Eliminating Property Rights Destroys Social Order

One of F. A. Hayek’s most foresightful warnings comes in the middle of his essay, “Individualism: True and False.”  He writes, “[W]hile it may not be difficult to destroy the spontaneous formations which are the indispensable bases of a free civilization, it may be beyond our power deliberately to reconstruct such a civilization once these foundations are destroyed.” 

Eradicate those foundations, and social order can be destroyed in mere decades. Those who overlook Hayek’s warning “see in everything the product of conscious individual reason.” They are sure their reasoning powers are supreme and they can fix what they break.

Hayek helps us understand that those without respect for spontaneous order seek to impose “a synthetic system of morals” to implement their plans. They are “unwilling to tolerate or respect any social forces which are not recognizable as the product of intelligent design.” Society is to be remade as “the product” of those believed to have “superior” thinking minds.

Many of us are familiar with the tragic destruction wrought by Mao’s Great Leap Forward and Cultural Revolution, but the early years of Mao’s murderous reign are not as well-known. Mao proclaimed the People’s Republic of China in October 1949 and began his collectivization campaign shortly after. Property rights were systematically eradicated under Mao, with grave consequences to social order. 

In The Road to Serfdom, Hayek explained, “the system of private property is the most important guarantee of freedom, not only for those who own property, but scarcely less for those who do not.” 

The catastrophic consequences of eradicating property rights were brought to light by Dutch historian Frank Dikötter in his book, The Tragedy of Liberation. Dikötter reported, “the first decade of Maoism was one of the worst tyrannies in the history of the twentieth century, sending to an early grave at least 5 million civilians and bringing misery to countless more.”

At long village meetings, agricultural “experts” conveyed messages such as “Since there is a shortage of ploughing animals and tools… it has been decreed that you may borrow your neighbours’ animals and tools. The local government will see to it that nobody refuses to share these things with his neighbours.”

Without property rights, Dikötter reported, “theft also became more common. As one [Communist Party] 1952 report noted, ‘social order is abnormal’, as entire villages sank into a form of open anarchy where every bit of property became fair game.”

Recently I asked Dikötter to elaborate on this chain of events, and he explained the Party, which initially welcomed the destruction of order, came to fear “social breakdown and anarchy.” 

The Maoists had no regrets about eliminating private property; they merely decried the complete breakdown of order as an unintended consequence. Why, they must have wondered, wasn’t society bending to their plans?

In Mao’s China, collectivization introduced perverse incentives that distorted human behavior and led to impoverishment. Dikötter explored, via archival research, how to avoid sharing “it was ‘very common’ for villagers to abandon years of frugality and slaughter their animals. One couple managed to devour a 50-kilo hog all on their own, not saving any of the meat.” Dikötter further explained what collectivization wrought:

Good horses were traded for old nags, carts with rubber tyres bartered for antiquated ones with wooden wheels. The trend started in the spring of 1950. Less than a year later, a third of the countryside was in dire poverty, lacking working animals, food, fodder and tools. Sometimes there was not enough seed to plant the next crop. And even with sufficient seed, the job was badly carried out with sprouts distributed unevenly over the fields. 

As Hayek predicted, without private property, freedom disappeared. Dikötter reported ignorant and often brutal cadres “issued orders while ignoring the conditions of the local economy.” Dikötter continued, “Villagers were locked up in meetings all night long. Animals starved to death. Tools were lacking. In some villages four out of five residents had no food to eat. Lending had come to a complete halt, as everybody feared being stigmatised as an ‘exploiter.’ The poor had nowhere to go, as charitable institutions from the old regime had been disbanded.” 

Dikötter described what today we might recognize as a cancel culture. It started in the early days of Mao’s tyranny: “Villagers who refused to go along with collectivization ran the risk of being called ‘unpatriotic’, ‘Chiang Kai-shek roaders’ or ‘backward elements’. In some cases cultivators who preferred to remain independent had strips of paper pinned on their backs, denouncing them as ‘capitalists’ or ‘go-it-aloners.’”

The Chinese environment was trashed as “traditional village rights and customs were neglected or destroyed.” Dikötter described,

There was a scramble over common resources that had not been confiscated and redistributed with land reform, for instance pastures, moorlands or salt marshes where animals were allowed to graze, or riverbanks and woodlands where children collected firewood. People tried to grab what they could before the state collectivised everything. In Huaxian county, Guangdong, a crowd of 200 fought over the forest, resulting in many injuries. In Maoming a village organised a team of 300 to cut down the trees belonging to a neighbouring hamlet. 

Farmers neglected “even carefully cultivated fields.” Dikötter quoted one farmer “who allowed his terraced field to collapse to the ground: ‘Why repair it when it will soon revert to the collective?’”

Grain was stored in government facilities instead of “small, individual or family-run facilities.” Dikötter reported grain rotted from mildew. Once again, perverse incentives because of the absence of private property were the cause: “local cadres, who cared more about quantity than quality… deliberately allowed high humidity to increase the overall weight.”

Famine followed in 1953, impacting approximately 25 million people.

When collectivist plans inevitably fail, politicians don’t adjust, they blame. Blame is a proven playbook of totalitarian societies. In Mao’s China, Dikötter reported, “Speculators, hoarders, kulaks and capitalists were blamed for all the trouble – despite years of organised terror against counter-revolutionaries and other enemies of the socialist order.” In Mao’s China, as in contemporary America, “more rather than less state power was seen as the solution” when plans failed. 

Dikötter described shifting moral attitudes under collectivism. When asked how he would repay a large loan, one Chinese man replied, “In a year or two we will have socialism and I won’t pay back shit.” In America today, some people express similar attitudes toward government loan programs.

Today in some areas of the United States, woke prosecutors have essentially decriminalized theft, and progressive policies have allowed sidewalk encampments in business and residential areas. Sidewalk encampments have deprived homeowners of fair use of their homes. Due to theft, businesses are closing in progressive strongholds such as Portland, Oregon, and Chicago. In San Francisco, Whole Foods closed a one-year-old flagship store.

In America today, house-squatting is a tiny, but growing, problem. Criminals break into a rental house, change the locks, and when the landlord calls the police, the owner is told the issue is civil, not criminal. A squatter told one property owner the landlord’s ownership right “doesn’t f****** matter.” 

Hayek explained we lose our freedom when we forget the role of private property: “It is only because the control of the means of production is divided among many people acting independently that nobody has complete power over us, that we as individuals can decide what to do with ourselves.”

The parallels are never exact, but we can learn from history. When a foundation of a free society, such as property rights, is abandoned, the destruction of social order and hardship for countless millions follows.

The post Eliminating Property Rights Destroys Social Order was first published by the American Institute for Economic Research (AIER), and is republished here with permission. Please support their efforts.