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Contra the "Labor Theory of Property"

October 23, 2007

Tags Private PropertyValue and Exchange

The Lockean (and Rothbardian) theory of initial acquisition of property involves the necessity of mixing one's labor with an object in the external environment. Once labor has been applied to a thing, it can legitimately become one's private property. The immediate question that arises is, how much labor is necessary in order to make a thing one's own? Suppose I pick up a stone thinking of throwing it an my foe; is the stone thereby mine? But isn't the stone unchanged? With what have I mixed my labor? Or suppose that I bend down and blow some air gently with my mouth over the stone without so much as touching it. Haven't I exerted myself? Can I now claim the stone as mine by natural right? In another scenario imagine that Robinson Crusoe has decided to use the island he discovered as an amusement park, e.g., by placing some dinosaurs in it. Doesn't it seem reasonable that he be able to claim the whole island as his own even before he populates it with raptors (otherwise, how can he be certain that he will not be thwarted in his endeavors for potential competitors in the meantime?)? Not according to Rothbard:

Suppose that Crusoe had landed not on a small island but on a new and virgin continent, and that, standing on the shore, he had claimed "ownership" of the entire new continent by virtue of his own prior discovery. This assertion would be sheer empty vainglory, so long as no one else came upon the continent. For the natural fact is that his true property – his actual control over material goods – would extend only so far as his actual labor brought them into production. (Ethics of Liberty, 34)

But what is true of a continent should be true of a smaller island, as well. And in yet another example, what if I want to abandon ownership of the stone by placing it back in the state of nature? Can I do that? The labor theory of property (LTP) would seem to say no. As Rothbard writes,

it would be empty and meaningless for Crusoe to trumpet that he does not "really" own some or all of what he has produced..., for in fact the use and therefore the ownership has already been his. Crusoe, in natural fact, owns his own self and the extension of his self into the material world, neither more nor less. (34)

A second problem is, how does an addition of labor to a thing make the entire result of capital good of (n-1)th order = labor + time + capital good of nth order one's own as opposed to just the results of his labor? In order to own the capital good of (n-1)th order one must also have previously come to own the capital good of nth order, for example, a good that one simply found in nature. But how does he come to own that original good? Isn't that precisely what we are trying to figure out? The LTP is of no help, for it assumes what it sets out to demonstrate. And it is beside the point that labor infused into a good is inseparable from that good. The question of justification of ownership remains. Further, say I labor on a good that belongs to someone else, and, what's more, I invest into it much more energy than its owner had put into it. What reason is there, according to the LTP, for not considering me as the rightful owner of the good?

Given these difficulties, it seems to me that the theory of ownership should be to an extent modified. It is not the labor per se that causes a thing to become owned, but rather the thing's participation in a plan of action devised by a person. If I simply decide to use an unowned object for a particular end, it immediately become my own. In other words, if there is a connection between a material thing and my immaterial designs for it, then that connection alone is sufficient to make the object mine. Thus, picking up the stone in order to defend myself causes the stone to become mine, because it is now part of a plan that I came up with to further my well-being. Blowing air over the stone does not, but not because the amount of labor exerted is too small, but because this action is meaningless and has no purpose. The use of the stone does not enter into my actions. Yes, Crusoe can claim the whole island as his, as long as he really intends to convert all of it into an amusement park. It becomes his the moment his plan forms in his mind with the natural proviso that the plan is at least at first glance realizable. Of course, if Friday also has plans for the island, it devolves to whoever first formally establishes his ownership of the island, for such a notice is essential to orderly claims of property rights in any actual society. And just as Crusoe can formally come to own the island, so he can, upon learning of the uselessness of a property to him, also formally divest himself of or abandon it. All he has to do is notify everyone of his no longer having an interest in it.

Thus, legal ownership should follow upon praxeological control. He comes to own a hitherto unowned thing who intends to use it for an end, even before he mixes any labor with it and regardless of the amount of the actual labor he imparts into it. In other words, the necessity of using labor with capital goods is due to the law that all production requires more than one input to factor in it. And it is true that working on a thing often constitutes good evidence of using it for a purpose, whereas Crusoe's harboring a plan in his head is hidden from whoever may challenge him for the claim to a property. But it must be realized that this epistemological utility of labor is irrelevant to who ought to own any given thing.

Notice that the second problem of the LTP mentioned above is also solved, for any original good can become private property once it is incorporated into a plan of human action. One is able to get something for nothing (that is, for free) by appropriating nature-given resources under the right circumstances, exactly as our intuition demands. The concept of ownership is useful here, because it is rare that the same object can be used for several different purposes by different people at the same time. But does not our theory allow Crusoe to claim ownership of an entire continent, as long as he comes up with a plan to exploit it? I believe so, yet there is no absurdity in this. It is precisely the fact that one cannot usually have such enormous ambitions that causes continents to become owned by different people one little patch of land after another. Further, consider the following situation: in the not-so-distant future a big corporation sends a ship to Mars with the hope of "terraforming" a large part of it and thereby making it habitable by human beings (rather like in the movie Total Recall). Would it not be a perfectly just thing for the company to come to own the entire land it intends to transform from hostile to human life to supportive of it? Would it not be reasonable for it to be able to charge independent colonists who wanted to move to Mars money for the land even before it is developed, despite the fact that the amount of the land in its possession is huge? Yes, I think, on both questions. The LTP, on the other hand, would not allow the land to become owned until it is actually terraformed which might cause the company to become involved into futile disputes with competitors.

Now suppose a person has "claimed" a parcel of land by putting up a fence around it, yet he does not intend to use it for anything. According to our theory of property, that person does not actually own the land. But even if his property rights are formally recognized, this is not a problem. For now anyone can buy the land from its "owner" for no more than a penny, for even a penny would be of more use to its "owner" than the land itself. Thus, again, the imparting of a final cause to a thing is crucial for any genuine ownership of it. Unless the final cause is present, the property is worthless and may even be an economic bad.

Again, this is an outline of a theory of initial appropriation, not a theory of property transfers. If I already own a thing and give to another person the right to use it for his own purposes (e.g., renting an apartment), he does not by virtue of his controlling the object come to own it and thereby deprive me from owning it. Only when all the proper rights in the bundle of rights are transferred does ownership change hands. In other words, ownership persists even if the original plan of action that caused the object to become owned is no longer viable, as long as it still figures in some plan or another.

If the arguments above are correct, then this "praxeological" theory of property is superior to the LTP and should be used instead of it.

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