In The Fatal Conceit: The Errors of Socialism, Hayek put the choice this way: “I would rather have no property in a country where many people own some property than live in a country where all property is collectively owned and its use is directed by the authorities.”
The point is clear. Where property rights are secure, possibilities are boundless. The poor can become prosperous through their own efforts instead of being trapped by status, class, and the wait for handouts.
In a broad sense, liberalism and the market economy are part of an egalitarian movement. But market equality has a precise meaning: equal protection of property, equal freedom, and equal rights. It does not mean equality of outcomes or leveling everyone down, much less DEI that manufactures inequality in reverse.
The market economy tears down barriers of status, breaks open occupational privileges, abolishes caste restrictions, and attacks privilege head-on. Everyone can succeed by serving others, not by virtue of rank or birth. Each person’s body and property belong to that person, not to others as objects of subordination and plunder. Everyone is free to do what they wish, so long as they do not violate the rights of others. Only under such a system can everyone’s productive energy be fully unleashed—and that is what has brought humanity an unprecedented rise in well-being since the Industrial Revolution.
The great transformation from poverty to prosperity in China since reform and opening up has its roots in the adoption of the socialist market economy. Pay attention: market economy is the operative phrase. Property has received better protection.
From commune collectivism to the household responsibility system; from calling three ducks “capitalist” to allowing individuals to work for themselves; from condemning roasted-seed sellers as the tail of capitalism to recognizing the private sector; from treating commerce as speculation to encouraging the circulation of goods; from needing a certificate to leave one’s village and being detained for seeking work in a city to the free movement of labor—each step reflects better protection for property rights.
Theory and experience have both shown decisively that when property rights are effectively protected, the economy flourishes and human well-being rises. When property is violated, the economy stalls and people’s welfare declines.
Property rights are therefore the foundation of freedom and prosperity. The market economy is the best anti-poverty system, and the system that benefits the poor most.
The way to advance the economy is actually simple: remove the shackles imposed on property and abolish interventionist economic policies. This does not require an activist government or public spending. It requires decisively cutting away interventionist laws and policies.
Deregulate and stop intervening in one sector, and that sector will flourish. Cut away all such controls, and the economy will surge forward. There is no Latin American trap or middle-income trap, and no pseudo-proposition that growth must slow simply because an economy has become large. These are just stories told to excuse the suffocation caused by layers of regulation and intervention.
There is so much to cut. As Hayek put it, more than 95 percent of the laws in the modern world are legislative commands dressed up in the name of law. Rothbard’s answer was abolitionism: insist uncompromisingly on repeal, not patching things up. Patching is really compromise and acquiescence. And as for what to repeal, Rothbard’s point was: cut anything. Every cut moves us closer to freedom. What matters is directly stripping administrative agencies of their power to regulate, not abolishing a department while leaving its power intact.
Only theoretical purity and radicalism can bring practical, marginal improvements. Theoretical compromise is betrayal; it is the devil. This theoretical purity and radicalism become all the more important and realistic when regulation and intervention have seeped into every detail of economic life, until people have grown accustomed to living under them.
Equal protection for everyone’s property is inherent in the protection of property rights. Property rights are rules, and rules must apply equally to everyone and pass a consistency test. If one person’s property is protected while another’s is not—or if protecting one person’s property comes at the expense of another’s—then property is not being protected, and there is no rule at all. That means the property of the rich must be protected too.
This allows the rich to lower their time preference, accumulate savings, and invest their wealth to expand it further. Capital accumulation can then keep growing.
More investment by the rich brings several benefits to the economy. First, if we set aside the human element, capital and labor are hiring one another. More capital therefore creates more jobs, making it easier for the poor to find work.
Second, more capital investment brings technological progress. Even without improving their skills or working longer hours, poor workers can use more advanced tools, raise their productivity, and in turn earn higher wages and improve their standard of living. The Industrial Revolution and the history of every technological advance show just how powerfully capital investment and technology have improved the lives of the poor.
Finally, investment and higher productivity mean more goods are supplied. Greater supply brings prices down. So even if workers’ money wages do not rise, their goods wages do: their purchasing power increases.
The conclusion is plain: the greatest beneficiaries of the rich person’s saving and investment are not the rich person, but the broad mass of the poor. In any case, the investor takes on the risk of production, paying factor owners rent in capitalized form and workers wages in advance for products that will only exist in the future.
In other words, so long as the property of the rich is protected, the poor can share in the greatest benefits of their investment, whether it succeeds or fails. That is the powerful positive externality of the market economy.
One person’s growing wealth is never bad news for everyone else. It is wonderful news. The same is true between countries: one country’s prosperity benefits all the others, while any country’s economic decline harms people everywhere because it means fewer opportunities to trade.
So, consistent with protecting the property of the poor, protecting the property of the wealthy is vital. In a free market, people are wealthy because they produce for the public, create value for the public, and win the public’s monetary votes. They are more capable entrepreneurs, natural elites tested by the market. Never forget the iron law of oligarchy: social progress is driven by a handful of elites, while most people follow in their footsteps and enjoy the fruits of their work.
If the property of the wealthy is not effectively protected and is always at risk of confiscation, they will naturally tend to consume too much, run down their capital, or stop creating wealth altogether. Such a society will gradually grow poorer.
And who suffers most in that society? Not the rich, but the poor.
The rich are rich because they have shrewd business minds and a keen political sense. Even in a society that violates property rights, they are likely to find better ways to survive than the poor. In a society full of regulation and intervention, the rich have more opportunities to get close to power, lobby for controls that build a moat around their businesses, and collect regulatory rents. The poor, however talented, may be shut out of the market. These interventionist policies, which restrict production, directly kill the poor’s creativity. Even when they have talent, they have no way to use it. Their path upward is blocked. That has been the norm under class and caste systems for thousands of years.
The rich can go further and ally themselves with power, becoming crony entrepreneurs and members of the ruling class. They can collect inflationary gains, benefit from tax revenue, and capture enormous monopoly rents. The poor remain far from power and the source of money. Their wealth is secretly stolen and transferred away, leaving them plundered and enslaved.
If proximity to power, regulatory intervention, and inflation bring enormous rewards, why bother accumulating capital or serving the public? Such a society will inevitably see less capital accumulation and a distorted structure of production, followed by a decline in supply. Yet the poor depend on abundant capital and strong productive capacity to enjoy low prices, raise their real wages, and survive. When wealth creation falls, the former rich can at least still eat. The poor are immediately “slaughtered.”
So if we are comparing whose need for property protection is greater, the poor have the stronger claim. Their very survival depends on it.
Today, intellectuals spend their time inciting the poor to violate the property rights of the rich and stirring up class conflict. They deceive the public: you are poor not because you lack ability or are lazy, but because someone is exploiting you. Only they can play the goddess of justice and use force to level the gap. Many poor people accept this comforting story and come to believe that violently taking the property of the rich will improve their own lives.
Labor laws, minimum-wage laws, welfare programs, pensions, price controls, protectionism, industrial policy, and so on all win popular support. At bottom, these policies use coercion to violate other people’s property rights and determine someone’s income, instead of relying on the ability to serve others and the judgment of consumers.
What they do not realize is that if this continues, power will decide everyone’s occupation and income, and how much each person is allowed to receive. A caste system and a world ruled by ration coupons will emerge. With no mechanism for people to succeed through ability and determine their own income, everyone will become a collective serf, working under the whip and receiving whatever ration the authorities choose to grant.
And when the principle of property is destroyed, the economic pie shrinks dramatically. What exactly is there left to divide? Plans that promise unlimited material welfare to everyone ultimately provide only a bare minimum—sometimes not even enough to survive—and make people dependent on the favor of those in power. Likewise, abolishing private property in any particular sector brings goods and services that are expensive and poor in quality. This merely reflects the unavoidable fact of scarcity. No one invests, no one produces, no one creates jobs, no one pays wages; affordable, high-quality goods disappear. That is what truly cuts off the poor’s means of survival.
So the policies intellectuals promote as protecting the poor by violating the property rights of businesses and the wealthy end up defeating their own stated purpose. The people they claim to protect are precisely the ones they hurt most. The poor in such a society will live far worse than under the “cold-blooded market economy” those intellectuals condemn.
This is what happens when people are denied an education in economics. They do not understand long chains of reasoning; they lack a basic sense of property rights and economic literacy. Intellectuals and poor people alike are among those least able to resist coercive power, yet they call for it every day, thinking it will make them better off.
One final point: the claim that property protection promotes prosperity is a utilitarian economic argument. It is easy for social democrats who prize equality and happiness to attack it: “I would rather give up economic prosperity and achieve equality, so that everyone feels better. What’s wrong with that?”
Utilitarianism cannot provide the ultimate defense of the free market. The free market must be grounded in ethics, and the principle of property rights must be justified at the level of logic. This is the great work of Rothbard and Hoppe: private property is not an arbitrary convention or a mere preference. It has an irrefutable, ultimate logical foundation. That is the great contribution of argumentation ethics.
Private property is not only a requirement of utility; it is the foundation of ethics. Ethics comes before utility. The ethics of private property and economic prosperity are two sides of the same coin. Without a commitment to the ethics of private property, there can be no economic progress, prosperity, or improvement in human well-being.