Justice and Property Rights: Rothbard on Scarcity, Property, Contracts…

From The Libertarian Standard, Nov. 19, 2010. Any updates to this post will be made here.

Justice and Property Rights: Rothbard on Scarcity, Property, Contracts…

Rothbard has so many amazing works. Some of my favorite of his articles include “The Mantle of Science,” “Law, Property Rights, and Air Pollution” (pdf), “Beyond Is and Ought,” “Toward a Reconstruction of Utility and Welfare Economics,” “Left and Right: Prospects for Liberty,” and various chapters in The Ethics of Liberty such as “‘Human Rights’ As Property Rights,” “Knowledge, True and False,” and “Property Rights and the Theory of Contracts.” I think my favorite collection of his works is The Logic of Action One and Two–just chock full of classic, amazing pieces [now online as Economic Controversies]. And yet another favorite is The Free Market Reader–one of the best introductions to free market thinking; see Rothbard’s opening chapter, “Ten Great Economic Myths” (also ch. 2 in another great collection, Making Economic Sense).

Case in point is his stunning, amazing article in The Logic of Action One, “Justice and Property Rights” [and, again, this is also in Economic Controversies]. This piece was published in two forms in 1974: first, in Egalitarianism as a Revolt Against Nature and Other Essays, and is available online here. The second version was also published in 1974, in Property in a Humane Economy, Samuel L. Blumenfeld, ed. (online here). Oddly, The Logic of Action One, at least the version online here, contains the original version of “Justice and Property Rights” from Rothbard’s Egalitarianism book; while Economic Controversies, which is otherwise identical in content to The Logic of Action, contains the Blumenfeld version that contains the extra paragraph.

Now, The Logic of Action is not online and not easy to find, but this article in my copy of that book is heavily underlined. But luckily the Blumenfeld book is online at Mises.org. The two pieces seem identical but the latter version appends an important concluding paragraph that is not present in the first one:

It might be charged that our theory of justice in property titles is deficient because in the real world most landed (and even other) property has a past history so tangled that it becomes impossible to identify who or what has committed coercion and therefore who the current just owner may be. But the point of the “homestead principle” is that if we don’t know what crimes have been committed in acquiring the property in the past, or if we don’t know the victims or their heirs, then the current owner becomes the legitimate and just owner on homestead grounds. In short, if Jones owns a piece of land at the present time, and we don’t know what crimes were committed to arrive at the current title, then Jones, as the current owner, becomes as fully legitimate a property owner of this land as he does over his own person. Overthrow of existing property title only becomes legitimate if the victims or their heirs can present an authenticated, demonstrable, and specific claim to the property. Failing such conditions, existing landowners possess a fully moral right to their property.

This part was no doubt added by Rothbard to combat the arguments of some, such as some left-libertarians, who want to argue that existing property titles are illegitimate because of their non-immaculate origins and, presumably, ought to be wrested from current nominal owners, especially the wealthy, and I suppose redistributed to the proles.

[Update: See Rothbard’s “Confiscation and the Homestead Principle,” from Libertarian Forum, vol. 1.6, June 15, 1969, which may be what Kevin Carson has in mind here:

I’m quite friendly to George, and think the lines between individualism and Georgism are a lot less harsh than (say) Tucker would have believed. But I believe a great deal of rent could be eliminated simply by removing subsidies to economic centralization and positive externalties created by taxpayers–not to mention by removing state enforcement of title to vacant and unimproved land. If as much urban infrastructure as possible were funded by user fees, and cities broken up into lots of mixed-use neighborhoods in which residential areas had their own miniature “downtown” cores, differential rent would be far less significant. I think a majority of George’s aims could be achieved by Tucker’s means, or even by a throughgoing application of Rothbard’s means.]

This piece is just so full of great insights. Hoppe has noted previously that there are arguments in Ethics of Liberty that basically anticipated Hoppe’s “argumentation ethics” defense of libertarian rights (see my post Hoppe and Intellectual Property: On Standing on the Shoulders of Giants). This piece is also full of proto-argumentation ethics insights, to-wit:

we have two mutually exclusive claimants to the ownership of the hoop. If the economist agrees to endorse only Z’s sale of the hoop, then he is implicitly agreeing that Z has the just, and Y the unjust, claim to the hoop. And even if he continues to endorse the sale by Y, then he is implicitly maintaining another theory of property titles: namely, that theft is justified. Whichever way he decides, the economist cannot escape a judgment, a theory of justice in the ownership of property.

…

Let us consider the first principle: the right to self-ownership. This principle asserts the absolute right of each man, by virtue of his (or her) being a human being, to “own” his own body; that is, to control that body free of coercive interference. Since the nature of man is such that each individual must use his mind to learn about himself and the world, to select values, and to choose ends and means in order to survive and flourish, the right to self-ownership gives each man the right to perform these vital activities without being hampered and restricted by coercive molestation.

Consider, then, the alternatives — the consequences of denying each man the right to own his own person. There are only two alternatives: either

1. a certain class of people, A, have the right to own another class, B; or
2. everyone has the right to own his equal quotal share of everyone else.

The first alternative implies that, while class A deserves the rights of being human, class B is in reality subhuman and, therefore, deserves no such rights. But since they are indeed human beings, the first alternative contradicts itself in denying natural human rights to one set of humans. Moreover, allowing class A to own class B means that the former is allowed to exploit and, therefore, to live parasitically at the expense of the latter; but, as economics can tell us, this parasitism itself violates the basic economic requirement for human survival: production and exchange.

The second alternative, which we might call “participatory communalism” or “communism,” holds that every man should have the right to own his equal quotal share of everyone else. If there are three billion people in the world, then everyone has the right to own one-three-billionth of every other person. In the first place, this ideal itself rests upon an absurdity — proclaiming that every man is entitled to own a part of everyone else and yet is not entitled to own himself. Second, we can picture the viability of such a world — a world in which no man is free to take any action whatever without prior approval or indeed command by everyone else in society. It should be clear that in that sort of “communist” world, no one would be able to do anything, and the human race would quickly perish.

…

Let us now turn to the more complex case of property in material objects. For even if every man has the right to self-ownership, people are not floating wraiths; they are not self-subsistent entities; they can only survive and flourish by grappling with the earth around them. They must, for example, stand on land areas; they must also, in order to survive, transform the resources given by nature into “consumer goods,” into objects more suitable for their use and consumption. Food must be grown and eaten, minerals must be mined and then transformed into capital, and finally into useful consumer goods, etc. Man, in other words, must own not only his own person, but also material objects for his control and use.

The piece also contains some comments that presage his more developed case in his “Property Rights and the Theory of Contracts,” which drew on Williamson Evers’s pioneering Toward a Reformulation of the Law of Contracts published in the JLS in 1977. (I draw heavily on Rothbard and Evers in A Libertarian Theory of Contract: Title Transfer, Binding Promises, and Inalienability). But Rothbard was already almost there, in 1974.  To-wit:

Until very recently, free-market economists paid little attention to the entities actually being exchanged on the very market they have advocated so strongly.

Wrapped up in the workings and advantages of freedom of trade, enterprise, investment, and the price system, economists tended to lose sight of the things being exchanged on that market.

Namely, they lost sight of the fact that when $10,000 is being exchanged for a machine, or $1 for a hula hoop, what is actually being exchanged is the title of ownership to each of these goods.

In short, when I buy a hula hoop for $1, what I am actually doing is exchanging my title of ownership to the dollar in exchange for the ownership title to the hula hoop; the retailer is doing the exact opposite.

In fact, Rothbard had related and similar insights even earlier than 1974; in Man, Economy and State (1962), ch. 2, §13, he writes:

take the case of a promise to contribute personal services without an advance exchange of property. Thus, suppose that a movie actor agrees to act in three pictures for a certain studio for a year. Before receiving any goods in exchange (salary), he breaks the contract and decides not to perform the work. Since his personal will is inalienable, he cannot, on the free market, be forced to perform the work there. Further, since he has received none of the movie company property in exchange, he has committed no theft, and thus the contract cannot be enforced on the free market. Any suit for “damages” could not be entertained on an unhampered market. The fact that the movie company may have made considerable plans and investments on the expectation that the actor would keep the agreement may be unfortunate for the company, but it could not expect the actor to pay for its lack of foresight and poor entrepreneurship.

[Update: see also KOL146 | Interview of Williamson Evers on the Title-Transfer Theory of Contract]

This article is so richly-packed with Rothbardian insights. For example, he:

• emphasizes how the nature of action and production means man grapples with scarce things to rearrange them to make them more valuable: “no producer really “creates” matter; he takes nature-given matter and transforms it by his personal energy in accordance with his ideas and his vision” (see my Locke on IP; Mises, Rothbard, and Rand on Creation, Production, and “Rearranging”);
• sets out a coherent, libertarian-Lockean theory of homesteading rooted in the concept of scarcity (see my and Jeff Tucker’s “Goods, Scarce and Nonscarce”);
• explains that it’s just for some children to inherit larger estates from rich parents because the parents have the right to dispose of their property as they see fit (this is an argument Ayn Rand also made, if I recall correctly);
• and, as the first quote above indicates, dispatches arguments as to the injustice of current property titles.

It goes without saying that … this is worth a read!