By Daniel Sutter

I hope your family has much to be thankful for this Thanksgiving. My family and I certainly have much to give thanks for. We as Americans should also be thankful for the prosperity our nation enjoys today.

America’s prosperity traces back in part to the first Thanksgiving almost 400 years ago. Life and history provide us many illustrations of economics in action, and the first Thanksgiving is no exception.

The Plymouth colony in Massachusetts was founded in 1620 under a system of common property, with crops grown by the colonists shared by all. In such a system, all worked together to produce one common harvest. At first glance this seems like a reasonable idea, given that the colonists were trying to survive in new and unfamiliar surroundings.

Only common property was a disaster. The hard work of planting, tending and harvesting crops must be done by individuals. It is far easier to slack off and let someone else do this work, especially if at the end of the year everyone, including the slackers, shares equally in the harvest.

With a weak connection between work and reward, the Pilgrims produced little food, and the colony was on the brink of starvation and ruin. According to Governor William Bradford, the colonists were inflicted with an unwillingness to work.

Communal property also bred conflict and ill-will, as each colonist feared being taken advantage of by his neighbors. The Pilgrims were plagued by what economists today call free riding.

After three years, in 1623, the Pilgrims decided that every family would grow food for themselves on a plot of land, effectively introducing private property in agriculture.

Not surprisingly the Pilgrims worked harder and more effectively that year than in the prior years. The Pilgrims planted far more corn and in the fall gave thanks for their abundant harvest.

The first Thanksgiving illustrates how the proper economic institutions allow prosperity. The Pilgrims did not suddenly become harder working and more industrious in 1623 than the year before. Rather, their institutions now rewarded hard work.

Private property is perhaps the greatest innovation in history, aligning peoples’ desire to improve the lives of themselves and their families with wealth creation in society. We take our prosperity for granted, but, until the Industrial Revolution, virtually all of humanity lived in poverty. The Pilgrims’ great accomplishment was figuring out the change in property rights needed before professional economists, like my colleagues at the Johnson Center, were around to advise them.

Sadly many Communists nations repeated the Pilgrims’ experiment with collective agriculture in the 20th Century. And the results were equally tragic.

Collectivized agriculture embodied Karl Marx’s famous dictum of “from each according to his ability, to each according to his needs.” In the Soviet Union in the 1930s, collective farming produced a famine which claimed at least 10 million lives in the Ukraine, previously known as the “Breadbasket of Europe” due to its agricultural productivity.

Collectivized agriculture in China resulted in a famine from 1958 to 1961 and 40 million (or more) deaths. Collectivized agriculture has also produced Communist famines in Cambodia and North Korea.

Economic reform first emerged in China after 1978 with private property in agriculture, as in the Plymouth colony. Privatization led to dramatic increases in agricultural productivity, banishing the specter of famine and freeing up labor to fuel China’s market transformation and economic rise.

In the years that followed the first Thanksgiving, the Plymouth colonists extended private ownership to homes, cattle and other goods. This helped establish a tradition of private property and economic freedom for the American economy.

Free markets allowed the United States to become the world’s leading economy. America’s farmers raise turkeys and grow sweet potatoes and cranberries for dinner today, not out of devotion to Thanksgiving tradition, but because they can sell them to us for a profit. Economic freedom is one of the many blessings we can give thanks for today, and we should remember the role of the Pilgrims in the establishment of this freedom.

 

Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University. Respond to him at dsutter@troy.edu and like the Johnson Center on Facebook.