Reply to the Caplan and Gochenour critique of Georgism
Published online: 18 October 2013
Springer Science+Business Media New York 2013
Abstract This paper refutes the proposition by Caplan and Gochenour that there is
no such thing as natural resources because all goods are produced. Caplan and
Gochenour use that proposition to argue against the reform proposal of Henry
George and his followers, to replace all taxes with a single tax on land value. The
rebuttal to Caplan and Gochenour made by this paper is that the discovery of a
resource does not constitute its production. The refutation here argues that entrepre-
neurship and investment create human capital and capital goods, not natural re-
sources. Discovery is not the same as invention or production.
JEL codes B59
This paper refutes the proposition by Caplan and Gochenour (2012 and 2013)thatthere
is no such thing as natural resources. Caplan and Gochenour use that proposition to
argue against the reform proposal of Henry George (1879) and his followers, to replace
all taxes with a single tax on land value. They dispute the Georgist proposition that a
land value tax does not negatively alter economic activity. Caplan and Gochenour argue
that land is a produced good, and therefore public revenue from land rent imposes a
deadweight loss by inhibiting the production and improvement of land.
The Caplan and Gochenour critique builds on that of Frank Knight, who claimed that
land is not a natural resource, but is produced by its discovery and by the exertion of
obtaining exclusive use, including that of expelling or eradicating the previous occupants.
Caplan and Gochenour go beyond Knight in analyzing the “production” of land from a
search for profit. For example, their claim is that entrepreneurs spend resources to discover
oil, and so the oil is not a natural resource, but is produced from discovery and extraction.
Rev Austrian Econ (2014) 27:451–461
F. Foldvary (*)
Department of Economics, San Jose State University, 1 Washington Square #114, San Jose,
CA 95192-0114, USA