The Meaning of "Interest" in Political Economy |
[Reprinted from Land and Freedom, November-December 1939]
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As to terms employed in presentation of the fiscal measure, we
recognize the practical usefulness in "A Single Tax on Land Values"
with its long-established meaning; and we must all recognize the
frequent need of using "land rent" (or ground-rent), because of badly
confused ordinary usage of the word "rent," and of similarly using
"rental values of land" instead of the less specific scientific
term "land values." All this aims simply at clarifying intended
meanings.
But how can we present "interest" as a scientific term meaning
"all returns for the use of capital, and not merely those that pass
from the borrower to the lender" (its meaning "as commonly used" by
Henry George in Progress and Poverty)? For "all returns for the
use of capital" includes returns which go neither to the borrower or
to the lender even the vast "returns" which are obviously distributed
to all by reduced labor costs and resulting in reduced selling prices
of products. Such returns have no connection whatever with "interest as commonly used" and do not go "exclusively to capital."
Therefore their inclusion makes the term inherently as unclear and
unscientific as the term "profits" obviously is. Certainly presenting it as essential to the basic "philosophy of Henry George" is a
serious "defect of presentation." He never publicly mentioned
interest himself in twenty years of teaching, and himself demonstrated
that the increased production due to ordinary using of tools benefits
all consumers equally regardless of ownership while above-average
using entitles high wages to such users, not interest to owners.
And does it not discredit that philosophy to tie to it the belief and
warning that normally provident and prosperous human beings will
not save wealth merely to insure against future needs and will not
lend it for use as capital (instead of suffering the waste of it which
nature decrees for non-use) unless borrowers guarantee return of
more than is loaned? "Business men" are naturally against increased
outgo to mere lenders, and "scholars" resent inconsiderate pleading.
Followers of Henry George are individually responsible for correcting "defects in presentation" of his basic philosophy.
Even captious objecting is better than blind following which at
best is fanatical.
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