Another Plug for an Underrated Book

A few months ago (in celebration of the Fourth of July), I blogged about how the introduction of property rights in the first American colonies saved early America from starvation. However, property rights are about much more than averting death; they are the key to a prosperous society and, more importantly, instrumental in promoting peace and cooperation amongst people. Market-Based Management emulates the productive and peaceful institution of property rights through decision rights, which are employees’ ownership and accountability over their roles, responsibilities, and expectations.

Traditionally, societies adopted property rights because they worked, while experiments at communal ownership ended in conflict and often starvation. While the effects were manifest, however, no one was quite sure why property rights proved reliably effective. People took property rights as a given—at least, until someone was dumb (or arrogant) enough to think he knew better.

Although the value of property rights can be thought of as a "given,” we should still be curious about them. So, while I steadfastly recommend against opening a property law book (mine is purposely glued shut), I can offer Tom Bethel’s excellent book The Noblest Triumph: Property and Prosperity through the Ages. The book is remarkably intelligent and clear. The New York Times went as far as to label it “amusing.” In fact, it is the kind of book that you will annoy those around you with continuous statements of “did you know….?” I can almost guarantee that The Noblest Triumph will not only provide valuable insight into a typically difficult subject, but it is one of those rare books that the reader can feel making him or her smarter.

Comments

[Bill Conerly]

Here, here. It's a great book. Two other good books on property: Richard Pipes, Property and Freedom, and Hernando De Soto's The Mystery of Capital.

[Pat Peterson]

A few points of consideration. Community-based property can work--though limitations on growth may be needed. I lived in a community (commune) for nearly 20 years, and know it is possible--though it may rely on a religious or other strict community structure.

What do you do with first-level employees who have no decision rights? The RR&Es may be slightly different than a similar co-worker, but there is really nothing they "own" as a part of the Koch/GP workforce.

[Alastair Walling]

Pat,
Bethell's book does discuss community property and the appropriate conditions under which it can succeed. Successful communes are rare, but not unheard of. Bethell gave three conditions that appear to overcome the free-rider problem and make a successful commune possible:
1. Small size—the magic number for a successful commune is no more than about 150. This small number allows members to watch each other and know each other personally, which creates the necessary bonds for community.
2. Some sort of religious zeal or enthusiasm is also needed to create the necessary spirit of self-sacrifice.
3. Celibacy: Ok, this seems a little weird, but the creation of individual families can divide the community. Individuals may be willing to engage in self-sacrifice for themselves, but this sense of self-sacrifice for the community should be overcome by the desire to self-sacrifice for the family—children in particular.

These appear to be the conditions for a successful commune. Of course, we all experience communal living during our lives—the family is a commune. However, anything beyond the family will probably require these three elements. Monasteries certainly embody all three, as have some religious cults. Of the three, celibacy is probably the most optional. Bethell gave the example of Hutterite communities, which somehow make communal living work without celibacy, but they do satisfy the first two conditions. Their zeal is strong and a new colony is created every time old ones grow past 150.

So, you are right, under certain strict conditions and on a small scale, communes can function. Historically, the problem has been when planners have attempted to impose communal property on a much larger scale. Only private property can create the incentives necessary for larger populations to grow the recourses needed for comfortable living.

In regards to your second point, most (if not all) Koch/GP/INVISTA employees should have some sort of decision rights. They “own” what they are directly responsible for, and also own a piece of whatever whole process they are involved with. We “own” what we do, and everyone (hopefully) does something. There may be exceptions, but I cannot think of any right now. Secondly, even if an employee has few decision rights, RR&Es are still needed. For starters, the managers can put all their employees’ RR&Es together in order to make sure that everything she is responsible for is covered. At the same time, when the manager and employee sit down together to review performance, the RR&E provides an excellent reference point to remind the manger and employee what “good” looks like. This makes it easier to determine what rewards or additional decision rights the employee maybe due. One last thing, this is merely a rough description of how things are supposed to work using MBM. However, we know that this may not always be the case. Managers may treat employees like they have no decision rights (do as I tell you), and employees may think they have none (I do only what I am told). This is the command and control environment that MBM tries to displace. Sadly, it probably still exists in too many places, but we are working on it.

Hope I got everything, and if not, then please let me know,

AL

[Pat Peterson]

Alistair, thank you for your response. The additional insights from Bethell's book were escellent--I will look for the book. And wading into Libertarian waters in my post-communal experiences helps me appreciate such important concepts as property rights.

As far as decision rights and RR&Es, it may be something that can be expressed more completely in reviews (tying the two together) in situations where an employee may be in a ground-level position. In considering your response, I can see places where I personally have decision rights that have not been explicitly discussed in regards to my RR&Es, and would help to open that document up even more in my day-to-day work.