Wednesday, December 30, 2009

What is private property?


When you hear the phrase "private property", you might think of those obnoxious red-and-black signs intended to evoke the image of a grumpy old hermit in a ramshackle house with a shotgun and two Dobermans ready to shoot on sight anyone who dares cross his property. In the Austrian tradition of economics, this is not what is meant by the phrase "private property".

Property is an exclusive right to use a physical resource. Some people (including some Austrian economists) hold that classes of physical objects (such as images, texts, motion pictures, inventions, blueprints, and so on) can be property but I think this is a categorical mistake and results from a fundamental failure to really grasp what property is.

Ask yourself, why is there property? Our nearest living evolutionary relatives have little or no concept of property. Somewhere between the time we parted ways on the evolutionary tree and today, humans began to engage in behavior that implied a conception of property. Property arose because it serves the purpose of conflict-avoidance by acting as a generally recognized heuristic allocating scarce physical objects to the exclusive control of one or another individual. If you pick up my camera from a seat at the airport, I will probably only need to say, “excuse me, that’s mine” to settle the matter of whether you may use it. There are many conflict-avoidance schemes in human affairs, from religious rituals to social customs. When someone says, “Pardon me” after bumping into you in a hallway, the odds of a physical conflict arising as a result of the mishap are lower than they otherwise would be. From the standpoint of biology, it should be clear to see how persons who engage in conflict-avoidance strategies have a reproductive advantage over those who do not. David Friedman approaches the problem from a game-theoretic point of view in this essay on property rights.

Property is the division of scarce resources in the physical world into regions (in both space and time) over which individual persons have exclusive control in order to avoid conflicts. There is no such thing as "common property" in this view of property. Common property is simply property in dispute, that is, property over which the boundary lines have not been settled. All disputes, in this view of property, are property disputes (conflicts over the use of scarce resources), a subject I will address in a future post.

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