In 1879 a much revered social theorist and economist, Henry George (1839-97) wrote ‘Progress and Poverty’, a book whose sales at the time exceeded any book except the Bible and whose plaudits were universal - regardless of political leanings.

George recognised that wherever economic progress went poverty rose in parallel and the reason was that economic growth separated social capital into ‘haves and have nots’. To remedy this George used the Hunter/Gatherer notion that the land belonged to everyone and hence its value should be universal and fixed.

George's premise was that increases in land value are due to location and surrounding developments, rather than from the result of hands-on labour; and that all distortions in wealth have their origins in monopolies and speculators who claim the land as their own; with the eventual result that the middle class is down-sized by the compounding wealth of the selected few with land rights; which ultimately leads to unemployment and pockets of poverty.

George advocated that any increase in land value should be returned to the general public via a Land Value Tax; which he predicted would eliminate the need for all other taxes while at the same time limiting land speculation.

The occupier of the land generates profit only from the productive capacity of labour on its land, along with the lands proximity to available markets, but not from the increased value of the land itself. 

Karl Marx (1818-1883) in collaboration with Friedrich Engels (1820-1895) co-authored ‘The Communist Manifesto’, published in 1848.Marx coined the term ‘capitalism’; a system which he noted:

‘...cloaks itself in the mantle of competition and egalitarianism while espousing neither when it comes to its actual implementation.’ 

The Concise Encyclopedia of Economics summarises Marxism as:

‘... a series of class struggles between owners of capital (capitalists) and workers (the proletariat). As wealth became more concentrated in the hands of a few capitalists, he thought, the ranks of an increasingly dissatisfied proletariat would swell, leading to bloody revolution and eventually a classless society.’

The ideology of communism is captured in the phrase ‘From each according to his ability, to each according to his need’. Marx believed that global poverty could be eliminated by removing monopolies on land, financial capital and technology while remunerating equally productive work equally. 

But as Friedman noted, most people’s thoughts start and finish with the things they own, so it’s doubtful that a true state of communism can ever be achieved. None-the-less there have been a number of political parties that moved successfully towards the intermediary phase known as social democracy, in which democratic processes preclude revolution. Over time social democracy has developed a focus on state regulation rather than the ownership of business and industry.

The first G20 leader’s summit took place in 2008 for the purpose of restoring and sustaining economic growth via stimulus packages designed to limit the collapse of financial markets. The result has been a $57 trillion dollar increase in global debt with little benefit to the working man or the middle class and with the imminent threat of a downturn that may take 30-40 years to correct.

The greater portion of global debt belongs to corporate interests in emerging ‘third world’ economies, especially China, while the remainder is ‘first world’ government debt - half of which is the United States.

‘… rescue the collapsing private banking system; that is, to bail out banks and big investors, pure and simple.  The ‘free money’ produced by the QEs (quantitative easing) and near zero rates of the past half decade saved the global capitalist banking system.’

‘…banks borrowed from the Fed at no cost and loaned out the Fed money to multinational corporations, hedge funds, equity firms, and other investors who borrowed the free money from the banks who borrowed from the Fed. Shadow banks and investors then paid banks a healthy interest of 5%-15% on their borrowed money, and then turned around and re-invested the borrowed money in global stocks, bonds, derivatives, properties, etc., worldwide, producing even greater rates of return and creating a host of new financial asset bubbles in the process…Private Banks were themselves encouraged by the Fed to directly invest in EMEs (emerging market economies) and to speculate directly once again in financial asset markets as well—both offshore and on—thus generating still more bank profits.’

Strangely enough the exact destination of much of the US Federal Reserve’s handout is still a Fed secret. On February 17^th 2015, the 82^nd Attorney General of the United States, Eric Holder, gave his underlings:

‘… three months to determine whether they can secure indictments against bankers who are widely believed to have committed fraud while issuing, packaging, marketing and selling the residential mortgage backed securities (RMBS) that caused last decade's multi-trillion dollar global financial meltdown.’

In the aftermath of the 1929 stock market crash the US put in place the Glass-Steagall Act (1933) to prohibit commercial banks from participating in the investment banking business. Since its removal in 1999 the 21^st Century neoliberal capitalist has become less and less interested in recycling money through wages and employee benefits; instead money is siphoned into investment schemes made possible by bank loans and encouraged by government legislation while profits are protected from taxation using off-shore bank accounts.

Goods that require labour intensive input are outsourced to low wage countries and bought back at low prices. Products made by mechanised, labour efficient processes and requiring large amounts of investment money for ‘tooling-up’, are sold at high prices with the profit going into the hands of a few; middle class income is downsized and the burden of social programs is left to government.

Hedge fund managers heavily populate the richest one percent of US citizens with the 25 highest-earning hedge fund managers for 2013 taking home $21 billion dollars.

 Hedging is a complicated gambling system where bets are laid on opposing influences so that the manager is insured against loss and his investors have an ‘each way’ chance of increasing their funds without any exertion of physical labour (although the mental labour may be tortuous). Global investment strategies such as these are in contradiction to Ricardo’s concept of a Nations ‘comparative advantage’ where the resulting financial returns go to each countries labour force.

The Bank of International Settlements in Basel, Switzerland is believed to be the controller of central banks around the world and its building is of course called the ‘Tower of Basel’. Carroll Quigley, American historian, theorist and mentor to Bill Clinton stated that:

‘The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole.  This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences.  The apex of the system was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world’s central banks which were themselves private corporations.'

In the ‘old days’ banks gave a healthy dividend for savings; nowadays healthy dividends are restricted to those with a capacity for investment portfolios, and the rest of us are left with investments in government or business assisted retirement plans – money which may never eventuate because of government debt; while your employer also seeks to find a way around payments. Any government with clout must first revisit a public banking system, a system whose heart is with its people.

Author of Web of Debt, Ellen Brown, recently wrote an article on the benefits of public banks:

Public banks in North Dakota, Germany and Switzerland have been shown to outperform their private counterparts…In November 2014, the Wall Street Journal reported that the Bank of North Dakota (BND), the nation’s only state-owned bank, “is more profitable than Goldman Sachs Group Inc., has a better credit rating than J.P. Morgan Chase & Co. and hasn’t seen profit growth drop since 2003.”

…because it has substantially lower costs and risks than private commercial banks. It has no exorbitantly-paid executives; pays no bonuses, fees, or commissions; has no private shareholders; and has low borrowing costs… It engages in old-fashioned conservative banking and does not speculate in derivatives.

Since the turn of the 21^st Century the popularity of social democratic thinking has been in decline and parties such as the Swedish Social Democratic Party, the Social Democratic Party of Germany, and the Social Democratic Party of Finland have been getting less and less of the vote.

In the aftermath of the 2008 financial cliff hanger there are those that believe in an imminent rebirth of interest in social democracy.

‘Poverty deepens as wealth increases and wages are forced down while productive power grows, because land, which is the source of all wealth and the field of all labour, is monopolized. To extirpate poverty to make wages what justice commands they should be, the full earnings of the labourer, we must therefore substitute for the individual ownership of the land a common ownership. Nothing else will go to the cause of the evil – in nothing else is there the slightest hope...We must make land common property.’

As noted by political economist Jack Rasmus, the money injected into the US economy since 2008 was to:

The world of ‘high finance’ requires investment capital and borrowing potential; once you've made your first million you can join the game.

Georgism