the exclusion axiom/criterion of property states: an object (another meta-self) is owned by a person or group of people (a meta-self) if the instances of complement of their meta-self are excluded from the object AND no meta-self component/sub meta-self is excluded from the object (notice it does not matter who is providing the exclusion service). The corollary of this is that at any point in time, the CUMULATIVE will and ability to exclude others determines what object is what meta-self’s property (just like the sum of all forces in a closed system on a physical object result in a net force).
this video is the second of a two part presentation of a comparison of the libertarian ethic of property rights and the exclusion axiom/criterion of property in a free market. the first part was a critique of the concept of rights and why they are logically inconsistent and with the free market. in this video, i will present the ego-utilitarian alternative that i claim is the only general ethic the free market can sustainably adopt.
meta-self: an object’s concept. a conceptual set that contains all the descriptors of the object and nothing more. each partition of components have a weighting that is inversely proportional to its set size and proportional to their importance to the existence of the entire meta-self.
economic profit: The difference between the revenue received from the sale of an output and the opportunity cost of the inputs used.
ego-utilitarianism is only concerned with the morality evolution imposes upon us. namely, it selects for the meta-selves that perpetuate WEIGHTED instances of themselves (meta-self interest).
so if you accept my argument that rights are inconsistent with a free society (part 1 of this presentation here), then one must ask “what desires and abilities would exist AND BE SUSTAINABLE (ego-utilitarian morality) in a free market?”. what would a perfectly rational person or society do in the face of an aggression against another’s property? and when would it be in the interest of a meta-self to provide defense, restitution, or punishment services with respect to property? is it ever in the meta-self interest of a market/society to commit aggression?
we start with a simple analysis applying the exclusion criterion of property. notice that the exclusion axiom/criterion is a positive definition of property. this well-defined universal axiom describes property in all cases. it describes property whether the hypothetical under consideration has a state or free market. the analysis works in all time periods past, present or future. it has consequences for a society populated by one man, billions of people, and everything in between. in order for something to be property it must be maintained and defended/excluded from others. these are the explicit cost of owning property that is foolishly assumed or ignored by libertarian property rights theory. the criterion must be satisfied in all cases by some actor. it must also be true that something becomes property when the CUMULATIVE will AND ability of ALL actors are such that everyone but the owner is excluded from the property.
let us first accept some necessary consequences. in a free market context the term”legitimacy” becomes irrelevant. the concern of ego-utilitarian analysis is what people are willing and able to pay for and what is sustainable. legitimacy only makes sense with a state or a social contract. if a thief steals property from another person and can successfully exclude others from it, then a transfer of ownership has taken place. if the property that was stolen was a piece of candy, it would be nonsense to say that the victim still owns the candy once the thief has long since consumed and digested it. applying the same analysis to the slaves of the antebellum United states, one must conclude that they did not own their labor since their slave owners were not excluded from their labor.
let us begin an abstract analysis on an “island” economy starting with one person. in this simplest of contexts, protecting property that yields less utility than the cost to maintain and defend it from the agents of nature is a losing evolutionary proposition. nature punishes such behavior proportionally. the greater the difference between costs and benefits (loss) for the meta-self, the greater the punishment. this mechanism imposed by nature (of which humans are a component of) is the very foundation of free market morality.
let us adjust the population of the island economy by adding another person. introducing other people that have the ability to cooperate due to specialization and trade creates high potential for establishing mutually beneficial relationships.
i am ignoring some aspects of meta-self interest here since it over-complicates the calculation. in this reality, the fact that they are the only two humans creates a very strong meta-self relationship since weighting is inversely proportional to component meta-self set size. ego-utilitarianism says there may be some moral value in helping another person even if there is no economic relationship in a small population hypothetical. for the sake of simplicity we can ignore its contribution to the analysis since it is significantly eroded for a large population .
in most cases, people will realize the value of establishing a trade relationship since it increases consumption possibilities beyond one’s own production capabilities. once a trade relationship is established, there exists a meta-self interested reason why a person should respect or even expend resources to help defend the other person’s property. meaning there exist some non-zero evolutionary incentive for people to choose to defend property of others that trade with them over simply taking it from them.
as we already learn from basic economics, trade allows people to consume beyond their own production possibilities allowing each participant the ability acquire more evolutionary utility. now the owner should not spend more money than the total utility gained from consumption and trade from the production of the property . also, a rational actor should never spend more to defend another’s property than the utility gained from the total trade that is a direct result of the production of the property. (more rigorously, both should not spend resources when it does not maximize economic profit). so taken together, the most sustainable strategy is for an person to own the property only if owning the property maximizes production and economic profit for the entire market. doing otherwise is again punished proportionally by evolution.
if no trade relationship exists between the two people (maybe due to irrationality), then there is no reason to expend resources to help defend the others property and the option of aggression is more likely to be economically profitable.
this analysis explains why humans dont respect the property of other animals. since the genetic meta-self relationship drops off very quickly, the meta-self relationship between other animals becomes relatively insignificant because of their lack of ability to provide economic value through trade.
the analysis also explains why even governments tend not to expend resources to defend and even violate the rights of non-citizens.
in general this mechanism explains why two meta-selves, people or nations, are more likely to aggress against each other when there is no trade relationship. as the late 19th century economist fredrich bastiat stated, “if goods dont cross borders, soliders will”.
so far this was just an analysis of whether the other person will help defend property, but does the analysis significantly change if we include the strategy of taking property by force? ego-utilitarianism and evolution say no.
let us look at a special case of capital property. it is possible that a forceful confiscation of property could benefit both people. if the opportunity cost of that person owning the capital is an increase in production sufficient to lower the price level by a greater percentage than the marginal loss of nominal income and cost of theft, then stealing and reallocating the property will make everyone better off including the victim. this possibility introduces the argument that even the victim should prefer the theft even though in the immediate present he may not.
similar to a mathematical induction argument, this two man analysis does not change for any given population since you can replace any person with a group of any size. we can then say, a market or society should not support the ownership of the property if the costs of defending exceed the total utility of those willing and able to pay those costs. and more rigorously, the owner will own the property only if it maximizes total production in the market. this is the normative ethic of the exclusion axiom of property and egoutist morality which is superior to an irrational ethic like homesteading which endorses supporting ownership on a mere first use basis.
this scenario is just a potential but not a necessary byproduct of confiscating capital property. the victim of property theft will not necessarily be better off even in the case of increasing total production through confiscation. but stopping the analysis here is incomplete since we are only focusing on costs suffered by the victim and not benefit of to the rest of society. it is fair to say that even if the victim may lose buying power in a specific instance of confiscation of his own property, he necessarily benefits when this same confiscation rule applies to all other property owners. this comprehensive view necessarily makes him better off by increasing everyone’s standard of living. this strategy is what egoutism claims evolution will select for and force all civilizations to converge to.
ego-utilitarianism says the only perspective that matters when measuring morality is actor’s (weighted) meta-self. the meta-self of concern in this analysis is the group of people willing and able to contribute to the defense or confiscation of a property. so the well-being of that meta-self is what determines morality. so ego-utilitarianism differs from normal libertarianism by saying that all aggression isnt necessarily immoral in a free market since evolution rewards particular forms of aggression. this is why ego-utilitarianism’s political ideology is called weak-libertarianism. weak libertarianism endorses freedom only from government and not aggression. watch my presentation on weak libertarianism and the non-aggression aphorism here.
the current owner has an absolute advantage in owning the capital property since defense is cheaper than aggression all else equal. also there are transition and transaction costs associated with a transferring of ownership which only increases if the transfer is involuntary. but an absolute advantage can be overcome if the opportunity cost of lost production is great enough.
if a voluntary buyout is rejected, the cost of defense of the capital must compensate the economic loss of the market. therefore the cost of defense must converge to the production of the most productive owner. therefore in the long run it must be that the person who maximizes total production is the only sustainable owner.
moral theft in a free market would probably still be a rare case. the condition where someone doesnt trade with the market is truly an anomaly since a corollary of the law of comparative advantage says as you increase the number of people in a market the gains from trade becomes enormous. in an economy consisting of the current world population, trade relations with such a market becomes each person’s GREATEST asset. also the conditions under which someone confiscates capital or consumer goods requires some type of extreme shortage and rivalry in the market. the purpose of this presentation is to show that it is possible to have evolutionary moral instances of “rights” violations. any intellectually honest and rigorous analysis of evolutionary morality will try to define all instances where aggression is moral instead of ignoring them.
calling this optimum strategy “might makes right” is an emotional argument. if rights mean privileges then it is correct. if rights describe normative morality then this is false. morality is determined by sustainability and not mere ability. “might makes right” tends to conflate the two. if freedom is the state of being free from any restriction then ability (might and power)determine one’s degree of freedom. it is a fact of a free market and mutually beneficial trade that privilege is proportional to production. the market and ego-utilitarian morality are meritocratic. each individual is a dependent component of the larger organism of the market.
there is also a significant difference between confiscation in a free market and eminent domain in a state society. a sustainable system will proportionally allocate the cost of confiscation to those who stand to benefit from it as opposed to systems that suffer from the tragedy of the commons. for instance in a democracy, special interests disperse costs and concentrate benefits when they utilize common property (tax revenue).
theft is a sunk cost and restitution of property is an inefficient strategy. there is no evolutionary reason to make a victim of property theft whole in all cases. this is an emotional projection of self-interest which leads to a mistake of only considering benefits of the victim without considering the cost of the restitution to society. if defense is truly cheaper than aggression and if defense was insufficient to stop the thief, then it is unlikely that restituting the victim by reclaiming the asset from the thief would be cost effective..
economic systems based on homesteading, property rights, and restitution will lead to a parasitic effect where unproductive ownership will be subsidized by productive owners. this relationship is unsustainable as you will have adverse selection of the former and attrition of the later who will select societies that endorse ego-utilitarian’s property ethic. rights subsidize ownership, just as patents subsidize intellectual property. in the case of subsidized ownership, you will have a surplus of ownership. also you will have a lower price level and higher standard of living in the society that endorses the exclusion axiom. systems that do not encourage ownership that maximize total production do not maximize economic profit and hence are less efficient. any society that subsidizes irrationality and inefficiency is not sustainable (notice its meta-self equivalent to the one man analysis).
ive talked about what how a free market deals with capital goods and resources and in a future presentation i will talk about the distribution of consumer goods in a free society and the optimum strategy of perfect price discrimination.