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Is Obama a Socialist?

Posted By Don Boudreaux On February 14, 2012 @ 3:20 pm In Law,Property Rights | Comments Disabled

Or, rather more appropriately, is nearly every modern politician (and many a pundit) a socialist?  The answer is no, if by “socialist” is meant someone who advocates government ownership of the means of production.

But suppose that “socialist” instead refers to someone who advocates something akin to the actual type of property law that existed in 20th-century socialist regimes such as the U.S.S.R.  What then?

The following quotation is from Michael Heller’s famous 1998 Harvard Law Review article [1] “The Tragedy of the Anticommons”; in this part, Heller identifies

three elements that distinguished socialist property laws from market legal systems and set the stage for the emergence of an anticommons:

(a) Hierarchy of Property. – Whereas market legal systems tend to dichotomize among types of property (for example, real and personal, or tangible and intangible) and to focus on the scope of individual rights, socialist law categorized property according to the identity of the owner.  Socialist law erected a hierarchy based on the level of protection afforded property held by different owners.  At the top was state socialist property, which received the most protection.  Next came cooperative property, which received similar but somewhat less protection.  Personal property received still less protection….

b) Objects of Socialist Property. – Within the category of socialist property, which included the objects of greatest economic value in socialist society, the state defined the boundaries of objects in ways that are unfamiliar in market legal systems.  Because all productive assets were in principle “unitary” and belonged to “the people as a whole,” socialist law did not delineate the ordinary physical and legal boundaries of private property.  Concretely, there was often no record of the line dividing land between two buildings.  In the early years of the transition from socialism, private owners and public officials often could not answer the question, “Who controls the land on which we stand?”

(c) Ownership of Socialist Property. – Instead of assigning an owner to each object, socialist law created a complex hierarchy of divided and coordinated rights in the objects it defined.  These ownership and control rights varied among socialist countries, but one can loosely compare them to Western forms of trust ownership.  The law integrated ownership of physical assets within overlapping state structures, often linking upward from a state enterprise, to a group of similar enterprises, to the local and then central offices of a ministry responsible for that branch of industry.  Central-planning mechanisms coordinated uses; state arbitration courts, formally, and the Communist Party, informally, resolved conflicts.

The most important point to focus on here is that, under socialist regimes, decision-making authority on how different pieces of property were to be used was divided among a large number of people.  Decision-making authority was collectivized, and rights to exercise that authority were assigned according to status rather than according to contract.

One result – the result that Heller explains and documents in his justly famous article – is that, even when such property rights were privitized following the collapse of the Berlin Wall and the disintegration of the U.S.S.R., the institutionalized multiple and overlapping domains of decision-making authority meant, in practice, that too many people had a say in deciding whether or not a piece of property was to be moved from a lower- to a higher-valued use.  As a result, much property is underused – kept in lower-valued uses instead of being moved to higher-valued uses.

As Jim Buchanan and Yong Yoon explain here [2], the underutilization of property in anticommons situations is a ‘tragedy’ almost exactly analogous to the overutilization of property in tragedy-of-the-commons situations.

So (as Buchanan & Yoon also explicitly note) modern developments in environmental ‘law’ – in which private, individual rights to decide on use and exclusion are divvied up and distributed to a variety of “stakeholders” and other units, both political and quasi-political – risk the creation of tragedies of the anticommons.  And the value lost as a result of these tragedies of the anticommons is no less real and not necessarily likely to be smaller than is the value lost from the tragedy of the commons that the new regime of environmental ‘law’ was established to prevent.

One can debate just where to best draw the line separating market from socialist property-rights regimes, but there can be little doubt that the further collectivization of decision-making authority over different pieces of property – the empowerment of “stakeholders” to veto decisions formerly allowed to traditional owners – has at least some of the unmistakable odor of those property-rights regimes instituted by sovereigns who proudly called themselves “socialist.”

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[1] Michael Heller’s famous 1998 Harvard Law Review article: http://www.jstor.org/pss/1342203

[2] here: http://www.jstor.org.mutex.gmu.edu/stable/10.1086/467445

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