Wednesday, November 26, 2008

How Capitalism Gave Us Thanksgiving

So the rather unique American holiday of Thanksgiving comes upon us tomorrow and I wish all our readers a happy and tasty one. Though the official holiday itself began during the Civil War period as Lincoln declared a day of thanksgiving in 1863, we are all familiar with the origins being traced back to the Pilgrims in the Plymouth Colony. As every school child knows, a great feast of celebration was had after the abundance of a large harvest, which followed the previous long period of suffering in the new wilderness.

The story that few school children will ever know however, is why it took until 1623 to have this abundant harvest, three years after the colonists first landed in 1620 (there was a celebration in 1621, celebrated by the original survivors after making it the first year, but the first feast of abundance that we associate the turkey and the other mythological imagery with was in 1623). By the short simple answer, the Pilgrims for the first two years suffered under socialism and in 1623 were saved by capitalism. The original colony was set up as a communal farming community. Every man worked on common fields and all produce was shared collectively. The result was the tragedy of the commons. Because all of the benefit of an individual's work would be shared but all of the cost of one's work must be assumed alone, the incentive to work is greatly diminished. One begins to free ride off of others. However when every worker thinks this way, total output rapidly declines and harms the greater whole.

Seeing these results over the first two seasons, reforms were made. The colonial governor, William Bradford, wrote in his diary on this problem:
So as it well appeared that famine must still ensue the next year also, if not some way prevented. Therefore [the colonists] began to think how they might raise as much corn as they could, and obtain a better crop than they had done, that they might not still thus languish in misery. At length after much debate of things, [I] (with the advice of the chiefest among them) gave way that they should set corn every man for his own particular, and in that regard trust to themselves. And so assigned to every family a parcel of land.

And there for the first time, the colonists of Plymouth had private property rights. Each family was solely repsonsible for the upkeep of its land, but in return was able to keep the produce from it. The result was a massive increase in farming output that season as every man had an incentive to work hard and efficiently. Bradford further wrote:

This had very good success...for it made all hands very industrious, so as much more corn was planted than otherwise would have been. By this time harvest was come, and instead of famine, now God gave them plenty, and the face of things was changed, to the rejoicing of the hearts of many.

A very similar pattern also happened in Jamestown, where the original settlers were largely indentured servants, and their work was split communally with the colony. After the first 500 or so settlers largely perished, the new governor Thomas Dale abandon the indentured servant model and gave each family a parcel of land. The result was the thriving of the colony. Famous settler John Rolfe stated that once men were granted property they went about, "gathering and reaping the fruits of their labors with much joy and comfort.” The settlers went from bartering for food from the local natives to selling excess food.

So this Thanksgiving when you're feasting on turkey and other delights, omong other things, make sure you take a little time to be thankful for property rights, free markets and capitalism. :)



Leave it to EJB to bring free market theory into Thanksgiving festivities. I only have a few random thoughts to add to this one.

First, the "tragedy of the commons" is a questionable theory; and I emphasize the word "theory" because there are no great societal examples of this phenomenon. The author of the phrase (which served as the title of his article) was Garrett Hardin, professor of sociology at California. His article purports to base the "tragedy of the commons" theory on the old English "Commons," communally owned pastures where shepherds would bring their sheep to graze. These "Commons" were eventually replaced by private farms. Hardin would have you believe that the downfall of the communally owned pastures was an inevitable consequence of letting property be owned communally in the first place. New research confirms (or, at least, strongly supports the idea) that the Commons fell because of other reasons.

Besides the complete lack of empirical evidence, the "tragedy of the commons" theory, upon closer inspection, seems to be flawed rationally as well. Hardin premised his theory on the assumption that if a resource were left to communal rule, and thus not protected by individual property rights, there would be a rush by individuals within the community to use all of that resource for themselves - thus destroying the resource and the environment. This article, by Ian Angus, notes that that assumption appears slightly myopic:

"Contrary to Hardin's claims, a community that shares fields and forests has a strong incentive to protect them to the best of its ability, even if that means not maximizing current production, because those resources will be essential to the community's survival for centuries to come."

A community, just like any individual person, can foresee, comprehend and adequately prepare for future scarcity.

My last point is more social than economic. It is a sad fact of history that "tragedy of the commons" theory - or, more broadly, the Lockean theory of private property supported by "tragedy of the commons" thinking - has been used to forcibly displace and destroy indigenous populations and civilizations. There is no better time to consider this embarrassment than Thanksgiving. The brutal oppression of the Colonists over Native Americans was fueled and subsequently "justified" by theories of private property. This is made clear by a conveniently on-point quote from Chief Justice John Marshall in his opinion in the case of Johnson v. McIntosh (wherein the Court held that private citizens could not buy land from Native American tribes):

"But the tribe of Indians inhabiting this country were fierce savages, whose occupation was war, and whose subsistence was drawn chiefly from the forest. To leave them in possession of their country, was to leave the country a wilderness..."

Thus, while EJB suggests being thankful for Locke, Friedman and property rights this Thanksgiving, I suggest that those with the good fortune of being descendants of the peoples who have most benefited from the imposition of private property rights consider themselves lucky and give thanks - descendants of the conquered (the few left, of course) might not consider themselves as lucky.