Man, Economy, and State with Power and Market

As we have stated above, the origin of all property is ultimately traceable to the appropriation of an unused nature-given factor by a man and his “mixing” his labor with this natural factor to produce a capital good or a consumers’ good. For when we trace back through gifts and through exchanges, we must reach a man and an unowned natural resource. In a free society, any piece of nature that has never been used is unowned and is subject to a man’s ownership through his first use or mixing of his labor with this resource.

How will an individual’s title to the nature-given factor be determined? If Columbus lands on a new continent, is it legitimate for him to proclaim all the new continent his own, or even that sector “as far as his eye can see”? Clearly, this would not be the case in the free society that we are postulating. Columbus or Crusoe would have to use the land, to “cultivate” it in some way, before he could be asserted to own it. This “cultivation” does not have to involve tilling the soil, although that is one possible form of cultivation. If the natural resource is land, he may clear it for a house or a pasture, or care for some plots of timber, etc. If there is more land than can be used by a limited labor supply, then the unused land must simply remain unowned until a first user arrives on the scene. Any attempt to claim a new resource that someone does not use would have to be considered invasive of the property right of whoever the first user will turn out to be.

There is no requirement, however, that land continue to be used in order for it to continue to be a man’s property. Suppose that Jones uses some new land, then finds it is unprofitable, and lets it fall into disuse. Or suppose that he clears new land and therefore obtains title to it, but then finds that it is no longer useful in production and allows it to remain idle. In a free society, would he lose title? No, for once his labor is mixed with the natural resource, it remains his owned land. His labor has been irretrievably mixed with the land, and the land is therefore his or his assigns’ in perpetuity. We shall see in later chapters that the question whether or not labor has been mixed with land is irrelevant to its market price or capital value; in catallactics, the past is of no interest. In establishing the ownership of property, however, the question is important, for once the mixture takes place, the man and his heirs have appropriated the nature-given factor, and for anyone else to seize it would be an invasive act.

As Wolowski and Levasseur state:

Nature has been appropriated by him (man) for his use; she has become his own; she is his property. This property is legitimate; it constitutes a right as sacred for man as is the free exercise of his faculties. It is his because it has come entirely from himself, and is in no way anything but an emanation from his being. Before him, there was scarcely anything but matter; since him, and by him, there is interchangeable wealth. The producer has left a fragment of his own person in the thing which has thus become valuable, and may hence be regarded as a prolongation of the faculties of man acting upon external nature. As a free being he belongs to himself; now, the cause, that is to say, the productive force, is himself; the effect, that is to say, the wealth produced, is still himself. Who shall dare contest his title of ownership so clearly marked by the seal of his personality?37

Some critics, especially the Henry Georgists, assert that, while a man or his assigns may be entitled to the produce of his own labor or anything exchanged for it, he is not entitled to an original, nature-given factor, a “gift of nature.” For one man to appropriate this gift is alleged to be an invasion of a common heritage that all men deserve to use equally. This is a self-contradictory position, however. A man cannot produce anything without the co-operation of original nature-given factors, if only as standing room. In order to produce and possess any capital good or consumers’ good, therefore, he must appropriate and use an original nature-given factor. He cannot form products purely out of his labor alone; he must mix his labor with original nature-given factors. Therefore, if property in land or other nature-given factors is to be denied man, he cannot obtain property in the fruits of his labor.

Furthermore, in the question of land, it is difficult to see what better title there is than the first bringing of this land from a simple unvaluable thing into the sphere of production. For that is what the first user does. He takes a factor that was previously unowned and unused, and therefore worthless to anyone, and converts it into a tool for production of capital and consumers’ goods. While such questions as communism of property will be discussed in later parts of this book, it is difficult indeed to see why the mere fact of being born should automatically confer upon one some aliquot part of the world’s land. For the first user has mixed his labor with the land, while neither the newborn child nor his ancestors have done anything with the land at all.

The problem will be clearer if we consider the case of animals. Animals are “economic land,” because they are equivalent to physical land in being original, nature-given factors of production. Yet will anyone deny title to a cow to the man that finds and domesticates her, putting her to use? For this is precisely what occurs in the case of land. Previously valueless “wild” land, like wild animals, is taken and transformed by a man into goods useful for man. The “mixing” of labor gives equivalent title in one case as in the other.

We must remember, also, what “production” entails. When man “produces,” he does not create matter. He uses given materials and transforms and rearranges them into goods that he desires. In short, he moves matter further toward consumption. His finding of land or animals and putting them to use is also such a transformation.

Even if the value accruing to a piece of land at present is substantial, therefore, it is only “economic land” because of the innumerable past efforts of men at work on the land. When we are considering legitimacy of title, the fact that land always embodies past labor becomes extremely important.38

If animals are also “land” in the sense of given original nature factors, so are water and air. We have seen that “air” is inappropriable, a condition of human welfare rather than a scarce good that can be owned. However, this is true only of air for breathing under usual conditions. For example, if some people want their air to be changed, or “conditioned,” then they will have to pay for this service, and the “conditioned air” becomes a scarce good that is owned by its producers.

Furthermore, if we understand by “air” the medium for the transmission of such things as radio waves and television images, there is only a limited quantity of wave lengths available for radio and for television purposes. This scarce factor is appropriable and ownable by man. In a free society, ownership of these channels would accrue to individuals just like that of land or animals: the first users obtain the property. The first user, Jones, of the wave length of 1,000 kilocycles, would be the absolute owner of this length for his wave area, and it will be his right to continue using it, to abandon it, to sell it, etc. Anyone else who set up a transmitter on the owner’s wave length would be as guilty of invasion of another’s property right as a trespasser on someone else’s land or a thief of someone else’s livestock.39 ,40

The same is true of water. Water, at least in rivers and oceans, has been considered by most people as also inappropriable and unownable, although it is conceded to be ownable in the cases of (small) lakes and wells. Now it is true that the high seas, in relation to shipping lanes, are probably inappropriable, because of their abundance in relation to shipping routes.41 This is not true, however, of fishing rights in oceans. Fish are definitely not available in unlimited quantities relatively to human wants. Therefore, they are appropriable—their stock and source just as the captured fish themselves. Indeed, nations are always quarreling about “fishing rights.” In a free society, fishing rights to the appropriate areas of oceans would be owned by the first users of those areas and then usable or salable to other individuals. Ownership of areas of water that contain fish is directly analogous to private ownership of areas of land or forests that contain animals to be hunted. Some people raise the difficulty that water flows and has no fixed position, as land does. This is a completely invalid objection, however. Land “moves” too, as when soil is uprooted in dust storms. Most important, water can definitely be marked off in terms of latitudes and longitudes. These boundaries, then, would circumscribe the area owned by individuals, in the full knowledge that fish and water can move from one person’s property to another. The value of the property would be gauged according to this knowledge.42

Another argument is that appropriation of ownership by a first user would result in an uneconomic allocation of the nature-given factors. Thus, suppose that one man can fence, cultivate, or otherwise use, only five acres of a certain land, while the most economic allocation would be units of 15 acres. However, the rule of first ownership by the first user, followed in a free society, would not mean that ownership must end with this allocation. On the contrary. In this case, either the owners would pool their assets in one corporate form, or the most efficient individual owners would buy out the others, and the final size of each unit of land in production would be 15 acres.

It must be added that the theory of land ownership in a free society set forth here, i.e., first ownership by the first user, has nothing in common with another superficially similar theory of land ownership—advanced by J.K. Ingalls and his disciples in the late nineteenth century. Ingalls advocated continuing ownership only for actual occupiers and personal users of the land. This is in contrast to original ownership by the first user.

The Ingalls system would, in the first place, bring about a highly uneconomic allocation of land factors. Land sites where small “homestead” holdings are uneconomic would be forced into use in spite of this, and land would be prevented from entering other lines of use greatly demanded by consumers. Some land would be artificially and coercively withdrawn from use, since land that could not be used by owners in person would have to lie idle. Furthermore, this theory is self-contradictory, since it would not really permit ownership at all. One of the prime conditions of ownership is the right to buy, sell, and dispose of property as the owner or owners see fit. Since small holders would not have the right to sell to nonoccupying large holders, the small holders would not really be owners of the land at all. The result is that on the ownership question, the Ingalls thesis reverts, in the final analysis, to the Georgist view that Society (in the alleged person of the State) should own the land.43

• 37Léon Wolowski and Émile Levasseur, “Property,” Lalor’s Cyclopedia of Political Science, etc. (Chicago: M.B. Cary & Co., 1884), III, 392.
• 38See the vivid discussion by Edmond About, Handbook of Social Economy (London: Strahan & Co., 1872), pp. 19–30. Even urban sites embody much past labor. Cf. Herbert B. Dorau and Albert G. Hinman, Urban Land Economics (New York: Macmillan & Co., 1928), pp. 205–13.
• 39If a channel has to be a certain number of wave lengths in width in order to permit clear transmission, then the property would accrue to the first user, in terms of such width.
• 40Professor Coase has demonstrated that Federal ownership of airwaves was arrogated, in the 1920’s, not so much to alleviate a preceding “chaos,” as to forestall this very acquisition of private property rights in air waves, which the courts were in the process of establishing according to common law principles. Ronald H. Coase, “The Federal Communications Commission,” Journal of Law and Economics, October, 1959, pp. 5, 30–32.
• 41It is rapidly becoming evident that air lanes for planes are becoming scarce and, in a free society, would be owned by first users—thus obviating a great many plane crashes.
• 42Flowing water should be owned in proportion to its rate of use by the first user—i.e., by the “appropriation” rather than the “riparian” method of ownership. However, the appropriator would then have absolute control over his property, might transfer his share, etc., something which cannot be done in those areas, e.g., states in the West, where an approach to appropriation ownership now predominates. See Murray N. Rothbard, “Concerning Water,” The Freeman, March, 1956, pp. 61–64. Also see the excellent article by Professor Jerome W. Milliman, “Water Law and Private Decision-Making: A Critique,” The Journal of Law and Economics, October, 1959, pp. 41–63; Milliman, “Commonality, the Price System, and Use of Water Supplies,” Southern Economic Journal, April, 1956, pp. 426–37.
• 43On Ingalls and his doctrines, see James J. Martin, Men Against the State (DeKalb, Ill.: Adrian Allen Associates, 1953), pp. 142–52, 220 ff., 246 ff. Also cf. Benjamin R. Tucker, Instead of a Book (2nd ed.; New York: B.R. Tucker, 1897), pp. 299–357, for the views of Ingalls’ most able disciple. Despite the underlying similarity and their many economic errors, the Ingalls-Tucker group launched some interesting and effective critiques of the Georgist position. These take on value in the light of the excessive kindness often accorded to Georgist doctrines by economists.