Editing Henry George (section)

==Economic contributions==
George reconciled the issues of efficiency and equity, showing that both could be satisfied under a system in harmony with [[natural law]].<ref>{{cite web |url=http://masongaffney.org/essays/Henry_George_100_Years_Later.pdf |title=Archived copy |access-date=January 27, 2014 |url-status=dead |archive-url=https://web.archive.org/web/20120303234646/http://www.masongaffney.org/essays/Henry_George_100_Years_Later.pdf |archive-date=March 3, 2012 }}</ref>{{Fact or opinion|date=September 2023}} He showed that Ricardo's Law of Rent applied not just to an agricultural economy, but even more so to urban economics. And he showed that there is no inherent conflict between labor and capital provided one maintained a clear distinction between classical factors of production, capital and land.

George developed what he saw as a crucial feature of his own theory of economics in a critique of an illustration used by [[Frédéric Bastiat]] in order to explain the nature of interest and [[Profit (economics)|profit]]. Bastiat had asked his readers to consider James and William, both carpenters. James has built himself a plane and has lent it to William for a year. Would James be satisfied with the return of an equally good plane a year later? Surely not! He'd expect a board along with it, as interest. The basic idea of a theory of interest is to understand why. Bastiat said that James had given William over that year "the power, inherent in the instrument, to increase the productivity of his labor," and wants compensation for that increased productivity.<ref>Frédéric Bastiat, [http://bastiat.org/en/twisatwins.html ''That Which is Seen, and That Which is Not Seen''], 1850.</ref>

George did not accept this explanation. He wrote, "I am inclined to think that if all wealth consisted of such things as [[plane (tool)|planes]], and all production was such as that of carpenters – that is to say, if wealth consisted but of the inert matter of the universe, and production of working up this inert matter into different shapes – that interest would be but the robbery of industry, and could not long exist."<ref>Henry George, [https://books.google.com/books?id=CjcqAAAAYAAJ ''Progress and Poverty,''], 161.</ref>

George's theory had its share of critiques. Austrian school economist [[Eugen von Böhm-Bawerk]], for example, expressed a negative judgment of George's discussion of the carpenter's plane. In his treatise, ''Capital and Interest'', he wrote:

{{blockquote|(T)he separation of production into two groups, in one of which the vital forces of nature form a distinct element in addition to labour, while in the other they do not, is entirely untenable... The natural sciences have long ago told us that the cooperation of nature is universal. ... The muscular movement of the man who planes would be of very little use, if the natural powers and properties of the steel edge of the plane did not come to his assistance.<ref>Eugen von Böhm-Bawerk, [https://books.google.com/books?id=KmUPAAAAYAAJ ''Capital and Interest: A Critical History of Economic Theory''] transl. William Smart (London: Macmillan and Co., 1890), 417.</ref>}}

Later, George argued that the role of time in production is pervasive. In ''The Science of Political Economy'', he writes:

{{blockquote|[I]f I go to a builder and say to him, "In what time and at what price will you build me such and such a house?" he would, after thinking, name a time, and a price based on it. This specification of time would be essential. ... This I would soon find if, not quarreling with the price, I ask him largely to lessen the time. ... I might get the builder somewhat to lessen the time ... ; but only by greatly increasing the price, until finally a point would be reached where he would not consent to build the house in less time no matter at what price. He would say [that the house just could not be built any faster]. ...

The importance ... of this principle – that all production of wealth requires time as well as labor – we shall see later on; but the principle that time is a necessary element in all production we must take into account from the very first.<ref>Henry George, [https://archive.org/details/bub_gb_TgJLAAAAYAAJ <!-- quote=if i go to a builder. --> ''The Science of Political Economy''] (New York: Doubleday & McClure Co., 1898), 369–370.</ref>}}

According to Oscar B. Johannsen, "Since the very basis of the Austrian concept of value is subjective, it is apparent that George's understanding of value paralleled theirs. However, he either did not understand or did not appreciate the importance of [[marginal utility]]."<ref>Johannsen, Oscar B. [https://archive.today/20120709154713/http://findarticles.com/p/articles/mi_m0254/is_5_60/ai_82469377/ Henry George and the Austrian economists.] ''[[The American Journal of Economics and Sociology]]''  (Am. j. econ. sociol.)  {{ISSN|0002-9246}}. Abstract.</ref> On the contrary, George explicitly used marginal utility in his analyses of both the 'margin of production' in macroeconomics and microeconomic decision theory.<ref>{{Cite web|url=http://politicaleconomy.org/speIII_5.htm#marg|title=The Science of Political Economy, Part III, Chapter 5|website=politicaleconomy.org}}</ref>

Another spirited response came from British biologist [[Thomas Henry Huxley|T.H. Huxley]] in his article "Capital – the Mother of Labour," published in 1890 in the journal ''The Nineteenth Century''. Huxley used the scientific principles of energy to undermine George's theory, arguing that, energetically speaking, labor is unproductive.<ref>T.H. Huxley, [http://aleph0.clarku.edu/huxley/CE9/CaML.html "Capital – the Mother of Labour: An Economical Problem Discussed from a Physiological Point of View,"] ''The Nineteenth Century'' (Mar. 1890).</ref>

George's writings were also a major influence on [[Sun Yat-sen]]'s program for modernizing China's economy.<ref name="Crean" />{{Rp|page=27}} [[Chiang Kai-shek]] and [[Soong Mei-ling]] praised George's economic writings in the 1940s, well after they had stopped being a major topic in the United States.<ref name="Crean" />{{Rp|page=27}}