Libertarians stress self-ownership and property rights, but one variant position, held by Albert Jay Nock and Frank Chodorov, limits property rights. In their view, which they derived from the nineteenth-century economist and social reformer Henry George, you own only the value your labor adds to the resources you appropriate. You do not own unworked land and other resources, because your labor has not made them. It is the entire community, taken as a group of individuals, which owns these resources.
People who want to use these resources bid against one another. For example, suppose that you want to establish a restaurant in a good location. You will get the location you want only if you offer to pay more rent for it than your competitors do. The result of the bidding for various locations will be that the total rent for all land will be the greatest possible, and all of this goes into a common fund that is equally divided among everyone, once the expenses of government are deducted. Using the revenue from land to pay for government expenses is the famous “single tax.”
The economic problems with this proposal are well-known, and I don’t intend to go into them here. If you think, though, that resources are owned by the community, you can see the rationale for the proposal. If “everyone” owns the resources, equal division of the total rent seems like a fair way to proceed.
If you don’t have this starting point but instead think that resources start out unowned, matters seem different. If resources are “there for the taking,” isn’t individual appropriation of property justified? Murray Rothbard and those of us who follow him adopt this position. A related view begins from noting that before resources are appropriated, in the sense that the owner can exclude other people from using them, everyone is at liberty to use any resource, so long as he doesn’t try to prevent others from using it as well. For example, someone who walks along a path doesn’t block others from using it later; but if someone appropriates the land where the path is located, he can compel those who used to walk on it to take a different route. This makes them worse off than before, so, it is argued, they are owed compensation for this loss. They are also owed compensation for the fact that once someone appropriates a resource, that resource is removed from the resources that can be appropriated. The compensation is, however, easily fulfilled. The need for compensation stems from the fact that people are made worse off but a system of private property rights makes everyone much better off than in the state of nature, before property is appropriated. This view is then in practice almost always equivalent to Rothbard’s position and was supported by Robert Nozick.
Suppose, though, that you agree that resources start off unowned but are also sympathetic to George’s single tax. Can you support the single tax from that starting point? It would seem not, but Hillel Steiner attempts to do it in an article entitled “Compensation for Liberty Lost: Left Libertarianism and Unconditional Basic Income,” which appeared in volume 22 of the journal Juncture. If anyone can do it, Steiner can, as he is one of the world’s leading political philosophers, but I do not think he succeeds. He objects to the positions held by Nozick and Rothbard that people under their systems do not have equal initial access to appropriating resources. Those on the scene first have a greater opportunity to do so than latecomers.
That’s indeed true, but if we ask how the latecomers get compensation for this, matters take an odd turn. Steiner takes the criterion of compensation to be that allowing appropriation makes people better off than if it isn’t allowed. People do not receive individual compensation because there are particular resources they aren’t free to use or appropriate, rather the system as a whole makes people better off. In particular, he imagines a modified Walrasian auction in which people are initially given an equal number of chips which they use to bid for all resources. In the auction, they have perfect knowledge of all prices and make their bids on that basis. In such an auction, winning bids go to those who can use the resources most efficiently, and Steiner thinks that if this is so, everyone is better off. Of course, in the actual world, we lack the knowledge required in the auction, but he takes the Georgist single tax, as explained earlier, as the best available substitute for it.
It isn’t clear to me that this is correct. In the free market, equilibrium is never reached, but entrepreneurs aim constantly to shift resources so that they go to those best able to satisfy the demands of consumers. If your aim is to approximate as closely as you can the conditions of Walrasian equilibrium—I don’t think this should be your aim, but we here looking at things from Steiner’s perspective—why isn’t the free market the best we can do? In the Georgist system, land rent is paid into a common pool and does not go to the individual owners of land, but what makes land special? The Georgists have an answer to this; they say that land cannot be owned by individuals, but it is not evident how Steiner, who starts with unowned resources and allows appropriation of them with compensation, can also say this.
Indeed we can go further. In the system in which all rents go to a common pool, people are not free to appropriate land but only to rent it. This contradicts the premise from which we began that resources can be appropriated. Further, Steiner does not deny that the alternative systems of Rothbard and Nozick do make people better off than they would be in a system without property titles; he just prefers to set a different baseline.
He might respond that people are better off with his baseline than with the alternative baseline because they have a guaranteed annual income, but once more this is highly doubtful. A great deal of the success of the free market in satisfying the demands of consumers depends on entrepreneurs’ being able to gain exceptionally large returns. The incentive to get such gains encourages them to shift resources in a way that anticipates consumers’ demands, because success in doing so is profitable for them. In the Georgist system, anything above a standard rate of return on capital is considered rent on resources and goes in the common pool. This would in practice stultify the market process. People would be able to spend the guaranteed incomes but would find the attenuated market less able to satisfy their demands.
In conclusion, you must either allow initial appropriation of resources or reject it. You cannot do both at the same time.