Do you see the cat?

The cat in questionI wrote this article for the Transition Network at the invitation of Jay Tompt who is involved in the Transition Movement’s REconomy project.

“Seeing the cat” has served as a metaphor for achieving an understanding of the teachings of Henry George since he set them out in his bestselling economic treatise “Progress and Poverty” in 1879. George sought to understand why there are recessions and poverty amid plenty and his investigation led him to identify the central role of land in the economy. The original story goes something like this:

“I was one day walking along Kearney Street in San Francisco when I noticed a crowd in front of a shop window… I took a glance myself, but I saw only a poor picture of an uninteresting landscape. As I was turning away my eye caught these words underneath the picture: ‘Do you see the cat?’ …I spoke to the crowd. “Gentlemen, I do not see a cat in the picture; is there a cat there?” Someone in the crowd replied, “Naw, there ain’t no cat there. Here’s a crank who says he sees a cat in it, but none of the rest of us can.” Then the crank spoke up. “I tell you,” he said, “there is a cat there. The picture is all cat. What you fellows take for a landscape is nothing more than a cat’s outlines. And you needn’t call a man a crank either because he can see more with his eyes than you can with yours.”

The metaphor works because the cat – like role of land in the economy – is utterly unmistakeable, once it becomes clear. I first “saw the cat” about three years ago and now I can’t help but see it everywhere. I see it when I walk up the High Street and pass street traders, empty shops and unaffordable house prices in estate agents’ windows. I see it when I walk past the Job Centre and derelict brownfield sites in other parts of town. I see it when the discussion turns to the barriers facing business start-ups. Any media coverage of economics, welfare dependency and poverty and again I “see the cat”.

IMG_1248Henry George realised that the boom-bust cycle, poverty and wealth inequality have the same root cause, namely the effect of the Law of Rent under conditions of private land ownership. He also found that as the economy developed, rent – defined as the economic return to land – would take up an ever larger share of the fruits of production at the expense of the returns to labour and capital. Furthermore, in anticipation of future gains, speculation pushed up the price of land to levels higher than could be justified by its best economic use in the present day.

The ramifications of these findings are far reaching and extremely relevant to the Transition Movement today as it develops initiatives to build resilience, re-localize the economy and create prosperity that is shared across the community. To be successful Transition requires social cohesion which in turn rests on equal access to economic opportunities and relative parity of wealth. However the Law of Rent is immutable – it is an economic reality that cannot be wished out of existence as we shift to a new economic paradigm. Landlords still need to be paid and new enterprises still need to secure locations at the going rate. The squeeze of rent will continue to be felt.

A possible future scenario is that land values will fall as the old economy unravels and landowners, finally recognising that there will be no “return to normal”, capitulate. This may then create the conditions for economic rebirth – a transition economy of new work opportunities, full employment and decent reward for an honest day’s work.  Examples of communities pulling themselves up by their bootstraps can be found in the past, particularly in the aftermath of wars and natural disasters. This “pioneer phase” is typically characterised by a high degree of cooperation and community spirit. Nevertheless as the economy blossoms it is inevitable that rents will rise once more and a wedge will again be driven horizontally through society, elevating those above it and pushing down those beneath.

IMG_1241What then is the solution to this problem? Henry George proposed that the economic rent of land be shared equally by the community rather than be allowed to flow into private pockets. He held that this remedy is in keeping with the highest principles of justice because people own what they create through their labour while the things found in nature, most importantly land, belong equally to all.

Whether or not one accepts George’s remedy the crux of the matter is that human beings cannot survive without access to the natural environment. The big issue at the heart of economics therefore is the terms upon which people have access to land. Understanding this and developing an effective response is the challenge facing all of us who are engaging in the task of creating an economy that works for people and planet.

“Until there be correct thought, there cannot be right action, and when there is correct thought, right action will follow”. Henry George, Social Problems, 1886.

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