Classical Liberalism Has no Place to Stand

Property is related to propriety, and is an ethical institution. It is a feature of our civilization.[1]

This is how a great Classical Liberal, Gottfried Dietze, starts his book, In Defense of Property. We can safely say that his book is the greatest treatise on the defense of private property written by a Classical Liberal. Dietze was a respected scholar of the Austrian School, a friend of Hayek, his book on the Federalist Papers was an astonishing success, and he was known for the “symmetry,  precision, and profundity” of his writings.

And yet, throughout the book, he fails to defend his thesis in his first sentence. He defends property on linguistic grounds, historical grounds, biological grounds, pragmatic grounds, “natural law” grounds. But he never touches the issue of the intrinsic ethical goodness of private property. He starts the book with the claim that property is an ethical institution, but then he subjects its ethical value to many other things. He doesn’t show how property is good per se. He doesn’t show any eternal ethical values in property. Property is good because it is part of our civilization; or because property rights have been acknowledged by so many law codes in the past; or because it has been an integral part of the rise of the West; and so on. But we don’t see anywhere a statement that private property is good just because it is good, period. The ethical institution is lost or forgotten, as Dietze progresses with his defense of property.

Given the fact that it is a book on the defense of property, and given the initial premise of the book, this is strange. If this is a defense of property, then its foundations are quite shaky. Some law codes acknowledge property, others don’t; how do we know which ones are legitimate and which aren’t? Or it may be part of our civilization, but civilizations change, as we know very well. Why should we believe that our civilization should remain forever? It has been an integral part of the rise of the West, and of its prosperity, but does that mean it is necessarily the ethical cause for that rise? A consistent critic of private property wouldn’t find it difficult to dismiss such arguments.

Dietze is not alone among the Classical Liberals in his inability to present an ethical defense of property. Ludwig von Mises—the man whose name is symbolic of the Austrian School—devoted only two pages to private property in his 900-page fundamental work, Human Action. The book was Mises’ magnum opus, a superb defense of free markets. Mises was a profound thinker and scholar. He knew economic thought was not isolated from philosophy, so he started it with a thorough exposition of his epistemology and a defense of his methodological individualism. The book is a delight to read—page after page of rational, precise definitions, arguments and conclusions. And yet, when he comes to private property, he is next to silent. He says at the very beginning of the small subsection on “Private Property” in Chapter 24, on page 682: “Private ownership of the means of production is the fundamental institution of the market economy.”[2]

One would think “the fundamental institution” would deserve at least a chapter in such a book. But no, it only get’s two pages. And no defense on ethical grounds. To the contrary, unlike Dietze, Mises makes sure he points to the fact that there is no defense of property on ethical grounds: “Private property is a human device. It is not sacred.”[3]

With Mises, private property has no intrinsic ethical value. It has pragmatic value, or historical value, but it is not ethical in itself. It is a human device; there is nothing sacred about it.

One wonders if Mises understands what he is saying. An opponent of private property should have no problem dealing with Mises’ argument by only saying that any human device can be used or abandoned at will. If the “fundamental institution” of the market economy is a human device and can be abandoned at will, then we shouldn’t complain when kings or majorities do it, and thus abandon the very market economy that depends on it.

The other great defender of free markets and individual liberties—Ayn Rand and her Objectivism—isn’t much better. Rand makes John Galt declare the source of property rights:

The source of property rights is the law of causality. All property and all forms of wealth are produced by man’s mind and labor. As you cannot have effects without causes, so you cannot have wealth without its source: without intelligence.

There are so many unwarranted assumptions in this one statement that they can fill a whole book. Why the law of causality? Because it is part of objective existence? But so is the law of the jungle. So is the law of power. So is the law of survival, if we believe the evolutionists. Why can’t we say that “the source of property rights is in the ability of the stronger to oppress the weaker”? And how do we know that all property is produced by man’s mind and labor? We just assume it? A leap of faith? How do we know we can’t have effects without causes? And if we can’t, doesn’t that bring us back to the Prime Cause, the Creator?

But the main problem with Galt’s statement, again, is this: There is no defense of property rights on ethical grounds. Property is good only as long as it is assumed to be an effect of a cause. The moment we change the assumption—and there is no reason why not, objectively—we are left without a defense of property rights.

All three of them—Dietze, Mises, and Rand—complain about the decline of property rights in the 20th century. They don’t say why such a decline is necessarily wrong, based on their own presuppositions. If property has no intrinsic ethical value, then there shouldn’t be anything wrong with its decline, ethically. If it has only historical value, then the decline is historically determined; if it has only pragmatic value, then the changes in the perceived goals of humanity will necessitate its decline; if its only source is the law of causality, then the new discoveries of science and social theory could change our understanding of it and change our commitment to property rights. No wonder we are witnessing such decline: If property rights can’t be defended on ethical grounds, they are left defenseless.

Dietze, Mises, Rand, and other Classical Liberal or Objectivist authors know this very well; they know very well that a rational defense of an ethical institution is impossible. But they are nevertheless reluctant to build an ethical defense of property. Why?

Because they have prior commitment to a philosophy that rejects any possibility for ethical defense of anything: evolutionism.

Being strong believers in natural law, the Classical Liberals saw property and property rights as evolving from an earlier state of common ownership of resources. In this they agreed with another strong proponent of natural law in the antiquity, Cicero. While he defended property rights, he admitted that in their natural state before they created civilizations, humans owned all things in common. Mises agreed with this: property came as a result of human action; a very useful and beneficial result indeed, but it was not part of the original “natural” state. Ayn Rand—even though she was skeptical concerning Darwinian evolution—still saw property as related to man’s survival, to his ability to “support his life.” While both Classical Liberals and Objectivists claimed that “property rights” were in essence “human rights,” philosophically they separated private property from human nature, and thus made it foreign and alien to human nature.