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The Essence of Libety

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Liberty knows no compromise

by Murray N. Rothbard

Chapter 11: Land Monopoly, Past and Present

Compiled and Edited

by

Dr. Jimmy T. (Gunny) LaBaume

There are two types of ethically invalid land titles. The first is “feudalism” which amounts to continuing aggression by titleholders against peasants. The second might be called land-engrossing. It is where arbitrary claims to virgin land are used to keep first-transformers out. Both can be called “land monopoly” which is properly defined as a receipt of exclusive privilege to a property beyond the libertarian rule of property rights.

Land monopoly is widespread. Feudal landholding is a crucial social and economic problem in the underdeveloped world. The united States is one of the very few countries of the world that is virtually free from feudalism. American laissez-faire economists generally confine their recommendations for the backward countries to the virtues of the free market. But this does not include an end to feudalism and land monopoly. Nor does it involve the transfer of title to these lands, without compensation , to the peasantry. Since agriculture is the most important industry in the undeveloped world, a truly free market can only be established by ending unjust feudal property claims. Since utilitarian economics is not grounded on an ethical theory of property rights, these economists can only defend the status quo—e.g. the feudal suppression of justice.

Conservatives lecture the backward countries on the importance of private foreign investment but fail to distinguish between legitimate, free-market foreign investment and investment based upon monopoly concessions. So to that extent, foreign capitalists take on the aspects of feudal landlords and must be dealt with accordingly.

Modern day examples of land aggression and monopoly abound. One is the Shah of Iran who owned more than half of all arable land in the country which was originally taken over by his father. Another contemporaneous example of foreign investment combined with land aggression comes from Peru . The Cerro de Pasco Corporation legitimately purchased its land. But, it later began to encroach upon and seize the lands of neighboring Indian peasants. When the Indians retook their land through mass non-violent action, the Peruvian government (at the behest of the corporation) sent troops.

Oil lands are major forms of foreign investment in underdeveloped countries. So how are property rights ethically judged? The answer depends on the justice of the property title in each specific case. For example, if an oil company discovers and drills for oil on previously unclaimed land, this is its “homesteaded” private property and it would not be just for the government to tax or regulate the company. By our criteria, if the government claims ownership of the land and leases it to the oil to the company, the government's claim is illegitimate.

But there are cases where an oil company uses the government to grant it a monopoly thereby using force to squeeze out competing producers. Eliciting the force of the State to eject peasants (as was done by the Creole Oil Co. in Venezuela ) is illegitimate. Any such collaborator with government is guilty of aggression against the property rights of the peasantry.

There is a serious flaw in most of the current programs of land reform in the undeveloped countries. Said reform generally involves the transfer of the least fertile land and with full compensation to the aggressor. To add insult to injury, this compensation is often financed by the peasants themselves via state aid. On the one hand, if the landlord's title is just, any land reform would be unjust. However, if his title is unjust then this type of reform fails to get to the heart of the matter. The only proper solution is the immediate transfer of title to the peasants with no compensation to the holder of the unjust title. This, of course, requires a detailed, meticulous inquiry into the land titles.

Early economic development in Western Europe provides historical support for our theory. The free market and capitalism flourished earliest and most strongly in the countries where feudalism and central government power were the weakest—e.g. the Italian city-states, and seventeenth-century Holland and England.

Other historical support is provided by North America . Many of the English colonies attempted to establish feudal rule. This was especially true where the colonies were chartered companies or proprietorships. But all attempts failed because the New World was a vast and virgin land area. The recipients of feudal land grants could only profit by inducing settlers to settle on their property. So, the landlords were economically forced to subdivide and sell their lands. It is unfortunate that these arbitrary claims and governmental grants, engrossed land titles settlement thereby forcing the settlers to pay for what should have been free land. However, once the land had been purchased, the injustice disappeared. So, the vast supply of virgin land, along with the desire of the land grantees for quick profits, led to the dissolution of feudalism in North America.

The exception was, of course, the slave system for which there was only one possible moral solution—immediate abolition with no compensation and a grant of the lands to the slaves under the “homesteading” principle. In this regard there was no difference between north and South.

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