The story of the snowstorm that paralyzed Kyiv is an excellent example of how property rights work, what happens when these rights go wrong, and what property rights actually are.
Property right is not something appointed, issued, or permitted; it is not a piece of paper with a seal, but an actual state of affairs. It arises, like all our activities, from the scarcity of the resources we need. Property right, in the broadest sense, is an agreement about who specifically uses these resources.
Economists and practitioners—lawyers, accountants, and the like—are usually taught property rights as a familiar triad: ownership, use, and disposal. In reality, however, things are far more complex, in that most property rights exist without ever reaching the stage of being clearly expressed, let alone “legally documented.” Property rights are a condition of our activity; we simply cannot act without some notion of “who owns what.” Property rights are clearly necessary only in society—Robinson Crusoe has absolutely no use for them. And I think it is equally clear that in most cases property rights exist as unspoken agreements maintained by society. Effectively, property rights are a multi-layered cake of relations, in which only the uppermost layer is formalized—which, by the way, does not mean “recognized by the state.”
Let me give examples. Consider the “multi-layered” nature of property rights. Take a medieval setting: a forest belonging to a lord, with peasants living nearby. These peasants, in most cases, could gather berries and other gifts of nature in the master’s forest. Hunting was already more complicated. Problems arose because the resource of “game” was scarcer than the resource of berries, and the lord also claimed it; most often, a special right to hunt was required. Well, no one would have allowed the peasants to cut down or burn the forest.
Now for examples of social recognition and agreements. You are sitting on a bench in a park. As long as you are using the bench, one might say it is in your possession. Whether other people will sit down next to you—whether they will also use the resource you are using—depends on the customs accepted in that society or locality. Generally, in a “civilized” society no one will sit down next to you without asking permission. But, say, hoodlums will sit down without asking anything.
As we can see, the overwhelming majority of cases are regulated by custom. So when does that very triad of ownership, use, and disposal arise? When does the need for formalization emerge?
Let me illustrate with this example. In the Soviet Union everything was state-owned, including the houses and apartments where citizens lived. Nevertheless, in any case, citizens had the right to use these apartments. For instance, no one could walk into your—formally, the state’s—apartment and start living there. “Unauthorized entry” into your dwelling was prosecuted by law; thieves and robbers were punished. In general, you had the right not to let others into your home—to exclude them from using the resource you were using. Then citizens effectively appropriated the right of disposal for themselves. At first it was “exchange” of apartments, and then outright purchase and sale, although, I repeat, formally the state was still the owner. And finally, the current situation, when we can speak of ownership, which also implies the right to destroy the object (of course, not in the case of an apartment). I should say immediately that in this case we are talking about the actual state of affairs; there are huge gaps in the “legislation” on property rights, but that is not what we are discussing now.
So, what happened? The formal owner—the state—increasingly ceased to use the resource (state control over citizens’ personal lives weakened starting in the 1960s), and therefore the resource passed de facto to those who actually disposed of it. Note that, in the course of this transfer, the property right acquired more and more characteristics of the classical triad, although, I repeat, it was not recognized by the state.
We see that property rights are formalized depending on the degree to which a resource enters “economic circulation.” Apartments became “full” property as the range of situations in which they could be used expanded, and as the number of people wanting to do so grew. The wider the market, the more formalized the rights become.
Now, what determines who will receive property rights to a specific resource? In society—that is, in a situation where your income depends on your ability to be useful to others—property rights are always in motion from those who bring lesser value to those who can bring greater value using the same resource. Roughly speaking, your property right is constantly being tested for social benefit. If others are found who can extract greater profit from the property you own, sooner or later the property rights will end up with them.
Now let’s turn to our snow. Here is an impassable section of road—a courtyard buried in snow, for instance. Local residents chip in to hire a tractor and clear the snow. In this situation they behave as owners of the courtyard. They need to use the resource (the road) to get from point A to point B, and they remove obstacles for this. Right now they are the owners. Yet formally, the road is owned by the state—or more precisely, by Popov and his associates. Why, then, do they not clear the road? Because their property right rests exclusively on state coercion. The income of the road owner—that is, Popov—in no way depends on how much the road is used as a resource, on how easy and safe it is to travel from point A to point B. Popov’s income consists of taxes: funds forcibly taken from the population. His ownership of roads does not pass any test for the ability to bring benefit to society, because the roads are not for sale. Accordingly, they are not cleared.
Of course, this does not mean the “authorities” will never clear them. No—it only means that the motivation here is completely different, exclusively administrative. And no one hides this. Our government is wonderful precisely in its artlessness. It does not invent legends about taxpayers, or worse, about voters, but says directly how things are. Here is a quote from Popov: “I took on obligations, and I will fulfill them. As for how professionally I did this, how well I organized this process—that will certainly be evaluated by both the Cabinet of Ministers and the president,” the head of the KSCA emphasized.
The essence of government, it must be said, is the same everywhere. This is not malicious intent, but ordinary economics: if income does not depend on the ability to use a resource to bring benefit, and if this ability is not evaluated by society—that is, if resources are not formally sold and bought—then such a resource will always be used poorly.
Kyiv, where they “don’t clean up” and where the quality of roads and “municipal services” in general is horrifying, differs from Prague, London, or New York not in the quality of government, but in the quality of society—how strong it is, and to what extent the government in its political and administrative activities is forced to reckon with it. The strength of society, in turn, depends on how large the volume of property in private hands is, and how free and independent people are; that is, on how much the state does not interfere as they dispose of their property. The impact of this strength is by its nature directly opposite to the impact of a crowd shouting under the city administration (although that happens too). This impact is strong precisely because, on one hand, it is regular, and on the other, it is unorganized—simply put, it is the situation when people prefer to do everything themselves rather than demand it from the state.
We do not have such a society. Therefore, for us, more pressing than for “developed countries,” is a real solution to municipal problems—not a palliative one. The issue is not mayors or “establishing order.” If you want to be able to drive on roads at any time of year—transfer them to private hands.