"Of Property" and the Mercantilist Fallacy
Sandwichman at Econospeak offers a look at a piece of history:
“Of Property” and the Mercantilist Fallacy
“Though the earth, and all inferior creatures, be common to all men, yet every man has a property in his own person: this no body has any right to but himself. The labour of his body, and the work of his hands, we may say, are properly his. Whatsoever then he removes out of the state that nature hath provided, and left it in, he hath mixed his labour with, and joined to it something that is his own, and thereby makes it his property.”
The above is the core of what is commonly referred to as John Locke’s “labour theory of property.” It is a extraordinarily compelling narrative, resplendent with “self-evident truth” (“We hold these truths to be self evident…) and nearly indiscernible ambiguity (what does “labour” mean? what’s “mixing” got to do with it?).
It is widely acknowledged by Locke scholars that his economic views were essentially mercantilist. Keynes suggested that Locke stood with “one foot in the mercantilist world and one foot in the classical world.” However that may be, chapter five of Locke’s Second Treatise on Civil Government, “Of Property”, is relentlessly, incorrigibly, two-footedly mercantilist. And nobody seems to have noticed (except possibly John R. Commons).
Why would this even matter?
Yeah, sure, we are told, ad nauseum, about how PROPERTY is the be all and end all of freedom, democracy and prosperity. A comic-book, social Darwinist pseudo-Locke lends the right-wing libertarian anti-tax mantra a veneer of moral righteousness and intellectual gravitas.
And it’s crap.
But there are bigger fish to fry: LABOUR.
While socialists and even liberals may be inclined to circumscribe the sanctity of property, they are loath to gainsay the hallowed individualist framing of labour. Some folks even think it’s downright revolutionary to insist on the worker’s right to the whole product of labour. Labour, though, is only conventionally something an individual performs. Labour is social. Labour power is best understood as a common-pool resource.
The ideology of labour as an extension of the self is pervasive, persuasive and pernicious. From that perspective, solidarity is a voluntary act of magnanimity that can be “terminated at will” just like a redundant employee. As individuals, the relationship between workers is accidental; their relationships with the employer and with the state are what matters.
The inescapable mercantilism of Locke’s notion of natural law puts that individualist ideology in a different light. In his Essay on the Law of Nature, Locke was adamant that “the rightness of an action does not depend on its utility; on the contrary, its utility is a result of its rightness.” “It is impossible,” Locke wrote, “that the primary law of nature is such that its violation is unavoidable. Yet, if the private interest of each person is the basis of that law, the law will inevitably be broken…”
Here is where the mercantilism comes in: “when any man snatches for himself as much as he can, he takes away from another man’s heap the amount he adds to his own, and it is impossible for anyone to grow rich except at the expense of someone else.” To avoid any mistake, Locke reiterates his objection to positing “every man’s self interest the basis of natural law”:
“For in such a case each person is required to procure for himself and to retain in his possession the greatest possible number of useful things; and when this happens it is inevitable that the smallest possible number is left to some other person, because surely no gain falls to you which does not involve somebody else’s loss.”
An unequivocal zero-sum game. “No gain falls to you which does not involve somebody else’s loss.” “It is impossible for anyone to grow rich except at the expense of someone else.”
Now there are those who will object that Locke modified his views between the earlier Essay on the Law of Nature and his later Second Treatise on Civil Government. Not so. In the latter, and especially in the chapter “Of Property,” Money plays a pivotal role in repealing what has become known as the spoilage limitation:
“He that gathered a hundred bushels of acorns or apples, had thereby a property in them… He was only to look, that he used them before they spoiled, else he took more than his share, and robbed others. And indeed it was a foolish thing, as well as dishonest, to hoard up more than he could make use of.”
Someone who took so much that it spoiled before he could use it did a foolish, dishonest thing and robbed others. In short, if you take so much that it rots, it was never yours to take.
How does Money nullify that limitation? The person who gathers more perishable goods than he can use can exchange it for durable Gold or Silver. Problem solved.
Locke was a staunch metallist who insisted on the intrinsic value of Money as represented by its weight and fineness. This is not some incidental biographical trivia. Locke’s well documented views on Money were decisive in the monetary reform and re-minting of British coinage in the 1690s.
According to Locke, it was not the absolute quantity of Gold and Silver a nation held that determined its wealth but the proportion of Gold and Silver it held relative to the holdings of the rest of the world:
“Riches do not consist in having more Gold and Silver, but in having more in proportion, than the rest of the World, or than our Neighbours, whereby we are enabled to procure to our selves a greater Plenty of the Conveniencies of Life than comes within the reach of Neighbouring kingdoms and States, who, sharing the Gold and Silver of the World in a less proportion, want the means of Plenty and Power, and so are Poorer.”
A zero-sum game. What was “one man’s gain is another’s loss” in useful things is mitigated by its transmutation into metal Money where one man’s gain is still another’s loss but is at least not a net loss (through waste). This later proviso, though, only holds good for Money with an intrinsic value of specified weight and fineness.
Postscript
Some readers may have wondered at the parenthetical reference to John R. Commons back in the second paragraph. Commons didn’t specifically address the passages I cited from the Essay on the Law of Nature. In fact, it wasn’t published until 20 years later. Nor did he discuss Locke’s influential writings on Money. But he did make a point in a reply to a critic that is germane to my argument here.
The context of Commons’s observations is crucial to the significance of his remark, so I will reproduce a substantial excerpt here:
My point of view is indeed personal, as was said by Professor Homan of all institutional economists. It is simply my own experience in collective action from which I drew a theory of the part played by collective action on individual action. It may or may not fit other people’s ideas of institutionalism. It started, indeed, with my trade-union membership and my later participation in labor arbitration; then turned to drafting a public utility law designed to ascertain and maintain reasonable values and reasonable practices; then to drafting and participating in administration of an industrial commission law with the similar purpose of reasonable practices applied to employers and employees; then to representing the western states before the Federal Trade Commission on the Pittsburgh Plus case of discrimination; then to aiding the House Committee on Congressman Strong’s bill for stabilization of prices; meanwhile administering and developing a plan for unemployment insurance finally enacted into law.
I do not see how anyone going through these 45 years of participation could fail to arrive at two inferences, conflict of interest and collective action. Even the state itself turned out to be merely collective action of those in possession of sovereignty.
Meanwhile I was necessarily studying hundreds of decisions, mainly of the United States Supreme Court, endeavoring to discover on what principles they decided disputes of conflicting interests under the clauses of the Constitution relating to due process, to taking property and liberty, and to equal treatment. I found that none of the economists had taken this point of view, and none of them except Professor Ely, had made any contributions that would make it possible to fit legal institutions into economics or into this constitutional scheme of American judicial sovereignty.
Drumroll… Now here’s his point:
Going back over the economists from John Locke to the orthodox school of the present day, I found they always had a conflicting meaning of wealth, namely a material thing and the ownership of that thing. But ownership, at least in its modern meaning of intangible property, means power to restrict production on account of abundance while the material things arise from power to increase the abundance of things by production, even overproduction.
A simple point but a profound and subtle one. Ownership is not the same as the material thing owned. But beyond that, the restrictive implication of ownership is contrary to the abundance implication of the material things owned.
I am Andrew Ryan and I am here to ask you a question:
Is a man not entitled to the sweat of his brow?
“…Whatsoever then he removes out of the state that nature hath provided, and left it in, he hath mixed his labour with, and joined to it something that is his own, and thereby makes it his property…”
Would Locke ascribe this property share to everyone along the chain or within the web of production? For instance, it takes 149,000 people to create that business we call Starbucks, but currently no-one would say these people “own” Starbucks. Mostly, their labour is repaid at or below cost, even though their participation is essential to the enterprise. Would Locke say they were “owners?”
Noni
No, they aren’t owners, they’ve traded their equity for cash payments for their labor. Similarly, the coffee bean growers, the UPS delivery guys, the dairy farmers, etc.
Goodwin
if you will collect the sweat of your brow in a bucket i will write you a certificate of ownership.
now, could we get back to serious comments.
I am not much of a philosopher so I think I lost the thread of the argument. But it seems to me the takeaway thought is this:
“It is impossible,” Locke wrote, “that the primary law of nature is such that its violation is unavoidable. Yet, if the private interest of each person is the basis of that law, the law will inevitably be broken…”
From which I will conclude that while “property rights” are part of the rights we ought to grant each other and respect, they are not “the primary law” which appears to be the assumption by economists in general, and Randians in particular.
I think we have a tradition of law in this country that understands this, where it is not corrupted from time to time by laws written by and for those with too much property, or perverted by lawyers and judges to serve evil purposes… perhaps one of the most evil of which is an excessive “letter of the law” severity which ignores our more fundamental obligation to each other of basic human decency.
Frankly I think that as a society we have lost the instinct for decency and are settling in for the long term worship of property… not obtained by the sweat of honest labor, but simply by sharp trading.
I don’t see even the left resisting this. instead they operate as “attorneys for the poor” with a narrow focus on obtaining as much “property” as they can at the expense of “the rich,” and do pretty well for themselves in fees.
Coberly,
That was a very clever response to Goodwin. I’m just relieved his name isn’t Godwin. And before Jack jumps all over me, I’m not trying to change the subject. Who determines what the sweat of one’s brow is worth?
Andrew asks a pertinent question.
Because the work is social, what you are entitled to is also social. It may consist of some portion of the product of your work. It may consist of social prestige — i.e., it makes you a “Big Man,” It may consist of a combination of the two. It may consist of having your needs met (from each according to ability; to each according to need).
The point is, though, that “property” in the sense of ownership is not the same as property in the sense of the useful (or useless) things owned. To define property in the way that Locke has leads to confusion and contradiction about the meanings of both property and labour because Locke also defines labour in relation to the ambiguous “property”.
Locke has mixed up his notion of labour with something that is associated with it but by no means equivalent to it.
And, yes, as Coberly points out, it is impossible that private interest is the basis of natural law. In fact, the essay on the law of nature in which Locke states that is titled: “An Privata Cujusque Utilitas Sit Fundamentum Legis Naturae? Negatur” translated as “Is Every Man’s Own Interest the Basis of the Law of Nature? No.”
Pretty clear, eh? That early essay, in turn, is the source for several of the arguments in chapter 5, “Of Property.”
Locke was clearly a pathbreaker in his analysis of economic phenomena but as Emerson remarked, “consistency is the hobgoblin of little minds.”
There is no need to own property until the population and density exceeds some threshold that creates a shortage of the desired resource. Private property is a right mostly because people desire property rights in order to control scarce resources. Think of the Native Americans who did not have a sense of individual private property. They considered property as a collective concept whereby the entire group owned or controlled land and resources collectively. In Europe, the population densities were so high and the available land so scarce in relation that ownership became a survival tactic. As long as mankind continues to multiply at unsustainable rates, private property rights will continue to be the key to survival individually. It will only get worse as we fill up this planet. Consider California in the 1960’s when we had less than 20 million people. Prices were low, beaches were mostly unused, the Sierras were empty, vast areas were left untouched. This all changed as we grew into our 38 million strong horde of competing rats on a strip of land.
Woolley,
You raise some absolutely essential issues but at the same time entangle them with assumptions that do not hold up under scrutiny.
First, there are many scarce resources that cannot be managed by private property rights — for example, the CO2 absorption capacity of the atmosphere.
Second, “property rights” consist of a bundle of rights that are separable; Ostrom distinguishes access, withdrawal, management, exclusion and alienation. “Private” property is most distinguished by the right to dispose of the property (alienation). That’s not always the most important thing with regard to conserving resources.
Third, the conventional notion of private property as a “natural law” right is fraught with contradictions that extend far beyond the one that Commons identified. I will be addressing those questions in a future essay.
Wooley
I don’t think so. The essence of “indian economics” was to share SCARCE resources. The lucky hunter today shared his catch with the unlucky… because tomorrow someone else would be the lucky one. Though I don’t think the indians thought of it in such crass terms. They seemed to believe that “sharing” was good it itself.
I believe… no actual knowledge… that the European model arose out of conquest. Some Europeans conquered others and made slaves of them. The conquerers owned the land and the people who worked it. Otherwise there was no reason that “the workers” would not have continued with a concept of shared resources not much different from that of the indians.
Of course “European” here includes Asians and Africans and some Indians. The Sioux did not share land with the Crow, and I don’t know how the Inca and Aztec managed “ownership,” but I don’t think it was “share the wealth.”
Sandwichman
consistency is also the hobgoblin of some rather well educated minds.
funny thing that, we need “consistency” to think at all… and at the end of the day it is consistency that keeps us from thinking about all the things that we never thought of while we were acquiring consistency.
Locke was definitely not a small mind, but you are quite right to point out that (either) he failed to be consistent, or, his consistency failed him. as it does to all of us…. another reason we need each other.
My view on property and other such “natural” rights as described by Locke and others is that these rights only became necessary as people moved into cities and towns and the population grew to the point where human beings no longer shared the type of connections that made a hunter gatherer society work. Its a huge topic and the comments above regarding my post are valid. If you think about property though as a purely human solution that is temporary then you have to ask why it came about given that no one can really own anything permanently regardless of the item we are calling property. Everything is temporal. Private property is simply a means by which we can protect something of value to us. The commons such as air, water, wild animals, the oceans and so on are not private property which means that the state or the world as a group must step in to value them enough to protect them. In essence, this group ownership is a form of collective property rights which protect scarce resources from exploitation or unwanted “takings”. I just keep coming back to that photo of the Earth from the moon whenever I think about private property in the context of a small planet with 7 billion people trying to carve it up.
J.Goodwin said…”No, they aren’t owners, they’ve traded their equity for cash payments for their labor. Similarly, the coffee bean growers, the UPS delivery guys, the dairy farmers, “
True, but maybe not helpful in tracking the expenditure of human effort, which underlies all currency.
A thousand people, together, can generate far more than 1000 times what any single person can, each operating with identical resources but unassisted. Suppose that together, they generate 5 times the goods needed to sustain them. It isn’t hard to see that the minimum wage worker, accorded bare sustenance for his efforts or less, is getting taken advantage of.
In fact, there is a word for a person whose work, within a society, is accorded only bare subsistence. The word is “slave.” Oh, other factors come in, but when a large segment of a society dedicates their whole working life to efforts that enrich others but not themselves, what would you call that society?
It is a noble thing to work hard, but not for the benefit of the rentiers.
woolley:
First a hello, I hope things are fine by you. The problem you point out with California is certainly a real one. If you look at where people live in the US, you would find it mostly in cities and places such as California. As a whole, the population of the US occupies 5% of the land mass which leaves quite a bit of open space. A good read on the topic is “300 Million and Counting” by Joel Garreau. The US is no where near the crowding experienced in places like japan or Singapore.
Bill H
i am rather fond of deserts myself. but it is hard to live in one.
quite similarly, i own a few acres of land… more than “my share.” but it would be hard to farm it if it was filled up with townhouses. or even little boxes made out of ticky tacky.
woolley
i have no real quarrel with you, but your “origins of property” doesn’t ring true with me.
for one thing, the people protecting the land against overuse were often the “rich” landowners.
there is plenty of injustice in the world, but it doesn’t all come from private property or even “inequality”.
i am not very fond of the greedy rich myself (that is not all the rich), but i have seen too much greed and spoilage coming from the not-rich to feel that “equality” is a solution.
I never understood Locke. He’s a property mystic, and I always have trouble with mystics. Property is a function of government and is, in the end, implemented by violence.
I think it was Walt Whitman who wrote a poem about each American owning his own labor, conflating job or vocation with labor proper. Once again, this involves some mysticism, but the low US population, abundant resources and liberal policy of government hand outs provided a sense of owning one’s own labor. (That is, if your skin was sufficiently pale so you weren’t considered property.) Whitman, at least, a poet, not a philosopher.
Noni
i think i agree with your point, but i don’t agree about the 1000 workers.
1000 workers without organization will not do more than “the sum of their parts.”
the person who organizes that labor has contributed “something” that makes the thousand workers more productive. he “deserves” a reward for his “labor.”
so, if, say, i build a factory and hire a thousand workers at 20 dollars an hour each, and i pay myself one dollar an hour for each of “my” workers, am i exploiting them? is the inequality “unfair”?
now, i would agree with you about conditions in “real” factories, but i think it is necessary to get our concepts straight before we can begin to correct them.
Kaleberg
you sound to me like pretty much of a mystic yourself.
there is nothing about “property” that requires either government or violence.
Property as a philosophical concept may not require either government nor violence, but ownership of property, of any sort, certainly does require the former and human nature assures the latter. Human history is the story of one group taking the property of another whether by violence or subterfuge. Within groups the same occurs amongst sub-groups and proceeds right down to the actions of individuals. In modern times the taking continues, but often within a framework of government that works better for some sub-groups than it does for others.
Jack
no doubt.
but two people can agree that “this is mine” and “that is yours” without any government or violence at all.
and i believe that is the “usual” situation.
even among “primitive” people, i am told, a person “owns” his own tools and weapons and clothes. of course if another member of his “tribe” admires one of his posessions he is honor bound to “give” it to him. though i am told that someone who abuses this custom is likely to find himself taken for a walk in the woods.
Coberly said, in part: “the person who organizes that labor has contributed “something” that makes the thousand workers more productive. he “deserves” a reward for his “labor.”
My dear, I am tickled in a way to see how you automatically set worker and manager apart as different, almost different species in a way, like sheep and sheepdog. Of course, the thousand are all one group, which includes managers, technicians, laborours, children, elders, etc. All of them are essential to the success of the whole, over time.
I believe the overproduction factor is quite a lot higher than 5 or 10 in our modern world. Heck, look at the rise in productivity worldwide since the 60s — yet in the 60s we had the “extra” to fuel the space program, the Cold War, a dizzying amount of research and development, to say nothing of the avalanche of useless knick-knacks and tchotchkes under which we every day bury ourselves, then and today. The problem is not scarcity, but the management of plenitude.
That there are large populations whose access to plenitude is prevented, often with deadly force, does not tell us they are poor, only that there are many who want them to continue to be poor.
Noni
Coberly,
Agreement is fine up to the point when it isn’t. That’s the history of human behavior, whether the issue is two neighbors or two geo-politically distinct nations. The problem is that there is no indication over the past 5,000 years that there is any solution to the problem of property and how to assure its equitable distribution. One man’s equity is another man’s demise. I can’t say that I like it that way, but I can say that even the development of complex government structures has given us reason to think otherwise.
Noni
you would be surprised by what i “automatically” assume and what i don’t.
you simply destroy language when you insist that the worker and manager are the same thing.
i was merely trying to establish a reasonable claim that the “owner” could “earn” a great deal more than the “worker” without being unfair.
but i failed to reckon with the religion of “equality.”
thus we will never reach an intelligent discussion of how to go about curing the real injustices of the world. it is simply enough(for you) to assert that “inequality” is the same as “injustice.”
for what it’s worth, i agree about “excess production” (i think. i think it is truly excess. you may think it is only “more than we absolutely neeed.”)
and i agree that there are “many who want them to continue to be poor.” but as long as you take the mental shortcut of calling those “many” “the rich,” you will not even begin to address the real problem.
Jack
you are not doubt correct about the history of human behavior. but that is all the more reason to be clear about our concepts and not confuse “property” with “theft.”
i don’t think your “equitable” distribution would be the same as my “fair and decent.”
i think you left a negative out of your last sentence, but i would not presume to assume. government is probably the “only” solution, and if it is imperfect and subject to abuse, well that gives us something to work on. we don’t get very far with demanding that everyone “share equally.”
please note i am a believer in government and the need to pay for it. and i know that there are malefactors of great wealth. but the rhetoric of resentment and envy is counterproductive.
coberly – “even among “primitive” people, i am told, a person “owns” his own tools and weapons and clothes. of course if another member of his “tribe” admires one of his posessions he is honor bound to “give” it to him. though i am told that someone who abuses this custom is likely to find himself taken for a walk in the wood”
“Property” as in “private property” doesn’t refer to personal property but to land, resources & the means of production.
All societies have a system of property rights but not all societies have a or any notion of private property.