Lee recently wrote a short post about property rights that led to a lengthy comment thread, which he followed up on here. This has led me to several different trains of thought, which I might elaborate on later. But for now I’ll just comment on the subject of how property was obtained in the first place. In the first post, Lee notes that “the currently existing distribution of property rights (is) in part a result of massive state intervention,” which makes it difficult to decide who, in a libertarian schema, holds property justly.

I think the issue is actually bigger than that: a lot of property today is actually owned by governments. This is especially true if you look outside the U.S. The Chinese government, despite no longer being formally communist, owns a whole sector of the economy known as state-owned enterprises; it also still builds most of the new buildings, and leases them to their occupants. But perhaps a more telling example is Saudi Arabia. It is certainly not communist, but is a very traditional monarchy, apparently following the theory that the House of Saud basically owns the country. Not only does the nation’s very name say that, but the government owns the oil, which amounts to 25% of the world’s proven reserves. As such, the Sauds basically run OPEC, and so in turn have a major hand in setting the price of oil all over the world. The government does not generally do this by force; instead, if another OPEC country violates production limits, Saudi Arabia can crank up its own production to the point of unprofitability. Because it has so much oil, it can do that without blinking for longer than any other country.

This may seem bullying, but corporations do that sort of thing all the time. Right now, Amazon.com is selling e-books at a loss so it can gain market share, which it can afford because it’s a giant. So really, who’s to say the Sauds don’t own all that oil, and therefore can’t run the world market? If it doesn’t belong to them, who does it belong to? And what, exactly, does that make them — a government or a corporation?

I think you see what I’m getting at here: if you recognized the right of all existing property owners, you would not create a libertarian utopia but simply freeze the status quo in place. A government like America’s could shrink through the electoral process, but ironically, those governments with the most complete control over their economies — that is, the ones that have effectively become giant corporations — would be untouchable.

Citizens of such a country could, I suppose, rise up and demand control over the judicial and military functions of the state, leaving people like the Sauds simply as very wealthy businessmen. It’s difficult to see how that would involve any real devolution of power, however, since the oil revenues would still be paying the soldiers and judges and so on. That is, I suppose, why premodern people didn’t see much difference between politics and economics. Politics is about who controls what territory; where wealth is based on land, the same is true of business.

This is why I said in an earlier post that libertarians actually demand a lot more of government, even as they want it to do less. Monarchs like the Sauds can have self-interests, friends, money, swagger — everything, in other words, that successful businessmen have. A justice system that hands out impartial verdicts based on principles of property rights, and has employees willing to fight and die for them, without asking for more than a civil-servant salary, is actually living the sort of ascetic collectivism that libertarians seem to despise. No wonder they can’t seem to find it in the real world.