RE: Property Rights

Billy Brown (
Mon, 24 May 1999 16:30:05 -0500 wrote:
> I say there are situations where other methods than private property work
> best for organizing the use of resources.
<insert assorted examples>

Yes, there are situations in which a strict adherence to the idea of individual ownership of everything would not work. However, 'private property' does not imply that everything must be owned by an individual.

Some resources have little or no economic significance, and thus are not worth the bother of keeping track of. So, regardless of our economic system, no one will worry about who owns which ant or which cc of air because no one cares.

Voluntary collectives can sometimes work, but only for very small groups with very strong social bonds. As the collective grows in size the connection between an individual's efforts and the rewards he receives becomes more tenuous, and the ability of the group to inspire contributions via social pressure diminishes. It also becomes more and more difficult for even an honest, hard-working individual to make an optimal contribution to the group, because there is no clear source of information to tell him how he should spend his time.

Involuntary collectives, of course, have a dismal track record regardless of their size. Even in an individual family, where the forces of corruption are at an absolute minimum and the motivation for the rulers to be benevolent is maximized, those who are ruled are rarely happy about the situation.

But perhaps I assume too much. Are you suggesting that we should be looking for ways to replace private property with collective ownership of some kind, or merely pointing out that there are occasional situations where the full private property treatment is more trouble than it is worth?

> I think you have tremendously oversimplified the situation here. Even if
> we agree that we should use property rights to dispose of the fruits
> of our labor, that would only refer to made objects. In fact, people
> often try to extend property beyond things which humans have created,
> such as the ants and air in my examples above.

You are correct. I should also state that a system of private property allows individuals and organizations to freely buy and sell things that are found in nature, while a pure collectivist system forbids all such exchanges and a socialist system falls somewhere in between. However, this is not much of an addition, because it is a separate case for only the most basic of material inputs (land, air, etc.) Most things we think of as 'natural resources' do not exist in any useable form until someone invests effort to create them, so the question I pose directly describes a large majority of the economy.

I'm still curious as to whether anyone can suggest a different way of dealing with this issue.

> Even in the context of human creations, it is often the case that
> property rights are not the most efficient means of deciding what will
> be done with them. Families do not use property rights to make many
> of their resource allocation decisions, and neither do corporations,
> and neither do voluntary communities like our own. It could be done; we
> could pay for each posting, and every object in your home could be owned
> by a specific person. But we don't do that, because it is
> not efficient.

In all of these cases those who actually own the property are the ones who make the decisions about how it will be used - directly in the case of small groups like a family, and indirectly in larger organizations. I think what you are really trying to say here is that they don't use markets to make their decisions. That is true, and in some of these cases it is a good thing, but in others it isn't.

A free market is a mechanism that a large group of people to efficiently allocate resources in a complex environment. It uses price signals to allow each person to locally optimize their own behavior, and over time these same signals will lead the entire system to allocate resources in a way that matches the desires of all of its participants as closely as is possible. No one ever needs to understand what is happening for this process to work, and no one ever decides what the ultimate goal will be.

Now, running a market involves certain costs. It takes effort to establish the market, effort to buy and sell things, etc. This inevitably means that for very small systems it is not worthwhile to establish a market. If a group is small enough that its members can simply discuss their situation and agree on their goals, there is no need for a more elaborate structure. If a system is simple enough that a single human mind can understand its behavior, appointing a manager makes more sense than establishing a market. If a resource has so little economic significance that it would cost more that it is worth to buy and sell it, then there is no reason to create a market for it.

However, this does not mean that there is never a need for markets. In fact, the opposite is true. In small organizations an authoritarian or collective system can work well, but as the scale increases they become increasingly ineffective. Central planning on the scale of a large corporation is very inefficient, which is why there is such a strong movement towards decentralized decision-making today. On the scale of a modern economy it is even worse - an economy without markets has its hands full just keeping people fed, as the Russians recently demonstrated.

So, I would say that the best approach is to make free markets and private property the default assumption for all economic activity. If individuals find it advantageous to voluntarily pool their resources into small collectives from time to time, this system would leave them free to do so. They would also be free to form any other sort of organization they wish, which would presumably lead to the best overall results that we can hope for.

Billy Brown, MCSE+I