Mises Daily Articles
Property: The Great Problem Solver
[Chapter 6, The Market for Liberty]
Most social problems which perplex national leaders could be solved fairly simply by an increase in the amount and type of property owned. This would entail the equally important, general recognition that ownership is and must be total, rather than merely a governmental permission to possess and/or manage property so long as certain legal rules are complied with and "rent" in the form of property taxes is paid. When a man is required to "rent" his own property from the government by paying property taxes on it, he is being forbidden to fully exercise his right of ownership. Although he owns the property, he is forced into the position of a lessee, with the government the landlord.
The proof of this is that if he fails to pay the taxes the government will take his property away from him (even though it is his property and not the government's), just as a landlord would kick out a tenant who failed to pay the rent. Similarly, if a man must comply with laws dictating the use or upkeep of his property (or any other rule except that of not using the property to initiate force or fraud against others), he is being forbidden to fully exercise his right of ownership.
Because a man must use his time — which is part of his life — to acquire, utilize, and care for property, he has a right to own and control that property fully, just as he has a right to fully own and control his life (so long as he doesn't use it to coerce any other man). Any form of property tax or regulation denies the individual's right to fully control his own property and, therefore, his own life. For this reason, taxation and regulation of property is always wrong — taxation is theft and regulation by initiated force is slavery.
In a governmentally controlled society, the unrestricted enjoyment of property ownership is not permitted, since government has the power to tax, regulate, and sometimes even confiscate (as in eminent domain) just about anything it pleases. In addition, much potential property is not permitted to be owned. In a laissez-faire society, everything which was valued and rationally claimed would be owned, and this ownership would be total.1
Property is anything which is owned. Ownership is the right to possess, use, and/or dispose of anything to which one has a moral claim. Property may be acquired by producing it, by exchange with others, as a gift, or by claiming an unowned value. The claiming of unowned values is the way in which all property originally came to be owned.
An unowned value cannot become one's property simply because one makes a verbal (or written) statement claiming it. If it could, you could say right now, "I claim the ocean bottoms of the entire earth and all the surface of the moon," and provided you were the first to make the claim, they would be yours. Obviously, this would lead to a welter of contradictory and unenforceable claims.
In addition to making a verbal claim, something must be done to establish that claim as having a basis in reality. In the case of portable items, there is no problem. Anything which can be transported by either hand or machine can simply be moved by the new owner and placed within the confines of some other piece of his property—his suitcase, car, house, or land. The newly claimed item may also be marked in some way to furnish more evidence of ownership (the owner's name, initials, or some sort of serial number or symbol is frequently used).
Non-movable items, such as a fully grown tree, a dam, or a piece of land, present a different kind of situation. All non-movable items may be considered as land, since even if the item itself is not land it cannot be separated from the land on which it stands. Since a non-movable item can't be carried away, it must be marked as the new owner's property where it stands. Because a non-movable item always occupies some land space, the land, too, must be marked.
All land is contiguous to other land (including islands, as can be seen if one considers the fact that submerged land is ownable). This means that the most important things to mark are the boundaries. This may be done by fencing, by a series of signposts at intervals, or in any other way which leaves a clearly visible evidence of possession on the land itself. Obviously, the better job of marking one does, the less likely one is to have trouble from someone with a conflicting claim.
Conflicting claims would be settled by bringing them before private arbitration agencies for binding arbitration. Since neither disputant would be able to sell the land, have much chance of renting it, or even any security of possession so long as his claim was in dispute, both parties would be impelled to bring the matter to arbitration. The free market arbitration agency, if it wanted to stay in business, would have to make as fair a decision as it possibly could. Both disputants would then be impelled to abide by the arbiter's decision, since a man who contracted to abide by the results of arbitration and then broke his contract would be announcing himself as unreliable, and no one would want to risk having any business dealings with him.
The fact that conflicting claims could arise and that they would have to be settled before impartial arbiters provides the answer to the question, "How well does a piece of property have to be marked to establish a man's claim to it?" Obviously, if the new owner wants his property to be secure, it has to be bounded (in the case of land) and marked clearly enough to establish his claim in the face of all possible conflicting claims. Suppose an eager prospector claimed a square mile of land in hilly, heavily wooded territory and marked it by erecting a six-foot tall signpost at each of the four corners. Six months later, a student who wanted the privacy of a quiet retreat came and fenced in two acres, part of which lay within the prospector's claim.
When the conflict was discovered and the matter brought to arbitration, the arbiters would very likely decide in favor of the student, even though his claim had been made later in time. It could reasonably be held that the student should not have been expected to know of the existence of the four signposts hidden in the woods and that, therefore, the prospector's "bounding" of his land had been insufficient to clearly establish his claim. Similarly, a man could land on a new planet, fence in a square mile, and then claim that, since the planet was a closed sphere, he owned all the territory outside the fence (that is, all the planet except the square mile enclosed by his fence). But he would find that no arbitration agency would decide in favor of his ridiculous claim if it were contested by a group of colonists who later landed on the other side of the planet (who could be expected to know nothing of the claim).
Different kinds of claims would have to be established by different kinds and degrees of bounding and marking, and each claim would be an individual case to be decided on its own merits. But the fact that all conflicting claims could be submitted to arbitration and that the integrity of the arbitration would be guaranteed by competition in a free market would insure the maximum justice humanly possible.
In a laissez-faire society, there would be no government to preempt the field of registering deeds. Businesses in a free market would take over this function, since it is a salable service. These companies would keep records of titles and would probably offer the additional service of title insurance (a service already offered by specialized insurance companies today).
Title insurance protects the insured against loss resulting from a defect in the title of the property he buys (as, for example, if the long-lost niece of a deceased former owner shows up and claims the property by inheritance). It would substantially reduce problems of conflicting claims, since title insurance companies would be unlikely to insure a title without first checking to make sure there was no conflict. In a free society, title insurance might also protect the insured against loss of his property due to aggression or fraud committed against him. In this case, the aggressor would be dealt with in the same manner as would any other aggressor.
There would probably be a plurality of companies competing in the field of title registration and insurance, so they would no doubt find it in their interest to maintain a computerized central listing of titles in the same way that other agencies now keep extensive files on the credit rating of consumers. In this way, they would be in the same relationship of cooperative competition as are present day insurance companies.
Because they would have competition, title insurance companies would have to be extremely careful to maintain a good business reputation. No honest person would jeopardize the value of his property by registering it with a company which had a reputation for dishonest dealing. If he made use of a shady company, other individuals and firms would have doubts about the validity of his title and would be reluctant to buy his property or to loan money on it. In a totally free market, companies would usually act honestly because it would be in their interest to do so.
An old and much respected theory holds that for a man to come into possession of a previously unowned value it is necessary for him to "mix his labor with the land" in order to make it his own.2 But this theory runs into difficulties when one attempts to explain what is meant by "mixing labor with land." Just how much labor is required, and of what sort?
If a man digs a large hole in his land and then fills it up again, can he be said to have mixed his labor with the land? Or is it necessary to effect a somewhat permanent change in the land? If so, how permanent? Would planting some tulip bulbs in a clearing do it? Perhaps long-living redwood trees would be more acceptable?
Or is it necessary to effect some improvement in the economic value of the land? If so, how much and how soon? Would planting a small garden in the middle of a 500-acre plot be sufficient, or must the whole acreage be tilled (or put to some other economic use)?
Would a man lose title to his land if he had to wait ten months for a railroad line to be built before he could improve the land? What if he had to wait ten years? And what of the naturalist who wanted to keep his land exactly as it was in its wild state in order to study its ecology?
Of course, making visible improvements in the land would certainly help to establish a man's title more firmly by offering further proofs of ownership. It is also true that very little of the potential economic value of most land could be actually realized without some improvements being made (even a scenic wilderness area must have roads or helicopter landing fields or something to make it accessible to tourists before any profits can be made from it). But mixing one's labor with the land is too ill defined a concept and too arbitrary a requirement to serve as a criterion of ownership.
It has been objected that simply having to mark the boundaries of newly claimed property would permit a few ambitious people to acquire far more property than they could use. It is difficult to understand, however, what would be so objectionable about this situation.
If the first comers were ambitious, quick and intelligent enough to acquire the property before anyone else, why should they be prevented from reaping the rewards of these virtues in order to hold the land open for someone else? And if a large chunk of land is acquired by a man who is too stupid or lazy to make a productive use of it, other men, operating within the framework of the free market, will eventually be able to bid it away from him and put it to work producing wealth. As long as the land is privately owned and the market is free, the land will come to be allocated to its most productive uses and its prices will be bid down to market level.
Intangible property may also be marked in various ways. For example, a man may claim a certain radio wave length by broadcasting his claim to ownership on that frequency (provided, of course, that no one else has beaten him to it). Ideas in the form of inventions could also be claimed by registering all details of the invention in a privately owned "data bank." Of course, the more specific an inventor was about the details of his invention, the thought processes he followed while working on it, and the ideas on which he built, the more firmly established his claim would be and the less would be the likelihood of someone else squeezing him out with a fake claim based on stolen data.
The inventor, having registered his invention to establish his ownership of the idea(s), could then buy insurance (from either the data bank firm or an independent insurance company) against the theft and unauthorized commercial use of his invention by any other person. The insurance company would guarantee to stop the unauthorized commercial use of the invention and to fully compensate the inventor for any losses so incurred. Such insurance policies could be bought to cover varying periods of time, with the longer-term policies more expensive than the shorter-term ones. Policies covering an indefinitely long time period ("from now on") probably wouldn't be economically feasible, but there might well be clauses allowing the inventor to re-insure his idea at the end of the life of his policy.
One of the most far-reaching differences in a free market society would spring from the fact that anything which had the potential for being property would be owned. In our present society, there is an enormous amount of potential property which does not, in actual fact, belong to anyone. Such unowned potential property falls into two categories: (1) things that remain unowned because the legal system does not recognize the possibility of their becoming property, and (2) "public property."
Today's legal system, having been developed in prescientific times, recognizes that a man can own a piece of land beside an ocean but does not recognize that he can just as well own a piece of land under that ocean. And yet, as companies drilling for offshore oil have proved, there is no reason why a piece of land cannot be owned and used simply because it is covered by water. In a similar manner, lake bottoms, and, in fact, the lake itself, can be owned by one or by several individuals. Rivers are also potential property, as is the air space above and around your home, and, further up, the "corridors" of air space which airliners use in flying their regular routes.
Granted, new rules would have to be figured out governing the rights of, say, the owner of a section of river in relation to owners of portions of that same river upstream and downstream from him, but if a man can own something as nonmaterial as the copyright to a song, surely he can own a river! The problem is not that such things are by their nature unownable but that the legal system, trapped in its own archaic rigidity, prohibits them from being owned. In a free society, a man who could mine a section of ocean bottom could claim and use it without having to wait for a legislature to pass a law saying that it could be owned. This would remove a tremendous barrier to progress and to the production of wealth.
The other type of unowned potential property is what is usually known as "public property." The concept of "public property" has come down from the days when the king or local feudal noble owned the land and all those under his jurisdiction were merely allowed to hold pieces of it "in fief." Gradually, as feudalism and monarchy gave way to democracy, such royal property came to be thought of as belonging to the public as a whole and as being administered for the public by the government.
Ownership necessarily involves the right of use and disposal as the owner sees fit, barring coercion against others. Since the king was an individual, he could actually exercise control over royal properties, using them and disposing of them according to his desires. But "the public" is not an individual – it is merely the aggregate of all the individuals who happen to be living in a certain area at a certain time. As such, "the public" has no mind or will or desires of its own. It cannot make decisions, and so it cannot decide how to use or dispose of a piece of property. "Public property" is, in fact, a fiction.
Nor can the government morally claim to own "public property." Government does not produce anything. Whatever it has, it has as a result of expropriation. It is no more correct to call the expropriated wealth in government's possession its property than it is to say that a thief rightfully owns the loot he has stolen. But if "public property" doesn't belong to either the public or to the government, it doesn't actually belong to anyone, and it is in the same category as any other unowned values. Among the items in this classification are streets and highways, schools, libraries, all government buildings, and the millions of acres of government-owned lands which comprise the major portion of many Western States.3
In a laissez-faire society, all property formerly "belonging" to government would come to be owned by private individuals and would be put to productive use. The economic boom this would be can be glimpsed from the following illustration: recently, several companies have sought to develop low-cost and plentiful power sources by tapping the energy of hot, underground water (the same thing that causes geysers and hot springs). There are several promising sources of this geothermal power, but most are on government land and the entrepreneurs were stopped because there are no laws permitting them to carry on such activities on "public property"!
As the laissez-faire society matured, it would eventually reach a state in which all potential property was actually owned. In the process of claiming unowned potential property and government "property," the present poor and dispossessed elements of our population would have plenty of opportunities to "homestead" on rural lands and in urban buildings formerly "owned" by various branches of government. This would give them a proprietary interest in something for the first time and teach them, as nothing else can, to respect the products of their own labor and of the labor of others – which means, to respect themselves and other men.
This situation of total property ownership would automatically solve many of the problems plaguing our present society. For instance, shiftless elements of the population, who had acquired no property and were not willing to work in order to earn enough money to rent living quarters, would be literally pushed to the geographic edge of the society. One can't sleep on park benches if the private owner of the park doesn't permit bums on his property; one can't search the back alleys for garbage if he is trespassing on alleys belonging to a corporation; one can't even be a beachcomber if all the beaches are owned. With no public property and no public dole, such undesirables would quickly "shape up or ship out."
Total property ownership would also lower crime rates in the same manner. A private corporation which owned streets would make a point of keeping its streets free of drunks, hoodlums, and any other such annoying menaces, hiring private guards to do so if necessary. It might even advertise, "Thru-Way Corporation's streets are guaranteed safe at any hour of the day or night. Women may walk alone with perfect confidence on our thoroughfares." A criminal, forbidden to use any city street because all the street corporations knew of his bad reputation, would have a hard time even getting anywhere to commit a crime.
On the other hand, the private street companies would have no interest in regulating the dress, "morals," habits, or lifestyle of the people who used their streets. For instance, they wouldn't want to drive away customers by arresting or badgering hippies, girls in see-thru blouses or topless bathing suits or any other non-aggressive deviation from the value standards of the majority. All they would ask is that each customer pay his dime-a-day and refrain from initiating force, obstructing traffic, and driving away other customers. Other than this, his life-style and moral code would be of no interest to them; they would treat him courteously and solicit his business.
Another aspect of total property ownership is that it would make immigration laws unnecessary and meaningless. If all potential property were actually owned, any "immigrant" would have to have enough money to support himself, or a marketable skill so he could go right to work, or someone who would help him out until he got started. He couldn't just walk into the free area and wander around – he'd be trespassing. Those who were skilled and ambitious would come; those who were lazy wouldn't dare to. This is much more just and effective than the present "national quota" system.
The pollution problem would also be well on its way to being solved. If I own the air space around my home, you obviously don't have the right to pour pollutants into that air space any more than you have a right to throw garbage onto my lawn. Similarly, you have no right to dump sewage into my river unless we have a contract specifying that you may rent the use of my river for such purposes (and that contract would have to include the consent of all those individuals who owned sections of the river downstream from me, too). Since pollution is already a problem in many areas, it would have to be understood that anyone buying a piece of property, by his act of buying it, consented to the average pollution level at the time of the sale but had the right to see that others kept it free of any further pollution.
Initially, this would mean that established companies could not increase the level of their pollution, nor could new companies begin polluting. But as pollution control methods and devices became common and relatively inexpensive, the established companies would seek to reduce and even to eliminate their pollution in order to keep from losing their employees to new industries operating in pollution-free areas. Pollution problems could not continue to exist in a competitive, laissez-faire, free market environment – an environment which governments destroy.
Total property ownership, contrary to the current popular belief, is the only feasible way of conserving natural resources. The conservation of resources is a subject badly befogged by misconceptions and unclear thinking. For example, it is contended that the market wastes scarce resources, thus robbing future generations of their use. But by what criterion does the critic decide which employments of resources are permissible and which are merely waste? If it is wrong to use up resources to produce some things consumers value, how can it be right to use them to produce any such things? And if natural resources must be saved for future generations, how can they ever be used at all, since each future generation still has a theoretically infinite number of future generations coming after it, for which it must save?
The only answer to the problem of scarce resources is to leave it up to free men trading in a free market. This will insure that resources are used in the most value-productive way possible and that they are used at the rate which consumers desire. Besides this, the technology stimulated by a free market continually uses natural resources to discover new natural resources.
This means more than just the discovery of new deposits of previously valuable resources, such as vast new oilfields. It also includes the discovery of how to use previously valueless resources, often to replace a scarcer resource in some area of use, thereby conserving it. An example of this is the many new uses of glass and plastic, some of which can replace steel and other metals derived from scarce resources.
There is a curious misconception that to prevent the wholesale waste of natural resources it is necessary to remove control of them from the hands of "greedy capitalists" and give it to "public-spirited government officials." The ridiculous fallacy of this position becomes obvious when one considers the nature of the control exercised by a government official.
To the extent that he has control over a natural resource (or anything else), a government official has a quasi-ownership of it. But this quasi-ownership ends with the end of his term in office. If he is to reap any advantage from it, he must make hay while his political sun shines. Therefore, government officials will tend to hurriedly squeeze every advantage from anything they control, depleting it as rapidly as possible (or as much as they can get away with).
Private owners, because they can hold their property as long as they please or sell it at any time for its market price, are usually very careful to conserve both its present and future value. Obviously, the best possible person to conserve scarce resources is the owner of those resources who has a selfish interest in protecting his investment. The worst guardian of scarce resources is a government official —he has no stake in protecting them but is likely to have a large interest in looting them.
Among the resources which would be conserved best under a system of total property ownership are wildlife and scenic recreation areas. Consumer demand for parks, campgrounds, wildlife sanctuaries, hunting grounds, natural scenery, etc., is evident from a study of recreational patterns. In a free-market society, just as much land would be set aside for these purposes as consumer demand warranted.
A system of total property ownership would be based on the moral requirement of man's life as a rational being,4 as man's survival is sub-human to the extent that the right to own property (beginning with self-ownership) is not understood and respected. (As a matter of actual fact, life itself would not be possible if there were no right to own property.) A system of total property ownership in a free society – i.e., in a society in which the right to own property is generally understood and respected – would produce a peaceful environment in which justice was the rule, not the exception (as it is today).
An environment of justice is based on the moral principle of "value for value" – that no man may justifiably expect to receive values from others without giving values in exchange (and this includes spiritual values, such as love and admiration, as well as economic values). Some people express shock and even horror at the thought of having to make some sort of payment for every value they receive. They seem to prefer, for example, to pay for their use of roads via taxation (even though this method is demonstrably more expensive) in order to be able to pretend to themselves that they are actually getting the service free.
Upon examination, such people usually prove to be suffering from a deficiency of self-esteem – lacking a sense of personal efficacy and worth, they feel a sneaky, unadmitted doubt about their ability to survive in a world where they will never be provided with the unearned. But their psychological problems do not alter the nature of reality. It still remains a fact that the only moral way for men to deal with one another is by giving value for value, and that the man who seeks the unearned is a parasite. The man of self-esteem realizes this and takes pride in his ability to pay for the values he receives.
From an examination of the areas covered in this and the preceding chapter, it is clear that a non-governmental, free-market society would, by its very nature, foster responsibility, honesty, and productivity in the individuals who lived in it. This would cause a substantial improvement in the moral tone of the culture as a whole, and a sharp drop in the crime rate. Nevertheless, since human beings are creatures with a volitional consciousness and are thus free to act irrationally if they so choose, there can be no such thing as a Utopia. A free-market society would still have to have means for the arbitration of disputes, the protection and defense of life and property, and the rectification of injustice. In the absence of government, institutions to provide these services would arise naturally out of the market.
- 1. In the case of joint ownership, each owner would have total ownership of a part of the whole, and his part would be specified in the voluntary agreement with the other owner or owners.
- 2. In this quote, "land" is used not in the common sense of real estate but in the economic sense of any nature-given original factor of production.
- 3. The land area in the State of Nevada was 88.4% "owned" by the Federal Government (U.S.A.) in June 1968, according to the Statistical Abstract of the United States of 1969.
- 4. That man is a rational being means, simply, that he is capable of rational thought and behavior; it does not mean that he will automatically think and behave rationally since, for this, he must make the choice to do so. Since man's consciousness is volitional, he is free to (1) not choose and to (2) choose not to think, as well as being free to choose to think. To survive, man must think; the choice to do so must be made by each person, individually and independently – by himself, alone. The choice to think or not can only be made by individuals; society does not have a brain to think with.