Respect for Property Rights Enhances Freedom

Franklin Cudjoe, Founding Director of IMANI and editor of gave a talk on Property Rights and Freedom to a 170 selected audience at the British Council Hall in Ghana in July 2009. Below is a typewritten version  of Franklin’s extempore talk.  Read the speech here.


Distinguished Past and Present Ministers of State, His Excellencies Mr. Harald Klein, Regional Director for Africa, Friedrich Naumann Foundation (FNF), Mr.Werner Nowak, West African Regional Director (FNF), Hubertus von Welck, Political Affairs Director, FNF, Chairman of the Baord, IMANI ,Senior Fellows, IMANI, members of the media and fellow country men and women, thank you for responding to our invitation.

When the FNF gives you a task such as I was given, to represent Ghana and report on proceedings at a property rights and freedom seminar, it is unmistakable to assume that they think highly of you. 

Significantly, it is the third time the FNF has facilitated my travel to important meetings, and I am happy to announce that my journey to libertarianism was partly emboldened by what is becoming an intellectual love affair with the FNF.  I can confidently say that the FNF deserves commendation for being part of the IMANI story, which has in the spate of the last three years been ranked the 6th most influential think tank in Africa as well the only African think tank to win twice the John Templeton Foundation award for innovative approaches to wining freedom battles and qualitative research, and the Antony and Dorian Fisher award of the Atlas Economic Research Foundation.

Raison d’être for the subject, Property Rights

Given the life-changing power it inherently possesses for individual freedom and success as well as national prosperity, property rights, is the foundational basis for the survival of the modern nation.  However belaboured the point has been made, meetings such as that sponsored by the FNF offers us a chance to reflect on why there could possibly be a section of society advancing what seems to be deep political and economic arguments against this noble institution for wealth creation.

It would not be far-fetched to suggest that anti-property rights activists and thinkers are simply an extension of the street anti-globalisers who believe globalisation has done more harm to the world than evidence adduced to the contrary.  Without the respect for property rights, the freedom to contract and from contract as well as the rule of law, none of the gains from global economic integration would have been possible.  True, globalisation has brought in its wake some destruction- but such destruction, even before they get corrected, has been pronounced in societies and countries that also do not respect individual and economic freedom.


Perhaps a little expose on what property rights is all about would be helpful.  Many dictionary definitions agree that property is something one owns or possesses.  However, one can have possession of something without necessarily owning it.  It is called holding a trusteeship.  Property is usually divided into two commonly understood nomenclatures – tangible and intangible. Tangible property refers to physical objects such as a piece of real estate, whereas intangible property refers broadly to ‘objects’ that can only be appreciated by their intellectual or sensual appeal.  Copy rights, trademarks and patents for creative inventions are examples.
Short History-Europe

The earliest debate on property rights began with Aristotle and Plato.  Plato in his The Laws argued that “friends have all things in common” so property should be commonly held.  Aristotle on the other hand counter argued that people who hold things in common tend to quarrel more than those who own them personally. Essentially, people with property have better incentives to produce.

Adam Smith identified that the first and chief design of every system of government is to maintain justice in order to prevent members of society from encroaching on one another’s property or seizing it.  Nobel laureate Milton Friedman has the famous quote on the value of individual ownership of property. He says “nobody spends somebody else’s money as carefully as he spends his own. Nobody uses somebody else’s resources as he uses his own. So if you want efficiency and effectiveness, if you want knowledge to be properly unitised, you have to do it through property”.

Peruvian economist, Hernando de Soto explains in his book, The Mystery of Capital: Why capitalism triumphs in the West and fails everywhere else, that the reason most developing countries are poor is because they have failed to formalise the myriad of properties they informally own.  To de Soto, the developing world alone is sitting on ‘dead capital’ which he values at 9 trillion dollars, more than the combined capital base of the major stock exchanges in the world.  To think that Ghana has over 60,000 land disputes in the superior courts of Accra alone underscores the value we are not according property.  Cursory analysis has put the value of such disputed land cases in Accra alone at close to US$ 5billion, which is more that a fourth of current  annual wealth.

Short History-Africa

Much scholarly evidence adduced all point to the fact that prior to contact with foreigners, landed resources were not communally owned.  Land for instance, was lineally held. The first owner usually acquires it through digging a well for water or cultivating crops on an unencumbered land and bequeathing farms to descendants.  Economist George Ayittey argues that, if this were not the case, shifting cultivation which was an ancient farming practice would involve whole communities moving whenever a farm ran out of soil nutrients. Instead it was farm lands that were shifted or even rotated.

British colonial administration in what use dot be the Gold Coast frantically tried to usurp ownership of aborigine lands for mining and timber rights. The crown lands bill of 1896 and the Lands Bill of 1897 were each vehemently opposed, leading to the establishment of the Aborigines Rights Protection Society in 1897.
Unfortunately, the colonial legacy of forcefully usurping private ownership continued after independence.  Under the cloak of socialism, many independent African leaders de-incentivised the ownership of land by supervising state farms that were bound to fail.  Many African countries are yet to learn from the bitter experience.  In 2005,  when temperate southern and eastern African countries were on the edge of famine, with 10 million affected in southern Africa alone many could not connect that  similar independet era  economic profile  were at play  in Zimbabwe, Malawi, Zambia, Mozambique, Swaziland and Lesotho and Kenya and Niger.  All these countries have a history of utopian schemes that failed to produce everlasting manna.  State farms, marketing boards, land redistribution, price controls and huge regional tariffs left few incentives or opportunities for subsistence farmers to expand.  Many other African countries still lack economic freedom and property rights; many had and still have  economies mismanaged by the state; many depend on aid.
In East Africa, Ethiopia’s Prime Minister Meles Zenawi believes that allowing Ethiopians to own their land would make them sell out to multinationals.  He seems to have overlooked a basic market principle based on a willing seller and a willing buyer at an agreed price.  If that price is worth selling for, the farmer might have some money to reinvest elsewhere; if that price is worth buying for, the purchaser must have plans to make the land profitable.  If there is no sale, owners might have an incentive to invest in their own land and future, having, at last, the collateral of the land on which to get a loan. After decades of socialism, Ethiopia’s agricultural sector — the mainstay of the economy — is less productive per capita than 20 years ago when Band Aid tried to defeat famine. Although 60% of the country is arable, only 10% has been cultivated. Ethiopia is entirely dependent on donations; but instead of grasping reality, Mr. Zenawi, a member of Tony Blair’s "Commission for Africa," has been  forcing resettlement on 2.2 million people.
Things are not that bad in Ghana despite the close to 60,000 land cases in our superior courts in Accra, the capital, alone. Yet they have the potential to drive investors away. It should not take our courts to grant ‘legal’ ownership  to a party in a land dispute who hurriedly erects a structure to the lintel level . That is aidning banditry, as the exercise of might and money will always win over weak and unprotected inviduals who could be rightful owners.  It seems to me that the current land administration project being undertaken by the state may provide some relief to prospecting investors. 
However, if the type of one-stop shop for land administration is the sort currently being deployed by the registrar of  businesses, then we have a long way to go, since that has rather entrenched bureacucracy and stifling business start ups.

Debating Points

We can glean from the foregoing comments that essentially there are four main themes of debate around property.  First and morally, property rights are legitimate because everyone must be entitled to his fruit of labour.  A counter argument to this view is that all property is inherited so every one must benefit from its use. 

Secondly and psychologically, property enhances the individual’s self esteem.  Critics holding opposite views suggest that individual ownership of property has a corrupting influence on one’s personality by infecting it with greed.

A third issue is the economic argument.  Proponents say property rights are the most efficient means of allocating and producing wealth.  This is countered by anti-property thinking that since economic activity is usually driven by the pursuit of private gain, the notion of individual ownership leads to wasteful competition.

For me, it is the fourth argument which gets my ire, especially as it applies to our circumstances in Ghana.   And that is the political debate.  Despite the well-amplified declaration in Chapter 5, articles 18 and 20 of the 1992 constitution of Ghana that “everyone has the right to own property alone or in association with others” and that compulsory acquisition of property must follow-laid down procedure, it is the practicalisation of this otherwise sensible legal requirement that has led the two dominant political parties in Ghana, the National Democratic Congress(NDC) and the New Patriotic Party(NPP) to quibble over which party is abusing the constitutional right to own property.

The NDC believes that the notion of property rights or a property-owning democracy as self-proclaimed by the NPP leads to inequality, generates injustice and perhaps social unrest.  Manifest in what was the apparent charge of “grabbing state property” which appeared to be properly and compulsorily acquired, but failure to grant the option of sale to original owners when the public interest use was no longer relevant, the anti-property ownership ideology perhaps made sense as long as evidence of political corruption could be established.  However, I see the NPP arguing that unless it is distributed in a grossly unfair manner, which many welfare states prefer, property rights promotes stability and constrains the power of government. 

The Economist Richard Pipes argued that “ the weakening of property rights by such devices as wealth distribution for purposes of social welfare and interference with contractual rights for the sake of “civil rights” undermines liberty[even] in the most advanced democracies”.

Intellectual Property Rights.

However, it is important to point out out that  property rights are not all about landed resources.  As I mentioned in my  introduction, copyrights, patents and trade marks are a significant source of wealth.  Many African countries have very weak intellectual property rights regime which makes the the development and sale of  essential products not only difficult but very dangerous.  Take for instance the sale of counterferit medicines and  rampant  piracy  in the creative art industry.
A recent  report from the International Policy Network and sponsored by  IMANI Center for Policy and Education details the shocking burden of fake drugs in less developed countries. Fake tuberculosis and malaria drugs alone are estimated to kill 700,000 people a year.  That’s equivalent to four fully laden jumbo jets crashing every day.  The report lays bare the ballooning problem of counterfeit and substandard drugs, which can constitute one third of the drug supply in certain African countries. These dodgy drugs result in unnecessary death and increased levels of drug resistance. Yet anti-development activists believe the insistence on patents by genuine pharmaceutical manufacturers is the sole reason why many in the developing world fail to access essential medicines.
Nashville in the American state of Tenessse is home to the Country Music industry, which creates US$6 billion a year for the city’s economy and supports tens of thousands of jobs. But eighty years ago it was in one of America’s poorest regions. Incomes were a mere 40% of the US average, a large number of people lived off subsistence farming and malaria was common.
In these difficult financial times,  perhaps a respect for intellectual property rights at least for creative inventions and works of art could be a away out Ghana’s difficulty.  Prof John Collins of the School of Performing Arts at the University Ghana  has estimated that  music could generate US$53 million a year from foreign sales  for Ghana. Ghana has  passed a strong copyright law in 2005, and although it has not been fully implemented, current efforts by the Ghanaian Minister of Justice and Attornney–General, Mrs Betty Mould Iddrisu  to at least mete out stiffer punishments to intellectual pirates offers an a ray of hope.
The Property Rights Alliance, an organisation dedicated to promoting property rights across the globe has in the last three years been publishing an index on property rights.  Africa’s record has been severely depressing with almost no data capturable for some countries. It is no accident that the absence of secured property rights, coupled with the absence of the rule of law, and decentralised decision making, controlled financial markets, and  bureaucratic obstacles to setting up businesses  impacts  negatively on its ability to comepete with outher economic powers.

Let me conclude by going back to  Richard Pipes who said in his book  Property and Freedom that “ the right to property in and of itself does not guarantee civil rights and liberties.  But historically speaking, it has been the single most effective device for ensuring both, because it creates an autonomous spehere in which by mutual consent, neither the state nor society can encroach; by drawing a line between the public and the private, it makes the owner co-soverign, as it were.  Hence, it is arguably more important than the right to vote”.
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