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January 20, 2005

How Not to Complain Against Taxes (II): Against Natural Property Rights

Anderson on Political Economy, Anderson on Taxes, Elizabeth Anderson: January 20, 2005

In a previous post, I argued that the claim "it's mine" does not by itself constitute an argument against taxation.  Nothing follows about the legitimacy of taxation from the mere fact that something is one's own property, nor, as Locke's example shows, even from the fact that something is one's own by a natural property right.  Several comments and a trackback on that post supposed that I was arguing from the truth of Locke's theory of natural property to my conclusions.  This is odd, since I explicitly disavowed theories of natural property rights in that post.  My point was only that "it's mine" is no argument against taxes; it's at best a begged question.  This of course does not rule out anyone's offering an alternative comprehensive theory of natural property that entails the illegitimacy of taxation, or taxation beyond what the minimal state requires.

Now I'd like to take on the idea of such a comprehensive theory of natural property more directly.  In that earlier post, I promised to explain why I reject theories of natural property rights, dropping the teaser that my answer would surprise you.  Here I spill the beans:  I reject theories of natural property rights because they are incompatible with capitalism.  More precisely, they are incompatible with the forms of modern capitalism that have proven so successful in  expanding people's opportunities, prosperity, and the scope of cooperation--that is, the forms worth supporting.  Far from being the foundation of capitalism, natural property rights, construed as putting constraints on state action, are its bane.

By a theory of natural property rights, I mean a theory that (a) identifies first principles by which individuals may initially own or acquire property without the help of a state; (b) upholds principles of virtually unrestricted voluntary transfer (freedom of contract, gift, and inheritance); and (c) limits the state (if it is to exist at all) to enforcing these strict property rights and whatever obligations arise from unrestricted freedom of contract.  Crucially, these rights and obligations may not be abridged, limited, or revised by the state in order to produce various desired consequences.  Some natural property rights theorists allow exceptions to these principles at the margins (Nozick, for example, allows that property rights may be abridged to avoid catastrophe).  But by and large they see free market capitalism as a spontaneous self-sustaining product of systems of property whose logic lies outside state definitions and social engineering.  The great danger to capitalism, on this view, is state "intervention" into a market sphere that runs by its own natural laws.

I think this picture of capitalism is misguided.  The forms of capitalism that exemplify its greatest virtues rest on artificial, not natural property formations.  The state does not "interfere" in a "natural" capitalistic realm; rather, state action constitutes this realm as distinctively capitalistic.  Advanced capitalism requires a vast apparatus of socially engineered institutions to sustain itself.   To put some specificity on these claims, I'll argue as follows.  (1) Certain types of property rights and rules found in advanced capitalism have no sound basis in "natural" property rights but are nonetheless essential to advanced capitalism.  (2) Natural property claims do spontaneously arise independent of state action, but they are incapable of generating the distinctive form of property needed for capitalism--namely, capital.  State action is required to turn property into capital, and such action will inevitably, and rightly, abrogate these "natural" claims.  (3) A pure system of natural property rights with unrestricted freedom of contract contains inherent tendencies to revert to feudalism if the state does not limit freedom of contract by restricting property transfers from the desperate to the well-endowed.

(1) Advanced forms of capitalism depend on types of property that have no natural foundation. 

Consider, for example, the limited liability corporation.  In a natural property regime, groups of people contracting together can enjoy no more rights vis-a-vis third parties than what the sum of their individual property rights already gives them.  Since individuals do not enjoy any "natural" limitation on their liability, they can't naturally acquire such a limitation just by combining their property with others.  Limited liability is justified not because it could arise from a system of natural liberty, but because investment in firms that separate ownership and control will be retarded, and hence overall economic growth will be depressed, if investors don't enjoy it.  Limited liability does leave some rightful claimants uncompensated when firms go bust.  Capitalism makes up for this in part through generally higher growth (which socializes some of the benefits of this property form).  It also partly makes up for this through social insurance schemes that prevent some of the worst costs from being so concentrated as to produce hardship (which socializes some of the costs of this property form).  For example, the state bails out pension funds that bankrupt firms owe to their workers.

Intellectual property rights are also both indispensable to capitalism and deeply artificial.  They contain two features that, in combination, cannot be rationalized by a theory of natural property:  (a) they afford monopoly rights to inventors, and (b) they are temporary.  A theory of natural property could reject intellectual property altogether, on the ground that thought, once made public, becomes part of the commons, and no one coerces anyone else in using a valuable idea.  Or it could insist that inventors have an absolute and permanent right to their ideas.  (This would, for example, grant to the heirs of the inventor of the alphabet the permanent right to determine who is permitted to use it, and how much they must pay for the privilege.)  But it is difficult to envision any theory of natural property that could both acknowledge the existence of such rights and insist on their expiration.  There is a sound economic justification for a property regime like this, but it isn't "natural."

Many other examples of property rules important to capitalism, but not rationalizable within a theory of natural property could be cited--for example, bankruptcy (which discharges an insolvent debtor's debts, thereby abrogating the "natural" property claims of creditors), the rule against perpetuities (some version of which is needed to ensure that property rights ultimately vest entirely in living people, to prevent the dead hand of the past from permanently weighing down future uses of property), anti-commons rules (which prevent owners from dividing their property into uselessly small bundles), and rules against shareholder oppression (which limit what majority owners can do to undermine minority shareholder interests).  Some version or other of these types of artificial property rule are vital for dynamic economies. (I don't pretend to defend the details of the ones currently in force.)  Of course, one person's modus ponens is another's modus tollens.  One might reject these types of property on the ground that they violate natural property rights.  But don't pretend that one's preferred system would still be able to sustain capitalism or preserve its observed advantages.

(2) Natural property systems do not generate the distinctive form of property essential to capitalism, namely, capital.

Natural property exists, in the sense that people do successfully establish private property regimes, based on local conventions, that are independent of and often in opposition to the state.  (Like my fellow-blogger Don Herzog, I happily embrace distinctions between state and society!) Indeed, natural property is by far the dominant form of property in the developing world.  The great Peruvian economist Hernando de Soto has documented that in major regions of the developing world, 65-85% of housing is extralegal (that is, it consists of squatter settlements).  The vast majority of retail markets and mass transportation in these regions also exist outside of the formal sector.

Since natural property systems exist as an empirical reality, and not just in the state-of-nature fantasies of philosophers, we can compare their performance with artificial property systems established by capitalist states.  De Soto's verdict is clear: natural property is inferior to artificial property.  The people who have only natural property are poor.  Moreover, they are not poor because the state actively interferes with their natural property systems.  For the most part, developing countries acquiesce in their formation.  Rather, they are poor because natural property systems cannot convert property into capital.  The distinctive feature of capital is that it has market value to strangers, to people who do not belong to the parochial community in which the property exists.  Capital can be sold to strangers and used as collateral on loans.  Capital's value rests on the fact that it is the locus of a massive expansion of the scope of cooperation and trust, beyond the face-to-face community, ultimately encompassing the whole world.  It is a great engine of cosmopolitanism, which is one reason why I support it.

The natural property theorist might insist that all that natural property lacks is formal recognition  by the state, exactly as it has been created by the locals.  This ignores the fact that natural property systems are profoundly idiosyncratic.  They vary in innumerable details from one locale to another, just as languages vary.  And just as language variation puts sand in the gears of cooperation and trust across linguistic groups, variations in natural property conventions impede the conversion of natural property into capital.  Strangers are reluctant to buy it, or accept it as collateral, and not just because they lack confidence that their property claim will be enforced (by either the state or the locals) if a dispute arises.  They are reluctant also because they literally don't know what they are getting.  The local conventions that define and encumber the property are not written down.  Even if they were, they are too idiosyncratic in form to enable effective comparison with other parcels of natural property.  Without easy comparison with other parcels, natural property lacks fungibility and so lacks a market value to strangers.

When the state grants legal recognition to natural property, as when it issues squatters title to the land they have been occupying extralegally, it incoporates that property into a vast system of artificial rules that are not of local making and that may well contradict the local conventions that previously defined the property.  Of course, as Robert Ellickson has shown in his wonderful Order Without Law, the locals remain free to observe the local conventions instead of the formal property rules.  But, as his work also shows, those conventions lose their force when strangers, who care little for local opinion, buy the property.  This is the price of the conversion of natural property into capital.  But the price is worth it.  This means that the state is not, and ought not to be, bound to respect natural property.

This is not to say that there cannot be a compelling case at times for the state to formalize natural property.  My point is rather that the case cannot be made on the ground that people have a fundamental right to whatever property they have acquired naturally.  This can't be the ground, because formalization does not merely recognize the property that was already there, but subjects it to a distinct and often contradictory artificial regime.   The case for formalizing natural property--incorporating it into the artificial capitalist regime--is rather that  in many cases this is the best way, of the available alternatives, to enable the owners to escape poverty, provide for their needs, and gain prosperity and a wider range of opportunities.

Now here's the rub:  those very same grounds also justify, at times, infringing on natural property and instituting new artificial property rights, such as social insurance entitlements, and hence the taxes to support them.  The general justification for any property regime rests on its ability to enable, to the highest feasible degree, everyone under it to live a decent life, enjoying dignity, personal independence, freedom from poverty and oppression, a wide range of opportunities, and the effective power to participate in the social and economic life of the community.  No one has a right, "natural" or otherwise, to a property regime that in fact deprives others of effective access  to such a life, if there is an available alternative property regime that does effectively secure these others such a life.  Such alternatives have been found through experience to require measures such as social insurance entitlements and the taxes needed to support them.

(3)  A pure system of freedom of contract, in which all property is fully alienable, tends to degenerate to feudalism.  Capitalism therefore needs restrictions on freedom of contract.

Feudalism is based on the principle that private property in land confers political power over whoever is on the land.  One's landlord is one's lord.  Feudalism permits the conversion of property over things into subjection over people.  Theories of natural property rights, which suppose that people have property in themselves, and that all property is alienable in contracts, permit the same conversion.  If the state places no limits on such conversions, then, given the volatile nature of capitalism, many people will be pushed into a poor bargaining position.  In such a position, many will sell their personal independence for subsistence.  Thus arise oppressive forms of contract feudalism such as those into slavery, bonded labor, and debt peonage.  Thus arose company towns in the U.S., which issued scrip instead of cash wages to their workers (redeemable only in company-owned stores), required workers to rent company-owned houses (with leases enforcing what the company deemed a proper lifestyle), and crowned the firm owner as mayor for life (without those pesky elections).  Thus arise modern factories in quasi-capitalistic China today, which keep their workers locked up in factory-owned dormitories, forbidden by contract to wander outside, lest they hire out their labor (enhanced by the training provided by the firm) to competitors.

Theories of natural property misidentify the objection to feudalism.  They suppose that what made feudalism objectionable is that the landlord's political power lacked the consent of the people.  On this view, contractual forms of feudalism, such as debt peonage and company towns, are legitimate.  But if fedualism is objectionable, it is not for lack of consent.  As Hume observed, the people did consent to the rule of their lords.  Their consent, however, had no legitimating force, because they had no reasonable alternative:

Can we seriously say, that a poor peasant or artisan has a free choice to leave his country, when he knows no foreign language or manners, and lives, from day to day, by the small wages which he acquires? We may as well assert that a man, by remaining in a vessel, freely consents to the dominion of the master; though he was carried on board while asleep, and must leap into the ocean and perish, the moment he leaves her.

The same objection applies to contemporary forms of contractual feudalism.  But even this objection does not get to the core of the issue, which is not consent, but rather the content of the relationship.  Feudalism, whether contractual or not, is objectionable because it constitutes a relation of personal subjection, in which one party enjoys arbitrary power over another.  Because personal independence is essential for liberty, it should be considered an inalienable right.

This entails limitations on freedom of contract that go well beyond the abolition of contract slavery, debt peonage, and company towns.  It justifies legal regulation of rental contracts, for instance, so as to guarantee tenants a right to privacy against unannounced or too-frequent invasions by their landlord.  It justifies laws against quid-pro-quo sexual harassment.  (In light of this analysis, quid-pro-quo sexual harassment should not be viewed as any ordinary contractual term, but as contract feudalism's analogue to the droit du seigneur, now applied directly to the vassals, whether male or female, rather than their wives.)  It even justifies laws restricting corporate contributions to politicians.  Without such restraints on contract, we don't get capitalism.  We get contract feudalism.  Capitalism can't survive as a distinctive formation without restrictions on the conversion of property into political power.

Under the capitalist system we have today, people's claims to property arise from a vast artificial system that has no natural foundation, and that rightly contradicts many natural property claims.   The system couldn't be capitalistic if it didn't.  Within such a system, people have no property claim against other parts of the artificial property system, including social insurance entitlements and the taxation needed to support it.  Since their prosperity arises from artificial property, no less than the economic security of those receiving social insurance entitlements does, their property claims enjoy no superior or prior status that could constrain the state's constitution of new entitlements and taxes that advance the proper goal of any property system--effectively securing a decent life for all.

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Comments

Posted by: Alex

It was my understanding of De Soto's point that the problem is not that natural property is intrinsically ineligable for conversion into capital, but rather that in order that natural property claims to provide a basis for capital formation it must be securely held. Where there is a conflict between the legal conventions governing property holding and the norms actually governing property (the norms arising from actual property-forming practices), property is not sufficiently secure. As a consequence, it is unsuited for the creation of capital -- e.g. a conditional claim to it cannot secure loans. So the problem isn't that natural property cannot be turned to capital, but instead that if the rights generated by natural property cannot be enforced/protected (as they cannot if these rights conflict with those recognized by the state) it cannot generate capital.

Posted by: Alex | Jan 20, 2005 1:00:16 PM


Posted by: Alex

Please excuse the typos in the previous comment...

Also, reading on, I see that my comments do not speak to Anderson's main aim in invoking De Soto -- i.e. that, insofar as they institute idiosyncratic entitlements, spontaneously generated property forming practices are unsuited to capital formation. This locates a real problem for the use of natural property and one states seem well poised to solve.

Posted by: Alex | Jan 20, 2005 1:10:05 PM


Posted by: Micha Ghertner

As Hume observed, the people did consent to the rule of their lords. Their consent, however, had no legitimating force, because they had no reasonable alternative

Those who find this argument persuasive must apply it to governments as well. One cannot at the same time hold that labor contracts are illegitimate when one party lacks a reasonable alternative and also hold that the authority of government is legitimate because of the social contract or "implicit" consent, when this too involves a great many parties who lack reasonable alternatives. (By definition, government is a coercive monopoly which excludes competitors from entering the market, thereby depriving its "customers" of reasonable alternatives.)

Posted by: Micha Ghertner | Jan 20, 2005 2:44:29 PM


Posted by: Jeff Licquia

Great article; I haven't thought about it fully, and plan to do so.

But I did want to point out a potential minefield:

Intellectual property rights are also both indispensable to capitalism and deeply artificial.

The first half of this claim is, perhaps, one of the most controversial topics of discussion on the Internet today. I suspect, regardless of your actual position on the topic, that you might want to moderate or disclaim that statement a bit, or disavow the example entirely (as it is not essential to your point).

Of course, the debate is worth having (indeed, I would oppose your statement above in such a debate), but do you want that debate to overshadow the worthy questions of taxation and natural property rights?

Posted by: Jeff Licquia | Jan 20, 2005 3:36:35 PM


Posted by: DBL

Very interesting post. You've given me lots to think about.

How would you apply your analysis to a proposal to enact a 99% or 100% tax on incomes over, say, $10,000,000? Or $100,000?

Posted by: DBL | Jan 20, 2005 3:50:46 PM


Posted by: Paul Deignan

The comparison to natural property rights would be more appropriate if these rights were phrased in terms of "use" rather than "possession". Capitalism and taxation are about "use". For that matter, property of any sort has no meaning in this analysis without a related use.

Posted by: Paul Deignan | Jan 20, 2005 5:45:43 PM


Posted by: Terrier

DBL, I think Elizabeth Anderson has identified herself as a support of capitalism. Would your proposed tax be good for "expanding people's opportunities, prosperity, and the scope of cooperation?"

Jeff Licquia, The founders had a different opinion, see Section 8, Clause 8, tho, I'm not proposing you are governed by the Constitution because certainly Micha Ghertner is not! :-) I would however observe that the artificiality of Intellectual rights are what is important to the poster's argument. In that vein, I would like ask a question of my own that rolls around in my head when these property rights discussions begin. Isn't money itself an artificial form of property? Doesn't it derive value from the existence of a government? What would replace it if we had no government to coerce value out of scraps of paper? Is it coersion that enables me to spend a greenback for a stick of gum or is this a case where the delusion of a collective has more force than rows of artillery pieces?

Posted by: Terrier | Jan 20, 2005 5:47:23 PM


Posted by: D.A. Ridgely

Since I have no investment in theories of natural property rights, I don’t much care whether Ms Anderson’s critique of them is sound or not. Moreover, I note that her unusual sense of the concept and history of feudalism would support some of my objections to majority rule and so-called social contract theories, too. It is, however, a long leap from the assertion that people need a set of legal institutions, including the institution of legal property in all its myriad forms, to the notion that establishing that legal system thereby legitimizes, let alone necessitates, the welfare state. Indeed, unless I am missing something too subtle for my admittedly feeble intellectual powers, she simply asserts without much argument or evidence that any ‘property regime’ (read “state”) of any sort that does not on utilitarian grounds require property redistribution for “social safety net” sorts of reasons “tends to degenerate to feudalism.”

Does it, indeed? Have we seen that happen over and over again? Refresh my memory; didn’t our market economy arise from feudalism and not vice versa? Wasn’t it, in fact, over the strong opposition of the feudal lords? Isn’t it at least as fair to say that those oppressed Chinese factory workers are today comparatively better off than when they lived under a socialist ‘feudalism’ and isn’t it more plausible that their expanded freedom of contract will eventually destroy that feudalism just as happened in the West (only much more quickly, given that there is a market economy outside China for it to enter)? Dire predictions of the collapse of market economies into anything even remotely resembling feudalism on a large scale are both counterfactual and counterintuitive.

I’m sure there are many libertarians (and I know there are many conservatives) who cling to natural rights theories with the same tenacity that many of Ms Anderson’s progressive colleagues harbor lingering hopes of a resuscitated Marxism, her apparent unawareness of such folks notwithstanding. But the question is not whether natural property rights are in some sense logically prior or superior to legal property rights or whether they exist or are even intelligible. The relevant questions are (1) whether it is moral for a mere majority to coerce others into contributing their wealth or labor for redistribution schemes with which they do not agree, and (2) whether state interference beyond the required legal superstructure is more beneficial than harmful.

As to the latter question, Ms Anderson merely assumes that the welfare state provisions she endorses “have proven ... successful in expanding people's opportunities [and] prosperity.” (I am inferring here that she is making reference not only to the complex legal system of property and contracts but also of the mixed economy elements such as regulation of private industry, public works projects and social ‘insurance’ of which she wrote favorably in one of her earlier arguments.) One might just as easily, indeed, more easily argue that opportunities and prosperity have increased despite the often largely negative consequences of such state interference.

Finally, although I am cheered that liberals have been reading de Soto, I think Ms Anderson misrepresents him a bit by suggesting that his distinction between informal property and legal property mirrors her distinction between natural property and artificial property. De Soto’s examples of uncapitalizable assets in local communities are not, for the most part, examples of natural property in any philosophical sense. The members of those communities have ‘laws’ governing property ownership and transfer and whatnot. Where they fail is in not having their ownership interests, such as they might be, incorporated into that wider, formal law-governed market that permits their use as collateral, etc. I do not mean to argue that de Soto is opposed to the position she has articulated or that he cannot be read to support her position, but only that she has suggested that his work gives greater support to that position than I think is the case.

Posted by: D.A. Ridgely | Jan 20, 2005 5:51:31 PM


Posted by: Paul Deignan

Continuing, so what is natural is based on the sovereignty of the individual (again back to free will). Property rights are simple an expression of this more fundamental right.

When Locke rambled the earth, his conceptualization of a just expression of property rights was probably adequate for his time. If he were alive today, he would likely have a more complex expression of those rights to match the complexity of our society today. Let's not be unfair to him on that account.

Posted by: Paul Deignan | Jan 20, 2005 5:56:58 PM


Posted by: Paul Deignan

Another thought: governments don't exist without the governed.

That is, a "government" cannot create anything. It is all the result of people acting through a loose association that they call a "government". So, a point to Terrier, all the value of those scraps of paper is not actually the product of some distinct entity called a "government". Rather that value of those scraps are in the integrity of the people. They choose to keep or not to keep those promises as a matter of free will.

Posted by: Paul Deignan | Jan 20, 2005 6:14:51 PM


Posted by: Terrier

Paul Deignan, didn't I say, "the delusion of a collective?" I mentioned this because some define the government as coercive but in the case of money it seems that the government is fueling our collective delusion and not forcing us.

Posted by: Terrier | Jan 20, 2005 6:42:45 PM


Posted by: mikec

Elizabeth,

I find your argument for point 1 completely unpersuasive.

a. Capitalism would work fine without the concept of a limited liability corporation. Investors would not be deterred from investing. They would buy liability insurrance. (Good idea, actually.)

b. Intellectual property rights are a very controversial issue. It's not at all clear that they are "indispensible to capitalism." It's worth noting that the some of the fastest growing capitalist economies have the weakest intellectual property laws.

None of your other examples seem any more persuasive. I think capitalism would adjust easily and quickly to abolishing bankrupcy laws, perpetuities, etc. Do you have reason to believe that capitalism would collapse without them?

Posted by: mikec | Jan 20, 2005 7:25:34 PM


Posted by: Glen Raphael

Terrier: Money derives its value from scarcity and the willingness of some person or entity to exchange it for something of value. Anything that is portable and tricky to duplicate can serve as money. If our government didn't print money, any bank, individual, or company of sufficient stature could (and did!) fill the same role. Many companies currently print "money": McDonald's gift certificates, AmEx traveller checks and United airline tickets are all pieces of paper that are printed privately, hard to duplicate, and serve as a temporary store of value.

Or consider the use of cigarettes as money among prisoners - does their value derive from government?

Posted by: Glen Raphael | Jan 20, 2005 7:45:17 PM


Posted by: Terrier

Glen Raphael, didn't I say, "the delusion of a collective?" I didn't mean that the government was necessary for that delusion, only that it was sufficent and not coercive.

Posted by: Terrier | Jan 20, 2005 8:15:56 PM


Posted by: D.A. Ridgely

Terrier, it is coercive (try printing your own money) but it is one of those few necessary elements of government about which I reluctantly think we have to agree to coerce ourselves (and others) to make the system work at all. (Yes, private currency can work up to a point, but not nearly as well.) In any case, some of the discussion here confuses money and wealth. Wealth has nothing to do with money, per se. Money merely facilitates the exchange and storage of wealth in a maximally efficient manner. (I say “merely” but those are enormous benefits.) To rephrase Mr. Deignan’s point, government does not create wealth. People do. I’ll gladly give you all the presidential portraits if I can have all the stuff it can be traded for in return.

Ms Anderson wants to argue, in essence, that it is part of the ‘price we pay’ to have a system that works as well as it does that we should also have government provided health and welfare benefits paid for collectively from our individually created wealth; but, to put it mildly, that’s a stretch. It requires, even to be vaguely plausible, that wealth disparity will lead to at least a significant number of people not only in poverty but growing numbers in inescapable poverty. That certainly has not been the American experience and it need not be the world’s experience. While it is true, for example, that wealth disparity has grown in the last several decades, it nonetheless remains true that even the poor are, on balance, better off than they were a generation ago. And this is not because of social welfare, per se, but because the entire standard of living has risen as greater wealth has been produced. We can, in effect, enjoy the luxury of richer poor people.

Posted by: D.A. Ridgely | Jan 20, 2005 8:33:07 PM


Posted by: Terrier

D.A. Ridgely, I am most certainly not confusing wealth with money - that is why I called it a 'delusion.' Certainly, the government will prevent you from printing your own money - that is a different issue than our collective agreement to value pieces of paper. Our agreement is not coercive, I wouldn't have to hold a knife to your throat to get you to accept a twenty-dollar bill. We have agreed to value that particular portrait of Jackson. To the extent that you and I suffer from the delusion that it represents a portion of your time, you will accept it in exchange for such an amount of time. It is possible for you and I and others to collectively agree on a particular idea without anyone resorting or needing to resort to force. If Micha Ghertner decided that the Jackson portrait was only useful to light cigars we certainly might consider him odd but I doubt you would force him to accept them from you. It is equally likely that you would not accept tree bark from him in payment for your services - is that coercive? Are you unfairly using the power of the state to demand that he pay you in a currency that others will also value?

Posted by: Terrier | Jan 20, 2005 9:44:56 PM


Posted by: rtr

A long post, so best to take it one idea at a time. I’ll cross-examine each claim and progression in turn, so expect a long reply. I taught myself to play tennis hitting the ball as hard as I could first, worrying about getting it in bounds second. I’m of course going to take the same approach to economics, philosophy, law, and political science. My inspiration is in the local Chicago commercial for the law offices of some guy who holds up a black book that says “The Law” in front of, and scaring off, a construction worker, chasing innocent citizens running in slow motion down the street, on a 5m.p.h. road flattener roller machine. Time to perform a post-socialist deconstruction. If I come across as harsh, it is only for the good of future human society I do so. Hernando de Soto will have to wait his turn.

EA: “I argued that the claim "it's mine" does not by itself constitute an argument against taxation.”

Stating that also implies the statement: the claim “it's my life” does not by itself constitute an argument against murder.

EA: “Nothing follows about the legitimacy of taxation from the mere fact that something is one's own property”.

This statement is an illogical contradiction. Something certainly does indeed follow about the legitimacy of taxation with any philosophical establishment or reference to the word “property”. Something is one’s own property or it is not. Her claim is no different than the claim: nothing follows about the legitimacy of rape from the mere fact the something is one’s own body.

EA: “My point was only that "it's mine" is no argument against taxes; it's at best a begged question.”

Again, that is no different than a point that “it’s my body” is no argument against rape; it’s at best a begged question. Ouch, that sounds so anti-feminist. But, nevertheless, ideas have consequences and they must be logically followed.

EA: “I reject theories of natural property rights because they are incompatible with capitalism. More precisely, they are incompatible with the forms of modern capitalism that have proven so successful in expanding people's opportunities, prosperity, and the scope of cooperation--that is, the forms worth supporting.”

The right should be immediately skeptical with the use of the word “capitalism”. What *exactly* does the left mean by this? It’s been used in so many different loaded ways for the last few centuries, that a specific definition is required from the left. Again, what is the difference between “capitalism” and “modern capitalism”? Also why should we take with even the slightest grain of salt what the left regards as “proven” “success”, “opportunity”, “prosperity”, and “cooperation” when it has not been much more than a decade since they have began to acknowledge the failure of socialism, practically and theoretically? It seems to me like the left wishes to define “modern capitalism” as “mixed economyism” or “democratic capitalism”. We need to be precisely clear.

EA: “Far from being the foundation of capitalism, natural property rights, construed as putting constraints on state action, are its bane.”

How anyone can not just burst out laughing at this I do not know. Constraints on state action are the bane of:

A.) Socialism

B.) The Free Market

C.) “Modern Capitalism”/”Democratic Capitalism”/The Mixed Economy


EA: “The state does not "interfere" in a "natural" capitalistic realm; rather, state action constitutes this realm as distinctively capitalistic.”

All leftist professors should be required to stay after class every day and write 500 times on the chalkboard:

“State’s don’t act. Only individuals act. The State is composed of acting individuals.”

All those who make reference, laugh at, or make accusations of anti-intellectualism, belief in God, “intelligent design”, etc. toward the Right should write the above out 1,000 times. The leftist view of the State is clearly religious, regarding it as some kind of “God”, when it is repeatedly self-evident and always observed that only individuals are acting and that “the State” is a *label* representing acting individuals.

EA: “Advanced capitalism requires a vast apparatus of socially engineered institutions to sustain itself.”

Quiz time: what is the difference between democratic capitalism, the mixed economy, capitalism, modern capitalism, and advanced capitalism?

Again note the religious “intelligent design” coatings of the words. “Socially engineered institutions”. “Sustain itself”.

EA: “Consider, for example, the limited liability corporation. In a natural property regime, groups of people contracting together can enjoy no more rights vis-a-vis third parties than what the sum of their individual property rights already gives them. Since individuals do not enjoy any "natural" limitation on their liability, they can't naturally acquire such a limitation just by combining their property with others.”

A great example to use. Many on the right and libertarians can potentially be roundly criticized here.

Two concepts emerge. 1.) Liability 2.) Limited Liability

It is alleged that property is “combined” in a corporation. Let us compare that to the limited liability family. If a minor child commits murder on his own volition, can or should a parent be held morally responsible? Notice that parents have “limited liability” in this regard.

Now what exactly is a corporation? Just like the State, it’s a labeled group of acting individuals. The corporation exists by contracting with individuals to sell a share of ownership of the corporation’s property. All those who are the acting individuals of the corporation are not the total number of acting individuals who have lent savings (capital), or bought, a stake in the corporation. Should individuals who have bought a stake in the company but aren’t the acting individuals of the company be held liable beyond their property stake in the company? Should the lender of a gun, be held liable for murder (and civil damages) if the borrower of the gun, commits murder (the lender had no knowledge or reasonable basis to belief the borrower would commit murder)?

Exactly. The so-called “limited” liability is nothing of the sort. All individuals are still fully liable for any harm their individual actions might cause. The shareholders are fully liable to the extent of their property ownership claim in the corporation for any harm the acting individuals of the corporation might cause. The shareholders take all the risk to the extent of their property ownership in the corporation for any libelous harm which might be caused by the acting individuals of the corporation. Their “investment” can become worth zero by any number of factors including harm caused by the acting individuals of the corporation.

EA: “Limited liability is justified not because it could arise from a system of natural liberty, but because investment in firms that separate ownership and control will be retarded, and hence overall economic growth will be depressed, if investors don't enjoy it.”

Again, there is no “limited” liability. It is at best a misnomer. Since investor’s do not enjoy limited liability, it has nothing to do with economic growth or depression of it.

EA: “Limited liability does leave some rightful claimants uncompensated when firms go bust. Capitalism makes up for this in part through generally higher growth (which socializes some of the benefits of this property form). It also partly makes up for this through social insurance schemes that prevent some of the worst costs from being so concentrated as to produce hardship (which socializes some of the costs of this property form). For example, the state bails out pension funds that bankrupt firms owe to their workers.”


It is true that some rightful claimants may go uncompensated when firms go bust. Unfortunately, you can’t get blood from a stone. EA’s criticisms may be valid for limited partnerships and the like (I‘m not sure), but those partnerships are acting individuals of the firm. Just because you have a job and commit a crime does not mean that your employer is liable for your actions. The Trial Lawyers, of course, want to make that so. Again, if someone goes postal at work, the owners and other individuals working for the firm aren’t going to jail for murder and nor should they be punished for an action they are not personally responsible for.

So capitalism does not “make up” for anything. Those are false claims. “Generally higher growth” is an understatement, especially in comparison to a true free market. Use of the word “socializes” is again religious pretending. It masks violent action that compels by threat of imprisonment and death; we are talking about non-voluntary theft when “social insurance schemes” and “pension fund bailouts” are invoked.

EA: “Intellectual property rights are also both indispensable to capitalism and deeply artificial.”

Indeed intellectual property rights are artificial. They are, however, exactly the opposite of indispensable to capitalism. “Intellectual property” prevents others from shaping their personal property in the manner that they would so choose. It is theft of the use of property which frequently involves confiscation, theft of actual property. They are anathema to capitalism (whoops I‘d better qualify that as free market, as what the left [and the right] may be referring to as capitalism could be including this)! They create artificial scarcity! They rise prices! They prevent competition! They hurt the poorest the most! I’m fairly confident that one of the great achievements the younger generations will bring about in their lifetimes, similar to the downfall of the Berlin Wall and communism, will be the downfall of intellectual “property”.

Ideas are non-material, non-tangible, non-circumscribable, non-property, like sunshine or air. They can be owned by anyone who thinks them. They can be simultaneously inhabited without violating the smallest increment of imaginable space.

Similar criticisms can be made regarding bankruptcy and perpetuities.

EA: “But don't pretend that one's preferred system would still be able to sustain capitalism or preserve its observed advantages.”

We won’t pretend that such objectionable things like intellectual property have anything to do with the free market. We will show that alleged “observed advantages” are nothing of the sort. They are anathema to the free market. They are socialist violent compulsion and theft.

EA: “(2) Natural property systems do not generate the distinctive form of property essential to capitalism, namely, capital.”

A.) True

B.) False

Let’s also add “natural property systems” to the philosophical (scientific) table of needed definition and analysis like the various adjective “capitalisms”.

EA: “(Like my fellow-blogger Don Herzog, I happily embrace distinctions between state and society!)”

Let the reader note that not a single limit has yet to be placed on the State as the leftist professors continue writing the definition of “State” on the chalkboard. And of course they sure do embrace “distinctions” between State and society in the sense that they are 100% anti-society a-social in their espousals of the unlimited State.

EA: “Since natural property systems exist as an empirical reality, and not just in the state-of-nature fantasies of philosophers, we can compare their performance with artificial property systems established by capitalist states. De Soto's verdict is clear: natural property is inferior to artificial property.”

We do not know what is meant by “natural property systems”, “empirical reality”, or “artificial property systems”, in relation to “capitalist” in the context of this paragraph. What is certain is that there are many inherent anti-free market aspects residing in “capitalism” as it is being used.

EA: “The people who have only natural property are poor.”

There are too many fallacies to list in this statement. If I said dead Iraqis cannot be tortured, what does that “mean”?

EA: “Moreover, they are not poor because the state actively interferes with their natural property systems. For the most part, developing countries acquiesce in their formation. Rather, they are poor because natural property systems cannot convert property into capital.”

What is the definition of “capital” in this paragraph? What does “poor” have in relation to the economically established definition and reason “trade” occurs? Does anybody seriously buy “developing countries” acquiescing or is it much more accurate to picture brutal dictators and governments compelling and taking? I’ll let the historians insert their evidence regarding this matter for the moment.

EA: “Rather, they are poor because natural property systems cannot convert property into capital. The distinctive feature of capital is that it has market value to strangers, to people who do not belong to the parochial community in which the property exists. Capital can be sold to strangers and used as collateral on loans. Capital's value rests on the fact that it is the locus of a massive expansion of the scope of cooperation and trust, beyond the face-to-face community, ultimately encompassing the whole world. It is a great engine of cosmopolitanism, which is one reason why I support it.”

Capital is surplus non-consumed *savings*. The distinctive feature of *value* is that it is extrinsically determined by acting individuals. Parochial communities and the property existing there have nothing to do with whether or not others’ attribute value to it or not. It’s completely dependent upon the subjective valuations of owners and non-owners, all acting individuals. Note the use of the word “sold” is a reference to the economic concept of “trade”. What is a certain *FACT* about this transaction is that what was received was subjectively valued more than what was given away by both parties to the transaction. Also, note that not just “capital” but absolutely anything and everything can be sold to strangers and used as collateral on loans. Whether one supports “that” or not sounds reminiscent of the “use value” fallacies the science of modern economics established itself upon refuting.

EA: “The natural property theorist might insist that all that natural property lacks is formal recognition by the state, exactly as it has been created by the locals. This ignores the fact that natural property systems are profoundly idiosyncratic. They vary in innumerable details from one locale to another, just as languages vary. And just as language variation puts sand in the gears of cooperation and trust across linguistic groups, variations in natural property conventions impede the conversion of natural property into capital.”

Again, I’m not sure what is meant by “natural property”. People either own themselves and their possessions by fact of possession of said possessions or they do not. The existence of idiosyncrasy is why trade occurs. People subjectively value different things differently. This for that is as universal as the universal language hook-ups abounding at American universities. What does “formal recognition” have to do with anything except in defining mine and yours, theft, rape, and murder (afterwards referenced as T-R-M)? All accused rapists are not guilty is they say they didn’t rape? Rape doesn’t exist unless a State says it does? Variations on States calling taxation not theft certainly does put sand into the gears of cooperation, by definition. Of course, such impedes the existence and accumulation of capital.

EA: “Strangers are reluctant to buy it, or accept it as collateral, and not just because they lack confidence that their property claim will be enforced (by either the state or the locals) if a dispute arises. They are reluctant also because they literally don't know what they are getting. The local conventions that define and encumber the property are not written down. Even if they were, they are too idiosyncratic in form to enable effective comparison with other parcels of natural property. Without easy comparison with other parcels, natural property lacks fungibility and so lacks a market value to strangers.”

Do I need to even comment on this? They don’t know whether it will be destroyed by the warring factions, confiscated by gangs calling themselves “the State” or “the People’s Karl Marx Goon Militia”. So are we know claiming that written language is necessary to define or understand mine and yours, T-R-M? Idiosyncratic comparisons between this and that, apples and oranges, stories and food, is what subjectively valuing trade exactly compares. Offering someone the words, “we’ll pretend you own this” certainly might bring about a valuation of zero to others just like Remax might have a problem with me selling the White House or the Brooklyn Bridge. It says nothing about what someone would value the White House or the Brooklyn Bridge at if they could possess and own it. As such, they do not at all lack market value. How much is it worth to the highest bidder if he could take possession of it?

EA: “When the state grants legal recognition to natural property, as when it issues squatters title to the land they have been occupying extralegally, it incoporates that property into a vast system of artificial rules that are not of local making and that may well contradict the local conventions that previously defined the property.”

How is “legal recognition” any different than the local mafia don granting recognition to “personhood” by not killing? Again, it’s claiming T-R-M cannot exist unless defined by an arbitrarily existing, religiously defined god called “the State”. So maybe we’re claiming that the strongest mightiest set the “artificial rules”? This has absolutely nothing to do with philosophically defining T-R-M independently which implicitly define and establish property by absence of T-R-M action. I suppose we could test whether T-R-M are local convention definitions.

EA: “This means that the state is not, and ought not to be, bound to respect natural property.”

And here is the ringing endorsement of T-R-M by the left. Guilty as charged, “caught on tape”.

EA: “This is not to say that there cannot be a compelling case at times for the state to formalize natural property. My point is rather that the case cannot be made on the ground that people have a fundamental right to whatever property they have acquired naturally.”

No wonder defense attorneys are making bank defending criminals.

EA: “The case for formalizing natural property--incorporating it into the artificial capitalist regime--is rather that in many cases this is the best way, of the available alternatives, to enable the owners to escape poverty, provide for their needs, and gain prosperity and a wider range of opportunities.”

“Owners?” How can there be owners without property? By escaping poverty do we mean escaping or minimizing T-R-M? Are we defining “their needs” as avoiding T-R-M? Or are defining “their needs” as the needs of T-R-Mers?

EA: “Now here's the rub: those very same grounds also justify, at times, infringing on natural property and instituting new artificial property rights, such as social insurance entitlements, and hence the taxes to support them. The general justification for any property regime rests on its ability to enable, to the highest feasible degree, everyone under it to live a decent life, enjoying dignity, personal independence, freedom from poverty and oppression, a wide range of opportunities, and the effective power to participate in the social and economic life of the community.”

Let’s note the religious ill-defined words that do not accurately account for the actual actions that occur: “social insurance entitlements”, “taxes”, “decent life”, “enjoying dignity”, “personal independence”, “freedom from poverty and oppression”, “opportunities”, “effective power”, “participate”, “community”. Let’s picture where each of these fits in relation to actual T-R-M action and note where and how the “justification” occurs.

EA: “No one has a right, "natural" or otherwise, to a property regime that in fact deprives others of effective access to such a life, if there is an available alternative property regime that does effectively secure these others such a life. Such alternatives have been found through experience to require measures such as social insurance entitlements and the taxes needed to support them.”

So the right to procreate gives another the right to pick whom and when regardless of the whom’s will?

“If there is an available alternative property regime” perhaps, if it does not involve T-R-M, which has not been demonstrated.

EA: “(3) A pure system of freedom of contract, in which all property is fully alienable, tends to degenerate to feudalism. Capitalism therefore needs restrictions on freedom of contract.”

I’ll get to (3) in another post. To be continued...

Posted by: rtr | Jan 20, 2005 10:58:48 PM


Posted by: D.A. Ridgely

Terrier, perhaps I did misunderstand you. However, the adoption of a state sanctioned or issued currency remains coercive at least to the following extent. Imagine Mr. Ghertner and I enter into a contract in which he provides me with some goods or services in exchange for a predetermined quantity of tree bark. He performs and I do not give him his bark. He sues me and wins. What is his remedy? Will the court order me to tender the agreed upon quantity of tree bark? No. It will require me to pay him the monetary value of the agreed upon quantity of tree bark. (There are rare occasions upon which courts will order and attempt to enforce specific performance, but this wouldn't be one.) To that extent, he would be coerced by the state to accept monetary payment.

Posted by: D.A. Ridgely | Jan 20, 2005 11:26:48 PM


Posted by: rtr

EA: “(3) A pure system of freedom of contract, in which all property is fully alienable, tends to degenerate to feudalism. Capitalism therefore needs restrictions on freedom of contract.”

Let’s remember that we have only fairly recently escaped from what was called “feudalism” and that it was escaped (to varying degrees) exactly by allowing freedom of contract and fully alienable property. Let’s remember that forbidding freedom of contract and preventing fully alienable property is the *definition of socialism*. How can “capitalism” need that when it is anathema to capitalism? Let’s remember the horrors that socialism brought to individuals in the twentieth century. How many Holocausts was it? Ten holocausts? Twenty holocausts? Are there any museums to mark and remember what these socialist forces did? Or is almost entirely residing on what libertarians and others of the Right have written?

EA: “Feudalism is based on the principle that private property in land confers political power over whoever is on the land. One's landlord is one's lord. Feudalism permits the conversion of property over things into subjection over people.”

This is why it is best to have private property divided between as many existing acting individuals as possible. “Capitalism” has brought about the division of labor and the division of property. Feudalism and socialism have brought about vast expanses of claimed ownership over vast tracts of land, empires, and the political power over subjugated individuals. “One’s landlord is one’s lord” is the same as “A man’s [and by “man” we today mean both women and men, all acting individuals] home is his castle”. Thus, it is best for everyone, the greatest number possible, to be their own landlord and lord. This *prevents* “States”, acting individuals, from having anyone exert political power over them.

EA: “Theories of natural property rights, which suppose that people have property in themselves, and that all property is alienable in contracts, permit the same conversion. If the state places no limits on such conversions, then, given the volatile nature of capitalism, many people will be pushed into a poor bargaining position.”

Let’s take as a statistical historical comparison the number of individuals in the U.S. who own their own homes and the land those homes are built upon and compare it throughout history. Some people might have “poor” bargaining positions but let’s put that in comparative context of having *no* bargaining position. What is the “volatile nature of capitalism” supposed to mean in comparison to the violent T-R-M actions of tyranny? That tyranny occurred *precisely* because “free” (take note of the superfluous use of the word “free” by myself) trade was prevented from occurring. That was the precise *entire* basis of subjection.

EA: “In such a position, many will sell their personal independence for subsistence.”

At least they have a choice of whether or not to sell rather than having no choice and just being flat out forced to do the same. This troubling aspect of poverty for the masses has been dramatically withered away by capitalism.

EA: “Thus arise oppressive forms of contract feudalism such as those into slavery, bonded labor, and debt peonage. Thus arose company towns in the U.S., which issued scrip instead of cash wages to their workers (redeemable only in company-owned stores), required workers to rent company-owned houses (with leases enforcing what the company deemed a proper lifestyle), and crowned the firm owner as mayor for life (without those pesky elections). Thus arise modern factories in quasi-capitalistic China today, which keep their workers locked up in factory-owned dormitories, forbidden by contract to wander outside, lest they hire out their labor (enhanced by the training provided by the firm) to competitors.”

All horrible things which should be thoroughly analyzed and roundly criticized. Let’s at least note that they were not being raped and buried in mass graves or sent off to be tortured in the gulag. Let’s note precisely where options did not exist because competition of better terms did not exist and take note of how the evolution of competition and accumulation of wealth has brought much better terms and will continue to bring about better terms unless the leftist forces of socialism succeed once again in enslaving humanity. A person cannot be forced to remain a slave except by violent force. Individuals who keep their workers locked up will be remembered once the first brave ones wander outside. No contract can keep a person from selling his labor to another with better terms except upon violation of the absolute property of their persons.

Micha Ghertner answered the “consent” part of EA’s argument well. Objections to the rest have been stated previously, so that will conclude my opening remarks to Elizabeth Anderson’s primary topic post.

Posted by: rtr | Jan 21, 2005 1:41:23 AM


Posted by: rtr

One other thing to think about. How much land can the richest persons today buy? Could any one individual buy New York City and kick everyone out? They couldn't come even close. Supply and demand and trade bring about distributions that maximize the material wealth the acting individuals of society. What percentage of England could the Royal Family purchase today? How about the Saudi Royal Family? Bill Gates?

What if the richest individuals of today could own the vast tracks of land the feudal lords of past could? What level of wealth would that imply they had in today's terms? What does this say about variance between the rich and the poor, the have and the have nots, today and then?

Posted by: rtr | Jan 21, 2005 1:49:39 AM


Posted by: Paul Deignan

Mikec,

On the note of intellectual property and coercion, consider the new trend in the US universities to consider all intellectual work performed by professors and students (even undergraduates) as well as any derivative work performed later to be the property of the university. I kid you not. Our universities have become feudal fiefdoms limited only by the reach of their legal staffs to sue students or to coerce others to apply such pressure.

Case in point, a good part of my income this past year went to our friends in the legal profession simply to assert my copyright of a computer algorithm and software. So lets consider that -- the power of raw capitalism being applied coercively to rob an individual of the value of their thoughts. Here natural conception of property rights seems far better than this implementation of capitalism.

Posted by: Paul Deignan | Jan 21, 2005 8:03:27 AM


Posted by: Terrier

D.A. Ridgely, the example you give does not address the issue of valuation - the court does not award you money in the case you outlined because it wants to coerce the use of money over tree bark, it does so because you already value money over tree bark. Tree bark might be awarded if you showed some unique valuation that money could not satisfy. My point still stands, we value money without coercion and entrust the government with the responsibility to maintain our 'delusion.' This is a collective agreement based upon shared goals that individually we could not achieve. You may print your own twenty-dollar bills with a portrait of Eric Dolphy but no one would accept them. It is because we all agree about our 'delusion' that money works as a symbol of property.

Posted by: Terrier | Jan 21, 2005 9:07:45 AM


Posted by: D.A. Ridgely

Terrier, yes and no, although perhaps we are speaking at cross purposes. As I already said, there are rare cases in which courts will order specific performance of the terms of a contract, e.g., sale and transfer of real property, works of art and other one-of-a-kind sorts of things. Generally, though, the courts don’t care how the parties value either the quid or the quo in the quid per quo. They simply award money damages for breach. Our suspicions that the money might really be worthless are irrelevant. I suppose, however, you could say that they impose the general ‘delusion’ even on those who do not share it, but we are still stuck with using it as a matter of government fiat (pun intended) whether delusional or not.

Posted by: D.A. Ridgely | Jan 21, 2005 9:28:02 AM


Posted by: D.A. Ridgely

It’s probably more relevant to Ms Anderson’s earlier take on Locke, but some here might be amused by a nice little slam in “Reason Online” of Michael Otsuka’s Libertarianism Without Inequality entitled John Locke Lite.

Posted by: D.A. Ridgely | Jan 21, 2005 9:48:58 AM


Posted by: Paul Deignan

From the above citation:

According to Locke, “he who appropriates land to himself by his labour, does not lessen but increase the common stock of mankind.

This goes straight to the complaint about the presumption of "possession" as opposed to "use" that I made earlier. The fundamental flaw of the header article here is that it is comparing apples to apple pie.


BTW: I can attest to the left and right libertarian problem -- had the same problem when asking respondents to sef-identify their political affiliation for the personality study.

Posted by: Paul Deignan | Jan 21, 2005 10:38:42 AM


Posted by: Bret

I'm looking forward to the third installment of this series where Elizabeth Anderson explains why we shouldn't complain about paying federal taxes in particular. In other words, why is it the federal government is the ideal place for taxing and funding of social safety nets? Why are state and local governments less good, or, on the other hand, if we need redistribution to occur at a global level, why not form a supernational government that collects the taxes and administers the social safety net across the planet?

I also don't think that conservatives in general have a problem with the legitimacy of taxes and safety nets. Libertarians and anarchists, yes, but those aren't really part of the Right, though they are certainly amply represented here in the comments of this blog. The debate with conservatives is more how taxes are structured, how big of a bite they take, how the safety nets are structured, and what strings are attached.

I had previously never interpreted de Soto quite that way, but I'll admit your interpretation is plausible, even if I'm not yet quite completely convinced.

My personal feeling is that social safety nets make us all richer by enabling people to take more risk and be more entrepreneurial. I'm talking about people who open the little restaurant, or framing shop, or dry cleaner, or landscaping service, or little technology company. I think people are more willing to do this if they know that failure doesn't mean destitution. So I support them, not because they're fair (which they may or may not be), but because they make me (and my children) richer. The only trick is to get the size of the safety nets right.

Posted by: Bret | Jan 21, 2005 11:57:58 AM


Posted by: Terrier

Paul Deignan, "the new trend in the US universities" is the old trend in business and they have better and more numerous lawyers than your university, so I would advise you to stay in your tower and I'll be sure and light a candle for you.

Posted by: Terrier | Jan 21, 2005 12:40:13 PM


Posted by: Paul Deignan

Terrier,

Did you have a point or was the last post just flamebait?

Posted by: Paul Deignan | Jan 21, 2005 1:06:44 PM


Posted by: frankly0

a. Capitalism would work fine without the concept of a limited liability corporation. Investors would not be deterred from investing. They would buy liability insurrance. (Good idea, actually.)

b. Intellectual property rights are a very controversial issue. It's not at all clear that they are "indispensible to capitalism."

If there's any single thing I find hardest to deal with in libertarians, it's the kind of thinking that lies behind these counterarguments.

There's an apparent absurdity derived from the philosophical basis of libertarianism? Don't be a fool! Actually, we of course accept and embrace those consequences! If libertarianism implies the rejection of limited liability corporations and of intellectual property, so be it! Modus ponens now, modus ponens tomorrow, modus ponens forever!

In my view, modus ponens is the crack cocaine of ideologues. An occasional use of modus tollens is the sure sign of an open mind.

Posted by: frankly0 | Jan 21, 2005 1:15:08 PM


Posted by: mikec

Frankly0,

If there's any single thing I find hardest to deal with in Liberals, it's their tendency to ridicule arguments they can't refute. :-)

Posted by: mikec | Jan 21, 2005 5:44:34 PM


Posted by: Paul Deignan

Some perspective:

As members of a society, whether local or global, a consequence of free will is that we will be able to act on others and necessarily to be acted upon. There is no refuge from this interaction.

Where there is a state, there will be a need to maintain that state by the contribution of its beneficiaries. It is perfectly proper for those that would be taxed to react, through speech or action – to squabble over who should pay what share and why.

What is not proper is that one actor should ever suggest to another that he not exercise his free will to act. That is symptomatic of an authoritarian streak that has been proven time and again to be destructive to all.


Posted by: Paul Deignan | Jan 23, 2005 1:51:57 PM


Posted by: No Lables Please

Let's get over the straw man of "natural property rights" and get back to the real world.

We live in a representative democracy that has chosen to incorporate various froms of taxation to fund collective governmental expenditures. So do most of the citizens of the world who enjoy a high standard of living.

If Ms. Anderson's main point is:

"The general justification for any property regime rests on its ability to enable, ***to the highest feasible degree***, everyone under it to live a decent life, enjoying dignity, personal independence, freedom from poverty and oppression, a wide range of opportunities, and the effective power to participate in the social and economic life of the community.”

I assume she means [cutting through the triple speak] that taxes should be higher/more progressive etc.

As I've noted in previous postings - that's fine. Please make a case to the electorate why higher taxes will maximize your stated objective function. Something like 75% of the households in this country earn less than $60,000 per year. Should be easy to get the votes to increase taxes on the wealthy, no?

If it isn't - maybe the question should be asked, why not?

Some possibilities:

1. The electorate doesn't believe that higher taxes will maximize the collective objective function over the long run.

2. The electorate thinks that higher taxes don't solve problems that government tries to address - eg education, where we spend more money per capita than any country in the world.

3. The electorate chooses not to support types of redistribution that seem to perpetuate an underclass with values that are hostile to the society's at large.

So, my point is- if you want to raise more revenue you'll need to make the case that the money won't be wasted, or have unintended consequences that make matters worse. I believe people in this country [on average] would support increased taxes for causes they believed made it sense for the government to fund.

Posted by: No Lables Please | Jan 24, 2005 1:27:00 PM


Posted by: Evan

This argument against natural property is interesting and thought provoking and may be substantially correct, but with regard to the issue of taxation I think it's kind of irrelevant.

I agree with this: the claim "it's mine" does not by itself constitute an argument against taxation. But the reason I agree with it is that the claim "it's mine" is itself false. Or rather, it's false when read the way libertarians tend to read it, as "it's entirely mine." The truth is, "my" money is only partly mine, and that goes for everyone else as well.

Why? Because I didn't earn it by myself; I had lots and lots of help. Libertarians fantasize that they would be able to earn and keep just as much money in the absence of a state as they do now. Without public roads, without standardized money, without police, without courts of law enforcing contracts, without banking regulations, without protection from fraud, without intellectual property law, without bankruptcy protection, without antitrust laws, etc etc etc--and, yes, without the social insurance that keeps their parents from being a financial burden on them--they imagine they'd be just as wealthy. And that is just plain nonsense.

There are lots of places where state power has collapsed. A war, a coup d'etat, whatever--boom, no more government. These places have names like Somalia and Rwanda and Afghanistan. They are not known for the wealth and security of their inhabitants. First-world corporations rarely rush into such locations and invest their money there to take advantage of the benefits of not having a government. If there were any such benefits, they would.

The reason we're all able to make so much money, invest it securely, and spend it frugally in the free market is that we have a government infrastructure that makes market transactions of all sorts a whole lot easier and more efficient. (Not that there's no room for improvement, mind you, but government is massively better than anarchy for making money.)

And that's the point: If, in the absence of a government, I couldn't reasonably expect to make more than, say, ten percent of my present income (and IMHO that's generous), then it follows that the government helped me earn the other ninety percent, and therefore has a legitimate claim on some portion of it. You can of course quibble with that 90% figure, I happily admit to having pulled it straight out of my ass, but it's some percentage greater than zero--and that percentage completely invalidates the argument that "it's mine".

N.B.: Of course it's reasonable to differ on how much the government should tax people; obviously, too much will stagnate the economy and starve people. But for the most part this is a practical and political matter; not a moral or ethical one. Taxation can be too heavy, and it might be best if it were very light--but it's not "theft" as long as the state actually helped earn the money. That argument holds no water.

Posted by: Evan | Jan 24, 2005 9:21:05 PM


Posted by: No Labels Please

"Since their prosperity arises from artificial property, no less than the economic security of those receiving social insurance entitlements does, their property claims enjoy no superior or prior status that could constrain the state's constitution of new entitlements and taxes that advance the proper goal of any property system--effectively securing a decent life for all."

What part of this theory prevents the omnipotent and all-wealth-producing 'state' from seizing the artificial property of individuals in random, capricious and/or unequal measures?

Is it worth noting that 'states' with stronger conceptions of personal property rights tend not to devolve into tyrannies?

Has Ms. Anderson studied 20th century history?

Posted by: No Labels Please | Jan 24, 2005 11:55:49 PM


Posted by: Evan

What part of this theory prevents the omnipotent and all-wealth-producing 'state' from seizing the artificial property of individuals in random, capricious and/or unequal measures?

Why is it necessary for any part of this theory to prevent that?

The subject under discussion was whether taxation is "theft", and in relation to that, whether the principles of "natural property" are consonant with modern capitalism. Which seems to me to be rather orthogonal to your point.

You seem to be suggesting, here, that the concept of natural property is the only thing that restrains a state from taxing people in random, capricious and unequal ways--and that's, well, wrong. No government I've ever heard of believes that taxes are theft. Yet many governments try to tax people in a fair and equitable manner; there are sound utilitarian as well as egalitarian reasons to do so.

Saying that taxation is not theft doesn't imply that taxes must be as high as possible; it just implies that that one particular anti-tax argument is vapid.

Posted by: Evan | Jan 25, 2005 12:57:17 AM


Posted by: Bernard

I see a significant parellel between this discussion thread and that about genetic determinism below. The main argument I see for natural property rights is not that there is any evidence for them, but that acknowledging their non-existence would lead to unrestrained kleptocracy and crumbling social structure. The main argument I see for dismissing a genetic role in the way people develop is not that there is any compelling evidence on which to dismiss, but that exploring the reality will lead to unrestrained prejudice and crumbling social diversity.

The problem in both cases is that people inevitably spot the holes in theories which have no supporting evidence. If there really were no stronger argument against a 98% tax rate than 'people have an a natural right to their property which I have no positive evidence to prove', then the prospects for capitalism would be bleak. Likewise if there were no stronger argument for diversity in higher education than the 'blank slate' idea which everyone and their grandmother can pull apart as a utopian fiction, then diversity would be in dire peril.

Fortunately, in both cases, there are stronger arguments.

Posted by: Bernard | Jan 25, 2005 4:45:38 AM


Posted by: No Labels Please

Evan:

I agree that taxes are not theft. See my other post further up.

However, this statement should scare the shit out of anyone who understands how 'beneficient' totalitarian regimes operate:

"Since their prosperity arises from artificial property, no less than the economic security of those receiving social insurance entitlements does, their property claims enjoy no superior or prior status that could constrain the state's constitution of new entitlements and taxes that advance the proper goal of any property system--effectively securing a decent life for all."

A [much] better statement might be:

"Since the people have collective interests and undertakings which must be funded in some fashion, each citizen agrees to contribute a portion of his earnings or wealth to enterprises for the common good. The people shall together decide the extent and nature of these enterprises, review their successes and failures and together determine the appropriate amount that each citizen must contribute based on his or her financial circumstances"

This is effectively how our system works today.

Ms Anderson's statement says - "Hey- we're the government - you don't have ANY claim to your own property if we say you don't - and if we think we have a better way to spend it than you do - tough shit - we'll confiscate it."

I personally find this more offensive than anything I have read on this blog yet, considering the historical connections between economic and political freedom, and the tens of millions of people who have been killed by systems that have arisen from the failure to understand this connection.

Posted by: No Labels Please | Jan 25, 2005 8:55:41 AM


Posted by: Elizabeth Anderson

No labels please characterizes my argument as saying:

"Hey- we're the government - you don't have ANY claim to your own property if we say you don't - and if we think we have a better way to spend it than you do - tough shit - we'll confiscate it."

and comments:

"I personally find this more offensive than anything I have read on this blog yet, considering the historical connections between economic and political freedom, and the tens of millions of people who have been killed by systems that have arisen from the failure to understand this connection."

But No Labels Please has systematically misread what I asserted, which affirms an objective, not a subjective standard for the justifiability of a property system. The standard is not "if government leaders *think* they know better how to spend your money, they can take it whenever they please, and kill you to boot." It is rather, if a system of entitlements *in fact* better secures the ability of *each* person to live a free, dignified life with ample opportunities than an alternative system, then this is a justification for enacting that system. It follows trivially that no system that engages in mass murder or other totalitarian actions could be justified by my standard, regardless of what government leaders might believe. The same conclusion also follows trivially from my argument in this post that we have inalienable rights. Furthermore, as a democrat (small d) I hasten to add that legitimate definitions of property entitlements are up to citizens, acting collectively through their elected representatives. I articulated other constraints on legitimate state taxation in my first post on taxation. My current post is intended to persuade you that capitalism rests on artificial foundations, and that if we want to preserve its virtues, resort to concepts of natural property will do us no good. But just because natural property rights don't establish justified constraints on state definitions of property rights doesn't mean there are no constraints at all.

Posted by: Elizabeth Anderson | Jan 25, 2005 10:08:06 AM


Posted by: Paul Deignan

Elizabeth,

Communism was taught as a science just not so many years ago.

"In fact" is problematic. How is that determined?

Posted by: Paul Deignan | Jan 25, 2005 10:17:11 AM


Posted by: Evan

A [much] better statement might be: Since the people have collective interests and undertakings which must be funded in some fashion, each citizen agrees to contribute a portion of his earnings or wealth to enterprises for the common good.

But that just begs the question; it's circular logic. Not all citizens do agree to contribute, nor do they choose the portion they will contribute; the subject at hand is whether they have a right to refuse. Furthermore, you applied a possessive pronoun to "earnings", when the nature and extent of citizens' possession of their earnings is pretty much exactly what's at issue.

I argued above that no "agreement" is required, because earnings don't entirely belong to the person who earned them. The government (or whatever organization maintains the market infrastructure and enforces the rules) helped--and therefore has a legitimate claim on a portion of the proceeds. For a non-governmental example, no one denies that eBay has a right to skim off some of the money that's earned in the marketplace it maintains. The government has the exact same right, for the exact same reason. Paying taxes is paying your free-market bill.

And I think Ms. Anderson is making a somewhat similar argument in the passage you objected to, with a subtle distinction: I say the government has a right to part of your earnings because of services they provided that enabled you to earn it; she's taking a step further back, and saying (if I read her correctly) that one of the useful services that government provided was to define and standardize the very meaning of the word "property"--and therefore it can define it in such a way as to require reasonable taxes if it bloody-well wants to.

She's not wrong. Property is, to some extent, defined by law; if you don't believe me, try to enforce a copyright in a country with no copyright law. But I do think this argument goes beyond what's necessary to refute the "taxes==theft" idea. Furthermore I think it's a confusing way to make the argument, because there is a kind of irreducible "commonsense" property that has nothing to do with government definitions. On some hypothetical stateless tropical island, it would presumably still be meaningful to say "this is my coconut", even if it were completely nonsensical to say "I hold the copyright on that hula dance".

So you're not really wrong, either. I think what you're objecting to is the suggestion that property is entirely defined by the government, and not at all by common sense. Whereas I have no objection in principle to that idea--with the caveat that the government's definitions had better be reasonably consistent with common sense, or the government won't last long.

Posted by: Evan | Jan 25, 2005 12:49:53 PM


Posted by: Miab

A proposal that might satisfy the "tax is theft" libertarians as well as the pro-tax people:

Keep the entire federal and state tax system the same, but allow an "opt-out." Anyone could opt out of the obligation to pay any taxes, and in exchange would put on a public list of people opting out of the benefits and protections of government. That person would be voluntarily giving up, for example:

- police and fire protection for his property
- the right to enforce contracts in court
- the right to protection of his body by laws against assault or murder or armed robbery
- the right to use the public roads, airports, sports stadiums, or any other facility built with public funds
- the right to recover in court in the case of fraud or theft
- legal protection of his intellectual property
- legal protection of his real property (e.g., no right to have a trespasser or squatter ejected)
- no right to bankruptcy protection
- no right to a U.S. passport, or to any help from consulates while abroad
- the right to collect principal or interest from any US, state, or municipal bonds (or, rather, the government would be contractually obligated to pay, but that person would have no recourse if it chose not to pay the opters-out).

It's difficult to figure out how to opt out of being protected by the U.S. military while within the U.S. Maybe that one's a freebie.

Is that incompatible with free-market tax-as-theft theory? I would be curious to see how it played out in practice.

Posted by: Miab | Jan 25, 2005 2:55:02 PM


Posted by: No Labels Please

Evan said:

"But that just begs the question; it's circular logic. Not all citizens do agree to contribute, nor do they choose the portion they will contribute; the subject at hand is whether they have a right to refuse. Furthermore, you applied a possessive pronoun to "earnings", when the nature and extent of citizens' possession of their earnings is pretty much exactly what's at issue."

Well....they don't have a right to refuse to contribute in this system - nor should they - I don't disagree with that - the problem with free riders is much too difficult to solve. They do have a right to influence the size of the portion they will contribute through the electoral process, which is fine. Also, ultimately, there is the option to leave the country. Again, I don't have a problem with taxes. I do have a problem with the subordination of property ab initio to the state.

Liz said:

"It is rather, if a system of entitlements *in fact* better secures the ability of *each* person to live a free, dignified life with ample opportunities than an alternative system, then this is a justification for enacting that system."

So, if the system is better - it's better? OK. We could debate the exact expression of the objective function, but let's not.

What's scarifying is the notion that the 'state' which is **truly** an artificial creation of the citizenry [much more so than property- whose legal definition is, I agree, artificial], may somehow able to define the *in fact* in your statement, and use it to justify unlimited [according to you] claims on individual property. This is how the really, really bad things have happened in recent history, no?.

Posted by: No Labels Please | Jan 25, 2005 3:46:03 PM


Posted by: Evan

A proposal that might satisfy the "tax is theft" libertarians as well as the pro-tax people: Keep the entire federal and state tax system the same, but allow an "opt-out."

This basically already exists; you just opt out of participating fully in the market.

For example, if you limit yourself to a job that pays less than $15,000 a year (or whatever the cutoff is these days), you pay no income taxes. If you don't have a paying job at all, you won't even owe payroll taxes anymore. Find someone willing to employ you for room and board alone, and you're all done with taxes.

So far I've never met a taxation opponent who was satisfied by that answer. They want to use the market; they just don't want to pay the bill.

Posted by: Evan | Jan 25, 2005 5:58:48 PM


Posted by: Elizabeth Anderson

No labels please continues to insist on reading into my words implications that flatly contradict what I actually say:

"What's scarifying is the notion that the 'state' which is **truly** an artificial creation of the citizenry [much more so than property- whose legal definition is, I agree, artificial], may somehow able to define the *in fact* in your statement, and use it to justify unlimited [according to you] claims on individual property. This is how the really, really bad things have happened in recent history, no?."

No, I have *never* claimed that the state may justify "unlimited claims on individual property." To the contrary, I have repeatedly stated that there are limits to taxation of individual property, in my original post on taxation, where I list several limits to taxation; in the current post, where I insist on the importance of inalienable rights; and in my previous comment to this post, where I reiterate the importance of democratic constraints on taxation.

One of the constitutive features of democracy is a free press and freedom of speech, part of the point of which is to prevent government leaders from "somehow" defining facts in ways that are patently contrary to the truth, and to give the people the power to boot out officials who try to do so. Now, I *do* find it scary when the press fails to do its job in fact-checking state leaders, as we saw most vividly in the run-up to the Iraq war. (There are systematic reasons why the press often does a bad job fact-checking state claims about war: the lack of transparency of war-planning operations and the data upon which the state claims to be acting, the relative ignorance of circumstances abroad and especially of the supposed enemy, the whipping up of fear and invocations of patriotism that tend to block reasoned discourse. But these reasons do not generally apply to domestic policy in democratic states.)

There are also scary costs to depriving the state of the power to tax in order to support social insurance entitlements. These costs have proven to be much worse than the costs of granting the state the power to tax for this purpose. The latter costs are not remotely comparable to granting the state totalitarian powers, as in the USSR. We've had enough experience with social democracy to know that it isn't on a slippery slope toward communism, either.

To reject *one* type of constraint on taxes (that it violates natural property rights) is hardly to reject them all.

Posted by: Elizabeth Anderson | Jan 26, 2005 1:02:23 AM


Posted by: Paul Deignan

Elizabeth,

Did you notice how many times you use the word "scary" in your post? Good policy is usually not the product of the terrified.

Posted by: Paul Deignan | Jan 26, 2005 1:08:31 AM


Posted by: Paul Deignan

BTW, I wouldn't beat up the press too much about the pre-war intel. They actually did a fair job reporting what there was to report.

A better criticism would be to ask why (portions of) the NIE was declassified only after the war. This would have shown a gapping hole in the intel. So if immediacy of a WMD threat was anyone's real reason for either supporting the operation or not, this would have been the route to go in changing the debate dynamic.

Posted by: Paul Deignan | Jan 26, 2005 1:26:41 AM


Posted by: Miab

"They want to use the market; they just don't want to pay the bill."

In the end, for all the high-flown talk about natural rights, property rights, Nozick, and whatever, the above is what it really boils down to -- give me the benefits that go along with the modern state, but I don't want to be the one to pay for it.

Posted by: Miab | Jan 26, 2005 12:30:19 PM


Posted by: No Labels Please

Liz:

Thanks for the clarification. I re-read your original post. I think it is inconsistent with this sentence from the second post:

"...their property claims enjoy no superior or prior status that could constrain the state's constitution of new entitlements and taxes that advance the proper goal of any property system..."

I think the "...no.....constrain..." clause here probably could [properly or improperly] be read to imply things you may not actually support.

Posted by: No Labels Please | Jan 26, 2005 3:57:13 PM


Posted by: lorenzo sleakes

Natural rights all stem from people’s inherent right to the ownership of their own bodies. All libertarians (left and right) agree about this. This precedes all man made positive laws and cultural norms, which is why we can say it is wrong for any culture to allow a parent to sell their children into slavery. Without the natural right preceding positive law we cannot make this statement because the law is just whatever people want and in some poor countries people may want the extra income gained from selling their children into slavery.

Libertarians also say taxes are theft and this extends from natural rights. There point is this: free housing and medical care are not rights but the freedom to own your own body and its labor is a right. Therefore for the state to force a doctor to provide free medical service is a form of slavery. The natural right of people to be free is more fundamental then any social goal of free medical care. So although it would be nice to provide free health care it is theft when we force a doctor to provide free labor. Income taxes are equivalent to forced labor because a portion of the fruits of your labor must be given to the state.

If I am a builder and a homeowner, and I add a two-bedroom extension to my house, it would be my natural right to own the fruits of my labor, which stems from the free ownership and use of my body. But if the state says, we have a social goal of providing rooms for the homeless so one of the rooms you constructed must be given to a homeless person then this would clearly be a violation of a natural right. But the state does the same in a less obvious way by increasing property tax based on me now having two new bedrooms. This is where libertarians agree that tax is theft. It is a kind of forced labor – for each bedroom you build I get one and you get to keep one. Natural rights exist and are not the same as social goals. Just like personal goals, social goals are unlimited but we have limited resources available for achieving them and therefore have to make hard choices given that we cannot afford to have everything we would like. A natural right to own ones own labor is a higher principle then any socially contingent goals such as providing education and health care.

At this point right libertarians loose their way by insisting that ALL property is private and extends from natural rights. In order for people to be have natural freedom of movement of their own bodies they must have space in which to move those bodies. When I ride my horse across the open prairies and come to a wall that says “keep out” certainly my natural freedom of movement has been curtailed. I can ignore the irritating warning to “keep out” but state police (“Men with Guns”) will not be far behind if I ignore the warning.

Now some right-libertarians will suddenly jump off the natural rights track to a utilitarian argument. Locke and Nozick will say we are all better off because farmers can fence off some piece of property and grow more food then would ever grow in a natural wild state. More wealth is produced when land is under private cultivation and we are all better off. However, who has the right put the fence up and block others from their natural freedom of movement? Can it really be the person who’s Great Great Grandfather first put up the fence?

This is where Henry George’s proposal of the Land Value Tax comes in. Maybe it is not a “single tax” as he suggested but just one example of a tax that is neither theft nor forced labor. People simply say we will agree to give up our natural and God-given freedom to roam through that land (annoying as it is) because we know more wealth can be created if it is used privately. But in exchange (voluntary of course) we would like a little bit of this wealth sent back to ourselves (the land value tax) for whatever purposes we choose (send me a check?, welfare?, education??)


Posted by: lorenzo sleakes | Mar 9, 2006 10:56:03 AM


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