In Praise of Private Property and a Peaceful World Order

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Empires come and go

History is filled with instances of the conquest by arms, annexation, or other means, of one people by another. Empires thereby gain additional resources. They impose some form of subordination or slavery on the conquered. They use many forms of taxation to extract resources from the conquered.

An empire rules Gaul or Asia or the waves. It is Holy or the sun never sets on it. But only a temporary equilibrium prevails. Dynasties reign, but sooner or later they give way and the empire perishes. There has been no exception to the rule that empires relying upon power-based hegemony decline and fall. This occurs because the factors that go into conquest and control change over time and rivals arise, internally and externally. There are many such factors and many ways for the empire to go wrong. Empires grow because of one or more advantages like resources, organization, technology, will, brainpower, motivation, shrewdness, wisdom, population, alliances, religion, leadership, geographical position, communications, etc. When one or more of these advantages fade or are surpassed by rivals, the empire becomes vulnerable.

Conquerors impose their wills, but the costs of domination and empire change, usually rising as rivals and rebellions spring up. The conquerors blunder. Out of such factors as ignorance, human frailties, and organizational and ideological weaknesses, they lose or throw away the key factors that gave them dominance in the first place. We see the results: Civilizations come and go. The equilibria of empires are not permanent. Control depends on too many variables. The slaves can revolt. The rulers fall behind in technology. Their ruling characteristics can deteriorate and they can lose control. Empires thus fall in many ways, entering history’s pageant.

Hegemonic vs. peaceful orders

In Human Action, Mises reviews the many thinkers who have distinguished two opposing types of societies or orders: the hegemonic (warlike, militant, pugnacious, authoritarian) and the peaceful (commercial, contractual, industrial, bourgeois). In one, mankind is enslaved; in the other, mankind is free. These are the extremes. Most societies mix the two orders.

We like to think that America has the peaceful order. This has been by and large true. We have been primarily a commercial and bourgeois nation, but always with a marked strain of the hegemonic and warlike. In the last few hundred years, Western civilization eliminated chattel slavery and bondage and developed along commercial and industrial lines, with America up to now being the foremost exponent of the peaceful ideas of Western civilization. But the twentieth century saw the peaceful society give way to the hegemonic. Tax slavery has grown enormously. For over 100 years America has pursued militarism and the associated means of empire to enforce a hegemonic order. More and more it seeks forcefully to impose its civilization, of which freedom and democracy are the current empty code words. Openly and consciously, Washington in 2006 extols and advances the most belligerent policies in American history while seeking also to extend its hegemony internally. It is as if a foreign philosophy had invaded the land, but it is no more than the culmination of the warlike leanings that Americans have become habituated to and now are enamored of. The dangers of America self-destructing have never been greater than at this moment. Twenty-nine long months remain before the Bush administration leaves office, twenty-nine long months in which it can plunge the country over the abyss by attacking Iran or another nation with overwhelming force or even nuclear arms. And after Americans elect new officials, the dangers unfortunately do not disappear because they are rooted in the American psyche.

Have we learned nothing? Do we understand so little about how empires rise and fall? Do we not see what is so plainly evident, that Western civilization’s ideas have been and will be triumphant without aggressive militarism and empire because they are the right ideas? Do we not understand what made America successful and why its ways have been imitated in other lands? Do we not understand what it is about America that has always been loved and envied the world over? And do we not see that even today mankind is ready to follow proper and peaceful American leadership if it will ever be restored? The victory of American ideals can be won peacefully, or at least with a minimum of pre-emptive and aggressive warfare. But such a victory is impossible if Americans continue to disown their sources of success and peace. Worse, America continues to smash the ideological pillars of its success. When America completes its self-destruction, historians will for a long time be trying to figure out how this happened. They will find that the answer lies in the internal growth of America’s hegemonic embryos into mighty and clever serpents that tempted the peaceful while encircling and ultimately crushing all resistance.

Private property rights

America’s ideals lie in these stirring words: "We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness." They lie in John Locke’s words, such as these: "Man being born, as has been proved, with a title to perfect freedom, and an uncontrouled enjoyment of all the rights and privileges of the law of nature, equally with any other man, or number of men in the world, hath by nature a power, not only to preserve his property, that is, his life, liberty and estate, against the injuries and attempts of other men; but to judge of, and punish the breaches of that law in others, as he is persuaded the offence deserves, even with death itself, in crimes where the heinousness of the fact, in his opinion, requires it." They lie in the Declaration of Colonial Rights: "That the inhabitants of the English Colonies in North America, by the immutable laws of nature, the principles of the English constitution, and the several charters or compacts, have the following rights: Resolved, N.C.D. 1. That they are entitled to life, liberty, and property, and they have never ceded to any sovereign power whatever, a right to dispose of either without their consent." (N.C.D. means unanimously.) They lie in Frdric Bastiat’s words: "Life, liberty, and property do not exist because men have made laws. On the contrary, it was the fact that life, liberty, and property existed beforehand that caused men to make laws in the first place." American ideals of property rights do not lie in the paper Constitution that created a political entity that was supposed to guide a government to protect those rights.

The private property ethic says basically: What’s mine is mine, and what’s thine is thine. This is its idea of justice. It is the same as: Thou shalt not steal. This ethic is the root of mankind’s greater prosperity in peaceful societies as compared with hegemonic societies. Private property rights imply freedom to use that property as one wishes. That implies that the owner reaps the benefits of its use. That fact encourages cooperation, division of labor, and all manner of agreements to use private property. These give us progress, invention, and peace. These give us production for the benefit of consumers. The benefits flow in all directions. Society benefits. Private property is tremendously important and essential. Even in the classical slave societies, it was important and accounts for their progress. Free societies have made even more progress because we more fully realized the concept. The Communists in the Soviet Union and China went backwards when they crushed private property. Their private agriculture plots gave them most of their food. Those nations only turned around when they embraced a greater degree of private property.

Retrogression

Modern man has learned, so we would like to believe, that human beings have unalienable rights. He has learned, we may hope, that slaves are relatively unproductive and that knowledge can be used more efficiently when there is freedom. Free societies came to the fore in modern times under the influence of these ideas. They produced more prosperity than mankind had ever seen. The American idea could be expressed in three words: private property rights. Freedom meant individual control over one’s property without interference from others. This was a new and different ethic, one much admired and envied the world over. Immigrants flocked to the new land of opportunity. As the ethic spread, so did widespread cooperation, trade, and the division of labor. The root was private property rights. Progress depended and still depends on private property rights.

Yet every free society retained many vestiges of the slave societies of the past, vestiges of the old order of conquest and domination. Every society maintained a central state. No society was one hundred percent free. America’s free society produced a new temporary equilibrium, but it was an uneasy one. There were still rulers, but their power was supposed to emanate from the majority. Yet the rulers learned how to increase their power and dominate the society. Power traveled in two directions: from those ruled upwards and from the rulers downwards. Time bombs ticked in the midst of a commercial and peaceful society. There existed the "lawful" ability of the rulers to destroy the private property rights they were pledged to protect. And there was the ability of the rulers to influence the people’s beliefs. The private property order began to disintegrate under persistent and long-lasting attacks. The hegemonic order came to the fore. The peaceful order retreated.

Today, the attacks on private property by state laws remain unrelenting. Americans not only do not know that the private property order is essential to their well-being, but also they do not know when it is being attacked and they often applaud the attacks.

The peril of power

Private property rights lessen disputes by making ownership well-defined. Moreover, those who exchange property have an incentive to coordinate rules of justice across broad regions in order to lower the costs of contract disputes. This was originally and still is influenced by the work of commercial and industrial interests acting privately. In common law courts in the 17th century "hardly any commercial cases will be found." (See Bradlee.) This is because there existed "private international law which grew in great degree out of the transactions [of merchants] between different nations." The first work on law merchant in 1622 made clear that it was "customary law" and "not a law established by the sovereignty of any prince." Eventually state common law courts took over the law merchant functions, but more recently "In commercial countries of both the civil and common law systems there has been a considerable increase in the extensive use of commercial arbitration that is in many ways comparable to the former private courts of merchants." (See here.)

The benefits of coordination of rules of justice across continents are clear, and it can be done privately. Nevertheless, large numbers of politically influenced trade pacts and international regulations heavily control foreign trade and, no doubt, un-coordinate rules of justice and exacerbate trade disputes by bringing in sovereign powers.

Any country like the U.S. that maintains an economic order of property that results in great wealth combined with a political order that allows a concentrated political power to gain access to this wealth will find the rulers tending toward expansion, domination, and conquest. The economy provides the means. Political rivalries provide the opportunities, and the rulers provide the motives. The result is crime on a national and international scale. Political rulers tend to be manipulative and unprincipled brutes; after all, their specialty is getting and using power. Turning them loose with practically unlimited resources is a deadly recipe for warfare. Furthermore, when a people with wealth applauds militarism and selects its rulers as the most savage and warlike, they get what they want and deserve.

The end result of concentrated state power, as in its disruption of the peaceful evolution of private commercial law, is the destruction of private property rights. The direct absorption of property by a panoply of taxes is self-evident. The destruction via regulations, legislative laws, and judicial rulings is equally important. The destruction wrought by wars is manifest.

The end result of state power is the expansion of the hegemonic order and the destruction of the peaceful order. The end result is warfare in all its forms, within society and without.

Michael S. Rozeff [send him mail] is the Louis M. Jacobs Professor of Finance at University at Buffalo.

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