How Do We Divide the Fruits of Labor?

“Left-wing” proposals call for society to achieve equity by redistributing most of the wealth. No distinction is made between the sources of income (land, labor or capital), and individuals control only a small portion of the wealth. In most cases this entails a large measure of social control, and a “planned economy.”

“Right-wing” proposals hold that efficiency requires more wealth to remain in private hands (also making no distinction between rent, wages and interest), and that society, or government, should only get the minimum it needs for necessary services, e.g., the role of “traffic cop.” This implies leaving the running of the economy to private interests.

“Middle-of-the-road” proposals seek a “balanced system” in the distribution of wealth and power between individuals and society – but make insufficient distinctions between earned and unearned incomes, and do not carefully define the proper spheres of society and the individual. The result is a hodgepodge in which efficiency and equity always appear to be at odds.

The Georgist proposal is different from all these ideologies in that it makes a distinction between the unearned income of land (rent) and the earned incomes of labor and capital (wages and interest). Rent to society, wages and interest to the individuals who earned them.

The proper spheres of society and the individual are clarified. The Georgist proposal achieves the goal of “left-wingers” for security and social action, but without restrictions on liberty. It achieves the goal of “right-wingers” to attain freedom, but without privilege and monopoly. And it achieves a balanced system sought by “middle-of-the-roaders,” but in a just rather than arbitrary way.