Wednesday, 19 August 2015

Getting property rights right: Mixing my labour?

WHERE DO PROPERTY RIGHTS come from? And what did John Locke get right?

It’s important to remember that the concept even of individual rights “is so new in human history that most men have not grasped it fully to this day.”  Indeed, only two centuries before Europeans arrived in New Zealand, to most Europeans as well they remained a complete mystery.

In accordance with the two theories of ethics, the mystical or the social, some men assert that rights are a gift of God—others, that rights are a gift of society. But, in fact, the source of rights is man’s nature.
    “The Declaration of Independence stated that men ‘are endowed by their Creator with certain unalienable rights.’ Whether one believes that man is the product of a Creator or of nature, the issue of man’s origin does not alter the fact that he is an entity of a specific kind—a rational being—that he cannot function successfully under coercion, and that rights are a necessary condition of his particular mode of survival.
    “The source of man’s rights is not divine law or congressional law, but the law of identity. A is A—and Man is Man. Rights are conditions of existence required by man’s nature for his proper survival. If man is to live on earth, it is right for him to use his mind, it is right to act on his own free judgment, it is right to work for his values and to keep the product of his work. If life on earth is his purpose, he has a right to live as a rational being: nature forbids him the irrational.”

Flawed beginnings

But where do rights come from, what is their source? Some men assert that rights are either a gift of God or a gift of society -- that men are either “endowed by their Creator with certain unalienable rights,” or are endowed by legislators with certain contingent rights that they may alienate at any time of their choosing.

Neither is particularly compelling on its own.

Neither is it enough to say that because we own our bodies, then we must therefore also own all the products of our bodies—it should be obvious this is a species of begging the question.  Not to mention tremendously confusing for our bodily wastes.

And it’s not correct to say that the source of property is that the concept makes goods “non-rivalrous” –since this confuses a consequence for a cause: everyone knows whose goods are whose because folk do have various rights in those goods. But that doesn’t explain why they do.

John Locke famously argued that we acquire rights in the property with which we mix our own labour:

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 re-moves out of the State that Nature hath provided, and left it in, he hath mixed his Labour with, and joyned to it something that is his own, and thereby makes it his Property. It being by him removed from the common state Nature placed it in, it hath by this labour something annexed to it, that excludes the common right of other Men. For this Labour being the un-questionable Property of the Labourer, no Man but he can have a right to what that is once joyned to, at least where there is enough and as good left in common for others.

You see immediately that, right from the off, Locke virtually assumes his own conclusion: that every Man has a Property in his own Person means the concept of Property is already assumed. But he does take it some way further.

But what exactly does it mean to say that we have mixed our labour with something? Locke gives a 3-stage process for this:

  1. I remove something from the State that Nature hath provided, and left it in
  2. I mix my labour with it
  3. By so doing, I “join to it” something I already own.

Thus and so, the thing I first espied in nature and then worked with is now mine. But that still leaves many questions.

  • First, why did I choose those particular things to remove from nature? What about them made them so special?
  • What does it mean to “mix my labour” with something? Does dropping my ham sandwich into a concrete block, asks Jeremy Waldron, make that block mine once it hardens?
  • How much mixing might be necessary? Would walking across an uninhabited continent make it mine, as some Australian aboriginals have claimed?
  • What exactly do I “join to it”? Something tangible? Or, as Karl Olivecrona contends, something intangible like some “spiritual ego”?
  • If something tangible, then may it at some stage be removed? If something intangible (spiritual and perhaps permanent), must ownership rights continue in perpetuity, as tangata whenua sometimes says they do?
  • And why isn’t mixing what I own with what I don’t own a way of losing what I do own, asks Robert Nozick, rather than a way of gaining what I don’t?

If I own a can of tomato juice and spill it in the sea so that its molecules (made radioactive, so I can check this) mingle evenly throughout the sea, do I thereby come to own the sea, or have I foolishly dissipated my tomato juice?

Fortunately, Locke himself gives some guidance. He gives examples of “mixing labour”: gathering nuts, growing vegetables and fruits, mining ore, drawing water, killing a deer, catching fish, hunting a hare, cultivating land for farming, sewing clothes, baking bread, felling timber, fermenting wine. (Never forget fermenting wine.) So labour is in this sense a goal-directed productive activity – “a rational (or purposeful), value-creating activity,” argues modern-day Lockean Stephen Buckle. “Tis Labour then which puts the greatest part of Value upon Land,” says Locke, “without which it would scarcely be worth any thing: ‘tis to that we owe the greatest part of all its useful Products.” In other words (the words of Adam Mossoff, from whom this short summary comes),

Labour creates valuable products—and turns worthless land into valuable real estate—because “labour” in this context means production.

And production in Locke’s context is a moral virtue.

If it is a moral obligation for people to pre-serve themselves, then it follows as a corollary that the means of this preservation is a moral virtue. For mankind, the means of survival are produced goods, such as shelter, clothing and food. Production therefore is the moral action by which a man fulfils his fundamental moral duty: preservation of his life.

Labour in this context means production. And production means a rational (or purposeful), value-creating activity. The result being the fulfilment of a moral duty: the preservation of the labourer’s life.

But these are the words of two modern-day interpreters trying to understand Locke’s infelicitous metaphor, not those of Locke’s himself—which are nowhere near as clear. And they still don’t get us fully down to the root of our cause for which we’re searching.

What really is the root of property rights?

The real root of rights

THE ROOT OF ALL RIGHTS is the human need to take action to survive, and the means by which human beings each elect to achieve it.

Individual rights are ultimately based on the needs of man’s life—they recognise man as a causal agent in his life, and frame the “moral space” within which he may take the actions as of right that are necessary to sustain it.  Unlike other animals we cannot survive as we come into the world; in order to stay alive and to flourish we each need to choose our own means of survival and flourishing (this needing to be first identified before it can be acted upon), and then to produce and to keep the fruits of our production (this needing to be kept so as to make our survival plan worthwhile). If our minds are our means of survival – as Julian Simon used to say, our Ultimate Resource – then property is the result of applying the creative potential of our minds to reality in order to enhance and promote our lives and those we love and interact with.

Other animals survive by acting automatically, instinctively; man survives by using his mind. Animals survive by repeating their actions of the past, by doing what worked yesterday; man survives by by looking towards the future, by using reason.

The protection of individual rights makes the world safe for reason.

The influence of reason shows up in the development of the individual’s conceptual ability to give a sense of present reality to his life in decades to come, and in his identification of himself as a self-responsible causal agent with the power to improve his life. This combination of ideas is what produced in people such attitudes as the realization that hard work pays and that they must accept responsibility for their future by means of saving. The same combination of ideas helped to provide the intellectual foundation for the establishment and extension of private property rights as incentives to production and saving. Private property rights rest on the recognition of the principle of causality in the form that those who are to implement the causes must be motivated by being able to benefit from the effects they create. They also rest on a foundation of secularism—of the recognition of the rightness of being concerned with material improvement. 
                                        (George Reisman, ‘The Philosophical Foundations of Capitalism and Economic Activity,’ in Capitalism)

So how exactly does reason “mix” with reality?  Consider that first question in the section above: why did I choose those particular things to remove from their “State of Nature”? What was it about those particular things made them so special? Carl Menger explains that what we are doing fundamentally in taking things from “the state of nature” is transforming things into goods on the basis of our human reason:

  Things that can be placed in a causal connection with the satisfaction of human needs we term useful things [“Nützlichkeiten”]. If, however, we both recognize this causal connection, and have the power actually to direct the useful things to the satisfaction of our needs, we call them goods.
     “If a thing is to become a good, or in other words, if it is to acquire goods-character, all four of the following prerequisites must be simultaneously present:
     1. A human need.
     2. Such properties as render the thing capable of being brought into a causal connection with the satisfaction
        of this need.
     3. Human knowledge of this causal connection.
     4. Command of the thing sufficient to direct it to the satisfaction of the need. 
        Only when all four of these prerequisites are present simultaneously can a thing become a good.

                                      (Carl Menger, ‘The General Theory of The Good,’ Principles of Economics)

This is the process by which resources are continually created where before there might have been none – how oil turned from bane to boon and desert turned to pasture. All four of Menger’s “prerequisites” require human reason—Menger saying bluntly that it is not primarily a property of the goods themselves that gives them good-character, “but merely a relationship between certain things and men, the things obviously ceasing to be goods with the disappearance of this relationship.”

At the very first stage of productive labour then, we see that the “labour” that is most important here is not physical, but intellectual—intellectual effort directed outward to make nature more humane.

Labour is the means by which man’s mind transmits his designs and purposes to matter. It is man’s application of his bodily and mental faculties for the purpose of altering matter in form or location and thereby making the matter thus altered serve a further purpose. . . 
    The physical matter of which natural resources a composed is, of course, not made by man—it is nature-given. Nevertheless, the wealth-character of natural resources is man-made: it is the result of human labour. It is the result of the labour that discovers the uses to which the natural resources can be put, and of the labour that enable them to become accessible in ways that they can be used gainfully. Thus, it is labour [mainly of an intellectual character] that establishes the character of natural resources as goods, and thus as wealth.” 
                                    (George Reisman, ‘Wealth & Labour,’ Capitalism)

Hence:

The source of the goods-character of things is ultimately within us. Goods derive their character as goods by virtue of their ability to benefit human beings.
                                     (George Reisman, ‘Wealth & Goods,’ in Capitalism)

We’re having a right-old relationship with our goods

And as Menger identifies above, it is the relationship that results between certain things and men that is the primary product of this intellectual labour. Because it’s important to recognise that property cannot simply be equated with objects. More accurately, property refers to a relationship—something tangible (or intangible) in which we have property.  “As long as this is understood, we may use the term ‘property’ to refer either to the object owned or to the relationship of ownership.” [Tara Smith.] It’s more accurate, strictly speaking, to say we have “property in” this or that than it is to say that this or that is property.

We frequently speak as if property denotes goods that a person owns. (‘Leave that alone, it’s my property.’)  Yet property does not refer to objects per se.  For an object is just that. . . An object qualifies as property only insofar as it stands in a certain relationship to some person. 
                                                (Tara Smith, Moral Rights & Political Freedom)

A man is said to have a right to his property, he may be equally said to have a property in his rights. 
                                    (James Madison)

Bear in mind that the right to property is a right to action, like all the others: it is not the right to an object, but to the action and the consequences of producing or earning that object. It is not a guarantee that a man will earn any property, but only a guarantee that he will own it if he earns it. It is the right to gain, to keep, to use and to dispose of material values.
                                   (Ayn Rand, ‘Man’s Rights’)

And this relationship clearly does not accrue to every man. Because specific individuals have identified these specific things with which they have formed a goods-relationship –those goods being perhaps part of some multi-period production plan requiring the certainty that can only be given by right.

Because, you see, the stuff that sustains human life all has to be createdgoods have to be created--wealth has to be created.  All the wealth in the world that now exists in the world had to be createdThe very act of creating new wealth brings it into a property relationship with the creator

Because when we create new wealth, we create new values. Those new values have an owner.

Individuals do not possess property rights simply because material goods are part of what life requires.  The other essential leg of the case stems from the origin of goods’ value. 
                                  (Tara Smith, Moral Rights & Political Freedom)

So the reason new values have an owner, is because without that owner those new values wouldn’t exist.

Mixing labour? Or rewarding good judgement.

So to return to our start and then reach a conclusion. John Locke’s brilliant analysis of how property rights are applied is undercut by his flawed argument for their justification—and particularly by his flawed metaphor of labour-mixing.  Tibor Machan amends the flaw and concludes as I have here that the fundamental justification for property rights is an entrepreneurial one--not based on a “labour theory of value,” where labour is identified only on its purely physical component, but on the crucially important identification of the role of the mind in production.

It’s in this sense that we can understand Ayn Rand’s saying that at root “all property is intellectual property.”

John Locke advanced the theory that when one mixes one’s labour with nature, one gains ownership of that part of nature with which the labour is mixed. Thus, for example, if I gather wood from the forest for a fire, or for materials to build a shelter, I have a ‘natural right’ to what I have gathered, inasmuch as I have ‘mixed my labour’ with it and to that extent put some of myself into it. Since I have a self-evident right to my own body, including my labour, that part of nature that includes myself (i.e., my labour) is also mine. Though Locke held that nature is initially a gift from God to us all, he argued that once we individually mix our labour with some portion of it, it becomes ours alone. 
    This idea, though perhaps commonsensically compelling when limited to simple examples of physical labour such as gathering wood, has not carried wide conviction, mainly because the idea of ‘mixing labour with nature’ is too vague. Does discovering an island count as an act of labour—never mind ‘mixing’ one’s labour? Does exploring the island? Fencing it in? Does identifying (discovering) a scientific truth count as mixing labour with nature? What about inventing a new device based on scientific information available to all? Or trade—should the act of coming to an agreement count as mixing one’s labour with something of value? Challenging examples to Locke’s principle abound. 
    A revised Lockean notion has been advanced in current libertarian thought by way of a theory of entrepreneurship, an idea advanced at about the same time by philosopher James Sadowsky of Fordham University and by economist Israel Kirzner of New York University. The novelist-philosopher Ayn Rand, perhaps the modern era’s most fervent advocate of capitalism based on a theory of the inalienable individual right to life, liberty, and property, also emphasised the moral role of individual judgment and initiative or entrepreneurship.
    “According to the entrepreneurial model, it is the judgment—no small matter in human affairs where instincts play hardly any role—that fixes something as possessing (potential) value (to oneself or others); and therefore the making of this judgment and acting on it—the alertness and attentiveness of it all—is what earns oneself the status of a property holder. The rational process of forming a judgment is neither automatic nor passive; neither does the process involve more than a minimum overt physical effort, but it is an act of labour nonetheless. What gives the judgment its moral significance is that it is a freely made, initiated choice involving the unique human capacity to reason things out, applied to some aspect of reality and its relationship to one’s purposes and life goals. One exerts the effort to choose to identify something as having potential or actual value. This imparts to it a practical dimension, something to guide one’s actions in life. Whether one is correct or not in any given instance remains to be seen, but in either case the judgment brings the item under one’s jurisdiction on something like a “first come, first served” basis. 
    For example, assume that George identifies some portion of unowned land as being of potential value. Having made this judgment, George now has rightful jurisdiction over the property, so that others may not (rightfully) prevent him from exploring it for oil or minerals, or simply using it to build a museum or a private home. His judgment may have been in error: the land may turn out to be infertile or otherwise unsuitable for his purposes. Even so, given that people require for their lives a sphere of jurisdiction, by having first made and acted upon the decision to select the land, he has appropriated it in a way that cannot be objectionable—indeed, is a prudent effort, at least.
 
                                        (Tibor Machan, ‘The Right to Private Property’)

Property creates new value

So ultimately, what we’re creating with our good judgement is new values.  By identifying and rearranging what nature has given use, we raise materials from a lower value (in relation to us) to a higher value (in relation to us); they move from being things to goods, from being materials to being resources. It is their creation as new goods that is the economic component. It is their creation as new values that is the moral component.

    Consider those things that people hold as property.  What makes the possession of these things desirable is that they serve human purposes. . .  All the things that individuals own … are valuable insofar as they contribute to the fulfilment of some purpose. . . 
    The point is, the goods that individuals own are valuable because of individuals’ efforts. [Individuals had to figure out, for example, that coal could be burnt to produce energy, how it might do so, what ends this might accomplish, and then proceed to locate, extract, transport, and burn coal under suitable conditions to serve those ends. Individuals had to figure out that rubber could be converted into tires, how to do so, why that might be useful, and proceed to harvest and treat the rubber in order to make it serve that function.] These goods are not intrinsically valuable.  Their value is not buried within them, like gifts in boxes, simply awaiting our discovery.  Things’ desirability does not precede individuals’ moulding resources to accomplish various purposes.  It is individuals’ deliberate employment of materials to serve certain needs that supplies things’ value.  Before that human contribution, naturally available resources hold merely the potential to be of value to people, if they are tapped in appropriate ways. 
    The relevance of all this to the defence of property rights is straightforward.  If objects’ value is the result of individual efforts, them objects are valuable only because particular individuals have worked in constructive ways to make things serve some ends.  When this realization is teamed with the egoistic premise that a person is entitled to live for her own benefit, it becomes clear that the value a person creates should be hers to keep and control.  
    Since human effort creates the value that any object possesses—since individuals are responsible for all of a thing’s value—it is appropriate to recognise property rights belonging to the individuals who generate the relevant value.  If a person is entitled to act to promote her own eudaimonia and through her actions creates something that is valuable to her, we have no grounds for denying her right to that product. 
                                 (Tara Smith, Moral Rights & Political Freedom)

Let’s spell out that last again:

  • Individuals are responsible for all of a thing’s value.
  • that value is a recognition that these things serve individuals’ purposes
  • it is appropriate to recognise property rights belonging to the individuals who generate the relevant value. 
  • If a person is entitled to act to promote her own eudaimonia and through her actions creates something that is valuable to her, we have no grounds for denying her right to that product.

As we see, this entrepreneurial argument for property is very far removed from the simple notion of “mixing one’s labour.”

And as we saw yesterday, and as explained especially by Ayn Rand and the Austrian economists, it is not just the individual who benefits from that right – though it is not the primary justification of any theory of rights, there is a general benefit from the private ownership of the means of production that can be achieved no other way.  Because in the same way that Thomas Edison’s cleaning lady benefits in her wage packet from the enormous productivity of her employer, so every individual in a division-of-labour society benefits from the creation, production and trade of these new values.

And that is good. And right.

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