Macromegas #38 - You Never Own Anything 1/3 - A short history of private property & Implications for physical goods
You Never Own Anything 1/3 - A short history of private property & Implications for physical goods
Hello Friends,
And happy Friday!
A short history of private property
Mankind started evolving the notion of private property when we shifted from a hunter-gatherer society to an agricultural one.
Before we settled down as species, it made little sense for us to fight for more possessions than we could physically carry around.
Power struggles were still omnipresent, but mostly for status and the reproduction advantage it entailed (similar to chimpanzee tribes nowadays, chimpanzees even waging wars on each other (Gombe Chimpanzee War)).
Permanent settlements made the upside of controlling more physical possessions virtually unlimited, from city-states to continent-spanning empires.
Controlling populations became a necessity as well: large wealth attracting competition from other rulers, each one needed to draft armies to protect their "belongings" or steal others'.
However, full private property remained the privilege of rulers and their nobility for a very long time, individual "commoners" never truly owning any land (let's not even mention slaves).
According to Ron Davison (The Fourth Economy: Inventing Western Civilization), private property (of land) as a social invention occurred very late in our shared history: "It was not until the twelfth century that the Catholic Church accepted the legitimacy of private property.".
This, combined with other socio-political factors such as plagues and famine decimating the workforce, triggered a progressive social shift towards individual rights.
Private entrepreneurship could now happen: people could start working towards creating wealth for themselves and their families, rather than for it to be confiscated by the ruling class.
Of course, this right was far from universal, non-existent in most countries, and took centuries to take hold. But it had started.
It ultimately resulted in the Industrial Revolution, populist movements across Europe (to acquire more freedom), and the rise of democratic nation-states.
Fast forward to today: most of us are now lucky enough to live in a society where our private property is assured by stable nation-states who can enforce it according to the rule of law.
However, those private property rights, the foundation of any wealth, have several limitations people are not usually aware of.
Implications for physical goods
Even today, the whole notion of private property relies on social consensus.
First, taxation: a majority of the population can decide to forcefully confiscate the wealth of a minority.
Most of the time, the system is not abused, but this remains an eventuality that can happen in perfect legality.
Second, actual abuse by governments.
In Russia, it is common for members of the "administration" to confiscate real estate or business assets without any legal recourse for the spoiled citizen.
The threat of being jailed in awful conditions without any more recourse is usually bad enough to ensure people cooperate.
The only real deterrent (besides being on the "good" side of the stick) is "key-man" insurance: if your business relies mostly on your know-how, expertise, and/or personal connections, then it becomes worthless if you are no longer part of it.
China might be yet another level: according to this article by Ray Kwong, a Chinese billionaire dies every 40 days. You don't want to have so much wealth that the Chinese government wants to control it itself.
This limitation on physical property goes back to the very fundamental principles of nation-states. I can't recommend enough for anyone to read at least the first half of Anarchy, State, and Utopia by Robert Nozick but, if you won't, this is a brilliant summary in his own words:
The self-interested and rational actions of persons in a Lockean state of nature will lead to single protective agencies dominant over geographical territories; each territory will have either one dominant agency or a number of agencies federally affiliated so as to constitute, in essence, one.
And we have explained how, without claiming to possess any rights uniquely, a protective agency dominant in a territory will occupy a unique position.
Though each person has a right to act correctly to prohibit others from violating rights (including the right not to be punished unless shown to deserve it), only the dominant protective association will be able, without sanction, to enforce correctness as it sees it.
Its power makes it the arbiter of correctness; it determines what, for purposes of punishment, counts as a breach of correctness.
In summary, as far as states are concerned, might is always right.
The only ways to avoid this hard truth are former feudal systems - that is, if you are lucky enough to be the local lord controlling the area - or frontier regions such as the Wild West: if you are the state or if there is not state, the above cannot apply. But might remains right and you are on your own to secure and defend your private property.
The only exception I can think of is the concept of trusts: putting your assets in a vehicle you are neither directly owning nor even controlling, and often in a jurisdiction out of reach of the state you leave in.
But the said state usually remains capable of preventing you to enjoy the benefits of that wealth, ultimately by imprisonment if it deems fit.
In the next issues, we’ll explore:
Implications for dematerialised goods
Lessons from history
The case for crypto & decentralisation
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Thanks for reading, and have a weekend full of freedom,
V