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The Ludwig von Mises Institute

Tu Ne Cede Malis

Advancing the scholarship of liberty in the tradition of the Austrian School for 30 years

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Chapter 1

1 The Nature of Ownership

Regarded as a sociological category ownership appears as the power to use economic goods. An owner is he who disposes of an economic good.

Thus the sociological and juristic concepts of ownership are different. This, of course, is natural, and one can only be surprised that the fact is still sometimes overlooked. From the sociological and economic point of view, ownership is the having of the goods which the economic aims of men require.[1] This having may be called the natural or original ownership, as it is purely a physical relationship of man to the goods, independent of social relations between men or of a legal order. The significance of the legal concept of property lies just in this—that it differentiates between the physical has and the legal should have. The Law recognizes owners and possessors who lack this natural having, owners who do not have, but ought to have. In the eyes of the Law 'he from whom has been stolen' remains owner, while the thief can never acquire ownership. Economically, however, the natural having alone is relevant, and the economic significance of the legal should have lies only in the support it lends to the acquisition, the maintenance, and the regaining of the natural having.

To the Law ownership is a uniform institution. It makes no difference whether goods of the first order or goods of higher order form its subject, or whether it deals with durable consumption goods or non-durable consumption goods. The formalism of the Law, divorced as it is from any economic basis, is clearly expressed in this fact. Of course, the Law cannot isolate itself completely from economic differences which may be relevant. The peculiarity of land as a means of production is, partly, what gives the ownership of real property its special position in the Law. Such economic differences are expressed, more clearly than in the law of property itself, in relationships which are sociologically equivalent to ownership but juristically allied to it only, e.g., in servitudes and, especially, in usufruct. But on the whole, in Law formal equality covers up material differences.

Considered economically, ownership is by no means uniform. Ownership in consumption goods and ownership in production goods differ in many ways, and in both cases, again, we must distinguish between durable goods and goods that are used up.

Goods of the first order, the consumption goods, serve the immediate satisfaction of wants. In so far as they are goods that are used up, goods, that is, which in their nature can be used but once, and which lose their quality as goods when they are used, the significance of ownership lies practically in the possibility of consuming them. The owner may also allow his goods to spoil unenjoyed or even permit them to be destroyed intentionally, or he may give them in exchange or give them away. In every case he disposes of their use, which cannot be divided.

The position is a little different with goods of lasting use, those consumption goods that can be used more than once. They may serve several people successively. Here, again, those are to be regarded as owners in the economic sense who are able to employ for their own purposes the uses afforded by the goods. In this sense, the owner of a room is he who inhabits it at the time in question; the owners of the Matterhorn, as far as it is part of a natural park, are those who set foot on it to enjoy the landscape; the owners of a picture are those who enjoy looking at it.[2] The having of the uses which these goods afford is divisible, so that the natural ownership of them is divisible also.

Production goods serve enjoyment only indirectly. They are employed in the production of consumption goods. Consumption goods emerge finally from the successful combination of production goods and labour. It is the ability to serve thus indirectly for the satisfaction of wants which qualifies a thing as a production good. To dispose of production goods is to have them naturally. The having of production goods is of economic significance only because and in so far as it leads finally to a having of consumption goods.

Goods to be used up, which are ripe for consumption, can be had but once—by the person who consumes them. Goods of lasting use, which are ripe for consumption, may be had, in temporal succession, by a number of people; but simultaneous use will disturb the enjoyment of others, even though this enjoyment is not quite excluded by the nature of the commodity. Several people may simultaneously look at a picture, even though the proximity of others, who perhaps keep him from the most favorable viewpoint, may disturb the enjoyment of any individual in the group; but a coat cannot be worn simultaneously by two people. In the case of consumption goods the having which leads to the satisfaction of wants by the goods cannot be further divided than can the uses which arise from the goods. This means that with goods to be used up, natural ownership by one individual completely excludes ownership by all others, while with durable goods ownership is exclusive at least at a given point of time and even in regard to the smallest use arising from it. For consumption goods, any economically significant relationship other than that of the natural having by individuals is unthinkable. As goods to be used up absolutely and as durable goods, at least to the extent of the smallest use arising from them, they can be in the natural ownership of one person only. Ownership here is also private ownership, in the sense that it deprives others of the advantages which depend upon the right of disposing of the goods.

For this reason, also, it would be quite absurd to think of removing or even of reforming ownership in consumption goods. It is impossible in any way to alter the fact that an apple which is enjoyed is used up and that a coat is worn out in the wearing. In the natural sense consumption goods cannot be the joint property of several or the common property of all. In the case of consumption goods, that which one usually calls joint property has to be shared before consumption. The joint ownership ceases at the moment a commodity is used up or employed. The having of the consumer must be exclusive. Joint property can never be more than a basis for the appropriation of goods out of a common stock. Each individual partner is owner of that part of the total stock which he can use for himself. Whether he is already owner legally, or owner only through the division of the stock, or whether he becomes legal owner at all, and whether or not a formal division of the stock precedes consumption—none of these questions is economically material. The fact is that even without division he is owner of his lot.

Joint property cannot abolish ownership in consumption goods. It can only distribute ownership in a way which would not otherwise have existed. Joint property restricts itself, like all other reforms which stop short at consumption goods, to effecting a different distribution of the existing stock of consumption goods. When this stock is exhausted its work is done. It cannot refill the empty storehouses. Only those who direct the disposal of production goods and labour can do this. If they are not satisfied with what they are offered, the flow of goods which is to replenish stocks ceases. Therefore, any attempt to alter the distribution of consumption goods must in the last resort depend on the power to dispose of the means of production.

The having of production goods, contrary to that of consumption goods, can be divided in the natural sense. Under conditions of isolated production the conditions of sharing the having of production goods are the same as the conditions of sharing consumption goods. Where there is no division of labour the having of goods can only be shared if it is possible to share the services rendered by them. The having of non-durable production goods cannot be shared. The having of durable production goods can be shared according to the divisibility of the services they provide. Only one person can have a given quantity of grain, but several may have a hammer successively; a river may drive more than one water wheel. So far, there is no peculiarity about the having of production goods. But in the case of production with division of labour there is a two-fold having of such goods. Here in fact the having is always two-fold: there is a physical having (direct), and a social having (indirect). The physical having is his who holds the commodity physically and uses it productively; the social having belongs to him who, unable to dispose physically or legally of the commodity, may yet dispose indirectly of the effects of its use, i.e. he who can barter or buy its products or the services which it provides. In this sense natural ownership in a society which divides labour is shared between the producer and those for whose wants he produces. The farmer who lives self-sufficiently outside exchange society can call his fields, his plough, his draught animals his own, in the sense that they serve only him. But the farmer whose enterprise is concerned with trade, who produces for and buys in the market, is owner of the means of production in quite a different sense. He does not control production as the self-supporting peasant does. He does not decide the purpose of his production; those for whom he works decide it—the consumers. They, not the producer, determine the goal of economic activity. The producer only directs production towards the goal set by the consumers.

But further owners of the means of production are unable in these conditions to place their physical having directly into the service of production. Since all production consists in combining the various means of production, some of the owners of such means must convey their natural ownership to others, so that the latter may put into operation the combinations of which production consists. Owners of capital, land, and labour place these factors at the disposal of the entrepreneur, who takes over the immediate direction of production. The entrepreneurs, again, conduct production according to the direction set by the consumers, who are no other than the owners of the means of production: owners of capital, land, and labour. Of the product, however, each factor receives the share to which he is economically entitled, according to the value of his productive contribution in the yield.

In essence, therefore, natural ownership of production goods is quite different from natural ownership of consumption goods. To have production goods in the economic sense, i.e. to make them serve one's own economic purposes, it is not necessary to have them physically in the way that one must have consumption goods if one is to use them up or to use them lastingly. To drink coffee I do not need to own a coffee plantation in Brazil, an ocean steamer, and a coffee roasting plant, though all these means of production must be used to bring a cup of coffee to my table. Sufficient that others own these means of production and employ them for me. In the society which divides labour no one is exclusive owner of the means of production, either of the material things or of the personal element, capacity to work. All means of production render services to everyone who buys or sells on the market. Hence if we are disinclined here to speak of ownership as shared between consumers and owners of the means of production, we should have to regard consumers as the true owners in the natural sense and describe those who are considered as the owners in the legal sense as administrators of other people's property.[3] This, however, would take us too far from the accepted meaning of the words. To avoid misinterpretation it is desirable to manage as far as possible without new words and never to employ, in an entirely different sense, words habitually accepted as conveying a particular idea. Therefore, renouncing any particular terminology, let us only stress once more that the essence of the ownership of the means of production in a society which divides labour differs from that found where the division of labour does not take place; and that it differs essentially from the ownership of consumption goods in any economic order. To avoid any misunderstanding we will henceforth use the words, 'ownership of the means of production' in the generally accepted sense, i.e. to signify the immediate power of disposal.

2 Violence and Contract

The physical having of economic goods, which economically considered constitutes the essence of natural ownership, can only be conceived as having originated through Occupation. Since ownership is not a fact independent of the will and action of man, it is impossible to see how it could have begun except with the appropriation of ownerless goods. Once begun ownership continues, as long as its object does not vanish, until either it is given up voluntarily or the object passes from the physical having of the owner against his will. The first happens when the owner voluntarily gives up his property; the latter when he does it involuntarily—e.g. when cattle stray into the wilds—or when some other person forcibly takes the property from him.

All ownership derives from occupation and violence. When we consider the natural components of goods, apart from the labour components they contain, and when we follow the legal title back, we must necessarily arrive at a point where this title originated in the appropriation of goods accessible to all. Before that we may encounter a forcible expropriation from a predecessor whose ownership we can in its turn trace to earlier appropriation or robbery. That all rights derive from violence, all ownership from appropriation or robbery, we may freely admit to those who oppose ownership on considerations of natural law. But this offers not the slightest proof that the abolition of ownership is necessary, advisable, or morally justified.

Natural ownership need not count upon recognition by the owners' fellow men. It is tolerated, in fact, only as long as there is no power to upset it and it does not survive the moment when a stronger man seizes it for himself. Created by arbitrary force it must always fear a more powerful force. This the doctrine of natural law has called the war of all against all. The war ends when the actual relation is recognized as one worthy to be maintained. Out of violence emerges law.

The doctrine of natural law has erred in regarding this great change, which lifts man from the state of brutes into human society, as a conscious process; as an action, that is, in which man is completely aware of his motives, of his aims and how to pursue them. Thus was supposed to have been concluded the social contract by which the State and the community, the legal order, came into existence. Rationalism could find no other possible explanation after it had disposed of the old belief which traced social institutions back to divine sources or at least to the enlightenment which came to man through divine inspiration.[4] Because it led to present conditions, people regarded the development of social life as absolutely purposeful and rational; how then could this development have come about, except through conscious choice in recognition of the fact that it was purposeful and rational? Today we have other theories with which to explain the matter. We talk of natural selection in the struggle for existence and of the inheritance of acquired characteristics, though all this, indeed, brings us no nearer to an understanding of ultimate riddles than can the theologian or the rationalist. We can 'explain' the birth and development of social institutions by saying that they were helpful in the struggle for existence, by saying that those who accepted and best developed them were better equipped against the dangers of life than those who were backward in this respect. To point out how unsatisfactory is such an explanation nowadays would be to bring owls to Athens. The time when it satisfied us and when we proposed it as a final solution of all problems of being and becoming is long since past. It takes us no further than theology or rationalism. This is the point at which the individual sciences merge, at which the great problems of philosophy begin—at which all our wisdom ends.

No great insight, indeed, is needed to show that Law and the State cannot be traced back to contracts. It is unnecessary to call upon the learned apparatus of the historical school to show that no social contract can anywhere be established in history. Realistic science was doubtless superior to the Rationalism of the seventeenth and eighteenth centuries in the knowledge that can be gained from parchments and inscriptions, but in sociological insight it lagged far behind. For however we may reproach a social philosophy of Rationalism we cannot deny that it has done imperishable work in showing us the effects of social institutions. To it we owe above all our first knowledge of the functional significance of the legal order and of the State.

Economic action demands stable conditions. The extensive and lengthy process of production is the more successful the greater the periods of time to which it is adapted. It demands continuity, and this continuity cannot be disturbed without the most serious disadvantages. This means that economic action requires peace, the exclusion of violence. Peace, says the rationalist, is the goal and purpose of all legal institutions; but we assert that peace is their result, their function.[5] Law, says the rationalist, has arisen from contracts; we say that Law is a settlement, and end to strife, an avoidance of strife. Violence and Law, War and Peace, are the two poles of social life; but its content is economic action.

All violence is aimed at the property of others. The person—life and health—is the object of attack only in so far as it hinders the acquisition of property. (Sadistic excesses, bloody deeds which are committed for the sake of cruelty and nothing else, are exceptional occurrences. To prevent them one does not require a whole legal system. Today the doctor, not the judge, is regarded as their appropriate antagonist.) Thus it is no accident that it is precisely in the defence of property that Law reveals most clearly its character of peacemaker. In the two-fold system of protection according to having, in the distinction between ownership and possession, is seen most vividly the essence of the law as peacemaker—yes, peacemaker at any price. Possession is protected even though it is, as the jurists say, no title. Not only honest but dishonest possessors, even robbers and thieves, may claim protection for their possession.[6]

Some believe that ownership as it shows itself in the distribution of property at a given time may be attacked by pointing out that it has sprung illegally from arbitrary acquisition and violent robbery. According to this view all legal rights are nothing but time-honoured illegality. So, since it conflicts with the eternal, immutable idea of justice, the existing legal order must be abolished and in its place a new one set which shall conform to that idea of justice. It should not be the task of the State "to consider only the condition of possession in which it finds its citizens, without inquiring into the legal grounds of acquisition." Rather it is "the mission of the State first to give everyone his own, first to put him into his property, and only then to protect him in it."[7] In this case one either postulates an eternally valid idea of justice which it is the duty of the State to recognize and realize; or else one finds the origin of true Law, quite in the sense of the contract theory, in the social contract, which contract can only arise through the unanimous agreement of all individuals who in it divest themselves of a part of their natural rights. At the basis of both hypotheses lies the natural law view of the "right that is born with us." We must conduct ourselves in accordance with it, says the former; by divesting ourselves of it according to the conditions of the contract the existing legal system arises, says the latter. As to the source of absolute justice, that is explained in different ways. According to one view, it was the gift of Providence to Humanity. According to another, Man created it with his Reason. But both agree that Man's ability to distinguish between justice and injustice is precisely what marks him from the animal; that this is his "moral nature."

Today we can no longer accept these views, for the assumptions with which we approach the problem have changed. To us the idea of a human nature which differs fundamentally from the nature of all other living creatures seems strange indeed; we no longer think of man as a being who has harboured an idea of justice from the beginning. But if, perhaps, we offer no answer to the question how Law arose, we must still make it clear that it could not have arisen legally. Law cannot have begot itself of itself. Its origin lies beyond the legal sphere. In complaining that Law is nothing more or less than legalized injustice, one fails to perceive that it could only be otherwise if it had existed from the very beginning. If it is supposed to have arisen once, then that which at that moment became Law could not have been Law before. To demand that Law should have arisen legally is to demand the impossible. Whoever does so applies to something standing outside the legal order a concept valid only within the order.

We who only see the effect of Law—which is to make peace—must realize that it could not have originated except through a recognition of the existing state of affairs, however that has arisen. Attempts to do otherwise would have renewed and perpetuated the struggle. Peace can come about only when we secure a momentary state of affairs from violent disturbance and make every future change depend upon the consent of the person involved. This is the real significance of the protection of existing rights, which constitutes the kernel of all Law.

Law did not leap into life as something perfect and complete. For thousands of years it has grown and it is still growing. The age of its maturity—the age of impregnable peace—may never arrive. In vain have the systematicians of Law sought dogmatically to maintain the division between private and public Law which doctrine has handed down to us and which in practice they think it cannot do without. The failure of these attempts—which indeed has led many to abandon the distinction—must not surprise us. The division is not, as a matter of fact, dogmatic; the system of Law is uniform and cannot comprehend it. The division is historical, the result of the gradual evolution and accomplishment of the idea of Law. The idea of Law is realized at first in the sphere in which the maintenance of peace is most urgently needed to assure economic continuity—that is, in the relations between individuals. Only for the further development of the civilization which rises on this foundation does the maintenance of peace in a more advanced sphere become essential. This purpose is served by Public Law. It does not formally differ from Private Law. But it is felt to be something different. This is because only later does it attain the development vouchsafed earlier to Private Law. In Public Law the protection of existing rights is not yet as strongly developed, as it is in Private Law.[8] Outwardly the immaturity of Public Law can most easily be recognized perhaps in the fact that it has lagged behind Private Law in systematization. International Law is still more backward. Intercourse between nations still recognizes arbitrary violence as a solution permissible under certain conditions whereas, on the remaining ground regulated by Public Law, arbitrary violence in the form of revolution stands, even though not effectively suppressed, outside the Law. In the domain of Private Law this violence is wholly illegal except as an act of defence, when it is permitted under exceptional circumstances as a gesture of legal protection.

The fact that what became Law was formerly unjust or, more precisely expressed, legally indifferent, is not a defect of the legal order. Whoever tries juristically or morally to justify the legal order may feel it to be such. But to establish this fact in no way proves that it is necessary or useful to abolish or alter the system of ownership. To endeavour to demonstrate from this fact that the demands for the abolition of ownership were legal would be absurd.

3 The Theory of Violence and the Theory of Contract

It is only slowly and with difficulty that the idea of Law triumphs. Only slowly and with difficulty does it rebut the principle of violence. Again and again there are reactions; again and again the history of Law has to start once more from the beginning. Of the ancient Germans Tacitus relates: "Pigrum quin immo et iners videtur sudore adquirere quod possis sanguine parare." (It seems feckless, nay more, even slothful, to acquire something by toil and sweat which you could grab by the shedding of blood.)[9] It is a far cry from this view to the views that dominate modern economic life.

This contrast of view transcends the problems of ownership, and embraces our whole attitude to life. It is the contrast between a feudal and a bourgeois way of thought. The first expresses itself in romantic poetry, whose beauty delights us, though its view of life can carry us away only in passing moments and while the impression of the poetry is fresh.[10] The second is developed in the liberal social philosophy into a great system, in the construction of which the finest minds of all ages have collaborated. Its grandeur is reflected in classical literature. In Liberalism humanity becomes conscious of the powers which guide its development. The darkness which lay over the paths of history recedes. Man begins to understand social life and allows it to develop consciously.

The feudal view did not achieve a similarly closed systematization. It was impossible to think out, to its logical conclusion, the theory of violence. Try to realize completely the principle of violence, even only in thought, and its anti-social character is unmasked. It leads to chaos, to the war of all against all. No sophistry can evade that. All anti-liberal social theories must necessarily remain fragments or arrive at the most absurd conclusions. When they accuse Liberalism of considering only what is earthly, of neglecting, for the petty struggles of daily life, to care for higher things, they are merely picking the lock of an open door. For Liberalism has never pretended to be more than a philosophy of earthly life. What it teaches is concerned only with earthly action and desistance from action. It has never claimed to exhaust the Last or Greatest Secret of Man. The anti-liberal teachings promise everything. They promise happiness and spiritual peace, as if man could be thus blessed from without. Only one thing is certain, that under their ideal social system the supply of commodities would diminish very considerably. As to the value of what is offered in compensation opinions are at least divided.[11]

The last resort of the critics of the liberal ideal of society is to attempt to destroy it with the weapons it itself provides. They seek to prove that it serves and wants to serve only the interests of single classes; that the peace, for which it seeks, favours only a restricted circle and is harmful to all others. Even the social order, achieved in the constitutional modern state, is based on violence. The free contracts on which it pretends to rest are really, they say, only the conditions of a peace dictated by the victors to the vanquished, the terms being valid as long as the power from which they sprang continues, and no longer. All ownership is founded on violence and maintained by violence. The free workers of the liberal society are nothing but the unfree of feudal times. The entrepreneur exploits them as a feudal lord exploited his serfs, as a planter exploited his slaves. That such and similar objections can be made and believed will show how far the understanding of liberal theories has decayed. But these objections in no way atone for the absence of a systematic theory for the movement against Liberalism.

The liberal conception of social life has created the economic system based on the division of labour. The most obvious expression of the exchange economy is the urban settlement, which is only possible in such an economy. In the towns the liberal doctrine has been developed into a dosed system and it is here that it has found most supporters. But the more and the quicker wealth grew and the more numerous therefore were the immigrants from the country into the towns, the stronger became the attacks which Liberalism suffered from the principle of violence. Immigrants soon find their place in urban life, they soon adopt, externally, town manners and opinions, but for a long time they remain foreign to civic thought. One cannot make a social philosophy one's own as easily as a new costume. It must be earned—earned with the effort of thought. Thus we find, again and again in history, that epochs of strongly progressive growth of the liberal world of thought, when wealth increases with the development of the division of labour, alternate with epochs in which the principle of violence tries to gain supremacy—in which wealth decreases because the division of labour decays. The growth of the towns and of the town life was too rapid. It was more extensive than intensive. The new inhabitants of the towns had become citizens superficially, but not in ways of thought. And so with their ascendancy civic sentiment declined. On this rock all cultural epochs filled with the bourgeois spirit of Liberalism have gone to ruin; on this rock also our own bourgeois culture, the most wonderful in history, appears to be going to ruin. More menacing than barbarians storming the walls from without are the seeming citizens within—those who are citizens in gesture, but not in thought.

Recent generations have witnessed a mighty revival of the principle of violence. Modern Imperialism, whose outcome was the World War with all its appalling consequences, develops the old ideas of the defenders of the principle of violence under a new mask. But of course even Imperialism has not been able to set in opposition to liberal theory a complete system of its own. That the theory according to which struggle is the motive power of the growth of society should in any way lead to a theory of co-operation is out of the question—yet every social theory must be a theory of co-operation. The theory of modern Imperialism is characterized by the use of certain scientific expressions such as the doctrine of the struggle for existence and the concept of the race. With these it was possible to coin a multitude of slogans, which have proved themselves effective for propaganda but for nothing else. All the ideas paraded by modem Imperialism have long since been exploded by Liberalism as false doctrines.

Perhaps the strongest of the imperialist arguments is an argument which derives from a total misconception of the essence of the ownership of the means of production in a society dividing labour. It regards as one of its most important tasks the provision of the nation with its own coal mines, own sources of raw material, own ships, own ports. It is clear that such an argument proceeds from the view that natural ownership in these means of production is undivided, and that only those benefit from them who have them physically. It does not realize that this view leads logically to the socialist doctrine with regard to the character of ownership in the means of production. For if it is wrong that Germans do not possess their own German cotton plantations, why should it be right that every single German does not possess his coal mine, his spinning mill? Can a German call a Lorraine iron ore mine his any more when a German citizen possesses it than when a French citizen possesses it?

So far the imperialist agrees with the socialist in criticism of bourgeois ownership. But the socialist has tried to devise a closed system of a future social order and this the imperialist could not do.

4 Collective Ownership of the Means of Production

The earliest attempts to reform ownership and property can be accurately described as attempts to achieve the greatest possible equality in the distribution of wealth, whether or not they claimed to be guided by considerations of social utility or social justice. All should possess a certain minimum, none more than a certain maximum. All should possess about the same amount--that was, roughly, the aim. The means to this end were always the same. Confiscation of all or part of the property was usually proposed, followed by redistribution. A world populated only by self-sufficient agriculturists, leaving room for at most a few artisans—that was the ideal society towards which one strove. But today we need not concern ourselves with all these proposals. They become impracticable in an economy dividing labour. A railway, a rolling mill, a machine factory cannot be distributed. If these ideas had been put into practice centuries or millenniums ago, we should still be at the same level of economic development as we were then—unless, of course, we had sunk back into a state hardly distinguishable from that of brutes. The earth would be able to support but a small fraction of the multitudes it nourishes today, and everyone would be much less adequately provided for than he is, less adequately even than the poorest member of an industrial state. Our whole civilization rests on the fact that men have always succeeded in beating off the attack of the re-distributors. But the idea of re-distribution enjoys great popularity still, even in industrial countries. In those countries where agriculture predominates the doctrine calls itself, not quite appropriately, Agrarian Socialism, and is the end-all and be-all of social reform movements. It was the main support of the great Russian revolution, which against their will temporarily turned the revolutionary leaders, born Marxists, into the protagonists of its ideal. It may triumph in the rest of the world and in a short time destroy the culture which the effort of millenniums has built up. For all this, let us repeat, one single word of criticism is superfluous. Opinions on the matter are not divided. It is hardly necessary to prove today that it is impossible to found on a "land and homestead communism" a social organization capable of supporting the hundreds of millions of the white race.

A new social ideal long ago supplanted the naive fanaticism for equality of the distributors, and now not distribution but common ownership is the slogan of Socialism. To abolish private property in the means of production, to make the means of production the property of the community, that is the whole aim of Socialism.

In its strongest and purest form the socialistic idea has no longer anything in common with the idea of re-distribution. It is equally remote from a nebulous conception of common ownership in the means of consumption. Its aim is to make possible for everyone an adequate existence. But it is not so artless as to believe that this can be achieved by the destruction of the social system which divides labour. True, the dislike of the market, which characterizes enthusiasts of re-distribution, survives; but Socialism seeks to abolish trade otherwise than by abolishing the division of labour and returning to the autarky of the self-contained family economy or at least to the simpler exchange organization of the self-sufficient agricultural district.

Such a socialistic idea could not have arisen before private property in the means of production had assumed the character which it possesses in the society dividing labour. The interrelation of separate productive units must first reach the point at which production for external demand is the rule, before the idea of common property in the means of production can assume a definite form. The socialist ideas could not be quite clear until the liberal social philosophy had revealed the character of social production. In this sense, but in no other, Socialism may be regarded as a consequence of the liberal philosophy.

Whatever our view of its utility or its practicability, it must be admitted that the idea of Socialism is at once grandiose and simple. Even its most determined opponents will not be able to deny it a detailed examination. We may say, in fact, that it is one of the most ambitious creations of the human spirit. The attempt to erect society on a new basis while breaking with all traditional forms of social organization, to conceive a new world plan and foresee the form which all human affairs must assume in the future—this is so magnificent, so daring, that it has rightly aroused the greatest admiration. If we wish to save the world from barbarism we have to conquer Socialism, but we cannot thrust it carelessly aside.

5 Theories of the Evolution of Property

It is an old trick of political innovators to describe that which they seek to realize as Ancient and Natural, as something which has existed from the beginning and which has been lost only through the misfortune of historical development; men, they say, must return to this state of things and revive the Golden Age. Thus natural law explained the rights which it demanded for the individual as inborn, inalienable rights bestowed on him by Nature. This was no question of innovation, but of the restoration of the "eternal rights which shine above, inextinguishable and indestructible as the stars themselves." In the same way the romantic Utopia of common ownership as an institution of remote antiquity has arisen. Almost all peoples have known this dream. In Ancient Rome it was the legend of the Golden Age of Saturn, described in glowing terms by Virgil, Tibullus, and Ovid, and praised by Seneca.[12] Those were the carefree, happy days when none had private property and all prospered in the bounty of a generous Nature.[13] Modern Socialism, of course, imagines itself beyond such simplicity and childishness, but its dreams differ little from those of the Imperial Romans.

Liberal doctrine had stressed the important part played in the evolution of civilization by private property in the means of production. Socialism might have contented itself with denying the use of maintaining the institution of ownership any longer, without denying at the same time the usefulness of this ownership in the past. Marxism indeed does this by representing the epochs of simple and of capitalistic production as necessary stages in the development of society. But on the other hand it joins with other socialist doctrines in condemning with a strong display of moral indignation all private property that has appeared in the course of history. Once upon a time there were good times when private property did not exist; good times will come again when private property will not exist.

In order that such a view might appear plausible the young science of Economic History had to provide a foundation of proof. A theory demonstrating the antiquity of the common land system was constructed. There was a time, it was said, when all land had been the common property of all members of the tribe. At first all had used it communally; only later, while the common ownership was still maintained, were the fields distributed to individual members for separate use. But there were new distributions continually, at first every year, then at longer intervals of time. Private property according to this view was a relatively young institution. How it arose was not quite clear. But one had to assume that it had crept in more or less as a habit through omission in re-distributions—that is, if one did not wish to trace it back to illegal acquisition. Thus it was seen that to give private ownership too much credit in the history of civilization was a mistake. It was argued that agriculture had developed under the rule of common ownership with periodic distribution. For a man to till and sow the fields one needs only to guarantee him the produce of his labour, and for this purpose annual possession suffices. We are told that it is false to trace the origin of ownership in land to the occupation of ownerless fields. The unoccupied land was not for a single moment ownerless. Everywhere, in early times as nowadays, man had declared that it belonged to the State or the community; consequently in early times as little as today the seizing of possession could not have taken place.[14]

From these heights of newly-won historical knowledge it was possible to look down with compassionate amusement at the teachings of liberal social philosophy. People were convinced that private property had been proved an historical-legal category only. It had not existed always, it was nothing more than a not particularly desirable outgrowth of culture, and therefore it could be abolished. Socialists of all kinds, but especially Marxists, were zealous in propagating these ideas. They have brought to the writings of their champions a popularity otherwise denied to researches in Economic History.

But more recent researches have disproved the assumption that common ownership of the agricultural land was an essential stage with all peoples, that it was the primeval form of ownership ("Ureigentum"). They have demonstrated that the Russian Mir arose in modern times under the pressure of serfdom and the head-tax, that the Hauberg co-operatives of the Siegen district are not found before the sixteenth century, that the Trier Gehöferschaften evolved in the thirteenth, perhaps only in the seventeenth and eighteenth centuries, and that the South Slav Zadruga came about through the introduction of the Byzantine system of taxation.[15] The earliest German agricultural history has still not been made sufficiently clear; here, in regard to the important questions, unanimous opinion has not been possible. The interpretation of the scanty information given by Caesar and Tacitus presents special difficulties. But in trying to understand them one must never overlook the fact that the conditions of ancient Germany as described by these two writers had this characteristic feature—good arable land was so abundant that the question of land ownership was not yet economically relevant. "Superest ager," (Arable land abounds.) that is the basic fact of German agrarian conditions at the time of Tacitus.[16]

In fact, however, it is not necessary to consider the proofs adduced by Economic History, which contradict the doctrine of the "Ureigentum," in order to see that this doctrine offers no argument against private property in the means of production. Whether or not private property was everywhere preceded by common property is irrelevant when we are forming a judgment as to its historical achievement and its function in the economic constitution of the present and the future. Even if one could demonstrate that common property was once the basis of land law for all nations and that all private property had arisen through illegal acquisition, one would still be far from proving that rational agriculture with intensive cultivation could have developed without private property. Even less permissible would it be to conclude from such premises that private property could or should be abolished.

[1]Böhm-Bawerk, Rechte und Verhältnisse vom Standpunkte der volkswirtschaftlichen Güterlehre (Innsbruck, 1881), p. 37.

[2]Fetter, The Principles of Economics, 3rd ed. (New York, 1913), p. 408.

[3]See the verses of Horace:
Si proprium est quod quis libra mercatus et aere est,
quaedam, si credis consultis, mancipat usus:
qui te pascit ager, tuus est; et vilicus Orbi
cum segetes occat tibi mox frumenta daturas,
te dominum sentit, das nummos: accipis uvam
pullos ova, cadum temeti.

(If that which one buys with formal purchase is one's own,
If usage confers title to things, as the lawyers maintain;
Then the farm which feeds you is yours; and the farmer,
when he cultivates the field which soon will give you grain, feels you are his master.
You pay your money: you get in return grapes, chickens, eggs, a jar of wine.)
[2. Epistol., 2, 158-163]The attention of economists was first drawn to this passage by Effertz (Arbeit und Boden, new ed. [Berlin, 1897], vol. 1, pp. 72, 79).

[4]Etatistic social philosophy, which carries all these institutions back to the "state," returns to the old theological explanation. In it the state assumes the position which the theologians assign to God.

[5]J.S. Mill, Principles of Political Economy, People's ed. (London, 1867), p, 124.

[6]Dernburg, Pandekten, 6th ed. (Berlin, 1900), vol. l, pt. 2, p. 12.

[7]Fichte, Der geschlossene Handelsstaat, edited by Medicus (Leipzig, 1910), p. 12.

[8]Liberalism tried to extend the protection of acquired rights by developing the subjective public rights and extending legal protection through the law courts. Etatism and socialism, on the contrary, try to restrict increasingly the sphere of private law in favor of public law.

[9]Tacitus, Germania, p. 14.

[10]A fine poetic mockery of the romantic longing, "Where thou art not, there is happiness," is to be found in the experience of Counselor Knap in Andersen's "The Galoshes of Fortune."

[11]Wiese, Der Liberalismus in Vergangenheit und Zukunft (Berlin, 1917), pp. 58 ff.

[12]Poehlmann, Geschichte der sozialen Frage und des Sozialismus in der antiken Welt, 2nd ed. (Munich, 1912), vol. 2, pp. 577 ff.

[13]"Ipsaque tellus omnia liberius nullo poscente ferebat" (Virgil, Georgica, I, 127 ff.) ["And the land itself provided everything spontaneously with a liberal hand."]

[14]Laveleye, Das Ureigentum, trans. by Bücher from French (Leipzig, 1879), pp. 514 ff.

[15]Below, Probleme der Wirtschaftsgeschichte, (Tübingen, 1920), pp. 13 ff.

[16]Germania, 26.

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