If a man shall cause a field or vineyard to be eaten, and shall put in his beast, and shall feed in another man’s field; of the best of his own field, and of the best of his own vineyard, shall he make restitution. If fire break out, and catch in thorns, so that the stacks of corn, or the standing corn, or the field, be consumed therewith; he that kindled the fire shall surely make restitution (Ex. 22:5-6).
These verses make plain at least three facts. First, the Bible affirms the moral and legal legitimacy of the private ownership of the means of production. Fields and cattle and crops are owned by private individuals. Second, private property rights are to be defended by the civil government. The State can and must require those people whose activities injure their neighbors or their neighbors’ property to make restitution payments to those injured. Third, owners are therefore responsible for their own actions, and also for the actions of their subordinates, including wandering beasts.
This combination of privately owned property, personal liability, and court enforcement of private property rights is the foundation of capitalism. It is surely the foundation of long–term economic growth. This property ownership arrangement is also important for the reduction and allocation of pollution. Initially, these verses may seem self-explanatory. Nevertheless, when we consider them in the light of the many intellectual and institutional problems related to the whole question of pollution, their application in society becomes an enormously complex task. Without these legal guidelines, however, we could not deal effectively with the pollution problem.
Contrary to many of the twentieth-century critiques of both capitalism and pollution, socialist commonwealths have not produced reasonable, cost-effective, workable solutions to the pollution problem. More than this: such solutions cannot be implemented in socialist societies, for it is the private ownership of the means of production which is the basis for a successful program of pollution control. In fact, it is common ownership–bureaucratic ownership–which creates most of the economic incentives to pollute and exploit the environment.
The “Tragedy of the Commons”
A fundamental economic problem in any system of common ownership is the problem of assessing true costs and benefits. Historically, one of the most familiar of these systems of common ownership has been commonly held land. From the Middle Ages through at least the late seventeenth century, these property units were known as “the commons,” and the term still persists in some regions of the United States, referring usually to city parks.
Where the community allows citizens to place their grazing animals on the commons, a whole series of difficulties emerges. The economic benefits accrue directly to the man who places his animal on the “free” land, but the costs are borne by everyone in the community who would like to use the property for any other purpose. In Puritan New England in the seventeenth century, roaming animals uprooted plants and over-grazed pastures. Townspeople cut down trees in the night for firewood or fencing. Similar problems have plagued the commons in every culture. This is the direct result of a system of ownership in which economic gains go to individual users and costs are borne by non-users.
Such a system inevitably produces economic waste and personal disputes over the proper use of the common property. Those who benefit directly from their personal use of the commons have few direct economic incentives to conserve the commons’ scarce economic resources, for these resources are obtained at nearly zero cost to the private users. The cost of running one additional animal on the commons is minutely felt by any single taxpayer-owner; he receives the benefits immediately. There is every incentive to over-graze the commons, for economic restraints are minimal, while benefits are direct. This creates a system of “positive economic feedback” rather than “negative feedback.” it leads to a situation described by some scholars as “the tragedy of the commons.” It involves such phenomena as over-grazing, soil exhaustion, and pollution. J. H. Dales writes: “The economic effect of making common property available for use on a no-rule basis, so that it may be freely used by anyone for any purpose at any time, is crystal clear. Common property will be over-used relative to both private property and to public property that is subject to charges for its use or to rules about its use; and if the unrestricted common property is depletable, over–use will in time lead to its depletion and therefore to the destruction of the property.”
The private ownership of property drastically reduces these problems. Private costs are more readily, accurately, and inexpensively assessed than public or social costs, precisely because private owners directly face the effects of their own economic decisions. The cost of adding another animal to the land is borne directly by the man who expects to profit from the decision, if the owner of the animal is also the owner of the land! When the private costs of adding one more animal to the land exceed expected future benefits, owners will stop adding new animals. Private costs and private benefits tend to balance over the long run. The better the knowledge that owners have about costs and benefits, the more rapidly the two will be equated. Resources are thereby conserved.
Nevertheless, men are continually tempted to pass on costs to their neighbors, while retaining benefits personally.One man may sneak his animals into another man’s field.The other man is harmed economically–robbed. The injured party has an immediate economic incentive to put a stop to his neighbor’s practice of transferring production costs to him. His incentive as an injured private owner to stop the practice is far greater than it would be in a system of common ownership, where the injury is spread over the entire population of so-called owners. (Do we really own common property? lf a man cannot disown a piece of property, it is difficult to see how he can be said to own it. At best, the costs of “disownership” are high; they involve political mobilization, not simply a private offer to sell.) The desire to reduce costs is strongly felt on both sides of the fence which separates privately owned properties. In fact, the very existence of the fence testifies to a man’s desire to keep outsiders from transferring their costs to him. Of course, a fence also testifies to people’s desire to avoid having their “benefits” wander off, especially if they might cause damage to another person’s property, assuming restitution is the law of the land.
(For the rest of my article, click the link.)