All Commentary
Tuesday, February 1, 1966

Property and Poverty

And one of the greatest incentives toward individual effort is the institution of private property.

If human beings were constituted the way communist or socialist doctrine contends they ought to be for perfect implementation of the formula, “from each according to ability, to each according to need,” then such terms as property and poverty would lose all mean­ing and might be expected to drop from use. Nor would there be a need for such a word as individuality to signify marks of distinction among equally characterless com­rades.

Property, then, must be a dis­tinguishing feature in any society where the dignity of the individual is recognized and respected — pri­vate property, under individual ownership and control, restricted only to the extent that such per­sonal use might injuriously in­fringe upon the comparable dig­nity and rights of other human beings. In other words, respect for the dignity of an individual presumes that individual to be responsible for the development and the use of his faculties, his qualities, his properties. Private ownership of property presumes a personal responsibility and lia­bility for the use of that property — property being one aspect of the character of an individual. Re­spect for the dignity of an indi­vidual presumes his property to be a vital part of his life — his right, and his responsibility.

To respect the dignity of an in­dividual is not to expect perfection of that individual; nor could any­one who presumes himself to be perfect honestly respect the dig­nity of anyone at all different from himself. “Perfect” men are bound to organize utopias and try to manage the inmates. Only im­perfect individuals can be ex­pected to tolerate either real or imagined imperfection in others and live together with mutual re­spect and human dignity. So, to practice freedom is to tolerate mistakes, not in the sense of in­viting or cultivating error, but as one of the prices to be paid in the endless search for improved ways and means toward meeting man’s rising expectations.

Freedom of the individual to make his own mistakes in the use of his life and his property places squarely upon him an unlimited liability for the consequences. To act in ways that trespass against the lives and properties of others is to invite claims for damages and punitive reactions from them. Governments are constituted and laws enacted among men to iden­tify and suppress those abuses of freedom that deprive others of their freedom. But it is neither necessary nor desirable to pass laws to prevent mistakes at one’s own expense.

The Right to Fail Should Not Be OutlawedThe direct victim of his own mistake ought to be afforded every opportunity to bear the burden and learn from it.

Such laws are unnecessary, be­cause the direct victim of his own mistake ought to be afforded every opportunity to bear the burden and learn from it. And he should need no further incentive to avoid similar mistakes in the future —no law to tell him to stop hurting himself. To the extent that poverty results from personal mistakes, it serves as an incentive to correct or avoid such mistakes and should not be outlawed.

Not only are such laws unneces­sary, but they are undesirable. With our capacity for hindsight, the following may not now seem true; but, at the time, almost every great discovery, break­through, invention, or a bit of prog­ress toward civilization must have seemed to the vast conservative majority of his contemporaries to have been a mistake on the part of the innovator. If he were different, he must be wrong! So, society’s laws to prevent mistakes almost certainly would be aimed to sup­press differences, and thus, in­advertently would stifle progress.

Let there be no mistaking what has just been said. A society with laws to preclude mistakes by in­dividuals is a collectivistic form of society that elevates the group above the individual and lacks respect for the dignity and the life of the individual human be­ing. And a most obvious charac­teristic of such a society is com­mon ownership or government control, rather than private owner­ship and control of economic goods and services. Laws and govern­ment programs to abolish or al­leviate poverty, regardless of the good and honorable intentions of their sponsors, must be recognized and counted as laws to prevent mistakes or to relieve the individ­ual of the consequences of his mis­takes. Tending in that same direction are certain features of our bankruptcy laws and the laws af­fording limited liability to indi­vidual participants in corporate and cooperative business ventures and to the members of labor unions.

Any law that relieves any in­dividual of the consequences of a mistaken use of his life or his property must necessarily and at the same time at least partially deny him and other individuals the benefits of the wise and judi­cious use of their faculties and properties. This encourages irre­sponsible human action and re­sults in the loss of self-respect as well as respect for the dignity of one’s fellow man. Herein lies the great threat and harm of com­pulsory collectivism among men, that it diminishes the incentive of every individual involved to achieve his greatest potential as a human being.

Compulsory Programs Have Failed

The countercharge, of course, must be faced: that the intent of compulsory collectivism is quite the opposite, that the objective of sharing the wealth is to give the poor individual a greater chance than he might otherwise have had. However, the results do not in practice, and cannot, in theory, measure up to that laudable aim.

History profusely records the failure of compulsory programs to alleviate poverty. The ways of identifying the poverty problem have varied, as have the details of the coercive methods applied to­ward its solution. But perhaps the most common manifestation of poverty has been hunger and the threat of starvation — a population in excess of the available food supply. And the most common manifestation of the proposed compulsory cure has been “the man on horseback,” some aristo­cratic ruler presumed able to plan and manage the lives of “lesser” human beings. Another distin­guishing feature of such societies has been the classification of in­dividuals according to status or caste in some form of master-slave arrangement. And closely re­lated to this classification of peo­ple has been the concentration of property under the control of the ruler and his court.The dignity of man has been denied

In other words, when human poverty has been considered pri­marily in terms of hunger, star­vation, and other physical needs of masses of people, the customary “cure” has involved “Superman,” or a small ruling clique of super­men, managing the great body of mankind as though these people were simply a number of mindless ordinary animals constituting a useful herd; the dignity of man has been denied.

A Faulty Solution

No dream should have been necessary under the rulership of the Pharaoh’s of ancient Egypt to foresee famine threatening such a slave society. But wise indeed would have been an inter­preter of dreams in those days who could have known that the voluntary transactions of free men in a free market, with private ownership and control of scarce goods and services, might afford a solution to the problems of chronic and acute surpluses and shortages. For all Joseph knew, the only cure for too much gov­ernment intervention was more intervention, planning, and con­trol. To be saved from starvation by that arrangement was to be further enslaved to the Pharaoh.

The early history of the Ply­mouth Colony in the New World affords further evidence of the disastrous consequences of collec­tive treatment of the poverty problem. The first years of com­munal effort, pooling the harvest and sharing “according to need,” were marked by dissension, dearth, and death. Fortunately, the solution was to try private ownership of the land and the fruits of each owner’s labor; and hunger and famine have been un­known in the land since that change.

In his 1869 essay on “The Famine of 1770 in Bengal,” John Fiske attributed the severity of the famine to the prevailing laws prohibiting all speculation in rice. In this, as in earlier and also in subsequent famines that have periodically plagued so much of the Orient from time immemorial, governments have intervened with price controls, rationing, and simi­lar restraints and compulsions. Always, the justification is that this is “for the good of the peo­ple.” Always, the consequence is “people control,” as if they were animals — and famines have pre­vailed to this day.

William Henry Chamberlin re­minds us that “the serious famines of the twentieth century, notably in Russia and Communist China, must be attributed in their extent and severity to the agrarian re­form efforts and other manifesta­tions of compulsory collectivism on its way to “the classless society.” The darkest cloud on the horizon of man today is the inevitability of famine on a scale previously undreamed, if popula­tions continue to expand at pres­ent rates in countries such as Rus­sia, Red China, India, Cuba, and others where private property is subject to arbitrary governmental expropriation and individuals are denied their rights of entry for voluntary exchange in the open competitive market.

Shakespeare caught the essence of the problem of poverty in this passage in Othello:

Who steals my purse steals trash; ’tis something, nothing:
‘Twas mine, ’tis his, and has been slave to thousands;
But he that filches from me my good name
Robs me of that which not enriches him
And makes me poor indeed.

In other words, the concept of private property is quite mean­ingless unless there be respect for the dignity — the good name — of the individual human being. Poor indeed is the individual who counts for nothing in terms of the well-being of the collective. Yet, if there be no respect for private property, neither is there within such a society any meaningful measure of poverty. And even the mass murder of millions of kulaks through man-made famine can be passed off as a necessary detail in communism’s march toward “progress.”

From a strictly economic point of view, poverty might be con­strued as the scarcity of a given resource relative to the demand for it. In other words, the price of a given item is beyond the reach of certain potential custom­ers. But this is only another way of saying that the limited resour­ces of such potential customers —their pennies, their services, or whatever marketable items they might, in turn, have to offer — are priced beyond the reach of so-called suppliers. For it must be remembered that in the market economy the customer, for one thing, is bound to be the supplier of another and vice versa. If Hen­ry Ford, for instance, had held the world’s supply of automobiles at prices beyond the means of all customers, it might have been con­tended that Henry Ford was a victim of poverty in that he could not — or would not — afford to buy the things others were willing to offer in exchange for his auto­mobiles.

The fact, of course, is that Mr. Ford could and did “buy” what customers offered for his cars, the result being a “nation on wheels.” His genius was in his capacity to mass produce for the masses, through the operation of the laws of supply and demand and price in the competitive market. And the “poor” customers of America handsomely rewarded Mr. Ford for that contribution toward the alleviation of their poverty. Mes­srs. Woolworth, Kresge, Penney, and countless others similarly at­tained fortunes through thus ca­tering to the wishes of property‑respecting consumers according to the free market method of wag­ing war on poverty. The result has been referred to as the “affluent private sector” of the economy by those who cannot or will not see that the public (government) sector inevitably will be starved — even if they themselves were put in charge of other people’s problems.

Poverty, then — in this sense of the term — is the great persuader as well as the great conservator, the incentive each of us has either to hoard or to bring to market those scarce and valuable resour­ces that others want in exchange for their own goods or services. Poverty and property are closely related, personal, private condi­tions, meaningful and applicable only to individual human beings. Those who would use their rela­tive poverty to justify seizure or denial of the property rights of others thereby revert from man to animal, destroy their own ac­cess to the market, and commit themselves to the authoritarian ways that always have spelled starvation.

Where Do We Stand?

In the light of the foregoing observations, how goes the real war on poverty in the United States of America and in the world today? In Russia, in Communist China, in India, in Cuba, and in most other totalitarian economies, the threat of starva­tion is too near to admit any other answer. But do not the to­talitarian measures rampant in the United States and elsewhere in the “free world” portend that same end?

What else can be expected from these government-enforced grants of special privileges for labor, and agriculture, and one pressure group after another? What can be the hopeful end of the regres­sive Social Security taxes that already exceed the progressively graduated personal income taxes of at least half of the families in America? What is the state of health of those now relieved of per­sonal responsibility for their medi­care? Is a man’s home still his cas­tle under the threat of eminent domain to achieve the ends of the pub­lic housing, urban renewal, area re­development, flood control, and re­lated efforts at group salvation?

Not even in America can we hope to escape the inevitable star­vation that has always resulted from governmental subsidization of poverty — unless we turn back to the defense of private property and the open competition of the market, based upon respect for the dignity of every human be­ing.


  • Paul L. Poirot was a long-time member of the staff of the Foundation for Economic Education and editor of its journal, The Freeman, from 1956 to 1987.