A Thought Experiment Gone Awry – Private Property

This post could have simply gone on to refute the “Thought Experiment” by Robert Nielsen in the post A Thought About Property Without The State.  The trouble with that approach is that I would be stuck finding a need to response to the countless other misguided critiques past and future.  So true to my worldview that education is the only source of change, I shall try to give readers as well as Mr. Nielsen some chapters/books to read prior to attempting to refute “Libertarianism”.

Prior to this, a word on caution.  The terms such as libertarianism/libertarian as well as “anarcho-capitalist” conjure up negative connotations in people that have not been exposed to the literature.  I personally don’t like the use of these words since in a discussion with someone, you are not just trying to convince them of your point but also have to overcome their preconceived ideas of what these words mean. A better term that should be used and adopted is a “Free Society”.

Below is an quote which classifies Libertarian movement into three groups.

If the central axiom of the libertarian creed is nonaggression against anyone’s person and property, how is this axiom arrived at? What is its groundwork or support? Here, libertarians, past and present, have differed considerably. Roughly, there are three broad types of foundation for the libertarian axiom, corresponding to three kinds of ethical philosophy: the emotivist, the utilitarian, and the natural rights viewpoint.

Part I, Chapter 2: Property & Exchange | Subsection Property Rights

For a New Liberty – Murray N. Rothbard

This is key, as many attempts to refute this worldview do not specifically target a specific type of Libertarian.  Rothbard in the above chapter goes on a refutes the Emotivist and Utilitarian position.  Suffice it to say not all Libertarian positions are correct/strong and perhaps Mr. Nielsen and I would agree on this point.  On a final note it is very common for people to get behind movements without actually knowing anything about what they stand for, and unfortunately the Libertarian movement falls victim to this.  The danger here is that people undermine the very foundation and moral position of Natural Law / Libertarianism when they engage in any form of violent acts against person (or property) or argue without the deep understanding of the literature. 

Now on to the refutation of the “thought experiment”:

The first and main problem with the vast majority of all critiques of this worldview is the complete ignorance of the literature. This is similar to critiques of  “Austrian Economics”.  From someone that has actually read multiple times vast amounts of literature on both topics as well as from someone that actively searches for critiques to determine if they have merit, what I have noticed is that most “points” used against these schools of thought have already been addressed in the literature.  The “Thought Experiment” under discussion is no different.  Coincidentally I happened to been listening to The Ethics of Liberty Chapter 9-11 at the time of reading the article by Robert Nielesen, and hence will use excepts from it to demonstrate that if the author educated himself prior to penning the article he would have attempted a different line of refutation and abandon his “Thought Experiment”.

The purpose of the “Thought Experiment” is re-stated here:

However, I’d like to use a thought experiment to show how a world of solely private property is little different from our current world and how private property contains many of the arbitrary coercion that libertarians so passionately denounce in states.

The misunderstanding of the Natural Law Libertarian  (Anarcho-capitalist) position starts with the first 9 words of the attempted refutation.

Imagine if you will, a man buys an island.

The starting point is to determine if the acquisition of this island is Just.  Did the seller of the Island actually own this island Justly (via the homesteading principl)?  Someone cannot just walk up to an island that has been untouched by human labour (virgin land) and claim it as their own and then attempt to sell it to someone else.

At this stage lets break the analysis into two scenarios.

1) The land purchased is virgin land and hence the title transfer is invalid.  But, lets say the person that purchased this land did start to work the land and develop part of this island.  He therefore “Rightfully”/”Justly” would own the homesteaded portion of the island.  Therefore if others that were the would be “Renters” came to this island, they would have the same homesteading right to unused land.  Therefore if the first person that landed attempted to make rules about conduct on this island, it would only be applicable to land area that was justly his via homesteading.  Any enforcement of his rules (ex. attempt to extract rent) outside of this area, say on another part of the island that someone else has homesteaded would be unjust and a criminal act. Therefore the assertion in the article that “the above scenario involves a private landlord dealing with private property, people are no freer than when they live in a state.” is patently false since people would be freer as arbitrary rules / unjust rent would not be able to be extracted as long as they are on a part of the island that they have homesteaded, and has not first been transformed by the initial person that landed on the island.

This point is expressed in chapter 8 of Ethics of Liberty

Some theorists have maintained—in what we might call the “Columbus complex”—that the first discoverer of a new, unowned island or continent can rightfully own the entire area by simply asserting his claim. (In that case, Columbus, if in fact he had actually landed on the American continent—and if there had been no Indians living there—could have rightfully asserted his private “ownership” of the entire continent.) In natural fact, however, since Columbus would only have been able actually to use, to “mix his labor with,” a small part of the continent, the rest then properly continues to be un-owned until the next homesteaders arrive and carve out their rightful property in parts of the continent.


Now lets continue our discussion by jumping over the difficulty that you can’t “own” land that has not or is not being used.  And hence Mr. Nielsen attempted demonstration has failed.  Feudalism is exactly what was described by Mr. Nielsen,  since the starting point was the assertion of a claim of land that was unjust, then forcing the would be subjects / renters to the will of this tyrant.

Chapter 10 of Ethics of Liberty extensively talked about feudalism and should be reviewed.

In this case of what we might call “feudalism” or “land monopoly,” the feudal or monopolist landlords have no legitimate claim to the property. The current “tenants,” or peasants, should be the absolute owners of their property, and, as in the case of slavery, the land titles should be transferred to the peasants, without compensation to the monopoly landlords.[5]

Note that “feudalism,” as we have defined it, is not restricted to the case where the peasant isalso coerced by violence to remain on the lord’s land to keep cultivating it (roughly, the institution of serfdom).[6] Nor is it restricted to cases where additional measures of violence are used to bolster and maintain feudal landholdings (such as the State’s prevention by violence of any landlord’s sale or bequest of his land into smaller subdivisions).[7] All that “feudalism,” in our sense, requires is the seizure by violence of landed property from its true owners, the transformers of land, and the continuation of that kind of relationship over the years. Feudal land rent, then, is the precise equivalent of paying a continuing annual tribute by producers to their predatory conquerors. Feudal land rent is therefore a form of permanent tribute. Note also that the peasants in question need not be the descendants of the original victims. For since the aggression is continuing so long as this relation of feudal aggression remains in force, the current peasants are the contemporary victims and the currently legitimate property owners. In short, in the case of feudal land, or land monopoly both of our conditions obtain for invalidating current property titles: For not only the original but also the current land title is criminal, and the current victims can very easily be identified.

2) Now lets turn our attention to a situation where the entire island has been transformed.

There are two was this can have happened:

a) That is the purchaser of the island has purchased the island that contains a giant Mall and perhaps some farms to fill up the rest of this island.

b) The person landed on the island and spend time/capital to transform the island to cover the island with a mall and tilled soil for vegetable cultivation.

The person can now justly be considered the owner of the entire island.  He/she now also has the right to set rules, guidelines, regulations, etc. We have now come to Mr. Nielsen’s scenario but much more precisely as we have established justices of the title transfer / ownership of the island.

But now unlike the Author, we will actually confront reality which is of course Economics (Not surprisingly for anyone, this will be in the Austrian Method).

How much rent will be able to be commanded? This is quite important not just at this point of the discussion, but at the point of purchase of the island or the transformation process of the homesteader (Time/Capital).  Why would someone purchase this island or put in the time and capital to build a mall and tilled soil just to receive a small amount of rent? Since rent is just the unit service of the space, the expense to purchase or build up this island would have to be economic, that is, would have to be less than the expectation of future rents adjusted for time preference.

Now say you were considering moving to such an island to open up a shop is the Mall.  Would you pay more rent that you expected to receive as income? Of course not! Now, would the set rules, guidelines, regulations, etc affect the amount of rent you would be willing to pay? Of course!

Now consider yourself the owner of such an island, you are not just concerned about the future rents you can collect from the stores and farm lands, you also care about the capitalized value of the entire island, since by setting rules, guidelines, regulations that would stifle the productivity of the renters, would result in more vacancies and therefore less income and poor reputation that would affect any resale value you could expect if you wanted to sell this island to another person.

The Natural Law / Theory of Justice is 100% adequate to demonstrate that the attempted “Thought Experiment” is full of fallacies or examined assumptions.  If Mr. Nielsen read Ethics of Liberty by Murray N. Rothbard, he would gain a deeper understanding of what the Natural Law Libertarian position actually is. The worldview / political philosophy is far from arbitrary, there are strong and well founded arguments and critiques of current political landscape.  By taking what you hear from anyone that calls themselves “Libertarian” would be sure folly, since many admittedly have absolutely no idea of what their position should be and how to properly argue their points.

Lastly, on the point “Tell me, what is the difference between this and the state?”  The clear difference is that if someone justly owned the property they purchased and therefore can set the rules, guidelines, regulations, that IS the difference.  The above quote implicitly asserts that the government owns the property that it has under its control.  But again from the Natural Law perspective, they DO NOT own the property and hence there is a clear difference.  In fact, this question asked above proves too much.  If we look at Mr. Nielsen’s proposed island it is admittedly not different from the state.  Since his island description is Feudalism and that is much closer to the State than the proposed Natural Law Libertarian conception of Justice and Private Property rights.

This piece is in no way an attack on Mr. Nielsen, since it is absolutely clear that he has either discussed this point with the “wrong” / ill informed Libertarian and / or has not gone through the literature which would make crystal clear the fallacies in his argument.  My goal is only to help Mr. Nielsen to be exposed to a very interesting and logically consistent perspective that I am sure he would find helpful when fully understood.

All the best to him and others that haven’t had the opportunity to educate themselves on this worldview.

A personal note: I would again not consider myself at all an expert or 100% believer in everything that any libertarians discuss / advocate for.  I am just someone that actually has read plenty of material and respect the cold logical discourse that flows from the position.  

Frederic Bastiat


Further Reading (Free PDFs):

For a New Liberty – Murray N. Rothbard

Ethics of Liberty – Murray N. Rothbard

The Law – Frederic Bastiat

Man, Economy, State with Power & Market – Murray N. Rothbard

Human Action – Ludwig von Mises