Тег: entrepreneur

Entrepreneurial Theory of Property

Shortly after my summary of Konstantin Morozov’s article stating that libertarians must either accept moral realism or give up the idea of proving that their ideology is the best, I began reviewing materials from the recently held “Capitalism and Freedom” conference in St. Petersburg. There, I came across Sergey Sazonov’s presentation, “Entrepreneurial Theory of Property.”

It seemed to me, and Valery Kizilov confirmed my suspicion in the Facebook comments, that the topic of this presentation echoes Morozov’s article.

The presentation showed that, purely philosophically, the concept of property can be based on two opposite foundations: deep private property (initially all property is the domain of individuals, and they can subsequently delegate their rights to society) and deep public property (initially everything belongs to everyone, and subsequently society may agree to allocate something into individual ownership).

It was further explained that the idea of deep private property in the most widely accepted Lockean interpretation has an insurmountable flaw—which is exactly what Konstantin Morozov points out. The basis for primary appropriation is the universal right of non-exclusive use of any ownerless resources, but everyone who appropriates them thereby deprives all others of their right of non-exclusive use. Deep public property, however, is devoid of such a logical flaw.

Although both concepts of the origin of property rights allow for the derivation of similar worldviews, there is a serious difference between them. By deriving property rights from deep private property, we must prove the extreme necessity of any state intervention. By deriving them from deep public property, conversely, we must prove any of our own authorizations to dispose of certain things—whether this will indeed be a socially beneficial use of property.

Sergey then demonstrates a justification for deep private property that is devoid of the aforementioned flaw. The transformation of a simple object into a resource that can be turned into property occurs not at the moment of the Lockean “mixing of labor with land,” but at the moment of making an entrepreneurial judgment about them. One sees how something unwanted by anyone can be applied—and that’s it, it’s appropriated. The Lockean contradiction is resolved because a simple object is transformed into a resource instantaneously, and no one is deprived of their non-exclusive right of use in the process. In contrast, within this approach, the idea of deep public property develops insurmountable problems.

In short, I highly recommend getting acquainted with the presentation; it’s a great mental workout. As for me, I will need to think about whether to include this material in my book, and if so, in what form.

Transaction insurance, supplement

I want to supplement Voluntarist’s yesterday’s post on transaction insurance.

In the Telegram comments, several points were quite rightly noted.

First, classical individual insurance is always based on statistics and probabilities, so it will primarily be applied where transactions are standardized and risks are sufficiently random. It is quite difficult to imagine, for example, insuring a bank against a borrower’s intentional non-payment of a loan while prohibiting the insurance company from forcibly recovering that very loan. If such an insurance service were provided, there would be a fairly strong temptation for bank employees to organize a scheme of issuing non-repayable loans to shell companies for kickbacks, with the bank subsequently receiving insurance when the loan is not returned.

Second, the use of escrow accounts is usually imposed on transaction participants by the platform owner who sets the trading rules. If transactions occur without an intermediary, the use of an escrow scheme is unlikely, especially if the freezing of funds is expected to be long, as in the case of shared construction agreements.

Third, I was reminded of my year-old post about, suddenly, juvenile justice, where I noted certain difficulties with liability insurance.

In this regard, I want to mention another convenient way to reduce the risks of contract non-performance that is not related to violent coercion. These are the good old insurance groups, meaning archaic collective responsibility. In the old days, a person’s entire kinship, tribe, clan, or community—in short, a group of relatives and possibly neighbors—was responsible for them. Therefore, one didn’t have to worry much about personal reputation; instead, a person was judged by who they belonged to.

Of course, in a stateless society, there is no need to necessarily restore communal living, although the factor of belonging to an insurance group would be a compelling reason to cluster in such a way. Then again, there is certainly no need now to organize specifically by kinship, as friends and like-minded people play the role of the kin today. But I want to discuss not interest-based circles, but how transaction risks can be further reduced.

Entrepreneurs wishing to earn the trust of potential counterparties can form associations. Admission to such an association can be based on various criteria. Some may be accepted for an already established good name. Others—for promises to conduct business with impeccable honesty and a large deposit. Others—under the guarantee of respected members of the association. For external counterparties, the association acts as a group guarantor for the transactions of its members.

Every member of the association is, on one hand, interested in the growth of its membership, because this means that in the event of collective responsibility, the losses of each member are reduced. On the other hand, everyone is interested in ensuring that only honest and reliable entrepreneurs enter the association—those who insure others rather than parasitize the collective. The association will cover the costs of a breached contract not only for classic insurance events, but also in cases of force majeure, and even if a member of the association turns out to be a fraudster. But, of course, in the latter case, it would mean a “wolf’s ticket” (blacklisting) for such an entrepreneur.

Finally, I will note that the proven, well-known dishonesty of an entrepreneur by no means means that he will die in a ditch because no one will sell him anything and no one will hire him for anything. It simply means he will not be taken at his word, and all transactions for him will operate on a “money upfront” principle.

Any attempts to depict a stateless society as something totally cannibalistic imply either an incredible scarcity of resources for which people must tear each other’s throats out, or a post-totalitarian syndrome of complete mutual distrust. Naturally, the gradual dying out of non-violent practices in general and the state in particular cannot be accompanied by such catastrophic symptoms.

Interview for admission to the association of agricultural producers