Public [government] ownership must be borne by all members of the public, and no member can divest himself of that ownership. Ownership of public property is not voluntary; it is compulsory as long as one is a member of the public. To call something “compulsory” usually is a good start toward condemning it.
This is an excerpt from a long report that Armen Alchian wrote for the RAND Corporation in 1961. It’s reprinted in The Collected Works of Armen A. Alchian, published by Liberty Fund in 2006. I’m working my way through over 1,500 pages of Armen’s work for a book review I’m writing for Liberty Fund. I remember telling Friedrich Hayek, in June 1975, after he had won the Nobel Prize the the previous year, that I thought Alchian deserved the Nobel Prize, and asking him what he thought. Hayek had his characteristic wince as he replied, “Two people who deserve the Nobel Prize, but won’t get it because they haven’t written enough, are Armen Alchian and Ronald Coase.” I had agreed that Armen hadn’t written enough. Now I don’t. Interestingly, he obviously didn’t care about where his work was published. Also, a number of pieces in it, including a number that are quite good, were previously unpublished.
The voters in my area recently voted, 55-45, to use eminent domain to have a local government agency take over privately owned Cal-Am Water. They have to do a feasibility study first, but pretty much everyone on both sides is convinced that it will be found “feasible.” I argued with various people locally about that. I should have used more of Alchian’s work, translated a little for non-economists.
Here is Alchian’s piece “Property Rights” that I commissioned for The Fortune Encyclopedia of Economics, which later became The Concise Encyclopedia of Economics.
READER COMMENTS
Jon Murphy
Nov 14 2018 at 7:23pm
Since I was first introduced to the works of Alchian by Walter Williams my first semester at GMU, I’ve just devoured whatever he’s written. The property rights paper you link to here and his article with Demsetz (The Property Right Paradigm) remain two foundational works in my thought and work. He was such an anazama economist
Benjamin Cole
Nov 15 2018 at 1:31am
One of the most fundamental requirements of a capitalist economic system—and one of the most misunderstood concepts—is a strong system of property rights.–Ramen Alchian
It is interesting that in Singapore all of the land is owned by the government. Yet many Westerners insist on regarding Singapore as a free enterprise Mecca.
I admired this bit of writing, but it seems to fall short on the issue of property zoning.
Alchian notes and disapproves that the courts have somewhat allowed rent control,for example. But as to the 1926 split vote by the Supreme Court to allow property zoning, Alchian is mute.
I propose a Nobel Prize for the lawyer who takes the case to the Supreme Court that abolishes property zoning.
Andrew Swift
Nov 15 2018 at 4:35am
Alchian should get more credit for describing the internet. The Wikipedia page for the Alchian-Allen effect says:
“When the prices of two substitute goods, such as high and low grades of the same product, are both increased by a fixed per-unit amount such as a transportation cost or a lump-sum tax, consumption will shift toward the higher-grade product.”
The opposite is also true: when the prices of two substitute goods are both reduced by a fixed per-unit amount, consumption will shift toward the lower-grade product.
The internet has dramatically reduced the costs of furnishing news and entertainment, and consumption has shifted to lower-grade products.
Thaomas
Nov 18 2018 at 6:31am
I have not read the article in question, but the excerpt seems like a bad start. Without a concept of when property rights CAN be violated we have nothing but a taboo and that has in fact been long broken. Take Eminent domain in the water company. The presumption that a well-functioning private enterprise should be left alone makes sense as does some skepticism about whether public ownership will improve things. And I agree that “feasibilty” is far too low a standard. But just to point out that this is a property rights violation seems very weak. Another line of defense in eminent domain cases should be that the expropriated owners should share in the estimated benefits of the expropriation.
Ernest.W
Nov 23 2018 at 5:06am
Interesting story fact about Armen Alchian
“Alchian’s critique of Keynes’s theory of investment (1955) is a classic in investment theory while his work on unemployment (1969) was one of the first to consider the natural rate of unemployment arising from “job search”. His 1972 work with Harold Demsetz on property rights was a generalization of Coase’s work. Finally, his famous 1964 textbook with W.R. Allen is an exemplary treatment in the Chicago vein – preserving and extending the Neoclassical market paradigm to handle all sorts of economic problems and describing purported “market failures” not as failures as such but as “market outcomes” in the face of transactions costs and information problems.”Did you know he was the first to come up with the concept of the economic calendar and put it on paper. I made a model on the site: (https://www.tradays.com/en/widget) according to its developments, what you think about it?
Ernest.W
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