The Law and Economics of Zion

September 13, 2006 | 17 comments
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It turns out that law-and-economics is not only the dominant theory of private law, but it also helps you think about the idea of Zion. If you look at the pattern of early Mormon settlement in Utah, you see a fairly common pattern repeated. The first settlers in the Salt Lake Valley created a single, large communal field. Everyone worked the field and everyone was entitled to produce from the field. Later, the field, which continued to be fenced as a single mass, was subdivided into lots apportioned to individuals. Finally, the concept of the “Big Field” was abandoned in favor of individually owned lots that were dispersed.

There are a number of stories that one could tell about this development. For example, Russell and other communitarians might see it as part of a sorry falling away from noble communal beginnings to the grubby world of private property. Others might posit that collective effort was necessary for the first plantings but not for others. And so on. Here are some interesting facts to consider: First, there is no reason that you couldn’t have had individual lots from the get go. Admittedly, the creation of things like irrigation networks required collective effort, but farming could have been conducted on a private property basis from the beginning. Another thing is that while communal ownership of land was abandoned rather rapidly, other communal economic institutions were not, which makes the apostacy-from-the-true-order-of-Zion story rather odd. Why was there a falling away from communitarianism as to property rules but not as to other institutions?

This is where law-and-economics scholarship becomes suggestive. I’ve heard economist suggest that the early communal ownership of land among the Mormons (and also, incidentally among the Pilgrims at Plymouth and the earliest settlers of Jamestown) was simply an ideological experiment that failed. Folks had grand ideas about having all things in common, which were abandoned in the face of free-rider problems, etc. Robert Ellickson, however, has suggested a more nuanced explanation:

A sole landowner bears the entire risk that his land will be damaged, devalued, or unproductive. Group ownership, by contrast, pools risk. Because most individuals are risk-adverse, the risk-spreading feature of group property had advantages — even decisive in certain situations.

As alternatives to group ownership of property, a group may employ numerous other risk-spreading mechanisms, including reciprocal altruism within a family or social group, insurance markets, and government welfare programs. In comparison, group ownership of land is in most contexts a mediocre method of spreading losses. . . . .

The efficiency thesis predicts that group land ownership will be more prevalent in situations in which risks are high and a group cannot employ a superior insurance mechanism. The settlers [in Salt Lake City] initially faced conditions of precisely this sort. That the risks were acute cannot be doubted. . . . .

Risk analysis also suggests why pioners would begin to parcelize their lands after a period of time. Settlers would lower their probability estimates of disaster and be less attentive to risk-spreading as they gradually learned how to prevent tribal raids, avoid disease, and grow croms. Moreover, as the months passed, the settlers could develop more efficient social-insurance mechanisms, such as . . . tithe-supported churches . . . . (Robert C. Ellickson, Property in Land,102 Yale L. J. 1315, 1342 (1993))

Mormon history largely backs up Ellickson’s thesis. Group ownership of land was abandoned as the Bishop’s Storehouses got up and running. In other words, the Mormons began by pooling economic resources via property rules. However, they rapidly abandoned property rules in favor of institutions as soon as they could get the institutions up and running. This, in turn, suggests that Zion as conceptualized in economic terms may have been less about avoiding the supposed evils of private ownership than about finding ways of pooling risk within the community of the Saints. However, in bearing one anothers burdens 19th century Mormons seemed to have migrated towards solutions that were economically efficient.

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17 Responses to The Law and Economics of Zion

  1. Jonathan Green on September 13, 2006 at 3:47 pm

    Interesting. Could a future iteration of the United Order consist not of having all property in common, but an institution for pooling risk? That sounds less utopian, but also more easily implemented, perhaps even in our lifetimes.

  2. Nate Oman on September 13, 2006 at 5:04 pm

    Jonathan: In a lot of ways we already have institutions that pool risk, everything from casseroles in times of crisis from the RS to the Church Welfare System are essentially devices that spread risk across the community as a whole. They are imperfect risk spreaders, of course, but thinking about Zion in terms of risk pooling is not such a bad idea. Of course, one wonders what the City of Enoch does in heaven. What risks do they face?

  3. Frank McIntyre on September 13, 2006 at 5:13 pm

    I wonder how effective land pooling is as a risk device.

    But you are right that risk matters. Dealing with risk appears to be a major motivator for a lot of economic behavior observed in developing countries.

  4. Nate Oman on September 13, 2006 at 5:24 pm

    Frank: I suspect that the answer is “not very,” which one of the reasons that it might have been jettisoned by the Mormons fairly quickly. It is not that they gave up on risk pooling, they simply substitute out of property rules and into institutions as a method of pooling as soon as the institutions had a comparative advantage over the property rules, which was quite soon.

  5. J. Stapley on September 13, 2006 at 5:33 pm

    It seems to me that Zion can’t be achieved by risk pooling alone. The modern welfare-state can be viewed as an example of risk pooling. It however doesn’t seem to resemble Zion all that much. There is a possibility that we do emphasize the communal requirement of Zion too much, but I am reticent to follow that path as every brief moment of Zion I have witnessed involved people interacting with each other selflessly, not just mitigating each others disaster.

  6. Frank McIntyre on September 13, 2006 at 5:34 pm

    Nate, do you have any sense of the timeline for the 3-point development in your first paragraph?

  7. Frank McIntyre on September 13, 2006 at 5:37 pm

    By the way, the two big issues (or two of them anyway) in risk pooling are:

    1. People like you and close to you are likely to face similar shocks, and so they don’t insure you well.
    2. People not like you and far from you have trouble monitoring if you are just lazy or if you really had a shock. Also it is tough to enforce some of the contracts when people are dishonest or what-have-you.

    Both of these ideas, I suppose, are related to Zion building.

  8. Dan Richards on September 13, 2006 at 5:47 pm

    I don’t really see how communal ownership of a “Big Lot” is less risky than individual ownership of smaller, contiguous lots. If my crops are destroyed by hail or crickets, isn’t it almost inevitable that each neighboring parcel will suffer the same fate? Unless we’re talking about really big lots, where hail might fall on part but not all of the lot. Or maybe it had to do with crop diversity, such that insects or disease might impact Farmer A but not Farmer B. My impression has been, though, that the Salt Lake pioneers of the first 2-3 years were not distributed over a large area, and that there wasn’t any less crop diversity after the partition than there was before. I’m not a farmer, so maybe somebody can set me straight.

  9. Robert C. on September 13, 2006 at 6:50 pm

    I think an integrally-related concept is stewardship and principal-agent problems. This seems to be more prevalent in the scriptural accounts and more closely related to the Bishop storehouse model and tithing, and suggest a possible different motivation for the split into different lots. That is, we become stewards over what we’re given and we are accountable agents to the bishop who represents God as the principal. We are then blessed according to our stewardship. However, if we are exposed to risk, the pooling of the stewardships in the Bishop’s storehouse allow us to be effectively insured against risk.

    This is how I tend to view the current welfare program in principle. In practice, I think there are many problems, though it seems much better than any other welfare program b/c of the way that it deals with these agency costs on an individual basis (at the bishop and welfare-council level rather than at a more aggregate level; the important difference is that our fast-offerings are voluntarily consecrated in contrast to the more explicit United Order expectation of full consecration…).

  10. Mark Butler on September 13, 2006 at 7:42 pm

    The Law of Consecration is more properly known as the Law of Consecration and Stewardship, and stewardship implies something akin to private lots. Now I do not mean an absolute claim to private property, but merely subdivided management and responsibility.

    I think the evidence is abundant that divided responsibility (i.e. stewardship, agency, or accountability) is spritually healthier in the long run compared to a state with no such division. And the best example of this principle by far is the divinely established order of the family, where God places responsibility for the temporal and spiritual salvation of children squarely into the hands (and on the heads) of the parents.

    It may very well take a community to properly raise a child, but someone, somewhere has to have primary responsibility. That is what stewardship is all about.

  11. Ed Johnson on September 13, 2006 at 10:00 pm

    Mark makes a good point…even with common “ownership” there can still be individual stewardships (e.g. separate lots).

    Here’s another theory: initially the saints didn’t really know how to do agriculture in the arid desert. So it made sense to wait a little while before dividing up the land, in order to figure out how much each person would need, set up irrigation systems, etc. Once the lots are divided up, it’s pretty hard to un-divide them.

    I’m not familiar with any research on the economics of land division and sub-division, despite the fact that this obviously has a strong and persistent effect on urban economies…does anybody know of anything interesting?

  12. DKL on September 13, 2006 at 10:19 pm

    What I glean from this is that communitarianism is like child labor: It’s often instrumental in getting an economy on its feet, but it is best to abandon it as soon as other options are available.

  13. Mark Butler on September 13, 2006 at 11:04 pm

    DKL, I think you are defining communitarianism rather too narrowly. If anything the modern world suffers from a lack of it – at least in its proper form (love, not coercion).

  14. Mark Butler on September 14, 2006 at 11:06 am

    It is worth noting that later on, it was very common for LDS farmers to cooperatively work in turn all the different fields in a community, as well as engage in all sorts of other collaborative enterprises short of the more extreme experiments they engaged in parts of southern Utah.

  15. andrew jensen on September 27, 2006 at 11:23 pm

    Very interesting discussion. where might I find some history books or articles dealing with topic?

  16. Nate Oman on September 28, 2006 at 7:38 am

    Andrew: If you are looking for a discussion of Mormon land policy in Utah, check out Leonard Arrington, Great Basin Kingdom or Firmage & Mangrum, Zion in the Courts. For a discussion of communal property rights and risk sharing, check out the Ellickson article cited in the post.

  17. Evaine on April 14, 2008 at 11:37 am

    Good post. You make some great points that most people do not fully understand.

    \”It turns out that law-and-economics is not only the dominant theory of private law, but it also helps you think about the idea of Zion. If you look at the pattern of early Mormon settlement in Utah, you see a fairly common pattern repeated. The first settlers in the Salt Lake Valley created a single, large communal field. Everyone worked the field and everyone was entitled to produce from the field. Later, the field, which continued to be fenced as a single mass, was subdivided into lots apportioned to individuals. Finally, the concept of the “Big Field” was abandoned in favor of individually owned lots that were dispersed.\”

    I like how you explained that. Very helpful. Thanks.

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