Good fences make good neighbours — Robert Lee Frost.
The recognition of private property is a decentralized way of solving the conflict that arises over the control of any good that may have alternative uses.
Private property goes hand in hand with the concepts of rights, freedom and peace:
Rights are abilities that must be respected. They are natural, conscience spots them.
Property is the right of exclusion over a scarce resource. It is the standard from where the rest of rights derive; if not, rights become fuzzy and contradictory.
Everyone has the right to preserve and enjoy his property, which is their own life and the peacefully acquired belongings. “Don’t tread on me”.
Respect for life begins with the recognition that each person is the owner of their own body. Self-achievements are also an essential part of life; so when people is able to keep and use the fruits of their labor (i.e. anything acquired through voluntary exchange, production or homesteading), then life is considered more fair and respected.
The free disposal and use of own property is called freedom.
The rights of one person imply negative obligations for the rest, i.e. they imply the duty of NOT employing aggression. “Live and let live”.
But rights don’t imply positive obligations, i.e. rights don’t imply the duty to act; because if they did, they would violate freedom. “Laissez faire, laissez passer”.
Nothing that requires the labor of others is a human right. For example, there is a moral obligation to help the needy, but the needy has no right of forcing others to help him.
I swear by my life and my love of it that I will never live for the sake of another man, nor ask another man to live for mine. — Ayn Rand.
The recognition of private property leads to the non-aggression principle and the self-defence right. Both claim that violence is never justifiable, except in defence against another aggression.
Trade, which thrives on respect for private property, induces social cohesion through spontaneous cooperation.
Free trade is God's diplomacy and there is no other certain way of uniting people in the bonds of peace. — Richard Cobden.
Trade turns strangers familiar with each other, while creating benefits for honest participants and disincentivizing hostiles attitudes.
It is almost a general rule that where there are mild customs, there is trade and that where there is trade, customs are mild. — Montesquieu noticed in 1748.
A man without a smiling face must not open a shop. — Chinese Proverb.
Frederich Bastiat also warned “When goods don’t cross borders, soldiers will”. Denying the possibility of voluntary exchange is banning the only possible way to acquire other people's goods peacefully.
Beyond ethics, private property’s recognition facilitates Economic Development by enabling economic calculation and by incentivizing the creation of value:
Economic calculation is an important ability for social coordination. It plays a a crucial role on economic adaptation to dynamic circumstances and evolving consumers' desires.
The price system works as a mechanism for communicating dispersed information relative to economic scarcity. For it to be reliable, economic freedom and sound money are necessary.
Prices enable the quantification of value, signalling the scarcity of a good in comparison to the scarcity of monetary units, and showing the spot in which the preferences of goods suppliers and money holders are satisfied.
The accounting of revenue and cost makes possible to estimate profits and losses, which informs the providers of goods whether they are creating more economic value than they are destroying.
Profit compared to the total value of the used tools, is called interest or profitability.
Profitability guides the assignation of resources and activities, attracting entrepreneurs to those sectors with higher interests.
The competitive experimentation to satisfy consumers' desires causes that, in the long run, and in the absence of coercion, no economic sector tends to earn more per unit of value.
Incentives for the creation of value:
Private property implies responsibility, which promotes self-monitoring and the maintenance of resources.
It also incentivizes the production and exchange of goods, which provides the ability to get goods that are more appreciated than what is transformed or is exchanged.
Private property rewards the division of labour and specialization, which tends to increase the variety and quality of goods.
Besides, it incentivizes innovation and capital accumulation, i.e. the creation and improvement of tools to satisfy consumer desires.
Economic Growth is a scarcity liberating mechanism, as it makes abundant what was considered scarce before. It implies that the availability and quality of goods are increasing, i.e. the standard of living is improving, so real incomes rise.
Economic adaptation can be imagined as a form of economic growth that satisfies changing necessities in order to achieve a similar standard of living to the previous one.
Economic growth is achieved by innovation, i.e., by the improvement of tools and social abilities that coordinate the production and exchange of goods.
Virtually all economic growth comes from innovation. New technologies, new habits, new ideas are what drive up living standards. Innovation is the parent of prosperity but it is the child of freedom. — Matt Ridley.
For innovation to occur, in addition to economic freedom, it is necessary to have ethical values of effort and long-term orientation that promote the creation of savings and investment.
Economic freedom is in direct relation with almost all of the economic, social or even environmental indicators, but it is only when a culture of “sacrificing the good now for the unimaginable down the road” exists, that innovation really excels.
Besides providing the conditions for the creation of wealth; the recognition of private property improves the quality of life by making a society more just, free and peaceful.
- Dignity: quality of deserving respect, i.e. having rights.
- Conscience: an inner voice or intuitive feeling about what is right.
- Aggression, violence: the use of physical force.
- Coercion, domination: intimidation. The use of physical force or the explicit threat of it to obtain compliance.
- Trade: various voluntary exchanges or swaps.
- Market: an area where trade takes place.
- Scarcity: relative low availability of something. In absolute terms, it indicates that the supply of something is not limitless.
- Price: an exchange rate denominated in monetary units.
- Income: amount of goods obtained per unit of time.
- Savings: non-yet spent income.
- Capital good: a tool. Anything that satisfies a different end than the leisure of its consumption.
- Investing: the spend of savings to get capital goods.
- Entrepreneur: person who manages and combines capital goods.
- Businesses, companies: association of people to impulse a common economic goal.
- Wealth: availability of economic goods.