The Economics Book

20

PROPERTY

SHOULD BE

PRIVATE

PROPERTY RIGHTS

W

e learn about ownership

and personal property

from our earliest

childhood tussles over toys. This

concept is often taken for granted,

yet there is nothing inevitable

about the idea. Private property

is fundamental to capitalism. Karl

Marx (p.105) noted that the wealth

generated by capitalism presents

societies with “an immense

collection of commodities” that are

privately owned and may be traded

for profit. Businesses are also

privately owned and operated for

profit in a free market. Without the

idea of private property, there is no

potential for personal gain—there is

no reason even to enter the market.

There is, in effect, no market.

Types of property

“Property” encompasses a wide

range of things, from material

goods to intellectual property (such

as patents or written text). It has

entered realms that even free

market economists would not

defend, such as slavery—where

people were viewed as commodities.

Historically, material property

has been organized three different

ways. First, everything can be held

in common and used by everyone

as they wish, on the basis of mutual

trust and custom. This was the case

in tribal economies, and it is still

practiced by the Huaorani people of

the Amazon. Second, property can

be held and used collectively; this

is the essence of the communist

system. Third, property can be held

in private, with each person free to

do with it as they choose. This is the

concept at the heart of capitalism.

Modern economists tend to

justify private property on pragmatic

grounds, arguing that the market

simply can’t operate without some

division of resources. Earlier

thinkers made more of a moral case

Defending private ownership is

important in capitalist countries. This

house in Warsaw, Poland, is the most

secure home ever built; it turns into a

steel cube at the touch of a button.

IN CONTEXT

FOCUS

Society and the economy

KEY THINKER

Aristotle (384–322 BCE)

BEFORE

423–347 BCE Plato argues in

The Republic that rulers should

hold property collectively for

the common good.

AFTER

1–250 CE In classical Roman

law the sum of rights and

powers a person has over a

thing is called dominium.

1265–74 Thomas Aquinas

argues that owning property is

natural and good, but private

property is less important than

the public good.

1689 John Locke states that

what you create by your own

labor is yours by right.

1848 Karl Marx writes the

Communist Manifesto,

advocating the complete

abolition of private property.