Unearned increment is an increase in the value of

land Land, also known as dry land, ground, or earth, is the solid terrestrial surface of the planet Earth that is not submerged by the ocean or other bodies of water. It makes up 29% of Earth's surface and includes the continents and various isla ...

or any

property Property is a system of rights that gives people legal control of valuable things, and also refers to the valuable things themselves. Depending on the nature of the property, an owner of property may have the right to consume, alter, share, r ...

without expenditure of any kind on the part of the proprietor; it is an early statement of the notion of

unearned income Unearned income is a term coined by Henry George to refer to income gained through ownership of land and other monopoly. Today the term often refers to income received by virtue of owning property (known as property income), inheritance, pensions ...

. It was coined by John Stuart Mill, who proposed taxing it so that it benefits every member of a society. Mill's concept was refined and developed by nineteenth-century economist

Henry George Henry George (September 2, 1839 – October 29, 1897) was an American political economist and journalist. His writing was immensely popular in 19th-century America and sparked several reform movements of the Progressive Era. He inspired the eco ...

in his book ''

Progress and Poverty ''Progress and Poverty: An Inquiry into the Cause of Industrial Depressions and of Increase of Want with Increase of Wealth: The Remedy'' is an 1879 book by social theorist and economist Henry George. It is a treatise on the questions of why pover ...

'' (1879). George argued that the value of land increased as population growth expanded the division of labor. A landowner's exclusive claim to their land granted them the ability to collect the excess productivity as

economic rent In economics, economic rent is any payment (in the context of a market transaction) to the owner of a factor of production in excess of the cost needed to bring that factor into production. In classical economics, economic rent is any payment m ...

Thorstein Veblen Thorstein Bunde Veblen (July 30, 1857 – August 3, 1929) was a Norwegian-American economist and sociologist who, during his lifetime, emerged as a well-known critic of capitalism. In his best-known book, ''The Theory of the Leisure Class'' ...

further developed the concept, pointing out that the value of a piece of land was also dependent on current technological capabilities.
Veblen thought the unearned increment increased as the industrial arts advanced, so the argument could be extended from land to capital goods. Focusing on the role of technical knowledge in the creation and operation of capital, Veblen argues the unearned increment in the case of capital is in the monopolization of the community's knowledge. As industrial methods advance and the unit of industrial equipment grows larger, it becomes feasible to monopolize the required materials for earning a living, effectively monopolizing a portion of the community's knowledge. For both George and Veblen, the unearned increment emerges from the actions of an individual with the ability to exclusively use a community asset in order to generate profit. The profit takes the form of an unearned increment because the individual reaping the profit didn't create the land (or knowledge) used to do so. Both thinkers also argued that such monopolization of the community's resources would lead to the creation of economic slavery.

References

Income {{wealth-stub

See also

References