no third solution

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Leasing and Renting in a Free Economy: Dealing With Scarcity

July 8th, 2009

As long as resource scarcity is a fact of reality, there will be some conflict between the limitless spectrum of human desires, and the limited resources at our disposal. Among these conflicts is that fact that not all resources will at all times be immediately available, especially within our own community, and that sometimes our desires conflict with others’.  Exchanging, or offering to exchange by sale of goods with one another on these terms, is one manner by which market participants simultaneously mitigate conflict, and allocate scarce resources.

To differentiate from an agreement to purchase an item permanently, we might consider agreements to lease or rent the item in question.  One would purchase a car from another, if he believed he had a great and continued need for transportation.  One might rent or lease a car from another, if he believes he only needs temporary transportation.

Deep in the comments to Profit IS Justified by Entrepreneurial Risk, I posed a question to db0, inquiring why:

  1. One should not be allowed to offer some of his belongings for temporary use, to another individual
  2. No other individual would be allowed to offer some of his belongings in exchange for temporary use of anothers’

In his response, db0 says both of these things are to be allowed, but qualifies the former by excluding “rent, wage-labor, interest” as “usury”, and further:

[T]his is not about preventing individuals from participating in such a transanction but to convince them not to. If we are to reach a libertarian society, then this kind of mentality will be built up as we progress towards it

I don’t understand why it is desirable to convince people not to participate in voluntary transactions, all parties to which believe said transaction is to their benefit. Consider: if I have an item, which I am using, and someone else says to me, “I would like to use that item for a few days, mind if I borrow it?” how should I respond?

On one hand, I might simply say, “No, I’m using it and therefore you can’t use it.” On the other hand, there is most likely some exchange he could effect, which would induce me to surrender (temporarily) the use of the item, and would offset the discomfort[1] I would otherwise experience if I were to loan it to him for “free”.

I do not mean to argue that “free” transactions won’t take place in a liberated economy.  Even in our current society, free transactions take place all the time. You borrow a compound mitre saw from your father, or an extension ladder from someone at work. Perhaps you loan a book or a CD or a video game to a friend[2]. And transactions of these sorts are wonderful.

They are wonderful because they are indicative of qualities inherent to true community: friendship, trust, neighborliness; all qualities inherent to true community.  I think in a free society, we would see more transactions like these (several orders of magnitude more, hopefully!), but I am by no means convinced that value-based exchange, especially the renting or leasing of items, would simply cease to exist.

1. Even considering an item that I am not immediately using, we might surmise that I am saving it for some anticipated future need, therefore anyone who wishes to use it now should pay (at the very least) for the depreciation of the item, and perhaps a small risk premium to account for the possibility that the item might be irreparably broken while in his possession.

2. But the people receiving these “free” loans are never under any illusion that they own the item which you’ve let them borrow, and for the most part, we understand that if the item is broken or stolen, the right thing to do is to offer to replace it.




no third solution

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