Lesson 1 of 0
In Progress


Scarcity is the origin of economics, the mismatch between the desired and available quantities of a good forces humans to carefully treat the good and try to maintain it in good shape to serve its functions, and to protect it from being taken by others. 

Scarcity, then, is also the origin of property, which Menger defines as the “only practically possible solution of the problem that is, in the nature of things, imposed upon us by the disparity between requirements for, and available quantities, of all economic goods.” Far from being an arbitrary invention, property is an inevitable consequence of humans’ need to economize, and Menger defines it as “the entire sum of goods at an economizing individual’s command for the satisfaction of his needs.” Wealth, on the other hand, is distinct from property in that it refers to “the entire sum of economic goods at an economizing individual’s command.”

We can also think of property as a way to convert labor time into future utility. By employing their labor at producing a durable good, man is forgoing present satisfaction in order to produce a good that provides continuous utility over a period of the future. Man’s most basic needs can be met more effectively by investing in durable property. Expending labor into a piece of land to make it better creates in a person an incentive to stay in the piece of land and continue to benefit from it. Owning land allows for long term investment into it, and the improvement of its utility. It allows for the improvement of individual plots of land more than if they had been left without owners, as the lack of ownership would discourage investment. 

The economic rationale for owning property is obvious and straightforward. Should the use of an economic good not consume it and render it obsolete, it can be reused again for the same purpose, and the user would naturally seek to maintain its ownership until they need it again. The hunter who builds a spear to successfully hunt a rabbit will instinctively understand that the spear can be reused for hunting another rabbit, and will choose to keep possession of it. Animal also have the instinct to take property in objects, but only to a very limited extent, particularly having to do with nests and territory. Humans’ superior intellect allows us to develop this in a much more sophisticated and complex manner, owning things for years and decades, and even centuries, through generations of the same family.

By taking property in valuable objects, humans can reduce the cost and time required to perform future tasks.  The owner of durable property goods is capable of arriving at her desired end with a smaller exertion of effort and cost than someone who does not own the same property. Investing labor in the construction of a durable house for the long term is a more effective way of obtaining shelter than finding a new makeshift arrangement every day. Domesticating and husbanding animals can be a more reliable way of obtaining food than trying to hunt every day. Growing your own trees and crops can be more reliable and productive than needing to forage for plants every day. These are all methods by which humans economize to improve their chances of survival, and to increase the value of their time; in other words, to increase the amount and value of time they have on earth. 

Property is a universal human phenomenon. We have no record of societies that do not have some notion of property. Even in the most primitive societies, humans take property in value objects, and  trade them with one another. All modern attempts at abolishing property have failed at eliminating it. They have instead either destroyed property or redistributed it. 

[Some anthropology on the emergence of property and its universality]

The universal existence and survival of the institution of private property and various customs, norms, and traditions to support its legitimacy strongly suggests it is beneficial to human society. And when understood as a solution to the problem of scarcity of human time, its enormous success and popularity are clear. In land, as in animals, houses, and many other goods, the institution of property rights is a solution to the problem of scarcity that is a universal condition of human existence.

The development of an understanding of property rights, as an institution in human society, is how property survives in the context of human society. Property rights can be understood as the social scaling mechanism that allows people to hold property in close proximity to others who might want to hold it. 

Types of property:

Consumer good?

Durable consumer good

Capital good

Begin with the individual rationale for how property must develop. Then property rights as the social scaling mechanism.

What is property?

Yiannopolous: “Property may be defined as an exclusive right to control an economic good…; it is the name of a concept that refers to the rights and obligations, privileges and restrictions that govern the relations of man with respect to things of value. “

Property comes from scarcity. It is the scarcity of a resource that urges individuals to declare property rights over it.

Scarcity necessarily means property or conflict.

“There is always the possibility of conflict over contestable (scarce) resources. This is in the very nature of scarce, or rivalrous, resources. By assigning an owner to each resource, the legal or property rights system establishes objective, publicly visible or discernible boundaries or borders that nonowners can avoid. “

Humans who learn to respect each other’s property end up being able to live at a much better living standard than others. They can live in peace and produce and invest.

What is the property rights system that can be applied universally and equally? What are the features of a property right system that leads to the least conflict. Same question, and same answer. Natural rights or utilitarian analysis lead us in the same direction.

Experience and history, as well as praxeological analysis shows us the same result: societal respect of property right in self and in objects.

(1) In the first place, each man has ownership over his own self, over his will and actions, and the manner in which he will exert his own labor. (2) He acquires scarce nature-given factors either by appropriating hitherto unused factors for his own use or by receiving them as a gift from someone else, who in the last analysis must have appropriated them as hitherto unused factors. 10 (3) He acquires capital goods or consumers’ goods either by mixing his own labor with nature-given factors to produce them or by receiving them as a gift from someone else.

Property in objects

“Thus, as Hoppe has argued, property title has to be assigned to one of competing claimants based on “the existence of an objective, intersubjectively ascertainable link between owner and the” resource claimed.”

One can establish ownership in unowned property: ” by doing something with things with which no one else had ever done anything before, i.e. the mixing of labor or homesteading.”

Legitimate property consists of:
1- homestead objects that were previously unowned.
2- Products derived from these objects
3- Objects obtained from rightful owners willingly, either as part of trade or gift

Ownership is different from possession. Libertarianism is not ‘might makes right’, as that is a recipe for conflict.

Prior-later distinction matters.

Self ownership

Since humans and their time are scarce, they will necessary be property. There must be someone who can command a human being and dictate what they do with their time. There are only three potential ways of organizing ownership of human bodies.

1- Self-ownership, wherein each person owns themselves completely, and has no ownership claims over others. 

2- Communal ownership, wherein all members of society jointly own all their bodies, and decide jointly what each body does.

3- Some people have ownership over themselves and others, while others have no right to ownership over themselves or others. 

The second option is not practically workable beyond the scope of a handful of people who know each other intimately, and even then, it would not be easy. Humans will find it very difficult to know all the information needed to decide what others should do with their life and time. The complexities of devising a mechanism for information communication, decision-making and execution in such a system are practically insurmountable at any large social scale.

The third option fails ethically and consequentially. What ethical basis can justify why some people should get to own themselves while others get to be owned by others? There can be no logically and ethically coherent way to justify this drastic difference in property rights assignment. Further, this difference is likely to be a recipe for plenty of conflict. The individual who does not have property right over himself will seek to gain it, and may feel justified in the use of violence against those who own him. 

Self-ownership is the only logically and ethically consistent solution to the problem of human ownership, and it is the only one likely to result in peaceful cooperation rather than violent conflict. Self-ownership means an individual has full claims over their own body and time. Once one accepts the premise of self-ownership, a coherent framework for understanding rights, justice, and non-aggression emerges. An individual’s self-ownership entitles them to decide what to do with their own body and time. The natural right of man is to decide what he does with his body and time. Aggression involves the use of violence, or the threat of violence, to control a person’s body or time. 

Any physical aggression against an individual would be a violation of their property right in their self. 

Property of your body and time mean that nobody can infringe on your body or your time without your consent. Physical aggression against a person means violation of their property right in their body.

It is difficult to argue an anti-libertarian position if one understands property rights as the only workable solution to economic scarcity, and subjectively values peace and civilization. Although economic theory does not dictate political ideology, understanding economic scarcity and subjectively valuing peace and civilization will naturally incline a person to adopting a libertarian outlook.  There are no alternatives to self-ownership that do not result in propagating conflict and engendering enmity and resentment between individuals and groups. 

Civilized peaceful people accept self-ownership for them and others. They therefore do not initiate violence. 

Individual rights, justice, and nonaggression collapse into property rights.

“Protection of and respect for property rights is thus not unique to libertarianism. What is distinctive about libertarianism is its particular property assignment rules: that is, the rules that determine who owns each contestable resource. “

“The libertarian view is that only its particular property assignment rule—self-ownership, as opposed to other-ownership (slavery)—fulfills the conflict-avoidance role of property rights. This is so for several interrelated reasons.”

Civilized man may be thus defined as he who seeks justification for the use of interpersonal violence.

Importance of Property Rights

Institutionalists keep talking about institutions as a bait and switch. Analytically, it is really property rights that made the difference in the countries they study. But in their conclusions, they simply conclude that it is “good institutions”, and in their recommendations they end up supporting taxation and regulation and all manner of statist nonsense.

It’s really hard to escape the conclusion that once security of property rights is assured for several generations, prosperity, capital accumulation, and civilization follow.

Arguably the first building block of civilization is property rights. Security of property rights is one of the things that is universally present in all peaceful and prosperous societies. The more secure property rights are, the more peaceful and productive a society is. 

Security of property right is instrumental in lowering time preference. The higher the expectation of maintaining secure ownership of property, the higher the incentive to invest in it for the future. Continuous conflict over property, and the likelihood of expropriation, on the other hand, incentivize the short-term exploitation of property.