Tag Archives: Cantillon

QUESTIONS STILL IN NEED TO BE SOLVED (VI) PREDICAMENT OF PRIVATE PROPERTY

An English translation by Bernard Bouvet of the post  “QUESTIONS À RÉSOUDRE (VI) DILEMMES DE LA PROPRIÉTÉ PRIVÉE”.

Private property, as we saw previously, allows you or I to selfishly take advantage of our planet’s generosity towards us and claim ownership of what she bears within her or what she produces spontaneously thanks to the sun, the wind, the rain, and derive a rent from it.

The impact of such an institution is quite obviously unfair. The French Revolution, nonetheless, stopped at its edge. The 1789 Declaration of the Rights of Man and of the Citizen even affirms: “Property being an inviolable and sacred right, no one can be deprived of private usage, if it is not when the public necessity, legally noted, evidently requires it, and under the condition of a just and prior indemnity.”

Gide and Rist comment on the revolutionaries’ attitude in this regard: “The Revolution removed the benefits of caste; it abolished primogeniture (the rights of the first born) which consecrated the children’s’ inequality within the family. But it upheld individual property rights – property rights which confer the most unjust of privileges, the right for the owner to “levy a premium on another’s labour”” (1909 : 247).

What justifies that tolerance towards private property, when no principles can and when its inherited redistribution becomes arbitrary after a few generations?

Private property, according to its proponents, at the very front the Physiocrats such as Richard Cantillon (1680-1734), François Quesnay (1694-1774), or Turgot (1727-1781), stimulates production and wealth creation.

Private property, supposedly, optimally brings out the best in people, first to their own benefit, but above all, in their view, to the benefit of their own children. This the prodding force: the care of their offspring is the motivation that is proposed that brings out the best in people.

But right then the Saint-Simonians protest: admitting that private property permits, to a certain extent, a production’s optimisation thanks to the motivation it provides, inheritance, as far as it is concerned, is counterproductive: the benefits of being productive are undermined if property is transmitted according to the “randomness of birth.”

On this topic Gide and Rist remark with a kind of fatalism: “One can justify inheritance only if one sees it as a strong excitant for the fathers to accumulate capital, – or again, for lack of a rational method, one cannot argue against randomness of birth any more than any other distribution’s method.” 190 251)

Private property officialises the spoliation of the community. Inheritance exaggerates its arbitrariness. Attempts to abolished it have so far proved at best inconclusive, at worst disastrous. Mother Earth has shown tremendous patience until now towards such little idiosyncrasies, but certainly the time is approaching when she will judge enough has been given.

QUESTIONS STILL IN NEED TO BE SOLVED (I) ARE ALL EARNINGS TRULY DESERVED?

An English translation of my post QUESTIONS À RÉSOUDRE (I) TOUS CEUX QUI SONT RÉMUNÉRÉS LE MÉRITENT-ILS VRAIMENT?

There is a question that neeeds to be answered at all costs; 19th century thinkers have devoted much thought towards its solution. Here it is: when we consider rent obtained by a landowner or by the owner of mineral ore extracted from the ground, interest obtained by the owner of capital also known as capitalist, the profit gained by an industrialist or entrepreneur, and the wages paid to a worker, is one of these incomes unjustified and thereby undeserved?

The only point of agreement reached so far is the following: wage-earners truly deserve their earnings, without a shred of a doubt in any case for that part of those wages needed for mere survival. Workers provide their labour and it goes without saying that they should for their own good turn up at work the following day; they therefore deserve without any dispute wages sufficient to survive until tomorrow. For all other types of earnings unfortunately, the answer to that question remains desperately out of reach.

Karl Marx (1818-1883) took up this question from the same point of view as David Ricardo (1772-1823). He simplified the problem radically by asserting that the only justified income are wages: value is created by work and by work only, therefore any other income allocated to other interested parties, such as land owners, “capitalists” as holders of capital, or industrialists as entrepreneurs is undeserved. Marx calls “spoliation” any payment to participants other than workers.

Other 19th century authors, essentially socialist and anarchist thinkers such as Sismondi (1773-1842) or Proudhon (1809-1865), following on the tracks of 18th century economists such as Richard Cantillon (1680s-1734), François Quesnay (1694-1774), or Adam Smith (1723-1790), were of a different opinion. For them several types of advances participate in the production process and each of them deserves as its reward a part of the newly created wealth (*). Thus income ensuing from property rights was according to some authors a reward for work previously performed – sometimes several centuries prior – by some forefather of the current beneficiary; profit accruing to the entrepreneur was a reward for management and supervision of the production process; lastly, interests and dividends collected by the capitalist were compensation for relinquishing control of the loan amount until later.

A solution to such a baffling conundrum remains far from obvious: newly created wealth obviously results from the combination of a number of elements but how can one assess the true contribution of every one of them? The only sure thing is that lacking an unambiguous answer to this question, throughout the ages and until now only the power balance between parties has determined how much every party ends up getting at the end of the day.

(to be continued…)

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(*) See for example what I have to say about the splitting of “parts” in the case of an african dugout canoe used for sea fishing in Le prix 2010 : 145-149