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THUS, THERE ARE TWO types of ethically invalid land titles:[1] “feudalism,” in which there is continuing aggression by titleholders of land against peasants engaged in transforming the soil; and land-engrossing, where arbitrary claims to virgin land are used to keep first-transformers out of that land. We may call both of these aggressions “land monopoly”—not in the sense that some one person or group owns all the land in society, but in the sense that arbitrary privileges to land ownership are asserted in both cases, clashing with the libertarian rule of non-ownership of land except by actual transformers, their heirs, and their assigns.[2]

     Land monopoly is far more widespread in the modern world than most people—especially most Americans—believe. In the undeveloped world, especially in Asia, the Middle East, and Latin America, feudal landholding is a crucial social and economic problem—with or without quasi-serf impositions on the persons of the peasantry. Indeed, of the countries of the world, the United States is one of the very few virtually free from feudalism, due to a happy accident of its historical development.[3] Largely escaping feudalism itself, it is difficult for Americans to take the entire problem seriously. This is particularly true of American laissez-faire economists, who tend to confine their recommendations for the backward countries to preachments about the virtues of the free market. But these preachments naturally fall on deaf ears, because “free market” for American conservatives obviously does not encompass an end to feudalism and land monopoly and the transfer of title to these lands, without compensation, to the peasantry. And yet, since agriculture is always the overwhelmingly most important industry in the undeveloped countries, a truly free market, a truly libertarian society devoted to justice and property rights, can only be established there by ending unjust feudal claims to property. But utilitarian economists, grounded on no ethical theory of property rights, can only fall back on defending whatever status quo may happen to exist—in this case, unfortunately, the status quo of feudal suppression of justice and of any genuinely free market in land or agriculture. This ignoring of the land problem means that Americans and citizens of undeveloped countries talk in two different languages and that neither can begin to understand the other’s position.

     American conservatives, in particular, exhort the backward countries on the virtues and the importance of private foreign investment from the advanced countries, and of allowing a favorable climate for this investment, free from governmental harassment. This is all very true, but is again often unreal to the undeveloped peoples, because the conservatives persistently fail to distinguish between legitimate, free-market foreign investment, as against investment based upon monopoly concessions and vast land grants by the undeveloped states. To the extent that foreign investments are based on land monopoly and aggression against the peasantry, to that extent do foreign capitalists take on the aspects of feudal landlords, and must be dealt with in the same way.

     A moving expression of these truths was delivered in the form of a message to the American people by the prominent left-wing Mexican intellectual, Carlos Fuentes:

You have had four centuries of uninterrupted development within the capitalistic structure. We have had four centuries of underdevelopment within a feudal structure. . . . You had your own origin in the capitalistic revolution. . . . You started from zero, a virgin society, totally equal to modern times, without any feudal ballast. On the contrary, we were founded as an appendix of the falling feudal order of the Middle Ages; we inherited its obsolete structures, absorbed its vices, and converted them into institutions on the outer rim of the revolution in the modern world. . . . We come from . . .slavery to . . . latifundio [enormous expanses of land under a single landlord], denial of political, economic, or cultural rights for the masses, a customs house closed to modern ideas. . . .  You must understand that the Latin American drama stems from the persistence of those feudal structures over four centuries of misery and stagnation, while you were in the midst of the industrial revolution and were exercising a liberal democracy.[4]

     We need not search far for examples of land aggression and monopoly in the modern world; they are indeed legion. We might cite one example not so very far removed from our hypothetical king of Ruritania: “The Shah owns more than half of all arable land in Iran, land originally taken over by his father. He owns close to 10,000 villages. So far, this great reformer has sold two of his villages.”[5] A typical example of foreign investment combined with land aggression is a North American mining company in Peru, the Cerro de Pasco Corporation. Cerro de Pasco, having legitimately purchased its land from a religious convent a half century ago, began in 1959 to encroach upon and seize the lands of neighboring Indian peasants. Indians of Rancas refusing to leave their land were massacred by peasants in the pay of the company; Indians of Yerus Yacan tried to contest the company’s action in the courts, while company men burned pastures and destroyed peasant huts. When the Indians retook their land through mass non-violent action, the Peruvian government, at the behest of the Cerro de Pasco and the regional latifundia owners, sent troops to eject, assault, and even murder the unarmed Indians.[6]

     What, then, is to be our view toward investment in oil lands, one of the major forms of foreign investment in underdeveloped countries in today’s world? The major error of most analyses is to issue either a blanket approval or a blanket condemnation, for the answer depends on the justice of the property title established in each specific case. Where, for example, an oil company, foreign or domestic, lays claim to the oil field which it discovers and drills, then this is its just “homesteaded” private property, and it is unjust for the undeveloped government to tax or regulate the company. Where the government insists on claiming ownership of the land itself, and only leases the oil to the company, then (as we will see further below in discussing the role of government), the government’s claim is illegitimate and invalid, and the company, in the role of homesteader, is properly the owner and not merely the renter of the oil land.

     On the other hand, there are cases where the oil company uses the government of the undeveloped country to grant it, in advance of drilling, a monopoly concession to all the oil in a vast land area, thereby agreeing to the use of force to squeeze out all competing oil producers who might search for and drill oil in that area. In that case, as in the case above of Crusoe’s arbitrarily using force to squeeze out Friday the first oil company is illegitimately using the government to become a land-and-oil monopolist. Ethically, any new company that enters the scene to discover and drill oil is the proper owner of its “homesteaded” oil area. A fortiori, of course, our oil concessionaire who also uses the State to eject peasants from their land by force—as was done, for example, by the Creole Oil Co. in Venezuela—is a collaborator with the government in the latter’s aggression against the property rights of the peasantry.

     We are now able to see the grave fallacy in the current programs for “land reform” in the undeveloped countries. (These programs generally involve minor transfers of the least fertile land from landlords to peasants, along with full compensation to the landlords, often financed by the peasants themselves via state aid.) If the landlord’s title is just, then any land reform applied to such land is an unjust and criminal confiscation of his property; but, on the other hand, if his title is unjust, then the reform is picayune and fails to reach the heart of the question. For then the only proper solution is an immediate vacating of the title and its transfer to the peasants, with certainly no compensation to the aggressors who had wrongly seized control of the land. Thus, the land problem in the undeveloped countries can only be solved by applying the rules of justice that we have set forth; and such application requires detailed and wholesale empirical inquiry into present titles to land.

     In recent years, the doctrine has gained ground among American conservatives that feudalism, instead of being oppressive and exploitative, was in fact a bulwark of liberty. It is true that feudalism, as these conservatives point out, was not as evil a system as “Oriental despotism,” but that is roughly equivalent to saying that imprisonment is not as severe a penalty as execution. The difference between feudalism and Oriental despotism was really of degree rather than kind; arbitrary power over land and over persons on that land was, in the one case, broken up into geographical segments; in the latter case, land tended to concentrate into the hands of one imperial overlord over the land-area of the entire country, aided by his bureaucratic retinue. The systems of power and repression are similar in type; the Oriental despot is a single feudal overlord with the consequent power accruing into his hands. Each system is a variant of the other; neither is in any sense libertarian. And there is no reason to suppose that society must choose between one and the other—that these are the only alternatives.

     Historical thinking on this entire matter was shunted onto a very wrong road by the statist German historians of the late nineteenth century: by men such as Schmoller, Bücher, Ehrenberg, and Sombart.[7] These historians postulated a sharp dichotomy and inherent conflict between feudalism on the one hand and absolute monarchy, or the strong State, on the other. They postulated that capitalist development required absolute monarchy and the strong State to smash local feudal and gild-type restrictions. In upholding this dichotomy of capitalism plus the strong central State vs. feudalism, they were joined, from their own special viewpoint, by the Marxists, who made no particular distinction between “bourgeoisie” who made use of the State, and bourgeoisie who acted on the free market. Now some modern conservatives have taken this old dichotomy and turned it on its head. Feudalism and the strong central state are still considered the critical polar opposites, except that feudalism is, on this view, considered the good alternative.

     The error here is in the dichotomy itself. Actually, the strong state and feudalism were not antithetical; the former was a logical outgrowth of the latter, with the absolute monarch ruling as the super-feudal overlord. The strong state, when it developed in Western Europe, did not set about to smash feudal restrictions on trade; on the contrary, it superimposed its own central restrictions and heavy taxes on top of the feudal structure. The French Revolution, directed against the living embodiment of the strong state in Europe, was aimed at destroying both feudalism with its local restrictions, and the restrictions and high taxes imposed by the central government.[8] The true dichotomy was liberty on the one side versus the feudal lords and the absolute monarch on the other. Furthermore, the free market and capitalism flourished earliest and most strongly in those very countries where both feudalism and central government power were at their relative weakest: the Italian city-states, and seventeenth-century Holland and England.[9]

     North America’s relative escape from the blight of feudal land and land monopoly was not for lack of trying. Many of the English colonies made strong attempts to establish feudal rule, especially where the colonies were chartered companies or proprietorships, as in New York, Maryland, and the Carolinas. The attempt failed because the New World was a vast and virgin land area, and therefore the numerous receivers of monopoly and feudal land grants—many of them enormous in size—could only gain profits from them by inducing settlers to come to the New World and settle on their property. Here were not, as in the Old World, previously existing settlers on relatively crowded land who could easily be exploited. Instead, the landlords, forced to encourage settlement, and anxious for a quick return, invariably subdivided and sold their lands to the settlers. It was unfortunate, of course, that by means of arbitrary claims and governmental grants, land titles were engrossed ahead of settlement. The settlers were consequently forced to pay a price for what should have been free land. But once the land was purchased by the settler, the injustice disappeared, and the land title accrued to its proper holder: the settler. In this way, the vast supply of virgin land, along with the desire of the land grantees for quick profits, led everywhere to the happy dissolution of feudalism and land monopoly, and the establishment in North America of a truly libertarian land system. Some of the colonial proprietors tried to keep collecting quitrents from the settlers—the last vestige of feudal exactions—but the settlers widely refused to pay or to treat the land as anything but their own. In every case, the colonial proprietors gave up trying to collect their quitrents, even before their charters were confiscated by the British Crown.[10] In only one minor case did feudal land tenure persist (apart from the vital case of slavery and the large Southern plantations) in the English colonies: in the Hudson Valley counties in New York, where the large grantees persisted in not selling the lands to settlers, but in renting them out. As a result, continuing resistance and even open warfare were waged by the farmers (who were even known as “peasants”) against their feudal landlords. This resistance culminated in the “Anti-Rent” wars of the 1840s, when the quitrent exactions were finally ended by the state legislature, and the last vestige of feudalism outside the South finally disappeared.

     The important exception to this agrarian idyll, of course, was the flourishing of the slave system in the Southern states. It was only the coercion of slave labor that enabled the large plantation system in staple crops to flourish in the South. Without the ability to own and coerce the labor of others, the large plantations—and perhaps much of the tobacco and later the cotton culture—would not have pervaded the South.

     We have indicated above that there was only one possible moral solution for the slave question: immediate and unconditional abolition, with no compensation to the slavemasters. Indeed, any compensation should have been the other way—to repay the oppressed slaves for their lifetime of slavery. A vital part of such necessary compensation would have been to grant the plantation lands not to the slavemaster, who scarcely had valid title to any property, but to the slaves themselves, whose labor, on our “homesteading” principle, was mixed with the soil to develop the plantations. In short, at the very least, elementary libertarian justice required not only the immediate freeing of the slaves, but also the immediate turning over to the slaves, again without compensation to the masters, of the plantation lands on which they had worked and sweated. As it was, the victorious North made the same mistake—though “mistake” is far too charitable a word for an act that preserved the essence of an unjust and oppressive social system—as had Czar Alexander when he freed the Russian serfs in 1861: the bodies of the oppressed were freed, but the property which they had worked and eminently deserved to own, remained in the hands of their former oppressors. With the economic power thus remaining in their hands, the former lords soon found themselves virtual masters once more of what were now free tenants or farm laborers. The serfs and the slaves had tasted freedom, but had been cruelly deprived of its fruits.[11]

[1]In addition, of course, to government titles, for which see below.

[2]As I have indicated in Man, Economy, and State (Princeton, N.J.: D. Van Nostrand, 1962), chap. 10, “monopoly” is properly defined as a receipt of exclusive privilege to a property beyond the libertarian rule of property rights.

[3]This happy exception does not hold for those Mexican lands seized from their owners and redistributed by the conquering Yankees—as can be seen by the recent movement of Mexican-Americans, led by Reies Lopez Tijerina, to return to the heirs of the victims the land stolen from them by the U.S. conquerors. On the theft of land from the Mexican-Americans, see Clark S. Knowlton, “Land-Grant Problems Among the State’s Spanish-Americans,” New Mexico Business (June 1967): 1-13. Also see Clyde Eastman, Garrey Carruthers, and James A. Liefer, “Contrasting Attitudes Toward Land in New Mexico,” New Mexico Business (March 1971): 3-20. On the Tijerina movement, see Richard Gardner, Grito!: Reies Tuerina and the New Mexico Land Grant War of 1967 (New York: Harper and Row, 1971).

[4]Carlos Fuentes, “The Argument of Latin America: Words for the North Americans,” in Whither Latin America? (New York: Monthly Review Press, 1963), pp. 10–12.

[5]Michael Parrish, “Iran: The Portrait of a U.S. Ally,” The Minority of One (December 1962): 12.

[6]Sebastian Salazar Bondy, “Andes and Sierra Maestra,” in Whither Latin America? p. 116, says:

From time to time, the Lima newspapers publish stories about such and such a community’s having “invaded” properties of latifundists or miners. The informed reader knows what is happening. Disgusted with being dispossessed, lacking official justice, the Indians have decided to take through their own effort what has always belonged to them.

[7]Ironically, Sombart’s later years were marked by an attack on the notion of capitalist development. See e.g., Werner Sombart, A New Social Philosophy (Princeton, N.J.: Princeton University Press, 1937); also see Werner Sombart, Vom Menschen (Berlin, 1938).

[8]On private property and feudalism in the French Revolution, see Gottfried Dietze, In Defense of Property (Chicago: Regnery, 1963), pp. 140-41.

[9]On the neglected case of the Dutch, see Jelle C. Riemersma, “Economic Enterprise and Political Powers After the Reformation,” Economic Development and Cultural Change (July 1955): 297-308.

[10]On the American experience, see Murray N. Rothbard, Conceived in Liberty (New York: Arlington House, 1975), vol. 1.

[11]In recent years, a new wave of pro-abolitionist historians—such as Staughton Lynd, James McPherson, and Willie Lee Rose—have recognized the critical importance of the abolitionist demand for “forty acres and a mule,” for turning over the old plantations to the slaves. See James M. McPherson, The Struggle for Equality: Abolitionists and the Negro in the Civil War and Reconstruction (Princeton, N.J.: Princeton University Press, 1964); and Willie Lee Rose, Rehearsal for Reconstruction: The Port Royal Experiment (Indianapolis, Ind.: Bobbs-Merrill, 1964). Also see Claude F. Oubre, Forty Acres and a Mule: The Freedmen’s Bureau and Black Land Ownership (Baton Rouge: Louisiana State University Press, 1978).

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