One of the most fundamental requirements of a capitalist economic system (and one of the most misunderstood concepts) is a strong system of property rights.

• A lot of people complain that there's a conflict between property rights and human rights.

• This isn't true because property rights are human rights.

• Social critics of property rights do not want to abolish those rights, rather, transfer them from private to government ownership.

• This is known as the tragedy of the commons

A property right is the exclusive authority to determine how a resource is used.

• The three basic elements of property rights:

  • Exclusivity of rights to choose the use of a resource

  • Exclusivity of rights to the services of a resource

  • Rights to exchange the resource at mutually agreeable terms

Limitations like price controls and restrictions on the right to sell are reductions of private property rights.

Under a private property system, the market values reflect the preferences and demands of society.

Property rights eliminate competition for control of economic resources.

Market values become influential.

• More complete property rights make discrimination more costly.

The two extremes in weakened private property rights are:

• Socialism: government agents excercise control over resources.

  • Soviet union fell because of this

  • Government officials siphoned out the profits of the government into private corporations, which caused a deficit in the budget of the Soviet government.

• Commonly owned resources

No property rights causes people to have less incentives to heed changes or to preserve the resources.

Private property rights don't need to be held by a single person

• Limited liability corporation

• Joint ventures, mutuals, partnerships

Private property rights are not absolute

Conflicting with the desire to secure private property rights is the desire to acquire more wealth by taking from other.

• Military conquest and forcible reallocation

• This is unethical.

Private property rights are the rights of humans to use specified goods and to exchange them.