Private Rights to Property
by John W. Allen
Ignorance of economics has probably caused . . . more harm to more people in more places than any other ignorance.
Michael Novak (See end note 1)
Only if we understand why and how certain kinds of economic controls tend to paralyze the driving forces of a free society, and which kinds of measures are particularly dangerous in this respect, can we hope that social experimentation will not lead us into situations none of us want.
Friedrich A. Hayek (See end note 2)
After 50 years of growing government and declining private rights property, there has been a remarkable resurgence of private rights to property and free market policies around the globe. Privatizing nationalized industries is the vogue. Even in mainland China, government control is giving way to the free market. The recent addition of economics into law schools and the latest appointments to the U.S. Supreme Court may very well reinforce and perpetuate this trend.
While many rejoice in this development, many others find it abhorrent. Still others are uncertain and many, perhaps most, are indifferent. Are these developments good or bad? That is a value judgment which depends upon individual perspectives. My purpose in writing this paper is to help people evaluate this trend.
Of course, this is not the first excursion into the area of economic systems. This has been a prominent area of inquiry even before but especially since the appearance of Adam Smith’s Wealth of Nations in 1776. While I cover some of the same material as other writers on this subject, my focus is on one aspect of economic organization that has received comparatively little attention: private rights to property.
The so-called “property rights perspective” in the analysis of economic and social affairs is a powerful vehicle for understanding the behavior of individuals and organizations. And knowledge about economic behavior is a necessary condition for predicting the likely results of proposed policies aimed at social reform.
For many generations Americans have lived within a system of private property rights. Because it has worked so well, few of us have had reason to examine the essence and importance of this institution. As a result we have given little thought to the consequences of giving up some of these rights. Over time we have allowed many of our property rights to be eroded gradually. Not observing the results of this erosion from an overall perspective, we have been unaware of their cumulative effects. I hope that this paper will help to develop that perspective and to reveal the likely consequences of the continued erosion or the resurgence of private rights to property.
Certainly I alone must shoulder the blame for any errors or omissions in this paper. But because I had so many good and careful reviewers, I take comfort in knowing that the errors are fewer. I am especially grateful to Armen Alchian of UCLA, who many regard as the founder of property rights analysis, for his careful reading, many suggestions and generosity in writing the “Foreword.” I believe my colleague and good friend Morgan Reynolds is one of our profession’s most talented and learned writers, and I was the beneficiary of his insightful intellect and sharp pencil. Much help was also received from my colleagues in the Real Estate Center, Jack Friedman and Jack Harris, and from John Baden of the Political Economy Research Center. I want to thank also the Real Estate Center’s Director, Rick Floyd, for his reading, advice, encouragement and financial support of this project. His belief that the Center should have something to say about property rights and that it has a duty to help the lay public understand this institution of private property is commendable and much appreciated. But even more important, his confidence in my ability to head this project is deeply appreciated. Last, but certainly not least, I am thankful for the support of the Center’s Advisory Committee, and I am especially grateful to its former member, George McCanse, whose enthusiasm and leadership were instrumental in launching this project.
John W. Allen