The incentive to kill

“Everybody’s property is nobody’s property” is an aphorism commonly used to point to the drawbacks of public ownership of resources. When a scarce resource is technically owned by everybody, nobody usually has the exclusive right to enjoy the benefits that could be got from its use. Consequently, nobody really has any strong economic incentive to preserve the resource, or put it towards productive use, either. In contrast, private property rights provide individuals, or a select group of individuals, the exclusive right to the use of a particular resource. And since the owners of the resource are also fully entitled to the benefits that can be got from its use, owners of private property usually have a very strong economic incentive to carefully preserve it.

“There will be killing: Collectivization and death of draft animals”, a 2017 paper by Shuo Chen and Xiaohuan Lan published in the American Economic Journal, provides an actual historical example of the kind of disaster that usually follows when resources are socialised by the state. The authors study the impact that China’s programme to collectivise land and draft animals owned by its peasants affected the use of these resources. As they state in their paper, “the Chinese collectivization movement allows us to examine how the deprivation of private property rights destroys existing productive assets”. During the period between 1955 and 1957, when the collectivisation movement was fully under way, as much as 12-15% of draft animals in China were killed by the peasants who owned them, according to estimates by the authors. This, however, should not be surprising at all to anyone who understands the choices faced by poor peasants.

For a peasant stripped of his legal right to own and usefully exploit the draft animals in his possession, it made better sense to quickly butcher them for personal use rather than hand them over to the government. Otherwise, since the government was not willing to pay an attractive price for the animals and, further, since the law empowered the government to confiscate the animals through force, the peasants stood the chance of losing pretty much all they had to their name. The study, in fact, finds that the slaughter of draft animals was higher in regions where established private property rights were stronger prior to the start of collectivisation, or where the extent of the government’s collectivisation programme was larger. Incidentally, the fate of draft animals in China is similar to the depletion of various other resources due to overuse. The extinction of forests and wildlife, both of which are prohibited from being owned by private parties, being the most common examples.

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Printable version | May 2, 2021 3:25:28 AM |

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