In his article „Property: Convention or Right?” (the Mises Review, Volume 8, Number 2, April 2003) David Gordon criticises Liam Murphy’s and Thomas Nagel’s (M&N) argument that private property is a convention defined by the legal system and therefore property and the influence of taxation on this property cannot hold its ground as a baseline for the evaluation of taxation.
Gordon’s main argument against this claim is that property rights are absolute rights, i.e. rights without duties or restrictions, and he tries to show with an example that M&N confuse legal with moral (or absolute) rights. I doubt that he succeeds in his attempt. In this essay I will show that property rights indeed are not absolute but conventional and that therefore Gordon’s argument is pointless. I will show that even Gordon has to accept the fact that property rights are conventions and that this is coherent with libertarian mainstream thinking. I will also show that M&N’s argument for taxation is reasonable and that as long as there is a government (and there has to be a government if we want to live in a civilized and technologically advanced society) taxation is just and not “legalized theft”.
I think it is appropriate to begin with an examination of M&N’s claim. After that I will examine whether Gordon’s perception of their argument is correct or not.
The main idea of M&N is that private property is a legal convention. They say that property rights depend on the system that defines them and taxes are an absolutely essential part of this (legislative) system. Furthermore they assume there would not be property rights if a state did not create them. Without some property rights people could not take part in exchanges of properties or market transactions that are essential for the creation of wealth. ”Without a system of property rights, we would be in Hobbes state of nature, rather than in a civilized and technologically advanced society” (T. Murphy/L. Nagel: The Myth of Ownership (2002), MoO; p.43). So they argue that if the state is a necessary condition of the creation of wealth, it is entitled to a part of this wealth, if not all of it. This means the state can legitimately impose taxes on the people because the wealth they create is not entirely due to them. In the end it is not up to the people what is theirs and what is not. “The idea of a prima facie property right in one’s pretax income –an income that could not exist without a tax supported government- is meaningless” (MoO; p.36)
M&N say the problem to see the validity of this argumentation is that we are born into a society and a social system in which private property is looked upon as normal and guaranteed. It seems to be the most natural thing for us to acquire property and exchange and transfer it. Since private property is kind of a pervasive idea, we almost never think about property and ownership as a convention. M&N think if conventions are sufficiently entrenched, they appear to be natural norms and their conventional nature becomes unseen. This is why we regard property rights as natural laws or absolute rights. M&N call this rather unreflective way of looking on the subject ‘everyday libertarianism’. “The assumption that market outcomes are presumptively just and that tax justice is a question of what justifies departures from that baseline, appears to flow from an unreflective or ‘everyday libertarianism’ about property rights” (MoO; p.15). M&N do not deny the existence or the necessity of property rights, but they refuse the way in which property rights are handled.
The conventional nature of property rights is one cause why we cannot look upon them as a baseline for the evaluation of tax policies. That they are conventions indeed I will show later in this essay.
David Gordon seems to think about property rights as of a Yes-or-No-Thing. As the title of his review “Convention or Right” suggests, he sees no possibility for a right to be a convention. He accepts that “legal rights indeed depend on the specifications of a particular legal system.” (D. Gordon; Property: Convention or Right?) However, he also states that people have moral rights, including property rights, which do not depend on the specification of a legal system and are valid in any situation. He calls them ‘libertarian property rights’.
That the nature of property rights is a conventional one does not mean that we have no property rights and the government can do what it wants to with what we own. It just means that -since without a government we could not own anything at all- we are not entitled to the whole income we receive.
Gordon seems to be afraid that, when property rights are not absolute, the government would take away from him what he considers his property without justification (he would not accept helping the poor as a justification). He thinks that, if it is true what M&N say, namely that property rights are legal conventions and that they are not independent from the legal system and taxes, he has no power over his property anymore.
I think this view is false. M&N argue that private property depends on the legal system and taxes cannot be judged independently of the state that creates the property rights. They do not deny the existence of property rights. They also do not say, that the state ought not to respect those property rights when they are created. What they do say, however, is that there simply are no property rights before their creation through the state. As it creates those rights and with them the possibility to acquire wealth, the state is partly entitled to that wealth.
The main theme of Gordon’s criticism of M&N is that from his point of view M&N reject absolute (libertarian) property rights and therefore property rights in general. He believes that if someone does not accept absolute property rights, then he does not accept property rights at all and thereby is forced to surrender himself to the goodwill and benevolence of the state. I think this is a misperception of him, and that even a radical libertarian like him has to accept the conventional structure of property rights.