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April 2016

The State and Market Discipline

Private property regimes incentivize good behavior—but some actors try to reap the benefits of the system without following the rules themselves.

One of the strongest arguments in favor of private property is as follows: a person who has the legally recognized capacity to acquire and profit from private property will tend to be on relatively good behavior.

They won’t be perfect. Sometimes they’ll abuse their capacities, including the capacity to acquire and profit from private property. Sometimes they’ll be downright awful. But on the whole, this is not the case, because property usually creates incentives to avoid being awful and to start being…well, bourgeois. Which isn’t so awful.

As David Hume wrote:

Who sees not…that whatever is produced or improved by a man’s art or industry ought, for ever, to be secured to him, in order to give encouragement to such useful habits and accomplishments? That the property ought also to descend to children and relations, for the same useful purpose? That it may be alienated by consent, in order to beget that commerce and intercourse, which is so beneficial to human society? And that all contracts and promises ought carefully to be fulfilled, in order to secure mutual trust and confidence, by which the general interest of mankind is so much promoted?

Examine the writers on the laws of nature; and you will always find, that, whatever principles they set out with, they are sure to terminate here at last, and to assign, as the ultimate reason for every rule which they establish, the convenience and necessities of mankind…

What other reason, indeed, could writers ever give, why this must be mine and that yours, since uninstructed nature, surely, never made any such distinction? The objects, which receive those appellations, are, of themselves, foreign to us; they are totally disjoined and separated from us; and nothing but the general interests of society can form the connexion.

Sometimes, the interests of society may require a rule of justice in a particular case; but may not determine any particular rule, among several, which are all equally beneficial. In that case, the slightest analogies are laid hold of, in order to prevent that indifference and ambiguity, which would be the source of perpetual dissention.

Property causes a set of complex changes in our behavior, and on the whole these changes are good: Property makes people artful and industrious. It makes them conscientious. It makes them  think about how to conserve for the future. It makes them ask how to get the most out of what they have. It makes them think about how they can be more productive than others who are similarly endowed. It turns their thoughts toward supplying “the convenience and necessities of mankind,” as Hume put it. And we all benefit when people generally behave that way.

Hume is often taken, I think wrongly, as a denier of natural rights. Rather the above argument should count – I think – as an affirmation of natural rights, and a description of their mechanism in its properly social context. Natural rights work, not through the grace of God, and not through any regard for Robinson Crusoe scenarios, but through the traits and dispositions that are commonly found in people in society, as they trade and seek individual advantage and security. Property rights work because of human nature. Rights in property are good, and they are properly called natural, because on the whole, recognizing these rights will do good things to us.

The term for this change is market discipline. Property rights applied universally would impose market discipline on everyone, and in such a society, everyone would diligently seek their own advantage through trade with others, and thus through the mutual satisfaction of wants. Weirdly, that could almost be called… altruistic, because most people would work very hard indeed, and because much of the fruit of their labor would redound to others. Not, though, that there’s anything wrong with that.

A certain type of egoist, meanwhile, would happily impose market discipline, but only on everyone else, and never on himself. In the pure egoist’s ideal world, he personally would be free to disregard the strictures of private property, strictures that still bind everyone else.

This puts him in an exceptionally sweet spot: He gets all the goods that market discipline would otherwise supply, but he doesn’t have to work for them. He lives surrounded by virtuous people, who are all docile, industrious, and way too honest ever to steal from him. And meanwhile he steals all the time.

The pure egoist, who does not care for principle, would much rather appropriate, and loaf about, and never face any meaningful discipline at all: Just as long as everyone else comports themselves according to the market, he’ll be in excellent shape.

Now, we can complain that this strategy is hypocritical, that its maxims can’t be generalized, and that it is unethical for its treatment of others as a mere means to the egoist’s ends. Indeed, we can point out that it violates many different ethical injunctions. But we can’t possibly say that this strategy is impractical: It works. Alas.

And this is precisely the position of the state, which has been content to impose the duties of lawful, responsibility-bearing property ownership on nearly all of its citizens, while exempting itself from the same. The shrewdly run state takes only the fruits of ownership, and never the discipline. Disciplining such a state remains necessary, in some sense, but it’s a discipline that the market does not supply.