This is the second article on the theories defended by Murphy and Nagel in their book The Myth of Ownership
Division of labor without ownership: a country run like a factory
You may think that property is just a myth invented by the individualistic morality of the bourgeoisie. That wealth is a social product, not an individual's creation. Therefore, the State (or rather, the man who runs it) must define who owns what. So did Lenin.
Or you may think that property is a myth because an individual's creation of wealth cannot be isolated from the the legal framework that supports it and from the many services provided by the State. Therefore, laws (or rather, those who write them) must define who owns what. So teach Murphy and Nagel.
In their book they repeat again and again –“ad nauseam” as they themselves admit-[1] that pre-tax income is entirely imaginary and morally irrelevant, [2] a myth, a mere bookkeeping convention[3].
Certainly, they cannot mean that wealth did not exist before the government puts its hands on it, which would suggest that it is created at that very moment by some magical process. Nor can they really mean that wealth is a mere bookkeeping convention, as it would be odd that all governments want so eagerly to grab imaginary things. Evidently, what the two philosophers mean is that pre-tax income is a very real and valuable thing, and the illusion they try to dispel is that it had belonged at any moment to those who give it to government in the form of taxes.
Nevertheless, there is a long stretch from the premise that we have to pay taxes, to the conclusion that we only own what governments allows us to own –that is, apart from a “Hegelian minimum” (see previous article on this blog). According to Murphy and Nagel “…since there are no property rights independent from the tax system, taxes cannot violate those rights”.[4]
Their arguments and their conclusion are alien to the conceptual framework that guides modern economic action –not just prevalent notions about taxes. Most of us do not say or think that if we make a table using a saw and a hammer then the table does not belong to us. Of course, we say that we have to pay for the saw and for the hammer. But we do not think that the maker of the saw and the maker of the hammer have a right to impose “conditions” and “hindrances” on us –they can collect the price due to them for the goods they provided, nothing more. In short, we do not think that division of labor is an argument against ownership –even when part of the labor is done by courts, the police, etc. Quite the contrary, we think that full and free ownership is a requirement for any division of labor and for the peaceful collaboration among men. Otherwise, if when making my table I were forced to comply with directives and hindrances imposed on me by the provider of the hammer, I would not be able to use my own judgment as a carpenter. Genuine division of labor would be replaced –in part or in full– by a chain of commands.
It is true that the services of the police and of the army are not sold and bought as other services are; governments force everyone to support these services. However, Murphy and Nagel’s argument for more “hindrances” does not rest (and could not rest) on a government’s powers of coercion. It is the reverse: they think that they have found a justification for more coercion and hindrances on the economic activities of individuals when they point out at the services provided by governments. But then, taken as services, those provided by the police and the army (not to mention subsidies) are not different from the services of the providers of water, of food, of handsaws, and of hammers. We can always prove –as Murphy and Nagel do– that all that individuals produce would have been impossible or very difficult without the services provided by others. This is hardly a new discovery: it is known as division of labor.
If the services provided justify governments to impose hindrances and conditions on our property rights, then the same justification applies to every provider of services and of goods. Then division of labor would be turned into an argument against ownership. However, as having thousands of people imposing conditions and “hindrances” on the productive uses of property would make production impossible, we would be glad to have only one master giving orders. Then division of labor would justify a chain of commands.
Everyone’s productive achievements depend on the services of others. True, but it does not make others the owners of our products. Division of labor cannot be turned into an argument against ownership because it is ownership that makes division of labor possible and efficient in a free market. That includes ownership of the means of production. Otherwise we have Lenin’s nightmarish ideal: a country run like a big factory.
Certainly, John Rawls said more than once that State's ownership of the means of production is compatible with a free market (see references in a previous article). Rawls did not provide any earthly example to justify his assertion.
We made you what you are: governments as domineering parents
Now, if the logical and the moral differences between paying limited taxes and surrendering all but a Hegelian minimum is so immense, what are the reasons that are presented to justify the claim that ownership is a myth? With small variations, Murphy, Nagel, Dworkin, and Sunstein write that industry and commerce would have great difficulties, and indeed would not have developed beyond very primitive levels, without the services of courts, the police, of defense against foreign invasion, etc. To that, Nagel and Murphy add public education, support for the arts, preservation of the environment, and –later in the book, as we will see– minimum wages. Citizens must pay for all that. That is true (at least for some of the things that the authors enumerate), but it has always been admitted. While there are objections about a good number of these services, about the degree and the moment when they cease to be beneficial and start to be roadblocks to progress, most defenders of capitalism do admit that a government provides essential services (or, to be precise, some governments do it, and then only among other activities unrelated to those essential services).
Of course, there are among the defenders of capitalism some who have suggested that governments should not exist, and that even coercion and defense should be provided by private companies. But free competition in the use of violence has never been the prevalent view among defenders of capitalism. Anyway, for all defenders of capitalism, even those who, like Murray Rothbard, would like to blend it with anarchy, the immediate concern is the encroachment that Murphy and Nagel are trying to justify and increase. Of course, most Americans have no objections against taxes as such. They object high taxes.
By ignoring their main contenders in the debate, by assuming that in arguing for more taxes they should deal only with those who oppose all taxes, Murphy and Nagel make their task easier, but at the same time less enlightening. I will not enquiry here whether anarcho-capitalism makes sense. It is enough to mention the obvious fact that it is not the only, not even the mainstream, defense of capitalism. Let’s have a quick review of some prominent thinkers that Murphy and Nagel have chosen to ignore, all of whom readily admit the important functions of governments. First, we have Eugene Böhm-Bawerk, one of the founding fathers of the Austrian school of economics. Already in 1881 he wrote an essay about the concept of economic goods, in which he fully recognized the value of the services provided by governments. He said that more than from direct services paid to anyone of us, we all benefit indirectly from the action of the state. For instance, he wrote, “those who never see a court of law, share in these benefits too (and perhaps in even more beneficial manner) because of the respect for law which prevails throughout the land by reason of the activities of those same judges”.[5] As most of the benefits are indirect, Böhm-Bawerk explained, and we do not know the names of the judges, policemen and road builders, we tend to lump all the services that contribute to the result and gather them under a single concept: the state, or the government. But it does not mean, he warns us, that the state is an economic good, apart and different from all the services it provides.
The warning was no mere quibbling about distinctions because it is always prudent to bear in mind that the value –from the economic point of view– rests and falls with the services actually provided. To use Böhm-Bawerk’s example, if a judge sets about reforming the law under the name of interpretation, and so undermines the respect for the law, there is no service rendered. Or rather, there is harm that is financially supported by our taxes. Moreover, as it was the case with the benefits, the indirect harm is far more extended than the harm to the litigants –though perhaps more difficult to trace.
Ludwig von Mises is assertive on the point: “Whoever denies the basic idea of Anarchism, whoever denies that it is or ever will be possible to unite men without coercion under a binding legal order for peaceful co-operation, will, whether liberal o socialist, repudiate anarchistic ideals. All liberal and socialist theories based on a strict logical connection of ideas have constructed their systems with due regard to coercion, utterly rejecting Anarchism. Both recognize the necessity of the legal order, thought for neither is it the same in content and extent. Liberalism does not contest the need of a legal order when it restricts the field of State activity, and certainly does not regard the State as an evil, or as a necessary evil”.[6]
Frederick Hayek, wrote extensively about the institutional conditions of capitalism. Indeed, Hayek gave such a prominent place to the rule of law as a condition for a flourishing capitalist economy, that the British law scholar Joseph Raz felt it necessary to confront him, and favor instead some departures from the rule of law when it is considered necessary to promote social goals.[7]
A fourth example is Ayn Rand, a novelist and philosopher very well known for her passionate defense of capitalism. She harshly criticized libertarians for their disregard of the essential services that governments provide.[8]
Most defenders of capitalism do not support the suggestion that capitalism might dispense with governments altogether. Free competition in the use of coercion and in defense against foreign attacks is not representative of the arguments advanced by both economists and ordinary people. Of course, that anarcho-capitalists are few in number –even unknown to most people– does not mean that they are wrong. I will not discuss that issue here. I only say that it is very odd that when Murphy and Nagel argue against what they believe is the position of the defenders of capitalism, they assume that anyone who rejects their views must also reject that governments provide (sometimes) essential services. Similarly, Sunstein seems to think that the arguments against high taxes and redistribution can be met effectively by pointing out that property rights could not be guaranteed by laissez-faire, as if laissez-faire had ever meant anarchism.[9]
But we must leave aside the odd selection of defenders of capitalism, and return to the authors’ argument for the suggestion that ownership might be a myth. They tell us that there is no wealth created outside the protection and the benefits provided by governments. That is true –if we exclude Robinson Crusoe’s island, and a number of similar cases. But from that, Murphy and Nagel deduce that there is no right to wealth apart from what the government decides to leave to each one. The collective body that provides these services also decides –to use Murphy and Nagel’s expression– “who owns what”[10], based on its view about distributive justice, social goals, etc.
That is a non sequitur, a conclusion that does not follow from its premises. I may have gone to a State school, I may cross a public-owned bridge, I may sue someone in a court of law, but this does not make my property a mere convention, and it provides no ground for authorities and judges to indulge in experiments of social remodeling at my expense.
Even the haughtiest Medieval King would have thought that such deduction is unwarranted. The King may have charged merchants large sums for just crossing a bridge, forced them to pay for services they did not want, and take for the protection against robbers only slightly less than the robbers. But the King would not have said that the exaction was not really an exaction.
Besides, the argument proves too much, for it applies not only to property but also to life itself. It is true that without a government’s action, our property would have very little defense against gangs of looters –but looters could also kill us. It is true that without public roads, commerce would be confined to a small area –but our lives would be confined in a similar manner. Does it make our lives conventional? Our right to walk and travel mere myths? Is this a reason to make all these individual liberties a conventional thing, to be defined collectively in view of some public goal?
Against common views about ownership, Murphy and Nagel write that “to appeal to the consequences of a convention or social institution as a fact of nature which provides the justification for that convention or institution is always to argue in circle”. They add that those who think that they have a natural right to their property do not realize that “these ‘natural’ rights are merely misperceptions of the legal consequences of the system itself”. And they conclude: “One can neither justify nor criticize an economic regime by taking as an independent norm something [the rights] that is, in fact, one of its consequences”.[11]
It may be unfortunate, but it is a fact of nature that governments cannot create goods by enacting laws –at most, they can take the goods from those who have created them. Something else is needed, namely: work, capital, ingenuity, perseverance, and a host of other things. Many a South American leader is still puzzled by the fact that goods do not grow out of the constitutions they enact from time to time.
Murphy and Nagel do not unravel all the consequences that hide in their theory. One wonders why do they find that the standard of rights violates logic only when it is a property right and leave alone the other rights. It is easy to show that life (not just ownership) would be very different –and very precarious– without police, armies and judges. Why not say, in the same way: one can neither justify nor criticize a regime according to the respect it pays to rights (all rights, not just ownership) as if rights could be used as independent standards?[12]
This is all wrong. Let’s put it in a few words: to describe conditions for the full development of individuals and their creativity does not justify the claim that they are merely conventional, or that they must be shaped and ruled at pleasure. If it were a matter of conditions for something, we could also say that modern government would not exist, and would have remained in a primitive and precarious condition, if it were not for all the services and goods created by industrialists and entrepreneurs. For instance, we could say that modern government could not be carried on without computers, and proceed to deduce that the bosses of the computer industry are entitled to define what government is and what is not. Government would be a mere convention, which incidentally would be a bit closer to the truth.
It is true that the computer industry could not exist without the protection provided by the police and the courts. But when a police force has prevented a gang of looters from attacking, say Hewlett-Packard offices, they do not become entitled to dictate what the company should do.
After all, the computer industry could not exist without power supply and a host of other services. In terms of their usefulness and the causal relation they have with the end product, government services and private services are equal. What would we do without water supply? Can we imagine life in a modern megalopolis without a constant provision of water? Does it make the providers of water the main owners of everything? No, they are usually humble providers of services, that is all. Why should governments be different, and think that their services (not always of the best quality) entitle them to domineer us? Unless we introduce some mystical theory that makes the State prior to individuals (a theory which Murphy and Nagel do not provide) our governments (in small letters) cannot define who owns what.
At any rate, it would be wicked for anyone to remove the obstacles for production and creation in order to claim total control over it –as if a music teacher claimed the right to define the careers of his students. We may even compare the argument that Murphy and Nagel make for the government with a similar one that could be made for parents. With parents, after all, the relation is closer than that of master and pupil –not to mention government and citizen. There is no doubt that, if it were not for our parents, we would not exist. We receive food, shelter, education, sometimes even money for our studies, or a capital. Our lives and our achievements are to a large extent determined by their efforts. None of that makes our achievements theirs, or our lives a matter to be defined by them. Parents who claim that they can define what their children would be are a menace. But that is nothing when compared to governments that see themselves as domineering parents.
[1] P. 99.
[2] P. 99.
[3] P. 75.
[4] P. 58.
[5] Böhm-Bawerk, Eugene
[6] Socialism, p. 57.
[7] The Rule of Law and its Virtue. Included in his book: The Authority of Law. Essays on Law and Morality. Oxford University
[8] Ayn Rand Answers, pages 72-76. New American Library 2005.
[9] The Second Bill of Rights, p. 198.
[10] P. 189.
[11] P. 9.
[12] Others would follow the argument to its consequences. Indeed, in Argentina , a professor at Buenos Aires University 69. In the book Filosofía del Derecho Argentina. Temis 2008.
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