Property Rights vs. “Public Interest”

In this paper, I will examine the role of a fundamental building block of society – property. I will do so primarily from an economist’s viewpoint, economics being my primary area of discipline; but I will also dip into political philosophy and try to remind the reader of the conservative perspective, which is often forgotten. I hope that I can synthesize these two disciplines and present convincing arguments in defense of the conservative and economic approach to property. These should show the correct path for reform in a country that wishes to pursue development based on rational economic organization and conservative values.

Without appropriating the right to define the “real” nature of conservatism, on this occasion I have drawn upon several works of conservative authors and have decided to confront today’s reality with the works of one inspirational author, who died in 1972. Very soon we will remember the 35th anniversary of this event. I am thinking of Frank S. Meyer and especially his work from 1962 entitled In Defense of Freedom, bearing the subtitle A Conservative Credo. ¹ This work is one of the most actively read in conservative circles, and we will rely upon it for conservative ideas going forward. After all, conservatives should not mind “swimming against the tide of fashion,” taking a step back from current developments in their doctrine, and returning to an older, if modern work, which had the ambition to identify the nature of conservatism.

Property as the foundation of peace and prosperity

Today we live in a an unusual era – we live longer and better than ever before. ² We enjoy a quality of life that not even the richest people in history have ever had. The economists were the ones to best explain why this is not just a coincidence. Whereas almost everyone first assumes that the creation of wealth depends on climate, abundance of natural resources, geographic location, etc., there is no doubt that social factors by far exceed the importance of natural ones. ³ It is apparent that regardless of the quirks of nature and climate, societies with a certain order – and those societies only – are successful. Only the existence of a social order and rational economic organization ensures that humans’ every day battle against nature leads to general prosperity. Adam Smith, already 230 years ago, explained in his Wealth of Nations how prosperity is created, and how – which most people find counterintuitive – the pursuit of private interest leads to great benefits for society. This is because the creation of private wealth depends on the production of things and services that are useful for others. The pursuit of one’s own good is effectively transformed into production of “public good,” the good of the society. (The pursuit of one’s own good does not of course preempt human virtues, such as helping others – see Smith’s The Theory of Moral Sentiments. ⁴) However, the above mentioned transformation of private interest into public good does not always take place. It depends on the presence of a social order that enables non-conflictual – that is peaceful – human coexistence. This is because scarcity engenders not only the need for (economic) choice, but also the need to discover rules of peaceful, non-conflictual existence. And the fundamental prerequisite for this order is a single concept – that of property. Whenever societies started to degrade or ignore property, whenever private or state-run predatory activities started to “blossom” at the expense of productive activities, the social order collapsed and society became less civilized – that is, less capable of keeping peace and producing wealth – and took a step back towards the historical standard, which is poverty. People have been very well aware of this fact and the institution of property – especially in Europe in the 18th and 19th centuries – was rightfully almost sanctified. ⁵ The concept of property is indispensable for economic progress, for as Ludwig von Mises ⁶ surmised, without it, rational (economically rational) division of labor cannot take place. In his work The Fatal Conceit, his student and comrade in arms for the recognition of the fundamental concept of property, Friedrich August Hayek, ⁷ also added that “where there is no property, there is no justice”.

Let’s summarize: property gives people space in which to pursue their liberty without the constant need to obtain the approval of others. Production is an indivisible part of this liberty – applying one’s talents in a process whose consequence is the creation of things that can satisfy needs, and therefore improve the lives of others. A means for exchange becomes possible, which benefits all participants. Markets and market prices are created, which enables people to find a niche in complex production activities where they can be of most benefit to others, and where they can therefore most effectively take part in the social division of labor. This “self-help” is the reason behind the leap forward that “freed us from the fields” and enabled us to engage in more fruitful activities – such as banking, engineering, teaching, scientific research, etc. This is the logic behind social development.

Good society

Isn’t the scope of progress just described too limited? Although we cannot deny the positive impact of economic development on all aspects of society, exemplified by the material and spiritual wealth of the last few centuries, don’t we need something more than that? The freedom to act, limited by private property, does not by definition guarantee the development of good values on which a civilized society is built.

There is no doubt about this. The science of economics (which is by definition free of normative judgments, and which only explains how rational economic organization, beneficial for all, can take place, and how therefore “public good” can be achieved without explicit effort) cannot, of course, answer this question. This is where political philosophy steps in – for example, conservatism with its search for criteria that define good society. We meet with the argument “upholding the objective existence of values based upon the unchanging constitution of being as the criteria for moral thought and action” (Meyer, page 3). That is, a human being without the right “equipment” can be good or evil; can be virtuous or less virtuous, etc; and this difference between good and evil, virtue and decadence cannot simply be identified by appeal to current legislation, because it exists independently of it. In a good society, people elect the good. Not in the “political” sense, but in the sense that they act on correct principles in every day life. “Men cannot be forced to be free, nor can they even be forced to be virtuous. To a certain extent, it is true, they can be forced to at as though they were virtuous. But virtue is the fruit of well-used freedom” (Meyer, page 66). Good society is possible only where “the social and political order guarantees a state of affairs in which men can freely choose; and when the intellectual and moral leaders, the “creative minority,” have the understanding and imagination to maintain the prestige of traditions and reason, and thus to sustain the intellectual and moral order throughout society” (Meyer, page 69). Only then is it possible to defend the need for accepting classical, conservative recipes for social development – that is, “the equal right of all men to be free from coercion exercised against their life, liberty and property” (Meyer, page 9) – and at the same time to defend morality, responsibility and unchanging values, towards which people should aspire.

The politicization of all life

Let’s have a look at the alternative to the realistic acceptance of the role that property plays as the foundation of order and prosperity, and the acceptance of the role that the “creative minority” plays in the cultivation of morality in society. The only other option is the violation of private property in “public interest” and the “cultivation of society” by the state, politicians, and majority groups. This is the world in which we live today. Although we have escaped the perverse experiments of socialism, the breakdown of the socialist system did by no means reinstate respect for property. As conservatives know well, the name of the system does not fundamentally change the nature of existing problems. “Those who possess the power of the state possess it exclusively and over against the rest of society, whether their power is confirmed by hereditary right, landed property, wealth or democratic ballot” (Meyer, page 94).

That is why any system in which property is violated in any way and “public interest” is subsequently defined, gives rise to problems that endanger the social order. This is because someone acquires privileges not available to others. Someone can violate property, while the property owner must tolerate the attack. Equality no longer exists, and violence and conflicts rear their ugly head. Simply put, privileged groups of people emerge, which parasitize others. As Frank Meyer states in his Conservative Credo: “When the state enters the economic sphere; when the state makes possible rules as to how men shall live that go beyond the preservation of the essential conditions of a free order; when the state takes upon itself the education of children or insurance against the hazards of life – with each of these steps its monopoly of force in the form of violence is fortified by control of economic, social and ideological life” (Meyer, page 98-9). The politicization of economic and social life is the shortest path toward the collapse of traditional social structures, which will be replaced by state institutions. The rule of the mob or special interest groups replaces the irreplaceable – the rightfully respected and inspirational “creative minorities.” The economists often refer to the concept “crowding out,” which describes exactly this. State investments crowds out private investments and centralized state systems replace traditional decentralized systems, whether we are discussing social or health systems. The state education system not only forces out private education, but it also helps expand propaganda and defends the reason for its own existence, as well as the impossibility of reforming other systems. The state “tax[es] to destroy the independent; spend[s] to create the dependent; from the destruction of the one and the elevation of the other, maintain[s] the power of the bureaucratic élite” (Meyer, page 111). We only need to look around to notice how the entire society is becoming politicized, and how it is influenced by bureaucracy on one side, and “public opinion” on the other. It is difficult to search for conservative morality and principles of virtuous life in such a system. Only politics remain. ⁸

In his book The Law, Frederic Bastiat is on the spot in his description of the politicization of social life – the entry of state and politics into spheres of life where these do not belong, thanks to the “perversion of law,” which leads to conflicts and the demand for “aid in any crisis” – which others should of course pay for:

“If the force of government were limited to suppressing injustice, then government would be as innocent of these sufferings as it is now innocent of changes in the temperature.

As proof of this statement, consider this question: Have the people ever been known to rise against the Court of Appeals, or mob a Justice of the Peace, in order to get higher wages, free credit, tools of production, favorable tariffs, or government-created jobs? Everyone knows perfectly well that such matters are not within the jurisdiction of the Court of Appeals or a Justice of the Peace. And if government were limited to its proper functions, everyone would soon learn that these matters are not within the jurisdiction of the law itself. But make the laws upon the principle of fraternity — proclaim that all good, and all bad, stem from the law; that the law is responsible for all individual misfortunes and all social inequalities — then the door is open to an endless succession of complaints, irritations, troubles, and revolutions.”

In modern terminology, create public policy XY; base “public interest” on the fates of farmers, small companies, exporters, prices of oil, gas and rents, etc., and people will interpret all their failures and increases in expenditure as violation of their “rights,” as failure of government to defend their interests, and as reason to elect someone else who will not let this happen again and who will ensure general happiness using someone else’s money. Instead of social harmony and respect for property we find ourselves in the midst of a systematic violation of property rights, which leads to general unhappiness, feeling of injustice, and the effort of almost every person to grab as much “public interest” for himself as possible, using predatory tactics.

Politics – the bearer of values for a good society?

Conservatives know that a society needs to have certain internal order, that it is not possible to create a plan for changing existing problems without a certain standard. As Meyer says, “without something in the nature of an ideal image of what a good society should be, without an end which political action can strive to approximate, there is no basis for judging the rights and wrongs of the practical alternatives that constantly present themselves” (Meyer page 7). That in human life and society there exist certain proven or “normal” things, as well as things that are coincidental or anomalous, which disturb the natural order. As professor H.H. Hoppe states in his work, such disturbing anomalies can be “earthquakes and hurricanes, diseases, pests, monsters and beasts, two-headed horses or four-legged humans, cripples and idiots, and war, conquests and tyranny”. ⁹ The ability to create a vision of a good society, based on the acceptance of “normality” as opposed to anomaly as its firm and sound basis, leads to the conservative focus on a classical family raising children, the household, in which every member has his responsibilities, and Meyer’s “creative minorities” that cultivate the society. The alternative is, as we already mentioned, the rule of majorities, privileged groups and interest groups, and foremost, all encompassing politics.

However, as we know from our own experience, the state cannot adequately provide even the simplest things. Usually it only creates conflict, lawlessness, and costly pseudo-services, not those admirable things that make a society a society. Almost every injustice can be covered up by appeal to the so-called public interest – expropriation of land because of highway construction or even a simple factory; deportation of foreign workers because of the pseudo-economic argument for labor-market protection; draft; mandatory purchase of cash registers; prohibition of private or home schooling, etc. – the list is never ending. Economists, thanks to the public choice, or the Austrian economics school, have already been explaining for fifty years that even if something like public interest existed, it could not possibly be achieved via political elections. The logic of political choice is unforgiving. The people who from the height of their political posts decide on educational curricula, pensions, and how much money the state will take out people’s pockets, devote their time to propaganda, increasing their political prestige and power, and the state of their finances, rather than the “public good” or the happiness of the society!

It is idealistic to think that the fault lies with specific politicians, who are either themselves bad or who have bad advisors, and that one day, someone will be elected to the right position who will order virtue and defeat the other corrupt politicians. Not without reason did F.A. Hayek entitle one of the chapters in his famous work The Road to Serfdom “Why the Worst Get on Top.” A cursory look at the world around us shows us that this was not simply an academic exercise, but that Hayek was not far from the truth.

Public interest exists!

Is it thus at all possible to find and define a real public interest, which is not only an “interest” of one group against the “interest” of another? The Harvard professor Richard Pipes, in the summary of his work entitled Property and Freedom, which examines the evolution and importance of private property, writes that “anthropology has no knowledge of societies ignorant of property rights ... which means ... that it is not merely a ‘legal’ or ‘conventional’ but a ‘natural’ institution”. ¹⁰ The protection of private property is therefore a primary conservative demand. It is the only sensibly defined “public interest”, because it creates a firm foundation for social order, instead of dividing the society into those who are privileged and those who are not. It enables the cultivation of good society, which in turn provides a measure for the progress of civilization.

A well understood “public interest” based on the protection of property is capable of solving whole range of current problems, which people today – usually thanks to the nationalization of such problems – do not identify at all with the concept of private property. At the same time, we are not talking about some kind of a modern experiment, but about proven methods of solving problems that are the consequence of human interaction:

* The protection of private property, its support and enforcement, also constitutes protection against all kinds of crime (private and public).

* Private property can protect the environment and enables even the smallest property owner to protect nature (without the need for a political majority, meaning that such protection is much more probable and more cheaply realized).

* Contractual freedom, which is an extension of private property, can achieve for all parties concerned acceptable terms of trade, whether the relationship is a working or a credit one, or just a regular business relationship.

* Private property ensures freedom of speech (and there is no other need for additional political quasi-rights).

* Private property enables the development of “social services,” that is, care of those who are orphaned, handicapped or ill.

* Private property solves the problem of immigration, protection of local culture, or regional specifics (which otherwise lead to never ending political discussions, which can never possibly reach a satisfactory end).

* Private property enables progress, entrepreneurship, and innovation in the above mentioned areas and ensures the fastest possible discovery of solutions to new problems that need solving.

It is far to easy to say: private property does not belong here, the state and its politicians must ensure this or that or the other. And it is amazing how many people are satisfied by such an argument, without understanding the consequence of their blind trust in such an alternative. It is not enough to have good intentions. If a good intention is to be realized, there must also be a realistic mechanism for its implementation. The results can be (and often are) exactly the opposite (let’s remind ourselves of the catastrophic impact of frequent economic policies such as rent control, minimum wage and state education). It is not banal to say that the road to hell is paved with good intentions.

Real socialism was an exemplary case of an economically and morally perverse system. That is also why the evil that it represented was easily identifiable. The obvious amorality and violence on which it was based, as well as the consequences of property rights violations, were clearly visible. However, its downfall created the false impression that these powers for destruction of the social order have also disappeared. Just as the abolishment of slavery does not necessarily mean the end of slavery within the framework of other social systems, the removal of the most disgusting and obvious methods for violating (property) rights by socialism does not mean the end of injustice, so long as smaller injustices, less visible privileged groups, and less organized violence remain. Otherwise we can only watch as every day, injustices and evils in our societies acquire a patina of “democratic legitimacy”. This fact has not escaped former and current national, international and democratic socialists, who are becoming loud supporters of a number of economic policies within the framework of today’s democracies. It is altogether clear to them, that via democracy they can achieve things that were formerly the target of rightful opposition. Again and again we see the appearance of socialist experiments, especially in sectors such as healthcare, education, etc., which are often ordained by EU legislation. A proponent of private property as the foundation of social order cannot however be fooled by democratic or European newspeak – he must constantly defend proven principles that will ensure peace and prosperity. He will understand that a person cannot through voting or through any other “delegation of power” gain rights that he did not have before. That which is injustice at an individual level cannot become a “right” or virtue through the voting of a larger group of people.

Culturally conservative people (which by the way includes classical liberals as well as conservatives) must combine their powers to defend the protection of property, competition, privacy and freedom – in a fight against those who believe in the capability of politics and who ignore the logic behind interest groups – so that no one can in the future force children, against the will of their parents, as it happens today, to learn about Darwinism, relativity, the benefits of “social politics” of the EU, or anything else. Artificial political (not natural social) hierarchy and its unification of state services represents a threat not only for the general fate of liberty, but also for those who espouse minority ideas, for people who have (sophisticated as well as depraved) minority tastes, and for people who want to lead a virtuous life (in faith or without it) that does not agree with the mores of the majority population. This among other things is also the message of the Conservative Credo of the very influential conservative thinker Frank Meyer.

Josef Šíma is an Editorial Director of the Liberal Institute (Prague).

The lecture was presented at the Conservative Economic Quarterly Lecture Series (CEQLS) held by the Conservative Institute of M. R. Štefánik in Bratislava on December 13, 2006.