Sunday, August 26, 2012

John Locke And Property Rights

By John Henry, Professor of Economics at UMKC. Originally published at New Economic Perspectives.

John Locke is the “father” of property rights theory, and continues to be referenced in defense of private property. In the second volume of his Two Treatises of Government, Locke specified the conditions that must be satisfied in order for property to be deemed legitimate. Initially, any property taken from “the commons” (public or collective property) had to be based on one’s labor that was expended to improve that property. (While Locke focused on landed property, his argument applies more generally.)

But, there were two further conditions that had to be met, labeled the “prejudice” and the “spoilage” constraints—and these were seen as moral constraints. Essentially, the prejudice constraint means that no one can be disadvantaged by another’s appropriation of property; all must benefit, though some may benefit more than others. The spoilage constraint connotes that none can seize property beyond that which can be used by one’s own labor. If either constraint is not satisfied, two options are proposed: the disadvantaged have the right to revolt and overturn a private property regime, or government has the obligation to step in to rectify the situation in the interests of the community at large.

Now, it is clear that any large property holdings—giant farms, the modern corporation, etc.—violate the spoilage constraint. Locke himself was aware that there was a problem in his formulation in that, if adhered to, the capitalist accumulation process could not proceed. (He tried to wiggle out of his self-imposed dilemma by arguing that the accumulation of money—gold for him—was morally permissible as it didn’t violate either the prejudice or the spoilage constraints; anyone could accumulate money, and money (gold) didn’t spoil. For a critical evaluation of Locke’s proposed solution, see Bell, Henry, and Wray 2004.) The main issue addressed here is whether unemployment violates the prejudice constraint, thus calling the continued adherence to a private property regime into question. If so, from a purely Lockean standard, then government must undertake a program to guarantee full employment in the interests of society as a whole—and this is a moral obligation.

It must be noted that Locke was arguing from what is now a politically conservative position. In his day, Locke was considered something of a radical, but with the passage of time, private property has become ingrained in our institutions and our habits of thought that it might be said to have become sanctified as a necessary condition for our very existence—the essence of “freedom.” So, from a modern conservative position, what follows should be seen as consistent with Locke’s defense of property, and, again, Locke continues to be called on as a seminal reference point in current debates.

It is clear that in a modern capitalist society, most of the non-propertied segment of society—overwhelmingly the majority of the population—is dependent on the private (propertied) sector for employment, thus income, thus well-being. There is, however, nothing in the arrangements of a modern economy to guarantee that the private sector will offer enough jobs to satisfy the needs of the non-propertied for work. (Nor, for that matter, that the wages offered will satisfy the needs associated with well-being.) Indeed, the normal case is that there is always some amount of unemployment; “full” employment (however determined) is exceptional and conventionally attendant to large-scale wars—when a goodly part of the labor force is sent out to kill and be killed. As the non-propertied (workers) are dependent on the propertied to provide them with employment, and if that employment is not forthcoming, then workers are “prejudiced” by the existence of private property: the “social contract” between the propertied and non-propertied has been violated; not all are advantaged by the arrangement.

This also calls into question the issues surrounding the spoilage constraint. Should some acquire property that is more than they can use in exerting their own labor, if he “. . . took more than his share, and robb’d others” (Locke, p. 318), others were denied the use of the spoiled output resulting from privatization and were thus “prejudiced.” Spoilage offends “. . . the common Law of nature,” and the property owner “was liable to be punished” for “he had no Right, farther than his Use called for . . .” (Ibid, 313; emphasis in original). Locke, if consistent, would oppose large-scale holdings. A Lockean solution to this issue would be the imposition of a Jeffersonian-style democracy where all would be independent small farmers, artisans, etc. But this is not capitalism, in which a class of property owners hires a class of non-propertied workers. (Indeed, we seem to be moving in a direction quite the opposite of that which Locke would find legitimate. Recent rulings which permit private oil and gas companies to use eminent domain in their own interests and cause great “prejudice” to be heaped on the non-propertied as well as those with small property holdings—the environmental, health, and other forms of damage inflicted by “fracking,” the construction of pipelines, etc.—represent an abrogation of the moral responsibility of government. See http://readersupportednews.org/news-section2/328-121/13067-oil-and-gas-companies-can-take-your-land.)

Now, while this raises the specter of revolt, let me focus on the more “reasonable” alternative—a jobs guarantee program. For Locke, should the two constraints be violated, government has the moral obligation to oversee the correction to the problem. One solution would be a very generous unemployment benefit that would at least equal the wage one could earn if employed. In addition to this payment, though, the benefit would have to include a sum that would compensate for the psychological costs of being unemployed, loss in skills as a consequence of not working, perhaps an additional amount to compensate for the social stigma usually attached to the inability to secure a job. All this would be necessary to override the Lockean “prejudice” caused by those with property who possess the ability to hire workers who do not do so in a sufficient amount. Clearly, this is unworkable as the compensation package would be considerably larger that the wages paid to the employed and many would find this a more satisfactory alternative to working. Wages would probably be driven up, causing costs in the private sector to rise and the propertied segment of the population would resist—mightily.

The other approach, and the only one that is feasible, is a jobs guarantee program. Governments have the ability to operate employment programs that do not compete with—indeed, may well complement—jobs in the private sector. Given their ability to spend without facing a profit constraint (one important aspect of so-called Modern Money Theory), governments can organize programs to employ all those who want a job, and, if properly structured, provide useful output for society. The rebuilding of infrastructure in the U.S. and elsewhere comes readily to mind. And such a program would clearly benefit the private sector. That is, it would not conflict with extant property rights. The list of projects is extensive: schools, hospitals, and so forth. And, one should not forget various service-sector possibilities including public arts projects. A short check of Works Progress Administration ventures of the 1930’s will confirm that government can undertake and has undertaken useful activities that enhance personal and societal well-being. And it can to this efficiently (though efficiency in the cost-minimizing or revenue-enhancing sense should not be the objective).

Would John Locke approve? If one takes him at his word, the answer is an unequivocal “yes.” When unemployment is seen as a “prejudice” resulting from the normal behavior of a propertied regime, government has the moral obligation to rectify the problem. And this is a politically conservative position.



References:

Bell, S., Henry, J, and Wray L. “A Chartalist Critique of John Locke’s Theory of Property, Accumulation, and Money: Or, is it Moral to Trade Your Nuts for Gold?” Review of Social Economy, LXII, No. 1, March 2004.

Locke, John. Two Treatises of Government, edited by Peter Laslett. Cambridge: Cambridge University Press, 1967.

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