Executive Summary

Armen Alchian (1914-2013) was a Professor of Economics at UCLA and a prominent microeconomic theorist whose work was influenced strongly by that of Adam Smith, Ludwig von Mises, and Nobel-Prize-winner Friedrich Hayek. In this article for The Concise Encyclopedia of Economics, Alchian discusses property rights.

1. Humans need to produce and consume goods in order to survive. Especially in a large-scale, dynamic economy, “the definition, allocation, and protection of property rights is one of the most complex and difficult set of issues that any society has to resolve, but it is one that must be resolved in some fashion.”
2. One fundamental value of resolved property rights is that “well-defined and well-protected property rights replace competition by violence with competition by peaceful means.”
3. “The purported conflict between property rights and human rights is a mirage”.  Property rights are human rights to use and exchange goods. Thus, the issue of property rights cannot be abolished, and the key question is whether property is to be controlled by governments or by private individuals.
4. Both versions of property rights assert that the owner has exclusive rights to determine the use of the resource, but private property rights also include the owner’s exclusive rights to the services of a resource and to exchange, delegate, or rent the resource.
5. The latter are often regulated by price controls and various restrictions on owners’ rights to sell. Such restrictions impede the achievement of property rights: the elimination of “destructive competition for control of economic resources.” For example, consider rent controls: instead choosing a tenant based on economic reasons, “the landlord, now unable to receive the full money price, will discriminate in favor of tenants whose personal characteristics … he favors.”
6. Extreme cases of weakened property rights are socialism and “commonly owned” resources—systems of ineffective and overuse of resources due to lack of incentives and competition based on personal traits of government officers.
7. The completeness of property rights is contextual. Some resources—such as air or water—inherently deny the possibility of total control over their use. Thus, property rights are not absolute; rather, “only to the extent that rights are salable are those values most revealed.”

Read Dr. Achian’s full essay here. Summary by Andrei Volkov and Stephen Hicks, 2021.

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See Next:

1. Ayn Rand, "Man's Rights"
2. Adam Mossoff, "Intellectual Property and Property Rights"
3. Hernando de Soto, "What if you can't prove you had a house?"