The recent award of the Nobel Prize for Economy to Douglas C. North is, among other also important considerations, a slap on the back to the fundamental economic strength that ownership rights have in the initiation and explosion of physical and intellectual development of any region or country in different and colourful historical times. Because of this it is fitting to briefly think aloud about this crucial institution of private property.

To give just one example North explained the effectiveness of property like this when referring to Holland and England... "In both nations constant economic growth took place, the consequence of a favourable context for the evolution of a system of ownership rights that fomented institutional agreements. This resulted in an absolute possession free of the earth's compulsions, free manpower, protection of private goods, patent rights and other stimuli for intellectual ownership, as well as a multitude of institutional agreements intended to reduce market imperfections in goods and capital markets."

The deepest root of that patent effectiveness is found in the mutually expansive relationship between freedom and ownership: freedom facilitates ownership but at the same time the latter is necessarily defined by the former since one only possesses what one has if one can really (freely) have it available.

The value of something cannot be gauged if we do not at the same time gauge its relationship with other goods with which the former can be combined. In order to value something we need to incorporate it into a group of goods with which we can harmonize it. We call that group of material goods patrimony. Its suitability, that is to say, its capacity to generate future wealth, has a strong component of unity and mutual influence. Each subset of the group of wealth has greater or lesser value depending on the extent that it is more or less supplemented and influenced by the rest of the group. The proprietor always gives that wealth its unity, and it is he who prepares and decides on it, and on its purpose. Wealth is one as soon as it belongs to a single unit of decision and it is worth more or less to the extent that that unit of decision (the owner, with free disposition on it) is able to supplement and influence it more or less with regard to his goals. When fecundating different people with our work, or with the work that is at our service, we start achieving our objectives.

Maybe because of that Leonardo Polo affirms that man is a being that, contrary to the rest, keeps a relationship of holding with his own characteristics, and also with the rest of the world: with everything (a rational creature is able to possess everything by knowing it). Possessing is absolutely typical of man. The capacity to possess is exactly what makes man distinctive. Giving an example familiar to economists, he explains that Robinson Crusoe, after being shipwrecked and arriving at "his" island, appropriated and inhabited it. From the first moment that he inhabits and appropriates it, relationships of inherent co-ownership arise with each and every one of the existent things on the island. By means of holding, a correlation takes place between all the things on which that is exercised. Some things remit to others and these to others, establishing a remittance structure which the owner gives unity and sense to.

At this point it is necessary to introduce the doctrine that, through Locke, was to be introduced in liberal law and economy: "Even when the earth and all the inferior creatures belong jointly to all men, each one maintains his own property. Only he has rights on that. One can say that the labour of his body and the work of his hands are truly his. Whenever he is able to take an object out of the state in which nature had located it and where he had been able to blend his work, something that belongs to him joins it, and in this way he appropriates it."

We are speaking about work in a broad sense, not only brute force but also an act that discovers something new and puts it into practice. As the professor Israel Kirzner points out, what ownership does is not, as a too hasty reading of Locke could suggest, the average job, man's physical work, his effort, but the idea, the creative act that accompanies them and of which they are inseparable. The possibility to create, the idea, is based in turn on man's most untransferable freedom: the freedom of thought.

The economy grows when innovations are captured in clarified ownership rights that encourage others to assume the risk of their buying and selling. The protection (security and justice) of those new rights, as well as the knowledge of the rules of their game makes them extend and fecundate the social body being anchored in what Balmes called the "social fund." The so-called "Japanese miracle" perhaps demonstrates that although land ownership is important, the human factor is even more so in a system of freedom since he is the "creator" of intellectual property.

In spite of the apparent effectiveness of the system of individual ownership rights derived from complete and entire freedom and responsibility, that is to say, from the complete and entire possession of itself, these rights are being gravely threatened. On one hand they are threatened by the excessive and disproportionate growth of the State and on the other, tied to the former, by the macroeconomic tendencies to dissect the components of individual ownership subsequently adding them separately with the object of creating models of economic analysis of growth and development controllable by the state apparatus.

When ownership rights are not extended in precision as well as in extension it leads to a situation of widespread abandonment and irresponsibility. Let us see how Hayek masterfully explains it: "The responsibility of many without imposing at the same time a duty of uniform combined action has the usual result that nobody really accepts the responsibility. After all, if everyone's property is nobody's, everybody's responsibility is nobody's.

Ownership is a requirement for innovation, to discover a better use for material things or of one's own professional capacity, contributing in that decisive way to the economic progress of society. Ownership facilitates the maximum exploitation of growth opportunities in this way. When our venturesome capacities are allowed to develop, facilitating the discovery of our abilities and those of the goods that are at our exclusive disposition, it contributes to the economic development of the whole community. It is necessary to recognize that the award of the Nobel to North is a sensible choice.

Joseph John Franch Menéu
Gaceta de los Negocios, Monday October 25th 1993