"Unearned Increment"

Context: John Stuart Mill was a precocious child, educated by his father; he became an astonishing philosopher and economist whose works in Philosophy, Logic, and Political Science have long outlived him. His Autobiography has become a classic, and nearly a century after its publication is required reading in English classes for its style and logical development. His essay on "Liberty" is read by university classes in English and Government, and even his text on logic can still be read with profit. However, it is his work on economics that remains Mill's greatest contribution to modern thought. His Principles of Political Economy that came out in 1848 in an edition of 1,000 copies, had an equal edition the next year, and an increase to 1,200 copies in 1852, with continually larger editions following. Mill followed the abstract theories of rent of David Ricardo (1772–1823), but applied economic doctrines to social conditions. His thinking was sharpened by an important event in his life. In 1831 he met and fell in love with Helen Taylor, but not until her husband's death in 1851 did he marry her. They enjoyed seven happy years together while he was developing many of his theories. He acknowledges in his Autobiography that his conviction of the complete equality of the sexes in legal, political, social, and domestic relations probably came from Helen Taylor. The first printing of his Political Economy carried a dedicatory acknowledgment of her help, but her dislike of publicity prevented its insertion in later copies. The author also made other changes in the book in its subsequent publications, up to the seventh edition, in 1870, the last during his lifetime. Some of Mill's ideas were published in Westminster Review, and in the London Review, as well as in The Review, when they were combined. At the suggestion of his wife, he started collecting and re-editing, and published the articles in two volumes of Dissertations and Discussions in 1859. Their reception was so friendly that he issued a third volume with an "Essay on Plato," originally appearing in the Edinburgh Review as its most important entry. In the fourth volume appeared an essay restating and rephrasing one of his most important contributions to economic thought and taxation, that put the phrase "unearned increment" into the vocabulary of Economics. The term was new, though the idea was not. Adam Smith (1723–1790), in his Inquiry into the Nature and Causes of the Wealth of Nations (1775), had written that "Landlords, like other men, love to reap where they never sowed." The belief grew that wealth which comes to a man without any effort of his own should not belong to him, and ought to be taken, all or in part, for the good of everybody, through taxation. Mill explains the theory and calls this windfall "unearned increment," in the fourth volume of his Dissertations and Discussions, and "unearned appendage" in his Principles of Economic Theory. A man who owns farm land, for instance, may suddenly find its value greatly increased because the city grows in his direction or a railroad extension makes the land attractive to factory builders. This is Mill's belief:

Before leaving the subject of Equality of Taxation, I must remark that there are cases in which exceptions may be made to it, consistently with that equal justice which is the groundwork of the rule. Suppose that there is a kind of income which consistently tends to increase, without any exertion or sacrifice on the part of the owner, those owners constituting a class in the community whom the natural course of things progressively enriches, consistently with complete passiveness on their own part. In such a case it would be no violation of the principles on which private property is grounded if the state should appropriate this increase of wealth, or part of it, as it arises. This would not properly be taking anything from anybody, it would be merely applying an accession of wealth, created by circumstances, to the benefit of society, instead of allowing it to become the Unearned appendage (unearned increment) to the riches of a particular class.