Henry George's Labor Theory of Value: He Saw the Entrepreneurs and Workers as Employers of Capital and Land, and Not the Reverse

In: The American journal of economics and sociology, Volume 48, Issue 3, p. 311-320

Abstract

Abstract. Henry George, the 19th century American economist and social philosopher, saw the problem of protecting the working peoples' wages and Jobs one of distributive justice. He attacked as fallacious the idea that equality of opportunity to work was a "privilege" accorded to labor. The protectionist system, he held, was based on the antidemocratic notion that "the many are called to serve and the few to rule." The paternalism of protection, whether in the domestic or the world economy, is "the pretense of tyranny," he argued. He holds that labor, including workers and entrepreneurs, and not landholders, or owners of capital, is the source of all economic value. Labor, he reasoned, "employs capital," and not the reverse. George's theory of value was an improvement on Adam Smith's, putting into it a greater emphasis on the importance of land in the analysis of the distribution of wealth. But it was a production cost theory, with all its problems and advantages.