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April 2017 Policy Study, Number 17-7


A Commentary on Property and Taxation


Part 3



At this point in this essay, the author is going to do something he hasn’t done previously, and that is to quote a fairly lengthy passage from a contemporary author.  The book is The Noblest Triumph: Property and Prosperity Through the Ages by Tom Bethell.  I pray Mr. Bethell will not be too upset with me for borrowing quite so much; but it is apropos to our current discussion and particularly good.  Perhaps, enough so, that it may cause you to read his entire book.  It is well worth the effort.  “The Blessings of Private Property,” excerpted from The Noblest Triumph by Tom Bethell:


The many blessings of a private-property system have never been properly analyzed, probably because of this peculiar history.  [Mr. Bethell described this history in the preceding pages of his book.]  It is a vast subject, and an introduction of this nature can only outline those benefits.  But there are four great blessings that cannot easily be realized in a society that lacks the secure, decentralized, private ownership of goods.  These are: liberty, justice, peace, and prosperity.  The argument of this book is that private property is a necessary (but not a sufficient) condition for these highly desirable social outcomes.


Of these, the relationship between liberty and property is by now fairly well understood.  Leon Trotsky long ago pointed out that where there is no private ownership, individuals can be bent to the will of the state, under threat of starvation.  The Nobel Prize-winning economist Milton Friedman has said that “you cannot have a free society without private property.”  Yet this elementary truth was not understood a hundred years ago, when intellectuals began to think of private property as a dispensable institution.  It was the practical experience of Communism that made all the difference.  Those who lived under its tyranny soon understood that without property rights, all other rights mean little or nothing.  Angels and spirits surely do not need property, but human beings have not yet attained that incorporeal state.


Private property is a compromise between our desire for unrestricted liberty and the recognition that others have similar desires and rights.  It is a way to be free, “and yet secure from the freedom of others,” as the American University law professor James Boyle has written.  Privacy these days is a much admired good, and American courts have discovered a right to it in the penumbras and emanations of the Constitution.  Yet it is obvious that privacy cannot be attained without an anterior respect for private property.


Rights are held against the state, and property is an important bulwark against state power.  Ownership in a society that protects and respects property will tend to be unequal, to be sure, and for over a hundred years property has been represented as an expression of power; but like all genuine rights, property rights protect the weak against the strong.  Some early arrivals in the United States marveled that smallholders were as secure in their possession as the rich were in theirs.  (“The law of the land is so constituted, that every man is secure in the enjoyment of his property,” a group of German settlers in Maryland said in 1763.  “[T] he meanest person is out of reach of oppression from the most powerful.”)  Recent immigrants have been delighted to find that you can buy property in the United States without paying bribes.  The call for secure property rights in Third World countries today is not an attempt to help the rich.  It is not the property of those who have access to Swiss bank accounts that needs to be protected.  It is the small and insecure possessions of the poor.  This key point was well understood in the first and best of the social encyclicals of the Catholic Church.  In Rerum Novarum (On the Condition of the Working Classes), published in 1891, Pope Leo XIII wrote that the “fundamental principle of Socialism, which would make all possessions public property, is to be utterly rejected because it injures the very ones whom it seeks to help.”


The institution of private property also plays a key role in establishing justice in a society.  This is one of the most important arguments in its favor, yet the connection between private property and social justice has rarely been made, mainly because social justice has been equated with the distribution of already existing goods.  Inequality is equated with injustice.  Nonetheless, a private-property regime makes people responsible for their own actions in the realm of material goods.  Such a system therefore ensures that people experience the consequences of their own acts.  Property sets up fences, but it also surrounds us with mirrors, reflecting back upon us the consequences of our own behavior.  Both the prudent and the profligate will tend to experience their deserts.  Therefore, a society of private property goes some way toward institutionalizing justice.  As Professor James Q. Wilson has said, property is a “powerful antidote to unfettered selfishness.”


Property is also the most peaceable of institutions.  In a society of private property, goods must be either voluntarily exchanged or laboriously created.  As long as such ownership is protected by the state, goods cannot easily be taken by force.  Furthermore, a society with legal institutions that encourage the creation of wealth poses a diminished threat to the wealth of neighbors.  In contrast, mutual raiding parties will flourish in adjacent societies with communal ownership.  Private property also allows a country to become rich enough to defend itself against aggressive neighbors, thereby reducing the likelihood of conflict.


Private property both disperses power and shields us from the coercion of others.  It enables us to formulate our own plans and to use the information that is uniquely in our heads.  It leaves us free to act without interference, within our own autonomous spheres.  People are not only permitted to make their own plans, but to a considerable degree are obliged to do so.  Nonetheless, in most countries the trend for much of the twentieth century has until recently been in the reverse direction.  Power has been centralized almost everywhere, and property frequently nationalized.  Where this was carried to an extreme — in the centrally planned economies of the Communist countries — a few “master brains” at the center were supposed to plan for everyone.  Most people were thereby reduced to servile status.  That is why all such countries turned out to be tyrannical.  The state was at war with the natural inclinations of the people.


Prosperity and property are intimately connected.  Exchange is the basic market activity, and when goods are not individually owned, they cannot easily be exchanged.  Free-market economies, therefore, can only be built on a private property base.  Property rights are “the fundament of a market economy,” as Daniel Yergin and Joseph Stanislaw note in The Commanding Heights.  By the same token, a knowledge of existing property rules in a society is a prerequisite of economic analysis, and the effects of such rules ought to be made explicit in economic theory.  Private ownership permits people to “evaluate” what they own and (in both the everyday and the financial sense) to “realize” that value.  It enables them to decide how much to ask, or to bid, for the good in question.


This connection, between prosperity and private property, has only been recently accepted.  For a long time, many people thought that centrally directed and planned economies could improve upon the free-market system.  But it turned out that non-owners employed by the state could not successfully substitute their own commands for the vast multiplicity of market judgments and exchanges.  The belief that planners could do this, thereby achieving the same outcome as that produced by private ownership (or a better outcome, because supposedly more just), was the key economic delusion of socialism.  (Emphasis in the original).




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