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THE HOMESTEAD PRINCIPLE

Most people would have no clue whatsoever what the topic of conversation would be if we would to mention this principle by its name. It is just another case where semantics gets in the way. The Homestead Principle is simply our old friend, the deal, with a few clarifications. Incredibly enough, it is all that’s needed. Let’s get to it.

In general terms the principle reads:

Ownership of un-owned property is achieved by actively using the property (i.e. in a manner that provides economic benefit), by joining it with a previously acquired property or by marking it as owned.

In principle, a property cannot be “acquired” by this principle if it belongs to somebody else, only if it is un-owned. This means no more “right of conquest” and related pseudo-rules. An un-owned property can only be acquired if one works it, joins it with something one already possesses or marks it as owned.

This simple rule convers a great deal of terrain, so to speak. However, it also introduces a few issues. We, as Absolute Austro-Libertarians, agree with the first, and disagree with the last two.

We have stated in our lesson The Master Contract Explained that we only consider an un-owned property owned through continuous use in its entirety. We also stated that marking a property does not make it ours, simply because there is no economic benefit for anybody. For the same reason, simply joining a new property with an existing one of ours, but not using it continuously, does not make it our property.

And so, in our little corner of the Austro-Libertarianism, we define the Homestead Principle as:

Ownership of un-owned property is achieved by continuously using or working the entire property (i.e. in a manner that provides economic benefit).

 

ECONOMIC BENEFIT

This condition, being the only one we accept to recognize ownership of a previously un-owned property, deserves further scrutiny.

We stated in our lesson The Master Contract Explained that:

“…we acquire property by using our bodies, which are our very first property. So some type of interaction is required. But which interaction is sufficient? Since the Master Contract is economy-dependent (as we have seen in previous Conditions), it makes sense to link claims of property to same sort of meaningful economic activity. Hence, the requirement for us to continuously work or use a property before we can claim it as ours.

But what does it mean continuous work or use? It means that the entire property must not only have some economic function but also that this function must be exercised continuously.”

Let’s analyze each condition separately.

 

We require the use our bodies

Why do we require that we use our bodies? It is a redundant requirement. It is more of an observation than a requirement. If we claim a property as ours but we outsource to a management company its development, did “we use our bodies”? Certainly so. If one would to trace back the origin of the decision to develop this property, it would trace back to us, to our brain and to the activity of our body that outsourced the work in the first place.

It is also some sort of catch-all condition to prevent strange scenarios. Let’s suppose that in the future we develop intelligent, working robots. Company A sends one such robot to Neptune. The robot mines a section of Neptune and returns with the cargo. The robot “gifts” the Neptune mine to me. Do I own it? No. I have not used my body in any way to “acquire” the mine. I don’t own Company A nor am I a shareholder. I am not the owner or designer of the robot. Therefore, my body was not used and since we do not recognize Homesteading Principles for robots, the mine belongs to the Company A.

 

We require interaction

We require that our bodies interact with the property that we intend to claim. Why do we so require? Because in economics the intention of doing something has no meaning nor effect. I intend to buy a Rolls Royce. Does this means that I am buying one? Most certainly not. Should the Rolls Royce company plan for my future order? No. Does my intention have any economic impact whatsoever? No.

Interaction is action and we need action to demonstrate our ownership. Intention is wishful thinking.

 

We require meaningful economic activity

Why do we require meaningful economic activity to demonstrate our ownership? Because the Master Contract (and the entire Absolute Austro-Libertarian system) is fundamentally based on biological principles and our biological imperatives which are economic in nature.

Meaningful economic activity is the proof of ownership that is necessary. The reason for this is the same reason why in economic terms a transaction between two people has no meaning until good or services and money changes hands. Up to that point it is only a possibility; passed that point is certainty. When we acknowledge that a property belongs to somebody, we demand to have certainty that it is so. Since this certainty is framed in economic principles, this certainty must be economic in nature.

In other words, put your effort where your mouth is and I will recognize your ownership to the property.

 

What is a meaningful economic activity

The term meaningful is certainly subjective, so we specified two conditions:

  1. Economic activity must be performed on the entire property
  2. Economic activity must be constant

Why the entire property? Because we need to place physical limits to the claim of ownership. It is yours as far as you worked it. If we would not do so, we would be accepting the idea of just claiming a property and not demonstrating your commitment.

Why constant economic activity? To demonstrate your commitment to ownership. If we would not do so, what would prevent somebody from performing some token economic effort on a huge property and claiming it? For example, let’s say that I wish to “own” 10.000.000 acres of Mars territory. I hire a company to spray green algae spore on it and I am done! I have covered the entire territory of my claim and have worked it by spraying. Is this OK? Most certainly not. This is a one-time event, a token effort. It has no continuity and therefore it does not demonstrate commitment.

 

What is an economic activity

An economic activity is a process that provides some sort of economic benefit. Do we mean business? Not necessarily. A commercial activity would certainly qualify, it would benefit us by creating profits and buyers and vendors by creating necessary products and purchasing raw materials respectively But it is not the only one. We could simply be “using” the property to live on.it or off it. It would produce an economic benefit for us (we wouldn’t have to buy or rent a property where to live) or it would sustain us (we wouldn’t have to buy sustenance from other vendors). In this case, it benefits only us.

How about beginning a commercial activity? It certainly has not produced any products nor profits yet. Where is the benefit? Vendors benefit.

The requirement to have an economic activity which produces benefits is to prevent “declarative” actions. For example, I could “declare” that I own a property with the purpose of speculating that its price will increase in the future and therefore I am engaging in an economic activity. Such “declarative” actions produce no economic benefits and therefore there is no commitment to ownership. However, if I wish to own a property with the intention of speculating with it but this time I fence it, care it, pay for maintenance and repair it and I do so throughout its entirety, then I am benefiting vendors and therefore I am performing a meaningful economic activity that provides benefits and this is acceptable.

 

What is the meaning of continuous

We demand that a property to be owned be worked or used continuously in order to demonstrate commitment to ownership. But what exactly is the meaning of continuous? Does it mean that we need to continue such an activity forever? Yes. But it must not be taken out of context. For example, we could claim ownership of a property by continuously living on it; however, when our claim is established, we may leave the property providing that we continuously care for it. The word continuous does not imply the same level of effort. One would be well advised to apply larger efforts at the beginning, to establish and demonstrate commitment to ownership, but once this claim has been established, a lesser degree of activity is perfectly acceptable. It continues to demonstrate our commitment.

Note: please see the Glossary if you are unfamiliar with certain words.

Continue to First come first served - Part 3

 

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