Handbook on Contemporary Austrian Economics

Handbook on Contemporary Austrian Economics

Elgar original reference

Edited by Peter J. Boettke

This Handbook looks through the lens of the latest generation of scholars at the main propositions believed by so-called ‘Austrians’. Each contributing author addresses key tenets of the school of thought, and outlines its ongoing contribution to economics and to the social sciences.

Chapter 6: Without Private Property, There Can Be No Rational Economic Calculation

Scott A. Beaulier

Subjects: economics and finance, austrian economics, economic psychology

Extract

Scott A. Beaulier It would hardly be unjust to say that the rationalistic approach is here opposed to almost all that is the distinct product of liberty and that gives liberty its value. Those who believe that all useful institutions are deliberate contrivances and who cannot conceive of anything serving a human purpose that has not been consciously designed are almost of necessity enemies of freedom. For them freedom means chaos. (F.A. Hayek, Constitution of Liberty, 1960, p. 61) 6.1 Introduction Economists generally focus on the positive incentives that property rights create. Perhaps the most widely recognized positive result of clearly defined property rights is a prevention of the “tragedy of the commons” (Hardin, 1968). When people are left alone to pursue their own self-interests in an environment lacking property rights, undesirable social outcomes – also known as the tragedy of the commons – often result. For example, when there were no regulations on buffalo hunting in the 1800s, overharvesting occurred, driving buffalo in the United States to near extinction. On the other hand, we know that when property rights are well-defined and protected, people have a strong incentive to be good stewards of resources. In fact, if resources are valuable enough and property rights are well-defined, people will engage in or encourage the production of goods that might have at one time been thought of as endangered or vanishing. For example, buffalo populations have increased in the West now that property rights in buffalo have been created, meaning that buffalo can...

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