In response to my last post, Chris asks why resource scarcity is needed before homesteading should kick in. Here’s why I think so:

First, I should say I don’t consider property rights to be “natural,” at least in the ethical sense. Property rights exist because they are useful, and they are always created and upheld by society. The way they are created and upheld may be through formal government or through informal social pressures, but property rights always need social agreement.

Second, the fundamental reason for property rights is to solve the problem of scarcity. Without de facto property rights, people have little incentive to consider resource scarcity, the limitations of resource availability. Property rights create this incentive by assigning exclusive use. Exclusive use means that the owner of a resource derives all (or at least most) of the benefit from using a resource which means the owner has a strong incentive to maximize the benefit from using the resource, and that requires considering its scarcity.

Homesteading should not be used before scarcity develops because there is no reason that people should consider limitations on resource availability when there are no limitations. If a resource is not scarce there should be no property rights over it, and if there are no property rights, there is no need to decide initial allocation. In fact, the notion of property rights over non-scarce resources is rather unappealing. What if the first person to discover America instantly owned it all simply by claiming it? If scarcity is not required before homesteading kicks in, it is impossible to limit the types of resources which can be owned. There is an infinite number of things we could call “resources,” but a limited number that are scarce. Should I be able to travel into space and simply claim ownership over a big chunk of it, next to the earth? Of course not; space isn’t scarce (yet).

Stephan Kinsella has made this same argument and also pointed out how intellectual property rights are different than other property rights. Ideas are not scarce.