Libertarian Property and Privatization: An Alternative Paradigm
Kevin A. CarsonCarlton Hobbs
recently challenged the tendency of mainstream libertarians, free marketers and anarcho-capitalists to favor the capitalist
corporation as the primary model of ownership and economic activity, and to assume that any future free market society will
be organized on the pattern of corporate capitalism. As one alternative to such forms of organization, Hobbs proposed "stateless
common property," with usufructory right possessed by the inhabitants of a given area, coming about "without any prior
formal agreements incorporating a potentially imprecise owning group." He gave, as historical examples of such kinds of
ownership, public rights of way, or villagers' rights of commons in a field, well or wood. (1) The questions he raised are
applicable on a much broader scale.
Libertarians and anarcho-capitalists, in calling for the abolition of state property
and services, typically call for a process of "privatization" that relies heavily on the corporate capitalist model of ownership.
The property of the State should be auctioned off and its services performed by, say, GiantGlobalCorp LLC. And the picture
of the future market economy, so far as business enterprise is concerned, is simply the present corporate economy minus the
regulatory and welfare state--an idealized version of Nineteenth Century "robber baron capitalism." The former tendency ignores
other alternatives, equally valid from a free market anarchist perspective, such as placing government services like schools
and police under the cooperative control of their former clientele at the town or neighborhood level. And the latter tendency
ignores the issue of state capitalism, of the extent to which the giant corporations that have received the lion's share of
their profits from the State can be regarded either as legitimate private property or the result of theft.
this aesthetic affinity for the corporation as the dominant form of economic organization, Karl Hess denounced those who simply
identified libertarianism "with those who want to create a society in which super capitalists are free to amass vast holdings..."
Writing in The Libertarian Forum in 1969, Hess argued instead that
Libertarianism is a people's movement and a liberation
movement. It seeks the sort of open, non-coercive society in which the people, the living, free, distinct people, may voluntarily
associate, dis-associate, and, as they see fit, participate in the decisions affecting their lives. This means a truly free
market in everything from ideas to idiosyncracies. It means people free collectively to organize the resources of their immediate
community or individualistically to organize them; it means the freedom to have a community-based and supported judiciary
where wanted, none where not, or private arbitration services where that is seen as most desirable. The same with police.
The same with schools, hospitals, factories, farms, laboratories, parks, and pensions. Liberty means the right to shape your
own institutions. It opposes the right of those institutions to shape you simply because of accreted power or gerontological
Hess decried the cultural tendency of too many libertarians to defend existing rights of private property,
regardless of how it was acquired, and to assume that those presently on top in the state capitalist economy were simply collecting
the rewards of "past virtue."
Because so many of its [the libertarian movement's] people... have come from the right
there remains about it at least an aura or, perhaps, miasma of defensiveness, as though its interests really center in, for
instance, defending private property. The truth, of course, is that libertarianism wants to advance principles of property
but that it in no way wishes to defend, willy nilly, all property which now is called private.
Much of that property
is stolen. Much is of dubious title. All of it is deeply intertwined with an immoral, coercive state system which has condoned,
built on, and profited from slavery; has expanded through and exploited a brutal and aggressive imperial and colonial foreign
policy, and continues to hold the people in a roughly serf-master relationship to political-economic power concentrations.
this situation, Hess called for creative libertarian analysis, confronting issues of "the revolutionary treatment of stolen
"private" and "public" property in libertarian, radical, and revolutionary terms" (including, for example): "Land ownership
and/or usage in a situation of declining state power"; "Worker, share-owner, community roles or rights in productive facilities....
What, for example, should happen to General Motors in a liberated society?"; and the injustice of freeing slaves and serf
without addressing their property rights in the land of their former owners (i.e. "forty acres and a mule").
spirit of Hess's comments, I will examine alternative libertarian models for "privatizing" government property and services,
and attempt to apply the same principles by analogy to the issue of how to deal with current "private" beneficiaries of state
capitalism in a future free market society. In so doing, I should first make clear that I am not an anarcho-capitalist, as
are most of the regular visitors to ASC, but an individualist anarchist influenced mainly by Tucker.
Means of "Privatizing" State Property
The anarchist caucus of the Young Americans for Freedom, in their 1969 manifesto
The "Tranquil" Statement (its authors included Karl Hess), expressed sympathy with radical students who had occupied their
college campuses. In response to right-wing denunciations of such crimes against "private property," the Statement remarked
the issue of private property does not belong in a discussion of American universities. Even those universities
that pass as private institutions are, in fact, either heavily subsidized by federal grants, or, as in many cases, supported
by federal research funds. Columbia University is an excellent example. Nearly two thirds of Columbia's income comes from
governmental rather than private sources. How, then, can anyone reasonably or morally consider Columbia University to be private
[?].... And in so far as it is public (government owned) property (that is, stolen property), the radical libertarian is justifiedin
seizing that property and returning it to private or communal control. This, of course, applies to every institution of learning
that is either subsidized by the government or in any way aiding the government in its usurpation of man's basic rights. (3)
corporations "in any way" receiving government subsidies, of course, might be excused for seeing ominous potential in this
Murray Rothbard, taking the same position in an editorial in The Libertarian, ridiculed the "grotesque"
Randian argument that Columbia was "private property," and that the students therefore were in violation of these "sacred
Apart from the various specific tie-ins with the State which the Columbia rebels were pinpointing..., nearly
two-thirds of Columbia's income comes from governmental rather than private sources. How in the world can we continue to call
it a private institution?...
To defend the "private-property" rights of "frankly state-owned" universities was,
self evidently, absurd. In such cases,
government property is always and everywhere fair game for the libertarian;
for the libertarian must rejoice every time any piece of governmental, and therefore stolen, property is returned by any means
necessary to the private sector.... Therefore, the libertarian must cheer any attempt to return stolen, governmental property
to the private sector: whether it be in the cry, "The streets belong to the people", or "the parks belong to the people",
or the schools belong to those who use them, i.e. the students and faculty. The libertarian believes that things not properly
owned revert to the first person who uses and possesses them, e.g. the homesteader who first clears and uses virgin land;
similarly, the libertarian must support any attempt by campus "homesteaders" the students and faculty, to seize power in the
universities from the governmental or quasi-governmental bureaucracy. (4)
Rothbard argued that "the most practical
method de-statizing is simply to grant the moral right of ownership on the person or group who seizes the property from the
State." This would entail, in most cases, treating the State's property as vacant or unowned, and recognizing the homestead
rights of those actually using it. In the case of "public" universities,
the proper owners of this university are
the "homesteaders", those who have already been using and therefore "mixing their labor" with the facilities.... This means
student and/or faculty ownership of the universities. (5)
This principle of homesteading State property by workers or clients
is amenable to wide application. Larry Gambone has proposed "mutualizing" public services as an alternative to corporate privatization.
This means decentralizing control of, say, schools, police, hospitals, etc., to the smallest feasible local unit (the neighborhood
or community) and then placing them under the democratic control of their clientele. For example, the people of a town might
abolish the city-wide school board, and place each school under a board of selectmen responsible to the pupils' parents. Ultimately,
compulsory taxation would be ended and the schools run on user fees. In practical terms, mutualizing is more or less equivalent
to reorganizing all the State's activities as consumer cooperatives. (6)
Privatization in Post-Communist
Murray Rothbard and Hans Herman Hoppe have attempted to apply the same homestead principle to state property
in post-communist societies.
Although Rothbard's assessment of the libertarian potential of Yugoslavia's combination
of worker self-management and market socialism was over-optimistic and naive, his statement of principle for post-Communist
societies was quite sound: "land to the peasants and the factories to the workers, thereby getting the property out of
the hands of the State and into private, homesteading hands." (7)
The fall of the Soviet empire and its satrapies
in 1989-91 transformed this from a theoretical to a very practical issue. The course generally followed in the ensuing period
involved issuing equal, marketable shares in State enterprises to all citizens, and then allowing subsequent ownership to
develop through the buying and selling of such shares. Rothbard proposed, instead, a "syndicalist" solution:
would be far better to enshrine the venerable homesteading principle at the base of the new desocialized property system.
Or, to revive the old Marxist slogan: "all land to the peasants, all factories to the workers!" This would establish the basic
Lockean principle that ownership of owned property is to be acquired by "mixing one's labor with the soil" or with other unowned
resources. Desocialization is a process of depriving the government of its existing "ownership" or control, and devolving
it upon private individuals. In a sense, abolishing government ownership of assets puts them immediately and implicitly into
an unowned status, out of which previous homesteading can quickly convert them into private ownership. (8)
made a similar proposal specifically regarding East Germany, albeit more hesitantly and with more qualifications. (9)
course, the term "syndicalist" was used mainly for color, since Rothbard and Hoppe were both adamant that such "syndicalist"
property be devolved to individual workers and peasants as marketable shares, and not to the members of production units collectively.
The ideal, as Hoppe expressed it, would be for share-ownership and labor to become separated as quickly as possible. But there
is no reason in principle, as Carlton Hobbs showed in regard to the commons, that such production units should not remain
the joint and indivisible property of their labor force, with a usufructory right in the wages and pensions derived from it.
Such a system would by no means necessarily prevent a market in factors of production. Workers' collectives would buy new
capital equipment on the market; but their property claims to any industrial production unit would be collective so long as
the enterprise maintained organizational and spatial continuity.
Although Rothbard made no such qualification in his
1969 statement (written, after all, at the height of his attempt at a coalition with the New Left), he and Hoppe agreed two
decades later that an attempt should be made to restore state property to its original legitimate owner before confiscation,
if records of ownership still existed. Hoppe attached similar caveats to "syndicalist" privatization of post-communist state
industry in Democracy: The God that Failed. (10) Rothbard and Hoppe agreed that such restoration would be easier in
the case of land, and would be easier in the case of Eastern Europe (where the expropriation had taken place only forty years
earlier) than in the Soviet Union. Rothbard stressed, however, that such a restoration would be virtually impossible in the
case of manufacturing and capital goods, since most of the industrial economy had been developed under state ownership. So
industry was best placed under the control of workers.
Practical Difficulties of Corporate Capitalist Privatization
of State Property
Privatization of state property, as it is actually carried out is just another form of state
capitalist subsidy. In the first state, transnational capital promotes infrastructure projects in Third World countries that
are essential to returns on Western capital in those countries, as a way of subsidizing foreign investment there at the expense
of native taxpayers. Next, the resulting debt load is used to discipline the country's government into carrying out policies
favorable to Western capital. And finally, under the "structural adjustment" regime imposed by the IMF and World Bank, the
country is forced to sell assets (previously paid for in the sweat of the native producing classes) to Western capital at
pennies on the dollar. Sean Corrigan ably described the phenomenon in an article for LewRockwell.com:
Does he not
know that the whole IMF-US Treasury carpet-bagging strategy of full-spectrum dominance is based on promoting unproductive
government-led indebtedness abroad, at increasingly usurious rates of interest, and then - either before or, more often these
days, after, the point of default - bailing out the Western banks who have been the agents provocateurs of this financial
Operation Overlord, with newly-minted dollars, to the detriment of the citizenry at home?
Is he not aware that, subsequent
to the collapse, these latter-day Reconstructionists must be allowed to swoop and to buy controlling ownership stakes in resources
and productive capital made ludicrously cheap by devaluation, or outright monetary collapse?
Does he not understand
that he must simultaneously coerce the target nation into sweating its people to churn out export goods in order to service
the newly refinanced debt, in addition to piling up excess dollar reserves as a supposed bulwark against future speculative
attacks (usually financed by the same Western banks lending to their Special Forces colleagues at the macro hedge funds) -
thus ensuring the reverse mercantilism of Rubinomics is maintained? (11)
Privatization also commonly involves a
phenomenon known as "tunnelling," in which politically connected elites have an advantage in acquiring rights to the former
state property. For example, besides Western capital, the other group that had funds available for buying up former Soviet
enterprises was the Party nomenklatura, which had accumulated ill gotten gains from decades of graft and corruption. (Sort
of like the good ol' boy sheriff who uses labor from the county work farm to staff his plantation, but on a much larger scale.)
of "Private" Property of Statist Ruling Class
But the line of argument so far applies not only to property currently
under formal state ownership, but to nominally "private" property acquired through statist means, or to enterprises built
with profits derived predominantly through state intervention. In the comments above by Rothbard and Hess on occupations by
student demonstrators, the property claims of ostensibly "private" universities funded mainly by the state were treated as
deserving of contempt. They were as liable as outright state property to being treated as "unowned" and opened to "homesteading"
by the occupiers, the students and/or faculty.
Rothbard applied the same principle to private corporations that derived
most of their revenues from the State. Nominally private universities like Columbia that got most of their funds from the
taxpayer, private "only... in the most ironic sense," were as deserving of confiscation and homesteading as those owned
by the State.
But if Columbia University, what of General Dynamics? What of the myriad of corporations which are integral
parts of the military-industrial complex, which not only get over half or sometimes virtually all their revenue from the government
but also participate in mass murder? What are their credentials to private property? Surely less than zero. As eager lobbyists
for these contracts and subsidies, as co-founders of the garrison state, they deserve confiscation and reversion of their
property to the genuine private sector as rapidly as possible. (12)
To treat gross revenue as the main criterion, as
Rothbard did, is probably too simple. The percentage of a firm's profit margin that has come from the state in past years
is a more relevant standard, since the present size and equity of a corporation is a result of its past accumulation. In the
case of the United States, the highway-automobile complex and the civil aviation system were vitual creations of the State.
Large civilian jet airliners were possible only because of federal spending on heavy bombers. C. Wright Mills pointed out
in The Power Elite that the value of plant and equipment expanded by roughly two-thirds during WWII, mostly at taxpayer
expense. The electronics industry was built largely from Pentagon R&D money through the 1960s; and had not the first supercomputers
been bought by the U.S. government, it is unlikely that the industry would have been able to reach the takeoff point for reducing
costs to make mainframe computers economical for the private sector. And don't forget the role of the Pentagon in creating
the infrastructure of the worldwide web....
But what of non-monetary benefits from the state, like the ability to charge
monopoly prices thanks to State-enforced patents? Much of the cartelization of industry in the late nineteenth and early twentieth
century was achieved by exchange of patent rights (e.g. between GE and Westinghouse). The U.S. chemical industry achieved
world prominence only after the U.S. government seized German patents during WWI and gave them away to the leading chemical
firms. And what of the total effects on the rate of accumulation owing to the State's intervention in the labor market? (This
latter would include restrictions on the right to organize like the Railroad Labor Relations Act or Taft-Hartley; restrictions
on free banking that keep interest rates artificially high, limit working class access to credit, and maintain debt as an
instrument of discipline.) And then there's the collective benefit of primitive accumulation in the early modern period (by
which peasants were robbed of their traditional property rights in the land and turned into tenants at will by the state),
the role of mercantilist force in creating the "world market," the near-totalitarian controls on the population during the
British Industrial Revolution, the massive subsidies to internal improvements, etc.
Taking these things together, it
requires no stretch of the imagination to treat virtually the entire large manufacturing sector as a creation of the corporate
Landlordism and the State
Jerome Tucille once contrasted legitimate libertarian principles
of land ownership with "anarcho-land grabbism":
Free market anarchists base their theories of private property rights
on the homestead principle: a person has the right to a private piece of real estate provided he mixes his labor with it and
alters it in some way. Anarcho-land grabbers recognize no such restrictions. Simply climb to the highest mountain peak and
claim all you can see. It then becomes morally and sacredly your own and no one else can so much as step on it. (13)
course, this Lockean labor standard of appropriation raises all kinds of complicating issues. Just how much "labor" is necessary
to appropriate a given piece of land? Does it require direct occupancy and cultivation, or is simply circumscribing it (on
foot? in an SUV?) and marking it off sufficient admixture of labor? If the latter, is there a time limit? Where do we stop
short of recognizing the right of a pope to draw a line across the map of South America and apportion it between Spain and
Portugal? On the other hand, if some tangible act of working or altering the land is required, it would seem that the amount
of land an individual could appropriate would bear some definite relation to the amount he could personally cultivate. In
this latter case we are approaching something like the mutualist "occupancy and use" standard for appropriation, which is
merely an alternative, non-Lockean system of private property rules (and one to which this author holds).
inadvertently pointed to the close parallel between the State's robbery by taxation, and the robbery involved in much of what
is called "rent":
In those days the upper classes, from the king to all his cronies, routinely engaged in extortion.
They disguised this, however, with the phony claim that everything belongs to the king and his cronies. Yes, monarchs and
those who rationalized monarchy spun this fantasy and managed to sell it to the people that they where the rightful owners
"of the realm," that they had a "divine right" to rule us. This way when the bulk of the country went to work on the farm
or wherever, they had to pay "rent" to the monarch and his cronies.
Of course, if I live in your apartment, I pay you
rent. It is your apartment, after all, so you have it coming to you. But what if you got your apartment by conquest, by robbing
a bunch of people of what belongs to them? That is mostly how the monarchs got to rule the realm, by conquest. By all rights
it is the folks who were working in the realm -- on the land and elsewhere -- who actually owned that realm, the monarchs
being the phony, pretend owners, nothing better. But since they managed to bamboozle a great many powerless folks into believing
that they did own the realm, the "rent" had to be paid. (14)
Although there are significant and fundamental differences
between mutualist and Lockean (and Geoist, for that matter) theories of land ownership, the issue is beyond our scope here.
What is really important to note is the extent of agreement between these rival theories as to the illegitimacy of much of
present nominally "private" landlord property. The vast tracts of land claimed by present-day land barons are illegitimate
by any plausible libertarian standard, including the Lockean rule of appropriation. In early modern Europe, the landlord class
acted through the State to turn its "ownership" in mere feudal legal theory into a modern right of absolute ownership, and
in the process robbed the peasants who had occupied and tilled the land from time out of mind of their very real traditional
rights in the land. This process was followed by rack-rents or by mass eviction and enclosure. In the New World, the state
acted to preempt access to empty or nearly empty land, by claiming it for the "public" domain. This was followed by restrictions
on access by individual homesteaders, coupled with massive land grants to land speculators, railroads, mining and logging
companies, and other favored classes. The result was to limit the average producer's independent access to the land as a means
of livelihood, to thereby restrict his range of independent alternatives in seeking a livelihood, and thus force him to sell
his labor in a buyer's market.
In virtually every society in the world where a few giant landlords coexist with a peasantry
that pay rent on the land they work, the situation has its roots in some act of past robbery by the State. The phenomenon
goes all the way back to the Roman Republic, as recounted by both Livy and Henry George, in which the patricians used their
access to the State to appropriate the common lands and reduce the plebians to tenancy and debt slavery. As Albert Nock wrote,
"economic exploitation is impracticable until expropriation from the land has taken place." (15)
is no need for the libertarian right to be so closely wedded to the corporation as an ideal organizational form. A corporate
economy on anything like the current pattern does not by any means logically follow from the principles of non-coercion and
free market exchange. A free market society that makes room for the vision of, say, Colin Ward and Ivan Illich, instead of
just Uncle Milty and John Galt, would be a lot more humanly tolerable.
Among non-libertarians, libertarianism is often
perceived as just a form of Republicanism that's soft on drug laws. In many cases, this is unjust. The libertarian movement
includes a very large petty bourgeois, populist strand that goes back to Warren and Tucker and the other individualists, and
has been passed down through the hands of Nock and Mencken. And most Rothbardians adhere to principles that would mean the
destruction of most big business as it exists today.
But in too many cases, the perception is unfortunately quite just.
A large segment of the libertarian movement is a glorified apology for those currently on top: for big business against small
business, consumers and labor; corporate agribusiness against organic farmers; for oil, timber and mining companies who want
access to government land with politically determined leases; and for the settlers in Third World pariah states or former
pariah states like Israel and Zimbabwe at the expense of the native dispossessed. Or in the words of Cool Hand Luke, "Yeah,
them pore ole bosses need all the help they can get."
If libertarianism continues to be perceived in this way, as an
elaborate justification of sympathy for the haves against the have-nots, we don't stand a snowball's chance in hell of ever
achieving victory. But if we act on the principles of non-aggression and non-coercion, even when those principles are harmful
to big business, we will have the basis for a genuinely libertarian coalition of left and right that can storm the citadel
of the State. I hope I have provided some concrete examples of how these principles can be applied in response to current
1. "Common Property in Free Market Anarchism: A Missing Link" http://www.anti-state.com/article.php?article_id=362>) 2. "Letter From Washington: Where Are The Specifics?" The Libertarian Forum
June 15, 1969 p. 2
3. In Henry J. Silverman, ed., American Radical Thought: The Libertarian Tradition (Lexington, Mass.:
D.C. Heath and Co., 1970), p. 268.
4. "The Student Revolution," The Libertarian (soon renamed The Libertarian Forum) May
1, 1969, p. 2.
5. "Confiscation and the Homestead Principle," The Libertarian Forum June 15, 1969 p. 3
7. "Confiscation" p. 3 8. "How and How Not to Desocialize," The Review of
Austrian Economics 6:1 (1992) 65-77
9. "De-Socialization in a United Germany" The Review of Austrian Economics 5:2 (1991)
10. Democracy, the God that Failed (New Brunswick and London: Transaction Publishers, 2002) pp. 124-31
Can't Say That!" August 6, 2002. http://www.lewrockwell.com/corrigan/corrigan13.html>
12. "Confiscation" p.3
13. "Bits and Pieces," The Libertarian Forum November
1, 1970, p. 3
14. Tibor R. Machan, "What's Wrong with Taxation?" http://www.mises.org/fullstory.asp?control=1103>
15. Chapter 2, Our Enemy, the State http://www.barefootsworld.net/nockoets2.html>