Ownership as a Social Functionl P.L. Poirot

LUDWIG VON MISES, Human Action IF ONE were obliged to list a single cause of our age of revolution, it might be this: the irresponsible use of private property. Serious enough is the problem of stewardship and responsibility for disposition of one's own prop erty. Infinitely greater are the problems created in the so-called charitable disposition of other peo ple's property, when one votes to tax others for funds to be dis tributed to the "worthy" poor. By this process, whole classes of "beneficiaries" may be deprived of their human dignity and of the This essay is from the "Mises 90th Birthday Collection," copyright by The Institute for Humane Studies. opportunity to live as responsible, mature individuals: - the young, publicly schooled to "sit in" and picket for favors; - the aged, socially secured against prod ucti ve use of their talents; - hypochondriacs, medicared into terminal illness; - the indolent, paid not to work; - unwed mothers, seduced by subsidy to fuel the population ex plosion; - farmers, paid to grow surplus crops, or not to farm at all; - businessmen, sheltered by tariffs and embargoes and protection ism generally; 599 600 THE FREEMAN October - craftsmen and other profes sionals guarded against compe tition through a union or asso ciation or licensing arrangement of one kind or another; - an endless list of personal fail ures, financed at the expense of everyone else.

Even so, to speak of the irre sponsible use of private property immediately calls to mind the widely publicized charges of mis beha vior leveled against "mer chant princes" and "robber ba rons" of an earlier century. And it well may be true that some in dividuals in those days made some mistakes. In his definitive history of prop erty rights (In Defense of Prop erty, Regnery, 1963), Professor Gottfried Dietze points out that: "In the nineteenth century, pri vate property enjoyed greater pro tection than ever before ... prop erty rights received far-reaching protection through legislation, adjudication and juridical sci ence." In other words, the full force of law and order and govern ment protection had been must ered in support. of the fundamen tal right of the owner to do with his property as he pleased. That was the juristic attitude toward property rights, nor should it be altogether surprising to find such property-protecting governments occasionally granting to various owners or groups a· bit of special privilege and political power. In any event, it is clear that individ ualism generally was favored over collectivism in America and much of Europe during the nineteenth century - and that the tide now runs strongly in the other direc tion.

The point at issue here is whether or not the owner's right to his· property carries with it any corresponding duty or responsi bility toward others. And the tend ency of the law in the nineteenth century was to say no; let the owner do with his property as he pleases so long as he doesn't inter fere with the property rights of others. Dangerous Protectionism While such a view toward prop erty may be economically and morally sound, it probably reflects poor political strategy. There is every logical reason, in a market oriented economy, why decisions concerning the use of property are best left to the owner. But the owner may properly be accused of negligence if he relies heavily upon the government to defend his title and does not try to explain to others the general blessings of private ownership and open com petition. Without that explanation, and understanding by the people, 1971 OWNERSHIP AS A SOCIAL FUNCTION 601 the same governmental force used to protect property can be pervert ed into a weapon for plundering, a perversion well advanced in the twentieth century. Owners who would protect private property are now obliged to explain to plund erers why property rights should not thus be violated.

The .term "private property" often is narrowly used to signify only the material possessions of the wealthier members of society. But in a broader and more con structive sense, "property rights" are synonymous with "freedom" and include the individual's right of self-control, self-respect, self responsibility, and personal choice as to how he'll use his own life. A man without property rights without the right to the product of his own labor and without re spect for the equal right of every other person - is not a free man. How, then, does one explain to would-be plunderers that their own and the public interest are best served by private ownership rather than public ownership of scarce resources? Perhaps the most likely point of agreement would be this: one does not use a club to explain a good idea to a reasonable person. The point is of great importance: the general wel fare is served by reducing violence and fighting to a minimum. Once men agree to stop plundering one another, they are in a position to consider and to act in other ways to satisfy their wants.

For the Best Management of Scarce Resources When reasonable persons give thought to the ever-lengthening list of unsatisfied human wants, the impressive fact comes clear that resources are scarce. It is of utmost importance that resources be used efficiently, rather than wasted, if the satisfaction of wants is to be maximized. The reasonable person also must real ize that the maximum satisfaction of human wants involves thought for the morrow as well as provi sion for immediate consumption. This means that some resources must be saved today and used as the tools and raw materials of fur ther production for the optimum ultimate service of consumers. The important question, then, among reasonable men, concerns who should own the scarce resources of the world in order to assure the best possible service of the needs of the sovereign consumer, each the judge of his own needs. And the most reasonable answer, in the light of experience to date, is that an unhampered competitive mar ket economy most effectively and efficiently places the ownership of scarce resources .in those hands that best serve consumers.

602 THE FREEMAN October Producers and Consumers A word about ownership may be appropriate here. Is the owner a producer or a consumer; are we speaking of production goods or consumption goods? As far as the goods are concerned, it doesn't rnatter . What rnatters is the owner's purpose, the reason why he wants possession. And the in evitable answer is that he is trying to satisfy his wants. The person who trades or participates in the market economy is both producer and consumer, nor is there any way he can be more one than the other in an open competitive so ciety.A king or dictator or slave master might pretend to be all consumer, leaving the production to others, but that situation does not spell freedom. Instead of dividing the owner ship of all land and tools and other factors of production equally among all men, the general wel fare depends upon directing such ownership and control into the hands of the most efficient pro ducers of the goods and services wanted by consumers. Day in and day out, in the market place, con sumers are expressing their latest preferences, handsomely reward ing some producers and letting others know they have failed. In the market economy, every owner is continuously obliged to justify, through service, his right to retain control of the resources he claims. Otherwise, consumers peacefully transfer the ownership and control into more capable, more productive, more serviceable hands. How is such transfer effected? Through the market sys tem of recording supply and de mand conditions in terms of prices that may be relied upon for the economic calculation of profit or loss. Consumers thereby direct the production of what best serves their needs, placing the ownership of property in the most capable hands.

Not all consumers, of course, are aware of the economic power they can effectively wield in their own interest through the open market. Some of them, forgetful or un aware of the inevitable scarcity of resources and the terrible cost of waste, are forever looking toward a political redistribution of prop erty in the expectation of having more for themselves for immedi ate consumption. They fail to see that any such political redistribu tion thwarts the production they had ordered by way of prices bid in the market. Nor is this dis placement of economic or market power by political power a simple qu.id pro quo - a foot gained for a foot lost. The tools of production are like a lever or a pry pole. It is possible to cut off a stove length from the lever for immediate use 1971 OWNERSHIP AS A SOCIAL FUNCTION 603 as firewood, but at a tremendous loss of leverage. It is rarely, if ever, in the consumer's best in terest to destroy the tools of pro duction.

Market Affords No Permanent Security to the Owners As previously mentioned, gov ernments of the nineteenth cen tury may have been somewhat overzealous in the protection of property, trying to maintain the prevailing pattern of ownership even if the market indicated the desirability of change. Producers, once they have served the market demand and acquired title to a considerable block of resources, are not necessarily pleased to see a competitor come forth with a better idea to serve consumers. Established owners sometimes seek governmental protection, to exclude would-be competitors from the market. Such protectionism also curbs production and distorts or weakens the signals consumers send to market. A conservatism on the part of property owners that would use governmental force to frustrate consumer demand in the market is a socialistic form of conservatism, not in the general welfare.

In other words, the market af fords no permanent security to the owner. Rather, it obliges him to prove himself over and over and over - endlessly. Consumers en trust property to his use, reward him handsomely if he serves them well, ruthlessly abandon him and reallocate the property the moment he fails to serve them. The market simply will not countenance the idea of property as an exclusive privilege of the owner. The mar ket insists that property rights belong to those who best use the property to serve consumers. The point for which we are striving here is that the present owners of property are not neces sarily the ones one might expect to uphold and defend the competi tive open economy - the market system. They are only human, and might well prefer the sort of pro tectionism nineteenth-century gov ernment gave property owners. So, it behooves the least of the property owners to protect his own interest in the market economy his interest as a consumer. The man who brings his goods or ser vices to market, in trade for prop erty. he would consume, is inter ested in the mobility of property for easy conversion to his pur poses, not protectionism and stag nation in formerly profitable uses - and not a political diversion of property to uses no one is willing to pay for.

The market has been severely, and unjustly, condemned of late for allowing or even encouraging 604 THE FREEMAN October the waste of natural resources and the serious pollution of air, water, morals, and other requisites for clean living. But closer inspection will reveal that the properties thus polluted are those not clearly sub ject to private ownership and con trol: the atmosphere, rivers, lakes, oceans, parks, streets, schools, Appalachia, the body politic. They have been treated as public prop erty, the responsibility of govern ment, nobody's business in particAn Open Society ular. Hopefully, it may be realized in time that such things as air and water and human virtue are scarce and valuable resources, that they should be subject to private ownership and control, and that government's sole responsibility is to protect the owner against rob bers and vandals and at the same time hold him responsible if he uses his property in ways injuri ous to others. Private ownership is a social function. I) IDEAS ON ~ LIBERTY CAPITALISM presupposes an open society in which the ends are determined by individuals, or by voluntary associations. of indi viduals. It is fundamentally incompatible with the idea of an all encompassing State purpose, or a single official Manifest Destiny - though it is thoroughly compatible with a church whose own purposes are extra-governmental, either "not of this world," or, if of this world, devoted to leadership, mediation, and charity in the realms which do not belong to Caesar.

Theoretically, of course, it is quite conceivable that capitalism could flourish without a legal framework, either under pure anarchism, or under a beneficent landlordism, or .with the bless ings of a "let alone" monarch. But, as we shall see, it was· James Madison, the scholar among the Founding Fathers, who put his finger unerringly on the need for a device which will put auto matic checks on government if any freedoms are to flourish. Purely as a practical matter the institutions of an open society demand the safeguards of a limited government. J 0 H N C HAM B E R L A IN, The Roots of Capitalism HENRY HAZLITT FOR. MORE than a century socialist writers have leveled two main charges against capitalism: 1. It is not productive (or only waste fully productive, or far less pro ductive than some imaginable so cialist system would be). 2. It leads to a flagrantly unjust "dis tribution" of the wealth that it does produce; the workers .are sys tematically exploited; "the rich get richer and the poor get poorer."