Freeman

ARTICLE

Communal vs. Private Property Rights

FEBRUARY 01, 1988 by JAMES D. GWARTNEY, RICHARD L. STROUP

James D. Gwartney and Richard L. Stroup are Professors of Economics at Florida State University and Montana State University and Associates of the Political Economy Research Center in Bozeman, Montana. This article was adapted from their economic principles text, Economics: Private and Public Choice (Harcourt Brace Jovanovich, 4th ed., 1987).

What is common to many is taken least care of, for all men have greater regard for what is their own than for what they possess in common with others.

—Aristotle

The point made by Aristotle more than 2,000 years ago is as true now as it was then, and it is as important in primitive cultures as it is in developed ones. When the property fights to a resource are communally held, the resource is often abused. In contrast, when the rights to a resource are held by an individual or family, conservation and wise utilitization generally result.

This point is ancient, but it is often missed today. Americans seem to be trying to make more and more property communal by allowing the government broad zoning powers and increasing public ownership of wilderness and parkland. Many people believe that the government protects resources more effectively than private individuals do, even though history shows exactly the opposite to be true.

The following examples, ranging from the sixteenth century to the present day, and from cultures as diverse as the American Indians and Communist Russia, illustrate the value of private property fights and the difficulties posed by communal property.

1. Cattle Grazing on the English Commons

In a famous 1968 essay, “The Tragedy of the Commons,” Garrett Hardin used the England commons to illustrate the problems of communal ownership. In the sixteenth century, many English villages had commons, or commonly held pastures, which were available to any villagers who wanted to graze their animals. Since the benefits of grazing an additional animal accrued fully to the individual, whereas the cost of overgrazing was an external one, the pastures were grazed extensively. Since the pastures were communal property, there was little incentive for an individual to conserve grass in the present so that it would be more abundant in the future. When everyone used the pasture extensively, there was not enough grass at the end of the grazing season to provide a good base for next year’s growth. Without private ownership, what was good for the individual was bad for the village as a whole.

In order to preserve the grass, pastures were fenced in the enclosure movement. After the enclosure movement established private property fights, overgrazing no longer occurred. Each owner had a strong incentive to protect the land.

2. The Property Rights of American Indians

Among American Indian tribes, common ownership of the hunting grounds was the general rule. Because the number of native Americans was small and their hunting technology was not highly developed, the hunted animals seldom faced extinction. However, there were at least two exceptions.

One was the beaver hunted by the Montagnais Indians of the Labrador Peninsula. When French fur traders came to the area in the early 1600s, the value of beaver pelts rose. The Indians hunted them more intensively and the beaver became increasingly scarce. Recognizing the depletion of the beaver population and the animal’s possible extinction, the Montagnais began to institute private property rights, as Harold Demsetz has discussed in a 1967 American Economic Review article, Each beaver-trapping area on a stream was assigned to a family, which then had both the incentive and the ability to adopt conservation practices. A family never trapped the last remaining pair of beavers in its territory, since that would harm the family the following year.

For a time, the supply of beavers was no longer in jeopardy. However, when a new wave of European trappers invaded the area, the native Americans—unable to enforce their property rights to the beaver or to their land—abandoned conservation. They took the pelts while they could. Individual ownership was destroyed, and conservation disappeared with it.

The second animal that faced extinction was the communally owned bison or American buffalo, which roamed America’s Great Plains. For many years, the buffalo and the migrating bands of Indians lived together in relative harmony. Buffalo were difficult for Indians to kill, and when they got one, they used it very carefully. But once native Americans gained access to both the gun and the white man’s market for hides, their ability and incentive to kill the buffalo increased. There was no owner to protect the buffalo herds, and any one Indian—or even a tribe—who killed fewer to save more for next year was unlikely to benefit since other Indians next year were much more likely to take the conserved buffalo. By 1840, reports Francis Haines in The Buffalo, Indians had emptied portions of the Great Plains of the area’s large buffalo population.

In this case, the communal property problem could not be solved by the indians. Unlike the beaver, the buffalo ranged widely over the Great Plains. Individual, family, and even tribal rights were impossible to establish and enforce. Like oil in a common pool or the sperm whale on the high seas, buffalo were a “fugitive resource,” and their mobility made property rights (and therefore sound management) unattainable. Only the later invention of barbed wire and the fencing of the range solved the problem, after most buffalo herds had al ready been destroyed by both Indians and whites.

3. Property Rights in the Soviet Union

In the Soviet Union, most farmland is cultivated collectively. The output of the collective farms goes to the state. As a result, most of the benefits derived from wise conservation practices and efficient production techniques accrue to the state rather than to the individual workers.

Families living on collective farms are permitted to cultivate a private plot, the area of which is not to exceed one acre. The “owners” of these private plots are allowed to sell their produce in a relatively free market. Although these private plots constitute approximately one per cent of the land under cultivation in the Soviet Union, the Communist press reported that in 1980 about one-quarter of the total value of agricultural output was generated by these plots. The productivity per acre on the private plots was approximately 33 times higher than that on the collectively farmed land!

Property rights make a difference even in the Soviet Union. Clearly, the farm workers take better care of the plots they own privately than the land they own communally. These three examples assure us that Aristotle would be satisfied with the long-range accuracy of his observation.

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February 1988

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