Property Rights: Is Appropriation Zero-Sum?

Release Date
August 3, 2017

Topic

Basic Economics Economics property rights
Description

Here’s how private property and appropriation can save us from the tragedy of the commons — and even make a whole community richer. Learn more  with Dr. Russell

    1. Tragedy of The Commons (video): Prof. Sean Mulholland defines tragedy of the commons and compares how government ownership and private ownership solve the problem.  
    2. Stealing from the Poor to Give to the Rich: An Anti-Robin Hood Story (video): Prof. Dan Russell explains why property rights are crucial in creating wealth. 
    3. This company helps African farmers secure their land rights. (article): Karol Boudreaux explains how securing property rights is improving the lives of farmers in Ghana.

Daniel Russell: Is appropriation zero sum?
Supposed that a group of settlers move into a new area, and they start growing crops and raising animals in fields and pastures that none of them owns. Every settler is free to use any piece of land that he or she wants. But after a while, some of the settlers join together, and they put up a fence around one piece of land, and now they control access to it. The other settlers are still free to use the rest of the land outside the fence, but they can no longer gain access to the land inside the fence unless they get the owners’ permission. What the owners have done then is change what is available to the other settlers through the process of appropriation.
Is that change a good thing or a bad thing? Is it fair? Or is it unfair? A very common response that people have when they imagine such changes is that they have to be bad things. Before anyone fenced off that piece of land, it was freely available to everyone, but after someone put up the fence, it was lost to everyone else. The amount of wealth and resources was larger before the appropriation, and it’s smaller after the appropriation, so it’s tempting to view appropriation as zero sum. One person gains something, but only because someone else loses that thing.
Now, if appropriation were zero sum, that would be a bad thing. As the philosopher John Locke put it, “Appropriation can be justified only if the new owner leaves enough resources, and resources that are just as good, for everyone else.” The question then is whether appropriation ever satisfies that requirement, but how could it? Appropriation looks like it’s zero sum, and that would make Locke’s requirement impossible to satisfy.
The problem with the zero sum view, though, is that it only considers what is seen. When we imagine some of the settlers declaring themselves the new owners of a piece of land that everyone once had access to, what is easy for us to see is that the total amount of land that everyone has free access to is now smaller. If we only consider the effects of the fence that are easy to see, then we will naturally assume that whenever someone takes a previously unowned resource, that person thereby subtracts from the available wealth. In other words, we will assume that appropriation is zero sum.
But what if we were also to consider the effects of appropriation that are not easy to see? One effect is what would’ve happened to the resource if no one had appropriated it and it had remained available to everyone instead. We probably imagine that people would’ve gone on freely enjoying that resource forever, but resources with uncontrolled access often meet a very different fate. To say that no one controls access to a resource is to say that there is no one in a position to keep it from being depleted through overuse, because no one can take away access from anyone using the resource in an unsustainable way. The depletion of resources that everyone would prefer to conserve, but that no one has the power to conserve is what philosophers, economists, and ecologists call the tragedy of the commons, and preventing such tragedies is one of the chief reasons for the appropriation of private property. So, leaving things unappropriated could be what actually subtracts from the available wealth over time.
The other effect of appropriation that we don’t see is the fact that appropriating a resource tends to be a prelude to production. When people appropriate resources, they are able to act on incentives to create more resources. That’s obviously favorable to the appropriators, but it’s important to see that it is favorable to their neighbors, as well. As more resources come to exist in the community, new opportunities for trade arise. This increases the division of labor and specialization, the very things that make it possible for people to create wealth. But if people couldn’t control those resources by exercising property rights in them, they wouldn’t have a reason to create those resources in the first place.
Appropriation is not zero sum. It’s positive sum, because it empowers people to protect valuable resources, and to be productive and increase the available wealth.