The moral economy of land value from Henry George to William Alonso

Who does the value of land belong to? Property taxes represent around 20% of state and local government revenue, grouping taxing on housing as well as on land. However, as economists have long observed, these are two different – if interrelated - kinds of goods, and accrue or lose value in fundamentally different ways. As central as land is to planning and municipal financing, the challenges its process of valuation poses to economics has also been a site to contest and frame who that value should belong to. In other words, the way that land value is framed as an object of knowledge by economics shapes the moral economy of its distribution. This, in turn, becomes important for how land value is framed as an object of governmental intervention, and specifically, of municipal finance. In this paper, I explore the foundations of this moral economy by centering two of the canonical authors in land value literature; Henry George and William Alonso. Henry George (1839 –1897) was a political economist who was influential in the framing of land value as unearned income that is collectively produced, and which sparked the “single-tax” movement. William Alonso (1933 – 1999)’s theory of bid-rent as a form of understanding land prices and locational economies continues to be the prevalent model taught in urban economics courses. While both are central to how land value is understood, their work is profoundly different. As I will explore in this paper, George largely followed the Ricardian labor theory of value, while Alonso’s bid-rent model inserted land into the marginalist value framework of neoclassical economics. However, it is precisely because of these differences that understanding the relationship and divergence vis-à-vis the marginalist economics of these two authors can be so constructive. The paper will look at how these two economists craft land value as an economic object, and how that relates to advances in marginalist neoclassical economics. Rather than depart from a particular definition of land value and rent, I will trace the emergence and definition of these terms as they encounter the challenges of attributing price and/or value to land, when its properties challenge conventional market mechanisms for reaching an optimum equilibrium. From George’s adoption of Ricardian differential rent theories (1924) – considered by Brue & Grant 2013, Stratford, 2022)- and others to be an early manifestation of marginalist frameworks, to Alonso’s bid-rent model (1964), I will trace how marginalist logics emerged, not despite land’s challenges, but in response to them. Although the genealogy will allow me to trace the evolution of marginalist approaches around land value from George to Alonso, it also enables the understanding of the political dimensions of such a conceptualization, which are less explicit it the bid-rent model than in Georgist conceptions of land value. In the concluding sections, I will begin to chart how such theories translate into a philosophy of political economy – how this vision of land value connects to visions of political governmentality and claims to the “public” nature of land.