The Power of Property Rights

Release Date
March 4, 2011

Topic

Free Markets and Capitalism
Description

Why are property rights important, even for those who own the least? Professor Tom W. Bell of Chapman University School of Law explains that property rights allow people to live together in peace, prosperity, and freedom. They prevent conflicts over scarce resources, encourage productive labor, and discourage waste. Bell bolsters his argument by drawing on classical liberal scholars such as Friedrich Hayek, Randy Barnett, Robert Nozick, and Ludwig von Mises.

  • In the Absence of Private Property Rights [Article]: Dwight R. Lee explains how private property is the necessary foundation of cooperation and human progress.
  • Property Rights [Article]: Armen A. Alchian defines the concept of property rights and the various ways they can be defined, allocated, and protected.
  • Property Rights [Article]: Karol Boudreaux explains the vital role property rights play in promoting growth, alleviating poverty, and conserving scarce resources (found on pp. 47-55).
  • Property Rights and Incentives in Africa [Audio]: Karol Boudreaux and EconTalk host Russ Roberts highlight the importance of property rights in creating incentives to serve one another.
  • The Economics of Property Rights [Article]: Andrew P. Morriss uses property rights to explain various patterns of social order.
  • The Role of Private Property in a Free Society [Article]: Peter Boettke demonstrates that clearly defined and enforced property rights are a prerequisite to economic prosperity and social harmony.

The Power of Property Rights
Why have property rights? Rich people like them of course. They get to live in fine homes, drive nice cars, and enjoy all the material comforts that property law secures.
Property rights aren’t just for the rich, however; they serve us all. By marking out who can do what with each home, car, and other things, property rights help us live together in peace and prosperity. Property rights pervade our social world, encouraging productive labor and discouraging waste. We all benefit from property rights. Indeed they prove especially valuable to those who own the least. To see why, let’s take a drive down to the beach.
Want a good example of how things go wrong without property rights? Consider a foreclosed home subject to a title dispute. When it isn’t clear who owns something, nobody has an incentive to preserve and protect it. The result: neglect, ruin, and waste.
Property rights help us avoid conflicts over all sorts of resources, from houses to cars to waves. Basically, even the best break provides a certain number of rideable waves. To make matters worse, each wave basically provides only one ride at a time. Combine lots of surfers with just a few good waves, and a conflict over scarce resources looms. Property rights come to the rescue.
Surfers have adopted customs to help them share the waves. Basically, the rider who takes off first near the breaking part of the wave has the exclusive right to keep riding it. But if that surfer falls or misses the wave or gets caught in the foam, the next surfer can take over. In this way surfers can share the waves without having them go to waste. In effect, surfers respect property rights in waves. Indeed if one surfer takes off on another surfer, the surfer in the right will yell, my wave. Harsher words or even physical blows might follow if the trespass continues. Property rights in waves may not last long, but surfers take them very seriously.
Classical liberal scholars take property rights seriously too. To find out why, let’s hit the books.
These days, happily, almost everyone understands that property rights encourage economic growth. Classical liberal thinkers, however, have an especially profound appreciation of where property rights come from and why they matter so much.
Classical liberals see property rights as more than simply privileges created by benevolent and far-seeing politicians. Nobel Prize winning economist Friedrich Hayek placed the origin of property rights even before history itself: “There can be no question now that the recognition of property preceded the rise of even the most primitive cultures, and that certainly all that we call civilization has grown up on the basis of that spontaneous order of actions which is made possible by the delineation of protected domains of individuals or groups.” We can hardly imagine life without property, which Hayek elsewhere described as “the only solution men have yet discovered to the problem of reconciling individual freedom with the absence of conflict. Law, liberty, and property are an inseparable trinity.”
As legal scholar Randy Barnett described them, “Property rights are ‘natural’ insofar as, given the nature of human beings and the world in which they live, they are essential for persons living in society with others to pursue happiness, peace, and prosperity.” Granted that property rights prove vital to human society, what should we do about inequalities in wealth? We cannot prevent such inequalities, as philosopher Robert Nozick explained, unless we can stomach the state to “either continually interfere to stop people from transferring resources as they wish to, or continually (or periodically) interfere to take from some persons resources that others for some reason choose to transfer to them.” To those who would redistribute wealth to achieve equality, Nozick wryly observed, “Liberty upsets patterns.”
At any rate, we should support a diversity of wealth. Those capable of supporting a luxury trade drive innovation. That trickles down to the mass market. And steadfast respect for property rights generates so much wealth that everyone benefits. As Austrian economist Ludwig Von Mises observed, “Even the poor man, who can call nothing his own, lives incomparably better in our society than he would in one that would prove incapable of producing even a fraction of what is produced in our own.” From rich to poor, from oceanside to mountaintop, property rights help us live together in peace, prosperity, and freedom. We can all appreciate that.