reflections of a former marxist on property rights

Reflections of a Former Marxist on Property and Property Rights

1

by Bienvenido S. Oplas, Jr. 2

Abstract This paper briefly explores Marx’s analysis of private property as contained in some of his writings in “Das Kapital” and “The Communist Manifesto”, and the author’s reassessment of Marx’s arguments now that he no longer a Marxist. Arguments by Friedrich Hayek on property and discussion of the result of the International Property Rights Index (IPRI) 2009 Report are also discussed.

1 Presented at the seminar, Freedom and Property, September 7, 2009, sponsored by the Friedrich Naumann Foundation (FNF), Millenia Suites, Ortigas, Pasig City, Philippines 2 President, Minimal Government Thinkers, Inc.

2


Bienvenido S. Oplas, Jr. 1. Introduction Karl Marx was my main intellectual idol in the mid-80s during my undergrad activist years at the University of the Philippines (UP) Diliman campus. I sincerely thought then that Marx was correct, that the main cause of mass poverty and exploitation of workers, was capitalism and the private ownership of the means of production. I was introduced to Marx’s writings by my friends at the UP Samahan sa Agham Pampulitika (UP Sapul) or Political Science Club, and my mentors at the Third World Studies Center (UP TWSC). Although I was an Economics major then at the School of Economics (UPSE), Marx’ economic writings like “Das Kapital” did not attract me much; it was his philosophical writings like “The Philosophy of Poverty and the Poverty of Philosophy”, and “A Critique of Hegel’s Philosophy of Right” that attracted me. I was interested to understand for instance, why Marx wrote “religion is the opium of the people” by which the anti-Marxists would exploit to attack the philosophy as promoting atheism. Like most young activists then, before reading Karl Marx, we were initially drawn into the national democratic (aka “nat-dems”) movement, led by the Communist Party of the Philippines – New People’s Army (CPP-NPA) underground, and their various above-ground front organizations. So we believed that capitalism was not much a problem compared to feudalism and US imperialism. As the political movement dragged on and as we read some works by Karl Marx, Friedrich Engels and Vladimir Lenin, we began to realize that the nat-dem movement -- guided more by the thoughts of Mao Tse Tung and his Filipino Maoist follower and CPP founder Joma Sison – rested on a wobbly ideological foundation. The nat-dems did not want their revolution to move directly to socialism, but go through a transition stage first called “national democracy”. National meaning anti-imperialism, and Democracy meaning anti-feudalism, anti-bureaucrat capitalism. Once the “landlord-bourgeois state” is overthrown, they wanted a limited and controlled capitalism first, to allow “nationalist capitalists” to help develop society’s productive forces and modernize the backward rural economy towards industrialization. Here, private ownership of the means of production (land, factory, machinery, etc.) will be allowed at a limited scope. Once a more developed nat-dem society is created, then they will march towards socialism and they will expropriate the private property of their erstwhile nationalist capitalist allies, in favor of the “Proletarian” state. Of course there were other factors and reasons why the nat-dem movement was not intellectually and organizationally attractive to us. So we just proceeded in forming our small socialist initiative at UP and a few other universities in Manila. In 1987, the Marxist socialists plus certain splintered groups of the nat-dems, the more radical wing of the social democrats (or “soc-dems”) called “democratic socialists” (or “dem-soc”), and other left-leaning individuals who were not comfortable with the nat-dems nor soc-dems, formed the first openly socialist group in the Philippines, the Bukluran sa Ikauunlad ng Sosyalistang Isip at Gawa (BISIG). In English, the federation for the

3

development of socialist thought and action. That was in 1987 and we openly campaigned for socialism to certain sectors and individuals in the country. I also went to Amsterdam that year to study Marxism and Trotskyism for 3 months at a Trotskyist training school. 2. Das Kapital

“Das Kapital”, written by Karl Marx and edited by Friedrich Engels, hardly mentioned about property rights. The 3-volume book focused on how surplus value and profit is created and how capital accumulation results from continued expropriation of surplus value from the workers. Accumulated capital from past labor is materialized in property, private property of the means of production, that is solely owned by the capitalist class or the “bourgeoisie”. In Volume II of “Capital”, Marx wrote:

“Employing surplus value as capital, reconverting it into capital, is called accumulation of capital…. From a concrete point of view, accumulation resolves itself into the reproduction of capital on a progressively increasing scale. The circle in which simply reproduction moves alters its form and changes into a spiral. To accumulate, is to conquer the world of the social wealth, to increase the mass of human beings exploited by him, and thus to extend both the direct and indirect sway of the capitalist.

For Marx therefore, the “mystery of capital” lies on a spiral of repeated and endless exploitation of workers who must receive wages enough to make themselves and their families survive to produce the future breed of exploitable workers. The amount of private property, “bourgeois property” that only the capitalist class have property rights, keep on accumulating. As the wealth of this class expands, the productive capacity of society also expands, and so is the army of the exploited class wanting class liberation from class exploitation. In Chapter XXIV of Das Capital (I cannot recall which of the 3 volumes), Marx wrote:

“The capital, which in itself rests on a social mode of production and presupposes a social concentration of means of production and labour power, is here directly endowed with the form of social capital (capital of directly associated with individuals) as distinct from private capital… It is the abolition of capital as private property within the framework of capitalist production itself.”

This is among the very few paragraphs where Marx mentioned the abolition of private property in Das Kapital. 3. The Communist Manifesto This document, produced in 1848, is the most straightforward among Marx’s writings in explicitly calling for the abolition of private property and its conversion to social and collective ownership of the means of production. Friedrich Engels co-authored with Marx in producing this paper. They wrote,

4

“All property relations in the past have continually been subject to historical change consequent upon the change in historical conditions.

The French Revolution, for example, abolished feudal property in favor of bourgeois property.

The distinguishing feature of communism is not the abolition of property generally, but the abolition of bourgeois property. But modern bourgeois private property is the final and most complete expression of the system of producing and appropriating products that is based on class antagonisms, on the exploitation of the many by the few.

In this sense, the theory of the Communists may be summed up in the single sentence: Abolition of private property.”

This formulation sounded a reverberating message – deep hatred of private property ownership – across many rebel and activist groups around the world for more than one century, manifested by the formation of Communist Party in many countries around the world. The first successful socialist revolution of course was the Russian Bolshevik revolution in 1917 led by Lenin.

On this note, may I digress a bit to briefly discuss the anti-private property ownership vision of two communist revolutions in the Philippines.

The first communist movement was formed during World War II. The Partido Komunista ng Pilipinas (PKP) led by Lava advocated both national liberation from Japanese occupation and class liberation from landlord and capitalist exploitation. After the war, PKP resume its activities and campaigned actively for land reform.

The second and longest communist movement in the country, existing until today, is the Communist Party of the Philippines (CPP) founded by Joma Sison in 1969. While the PKP was pro-Stalin, the CPP was anti-Stalin, pro-Maoist. Nonetheless, the hatred of private property ownership, especially in agricultural land, was a vision that was common to both communist movements.

Back to the Manifesto. Marx and Engels wrote further:

“Capital is therefore not only personal; it is a social power. When, therefore, capital is converted into common property, into the property of all members of society, personal property is not thereby transformed into social property. It is only the social character of the property that is changed. It loses its class character.”

This is a sociological perspective employed by the two authors. They attempt to “dis-alienate” the workers, even perhaps the jobless and other sectors of society, from property that are used to sustain and develop humanity and society. Marx has written that with private property, the workers are “alienated” from the machines, factories, raw materials, and other means of production that were in reality a product of labor itself, of past workers whose labor were not adequately compensated by the capitalists.

5

4. Why Marx was wrong Those thoughts provoked both intellectual and emotional outburst in me and in many other Marxists, especially when one is younger and dreamed of changing the world quick. I began to slowly realize the defect of such arguments in the 90s when I became inactive in the socialist movement and was convinced of its impracticality. Middle of this decade, we formed Minimal Government (MG) and I was introduced to the free market movement around the world, I began reading a few classical liberal thinkers like Hayek. Here now are some of the reasons why I believe that Marx was wrong. a. Marx wrote: “The average price of wage labor is the minimum wage, i.e., that quantum of the means of subsistence which is absolutely requisite to keep the laborer in bare existence as a laborer.” Wrong. The average price of labor is between the minimum wage and the wage of the most skilled or “most favored” workers. Some wages are below the minimum wage as set by the government but the difference between the two, below-minimum and minimum wage, is not very far. Whereas the wage of the most skilled or most favored workers can be far out from the minimum wage. It happens too often that the wage of the most skilled workers (managers) in a big corporation is several times bigger than the implied wage + profit of the owner or capitalist of a small and struggling corporation. Consider these 2 graphs below:

A. Wage setting in various companies B. Wage setting in one big company

Wage (per day or month) Wage (per day or month)

100 A (wage of the most skilled workers)

B Supply C

D Labor demand curve

50 E

Demand F …

Z (min. wage)

Quantity Quantity Workers (and businessmen and capitalists) are not similar and homogeneous. Some are better educated than others; some are more ambitious, more hard-working than others; some are more efficient than others. So there is variety in skills and drive among workers (and capitalists). There are corresponding demand by employers for every group of workers. So in graph A, there are various “equilibrium” wage levels where supply meets demand. There is no single wage level that applies to all workers in all companies in all industries and sectors at all time.

6

Graph B shows a big company which has varying needs for workers and workers are stratified or segmented into different departments. Some workers are put in actual manufacturing department, some are sweepers and utility workers; some are mechanics and electricians, some are in monitoring and supervisory department; some are in marketing and advertising; some are in delivery and sales; some are in collection and accounting; some are in business research and forecasting; some are in managerial position, and so on. There are different wage levels for each department, and in each department, there are different wage levels too, the chief of each department receiving higher pay than the workers under him/her. So the most skilled (and perhaps the most favored by the company owners) get the highest wages or point A in the above graph. The median wages are in points D, E, F, while the least skilled workers are in wage points X, Y, Z, near or in the government-set minimum wage level. Those in wage points A, B, C and D can decide later to stop being workers forever, and will someday become property owners and start-up capitalists. With enough savings, enough business network (including capital pooling) and high ambition and work efficiency, this is possible. b. Marx wrote: “The bourgeoisie has stripped of its halo every occupation hitherto honored and looked up to with reverent awe. It has converted the physician, the lawyer, the priest, the poet, the man of science, into its paid wage laborers.” Wrong. It may be true at a certain point during those times that those intellectuals were paid laborers of the traditional capitalists. But capitalism itself has liberated these professionals from the owners of physical property (PP). Modern civilization and modern capitalism has created intellectual property (IP) and inventors of non-physical properties like a new song, a new poem, a new legal opinion, a new medical discovery, a new medicine, a new seed variety, a new software, a management tool, etc. can now capitalize on their inventions as their own capital. Many IP capitalists in fact are much richer than the traditional capitalists, like multi-billionaire owners of Microsoft, Apple, Google, Facebook and Yahoo. c. Most importantly, the assumption that capitalists do not contribute their own labor, that only laborers contribute, to capital accumulation and hence, to private property. Wrong. Putting up a business, much more expanding it, is not for everyone. Lots of mental and manual work are needed to assemble various factors to produce a particular product or service. Where to get cheap and sufficient funding and credit, where to get cheap and stable sources of raw materials and intermediate inputs, whom to employ and trust and how to continue motivating them, whom, where and when to sell your output at how much quantity to consider seasonality of demand; what business model to take in the face of growing competition; what new technologies to use to further bring down production costs; what accounting procedures to take to comply with various government regulations; how to deal with heavy corruption in government, both local and national governments, and so on. Even the most hardworking and most efficient workers, and not all start-up capitalists will not be able to assemble those factors in a very efficient way. That is why bankruptcy and not just corporate expansion, are very much part of capitalism. It is

7

the threat of bankruptcy, the opportunity for expansion, and the constant challenge by other competing firms, that put each and every surviving capitalists to be on their toes always. There is little room for complacency and laziness. 5. Hayek on Property Among my favorite classical liberal thinkers is Friedrich von Hayek (1889-1992), an Austrian economist who later turned to writing legal and political philosophy. I would even say that the main “Marxist killer” in me, should there be any molecule of belief in me on what Marx wrote about capitalism, is Hayek. Hayek is very emphatic in advancing individual liberty and in identifying the important safeguards to guard and protect it. The two most important safeguards according to him, are the rule of law, and private property. I have written a few papers about Hayek’s discussion of the rule of law, for instance, “Hayek Reader: Liberty and Rule of Law” and “Hayek Reader 3: Inequality, Meritocracy and Responsibility”. Both are available in our website, www.minimalgovernment.net. For this paper, I will only quote paragraphs where he discussed property and property rights. He wrote,

“The recognition of private or several property is thus an essential condition for the prevention of coercion, though by no means the only one. We are rarely in a position to carry out a coherent plan of action unless we are certain of our exclusive control of some material objects; and where we do not control them, it is necessary that we know who does if we are to collaborate with them. The recognition of property is clearly the first step in the delineation of the private sphere which protects us against coercion; and it has long been recognized that ‘a people averse to the institution of private property is without the first element of freedom’ and that ‘nobody is at liberty to attack several property and to say at the same time that he values civilization.”

An individual will have zero peace of mind if his house, his car and his cell phone can also be claimed by others as also “their house, their car, their cell phone”, so that they can enter the house, open up and drive the car, take and use the cell phone, anytime they want. It is the exclusivity of use, the exclusivity of decision and control of what to do with the property – to use it, rent it, sell it, or just leave it idle – that gives the individual freedom and peace of mind. Leaving a property idle or not optimally used, say a house or an agricultural land, may be wasteful. But an individual has the right to make his property productive and reap the benefits and additional income, or keep it idle, reap and earn nothing while paying property taxes to the government. Hayek also pointed out one important point: people need not own something to enjoy using it. What is important is control, not ownership per se. If the owner of a private property, say a house or car, will rent it out to other people for a specified period of time at a specified rental rate and other conditionalities, then people will have freedom of using those properties so long as they stick to the terms set by the property owner. He wrote:

8

It is one of the accomplishments of modern society that freedom may be enjoyed by a person with practically no property of his own (beyond personal belongings like clothing – and even these can be render)and that we can leave the care of the property that serves our needs largely to others. The important point is that the property should be sufficiently dispersed so that the individual is not dependent on particular persons who alone can provide him with what he needs or who alone can employ him.”

How is this possible without generating conflict and debates later on? First, the rule of law, the enforcibility of contracts between or among consenting parties. And second, a competitive market where greed by owners and suppliers of particular goods or services, is tempered by the threat of potential clients walking away and go to other property owners and service providers. Hayek put it this way:

“That other people’s property can be serviceable in the achievement of our aims is due mainly to the enforcibility of contracts. The whole network of rights created by contracts is as important a part of our own protected sphere, as much the basis of our plans, as any property of our own… It is competition made possible by the dispersion of property that deprives the individual owners of particular things of all coercive powers.”

6. Mises on Property Another Austrian economist, Ludwig von Mises, Hayek’s mentor actually, emphasized the importance of private property in promoting freedom.

“The program of liberalism, therefore, if condensed into a single word, would have to read: property, that is, private ownership of the means of production... All the other demands of liberalism result from this fundamental demand.”

7. International Property Rights Index (IPRI) Societies that have well-defined private property rights and rule of law is properly and strictly observed, tend to have more economic stability. Consumers and producers, workers and entrepreneurs, have peace of mind knowing that whatever contract they will enter with other people within or outside the country will be honored and respected. That whatever commodity or service they will buy or receive as grants from other people, will be protected as their own private property, and no other people can claim ownership or control of those commodities and services. This philosophy and sentiment is captured by the study, “International Property Rights Index (IPRI), 2009 Report”. This study is done and commissioned annually by the Property Rights Alliance (PRA) starting in 2007. The 2009 IPRI Report compared the protections of physical and intellectual property to economic stability in 115 countries representing 96 per cent of the world’s GDP. The Report is a composite ranking of three comprehensive areas of property rights: Legal and Political Environment (LP), Physical Property Rights (PPR), and Intellectual Property Rights (IPR).

9

The components or determinants of each of them are as follows:

(1) LP: Judicial independence, Rule of law, Political stability, and Control of corruption.

(2) PPR: Protection of physical property rights, Registering property, and Access to loans.

(3) IPR: Protection of IPR, Patent protection, and Copyright piracy. Among the general findings of the Report are the following: a. Countries that protect the physical and intellectual property of their people enjoy nearly nine times higher GDP per capita than countries ranking lowest in property rights protections. b. Of the 115 countries included, the top quartile averaged $39,991 in GDP per capita while the average in the bottom twenty per cent was only $4,341 per capita. The second, third and fourth quartiles averaged $23,982, $11,748, and $4,891 respectively. The nearly linear data trend shows that countries placing a high priority on property rights see increased economic security. c. The result of scoring and ranking of each country and city, especially for Asian countries, is shown in this table below: Table 1. Overall IPRI score and ranking, 2008 Rank Country Score Rank Country Score

1 Finland 8.7 17 Japan 7.6 2 Netherlands 8.5 19 Hong Kong 7.3 Denmark 8.5 24 S. Korea 6.8 4 New Zealand 8.3 29 Taiwan 6.5 Sweden 8.3 36 Malaysia 6.2 Germany 8.3 46 India 5.6 Norway 8.3 51 Thailand 5.4 8 Switzerland 8.2 68 China 4.7 Australia 8.2 71 Sri Lanka 4.6

10 Austria 8.1 74 Philippines 4.5

Iceland 8.1 77 Vietnam 4.4 Singapore 8.1 87 Indonesia 4.1

As shown above, the Philippines ranked poorly, landing in 74th place out of 115 countries surveyed and studied. The country had a respectable score in PPR (5.5) but was pulled down by a low score in LP (3.3), so that based on LP score, the Philippines ranked 95th out of 115 countries! 8. Intellectual property and freedom The “Cheaper medicines law” (RA 9502) provides among others, the issuance of Compulsory Licensing (CL), special CL, and Government use. These are tools where the State can confiscate the private property -- an IPR like patent – issued by the State itself, to a new medicine, should national health emergencies and related

10

conditions occur. Government or its authorized representative or subcontractor, can use or appropriate a medical invention. Consider this hypothetical case: Supposing there is AIDS epidemic in the country, even if the cases are isolated but the government has ruled there is “national emergency”. From among anti-AIDS drugs, one-fifth of those drugs can cure an average AIDS patient in about 8 years; another one-fifth can cure the patient in about 6.5 years on average; another one-fifth can do it in 4 years; another one-fifth can do the job in 2.5 years on average, and the remaining one-fifth can cure a patient in 1 year. But the price of the latter drugs is higher than the rest, with the more effective, more expensive drugs pattern. Which medicines will likely be issued CL or declared “for government use”, the cheaper but less effective drugs, or the expensive but more effective ones? It will be the latter because that’s where the eyes of the public and the politicians will be set. Which points to one ugly reality: the criteria in choosing which products will get the heaviest government regulation, in this case CL, is pure envy. CL can actually be issued anytime even without real health emergencies, depending on politics. Like the issuance of the current drug price control, arbitrarily set because of politics, mainly between the opposition Senator-author of the law and the President. There was no health emergency to justify it. One impact of this policy, along with drug price control, is that producers of innovative and revolutionary medicines will not bring their product to the Philippines. If Filipino patients need such drugs, they will have to buy those in Hong Kong, Singapore, Japan, US, Europe, or other countries where IPR is respected and price control is not imposed. Freedom from debilitating and killer diseases will be sacrificed as a result of populist policies that penalize innovators and turn a blind eye to other factors that make medicine prices expensive, like government high and multiple taxes on medicines. I have discussed the various aspects of IPR confiscation in a number of my papers, such as the “Essays on IPR and Health” series, parts 1 to 6, posted in our website. 9. Concluding Notes Rule of law (the law is above everyone, governors and governed, rulers and ruled, no one is exempted from the law, and no one can grant exemption) and private property rights, are two of the cornerstone of a free economy and free individuals. The Marxist, socialist, and interventionist approach in confiscating private property in favor of the collective and society, is a formula for slowly diminishing economic freedom and individual liberty. The temptation to intervene such as imposing price control, IPR confiscation, and high taxation of private property (like real property tax) might be high but it should be tempered or abdicated. It is not healthy for an economy to embrace left-leaning policies that attempt to disrespect individual talents and performance, and forcibly collectivize things. Property rights is not a result of positive accidents that allowed the rights owner/s to

11

own and control something without hard or meaningful work. Neither is it a privilege that was bestowed by the Gods of the Earth to their current right owners. Leftism cannot guarantee the respect and expansion of private property rights. References Hayek, Friedrich, 1961. “Coercion and the State”, Chapter 9, The Constitution of Liberty. University of Chicago Press. Marx, CAPITAL: A Critique of Political Economy, Volume II. Book II: The Process of Circulation of Capital, Edited by Friedrich Engels. Progress Publishers, Moscow, 1971. Marx, DAS KAPITAL: A Critique of Political Economy, Edited by Friedrich Engels, Condensed by Serge Levitsky. Chicago: Henry Regnery Company, 1970. Oplas, Nonoy, 2009. Property rights and lefts, http://www.minimalgovernment.net/media/mg_20090227.pdf Oplas, Nonoy, 2009. Essays on IPR and Health, part 6 http://www.minimalgovernment.net/media/mg_20090619.pdf Oplas, Nonoy, 2009. Essays on IPR and Health, part 5 http://www.minimalgovernment.net/media/mg_20090529.pdf International Property Rights Index, www.internationalpropertyrightsindex.org

12


Bienvenido S. Oplas, Jr.

Seminar on “Property and Freedom”, Friedrich Naumann Foundation

Millenia Suites, Ortigas Center, Pasig, Metro Manila,

September 7, 1009

2

Outline of Presentation

1. Introduction

2. Das Kapital

3. The Communist Manifesto

4. Why Marx was wrong

5. Hayek on property

6. Mises on property

7. International property rights index (IPRI)

8. Intellectual property and freedom

9. Concluding Notes

3

1. Introduction

� Marxism in UP

� Nat-dems and shallow understanding of Marxism

� BISIG and open campaign for socialism

� Trotskyist school in Amsterdam

4

2. Capital: A Critique of Political Economy (3 volumes)

by Karl Marx, edited by Friedrich Engels

5

Kapital, Vol. 3

“Employing surplus value as capital, reconverting it into capital, is called accumulation of capital…. From a concrete point of view, accumulation resolves itself into the reproduction of capital on a progressively increasing scale. The circle in which simply reproduction moves alters its form and changes into a spiral.”

6

Kapital, Chap. XXIV

“Capital, presupposes a social concentration of means of production and labour power, is here directly endowed with the form of

social capital (capital of directly associated with individuals) as distinct from private capital… It is the abolition of capital as private property within the framework of capitalist production itself.”

13

7

3. The Communist Manifesto1st Edition 1848 (German)

The distinguishing feature of communism is not the abolition of

property generally, but the abolition of bourgeois property. But modern

bourgeois private property is the final and most complete expression

of the system of producing and appropriating products that is based

on class antagonisms, on the exploitation of the many by the few.

The theory of the Communists may be summed up in the single

sentence: Abolition of private property.

8

The Communist Manifesto

� “modern bourgeois private property is the final and most complete expression of the system of producing and appropriating products that is based on class antagonisms, on the exploitation of the many by the few.

� In this sense, the theory of the Communists may be summed up in the single sentence: Abolition of private property.”

9

A bit of digression

� 1st successful Marxist-socialist revolution, Russian Bolshevik revolution in 1917, led by Lenin

� Philippine communism: the PKP in the 40s –anti-Japanese occupation, land redistribution

� The CPP (1969 to present) – Maoist, anti-imperialist, anti-feudal, but not explicitly anti-capitalist

10

The Communist Manifesto

“Capital is therefore not only personal; it is a social power. When, therefore, capital is converted into common property, into the property of all members of society, personal property is not thereby transformed into social property. It is only the social character of the property that is changed. It loses its class character.”

11

4. Why Marx was wrong (1)

� “The average price of wage labor is the minimum wage, i.e., that quantum of the means of subsistence which is absolutely requisite to keep the laborer in bare existence as a laborer.”

� Wrong. The average price of labor is between the minimum wage and the wage of the most skilled or “most favored” workers.

12

Workers segmentation and wage differentiation

� In a competitive market, there are various “equilibrium” wage levels where supply meets demand. No single wage level that applies to all

workers in all companies in all industries and sectors at all time.

� In one big company, workers are stratified or segmented into different functions with different

skills and different wages.

� Those with higher wages will someday become property owners and start-up capitalists themselves.

14

13

Why Marx was wrong (2)

� “The bourgeoisie has stripped of its halo every occupation hitherto honored and looked up to with reverent awe. It has converted the physician, the lawyer, the priest, the poet, the man of science, into its paid wage laborers.”

� Wrong. May be true before, but capitalism has liberated these professionals from the owners of physical property (PP) and they have become intellectual property (IP) capitalists, inventors of non-physical properties: new song, new seed, new medicine, new software,…

14

Why Marx was wrong (3)

� Assumption that capitalists do not contribute their own labor, that only laborers contribute, to capital accumulation and hence, to private property.

� Wrong. Putting up a business, much more expanding it, is not for everyone. Lots of mental and manual work are needed to assemble various factors to produce a particular product or service.

15

5. Hayek on Property

� Friedrich von Hayek (1889-1992), Austrian economist and political philosopher

� two most important safeguards according to him: rule of law, and private property.

� See my 2 papers on rule of law:

� “Hayek Reader: Liberty and Rule of Law” and

� “Hayek Reader 3: Inequality, Meritocracy and Responsibility”.

16

Hayek on property (1)

“The recognition of private or several property is thus an essential condition for the prevention of coercion, though by no means the only one. We are rarely in a position to carry out a coherent plan of action unless we are certain of our exclusive control of some material objects; and where we do not control them, it is necessary that we know who does if we are to collaborate with them.”

17


“A person with practically no property of his own (beyond personal belongings like clothing) we can leave the care of the property that serves our needs largely to others. The important point is that the property should be sufficiently dispersed so that the individual is not dependent on particular persons who alone can provide him with what he needs or who alone can employ him.”

18


“That other people’s property can be serviceable in the achievement of our aims is due mainly to the enforcibility of contracts. The whole network of rights created by contracts is as important a part of our own protected sphere, as much the basis of our plans, as any property of our own…It is competition made possible by the dispersion of property that deprives the individual owners of particular things of all coercive powers.”

15

19

6. Ludwig von Mises (1881-1973)

“The program of liberalism, therefore, if condensed into a single word, would have to read: property, that is, private ownership of the means of production... All the other demands of liberalism result from this fundamental demand.”

20

Source: http://tomgpalmer.com/wp-content/uploads/legacy-

images/Lee%20and%20Madison%20on%20Property2.jpg

21

7. International Property Rights Index (IPRI)

� commissioned annually by the Property Rights Alliance (PRA) starting 2007.

� MG Thinkers is the only Philippine-based think tank that partnered with PRA

22

IPRI Report, 3 areas of study

� Legal and political environment (LP): Judicial independence, Rule of law, Political stability, and Control of corruption.

� Physical property rights (PPR): Protection of physical property rights, Registering property, and Access to loans.

� Intellectual property rights (IPR): Protection of IPR, Patent protection, and Copyright piracy.

23

IPRI 2009 Result (out of 115 countries surveyed)

4.1Indonesia878.1Singapore

4.4Vietnam778.1Iceland

4.5Philippines748.1Austria10

4.6Sri Lanka718.2Australia

4.7China688.2Switzerland8

5.4Thailand518.3Norway

5.6India468.3Germany

6.2Malaysia368.3Sweden

6.5Taiwan298.3New Zealand4

6.8S. Korea248.5Denmark

7.3Hong Kong198.5Netherlands2

7.6Japan178.7Finland1

ScoreCountryRankScoreCountryRank

24

8. Intellectual property rights and freedom

� Cheaper medicines law” (RA 9502) provides among others, the issuance of Compulsory Licensing (CL), special CL, and Government use. Tools where the State can confiscate the private property -- an IPR like patent – issued by the State itself, to a new medicine, should national health emergencies and related conditions occur.

� Can actually be issued anytime even without a real health emergencies. Like the issuance of the current drug price control, arbitrarily set because of politics, no health emergencies to justify it.

16

25

IPR and freedom

� One impact of this policy, along with drug price control, is that other producers of innovative and revolutionary medicines may not bring their product to the Philippines.

� Freedom from debilitating and killer diseases will be sacrificed as a result of populist policies that penalize innovators and turn a blind eye to other factors that make medicine prices expensive, like government high and multiple taxes on medicines.

27

9. Concluding Notes

� Rule of law and private property rights are the cornerstone of a free society.

� Marxist, socialist and interventionist approach in confiscating private property in favor of the collective is a formula for diminishing economic freedom and individual liberty.

� Not healthy for an economy to embrace left-leaning policies that attempt to disrespect individual talents and performance and forcibly collectivize things.

26

Article by the author, BusinessWorld, November 4, 2007

reflections of a former marxist on property rights

Government & Nonprofit