Wanting to Maintain Stability? Protecting Property Rights First!

 

Sheng Hong

“Stability maintaining” and “rights protecting” are two keywords of vital importance in current Chinese society. The former is rather new. The latter, however, has existed since ancient times. Mencius said, “The first thing towards a benevolent government must be to lay down the boundaries.” “Lay down the boundaries” here refers to delimitation of property rights, and “rights protecting” is undoubtedly its essential meaning. More importantly, Mencius then discussed the relationship between “rights protecting” and “stability.” He said, “If the boundaries be not defined correctly, the division of the land into squares will not be equal, and the produce available for salaries will not be evenly distributed. On this account, oppressive rulers and impure ministers are sure to neglect this defining of the boundaries. ” This means, those inclined to abuse public power will seize the opportunity whenever delimitation of property rights is not clear even in the slightest degree, and that’s why society would not be stabilized. He continued to say that, “When the boundaries have been defined correctly, the distribution of farming land and of revenue produced by the land is fair, , the society would be settled when the ruler is sitting.” This means, when property rights are well defined and protected, we can sit at ease to play bridge.

Obviously, in the opinion of the mainstream Confucian tradition, maintenance of property right system is the foundation of social stability. This is actually the great wisdom widely accepted at all times and in all countries. In fact, property rights equal to the right of existence for the immense majority in every society, which is also well elaborated in John Locke’s theory. The property rights advocated by him are the rights derived from people’s rights of survival, namely, the property rights defined by mankind’s natural consumption ability and production capability. This sort of property rights is usually of a small scale. That’s why this definition was taunted by the later generations as peasant-style property right. However, no matter how “advanced” the later property rights theories are, the Locke-style property rights remain the most common form of property rights in every society. In other words, the property rights of most people are solely used to maintain their survival.

In addition, property rights of larger scale are actually a logical result of the Locke-style property rights. Among peasant-style property rights owners, some work harder, or are smarter or luckier. As a result, their assets accumulate and expand in market transaction circulation. To protect these property rights of larger scale is to protect principles of Locke-style property rights. This is because to infringe this sort of large-scale property rights is to negate the foundation which all property rights base on. In other words, “Labor is the most important factor in changing natural resources shared by all human beings into properties owned by certain specific individuals.” Infringement of this sort of property rights not only encroaches on people’s fruits of labor and their accumulation but also subverts the widely accepted principle of fairness. No matter how much criticism there is about larger-scale property rights, it is still much fairer than infringement of property rights.

As long as the property rights system of a society is reliable and its people could expect their property rights to be soundly preserved, the people will lead a well-off life and their survival will be guaranteed. Moreover, they can safely increase their investment in their own assets, such as, land, etc., to improve productivity; they can bring their products produced by using their own assets to market for sale; they can sell their assets directly; they can also purchase assets with accumulation of their labor. The people wish for a stabilized society and a market with order. They wish for stability. However, infringement of the Locke-style property rights will be no less than misfortune dropped from Heaven for property rights owners as their survival will be directly threatened. “Survival” here not only means “having enough to eat,” but also includes “residential space.” Thus, property rights in the form of small-scale landownership and property ownership will directly be the living shell of families. Once their existence could hardly be guaranteed, their immense energy of resistance will burst, as they have no reason to continue their tolerance any more.

By contrast, we will find current instability is mainly caused by infringement of the Locke-style property rights, which is commonly reflected in forced expropriation of farmers’ land by local governments for city expansion. This sort of action is rather common, mainly because the constitutional defect existing in China’s legislation process results in land-related legal framework reflecting merely the wishes of administrative departments without having the farmers’ consent. Land Administration Law of the PRC stipulates that any unit or individual that need land for construction purposes shall apply for the use of land owned by the State. By making use of this point, some administrative departments and local governments went on to regulate that land owned by farmer collectives could be changed into land owned by the State through governmental land expropriation. However, according to the Land Administration Law, the compensation standard is six to ten times that of the average yield of the previous three years, which is only 24% to 40% that of the value for agricultural purposes calculated by discounted future earnings method. When local governments acts according to this sort of law, land expropriation then becomes infringement of farmers’ property rights.

More importantly, the relationship between local governments and land-expropriated farmers is by no way equal. One party is in absolute strong position, while the other in absolute inferior position. Moreover, the smaller the property rights are, the less strength they have to resist local governments. Even if the farmers are dissatisfied with the “compensation” by local governments, they have no means to change the situation. Even the door to judicature is locked towards them as disputes related to land expropriation will be dismissed by courts.

Therefore, farmers have only two ways to deal with infringement of their property rights. The first is to appeal to higher authorities for help, which is called “shangfang” or “xinfang” (letter and visit petition); the other is to protest with their bodies. Both actions are considered as “instability” by relevant administrative departments, and the so-called “stability maintenance” is directly aimed at the above-mentioned two actions. Though letter and visit petition is a system for common people to complain about local governments’ problems in China, it is quite a prevalent unwritten rule for governments to secretly hector the common people out of petition, to stop petition, to beat petitioners, and to hijack petitioners back to their residence. In the incident of “Mistaken Beat Gate” in Hubei which happened a few days ago, a senior official’s wife was mistaken as a petitioner and beaten badly by police. This hideous incident shows clearly that the so-called “stability maintaining” by relevant administrative departments is nothing more than violent repression of the petitioners coming to provincial governments for petition. Those plain-clothes policemen beating the petitioners are paid the salary under the name of “stability maintaining expense.” I heard a story written by a researcher several years ago. In order to study the problem of petition, the researcher dressed himself as a petitioner and came to the gate of the Office of Letters and Calls in Beijing. He was “welcomed” by people lining the street with violence almost in time. In addition, such a violent action was not stopped by any policeman.

Since the judicial channel is blocked and petition costs too much, a more common form of resistance is taken, that is, body protest. Body protest can be divided into two types. One is so-called mass conflict, and the other is individual protest, including protest in the form of self-mutilation. According to estimation by Prof. Yu Jianrong, chairman of the Social Issues Research Center of the Rural Development Institute of the China Academy of Social Sciences, over 60% of the eighty to ninety thousand mass conflicts incidents happening each year is caused by land expropriation. One of the most important reasons is that local governments use public power resources to demolish houses of residents or to drive land owners away from their land coercively, which inevitably results in violent resistance and even vicious incidents like casualties. In addition, the occurrence of vicious incidents will cause very abominable social influence. Individual self-immolation incidents are rare. However, once it happens, it will exert significant social influence. For example, Tang Fuzhen, who set herself on fire to protest against forced demolitions in Chengdu, Sichuan Province, has now become a “God” worshipped by thousands of householders whose houses are demolished by force.

Surely, more tort actions succeed by relying on force of administrative departments. Most of the weak submit meekly to humiliation and swallow the insults. However, they hide their anger in their minds. This sort of “instability,” though could hardly be found out outwardly, will burst at a certain moment.

However, our present relevant administrative departments totally ignore the fact that tort is the major reason for instability. Instead, they view the consequent social conflicts as instability, and deals with rights protecting actions, which mean to bring settlement of conflicts into the judicial track, as actions undermining stability. This is an extremely erroneous opinion.

Firstly, the prevalent infringement of peasant-style property rights destroys the basic safeguard which most farmers depend on for existence, and ultimately disrupts social balance completely. Secondly, infringement of small-scale property rights by local governments in collusion with powerful commercial interest groups not only disrupts social order of fairness, but also shakes people’s faith in social fairness. Thirdly, the prevalent infringement of property rights and abuse of public force resources results in vicious incidents of casualties; repression of petitions and judicial rights protecting actions, as well official corruptions after infringement, will only nibble away at the political reputation of the ruling party accumulated since the reform and opening-up. Last but not the least, creating the superficial “harmonious” situation by covering numerous problems through “stability maintenance” will then promote relevant administrative departments to carry out tort actions even more recklessly, thus causing a new round of social damage, which is of even larger scale. Therefore, to crack down “rights protecting” by “stability maintaining” is actually to create more fundamental instability.

In fact, real “stability maintaining” and “rights protecting” are national public goods over current benefits. Though specific property rights involve specific individuals, the property rights system is a public good in its fundamental meaning. “Stability,” however, exceeds the scope of a specific place. If the farmers’ land is encroached on in a certain place, these landless farmers might move to other places. Therefore, in terms of “stability maintaining” and “rights protecting,” the orientation of local governments is distinctly different from that of the central government and the ruling party. Local governments look more favorably upon the gained “land finance” through infringement of farmers’ property rights. As a result, they dare to destroy the property rights system which is the base for social stability; they are more willing to mislead the public into believing that “rights protecting” harms stability; they wish more to attribute conflicts caused by property rights infringement to resistance of the victims. The central government and the ruling party, however, should view this issue from the overall situation and the long-term perspective, and see clearly that the costs of infringement by local governments will finally be shouldered by the central government, and that damage to social fairness caused by tort is actually exhausting the ruling party’s political legitimacy.

The reason for confusing or even reversing the importance order of “rights protecting” and “stability maintaining” also lies in the fact that the lack of sober constitutional consciousness in our society and governments results in people mixing up lower-level public goals with constitution principles and believing they can violate the Constitution for technical excuses. In terms of local governments, this means that they believe they can destroy the property rights system and social principle of fairness for the purpose of promoting urbanization. In reality, urbanization can go on more healthily under a mature property rights system, in which the government raises public resources for municipal infrastructure investment through collecting land value-added taxes and property taxes rather than expropriating land with low compensations, and land prices formed through bargaining between developers and land owners will reflect the real scarcity of land, thus guiding the governments and enterprises to make use of and allocate land more efficiently.

Therefore, it’s of great significance for the Central Government and the ruling party to understand the underlying causes of stability from the institutional structure level, to understand the institutional structure from the constitutional level, and to be with sober political consciousness and sharp eyesight seeing through lies. According to the Analects of Confucius, Ji Kang, the administrative leader in Lu which was a state in the period of the Spring and Autumn in China, was distressed about the number of thieves in the state, and inquired of Confucius how to do away with them. Confucius said, “If you, sir, were not covetous, although you should reward them to do it, they would not steal.” The ancient wisdom of over two thousand years ago is actually already enough in judging current “stability maintaining.” As long as we safeguard people’s legal rights, we can easily save the stability maintaining expense of 500 to 600 billion RMB each year.

In Study of Fivewoods on August 20th, 2010

Author: flourishflood

Economist, Confucianist

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