Just Property
Discussion
What Kinds of Things Should be Owned, and Why?
By Matthew Prewitt, in a review of Radical Markets:
"It is easy to get lost in efficiency analyses, forgetting that taxation schemes like Harberger Taxes must also be considered from the perspective of justice. Efficiency arguments, after all, did not suffice to justify trickle-down economics, and they do not suffice to justify HT.
As we saw, high Harberger taxes would (a) ensure the efficient of allocation of capital, but also (b) siphon away much of its financial value. It is sloppy to suggest that this would always increase justice, and equally sloppy to suggest it would never increase justice. The right answer is going to be a messy in-between: HT is just, but only at the proper rate, and the proper rate depends on the asset in question.
In a word, since turnover-rate HT amounts to a kind of maximum efficient appropriation, it is most justly applied to assets that — ignoring efficiency — ought to be owned in common. Conversely, barring efficiency justifications, it should not apply to assets that are justly privately held. We therefore find ourselves shunted to a deeper question: what should be privately held on grounds of justice (as opposed to mere efficiency), and what shouldn’t be? We have arrived at the murky shores of just ownership theory.
* The Key Distinction: Natural Versus Artificial Capital
A century ago, economists inspired by Henry George drew a distinction between “natural” and “artificial” capital — that is, the products of nature and those of labor. They suggested that rights of private ownership attached more properly to artificial capital than to natural capital. The distinction between these two species of capital is often fuzzy in practice, but it is clear in theory, and important to understand. Let’s explore why.
The case against private ownership of natural capital is rooted in the observation that nobody’s labor created the spoils of nature. Gold, oil, land, and other natural resources exist independently of humanity. So it is illogical for the law to reward private parties for their existence. To be sure, people must procure natural resources. That labor must be compensated, and should be incentivized insofar as it is socially efficient. But, when the market value of a natural thing grossly exceeds the value of the labor needed to procure it, does justice entitle anyone to capture that surplus? What if we’re talking about the last water hole in a drought-stricken country? A massive oil field discovered by chance underneath a backyard?
Contrast natural capital with objects in which artificial capital predominates, like paintings. A painting derives most of its value from its labor, and very little from its constituent natural materials like oil, cotton, and wood. Therefore a painter, far more than a mine owner, enhances the value of naturally-existing materials, and deserves a reward for the sheer existence of her wares. Her right to sell her painting for as high a price as she likes seems much more justified. Likewise with other objects of artificial capital such as sailboats, software, and skyscrapers.
Thus, Georgist economists proposed that common ownership schemes should be applied to natural capital, but not artificial capital. This distinction has efficiency grounds: granting the privilege of private property helps incentivize people to make art, but does not result in the production of additional gold or land. But it also has justice grounds: the privilege of private property may be a just reward for bringing artificial capital into existence, but it is not clear why those who gain possession of naturally-existing things deserve quite the same reward.
Even Confirmed Libertarians Get a Little Squirrely About the Justifications of Private Property in Natural Capital Henry George is not everyone’s cup of tea. So let us examine the views of two thinkers with stronger laissez-faire bona fides: John Locke and Robert Nozick.
It turns out that there is a clear recognition at the very core of the liberal/libertarian tradition that (a) natural and artificial capital are different, and that (b) property rights in natural capital are much harder to justify. This recognition flows from what Nozick called the Lockean proviso.
Nozick based his theory of just ownership on the insight that property justly acquired, and thereafter justly transferred, is justly held. In defining “just acquisition”, he looked to John Locke. Locke famously contemplated how ownership interests could arise in unowned things, like unclaimed land. He suggested that such interests arose when a person appropriated unowned land and “mixed his labor” with it (i.e., improved it). But he added the “proviso” that such an appropriation must always leave “enough and as good” in the unowned domain. Otherwise, the appropriation would prejudice others, and not be just or valid.
Locke’s proviso is a serious problem for Nozick and anyone else who wants to endorse private property interests in natural capital. Because the reserves of natural capital — land, gold, and the like — are inherently finite. Even back in Locke’s time, when the wilderness must have seemed almost endless, there surely wasn’t always “enough and as good” left over for just anyone, especially after the choice farmland, just outside of town, had been claimed by powerful local lords. And that problem has worsened as the world has grown more crowded.
Nozick argued that “each owner’s title to his holding includes the historical shadow of the Lockean proviso on appropriation.” He took the limit quite seriously:
- “Once it is known that a person’s ownership runs afoul of the Lockean proviso, there are stringent limits on what he may do with (what is difficult any longer unreservedly to call) his property. A person may not appropriate the only water hole in the desert and charge what he will. Nor may he charge what he will if he possesses one, and unfortunately it happens that all the water holes in the desert dry up, except for his. This unfortunate circumstance, admittedly no fault of his, brings into operation the Lockean proviso and limits his property rights.”
Thus, even from a libertarian perspective, doubts arise about the justness of property interests in natural capital whose scarcity results in market power. Friedrich Hayek himself called Georgism “the most seductive and plausible of all socialist schemes,” which has to count as a compliment, coming from him. [2] Hayek argued that common ownership of natural capital would make sense, if only it were possible to separate the “natural” and “artificial” components of assets’ values.
I think Hayek was a little too pessimistic. But he correctly identified the problem."
(https://medium.com/blockchannel/reimagining-property-fbce9d3832a4)