How to start a revolution without really trying

National Review, Nov 15, 1985 by Tom Bethell

IN A RECENT article (NR, Aug. 23) I pointed out that the international debt crisis would not soon go away, because the indebted countries have been unable to create property rights, which are indispensable if new wealth is to be created. And without new wealth, debts cannot be repaid. Moreover, I suggested, certain American elites have sometimes worked to obstruct the emergence of property rights abroad, whether or not they knew they were doing so.

Property rights depend on the rule of law: the establishment and acceptance of the idea that the law must apply to all, including (especially) those who administer it; and that there exist human rights of ownership and exchange, the security of which it is the duty of governments to protect. Today, the central problem of economic philosophy is simply this: How is the rule of law to be established in those countries--the great majority--that do not enjoy it? Not only has this not been answered it contemporary economic discourse. It has scarcely been asked. For example, Professor P. T. Bauer of the London School of Economics (now Lord Bauer), perhaps the leading critic of mainstream "development" economics, does not raise the question of property rights and how they are to be established in underdeveloped countries.

Let us now embark on a brief excursion, beginning with the Philippines. Citing a Communist threat, Ferdinand Marcos imposed martial law there in September 1972. Political opposition and press freedom were curtailed. And land reform was instituted. This, Marcos said, "would eliminate landlordism in the Philippines and give land to the tillers everywhere in the country." Marcos had simply seized the power to expropriate rural property, with the added provision that the tillers, or renters, of the land were in some cases declared to be its new "owners."

The New York Times reacted to Marcos's martial law with telltale ambivalence. It was predictably concerned about the "repression of civil liberties" and the "suspension of democratic institutions." But it relished the "genuine reform" of expropriation, which deserved "open encouragement." This might take the form of "generous economic assistance for programs to help the majority of Filipinos." (The welfare state should be extended to the Philippines, in short.)

Land to the Tillers!

THE TRUTH was that Marcos deserved condemnation on all counts. But the Times saw partial merit in his version of martial law: Freedom of speech was a civil liberty; the security of ownership was not. The Times here made explicit what we all know: The claims of property are often suspect to educated elites. Even though we may enjoy the security of property and take it for granted in our own lives, its general advocacy and application are intensely controversial. Explicit support of the security of property by the economics profession would entail a repudiation of the statist ideology by which it has been guided for fifty years, and such a change is too painful to contemplate, no matter what the evidence may be.

A year later, in October 1973, embarrassing details about the Philippine land reform were published by the New York Times. The reform was facing a "major roadblock." Tens of thousands of middle-class smallholders were unexpectedly scheduled for expropriation. Half the plots eligible for plunder were 25 acres or less. They were owned, Tillman Durdin reported, by businessman, retired military officers, teachers, and other professionals who have put their savings into small rural properties that they have regarded as providing basic security for themselves and their heirs. Tenants cultivate their lands while they live in towns and collect as rent their share of what the tenants make.

The secretary of Agrarian Reform was quoted as saying: "These are the very people, a part of the middle class, whose support the president needs. They will be very bitter if they have to give up their lands."

Oh dear, somebody had goofed. Marcos had been persuaded that ownership was the great bulwark against Communism. Therefore, if you took land from "absentee landlords" and gave it to the tillers, ownership would increase and Communism would find no foothold. But the absentee landlords turned out to be teachers--Marcos's own bureaucrats!--who had bought a little land as a form of pension plan: something literally to live on after retirement. And now Marcos wanted to seize it from them. Adding insult to injury, the New York Times (its editorial writers secure in Scarsdale) had given its blessing.

Much of this planned plunder was forestalled. Nevertheless, Marcos weakened his own country with land reform, which provided him with the rationale for seizing the property of political opponents (including the largest steel mill in the country), thereby contributing to a general insecurity. Furthermore, when the rule of law is subverted, corruption invariably takes its place. If a landowner's property was unexpectedly not taken, then his neighbors would suspect him of buying off the Agrarian Reform surveyors even if he had not.