What Cavemen Can Teach Us About Property Rights

Economic history is a bit of an unloved child within economics. Once at the centre of the subject it has fallen by the wayside in the rush to be scientific of recent years. Indeed most undergraduate courses no longer teach any economic history as a core subject and many don’t offer any option whatsoever. So why am I going on about economic history? Well, it turns out it’s very interesting indeed…

A Scientist for Every Issue

What sparked my interest in economic history was actually a book which had very little to do with the past. It was ‘The Cult of Statistical Significance’ by Steven Ziliak and Deirdre McCloskey.  The book was, as you have probably guessed about statistics; furthermore the authors argued that statistics was having a negative effect on the way that economists undertook research. They argued that economists liked to appear scientific and one of the ways to do so was to use statistical significance. A clean cut, simple procedure that gives a right or wrong answer appeals because it seems to offer a degree of certainty to a researcher’s findings. Does smoking lead to an increase in the use of other drugs? Do a t-test and you have your answer. However what exactly does the test of statistical significance prove? The answer, to the authors, was not much.

I am not going to talk more about this debate here (as it is quite technical, divisive and will likely bore the pants off anyone that isn’t interested in doing research in the social and natural sciences). One of the points that I did take away and thought would be interesting to talk about, was that economists can benefit from grounding their work in a wider context.

How to Build a Discipline from the Ground Up

This is where economic history can really play a part. Firstly modern neoclassical economics, the stuff that gives us supply and demand diagrams and the toolkit for how a central bank should be run, is based on a number of key assumptions about the nature of the world. Many of the debates on these assumptions happened over a hundred years ago.

Take for example the theory of value. What should the price of a good be? Should it be decided by how much of each input goes into its production?  Or should it be decided by how much use that people get out of it? Why don’t we just let the market decide and take that as its value? If the first case is true then is the value of the internet, which as a service is very cheap to provide for each user, valueless? Likewise if we use the third option and let the market decide then the internet is still pretty cheap. However, people clearly get a lot out of the internet. It has created a great deal of what economists call consumer surplus; that is what consumers get in value above and beyond the price they pay.

Trial and error, a 10000 year experiment

Secondly it allows us to enrich many of the theories we have to explain the world as it is today. I am currently reading another book (this is the last I will mention I promise!) called ‘Structure and change in economic history’ by Douglas North. In the book he attempts to create a theory which can explain why economies over time fair well and poorly.

For example, we can explain why humans moved from a hunter gatherer society to organised agriculture. For the first million and a half or so years of our history humans occupied a very small area of the globe. There was a lot of space and so as our population grew there was little pressure on hunting resources as new groups or clans could simple move into territory unoccupied by other humans. However, as the world began to be filled up the amount of free space decreased. This caused a decline in the marginal benefit of hunting as there were fewer animals to go around, and there was no incentive for tribes to not exploit all of the animals that surrounded them. If they decided to not hunt a herd or buffalo, some other tribe would. Hunting suffered from what the tragedy of the commons. At some point, the marginal productivity of hunting must have fallen below that of agriculture. When this happened it became in the interest of tribes to start farming, as extra hunters had very little effect on how much game a tribe would catch. Over time agriculture became more and more productive (from breeding crops, improving techniques etc.) and eventually replaced hunting as the main form of food production.

There are no ways of testing such a theory, but it is interesting none the less. It also demonstrates how central property rights and natural resources, two items usually omitted from modern economical analysis, can be in examining the nature of the world.

8 Responses to “What Cavemen Can Teach Us About Property Rights”

  1. Jonasch Wiaderny Says:

    ‘The Cult of Statistical Significance’: A great book, indeed! I once had the opportunity to meet Deirdre, she is an incredibly motivating person.

  2. Mpho Says:

    To be honest, I only lucked into this site because of the catchy title. Initially, I thought the post would be about the history of property rights, in fact, the emergence of property purchase and so forth. The information that has been provided is interesting but is unrelated to the title. However, I found this post to be more about the contemporary economist than about the ‘cavemen’.

  3. Palesa Molotsi Says:

    This article has reminded me of the importance of knowing the history of economics. To have a good understanding and knowledge of economics we need to know the history behind our present economy. This article has encouraged me to learn more about the history of economics. Thank you for the post.

  4. Tamra Says:

    Very awesome article! It is incredible to see how everything is linked when it comes to Economics.It is interesting how Economics also intertwines with Statistics and the different views of value. I have never considered learning about the history of Economics, but this article definitely helped me see that the history is actually quite interesting. The article really makes it simple to understand where economics started and how it has developed over the years,again proving that it is incorporated into everything.

  5. Mashabela Mafetane Thermocius Says:

    This is by far the most insightful blog I have been exposed to,I would not have known how large the field of economics is

  6. Thabi Says:

    this is just amazing to read about and how we value things this has helped me see the value of things in such a different aspect. thank you so much for this blog

  7. Sean Says:

    very interesting article. Its always nice to look at economics from a sociopolitical context. The blog gives good examples of how for instance economics can be used to analize events in history that have defined the world we live in today.It would have been nice to maybe get a more detailed view on competition with regards to property rights and hunting.

  8. Eva-Liisa Heita Says:

    This is an amazing and educative piece of work. I agree that we have a lot to learn from our ancestors. From the hunter-gatherer way of life to a farming lifestyle-quite smart.

    Now that I am thinking of it, I actually understand this was caused by a limited number of natural resources(springboks and kudus) which was needed by a large population(our ancestors)to satisfy unlimited needs(food, water, clothing-animal skin), which boils down to the definition of economics-the study of satisfying unlimited needs with limited resources. Amazing Stuff!! It is a huge loss though to modern economic analysts who chose to omit this wonderful discovery from their research theses.

    Nonetheless, I must say, I am very impressed by this article! Keep those constructive posts coming!!!!

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