At Bleeding Heart Libertarians, University of Arizona philosopher David Schmidtz discusses what a good concept of property does for society. He sums his view concisely at the end, reproduced below. Go read the rest of it for the background and support for these conclusions.
To summarize, in more concrete terms, when a system of property is working, it enables people to live good lives together by helping people to solve a cluster of key problems:
- It puts people in a position to produce.
- It puts producers in a position to trade.
- It fosters creative destruction by encouraging people to experiment, and to shut down experiments that are not working, and to acquire and transmit information about which experiments work and which do not.
- It limits externalities. That is, it results in people having to pay the costs of their own experiments, and also in people being able to enjoy the benefits of their own experiments, thereby helping a society make progress. In most times and places, this will mean a mixed regime in which important bits of property are held by the public but in which the primary means of production are in private hands. That kind of mixed regime has been tested repeatedly in practice. Evidently, and for well-known reasons, it just works better.
- It limits transaction cost. A system must enable producers to take steps to minimize the cost of getting their product to their customers. The roads must be good. Tariffs must not prevent them from dealing with foreign suppliers, and so on.
- It enables producers to grow their business, setting up production processes that exploit opportunities for productivity-increasing division of labor and economies of scale.
A system of good property law and good government does these six things, then stops. Property rights don’t do everything for people, any more than do traffic lights, or plumbers, but this much they can do: they can structure people’s opportunities and incentives such that the most profitable thing people can do is to be as useful as possible to the people around them. The key to explosive economic growth is simple: Secure our possessions well enough to make it safe for us to be a part of the community. Put us in a situation where the key to personal prosperity is to devise ever more effective ways of making the people around us better off. That isn’t everything, but it is a lot.