Property

Property, or a property right, is a rule assigning to some person the authority to decide how a particular scarce resource is used. The subject matter runs from land and raw materials through the means of production and finished goods, and on some accounts to inventions and texts as well, though that extension is disputed within the Austrian tradition.

Property is the institution Austrian economics is built on rather than one topic among many. Ludwig von Mises wrote that the programme of liberalism, condensed to a single word, would read "property", meaning private ownership of the means of production.

Property as the answer to conflict

The Austrian case begins from scarcity. Where a resource can serve two incompatible purposes and two people want it for different ones, some rule has to determine whose purpose prevails, or the matter is settled by force. A property rule is that determination. On this reading property rights are not an imposition on an otherwise harmonious world; they are the technique by which the conflict that scarcity implies is resolved without violence.

The point generalises past physical shortage. Two parties can quarrel over a piece of land not because land in general is short but because that site has a history or a significance neither will trade away. Even then the question the property rule answers is the same one: who decides.

Hans-Hermann Hoppe developed this into a systematic argument that norms governing scarce means are what any dispute presupposes, since the parties to an argument are already exercising exclusive control over their own bodies while they argue.

Property and calculation

The second Austrian argument is economic rather than ethical, and it is the one Mises regarded as decisive. Where the factors of production are owned and traded, they carry money prices, and those prices let a producer compare the many technically possible ways of making a thing and find which wastes least. Remove ownership of the factors and the prices go with it, leaving no way to make the comparison. Mises's argument against socialism is therefore an argument about property, and it holds against planners of any degree of diligence and good faith. See economic calculation problem.

The three systems

Arrangements are conventionally sorted into three kinds, and the distinctions matter because the second and third are routinely confused.

• Under common property a resource is open to all comers, with no one entitled to exclude anyone. Grazing land held in common is the standard case, and the difficulty it runs into is that each user bears the whole benefit of taking more and only a fraction of the cost. See tragedy of the commons.
• Under collective property use is directed by a body acting in the name of society. This is not the same as common property and often its opposite: the resource is closed to individual decision rather than open to it, and the decision passes to whoever speaks for the collective.
• Under private property a determinate owner decides, need account to no one for the decision, bears the consequences, and may transfer the authority to another who then holds it on the same terms.

Where titles come from

A theory of ownership needs an account of how anything came to be owned in the first place, since exchange and gift only move a title that already exists. Austrians in the Lockean line, above all Murray N. Rothbard, hold that unowned resources are appropriated by being brought into use, and that the resulting title is then transferable.

The rival account, that titles are conferred by the state or by social convention, is rejected on the ground that a grant revocable by the granter is not ownership but a licence. Whether that objection succeeds is one of the live disagreements between libertarian and mainstream legal theory.

Where the tradition disagrees: intellectual property

Austrians divide sharply over whether ideas can be owned. The older position, held by Rothbard in a qualified form, allowed copyright as a matter of contract while rejecting patents. The position that has become dominant among Rothbardians, argued at length by Stephan Kinsella, denies that intellectual property is property at all: patterns of information are not scarce in the relevant sense, since one person's use of a design does not prevent anyone else's, so no conflict arises that a property rule would be needed to settle. On this view intellectual property is a state-granted monopoly privilege and an interference with property in physical things.

Others in the tradition hold that the products of the mind are the clearest case of something a person made and therefore owns. The dispute turns on whether scarcity is the ground of property or merely a common occasion for it, which is why it reaches back into the argument at the top of this article.

See also

• Private property
• Scarcity
• Economic calculation problem
• Intellectual property
• Tragedy of the commons
• Contract

Links

• Property by Ludwig von Mises (from Liberalism (book))
• The Ethics of Liberty by Murray N. Rothbard
• The Economics and Ethics of Private Property by Hans-Hermann Hoppe
• Property at Wikipedia