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A Crusoe Social Philosophy

Mises Daily: Friday, February 09, 2007 by

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[This article is excerpted from the chapters 6–9 of The Ethics of Liberty. Audiobook versions of these chapters, read by Jeff Riggenbach, are now available for podcast or download.]



Introduction

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One of the most commonly derided constructions of classical economic theory is "Crusoe Economics," the analysis of an isolated man face-to-face with nature. And yet, this seemingly "unrealistic" model, as I have tried to demonstrate elsewhere, has highly important and even indispensable uses.[1] It serves to isolate man as against nature, thus gaining clarity by abstracting at the beginning from interpersonal relations. Later on, this man/nature analysis can be extended and applied to the "real world." The bringing in of "Friday" or of one or more other persons, after analysis of strictly Robinsonian isolation, then serves to show how the addition of other persons affects the discussion. These conclusions can then also be applied to the contemporary world. Thus, the abstraction of analyzing a few persons interacting on an island enables a clear perception of the basic truths of interpersonal relations, truths which remain obscure if we insist on looking first at the contemporary world only whole and of a piece.

If Crusoe economics can and does supply the indispensable groundwork for the entire structure of economics and praxeology — the broad, formal analysis of human action — a similar procedure should be able to do the same thing for social philosophy, for the analysis of the fundamental truths of the nature of man vis-à-vis the nature of the world into which he is born, as well as the world of other men. Specifically, it can aid greatly in solving such problems of political philosophy as the nature and role of liberty, property, and violence.[2]

Let us consider Crusoe, who has landed on his island, and, to simplify matters, has contracted amnesia. What inescapable facts does Crusoe confront? He finds, for one thing, himself, with the primordial fact of his own consciousness and his own body. He finds, second, the natural world around him, the nature-given habitat and resources which economists sum up in the term "land."[3] He finds also that, in seeming contrast with animals, he does not possess any innate instinctual knowledge impelling him into the proper paths for the satisfaction of his needs and desires. In fact, he begins his life in this world by knowing literally nothing; all knowledge must be learned by him. He comes to learn that he has numerous ends, purposes which he desires to achieve, many of which he must achieve to sustain his life: food, shelter, clothing, etc. After the basic needs are satisfied, he finds more "advanced" wants for which to aim. To satisfy any or all of these wants which he evaluates in accordance with their respective importance to him, Crusoe must also learn how to achieve them; he must, in short, acquire "technological knowledge," or "recipes."

Crusoe, then, has manifold wants which he tries to satisfy, ends that he strives to attain. Some of these ends may be attained with minimal effort on his part; if the island is so structured, he may be able to pick edible berries off nearby bushes. In such cases, his "consumption" of a good or service may be obtained quickly and almost instantaneously. But for almost all of his wants, Crusoe finds that the natural world about him does not satisfy them immediately and instantaneously; he is not, in short, in a Garden of Eden. To achieve his ends, he must, as quickly and productively as he can, take the nature-given resources and transform them into useful objects, shapes, and places most useful to him — so that he can satisfy his wants.

In short, he must (a) choose his goals; (b) learn how to achieve them by using nature-given resources; and then (c) exert his labor energy to transform these resources into more useful shapes and places: i.e., into "capital goods," and finally into "consumer goods" that he can directly consume. Thus, Crusoe may build himself, out of the given natural raw materials, an axe (capital good) with which to chop down trees, in order to construct a cabin (consumer good). Or he may build a net (capital good) with which to catch fish (consumer good). In each case, he employs his learned technological knowledge to exert his labor effort in transforming land into capital goods and eventually into consumer goods. This process of transformation of land resources constitutes his "production." In short, Crusoe must produce before he can consume, and so that he may consume. And by this process of production, of transformation, man shapes and alters his nature-given environment to his own ends, instead of, animal-like, being simply determined by that environment.

"If Crusoe economics can supply the indispensable groundwork for the entire structure of economics and praxeology, a similar procedure should be able to do the same thing for social philosophy."

And so man, not having innate, instinctive, automatically acquired knowledge of his proper ends, or of the means by which they can be achieved, must learn them, and to learn them he must exercise his powers of observation, abstraction, thought: in short, his reason. Reason is man's instrument of knowledge and of his very survival; the use and of his mind, the acquisition of knowledge about what is best for him and how he can achieve it, is the uniquely human method of existence and of achievement. And this is uniquely man's nature; man, as Aristotle pointed out, is the rational animal, or to be more precise, the rational being. Through his reason, the individual man observes both the facts and ways of the external world, and the facts of his own consciousness, including his emotions: in short, he employs both extraspection and introspection.

Crusoe, we have said, learns about his ends and about how to attain them. But what specifically does his learning faculty, his reason, do in the process of obtaining such knowledge? It learns about the way things work in the world, i.e., the natures of the various specific entities and classes of entities that the man finds in existence; in short, he learns the natural laws of the way things behave in the world. He learns that an arrow shot from a bow can bring down a deer, and that a net can catch an abundance of fish. Further, he learns about his own nature, about the sort of events and actions that will make him happy or unhappy; in short, he learns about the ends he needs to achieve and those he should seek to avoid.

This process, this method necessary to man's survival and prosperity upon the earth, has often been derided as unduly or exclusively "materialistic." But it should be clear that what has happened in this activity proper to man's nature is a fusion of "spirit" and matter; man's mind, using the ideas it has learned, directs his energy in transforming and reshaping matter into ways to sustain and advance his wants and his life. Behind every "produced" good, behind every man-made transformation of natural resources, is an idea directing the effort, a manifestation of man's spirit.

The individual man, in introspecting the fact of his own consciousness, also discovers the primordial natural fact of his freedom: his freedom to choose, his freedom to use or not use his reason about any given subject. In short, the natural fact of his "free will." He also discovers the natural fact of his mind's command over his body and its actions: that is, of his natural ownership over his self.

Crusoe, then, owns his body; his mind is free to adopt whatever ends it wishes, and to exercise his reason in order to discover what ends he should choose, and to learn the recipes for employing the means at hand to attain them. Indeed, the very fact that the knowledge needed for man's survival and progress is not innately given to him or determined by external events, the very fact that he must use his mind to learn this knowledge, demonstrates that he is by nature free to employ or not to employ that reason — i.e., that he has free will.[4] Surely, there is nothing outré or mystical about the fact that men differ from stones, plants, or even animals, and that the above are crucial differences between them. The critical and unique facts about man and the ways in which he must live to survive — his consciousness, his free will and free choice, his faculty of reason, his necessity for learning the natural laws of the external world and of himself, his self-ownership, his need to "produce" by transforming nature-given matter into consumable forms — all these are wrapped up in what man's nature is, and how man may survive and flourish. Suppose now that Crusoe is confronted with a choice of either picking berries or picking some mushrooms for food, and he decides upon the pleasantly tasting mushrooms, when suddenly a previously shipwrecked inhabitant, coming upon Crusoe, shouts: "Don't do that! Those mushrooms are poisonous." There is no mystery in Crusoe's subsequent shift to berries. What has happened here? Both men have operated on an assumption so strong that it remained tacit, an assumption that poison is bad, bad for the health and even for the survival of the human organism — in short, bad for the continuation and the quality of a man's life. In this implicit agreement on the value of life and health for the person, and on the evils of pain and death, the two men have clearly arrived at the basis of an ethic, grounded on reality and on the natural laws of the human organism.

"If a man cannot affirm a proposition without employing its negation, he is not only caught in an inextricable self- contradiction; he is conceding to the negation the status of an axiom."

If Crusoe had eaten the mushrooms without learning of their poisonous effects, then his decision would have been incorrect — a possibly tragic error based on the fact that man is scarcely automatically determined to make correct decisions at all times. Hence, his lack of omniscience and his liability to error. If Crusoe, on the other hand, had known of the poison and eaten the mushrooms anyway — perhaps for "kicks" or from a very high time preference — then his decision would have been objectively immoral, an act deliberately set against his life and health. It may well be asked why life should be an objective ultimate value, why man should opt for life (in duration and quality).[5] In reply, we may note that a proposition rises to the status of an axiom when he who denies it may be shown to be using it in the very course of the supposed refutation.[6] Now, any person participating in any sort of discussion, including one on values, is, by virtue of so participating, alive and affirming life. For if he were really opposed to life, he would have no business in such a discussion, indeed he would have no business continuing to be alive. Hence, the supposed opponent of life is really affirming it in the very process of his discussion, and hence the preservation and furtherance of one's life takes on the stature of an incontestable axiom.

We have seen that Crusoe, as in the case of any man, has freedom of will, freedom to choose the course of his life and his actions. Some critics have charged that this freedom is illusory because man is bound by natural laws. This, however, is a misrepresentation — one of the many examples of the persistent modem confusion between freedom and power. Man is free to adopt values and to choose his actions; but this does not at all mean that he may violate natural laws with impunity — that he may, for example, leap oceans at a single bound. In short, when we say that "man is not 'free' to leap the ocean," we are really discussing not his lack of freedom but his lack of power to cross the ocean, given the laws of his nature and of the nature of the world. Crusoe's freedom to adopt ideas, to choose his ends, is inviolable and inalienable; on the other hand, man, not being omnipotent as well as not being omniscient, always finds his power limited for doing all the things that he would like to do. In short, his power is necessarily limited by natural laws, but not his freedom of will. To put the case another way it is patently absurd to define the "freedom" of an entity as its power to perform an act impossible for its nature![7]

If a man's free will to adopt ideas and values is inalienable, his freedom of action — his freedom to put these ideas into effect in the world, is not in such a fortunate condition. Again, we are not talking about the limitations on man's power inherent in the laws of his own nature and of the natures of other entities. What we are talking about now is interference with his sphere of action by other people — but here we are getting a bit ahead of Robinson Crusoe and our discussion. Suffice it to say now that, in the sense of social freedom — of freedom as absence of molestation by other persons — Crusoe is absolutely free, but that a world of more than one person requires our further investigation.

Since, in this book, we are interested in social and political philosophy rather than in philosophy proper, we shall be interested in the term "freedom" in this social or interpersonal sense, rather than in the sense of freedom of will.[8]

Let us now return to our analysis of Crusoe's purposeful transformation of nature-given data though the understanding of natural laws. Crusoe finds virgin, unused land on the island; land, in short, unused and uncontrolled by anyone, and hence unowned. By finding land resources, by learning how to use them, and, in particular, by actually transforming them into a more useful shape, Crusoe has, in the memorable phrase of John Locke, "mixed his labor with the soil." In doing so, in stamping the imprint of his personality and his energy on the land, he has naturally converted the land and its fruits into his property. Hence, the isolated man owns what he uses and transforms; therefore, in his case there is no problem of what should be A's property as against B's. Any man's property is ipso facto what he produces, i.e., what he transforms into use by his own effort. His property in land and capital goods continues down the various stages of production, until Crusoe comes to own the consumer goods which he has produced, until they finally disappear through his consumption of them.

As long as an individual remains isolated, then, there is no problem whatever about how far his property — his ownership — extends; as a rational being with free will, it extends over his own body, and it extends further over the material goods which he transforms with his labor. Suppose that Crusoe had landed not on a small island, but on a new and virgin continent, and that, standing on the shore, he had claimed "ownership" of the entire new continent by virtue of his prior discovery. This assertion would be sheer empty vainglory, so long as no one else came upon the continent. For the natural fact is that his true property — his actual control over material goods — would extend only so far as his actual labor brought them into production. His true ownership could not extend beyond the power of his own reach.[9] Similarly, it would be empty and meaningless for Crusoe to trumpet that he does not "really" own some or all of what he has produced (perhaps this Crusoe happens to be a romantic opponent of the property concept), for in fact the use and therefore the ownership has already been his. Crusoe, in natural fact, owns his own self and the extension of his self into the material world, neither more nor less.

Interpersonal Relations: Voluntary Exchange

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"In the sense of social freedom — of freedom as absence of molestation by other persons — Crusoe is absolutely free, but a world of more than one person requires our further investigation."

It is now time to bring other men into our Robinsonian idyll — to extend our analysis to interpersonal relations. The problem for our analysis is not simply more people: after all, we could simply postulate a world of a million Crusoes on a million isolated islands, and our analysis would not need to be expanded by one iota. The problem is to analyze the interaction of these people. Friday, for example, might land in another part of the island, and make contact with Crusoe, or he might land on a separate island, and then later construct a boat that could reach the other island.

Economics has revealed a great truth about the natural law of human interaction: that not only is production essential to man's prosperity and survival, but so also is exchange. In short, Crusoe, on his island or part thereof, might produce fish, while Friday, on his part, might grow wheat, instead of both trying to produce both commodities. By exchanging part of Crusoe's fish for some of Friday's wheat, the two men can greatly improve the amount of both fish and bread that both can enjoy.[10] This great gain for both men is made possible by two primordial facts of nature — natural laws — on which all of economic theory is based: (a) the great variety of skills and interests among individual persons; and (b) the variety of natural resources in geographic land areas. If all people were equally skilled and equally interested in all matters, and if all areas of land were homogeneous with all others, there would be no room for exchanges. But, in the world as it is, the opportunity for specialization in the best uses for land and people enables exchanges to multiply vastly and immensely to raise the productivity and the standard of living (the satisfaction of wants) of all those participating in exchange.

If anyone wishes to grasp how much we owe to the processes of exchange, let him consider what would happen in the modern world if every man were suddenly prohibited from exchanging anything with anyone else. Each person would be forced to produce all of his own goods and services himself. The utter chaos, the total starvation of the great bulk of the human race, and the reversion to primitive subsistence by the remaining handful of people, can readily be imagined.

Another remarkable fact of human action is that A and B can specialize and exchange for their mutual benefit even if one of them is superior to the other in both lines of production. Thus, suppose that Crusoe is superior to Friday in fish and wheat production. It still benefits Crusoe to concentrate on what he is relatively best at. If, for example, he is a far better fisherman than Friday but only a moderately better farmer, he can gain more of both products by concentrating on fishing, and then exchanging his produce for Friday's wheat. Or, to use an example from an advanced exchange economy, it will pay a physician to hire a secretary for typing, filing, etc. even if he is better at the latter jobs, in order to free his time for far more productive work. This insight into the advantages of exchange, discovered by David Ricardo in his Law of Comparative Advantage, means that, in the free market of voluntary exchanges, the "strong" do not devour or crush the "weak," contrary to common assumptions about the nature of the free-market economy. On the contrary, it is precisely on the free market where the "weak" reap the advantages of productivity because it benefits the "strong" to exchange with them.

The process of exchange enables man to ascend from primitive isolation to civilization: it enormously widens his opportunities and the market for his wares; it enables him to invest in machines and other "high-order capital goods"; it forms a pattern of exchanges — the free market — which enables him to calculate economically the benefits and the costs of highly complex methods and aggregates of production.

"What is really being exchanged is not the commodities themselves, but the rights to ownership of them."

But economists too often forget, in contemplating the critical importance and the glories of the free market, what precisely is being exchanged. For apples are not simply being exchanged for butter, or gold for horses. What is really being exchanged is not the commodities themselves, but the rights to ownership of them. When Smith exchanges a bag of apples for Jones's pound of butter, he is actually transferring his ownership rights in the apples in exchange for the ownership rights to the butter, and vice versa. Now that Smith rather than Jones is the absolute controller of the butter, it is Smith who may eat it or not at his will; Jones now has nothing to say in its disposition, and is instead absolute owner of the apples.

Returning now to Crusoe and Friday, suppose that more people, C, D, E … join Crusoe and Friday on the island. Each specializes in different products; gradually one particular product emerges — because of such qualities as high value, steady demand, ready divisibility — as a medium of exchange. For it is discovered that the use of a medium enormously expands the scope of exchanges and the wants that can be satisfied on the market. Thus, a writer or an economics teacher would be hard put to exchange his teaching or writing services for loaves of bread, parts of a radio, a piece of a suit, etc. A generally acceptable medium is indispensable for any extensive network of exchange and hence for any civilized economy.

Such a generally acceptable medium of exchange is defined as a money. It has generally been found, on the free market, that the best commodities for use as a money have been the precious metals, gold and silver. The exchange sequence now appears as follows: A, owning his body and his labor, finds land, transforms it, produces fish which he then owns; B uses his labor similarly to produce wheat, which he then owns; C finds land containing gold, transforms it, produces the gold which he then owns. C then exchanges the gold for other services, say A's fish. A uses the gold to exchange for B's wheat, etc. In short, the gold "enters circulation," i.e., its ownership is transferred from person to person, as it is used as a general medium of exchange. In each case, the exchangers transfer ownership rights, and, in each case, ownership rights are acquired in two ways and two ways only: (a) by finding and transforming resources ("producing"), and (b) by exchanging one's produce for someone else's product — including the medium of exchange, or "money" commodity. And it is clear that method b reduces logically to a, for the only way a person can obtain something in exchange is by giving up his own product. In short, there is only one route to ownership of goods: production-and-exchange. If Smith gives up a product in exchange for Jones's which Jones also acquired in a previous exchange, then someone, whether the person from whom Jones bought the product or someone else down the line, must have been the original finder- and-transformer of the resource.

A man then, can acquire "wealth" — a stock of useful capital or consumer goods — either by "producing" it himself, or by selling to its producer some other product in exchange. The exchange process reduces logically back to original production. Such production is a process by which a man "mixes his labor with the soil" — finding and transforming land resources or, in such cases as a teacher or writer, by producing and selling one's own labor services directly. Put another way: since all production of capital goods reduces ultimately back to the original factors of land and labor, all production reduces back either to labor services or to finding new and virgin land and putting it into production by means of labor energy.[11]

"Since all production of capital goods reduces ultimately back to the original factors of land and labor, all production reduces back either to labor services or to finding new and virgin land and putting it into production by means of labor energy."

A man may also obtain wealth voluntarily in another way: through gifts. Thus Crusoe, upon stumbling on Friday at another end of the island, may give him some sustenance. In such a case, the giver receives, not another alienable good or service from the other party, but the psychic satisfaction of having done something for the receiver. In the case of a gift, also, the process of acquisition reduces back to production and exchange — and again ultimately to production itself, since a gift must be preceded by production, if not directly as in this case, then somewhere back down the line.

We have so far analyzed the exchange process for a multitude of exchanges of consumer goods. We must now complete our picture of the real world by analyzing exchanges along the structure of production. For exchanges in an advanced economy are not only "horizontal" (of consumer goods), but also "vertical": they proceed downward from the original transformation of land, down through the various types of capital goods, and finally to the ultimate state of consumption.

Let us consider a simple vertical pattern as it occurs in the exchange economy. Smith transforms land resources and constructs an axe; instead of using the axe to make another product, Smith, as a specialist in a vast exchange economy, sells his axe for gold (money). Smith, producer of the axe, transfers his right of ownership to Jones, in exchange for a certain amount of Jones's gold — the precise amount of gold being agreed upon voluntarily by the two parties. Jones now takes the axe and fells lumber, then sells the lumber to Johnson for gold; Johnson in turn sells the lumber to Robbins, a contractor, for gold, and Robbins in his turn constructs a house in exchange for the gold of his client, Benton. (It should be evident that this vertical network of exchange could not take place without the use of a monetary medium for the exchanges.)

To complete our picture of a market economy, let us suppose that Jones has cut down his lumber, but has to ship it downriver to transfer it to Johnson; Jones, then, sells the lumber to another intermediary, Polk, who hires the labor services of X, Y, and Z to transport the logs to Johnson. What has happened here, and why doesn't the use of X, Y, and Z's labor in transforming and transporting the logs to a more useful place give them rights to ownership of the logs?

What has happened is this: Polk transfers some gold to X and to Y, and to Z, in return for their selling to him their labor services of transporting the logs. Polk did not sell the logs to these men for money; instead, he "sold" them money in exchange for employing their labor services on his logs. In short, Polk may have bought the logs from Jones for 40 gold ounces, and then paid X, Y, and Z 20 gold ounces each to transport the logs, and then sold the logs to Johnson for 110 ounces of gold. Hence, Polk netted a gain of 10 gold ounces on the entire transaction. X, Y, and Z, if they had so desired, could have purchased the logs from Jones themselves for the 40 ounces, and then shipped the logs themselves, sold them to Johnson for 110 and pocketed the 10 extra ounces. Why didn't they? Because (a) they didn't have the capital; in short, they hadn't saved up the requisite money by reducing their previous consumption sufficiently below their income to accumulate the 40 ounces; and/or (b) they wanted money payment while they worked, and were not willing to wait for the number of months it took for the logs to be shipped and sold; and/or (c) they were unwilling to be saddled with the risk that the logs might indeed not be saleable for 110 ounces. Thus, the indispensable and enormously important function of Polk, the capitalist in our example of the market economy is to save the laborers from the necessity of restricting their consumption and thus saving up the capital themselves, and from waiting for their pay until the product would (hopefully) be sold at a profit further down the chain of production. Hence, the capitalist, far from somehow depriving the laborer of his rightful ownership of the product, makes possible a payment to the laborer considerably in advance of the sale of the product. Furthermore, the capitalist, in his capacity as forecaster or entrepreneur, saves the laborer from the risk that the product might not be sold at a profit, or that he might even suffer losses.

"The capitalist, far from somehow depriving the laborer of his rightful ownership of the product, makes possible a payment to the laborer considerably in advance of the sale of the product."

The capitalist, then, is a man who has labored, saved out of his labor (i.e., has restricted his consumption) and, in a series of voluntary contracts has (a) purchased ownership rights in capital goods, and (b) paid the laborers for their labor services in transforming those capital goods into goods nearer the final stage of being consumed. Note again that no one is preventing the laborers themselves from saving, purchasing capital goods from their owners and then working on their own capital goods, finally selling the product and reaping the profits. In fact, the capitalists are conferring a great benefit on these laborers, making possible the entire complex vertical network of exchanges in the modern economy. For they save the money needed to buy the capital goods and to pay the laborers in advance of sale for "producing" them further.[12]

At each step of the way then, a man produces — by exerting his labor upon tangible goods. If this good was previously unused and unowned, then his labor automatically brings the good under his control, his "ownership." If the good was already owned by someone else, then the owner may either sell this (capital) good to our laborer for money, after which his labor is exerted on the good; or the previous owner may purchase the labor service for money in order to produce the good further and then sell it to the next buyer. This process, too, reduces back to the original production of unused resources and to labor, since the capitalist — the previous owner in our example — ultimately derived his own ownership from: original production; voluntary exchange; and the saving of money. Thus, all ownership on the free market reduces ultimately back to: (a) ownership by each man of his own person and his own labor; (b) ownership by each man of land which he finds unused and transforms by his own labor; and (c) the exchange of the products of this mixture of a and b with the similarly produced output of other persons on the market.

The same law holds true for all ownership, on the market, of the money commodity. As we have seen, money is either (1) produced by one's own labor transforming original resources (e.g., mining gold); or (2) obtained by selling one's own product — or selling goods previously purchased with the proceeds of one's own product — in exchange for gold owned by someone else. Again, just as c in the previous paragraph reduces logically back to a and b production coming before exchange — so here 2 ultimately reduces logically back to 1.

In the free society we have been describing, then, all ownership reduces ultimately back to each man's naturally given ownership over himself, and of the land resources that man transforms and brings into production. The free market is a society of voluntary and consequently mutually beneficial exchanges of ownership titles between specialized producers. It has often been charged that this market economy rests on the wicked doctrine that labor "is treated as a commodity." But the natural fact is that labor service is indeed a commodity, for, as in the case of tangible property, one's own labor service can be alienated and exchanged for other goods and services. A person's labor service is alienable, but his will is not. It is most fortunate, moreover, for mankind that this is so; for this alienability means (1) that a teacher or physician or whatever can sell his labor services for money; and (2) that workers can sell their labor services in transforming goods to capitalists for money. If this could not be done, the structure of capital required for civilization could not be developed, and no one's vital labor services could be purchased by his fellow men.

The distinction between a man's alienable labor service and his inalienable will may be further explained: a man can alienate his labor service, but he cannot sell the capitalized future value of that service. In short, he cannot, in nature, sell himself into slavery and have this sale enforced — for this would mean that his future will over his own person was being surrendered in advance. In short, a man can naturally expend his labor currently for someone else's benefit, but he cannot transfer himself, even if he wished, into another man's permanent capital good. For he cannot rid himself of his own will, which may change in future years and repudiate the current arrangement. The concept of "voluntary slavery" is indeed a contradictory one, for so long as a laborer remains totally subservient to his master's will voluntarily, he is not yet a slave since his submission is voluntary; whereas, if he later changed his mind and the master enforced his slavery by violence, the slavery would not then be voluntary. But more of coercion later on.

"All ownership reduces ultimately back to each man's naturally given ownership over himself, and of the land resources that man transforms and brings into production."

The society that we have been describing in this section — the society of free and voluntary exchanges — may be called the "free society" or the society of "pure liberty." The bulk of this work will be devoted to spelling out the implications of such a system. The term "free market," while properly signifying the critically important network of free and voluntary exchanges, is insufficient when going at all beyond the narrowly economic or praxeologic. For it is vital to realize that the free market is exchanges of titles to property, and that therefore the free market is necessarily embedded in a larger free society — with a certain pattern of property rights and ownership titles. We have been describing the free society as one where property titles are founded on the basic natural facts of man: each individual's ownership by his ego over his own person and his own labor, and his ownership over the land resources which he finds and transforms. The natural alienability of tangible property as well as man's labor service makes possible the network of free exchanges of ownership titles.

The regime of pure liberty — the libertarian society — may be described as a society where no ownership titles are "distributed," where, in short, no man's property in his person or in tangibles is molested, violated, or interfered with by anyone else. But this means that absolute freedom, in the social sense, can be enjoyed, not only by an isolated Crusoe but by every man in any society, no matter how complex or advanced. For every man enjoys absolute freedom — pure liberty — if, like Crusoe, his "naturally" owned property (in his person and in tangibles) is free from invasion or molestation by other men. And, of course, being in a society of voluntary exchanges, each man can enjoy absolute liberty not in Crusoe-like isolation, but in a milieu of civilization, harmony, sociability, and enormously greater productivity through exchanges of property with his fellow men. Absolute freedom, then, need not be lost as the price we must pay for the advent of civilization; men are born free, and need never be in chains. Man may achieve liberty and abundance, freedom and civilization.

This truth will be obscured if we persist in confusing "freedom" or "liberty" with power. We have seen the absurdity of saying that man does not have free will because he has not the power to violate the laws of his nature — because he cannot leap oceans at a single bound. It is similarly absurd to say that a man is not "truly" free in the free society because, in that society, no man is "free" to aggress against another man or to invade his property. Here, again, the critic is not really dealing with freedom but with power; in a free society, no man would be permitted (or none would permit himself) to invade the property of another. This would mean that his power of action would be limited; as man's power is always limited by his nature; it would not mean any curtailment of his freedom. For if we define freedom, again, as the absence of invasion by another man of any man's person or property, the fatal confusion of freedom and power is at last laid to rest.[13] We then see clearly that a supposed "freedom to steal or assault" — in short, to aggress — would not be a state of freedom at all, because it would permit someone, the victim of an assault, to be deprived of his right to person and property — in short, to have his liberty violated.[14] Each man's power, then, is always necessarily limited by the facts of the human condition, by the nature of man and his world; but it is one of the glories of man's condition that each person can be absolutely free, even in a world of complex interaction and exchange. It is still true, moreover, that any man's power to act and do and consume is enormously greater in such a world of complex interaction than it could be in a primitive or Crusoe society.

A vital point: if we are trying to set up an ethic for man (in our case, the subset of ethics dealing with violence), then to be a valid ethic the theory must hold true for all men, whatever their location in time or place.[15] This is one of the notable attributes of natural law — its applicability to all men, regardless of time or place. Thus, ethical natural law takes its place alongside physical or "scientific" natural laws. But the society of liberty is the only society that can apply the same basic rule to every man, regardless of time or place. Here is one of the ways in which reason can select one theory of natural law over a rival theory — just as reason can choose between many economic or other competing theories. Thus, if someone claims that the Hohenzollern or Bourbon families have the "natural right" to rule everyone else, this kind of doctrine is easily refutable by simply pointing to the fact that there is here no uniform ethic for every person: one's rank in the ethical order being dependent on the accident of being, or not being, a Hohenzollern. Similarly, if someone says that every man has a "natural right" to three square meals a day, it is glaringly obvious that this is a fallacious natural law or natural rights theory; for there are innumerable times and places where it is physically impossible to provide three square meals for all, or even for the majority, of the population. Hence this cannot be set forth as some kind of "natural right."

"Absolute freedom, then, need not be lost as the price we must pay for the advent of civilization; men are born free, and need never be in chains. Man may achieve liberty and abundance, freedom and civilization."

On the other hand, consider the universal status of the ethic of liberty, and of the natural right of person and property that obtains under such an ethic. For every person, at any time or place, can be covered by the basic rules: ownership of one's own self; ownership of the previously unused resources which one has occupied and transformed; and ownership of all titles derived from that basic ownership — either through voluntary exchanges or voluntary gifts. These rules — which we might call the "rules of natural ownership" — can clearly be applied, and such ownership defended, regardless of the time or place, and regardless of the economic attainments of the society. It is impossible for any other social system to qualify as universal natural law; for if there is any coercive rule by one person or group over another (and all rule partakes of such hegemony), then it is impossible to apply the same rule for all; only a rulerless, purely libertarian world can fulfill the qualifications of natural rights and natural law, or, more important, can fulfill the conditions of a universal ethic for all mankind.

Interpersonal Relations: Ownership and Aggression

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We have so far been discussing the free society, the society of peaceful cooperation and voluntary interpersonal relations. There is, however, another and contrasting type of interpersonal relation: the use of aggressive violence by one man against another. What such aggressive violence means is that one man invades the property of another without the victim's consent. The invasion may be against a man's property in his person (as in the case of bodily assault), or against his property in tangible goods (as in robbery or trespass). In either case, the aggressor imposes his will over the natural property of another — he deprives the other man of his freedom of action and of the full exercise of his natural self-ownership.

Let us set aside for a moment the corollary but more complex case of tangible property, and concentrate on the question of a man's ownership rights to his own body. Here there are two alternatives: either we may lay down a rule that each man should be permitted (i.e., have the right to) the full ownership of his own body, or we may rule that he may not have such complete ownership. If he does, then we have the libertarian natural law for a free society as treated above. But if he does not, if each man is not entitled to full and 100 percent self-ownership, then what does this imply? It implies either one of two conditions: (1) the "communist" one of Universal and Equal Other-ownership, or (2) Partial Ownership of One Group by Another — a system of rule by one class over another. These are the only logical alternatives to a state of 100 percent self-ownership for all.[16]

Let us consider alternative 2; here, one person or group of persons, G, are entitled to own not only themselves but also the remainder of society, R. But, apart from many other problems and difficulties with this kind of system, we cannot here have a universal or natural-law ethic for the human race. We can only have a partial and arbitrary ethic, similar to the view that Hohenzollerns are by nature entitled to rule over non-Hohenzollerns. Indeed, the ethic which states that Class G is entitled to rule over Class R implies that the latter, R, are subhuman beings who do not have a right to participate as full humans in the rights of self-ownership enjoyed by G — but this of course violates the initial assumption that we are carving out an ethic for human beings as such.

What then of alternative 1? This is the view that, considering individuals A, B, C … , no man is entitled to 100 percent ownership of his own person. Instead, an equal part of the ownership of A's body should be vested in B, C … , and the same should hold true for each of the others. This view, at least, does have the merit of being a universal rule, applying to every person in the society, but it suffers from numerous other difficulties.

In the first place, in practice, if there are more than a very few people in the society, this alternative must break down and reduce to alternative 2, partial rule by some over others. For it is physically impossible for everyone to keep continual tabs on everyone else, and thereby to exercise his equal share of partial ownership over every other man. In practice, then, this concept of universal and equal other-ownership is utopian and impossible, and supervision and therefore ownership of others necessarily becomes a specialized activity of a ruling class. Hence, no society which does not have full self-ownership for everyone can enjoy a universal ethic. For this reason alone, 100 percent self-ownership for every man is the only viable political ethic for mankind.

"No society which does not have full self-ownership for everyone can enjoy a universal ethic."

But suppose for the sake of argument that this utopia could be sustained. What then? In the first place, it is surely absurd to hold that no man is entitled to own himself, and yet to hold that each of these very men is entitled to own a part of all other men! But more than that, would our utopia be desirable? Can we picture a world in which no man is free to take any action whatsoever without prior approval by everyone else in society? Clearly no man would be able to do anything, and the human race would quickly perish. But if a world of zero or near-zero self-ownership spells death for the human race, then any steps in that direction also contravene the law of what is best for man and his life on earth. And, as we saw above, any ethic where one group is given full ownership of another violates the most elemental rule for any ethic: that it apply to every man. No partial ethics are any better, though they may seem superficially more plausible, than the theory of all-power-to-the-Hohenzollerns.

In contrast, the society of absolute self-ownership for all rests on the primordial fact of natural self-ownership by every man, and on the fact that each man may only live and prosper as he exercises his natural freedom of choice, adopts values, learns how to achieve them, etc. By virtue of being a man, he must use his mind to adopt ends and means; if someone aggresses against him to change his freely selected course, this violates his nature; it violates the way he must function. In short, an aggressor interposes violence to thwart the natural course of a man's freely adopted ideas and values, and to thwart his actions based upon such values.

Tangible Property

We cannot fully explain the natural laws of property and of violence without expanding our discussion to cover tangible property. For men are not floating wraiths; they are beings who can only survive by grappling with and transforming material objects. Let us return to our island of Crusoe and Friday. Crusoe, isolated at first, has used his free will and self-ownership to learn about his wants and values, and how to satisfy them by transforming nature-given resources through "mixing" them with his labor. He has thereby produced and created property. Now suppose that Friday lands in another part of this island. He confronts two possible courses of action: he may, like Crusoe, become a producer, transform unused soil by his labor, and most likely exchange his product for that of the other man. In short, he may engage in production and exchange, in also creating property. Or, he may decide upon another course: he may spare himself the effort of production and exchange, and go over and seize by violence the fruits of Crusoe's labor. He may aggress against the producer.

If Friday chooses the course of labor and production, then he in natural fact, as in the case of Crusoe, will own the land area which he clears and uses, as well as the fruits of its product. But, as we have noted above, suppose that Crusoe decides to claim more than his natural degree of ownership, and asserts that, by virtue of merely landing first on the island, he "really" owns the entire island, even though he had made no previous use of it. If he does so, then he is, in our view, illegitimately pressing his property claim beyond its homesteading-natural law boundaries, and if he uses that claim to try to eject Friday by force, then he is illegitimately aggressing against the person and property of the second homesteader.

Some theorists have maintained — in what we might call the "Columbus complex" — that the first discoverer of a new, unowned island or continent can rightfully own the entire area by simply asserting his claim. (In that case, Columbus, if in fact he had actually landed on the American continent — and if there had been no Indians living there — could have rightfully asserted his private "ownership" of the entire continent.) In natural fact, however, since Columbus would only have been able actually to use, to "mix his labor with," a small part of the continent, the rest then properly continues to be unowned until the next homesteaders arrive and carve out their rightful property in parts of the continent.[17]

"Any ethic where one group is given full ownership of another violates the most elemental rule for any ethic: that it apply to every man."

Let us turn from Crusoe and Friday and consider the question of a sculptor who has just created a work of sculpture by transforming clay and other materials (and let us for the moment waive the question of property rights in the clay and the tools). The question now becomes: who should properly own this work of art as it emerges from the fashioning of the sculptor? Once again, as in the case of the ownership of people's bodies, there are only three logical positions: (1) that the sculptor, the "creator" of the work of art, should have the property right in his creation; (2) that another man or group of men have the right in that creation, i.e., to expropriate it by force without the sculptor's consent; or (3) the "communist" solution — that every individual in the world has an equal, quotal right to share in the ownership of the sculpture.

Put this starkly, there are very few people who would deny the monstrous injustice in either a group or the world community seizing ownership of the sculpture. For the sculptor has in fact "created" this work of art — not of course in the sense that he has created matter, but that he has produced it by transforming nature-given matter (the clay) into another form in accordance with his own ideas and his own labor and energy. Surely, if every man has the right to own his own body and if he must use and transform material natural objects in order to survive, then he has the right to own the product that he has made, by his energy and effort, into a veritable extension of his own personality. Such is the case of the sculptor, who has placed the stamp of his own person on the raw material, by "mixing his labor" with the clay. But if the sculptor has done so, then so has every producer who has "homesteaded" or mixed his labor with the objects of nature.

Any group of people who expropriated the work of the sculptor would be clearly aggressive and parasitical — benefiting at the expense of the expropriated. As most people would agree, they would be clearly violating the right of the sculptor to his product — to the extension of his personality. And this would be true whether a group or the "world commune" did the expropriation — except that, as in the case of communal ownership of persons, in practice this expropriation would have to be performed by a group of men in the name of the "world community." But, as we have indicated, if the sculptor has the right to his own product, or transformed materials of nature, then so have the other producers. So have the men who extracted the clay from the ground and sold it to the sculptor, or the men who produced the tools with which he worked on the clay. For these men, too, were producers; they too, mixed their ideas and their technological know-how with the nature-given soil to emerge with a valued product. They, too, have mixed their labor and energies with the soil. And so, they, too, are entitled to the ownership of the goods they produced.[18]

Land Property

If every man has the right to own his own person and therefore his own labor, and if by extension he owns whatever property he has "created" or gathered out of the previously unused, unowned state of nature, then who has the right to own or control the earth itself? In short, if the gatherer has the right to own the acorns or berries he picks, or the farmer his crop of wheat, who has the right to own the land on which these activities have taken place? Again, the justification for the ownership of ground land is the same for that of any other property. For no man actually ever "creates" matter: what he does is to take nature-given matter and transform it by means of his ideas and labor energy. But this is precisely what the pioneer — the homesteader — does when he clears and uses previously unused virgin land and brings it into his private ownership. The homesteader — just as the sculptor, or miner — has transformed the nature-given soil by his labor and his personality. The homesteader is just as much a "producer" as the others, and therefore just as legitimately the owner of his property. As in the case of the sculptor, it is difficult to see the morality of some other group expropriating the product and labor of the homesteader. (And, as in the other cases, the "world communist" solution boils down in practice to a ruling group.) Furthermore, the land communalists, who claim that the entire world population really owns the land in common, run up against the natural fact that before the homesteader, no one really used and controlled — and hence owned — the land. The pioneer, or homesteader, is the man who first brings the valueless unused natural objects into production and use.

"The homesteader is just as much a 'producer' as the others, and therefore just as legitimately the owner of his property."

And so, there are only two paths for man to acquire property and wealth: production or coercive expropriation. Or, as the great German sociologist Franz Oppenheimer perceptively put it, there are only two means to the acquisition of wealth. One is the method of production, generally followed by voluntary exchange of such products: this is what Oppenheimer called the economic means. The other method is the unilateral seizure of the products of another: the expropriation of another man's property by violence. This predatory method of getting wealth Oppenheimer aptly termed the political means.[19]

Now the man who seizes another's property is living in basic contradiction to his own nature as a man. For we have seen that man can only live and prosper by his own production and exchange of products. The aggressor, on the other hand, is not a producer at all but a predator; he lives parasitically off the labor and product of others. Hence, instead of living in accordance with the nature of man, the aggressor is a parasite who feeds unilaterally by exploiting the labor and energy of other men. Here is clearly a complete violation of any kind of universal ethic, for man clearly cannot live as a parasite; parasites must have non-parasites, producers, to feed upon. The parasite not only fails to add to the social total of goods and services, he depends completely on the production of the host body. And yet, any increase in coercive parasitism decreases ipso facto the quantity and the output of the producers, until finally, if the producers die out, the parasites will quickly follow suit.

Thus, parasitism cannot be a universal ethic, and, in fact, the growth of parasitism attacks and diminishes the production by which both host and parasite survive. Coercive exploitation or parasitism injure the processes of production for everyone in the society. Any way that it may be considered, parasitic predation and robbery violate not only the nature of the victim whose self and product are violated, but also the nature of the aggressor himself, who abandons the natural way of production — of using his mind to transform nature and exchange with other producers — for the way of parasitic expropriation of the work and product of others. In the deepest sense, the aggressor injures himself as well as his unfortunate victim. This is fully as true for the complex modern society as it is for Crusoe and Friday on their island.

Property and Criminality

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We may define anyone who aggresses against the person or other produced property of another as a criminal. A criminal is anyone who initiates violence against another man and his property: anyone who uses the coercive "political means" for the acquisition of goods and services.[20]

Now, however, critical problems arise; we are now indeed at the very heart of the entire problem of liberty, property, and violence in society. A crucial question — and one which has unfortunately been almost totally neglected by libertarian theorists — may be illustrated by the following examples:

Suppose we are walking down the street and we see a man, A, seizing B by the wrist and grabbing B's wristwatch. There is no question that A is here violating both the person and the property of B. Can we then simply infer from this scene that A is a criminal aggressor, and B his innocent victim?

Certainly not — for we don't know simply from our observation whether A is indeed a thief, or whether A is merely repossessing his own watch from B who had previously stolen it from him. In short, while the watch had undoubtedly been B's property until the moment of A's attack, we don't know whether or not A had been the legitimate owner at some earlier time, and had been robbed by B. Therefore, we do not yet know which one of the two men is the legitimate or just property owner. We can only find the answer through investigating the concrete data of the particular case, i.e., through "historical" inquiry.

"And so, there are only two paths for man to acquire property and wealth: production or coercive expropriation."

Thus, we cannot simply say that the great axiomatic moral rule of the libertarian society is the protection of property rights, period. For the criminal has no natural right whatever to the retention of property that he has stolen; the aggressor has no right to claim any property that he has acquired by aggression. Therefore, we must modify or rather clarify the basic rule of the libertarian society to say that no one has the right to aggress against the legitimate or just property of another.

In short, we cannot simply talk of defense of "property rights" or of "private property" per se. For if we do so, we are in grave danger of defending the "property right" of a criminal aggressor — in fact, we logically must do so. We may therefore only speak of just property or legitimate property or perhaps "natural property." And this means that, in concrete cases, we must decide whether any single given act of violence is aggressive or defensive: e.g., whether it is a case of a criminal robbing a victim, or of a victim trying to repossess his property.

Another vital implication of this way of looking at the world is to invalidate totally the utilitarian way of looking at property rights and therefore of looking at the free market. For the utilitarian, who has no conception, let alone theory, of justice, must fall back on the pragmatic, ad hoc view that all titles to private property currently existing at any time or place must be treated as valid and accepted as worthy of defense against violation.[21] This, in fact, is the way utilitarian free-market economists invariably treat the question of property rights. Note, however, that the utilitarian has managed to smuggle into his discussion an unexamined ethic: that all goods "now" (the time and place at which the discussion occurs) considered private property must be accepted and defended as such. In practice, this means that all private property titles designated by any existing government (which has everywhere seized the monopoly of defining titles to property) must be accepted as such. This is an ethic that is blind to all considerations of justice, and, pushed to its logical conclusion, must also defend every criminal in the property that he has managed to expropriate. We conclude that the utilitarian's simply praising a free market based upon all existing property titles is invalid and ethically nihilistic. [22]

I am convinced, however, that the real motor for social and political change in our time has been a moral indignation arising from the fallacious theory of surplus value: that the capitalists have stolen the rightful property of the workers, and therefore that existing titles to accumulated capital are unjust. Given this hypothesis, the remainder of the impetus for both Marxism and anarchosyndicalism follow quite logically. From an apprehension of what appears to be monstrous injustice flows the call for "expropriation of the expropriators," and, in both cases, for some form of "reversion" of the ownership and the control of the property to the workers.[23] Their arguments cannot be successfully countered by the maxims of utilitarian economics or philosophy, but only by dealing forthrightly with the moral problem, with the problem of the justice or injustice of various claims to property.

Revolution and "Social Peace"

Neither can Marxist views be rebutted by utilitarian paeans to the virtues of "social peace." Social peace is all very well, but true peace is essentially the quiet, unmolested enjoyment of one's legitimate property, and if a social system is founded upon monstrously unjust property titles, not molesting them is not peace but rather the enshrinement and entrenchment of permanent aggression. Neither can the Marxists be rebutted by pointing the finger at their use of violent methods of overthrow. It is, to be sure, a consistent creed — though one that I do not share — that no violence should ever be used by anyone against anyone else: even by a victim against a criminal. But this Tolstoyan-Gandhian moral position is really irrelevant here. For the point at question is whether or not the victim has a moral right to employ violence in defending his person or property against criminal attack or in repossessing property from the criminal. The Tolstoyan may concede that the victim has such a right but may try to persuade him not to exercise that right in the name of a higher morality. But this takes us afield from our discussion into broader reaches of ethical philosophy. I would only add here that any such total objector to violence must then be consistent and advocate that no criminal ever be punished by the use of violent means. And this implies, let us note, not only abstaining from capital punishment but from all punishment whatsoever, and, indeed, from all methods of violent defense that might conceivably injure an aggressor. In short, to employ that horrid cliché to which we shall have occasion to return, the Tolstoyan may not use force to prevent someone from raping his sister.

"The aggressor has no right to claim any property that he has acquired by aggression."

The point here is that only Tolstoyans are entitled to object to the violent overthrow of an entrenched criminal group; for everyone who is not a Tolstoyan favors the use of force and violence to defend against and punish criminal aggression. He must therefore favor the morality, if not the wisdom, of using force to overthrow entrenched criminality. If so, then we are pushed immediately back to the really important question: who is the criminal, and therefore who is the aggressor? Or, in other words, against whom is it legitimate to use violence? And if we concede that capitalist property is morally illegitimate, then we cannot deny the right of the workers to employ whatever violence may be necessary to seize the property, just as A, in our above example, would have been within his rights in forcibly repossessing his watch if B had stolen it previously.

The only genuine refutation of the Marxian case for revolution, then, is that capitalists' property is just rather than unjust, and that therefore its seizure by workers or by anyone else would in itself be unjust and criminal. But this means that we must enter into the question of the justice of property claims, and it means further that we cannot get away with the easy luxury of trying to refute revolutionary claims by arbitrarily placing the mantle of "justice" upon any and all existing property titles. Such an act will scarcely convince people who believe that they or others are being grievously oppressed and permanently aggressed against. But this also means that we must be prepared to discover cases in the world where violent expropriation of existing property titles will be morally justified, because these titles are themselves unjust and criminal. Let us again use an example to make our thesis clear. To use Ludwig von Mises's excellent device for abstracting from emotionalism, let us take a hypothetical country, "Ruritania."

Let us say that Ruritania is ruled by a king who has grievously invaded the rights of persons and the legitimate property of individuals, and has regulated and finally seized their property. A libertarian movement develops in Ruritania, and comes to persuade the bulk of the populace that this criminal system should be replaced by a truly libertarian society, where the rights of each man to his person and his found and created property are fully respected. The king, seeing the revolt to be imminently successful, now employs a cunning stratagem. He proclaims his government to be dissolved, but just before doing so he arbitrarily parcels out the entire land area of his kingdom to the "ownership" of himself and his relatives. He then goes to the libertarian rebels and says: "all right, I have granted your wish, and have dissolved my rule; there is now no more violent intervention in private property. However, myself and my eleven relatives now each own one-twelfth of Ruritania, and if you disturb us in this ownership in any way, you shall be infringing upon the sanctity of the very fundamental principle that you profess: the inviolability of private property. Therefore, while we shall no longer be imposing 'taxes,' you must grant each of us the right to impose any 'rents' that we may wish upon our 'tenants,' or to regulate the lives of all the people who presume to live on 'our' property as we see fit. In this way, taxes shall be fully replaced by 'private rents'!"

Now what should be the reply of the libertarian rebels to this pert challenge? If they are consistent utilitarians, they must bow to this subterfuge, and resign themselves to living under a regime no less despotic than the one they had been battling for so long. Perhaps, indeed, more despotic, for now the king and his relatives can claim for themselves the libertarians' very principle of the absolute right of private property, an absoluteness which they might not have dared to claim before.

"We cannot get away with the easy luxury of trying to refute revolutionary claims by arbitrarily placing the mantle of 'justice' upon any and all existing property titles."

It should be clear that for the libertarians to refute this stratagem they must take their stand on a theory of just versus unjust property; they cannot remain utilitarians. They would then say to the king: "We are sorry, but we only recognize private property claims that are just — that emanate from an individual's fundamental natural right to own himself and the property which he has either transformed by his energy or which has been voluntarily given or bequeathed to him by such transformers. We do not, in short, recognize anyone's right to any given piece of property purely on his or anyone else's arbitrary say-so that it is his own. There can be no natural moral right derivable from a man's arbitrary claim that any property is his. Therefore, we claim the right to expropriate the 'private' property of you and your relations, and to return that property to the individual owners against whom you aggressed by imposing your illegitimate claim."

One corollary that flows from this discussion is of vital importance for a theory of liberty. This is that, in the deepest sense, all property is "private."[24] For all property belongs to, is controlled by, some individual persons or groups of persons. If B stole a watch from A, then the watch was B's private "property" — was under his control and de facto ownership — so long as he was allowed to possess and use it. Therefore, whether the watch was in the hands of A or B, it was in private hands — in some cases, legitimate-private, in others criminal-private, but private just the same.

As we shall see further below, the same holds for individuals forming themselves into any sort of group. Thus, when they formed the government, the king and his relatives controlled — and therefore at least partially "owned" — the property of the persons against whom they were aggressing. When they parceled out the land into the "private" property of each, they again shared in owning the country, though in formally different ways. The form of private property differed in the two cases, but not the essence. Thus, the crucial question in society is not, as so many believe, whether property should be private or governmental, but rather whether the necessarily "private" owners are legitimate owners or criminals. For, ultimately, there is no entity called "government"; there are only people forming themselves into groups called "governments" and acting in a "governmental" manner.[25] All property is therefore always "private"; the only and critical question is whether it should reside in the hands of criminals or of the proper and legitimate owners. There is really only one reason for libertarians to oppose the formation of governmental property or to call for its divestment: the realization that the rulers of government are unjust and criminal owners of such property.

Illegitimate Property

In short, the laissez-faire utilitarian cannot simply oppose "government" ownership and defend private; for the trouble with governmental property is not so much that it is governmental (for what of "private" criminals like our watch-stealer?) but that it is illegitimate, unjust, and criminal — as in the case of our Ruritanian king. And since "private" criminals are also reprehensible, we see that the social question of property cannot ultimately be treated in utilitarian terms as either private or governmental. It must be treated in terms of justice or injustice: of legitimate property-owners vs. illegitimate, criminal invaders of such property, whether these invaders are called "private" or "public." The libertarian may now be getting rather worried. He may say: "granted that you are right in principle, that property titles must be validated by justice, and that neither the criminal may be allowed to keep the stolen watch, nor the king and his relatives 'their' country, how can your principle be applied in practice? Wouldn't this involve a chaotic inquiry into everyone's property title, and furthermore, what criterion can you establish for the justice of these titles?"

The answer is that the criterion holds as we have explained above: the right of every individual to own his person and the property that he has found and transformed, and therefore "created," and the property which he has acquired either as gifts from or in voluntary exchange with other such transformers or "producers." It is true that existing property titles must be scrutinized, but the resolution of the problem is much simpler than the question assumes. For remember always the basic principle: that all resources, all goods, in a state of no-ownership belong properly to the first person who finds and transforms them into a useful good (the "homestead" principle). We have seen this above in the case of unused land and natural resources: the first to find and mix his labor with them, to possess and use them, "produces" them and becomes their legitimate property owner. Now suppose that Mr. Jones has a watch; if we cannot clearly show that Jones or his ancestors to the property title in the watch were criminals, then we must say that since Mr. Jones has been possessing and using it, that he is truly the legitimate and just property owner.

"Ultimately, there is no entity called 'government'; there are only people forming themselves into groups called 'governments' and acting in a 'governmental' manner."

Or, to put the case another way: if we do not know if Jones's title to any given property is criminally derived, then we may assume that this property was, at least momentarily in a state of no-ownership (since we are not sure about the original title), and therefore that the proper title of ownership reverted instantaneously to Jones as its "first" (i.e., current) possessor and user. In short, where we are not sure about a title but it cannot be clearly identified as criminally derived, then the title properly and legitimately reverts to its current possessor.

But now suppose that a title to property is clearly identifiable as criminal, does this necessarily mean that the current possessor must give it up? No, not necessarily. For that depends on two considerations: (a) whether the victim (the property owner originally aggressed against) or his heirs are clearly identifiable and can now be found; or (b) whether or not the current possessor is himself the criminal who stole the property. Suppose, for example, that Jones possesses a watch, and that we can clearly show that Jones's title is originally criminal, either because (1) his ancestor stole it, or (2) because he or his ancestor purchased it from a thief (whether wittingly or unwittingly is immaterial here). Now, if we can identify and find the victim or his heir, then it is clear that Jones's title to the watch is totally invalid, and that it must promptly revert to its true and legitimate owner. Thus, if Jones inherited or purchased the watch from a man who stole it from Smith, and if Smith or the heir to his estate can be found, then the title to the watch properly reverts immediately back to Smith or his descendants, without compensation to the existing possessor of the criminally derived "title."[26] Thus, if a current title to property is criminal in origin, and the victim or his heir can be found, then the title should immediately revert to the latter.

Suppose, however, that condition a is not fulfilled: in short, that we know that Jones's title is criminal, but that we cannot now find the victim or his current heir. Who now is the legitimate and moral property owner? The answer to this question now depends on whether or not Jones himself is the criminal, whether Jones is the man who stole the watch. If Jones was the thief, then it is quite clear that he cannot be allowed to keep it, for the criminal cannot be allowed to keep the reward of his crime; and he loses the watch, and probably suffers other punishments besides.[27] In that case, who gets the watch? Applying our libertarian theory of property, the watch is now — after Jones has been apprehended — in a state of no-ownership, and it must therefore become the legitimate property of the first person to "homestead" it — to take it and use it, and therefore, to have converted it from an unused, no-ownership state to a useful, owned state. The first person who does so then becomes its legitimate, moral, and just owner.

But suppose that Jones is not the criminal, not the man who stole the watch, but that he had inherited or had innocently purchased it from the thief. And suppose, of course, that neither the victim nor his heirs can be found. In that case, the disappearance of the victim means that the stolen property comes properly into a state of no-ownership. But we have seen that any good in a state of no-ownership, with no legitimate owner of its title, reverts as legitimate property to the first person to come along and use it, to appropriate this now unowned resource for human use. But this "first" person is clearly Jones, who has been using it all along. Therefore, we conclude that even though the property was originally stolen, that if the victim or his heirs cannot be found, and if the current possessor was not the actual criminal who stole the property, then title to that property belongs properly, justly, and ethically to its current possessor.

To sum up, for any property currently claimed and used: (a) if we know clearly that there was no criminal origin to its current title, then obviously the current title is legitimate, just and valid; (b) if we don't know whether the current title had any criminal origins, but can't find out either way, then the hypothetically "unowned" property reverts instantaneously and justly to its current possessor; (c) if we do know that the title is originally criminal, but can't find the victim or his heirs, then (c1) if the current title-holder was not the criminal aggressor against the property, then it reverts to him justly as the first owner of a hypothetically unowned property. But (c2) if the current titleholder is himself the criminal or one of the criminals who stole the property, then clearly he is properly to be deprived of it, and it then reverts to the first man who takes it out of its unowned state and appropriates it for his use. And finally, (d) if the current title is the result of crime, and the victim or his heirs can be found, then the title properly reverts immediately to the latter, without compensation to the criminal or to the other holders of the unjust title.

"There is really only one reason for libertarians to oppose the formation of governmental property or to call for its divestment: the realization that the rulers of government are unjust and criminal owners of such property."

It might be objected that the holder or holders of the unjust title (in the cases where they are not themselves the criminal aggressors) should be entitled to the property which they added on to the property which was not justly theirs, or, at the very least, to be compensated for such additions. In reply, the criterion should be whether or not the addition is separable from the original property in question. Suppose, for example, that Brown steals a car from Black, and that Brown sells the car to Robinson. In our view, then, the car must be returned immediately to the true owner, Black, without compensation to Robinson. Being a victim of a theft should not impose obligations on Black to recompense someone else. Of course, Robinson has a legitimate complaint against the car-thief Brown, and should be able to sue Brown for repayment or damages on the basis of the fraudulent contract that Brown had foisted upon him (pretending that the car was really Brown's property to sell). But suppose that Robinson, in the course of his possession of the car, had added a new car radio; since the radio is separable from the car, he should be able to extract the radio as legitimately his own before returning the car to Black. On the other hand, if the addition is not separable, but an integral part of the property (e.g., a repaired engine), then Robinson should not be able to demand any payment or property from Black (although perhaps he may be able to do so by suing Brown). Similarly if Brown had stolen a parcel of land from Black, and sold it to Robinson, the criterion should again be the separability of any additions Robinson had made to the property. If, for example, Robinson had built some buildings on the property, then he should be able to move the buildings or demolish them before turning the land over to the original landowner, Black.

Our example of the stolen car enables us to see immediately the injustice of the current legal concept of the "negotiable instrument." In current law, the stolen car would indeed revert to the original owner with no obligation on the owner's part to compensate the current holder of the unjust title. But the State has designated certain goods as "negotiable instruments" (e.g., dollar bills) which the non-criminal recipient or buyer is now deemed to own, and who cannot be forced to return them to the victim. Special legislation has also made pawnbrokers into a similarly privileged class; so that if Brown steals a typewriter from Black, and then pawns it with Robinson, the pawnbroker may not be forced to return the typewriter to its just property owner, Black.

To some readers, our doctrine may seem harsh on good-faith recipients of goods which later turn out to be stolen and unjustly possessed. But we should remember that, in the case of land purchase, title searches are a common practice, as well as title insurance against such problems. In the libertarian society, presumably the business of title search and title insurance will become more extensive to apply to the wider areas of the protection of the rights of just and private property.

We see, then, that, properly developed libertarian theory neither joins the utilitarians in placing an arbitrary and indiscriminate ethical blessing upon every current property title, nor does it open the morality of existing titles to total uncertainty and chaos. On the contrary, from the fundamental axiom of the natural right of every man to property in his self and in the unowned resources which he finds and transforms into use, libertarian theory deduces the absolute morality and justice of all current titles to property except where the origin of the current titles is criminal, and (1) the victim or his heirs can be identified and found, or (2) the victim cannot be found but the current title-holder is the criminal in question. In the former case, the property reverts in common justice to the victim or his heirs; in the latter, it becomes the property of the first appropriator to alter its unowned state.

Conclusion

We thus have a theory of the rights of property: that every man has an absolute right to the control and ownership of his own body, and to unused land resources that he finds and transforms. He also has the right to give away such tangible property (though he cannot alienate control over his own person and will) and to exchange it for the similarly derived properties of others. Hence, all legitimate property-right derives from every man's property in his own person, as well as the "homesteading" principle of unowned property rightly belonging to the first possessor.

"Being a victim of a theft should not impose obligations to recompense someone else."

We also have a theory of criminality: a criminal is someone who aggresses against such property. Any criminal titles to property should be invalidated and turned over to the victim or his heirs; if no such victims can be found, and if the current possessor is not himself the criminal, then the property justly reverts to the current possessor on our basic "homesteading" principle.

Let us now see how this theory of property may be applied to different categories of property. The simplest case, of course, is property in persons. The fundamental axiom of libertarian theory is that each person must be a self-owner, and that no one has the right to interfere with such self-ownership. From this there follows immediately the total impermissibility of property in another person.[28] One prominent example of this sort of property is the institution of slavery. Before 1865, for example, slavery was a "private property" title to many persons in the United States. The fact of such private title did not make it legitimate; on the contrary, it constituted a continuing aggression, a continuing criminality, of the masters (and of those who helped enforce their titles) against their slaves. For here the victims were immediately and clearly identifiable, and the master was every day committing aggression against his slaves. We should also point out that, as in our hypothetical case of the king of Ruritania, utilitarianism provides no firm basis for vacating the "property right" of a master in his slaves.

When slavery was a common practice, much discussion raged as to whether or how much the master should be monetarily compensated for the loss of his slaves if slavery were to be abolished. This discussion was palpably absurd. For what do we do when we have apprehended a thief and recovered a stolen watch: do we compensate the thief for the loss of the watch, or do we punish him? Surely, the enslavement of a man's very person and being is a far more heinous crime than the theft of his watch, and should be dealt with accordingly. As the English classical liberal Benjamin Pearson commented acidly: "the proposal had been made to compensate the slaveowners and he had thought it was the slaves who should have been compensated."[29] And clearly, such compensation could only justly have come from the slaveholders themselves, and not from the ordinary taxpayers.

It should be emphasized that on the question of slavery, whether or not it should have been abolished immediately is irrelevant to problems of social disruption, of the sudden impoverishing of slave masters, or of the flowering of Southern culture, let alone the question — interesting, of course, on other grounds — whether slavery was good for the soil, and for the economic growth of the South, or would have disappeared in one or two generations. For the libertarian, for the person who believes in justice, the sole consideration was the monstrous injustice and continuing aggression of slavery, and therefore the necessity of abolishing the institution as soon as it could be accomplished.[30]


Murray N. Rothbard (1926–1995) was dean of the Austrian School. See his archive. Comment on the blog.

This article is excerpted from the chapters 6–9 of The Ethics of Liberty. Audiobook versions of these chapters, read by Jeff Riggenbach, are now available for podcast or download.


Notes

[1] See Murray N. Rothbard, Man, Economy, and State (Princeton, N.J.: D. Van Nostrand, 1962), vol. 1, chaps. 1 and 2.

[2] Such seventeenth- and eighteenth-century constructs as "the state of nature" or "the social contract" were not wholly successful attempts to construct such a logical analysis. Such attempts were far more important than any actual historical assertions that may have been made in the course of developing these concepts.

[3] This economic "land," including all nature-given resources, does not necessarily mean "land" in the popular sense, as it may include parts of the sea, e.g., fishing waters, and excludes man-made improvements on the earth.

[4] See Murray N. Rothbard, Individualism and the Philosophy of the Social Sciences (San Francisco: Cato Institute, 1979), pp. 5–10. For one thing, a person cannot coherently believe that he is making judgments and at the same time that he is being determined by a foreign cause to do so. For if that were true, what would be the status of the judgment that he is determined? This argument was used by Immanuel Kant, Groundwork of the Metaphysics of Morals, trans. H.J. Paton (New York: Harper and Row, 1964), pp. 115f.

[5] On the value of life not depending on whether it is perceived as one of happiness, see Philippa R. Foot, Virtues and Vices (Berkeley: University of California Press, 1978), p. 41.

[6] Elsewhere, I have written: "if a man cannot affirm a proposition without employing its negation, he is not only caught in an inextricable self-contradiction; he is conceding to the negation the status of an axiom." Rothbard, Individualism, p. 8. Also see R.P. Phillips, Modern Thomistic Philosophy (Westminster, Md.: Newman Bookshop, 1934–35), vol. 2, pp. 36–37.

[7] See Rothbard, Individualism, p. 8, and F.A. Hayek, The Road to Serfdom (Chicago: University of Chicago Press, 1944), p. 26.

[8] Perhaps the one great advantage of the term "liberty" over its synonym "freedom" is that liberty is generally used only in the social, and not in the purely philosophic free-will sense, and is also less confused with the concept of power. For an excellent discussion of free will, see J.R. Lucas, The Freedom of the Will (Oxford: Clarendon Press, 1970).

[9] Later on, when other people arrived on the continent, they too, in natural fact, would own the lands which they transformed by their labor, the first man could only obtain ownership of them by the use of invasive force against their natural property, or by receiving them from the newcomers in voluntary gift or exchange.

[10] On the economic analysis of all this, see Murray N. Rothbard, Man, Economy, and State (Princeton, N.J.: D. Van Nostrand, 1962), chap. 2.

[11] That capital goods reduce back to land and labor as original factors is a fundamental insight of the Austrian School of economics. In particular, see Eugen von Böhm-Bawerk, The Positive Theory of Capital, vol. 2 of Capital and Interest (South Holland, Ill.: Libertarian Press, 1959).

[12] In technical economic terms, the laborers, by choosing to take their money in advance of sale, earn the "discounted marginal value product" of their labor-the discount being the value which the laborers achieve by getting their money now instead of later. The capitalists, by advancing money now and relieving the laborers of the burden of waiting until later, earn the discount for "time-preference"; the farsighted ones also earn the reward for being better at forecasting the future under conditions of uncertainty, in the form of "pure profits." The less farsighted entrepreneurs suffer losses for poor handling of decisions under uncertainty. See Rothbard, Man, Economy, and State, passim.

[13] We shall see later that this definition of freedom or liberty must be clarified to read "absence of molestation of a man's just property," with justice implying, once again, ownership title to one's own self, to one's own transformed property, and to the fruits of voluntary exchanges built upon them.

[14] For a critique of the "freedom to steal or assault" argument against the libertarian position, see Murray N. Rothbard, Power and Market, 2nd ed. (Kansas City: Sheed Andrews and McMeel, 1977), p. 242.

[15] On the requirement that ethical laws be universally binding, see R.M. Hare, The Language of Morals (Oxford: Clarendon Press, 1952), p. 162; Marcus Singer, Generalization in Ethics (New York: Knopf, 1961), pp. 13–33.

[16] Professor George Mavrodes, of the department of philosophy of the University of Michigan, objects that there is another logical alternative: namely, "that no one owns anybody, either himself or anyone else, nor any share of anybody." However, since ownership signifies range of control, this would mean that no one would be able to do anything, and the human race would quickly vanish.

[17] A modified variant of this "Columbus complex" holds that the first discoverer of a new island or continent could properly lay claim to the entire continent by himself walking around it (or hiring others to do so), and thereby laying out a boundary for the area. In our view, however, their claim would still be no more than to the boundary itself, and not to any of the land within it, for only the boundary will have been transformed and used by man.

[18] Cf. John Locke, Two Treatises on Government, pp. 307–8.

[19] Franz Oppenheimer, in his book The State (New York: Free Life Editions, 1975), p. 12, said:

There are two fundamentally opposed means whereby man, requiring sustenance, is impelled to obtain the necessary means for satisfying his desires. These are work and robbery, one's own labor and the forcible appropriation of the labor of others…. I propose … to call one's own labor and the equivalent exchange of one's own labor for the labor of others, the "economic means" for the satisfaction of needs, while the unrequited appropriation of the labor of others will be called the "political means."

[20] We are here using "crime" and "criminal" in the ordinary language, rather than technical, legal sense. In legal parlance, offenses or aggressions against individuals are not crimes but torts, with committers of torts being referred to as tortfeasors. The legal concept of "crime" is confined to offenses against the State or Community. It will be seen below that we deny the latter concept altogether, with all legally punishable offenses confined to invasions of the person or property of other individuals. In short, in the libertarian conception, its "crimes" correspond to legally designated "torts," although there is no particular reason for redress or punishment to be confined to monetary payment, as was the case in ancient tort law. See Sir Henry Maine, Ancient Law (New York: E.P. Dutton, 1917), pp. 217ff.

[21] For a criticism of utilitarianism on this point, see John Rawls, A Theory of Justice (Cambridge, Mass.: Harvard University Press, 1971), pp. 26–27, secs. 83–84. Utilitarianism is attacked more generally in Peter Geach, The Virtues (Cambridge: Cambridge University Press, 1977), pp. 91ff., 103ff. Geach points out the counter-intuitive nature of the formula, "the greatest happiness of the greatest number." For a utilitarian defense of existing property titles, see Ludwig von Mises, Socialism (New Haven, Conn.: Yale University Press, 1951), pp. 45–47.

[22] For more on the role of government and existing property titles see below; for a more detailed critique of utilitarian free-market economics, see pp. 201–14 below.

[23] In this sense, the only proper carrying out of the Marxian ideal has partially occurred in Yugoslavia, where the Communist regime has turned the socialized sphere of production over to the control, and hence de facto ownership, of the workers in each particular plant.

[24] I owe this insight to Mr. Alan Milchman.

[25] See pp. 159–98 below for a further discussion of the role of government.

[26] Or it may revert to any other of Smith's assignees. Thus, Smith might have sold his claim or right to the watch to someone else, and then if this purchaser or his heirs can be found, the legitimate property title reverts to him.

[27] We are assuming here that criminals suffer punishment beyond simple surrender of the property stolen: but how much the punishment should be or what theory it should be based upon — whether retributive, deterrent, or reform, for example — will be treated below.

[28] The difficult case of children will be treated on pp. 97–112.

[29] Quoted in William D. Grampp, The Manchester School of Economics (Stanford, Calif.: Stanford University Press, 1969), p. 59. Also on compensation and slavery, see pp. 204, 237ff below.

[30] For more on the general necessity for the libertarian to be an "abolitionist," see pp. 259ff below.