This is the first in a series of articles that I will post about the attacks, mostly made by American philosophers and law professors, against the notion of ownership, which now they dismiss as if it were a myth
Two celebrated philosophers, Liam Murphy and Thomas Nagel, have dedicated a book to debunking The myth of ownership.[1] Their view is shared by Cass Sunstein, a law scholar and regulation Tsar under the Obama administration, who writes in his book The Second Bill of Rights that “it is comically implausible to find so many people complaining that taxes take some portion of ‘their’ money”.[2] As they see it, taxes do not take anything from people, and to claim the contrary is not simply wrong, but nonsensical. Ronald Dworkin, an influential law scholar, is of the same opinion: he writes, “the usual arguments that supposedly demonstrate that pretax income is ‘my’ money are incoherent”.[3]
It is surprising that these thinkers assume that their verdict about the myth is obvious, and that people’s convictions about private property and taxation can be so easily debunked. More surprisingly still, these American philosophers do not find it necessary to confront their ideas with those that sparked the American revolution. In contrast, at the time of the revolution, even their enemies –the British– made the connection with their own historical struggles for liberty. Speaking in Parliament, Lord Camden declared that in Britain
Today Americans are taught that the noble Lord was talking nonsense. Not a distant King but their own philosophers and law scholars tell Americans that the link between taxes and ownership is wrong, a crass delusion. Murphy and Nagel write that taxes, even high taxes, do not take anything from our property. Ownership is merely a convention to be defined by law, and it comes into being only by means of laws. Why is that? Answer: because without the protection of the laws, property would soon disappear, or remain precarious. We must be clear: the claim is not simply that governments contribute to the production of goods by building roads and bridges, or keeping courts of justice, police and armed forces. The novelty of the view does not consist merely in the omission of the usual caveat that governments often make the production of goods more difficult, and sometimes impossible (after all, when we discuss government’s contributions to production, are we talking about F.D. Roosevelt, Margaret Thatcher, or Idi Amin?). Leaving the caveat aside, we must understand that the main goal of the theory is to convince us that ownership, what we know as “private property”, is merely a legal convention. We only have a right to what taxes leave to us. How glad would have been the King of England if he could have defeated the American revolutionaries with such simple argument!
As Murphy and Nagel’s book is entirely devoted to debunking the myth of ownership, I will deal mostly with the arguments they present. I will add some reflections about the contributions made by other followers of the same ideas. They are speedily gaining popularity among scholars, and many treat the issue as already settled.
From the start, we must take notice that Murphy and Nagel often pass freely from the assertion that pre-tax ownership is a myth, to the more direct one that ownership –not just a portion of it– is a myth. And there is much logic in doing so: if governments are free to define and redefine our property rights and tell us that we never really had what they take from us in the form of taxes, then ownership as a whole becomes a myth. The philosophers’ aim is not merely to justify higher taxes but to suggest a new design for property rights.[5]
Of course, with the exception of anarchists, nobody denies that we have to take some dollars from what we have earned in order to pay taxes, as we have to take some dollars to pay for services provided to us, or bread sold to us. But this is not the point. What Murphy, Nagel, and others argue is that we simply have not earned that money. It is in our pockets by mere chance.
Murphy and Nagel have very strong words for the views about taxes and property that prevail in the US United States US
On the other hand, as we see reading the book’s back cover, The Myth of Ownership has been hailed by law scholars and book reviewers as a fundamental philosophical contribution to the debate about taxes that has been going on for some time in the United States
According to Murphy and Nagel, ownership is an old illusion, and they want to free their fellow Americans from it. Certainly, they would be ready to grant, but without entering into details, that there is a minimum of personal belongings that individuals have a right to retain. They call it “a Hegelian minimum”, agreeing with the German philosopher that some form of personal property is indeed linked with individual freedom.[9] They acknowledge that “a minimal form of economic freedom is essential to a liberal system: the freedom to do what one wants with it”. However, in their opinion this does not cover “a much larger freedom...to engage with minimal hindrance or conditions in significant economic activity of the sort that drives a market economy”.[10]
Before going further into the authors’ arguments we must remember that the legal limits of property rights are independent of the size and value of the goods involved. We do not have rules for a minimum –Hegelian or any other– , and different rules for bigger possessions. In spite of minor and irrelevant exceptions to the principle, I am as free to spend my modest income as I would be to spend a fortune. Traffic rules are the same for cheap cars and for luxury cars. The owner of a big factory must not dump garbage on his neighbor’s property, and the same applies to the owner of a small apartment. This is the meaning of “equal justice under the law”.
In contrast, it is one of the main tenets of Marxism that those goods that are considered means of production should be treated differently. Though Murphy and Nagel tell us that “significant economic activity of the sort that drives a market economy” is not part of the freedom they would grant to people, they do not seem to suggest that governments should take actual possession of the means of production. They just mention “hindrances” and “conditions” and indicate that they might be more than minimal without any special justification. Even then, in their opinion there would be no conflict with freedom. We must remember that John Rawls –who taught philosophy to Nagel, as well as to a good number of modern philosophers– wrote that government’s ownership of the means of production was compatible with a free market. He never cared to justify that assertion.[11]
Beyond the portion of their goods that the philosophers would leave to people as essential for their freedom, everything else is conventional –“conventional” being a refined way of saying that legal institutions “define who owns what”[12]. That is why Murphy and Nagel find it absurd that so many people think that laws must respect property. Laws define what property is, and who owns it. A figure in plaster cannot contradict its maker, and wish another shape. Then there can be no conflict, only submission. Murphy and Nagel write: “Our own view, as will emerge, is that property rights are conventional, but that there is room in their design and justification for the consideration of other rights and deontological values. While the protection of some form of private property is an essential part of human freedom, the overall structure of the system of property rights should be determined largely on other grounds”.[13]
Incentives for work, not for business
Apart from a Hegelian minimum –left undefined–, Murphy and Nagel would keep some incentives for work. But for that purpose there is no need to let rich people pocket large amounts of money. In fact –they argue– higher taxes for the rich would have two effects, and not just one. Of course, some people would work less if the return is small; but others would try to make up for the loss by working more.[14] Murphy and Nagel cite the opinion of experts who tell us that “nearly all research concludes that male participation and hours worked respond hardly at all to changes in after-tax wages and therefore to marginal tax rates”.[15]
We must realize that the whole question about incentives is misleading. It is a common error –or rather lack of perspective– to think that capitalism is just about material incentives for workers and CEOs. The error underlies a good part of the discussions about capitalism. Nevertheless, we must not forget that taxes often reduce capital itself. Moreover, high and low profits direct capital (not only work) to different pursuits.
The key error is this: capitalism is not a system of carrots and sticks used to encourage work, marginally different from the system of socialism, of sticks and more sticks. Not surprisingly, capitalism is about capital. It means that individuals take decisions about what to produce, where, using what materials, in association with what partners, at what time. It is often pointed out that CEOs would keep working even if their salaries were substantially reduced and if they had no other alternative in the market. Probably they would work harder to compensate, as Murphy and Nagel suggest. That is true: a CEO can be reduced to something very similar to a functionary in a collectivist country –in fact, they have been reduced to that in a number of mixed economies, in the past and in the present. Some of them may feel comfortable in such situation.
However, as Ludwig von Mises has explained, capitalism is not a managerial system, it is an entrepreneurial system.[16] The argument about the effects of higher taxes on work (even as managers) forgets this basic truth. It leaves aside the decisions people (and especially entrepreneurs) make about the goods they own –not merely about the goods they manage for others. Capitalism is about capital and its return, not about bonuses .
CEOs, managers –even workers– can receive bonuses. But unless they also share the losses, pay themselves the expenses, decide what to sell, and when to invest their own capital, they cannot replace entrepreneurs. Of course, if those conditions are met, they would not replace entrepreneurs; they would be entrepreneurs. But bonuses alone do not turn managers into businessmen. On the contrary, they can make managers foolhardy and ready to take unreasonable risks.
Incentives for work are not the distinguishing mark of capitalism. Actually, mere incentives for work exist even in places where the control of the means of production by the government has been taken to its highest stage. We read that in the prison camps of North Korea
[1] Oxford University
[2] The Second Bill of Rights. Basic Books 2004, 201. The subtitle of the book is “FDR’s unfinished revolution and why we need it more than ever”.
[3] Is Democracy Possible Here? Princeton University
[4] Campbell, John: Lives of the Lord Chancellors and Keepers of the Great Seal of England
[5] As proof that the goal is larger, see the text cited at the end of the present section.
[6] P. 72.
[7] P. 143.
[8] P. 178.
[9] P. 145.
[10] P. 64.
[11] A Theory of Justice, pages 57 and 137. Harvard University Harvard University
[12] P. 189.
[13] P. 45.
[14] P. 69.
[15] P. 137.
[16] Human Action, Vol. 3, pages 303 and 708. Liberty
[17] David Hawk, The Hidden Gulag. US Committee for Human Rights in North Korea
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