Resource limits are worse under the alt—soviet union proves anticapitalists have reduced incentives to care for their environment.

A third fatal defect of socialism is its disregard for the role of private property rights in creating incentives that foster economic growth and development. The failure of socialism around the world is a “tragedy of commons” on a global scale. The “tragedy of the commons” refers to the British experience of the 16th century when certain grazing lands were communally owned by villages and were made available for public use. The land was quickly overgrazed and eventually became worthless as villagers exploited the communally owned resource.

When assets are publicly owned, there are no incentives in place to encourage wise stewardship. While private property creates incentives for conservation and the responsible use of property, public property encourages irresponsibility and waste. If everyone owns an asset, people act as if no one owns it. And when no one owns it, no one really takes care of it. Public ownership encourages neglect and mismanagement.

Since socialism, by definition, is a system marked by the “common ownership of the means of production,” the failure of socialism is a “tragedy of the commons” on a national scale. Much of the economic stagnation of socialism can be traced to the failure to establish and promote private property rights.

As Peruvian economist Hernando de Soto remarked, you can travel in rural communities around the world and you will hear dogs barking because even dogs understand property rights. It is only statist governments that have failed to understand property rights. Socialist countries in the 1990s started to recognize the importance of private property as they privatized assets and property in Eastern Europe. Venezuela today is moving in the opposite direction. Under Hugo Chavez, the private property and assets of foreign-owned oil companies from the US, France, and Italy were nationalized and converted to state-owned, state-managed assets. The results were completely predictable: corruption, lack of investment, deteriorating capital assets, mismanagement and a sharp and ongoing decline in the country’s oil production. Despite sitting on the world’s largest reserves of oil, socialist Venezuela’s departure from the principles of profit-and-loss accounting and private property rights have seriously and permanently handicapped its nationalized oil industry.