Property rights

Property sounds like a dry legal topic. In fact it is the answer to one of the oldest human problems: how can people who want the same scarce things live together without fighting over them?

Why property exists

Imagine a world of endless abundance, where every apple, field and house existed in unlimited supply. Nobody would need property rules: you would simply take another apple. Property exists because we live in a world of scarcity. One field cannot be planted by two farmers in two different ways at once. One bicycle cannot be ridden to two places at the same time.

Whenever two people want to use the same scarce thing in incompatible ways, there is a potential conflict. There are only two ways to settle it: by force, or by a rule that says who decides. Property is that rule. Hans-Hermann Hoppe puts it simply: the purpose of property norms is to make conflict-free interaction possible.

That is why property is not the opposite of cooperation. It is what makes cooperation possible. You can lend, rent, sell, share or give away something only if it is clear whose it is.

How do things become someone’s?

Libertarians usually accept three legitimate ways of acquiring property.

1. Original appropriation (homesteading). A thing nobody owns becomes yours when you first put it to use: you clear a field, build a hut on empty land, catch a fish in open sea, or write down an idea in your own notebook.
2. Voluntary exchange. You trade something you own for something someone else owns, and both of you agree.
3. Gift and inheritance. An owner may give their property to anyone they like, during their life or after it.

Everything that does not come from one of these three, theft, fraud, extortion, conquest, is illegitimate. That includes, libertarians argue, much of what states acquire.

Locke and the mixing of labor

The classic statement comes from John Locke’s Second Treatise of Government (1689). Because you own yourself and your labor, when you “mix your labor” with an unowned thing, you make it yours. Locke added a condition, later called the Lockean proviso: you may appropriate only as long as “enough and as good” is left for others.

Murray Rothbard and most modern libertarians drop the proviso. They argue that the first user does not take anything from latecomers: before the field was cleared, it produced nothing for anyone. By putting it to use, the homesteader creates value that can later be traded, rented or sold to others.

Property and prosperity

Secure property is not only fair; it is the foundation of wealth.

• Investment needs security. Nobody plants an orchard that will bear fruit in ten years if someone else may take the trees in five. Where property is uncertain, people consume today rather than build for tomorrow.
• Prices need owners. Market prices arise when owners trade. Without private ownership of factories, land and machines, there are no prices for them, and without prices nobody can calculate which use is efficient. This was Ludwig von Mises’s argument against socialism; see Austrian economics.
• Dead capital. The Peruvian economist Hernando de Soto showed in The Mystery of Capital (2000) that the poor in developing countries hold huge amounts of land and housing, but without clear legal title they cannot sell it, mortgage it or use it as collateral. Their wealth is “dead capital”.

The tragedy of the commons

When something belongs to everyone, nobody has a reason to look after it. Garrett Hardin described this in 1968 as the tragedy of the commons: on a pasture open to all, each herder adds one more cow, because he gets the full benefit and shares the cost of overgrazing with everyone. The pasture is ruined.

The fish in the open ocean, the air over cities and the forests of many developing countries all suffer from this problem. Libertarians argue that the solution is clearer ownership, not more political control.

Elinor Ostrom, who won the Nobel Prize in economics in 2009, added an important nuance in Governing the Commons (1990). She showed that local communities, from Swiss alpine villages to Spanish irrigation systems, often manage shared resources well for centuries through their own rules, without a central state and without splitting everything into private plots. The lesson is the same: voluntary local rules beat top-down control.

Property and the state

States claim the right to override property whenever they see fit. Some of the ways are obvious, others are not.

• Taxation takes part of what you earn or own every year. See is taxation theft?
• Inflation dilutes the value of the money you save. See money and inflation.
• Eminent domain (expropriation) forces you to sell your land for a road, a pipeline or sometimes a private developer.
• Zoning and building rules decide what you may build on land you own.
• Civil asset forfeiture, in some countries, lets police seize property suspected of a link to crime, without convicting anyone.

Each of these may come with good intentions. But each means that the final decision about your property lies with someone else.

Hard questions

What about land stolen in the past?

Much of the world’s land was taken by conquest at some point. Rothbard’s answer in The Ethics of Liberty (1982) is that where a specific victim or heir can be identified, the property should be returned to them. Where none can, the current peaceful possessor is the best owner available. This is roughly how restitution after communism worked in Czechoslovakia from 1990: property confiscated after 1948 went back to identifiable original owners or their heirs.

Is there property in ideas?

Libertarians are divided on intellectual property. Some see patents and copyright as the natural fruit of creative labor. Others, such as Stephan Kinsella in Against Intellectual Property (2008), argue that ideas are not scarce: if you copy my song, I still have it. In their view, patents and copyright are state-granted monopolies that restrict what people may do with their own paper, computers and factories. They point to fashion, recipes, open-source software and stand-up comedy as fields that thrive with little formal protection.

Doesn’t property create inequality?

It allows differences, yes. But the alternative is not equality: it is that the people who control the state decide who gets what. In planned economies the gap between party officials and ordinary workers was enormous, it just was not measured in money. Secure property lets the poor keep and build on what they earn, which is how most families have escaped poverty.

Where to go next

• Property extends self-ownership and the non-aggression principle to things.
• Defending it without a state: private law and defense.
• Shared resources and infrastructure: public goods without a state.