The Online Library of Liberty

A project of Liberty Fund, Inc.

• F. A. Harper, Introduction
• Gustavo R. Velasco, On the 90th Anniversary of Ludwig Von Mises
• F. A. Harper, Ludwig Von Mises
• Property and Freedom, Alberto Benegas Lynch
• Technological Progress and Social Resistance, Guillermo Walter Klein
• Principles Or Expediency? F. A. Von Hayek
• Protection For Farmers, Antony Fisher
• For a Philosophy of Choice, Lord Grantchester
• The Surest Protection, Ralph Harris
• Towards the Just Society, Ralph Horwitz
• Size and Well-being, J. Enoch Powell
• Pour Eviter “une Collectivisation Par Annuities”, René Berger-perrin
• En Défense De L'economie Libérale: Réponse à Quelques Objections, Gaston Leduc
• L'occident Pour Son Malheur a Choisi Keynes Contre Mises, Pierre Lhoste-lachaume
• Das Ordnungsdenken In Der Martwirtschaft, Ludwig Erhard
• Unsere Gesellschaftsordnung Und Die Radikale Linke, Edith Eucken-erdsiek
• Privateigentum— Die Für Mitmenschen Günstigste Lösung Bei Den Produktionsmitteln, Wolfgang Frickhöffer
• Macht Oder ökonomisches Gesetz, Ernst Heuss
• The Reliability of Financial Statements, Ulrich Leffson and Jörg Baetge
• Ist Die Inflation Unser Schicksal? Alfred Müller-armack
• Der Reiche Goethe Und Der Arme Schiller, Volkmar Muthesius
• Krise Der Politischen Formen In Europa, Otto Von Habsburg
• The Need to Make Cognizance Available, Ulysses R. Dent
• Ways to Communism, Giuseppe Ugo Papi
• Convergence Theories and Ownership of Property, Kenzo Kiga
• Soaring Urban Land Prices and Market Economy, Toshio Murata
• Jesus and the Question of Wealth, Alberto G. Salceda
• A Program For a Liberal Party, Gustavo R. Velasco
• On the Entrepreneur Andries De Graaff
• La Integracion Economica De America Latina, Romulo A. Ferrero
• Problems of Economic Responsibility and Initiative Re-emerging In Eastern Europe, Ljubo Sirc
• Rent Control In Sweden: Lessons From a Thirty Year Old Socio-economic Experiment, Sven Rydenfelt

Property and Freedom
Alberto Benegas Lynch

It is a great honour to be able to share this deserved homage to Professor Doctor Ludwig von Mises. He is undoubtedly the most enlightened man of thought of our times, consubstantiated with the basic principles which brought about the greatness of western civilization.

Constantly, in his teachings, he has been loyal to scientific truth. He has always disliked “pseudoeconomists” who, far from standing firmly for scientific criterium, yield to the fashionable statism impulsed by inveterate demagogy. The intelectual integrity of Professor Mises is the best example for students who love truth.

If human beings wish to enjoy prosperity all that government can do is to establish and support the institutional system which enables the maximum accumulation of capital. This system is the classic capitalism based on private property and free market. All the wrong economic policies that nowadays prevail are anticapitalistic and antiliberal, in different degrees. These antiliberal policies are always poisoned with demagogic ingredients.

Mises' teachings show the relevance of private property and individual freedom for the improvement of civilization.

Freedom and property are always very important subjects. But, nowadays, in the unsteady times in which we are living, the subject “Freedom and Property” is of outstanding importance. The decay of civilization at present shows us how important it is to recover the complete force of private property in order to preserve individual freedom.

Our times are inclined to destruction. Changes take place swiftly while destruction is being accomplished. Without analyzing the causes of the evils that we wish to avoid, and without knowing the real significance of social institutions, without minding what comes next, a blind impulse brings about senseless changes. The remnants of many free institutions are being threatened to be extinguished.

Under these circumstances it is a good idea to stop and think. Let us cast a look upon one of the basic constituents of civilization. and ponder the causes that move the modern barbarism which destroys civilization.

During these hard times, private property, pursued and crippled, has become a kind of Cinderella. This Cinderella is threatened by many social reforms that makes her the real scapegoat. In this way civilization retreats, because private property is its irreplaceable basis and is the principal component of individual freedom.

Property is the Basis of Civilization

Throughout human history we can see that the great advances of civilization take place at a time when private property exists as a basic social institution. Western civilization owes its progress in a great measure to the existence and due respect of the right of property. Private property is born with the right to live. To preserve life implies to enjoy the fruits of one's labour freely. Without doubt labour belongs (in property) to the one that accomplishes it, as does our organism to us. Private property of the intellectual, or manual work or services performed. are the prolongation of the personality of he who has performed them.

The great political movements that brought about a high civilization recognized private property as the background of social order. Private property is a part of individual liberty and it is as important as life itself, thus none of them can be deprived at will. This is the sense of the declarations on private property contained in the documents of democratic revolutions against absolute monarchies—English, American and French revolutions are the proof. The same thing can be said of the movements for independence in the whole of America. The same idea is reflected in the modern Constitutions which were the basis of the political organizations of the new nations.

Although liberty is the essential element of the advance of civilization, private property is its prerequisite and its principal component. We cannot imagine individual freedom without private property. To acquire and possess private property and its free disposal, is indispensable for the free creative activity of individuals. Freedom to create involves the existence of individual property. Individual property makes it possible to exchange goods and services. Individual property makes these exchanges the most useful and it enriches the members of society. The worker who suffers violation of the property of his earnings does not enjoy freedom. And the property of his earnings is violated, for instance, when governments and unions deprive him by force of a portion of his income, to spend it on different purposes than those freely chosen by the owner. This is the case of compulsory contributions for retirements, pensions, etc., whenever such contributions and the systems established are imposed by force. That is to say, whenever the system and the contribution have not been accepted voluntarily by those who have to pay.

Civilization Threatened by Marxism and Demagogy

If civilization is nowadays under crisis, it is in great measure due to the deterioration of private property which, in some cases, has even been totally abolished, just as Marx, Engels and Lenin wished. Even in those places where private property has not been totally abolished, it has been discredited by unjust legislations. These unjust legislations have been established by the impulse of the fashionable demagogy.

Freedom is not defended as it should be. because some people deny that private property is an essential prerequisite to liberty. These people, sometimes well intended, do not realize the preeminent rank of private property in social institutions. Besides its other qualities, private property is one of the bastions that confers independence to the individual, and makes it possible for him to resist the lurking intent of political power to outbound itself.

The advantages accomplished by the collectivists in the dramatic ideological struggle between liberty and collectivism are due, in great measure, to the success of the preachings of Marxism. These preachings are led to soften the defence of private property which should be undefeatable, since it is the background of progress of civilization.

The demagogic spirit accompanies, supports and stimulates every advance of collectivism. This always leads to deteriorate private property. The eternal facing between rich and poor is provoked by demagogues, and determines hard feelings in the people as well as low passions. This facing is at present also at international level, because international bureaucrats have been practicing demagogy for some time now, pretending that the poverty of the poor countries is due to the richness of rich countries. The pure emotional element blinds reason. Conscious or unconsciously, along this path, the gates are opened for ignorance to mislead the real causes that provoke wealth or poverty. Laziness is also stimulated in this way. In this manner it is encouraged to hate capital, notwithstanding capital being the fundamental factor for redemption of the poor. Capital is precisely the element that cannot be substituted to increase mass production of goods and services. And mass production of goods and services has no other destiny than mass consumption, which, consequently, improves the standard of living of the masses. Since the saving spirit has been weakened, the investment of capital is impeded. And, as we know, investment of capital is the real redeemer of poverty.

Free and Contractual Society Demands Respect for Private Property

In this atmosphere, poisoned by error, it becomes very difficult to defend private property and its essential attributes, as civilization demands.

Nowadays, in the opinion of many of our contemporaries, to own goods and use them, as well as dispose of them freely, has not the same significance as it used to have for our Founding Fathers. Free and contractual society tends, in this way, to be replaced by collectivistic and hegemonic society. The will of the parties, which does not affect the rights of others, is not the supreme law any more. Authoritarian government neglects such a law in order to impose its paternalistic dictates. Along such a path sometimes government uses intimidation and even violence, by means of the unions. In these cases the unions often stand on the basis of a totalitarian legislation, which accumulates privileges, violating private property as well as freedom to work, to contract and to associate.

The advance of collectivistic conception of the society based on hegemonic principles changes the structure of government. Government expands its function and enlarges its costly dimension, sometimes politically supported by gigantic unions, often of spurious origin. Governments become entrepeneurs and manage railroads, telephones, oil, banks, power: governments become merchants, liquor dealers, manufacturers, etc. They assume most of the functions that are forbidden to the State in a free society based on contractual principles. Limited government, characteristic of free societies is being replaced by omnipotent government, characteristic of hegemonic societies. In this process, property and freedom deteriorate. Government intensifies its extraofficial activities at a time when the fulfilment of its specific functions is considerably weakened. The effective protection of life, property and freedom is becoming more and more neglected. Governments are at present devoted to many activities alien to their proper functions. At the same time they lack efficient means to put an end to terrorism and subversion, with their sequel of murders, kidnappings, thefts and depredations, which put governments in a tight corner. In short, governments do what they should not, while they do not do what they should.

The Poor Benefit More Than the Rich by Private Property

Defence of property in safeguard of individual freedom, as civilization requires, benefits the poor much more than the rich. The former are those who are in more need of the inviolability and solidity of this basic social institution. Security to the right of property is indispensable to the poor, who wish to enrich themselves in order to grant comfort to their people. They cannot do without such security to obtain comfort by means of fruitful work, savings and subsequent investments, which is the only way to get rich honestly. It is well known that investments vanish without security to the right of property, on which rests the confidence that attracts investors. To guarantee the right of property it is essential to intensify, up to the maximum, investment of capital in order to increase production of goods and services. And goods and services produced are distributed, in the last instance, in the most convenient way for everybody, through the working of a free market. In this way those who have less means at their disposal are the ones who profit more. Needless to say the rich, whose riches come from the support of satisfied consumers, also benefit by the security to the right of property.

It is a pity that most of the people, when thinking of popular measures which can be taken by government, really do not have in mind the kind of measures that benefit the people. Professor Hayek, in one of his books, explains why the worst reach the top. In fact the whole problem comes from ignorance. As soon as somebody realizes the correct relation between cause and effect he will never allow a measure that harms the people to become popular. The only measures adopted by government that really can be considered popular are those that benefit the people.

As Mises teaches, and as I have already mentioned, the only way in which government can really benefit the people is by establishing and preserving social order based on private property, free market and limited government, that is to say, classic capitalism. Unfortunately the ignorance that prevails in general makes the economic policies that benefit the people unpopular, at the same time as many wrong policies that harm the people become very popular.

There is no doubt that if most of the people in every country of western civilization realized the advantages for everybody of the social system of capitalism, the majority would vote for the best. Western countries would be much more prosperous than they are now and the difference between totalitarian and free countries would be greater.

Unfortunately the fallacies of the preachings of the demagogues make many people think that the way to prosper is to use the apparatus of compulsion and coercion that is the state, in order to “redistribute” the wealth of those who earned it honestly in the market.

We must believe in truth and be optimistic in the hope that the day will come when more people will seriously study the writings of Professor Ludwig von Mises. When that time comes, step by step, more and more people will think correctly and see clearly the fundamental problems of social life.

Social Reforms

Everywhere we hear people demanding changes. These changes are usually called social reforms. Among these, in many countries—especially in the so-called under-developed countries—agrarian reform is a current slogan.

None of the politicians demanding agrarian reform has taken the trouble to study the problem. They only wish to appeal to the emotional aspect, offering to those who do not own land and wish to become owners a piece of land that will be taken from a land owner.

In Latin American countries this is something that is happening in a very extended way. In Cuba, for instance, when Fidel Castro brought about the agrarian reform that was the way he proceeded. Everybody knows the result of the agrarian reform in Cuba. Production of sugar and other crops declined noticeably. A very able newspaper man who was in Cuba at the time the agrarian reform took place stated that when he asked the new farmers their opinion regarding the success of the agrarian reform, most of them emphatically remarked upon the failure of same, but at the same time most of them said they were not unhappy. When the newspaper man requested an explanation of this apparent contradiction, the general reply was that they were content because Mr.John or Mr. Paul—who were big land owners—had been deprived of their property. This confirms the importance of envy and other low passions in politics when ignorance prevails.

At present the new policy initiated in Chile with the coming into power of the communists, shows that even the more educated people have learnt very little. We must admit that in Chile the politicians who took over have only read the wrong side of the library, say the Marxist authors. They are even incapable of learning by facts. It is incredible that they learnt nothing from the disastrous experience of Cuba.

These sad experiences in Latin America show how far off the people in most of those countries are in understanding the relevance of private property to freedom and prosperity.

A free market places the land in the hands of entrepeneurs, who are of greater benefit to the consumers; and the size of the land in the last instance depends on the will of the market. Many times the market indicates that the consumer is best served when the size of the land owned by the land owner is larger than it was before, as this makes it possible to have better quality crops at lower prices.

In the industrial areas social reforms that are proposed by demagogues and which, needless to say, deteriorate or even abolish private property, are related to measures that make it compulsory for workers to participate in the management of the enterprise. But also, as is happening in Chile, expropriation in the name of nationalization takes place. In fact, this policy results in confiscation, because when the government pays for expropriation the price generally is below the real value, with long payment terms in money devaluated by inflation. The Chilean example is an experience that should be carefully studied. As time passes, the collectivistic policy adopted by Chile will show the way deterioration and abolition of private property ends all kind of individual freedom.

Freedom of Expression

In the last instance, every individual freedom depends on private property. The individual freedom that is easiest to understand nowadays, that is freedom of expression, is also dependent on private property: and this is so in spite of the thinking of many people who consider the right to express ideas freely is the fundamental one on which are based all the other liberties of the individual. People who think in this way argue that so long as one can express freely one's ideas it is always possible to defend, in this manner, the other liberties of the individual.

But in order to spread ideas by any of the modern media many requisites are needed. If this is done through the press, by means of books, radio, television or any other form, some kind of investment must be made. In the case of books or newspapers, a building is needed, some kind of machinery, various raw materials, money to pay the wages of the people who work for the newspapers or publishers, etc. In the case of radio and television, many investments must also be made in machinery, buildings, raw materials, wages, etc.

If independent thinking is to be transmitted to the people through the aforementioned media, it is impossible for these investments to be owned by the government or the state. If the latter is the case, the kind of thinking that is transmitted is always that of those who govern.

In short, to preserve independent thinking private property is fundamental. It is necessary that all the investments required for free expression be privately owned, otherwise the means to express ideas will be used only to express the thinking of the bureaucrats in the government.

Other Individual Liberties

If the aforementioned is the case when analyzing freedom of expression, it becomes even clearer when we consider the case of every other individual liberty.

We cannot imagine freedom to contract, freedom to associate, freedom to work and even religious freedom without private property.

When putting into practice any of these special kinds of individual liberties some property must be owned. In the case of a contract, where somebody is selling his services or his work, he is the owner of those services and that work, and the salary obtained in exchange for same also becomes the property of the person who has earned it. In the case of religious freedom it has been denied that private property is required to put it into practice. However, if apparently one does not need to own anything to pray, one must be the owner of the time dedicated to prayer. And if we wish to pray in the way people generally pray, then somebody must own the land where the church is to be built, and many expenses must be paid in order to maintain this religious culture.

Needless to say, if the land, buildings and money dedicated to religious culture is not owned privately—the state being the owner—the religion that will be practiced will be the religion of the state, and this is not religious freedom. As the government has no resources other than the taxes collected, this means that many tax-payers who profess a religion different to that of the government will be paying for the culture of a religion that is not their own.

Power Tends to Expand

Always governments tend to expand their power at the expense of individual freedom. Long ago Lord Acton very correctly said: “Power corrupts and absolute power corrupts absolutely.”

In fact, it goes without saying that corruption bred by power appears when power is outbounded. But extralimitation of power is something inherent to all kinds of government at every moment of history.

On this subject Professor von Mises, in his book “The Free and Prosperous Commonwealth” remarks, referring to the relevance of private property and the general tendency of all governments to hamper this basic social institution: “In this sense, it has even been called the fundamental prerequisite for the development of the individual. But it is only with many reservations that the latter formulation can be considered acceptable, because the customary opposition between individual and collectivity, between individualistic and collective ideas and aims, or even between individualistic and universalistic science, is an empty shibboleth.

“Thus, there has never been a political power that voluntarily desisted from impeding the free development and operation of the institution of private ownership of the means of production. Governments tolerate private property when they are compelled to do so, but they do not acknowledge it voluntarily in recognition of its necessity. Even liberal politicians on gaining power, have usually relegated their liberal principles more or less to the background. The tendency to impose oppressive restraints on private property, to abuse political power, and to refuse to respect or recognize any free sphere outside or beyond the dominion of the state is too deeply ingrained in the mentality of those who control the governmental apparatus of compulsion and coercion for them ever to be able to resist it voluntarily. A liberal government is a ‘contraditio in adjecto’. Governments must be forced into adopting liberalism by the power of the unanimous opinion of the people; that they could voluntarily become liberal is not to be expected.

It is easy to understand what would constrain rulers to recognize the property rights of their subjects in a society composed exclusively of farmers all of whom were equally rich. In such a social order, every attempt to abridge the right to property would immediately meet with the resistance of a united front of all subjects against the government and thus bring about the latter's fall. The situation is essentially different, however, in a society in which there is not only agricultural but also industrial production, and especially where there are big business enterprises involving large-scale investments in industry, mining and trade. In such a society it is quite possible for those in control of the government to take action against private property. In fact, politically there is nothing more advantageous for a government than an attack on property rights, for it is always an easy matter to incite the masses against the owners of land and capital. From time immemorial, therefore, it has been the idea of all absolute monarchs, of all despots and tyrants toally themselves with the ‘people’ against the propertied classes. The Second Empire of Louis Napoleon was not the only regime to be founded on the principle of Ceasarism. The Prussian authoritarian state of the Hohenzollerns also took up the idea, introduced by Lassalle into German politics during the Prussian constitutional struggle, of winning the masses of workers to the battle against the liberal bourgeoisie by means of a policy of etatism and interventionism. This was the basic principle of the ‘social monarchy’ so highly extolled by Schmoller and his school.”

Private Property Needs to be Defended

In these troubled times, when most of the people are dissatisfied, and many are demanding changes, it is more important than ever to find the real fundamental root of the present decay of civilization.

Professor Ludwig von Mises has been preaching for a long time the right ideas for a prosperous social order. He has been forecasting all the troubles that mankind is experiencing nowadays. He has been explaining clearly the dangers of government intervention, of nationalism, of protectionism, of inflation, of socialism and collectivism, all of which policies deteriorate private property and are contrary to the classical liberal capitalism which made possible the greatness of Western civilization.

As all the wrong policies are based on deterioration of private property, the most important task of our times is to properly defend this fundamental social institution.