Scarcity of
resources exists in many forms and is THE
problem in economics. If resources were not scarce, there would be no need to economize.
The existence of scarcity is true of all resources (time, human energy, natural
resources, etc.) It is not intuitive that allowing scarce resources to be owned
privately is the solution to this problem. Socialists would like to ignore this
reality of scarcity and have all resources owned collectively for the common
good. By contrast, we Austrians know that private property solves the economic
fact and economic problem of scarcity, as I will now discuss.
A society
which spurns private property and throws all resources open to those who wish
to take them will quickly learn the terrible lesson of the tragedy of the commons; i.e., that commonly held resources
will be plundered to extinction.
If society
spurns allowing private ownership of resources, it must find some other means
to prevent the tragedy of the commons, and historically the means chosen is the
use of force. Throughout history most of mankind has been divided into a
hierarchical system of masters and slaves with some graduations between the two
extremes, such as priestly or aristocratic classes. The masters (pharaohs,
emperors, kings, sultans, warlords, etc.) devised complex rules-based systems for
resource distribution that ultimately depended upon pure terror for
enforcement.
But this
so-called solution to the problem of scarcity--restricting the people's liberty
through the use of force--does not work. The gradual understanding of modern
economics eventually ended thousands of years of subsistence existence for the
masses in the West. Modern economics explained that without private ownership
of resources, a man could not hold an ordinal preference. The term ordinal , of
course, means that something is prioritize from highest to lowest. Without
ordinal preferences, there is no rational means to economize for the betterment
of society. In other words, the masters never really knew what to order the
slaves to produce, what technical means to use, what alternative materials to
use, the quality desired, or how much to produce. Thus, the Commissars of the
Soviet Union ordered the production of inefficiently produced, shoddy goods. The
Soviet empire collapsed, despite the fact that Russia is blessed with vast
resources and an industrious population .
A second fatal
problem with common ownership of all resources is that few such readily
available, consumable resources actually exist. There are no resources on the
planet that do not require at least a minimum of effort to transform into a
consumable product. Even edible berries growing in the wild must be harvested,
meaning that someone must transport himself to the berries' location and pull
them from the bush at just the proper time. The cost of doing so is the value
one places on forfeiting his leisure. Of course, other natural resources require
much more effort to convert to consumable products, passing through uncountable
stages of production. For example, timber and minerals must be extracted,
harvested, etc. and then molded into something that can be consumed. Consider a
hiker lost in the wild. It matters not at all to him that great stands of
timber lie within easy reach or that valuable minerals lie under foot. These
natural resources require great effort over very long time periods to be
converted into something consumable, such as a shelter or gasoline. A lost
hiker does not have the knowledge, time, or previously produced means to
convert these basic resources into consumable products to ensure his survival.
All this is far beyond anyone's autarkic abilities.
Now let us
assume that someone did harvest trees by felling them, transporting them to a
lumber mill, milling them, storing them in a ventilated and dry place for many
months before kiln-drying them (all processes that are required to turn trees
into useable lumber), advertising their availability to contractors, keeping
sales records, sending out bills, collecting the bills, etc. only to have a
socialist call him a plunderer and confiscate his lumber for free distribution
to whomever the masters deemed to be politically advantageous to their
continued privileged position. No one would ever harvest another tree. In other
words, production of usable lumber would cease despite the fact that trees were
readily available.
Now let us
consider what would happen if the commissars did order slaves to harvest the trees. Great forests would be
denuded in short order, because there would be no social mechanism to prevent what
would amount to a tragedy of the commons by order of the state.
Proper harvesting of timber
requires that its value be capitalized
Capitalization
of timber requires that it be privately owned in order that its worth can take
its proper place in the ordinal hierarchy of preferences. The consequences of
ignoring this fact of economic science is most evident today in China's ghost cities, where resources, both
natural and human, have been expended for no
observable benefit except to advance the careers of politicians who can
claim to have met the requirements of the latest Five Year Plan.
The opposite case
of resource waste comes from special interest groups who capture the political
(police) apparatus of the state and prohibit exploitation of resources by
private individuals. In the name of protecting Mother Gaia from being plundered, modern environmentalists have
convinced the political class that most progress is unsustainable, dangerous to
our health, or any number of other specious claims. Society is prevented from
benefiting from their conversion to consumable products. Private ownership
insures that resources will never be plundered to extinction, because their
value will have been capitalized. The process of determining a resource's
capitalized value is impossible absent free market capitalism with strict defenses
of property rights.
Despite both
the theoretical and empirical evidence to the contrary, socialists tell us the
opposite; i.e., that state ownership
of all resources will prevent their plunder and ensure prosperity for all. As
Ludwig von Mises explained, socialism is not an alternative economic system of
production. It is a system of consumption only, and a system of economic ignorance
and economic plunder.
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