhere,* meaning the equal right to independently use the naturally available wealth in a territory to shelter himself and to produce his own livelihood. This same Geoism is the nexus subset condition of Socialism where government does not top-down command and control markets, but is very careful to avoid granting politically enforced entitlements. Such restraining vigilance results in "maintaining" a level playing field where the market is not forcibly tilted in anyones one's favor. Such Socialism results in a market where no one has a government enforced entitlement to more than percapita shares of natural means of production. Such market "maintenance" results in a condition where all producers have equal rights to use and access naturally available market values (natural means of production) while enjoying the voluntaryist freedom of choice in a genuine, unrigged "laissez faire" market. Geoism provides both the advantages of Capitalism and Socialism without either's possible negative conditions.
Regards, Chris Toto
Chris Toto <ChrisToto@aol.com>
NJ USA - Tuesday, June 08, 1999 at 11:50:55 (EDT)
Hi Lindy, I forgot to include this at the end of my previous comment. Where Land Monopoly is not part of a Laissez Faire market, the Socialist ideal of "Producers owning the natural means of production" is achieved and conserved. When this condition holds, the Capitalists supposed goal of private ownership instead of Government ownership is conserved also. What is eliminated from this market condition is entitlements and entrenchments enforced by Political Power. Geoism provides both the advantages of Capitalism and Socialism without either's possible negative conditions. Chris T.
Chris Toto <ChrisToto@aol.com>
NJ USA - Tuesday, June 08, 1999 at 12:22:08 (EDT)
Dear Lindy Davies: Chris Toto sent me a copy of his email to you and I just visited this site to read your piece. I discoverd a few years ago that the best description of my political outlook and philosophy was Geolibertarianism. This was the missing link in the debate between socialism and capitalism. The ownership of land and natural resources is the key. No elite group shoud have government enforced entitlment to land ownership. Yet every individual has a right to be and work somewhere in order to enjoy the fruits of their labor, therefor the only legitimate role for government acting in behalf of the entire community is to guarantee each individual the right of access to the natural means of production. Then and only then can you have a truly free market of labor produced goods. As you pointed out "For Henry George, however, the principle was clear. The value of natural opportunities belongs entirely to the community, and the production of wealth by labor, using capital, should be entirely unhindered by the penalty of taxation. For George, the most important question was not the amount of wealth that should be taken by the community, but the kind of wealth that should rightfully go to the community, because it is a value that the community has created." Warren
Warren Chamberlain <W1uir@aol.com>
Holliston, MA - Wednesday, June 09, 1999 at 07:11:46 (EDT)
I have been looking for a site like this for a while. I am doing reasearch for a project and the sure helps me to get started! Thanx!!!!
Sarah Smith <comdown@at&t.com>
Georgetown, Tx USA - Friday, June 25, 1999 at 17:00:26 (EDT)
"But the poverty, suffering and environmental destruction that come under such a 'private property' regime cannot be denied." Certainly it can. One can argue that all of the poverty and enviromental destruction, at least, are products of the holding of public property, rather than the reverse, since no truly free market has ever held sway. Suffering, of course, is quite subjective, and some who are certainly poor do not percieve themselves to be "suffering", as some would claim.
Randall Randall <wolfkin@freedomspace.net>
Melbourne, FL US - Tuesday, June 29, 1999 at 01:23:16 (EDT)
That's very special, Randall. So, are you actually saying that poverty is a liberal myth?

A truly free market requires that a proper distinction be made between private and common property. When private individuals hold fee simple title to natural opportunities, what happens is market failure. Libertarians are against monopolies, are they not?
- Tuesday, June 29, 1999 at 10:13:34 (EDT)

Interesting. Got any more?
Don Purcell <dcp@purcellas.com>
Tacoma, WA USA - Tuesday, June 29, 1999 at 13:50:21 (EDT)
"Special"? ;) No, poverty is very real, but entirely relative. One is poor not because of a particular lack, but because others have far more. This is not, however, a feature of capitalism, but of "public" or "common" property. A truly free market will have no "common" property, except that which no one cares enough to claim. In any case, the value of opportunity is quite small compared to the created value which is manufactured from opportunistic capital and human capital. AFAIK, most libertarians dislike monopolies because they are an indication of State interference in the marketplace, not because they are bad in and of themselves.
Randall Randall <wolfkin@freedomspace.net>
Melbourne, FL US - Thursday, July 01, 1999 at 01:29:17 (EDT)
Depends on what you mean by "capitalism" -- and indeed, by all those terms. This debate could go on and on. Before it does, I suggest you take a look at this essay. Then you'll have a much clearer idea where I'm coming from.
Lindy Davies
- Thursday, July 01, 1999 at 10:14:42 (EDT)
Why can't we get rid of landlords? Is it right to have to pay rent? hy can't land belong to the community and everyone have a right to a piece of it without having to buy it or sell it?
gena van camp <vcamp.vom.com>
glen ellen, ca usa - Tuesday, July 20, 1999 at 14:43:49 (EDT)

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Wealth and Want
... because democracy alone hasn't yet led to a society in which all can prosper