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Property Rights and Coercion

December 14, 2011

Clearly identified and enforced property rights are highly important to economies and legal systems. Legal systems deal with breaches of commutative justice, which occur when some right is violated. There are crimes against someone’s person, such as murder, assault, and rape and crimes against their property, such as theft or arson. A crime against property is a violation of previously established property rights.

Property rights over natural resources are established by force. There is nothing about the state of nature which implies that one person has access to a field or a mine and another does not. Since governments have a comparative advantage in force, governments decide who gets access to natural resources.

A Simple Model
Let’s start with a model with two types of people: workers and soldiers. Soldiers can fight, but cannot make goods. The workers can make goods, but cannot fight.

The soldier takes all the land using force, but eventually, he gets hungry and decides to assign some of the land to the workers so that they can grow food. The workers grow food, and eat some and give some to the soldiers in the form of taxes. If the workers do not pay up, the soldiers can hurt them, or reassign their property rights to another person.

Now, let’s say a thief comes in to a worker’s house and takes some goods. By assumption, the soldier is the only one who can fight, and thus the only one who can force anyone to do anything. The worker goes to the soldier and asks the soldier to force the thief to give his goods back. Hence, the property rights established by trade must still be enforced by violence.

When a worker says he own land or capital, that means he can convince the soldier to beat up anyone who takes it from him. Of course, the soldier could take the worker’s stuff if he really wanted to, but eventually he would go hungry. Workers would not be willing to farm for the soldier, if the soldier did not protect them from thieves and let the workers keep a share of their production for themselves.

Explanation
Property rights are established through force and enforced by force. The statement “Taxation is Theft” is essentially “I don’t like the current property rights system” or perhaps “I wish I were sovereign”. Theft is an assertion of property rights that does not align with the government’s declaration. If the soldier takes some food from a farmer and gives it to a worker, that is “tax and spend”. If a worker takes food from another without the soldier’s permission, that is “theft”. While both taxation and theft refer to a taking by force, the difference lies in who has the comparative advantage in violence: a government does, a thief does not.

If the farmer does not get to keep some of his production for himself, he will not farm. The link between unstable property rights and poverty is well documented. While it might seem like it would be in the soldier’s best interest to take as much as he can from the workers, but if he does so, the workers will stop producing, which will result in poverty for everyone.

Excludability and Utopia
Scarcity is a fundamental property of the universe and most goods are rival, meaning, if I use them, you can’t. An apple eaten by one person cannot be eaten by another. Throughout history, people have occasionally expressed the opinion that without property rights, there would be plenty for all. Nothing could be further from the truth. Producing the goods necessary for survival requires investment and hard work. Not only do you need people to work to harvest the fields, but you also need plows, shovels, seeds, and other capital investments. Without property rights, workers would have neither compensation nor incentives to work. Perhaps property and exclusion is in some ideal sense wrong, but in practical terms, it is needed for survival. If someone believes that property is theft, and that theft is wrong, then logically they must starve themselves to death, because eating is an assertion of property rights over the food you eat.

Further Reading
Power and Prosperity by Mancur Olsen
Tyler Cowen on stationary bandits.
Taxation as Theft
SMBC on property rights
Grab World

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5 Comments leave one →
  1. December 14, 2011 5:37 pm

    I am very pleased that you explicitly pointed out the link between property and force. So many of the libertarian/anarchist rants/articles that I read on the web don’t seem to make that link, and makes it hard to understand their reasoning.

    • December 14, 2011 6:09 pm

      That’s what caused me to write this article. Wishing there were no one with a comparative advantage in violence doesn’t make it so. I prefer to focus on limiting the government’s ability to take.

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