Property, law and government (crosspost from Crooked Timber)

A while back, in a context I can’t exactly remember, I made the point, which seemed to me to be obvious, that all property rights are derived from states governments, and so it’s impossible to sustain a claim that state government interference with property rights is inherently wrong. It rapidly became apparent that this point is controversial in all sorts of ways, so I thought it might be worthwhile to work out where the main lines of disagreement run.

The great thing about a blog like CT is that, on (almost) any topic, lots of my co-bloggers and readers know more than I do, and most aren’t shy about saying so. So, please point me to the relevant literature (about my only reference point here is James C Scott).

I’ll with the classic approach of defining my terms.

* Property is a right of control over and use of objects (and, in slave societies, other people) recognised as lawful in a given society
* Law is a set of rules in a given society that can legitimately be enforced by coercion
* The state Government is the set of institutions that determines and enforces the law in a given society

If these definitions are accepted as a characterization of property, law and the state, applicable to all human societies, then the claim that all property rights are derived from a state is, I think, true by definition.

I think (but feel free to prove me wrong) that the first two points are reasonably uncontroversial, and that all societies have a body of law that, among other things, defines legitimate property rights [^1]. The big problem (I think) comes with the term ‘state’. Obviously, if your definition of a state requires the existence of a distinct ruling class, supported by a body of administrative and military specialists, and exercising unitary and exclusive control over some given territory and its inhabitants, then lots of societies are ‘stateless’. But that’s just semantics: we can use (or maybe misuse) a term like “Westphalian state” for the version just described and come back to the question of whether there are, or have been, societies without any institutions for determining and enforcing the law.

An obvious way of dispensing with such institutions is to suppose that the law is inherited by tradition, is unambiguous in all cases (or at least, sufficiently clear that any ambiguity or gap can be resolved by consensus), and is universally obeyed, so there is no need to make new laws or enforce existing ones. Discussion of stateless societies that I’ve read often seems to imply something of the kind, but hedged in various ways, most obviously with references to “elders” who make judgements that are generally accepted.

Replace “elders” with “old, high-status men”, and you get something that looks to me a lot like, say, the pre-1980 US Supreme Court, complete with the claim that they are merely announcing the law rather than making it. So, I don’t buy the idea that a society can have law without legislators and law-enforcers, even if these are not specialist roles. But that’s a judgement based on near-zero expertise in anthropology, is feel free to set me straight.

[^1]: The European occupiers of Australia found it convenient to deny this when they described the country as terra nullius, but even at the time it was obvious that they were taking land that was the property of the indigenous inhabitants.

81 thoughts on “Property, law and government (crosspost from Crooked Timber)

  1. This debate was in front of mind at the foundation of the American republic. Bentham’s view that property “rights” derived from the state prevailed over Locke’s view that property was a natural right. “Property” was omitted from the list of fundamental rights: “Life, liberty and the pursuit of happiness” in the Declaration of Independence.

    At the time of a vigorous debate in Queensland over the right of landholders to compensation for the removal by legislation of their “right” to clear vegetation (2002), I wrote a departmental paper exploring these issues. This is available online: http://www.isaa.org.au/articles?pg=2

    In short, I agree with Prof John’s logic. The modern state is successor to the traditional elders; property rights nowadays are those that the state chooses to enforce; the state can create property out of nothing (e.g. intellectual property); some commons regimes (like fish) are not so much natural rights but property rights that the state chooses not to enforce; Garrett Hardin in “Tragedy of the Commons” (1968) misunderstood the feudal commons as unmanaged; even a supposedly entirely private contract is underwritten by the state as contract law can be invoked if a party defaults; in Australia at federation the six States retained control over property leaving the Commonwealth a very limited role (federation wouldn’t have happened otherwise); and the colonies inherited Australia’s property from the English monarch who obtained it by conquest from the previous owners.

    A similar line of argument can be advanced to demonstrate that “markets” do not exist, even in the traditional village, outside the rule of law, so the whole concept of “government invention in the market” is a nonsense, as modern markets don’t exist without public institutions – contract law, currency, prudential regulation, property law etc.

  2. The USA has indeed proceeded a long way down the path of crony and monopoly capitalism.

    Crony capitalism by definition is not laissez-faire capitalism. Crony capitalism entails the government taking actions, whether through legislating special rules or handing out selective subsidies, to protect the interests of certain producers over the wider interests of society.

  3. A similar line of argument can be advanced to demonstrate that “markets” do not exist, even in the traditional village, outside the rule of law, so the whole concept of “government invention in the market” is a nonsense, as modern markets don’t exist without public institutions – contract law, currency, prudential regulation, property law etc.

    So the black market does not exist? There is no trade in illegal drugs? That can not seriously be your position.

    Maybe have a look at Yeonmi Park’s speech at the 2014 Oslo Freedom Forum and think about this a little harder.

  4. PS John

    You asked for a pointer to relevant literature. Anything by Harvard Jewish scholar Joseph Singer is worth reading. We should remember that our Australian/English/enlightenment traditions derive not only from Graeco-Roman law but also from Hebrew origins.

  5. @Geoff Edwards

    I agree. That is the realpolitik interpretation of the existing state of affairs. We might agree or disagree with the foundation or the details of this state of affairs but it is the existing, extensive and pervasive reality.

  6. @TerjeP

    TerjeP, of course black markets exist and they are outside the rule of law as the term is understood. The existence of an aberration or an exception does not disprove the validity of the model. Indeed, in one sense it supports my model, for black-market goods exchanged under cover of darkness are in principle not actually “property”, as evidenced by the fact that the state can seize them without compensation.

    The lecture by Yeonmi Park also doesn’t disprove my model – I’m not sure what it proves, except perhaps that the freedom of exchange within a private or community market is a domain separate from political freedom of expression. Private markets do not necessarily give rise to political freedoms. Across the globe, there are all kinds of hybrid systems.

  7. @TerjeP

    Terjebots is probably a better term but calling you descriptive names is not particularly personal. Ridicule is an effective policy for the politically powerless. And there is a need for some attempt to categorise your type of ‘libertarian; the list you provided as a guide to what sort of libertarian you are was not particularly helpful for those of us who see a need for consistency and integrity in one’s political philosophy.

    You really do need to learn to ignore me and not bite back. That would be a grown-up thing for you to do. Did you know of the old saying – and often it seems to me that psychology verifies these old sayings but places them in a context in which the dynamics can be made explicit – that goes; the faults you see in others are yours?

  8. We need to be aware of the various distinctions which can be made between “personal property” and “private property.”

    Legally, “Personal property is generally considered property that is movable, as opposed to real property or real estate.” – Wikipedia.

    In a socialist view, personal property involves those “items intended for personal use,” (e.g., toothbrushes clothes, homes, and vehicles). So in this view, some real property (a home) can be personal property.

    “Private property” is a social relationship between the owner and non-owners. Thus private property is not a relationship between a person and a thing. Private property is a social institution ruled by law, now state law, and governing relationships between persons.

    “To many socialists, the term private property refers to capital or the means of production, while personal property refers to consumer and non-capital goods and services.” – Wikipedia.

    It is clear that socialism or some important variants of it envisage the retention of personal property but a change in the laws and institutions governing private property relations. The dividing line runs between property that used as a means of production and property that is personal property and a mode of consumption not a mode of production. If everyday parlance, if one uses property, especially real property like a factory, to make a profit AND this involves employed workers other than oneself then it is NOT personal property in the socialist sense. It is or should be cooperative property, communal property or state property in the socialist view.

  9. @Mayan

    I’m not seeing how deleting the concept of private ownership is a win for anyone

    I’m not aware that anybody on here is arguing against the concept of private ownership in the sense of individual ownership of ‘stuff’. I, however, would argue very strongly against the idea that some people’s labour should be the property of others. That would be a win for working people, surely?

  10. Libertarian ideology is silly. By any libertarian measure of property ownership (conquest/homesteading/populating etc) the Australian government has legitimate ownership of the land. However, they choose to ignore the property claims of the legitimate owner and arbitrarily decide that it’s claim is invalid because said libertarians don’t like the conditions of use of the land as laid out in the current legislative framework!

  11. Going right back to the very first sentence of the post, I offer tentatively my own view: I agree in regarding as unsustainable the claim that government interference with property rights is inherently wrong, but for a completely different kind of reason.

    To my way of thinking, whether government interference with property rights is right or wrong depends on what sort of interference it is, with what sort of rights, in what sort of property, by what sort of government and in what context. I expect with some thought and some historical research I could come up with some examples of government interference with property rights that were justifiable and perhaps even essential, and other examples which were outrageous atrocities. What I would judge these things by would be the concrete harms and/or benefits to actual people, not the definitions of terms.

    In my life I’ve probably spent more time than the average person in thinking about and discussing the definition of terms, and I still think that can be an interesting and sometimes a worthwhile activity, but I also think it’s important to recognise how easy it is, and how misguided, to be trapped into overestimating the importance of the definition of terms to the kind of subject under discussion here.

    To establish that something is true by definition is only to establish something about how words are used, and that has its uses, but also its limits. Not every real issue can be settled just by defining terms.

  12. Fair enough up to a point J-D, but there is a vulnerability in your argument: Why is your judgement as to “concrete harms and/or benefits” any more normative or reliable than anyone else’s judgement? To overcome the atomisation of society that would follow if we allowed everyone to decide harm, that is, to judge other people’s behaviour, we delegate the task to governments according to law (including common law). If you want something more basic, or if you like superior to governments’ judgement, international law is arguably more normative and averages out individual governments’ idiosyncrasies, but again we leave interpretation of that to domestic governments – back to square 1.

  13. @Geoff Edwards

    I’m having difficulty discerning whether you’re asking me a question, or in some other way looking for a response from me. There’s no reason why you should be, but if you are, could you provide a little clarification?

  14. Polanyi argued that the development of the modern state went hand in hand with the development of modern market economies and that these two changes were inextricably linked in history. Essential to the change from a premodern economy to a market economy was the altering of human economic mentalities away from a non-utility maximizing mindset to one more recognizable to modern economists.[5] Prior to the great transformation, markets had a very limited role in society and were confined almost entirely to long distance trade.[6] As Polanyi wrote, “the same bias which made Adam Smith’s generation view primeval man as bent on barter and truck induced their successors to disavow all interest in early man, as he was now known not to have indulged in those laudable passions.”[7]

    Mindful of JQ’s request for readings re the state, and aware that this reference to Polanyi might be like sending coal to Newcastle, nevertheless, his ‘Great Transformation’ remains one of the most compelling accounts of the development of the state:

    The great transformation was begun by the powerful modern state, which was needed to push changes in social structure and human nature that allowed for a competitive capitalist economy. For Polanyi, these changes implied the destruction of the basic social order that had reigned because of pre-modern human nature and that had existed throughout all earlier history. Central to the change was that factors of production like land and labor would now be sold on the market at market determined prices instead of allocated according to tradition, redistribution, or reciprocity.[8] He emphasized the greatness of the transformation because it was both a change of human institutions and human nature.

  15. There is a distinction to be made between objects and other forms of property, from land to intellectual property. An object can be destroyed by its owner. While land can be degraded, the land itself, as an area of the surface of the planet, will always remain.

    Land is the best example of the OP’s point. When I acquire a block of land, the only thing that physically happens is that an entry is made in the relevant page of a register kept in the land registry of the state or territory. The property rights I acquire are entirely defined by the class of title defined by the law of the state or territory, as further circumscribed by environmental, planning, mineral extraction and other bodies of regulation, and, possibly, by caveats and easements limiting my use of the land. Property rights in land as currently understood are a relatively new invention, superseding feudal systems of quasi-communitarian settlement.

    In short, no state, no land ownership.

  16. I looked briefly at that heading yesterday and it didnt immediately “gel”.

    But when it did hit home a few minutes ago, the roof nearly lifted with my cheer.

    As ever, indebted to Prof Quiggin for putting the horse before the cart on a foundational issue.

  17. Central to the economics of property rights is that the definitions of legal and economic property rights really have not much to do with each other. Yoram Barzel defines (economic) property rights as:

    … an individual’s net valuation, in expected terms, of the ability to directly consume the services of the asset, or to consume it indirectly through exchange. A key word is ability: The definition is concerned not with what people are legally entitled to do but with what they believe they can do.

    Barzel’s definition disconnects property rights from any legal connotation. On legal property rights, he says:

    The economic rights people have over assets (including themselves and other people) are not constant; they are a function of their own direct efforts at protection, of other people’s capture attempts, occasionally of formal and informal non-governmental protection, and of governmental protection effected primarily through the police and the courts.

    Legal rights are the rights recognized and enforced, in part, by the government. These rights, as a rule, enhance economic rights, but the former are neither necessary nor sufficient for the existence of the latter.

    Given this chasm between the legal and economic definitions of property rights, not surprisingly, barzel defines a firm this way:

    The firm is a nexus of the agreements (and parts of agreements) guaranteed by centralized equity capital and that are enforced without the state’s assistance.

  18. Jim Rose does not provide a reference to the quotes attributed to Yoram Barzel. I take these words as a given and my comments are limited to the text provided by Jim Rose.

    Why would anybody wish to replace the well established term ‘preferences’ with ‘rights’? What is the purpose? Of course anybody can ‘value’ the moon in ‘expected terms’ and there is no law against it nor for it. Everybody can ‘consume’ the moon by looking at it – not at the same time though. People may even write numbers they give to planets on a piece of paper, call them assets, and trade them. Is this what we mean by ‘economic’?

    IMHO Jim Rose has provided yet another example of empty verbal theorising. By comparison, both axiomatic general equilibrium theory and game theoretic models are like beacons of light and clarity.

    There is a word in JQ’s post which. I believe, has been ignored sofar, namely ‘westphalian state’. This term relates to the peace treaty of Westphalia in the mid-17th century. As outlined in the following reference, this peace treaty contains elements of the notion of a sovereign state, which persist to this day, albeit embedded in international legal frameworks.
    http://www.articlemyriad.com/relevance-westphalian-system-modern-world-sasha-safonova/

    If one takes the westphalian state as a point of reference, then the question is not what words Yoram Barzel chooses to write somewhere for some unspecified reasons but whether the phrase ‘property rights’ has any (economic) meaning in reality independent of ‘the state’ during the past 300 years in European-centric societies. I believe the answer is NO.

  19. When I acquire a block of land, the only thing that physically happens is that an entry is made in the relevant page of a register kept in the land registry of the state or territory.

    That’s how land title essentially operates under the Australian invented system of Torrens title. But land ownership predates the existance of Torrens title and lots of places don’t use the system. Most of the U.S. for instance does not use this system. The traditional alternative requires the chain of title to be traced back to it’s origin or as far back as is necessary to satisfy a buyer that the title will be secure.

  20. Minarchist libertarians seek to be moral entrepreneurs in the matter of redefining property rights. But then democratic socialists like me also seek to be moral entrepreneurs in this matter. Opposing existing relations with mere words (which are intended to be persuasive) is the essence of moral entrepreneurship, at the first level anyway. The framers of the treaty of Westphalia were also moral entrepreneurs. But for sure, the modern nation state, in the West at least, realistically and practically “underwrites” property laws in this phase of history.

    “A moral entrepreneur is an individual, group or formal organization that seeks to influence a group to adopt or maintain a norm. Moral entrepreneurs are those who take the lead in labeling a particular behavior and spreading or popularizing this label throughout society.” – Wikipedia.

  21. Ernestine Gross :
    … People may even write numbers they give to planets on a piece of paper, call them assets, and trade them. Is this what we mean by ‘economic’? …

    Have you read The Little Prince?

  22. But for sure, the modern nation state, in the West at least, realistically and practically “underwrites” property laws in this phase of history.

    I think that is correct. And proper also. But it’s a far cry from saying property rights are derived from the nation state. Or that it’s okay for the state to confiscate property at it’s convenience.

    Thankfully the Australian constitution has a “just compensation” clause. Unfortunately it does not apply to state governments.

  23. @Ernestine Gross In Sovereignty: Organised Hypocrisy, Krasner (1999) argues that

    the word sovereignty has four distinctive attributes: international legal sovereignty as international recognition from states; Westphalian sovereignty as the principle of non-interference, domestic sovereignty as the ability of a state to maintain the monopoly of the use of violence within its territory and interdependence sovereignty as the capacity of a government to control the intra-borders movements of any kind.

  24. TerjeP

    In rule of law countries, it is near-universal that states do not seize property (compulsorily acquire) without due process, for a public purpose, and payment of compensation. This dates back to Magna Carta and is a principle of common law.

    In all Australian States, these principles of public purpose and just terms are also embedded in statute law. Interestingly, the term “resume” is often used to describe compulsory acquisition, implying (correctly) that the state is taking back what was originally its own.

    There is scholarly debate about the origin of the just terms clause in the Australian Constitution. The explanation that seems most plausible is that it was included to allow the Commonwealth to actually acquire real property. Without that clause, to purchase land for national purposes (defence, telecoms etc), the Commonwealth would have had to rely on the states who retained all jurisdiction over land tenure and development. The just terms text was included by way of addendum (to confirm the common law) and was not the central purpose of the clause.

  25. Hey Prof Q, I stopped talking to Terje a day ago or so. I have said nothing today. Nothing! 🙂

  26. Geoff – you are right. However the Australian states have found occassion to circumvent the just terms tradition when it suits them. Most notably in regard to native vegetation legislation where a commonwealth bribe was all it took. However local governments (creatures of state governments) also do it fairly routinely in regards to heritage laws. If the constitution was not limited to the national government then we would likely have less meddling with peoples property rights.

  27. I realise I’m a bit late to the thread, but I figured I’d comment anyway.

    Property is a right of control over and use of objects (and, in slave societies, other people) recognised as lawful in a given society

    Legally speaking, property rights aren’t generally an unrestricted right to use an object, land (or person). Rather than are a right of exclusive possession; that is a right to prevent others from using the subject of the property right. The freedom of use of property stems from the fact that one is free to do anything that isn’t proscribed by law. As an extreme example, the owner of a knife can prevent someone else from taking the knife away, and they can use it to cut an apple, but the owner cannot use the knife to kill someone simply because the knife is their property.

    The complaint about government interference with property rights isn’t entirely misguided. TerjeP’s appeal to nature law isn’t completely without merit. Human psychology does result in people forming attachments to objects, and it’s reasonable to argue that the law ought to reflect that desire and expectation of control, along with the practical benefits of ownership and trade. Socialogically, people have expended great effort to control land and things (and people). Originally this would have been done with violence (as it is in children), but later that violence would have been implicitly leveraged through social customs and culture, and explicitly leveraged through systems of rulership and laws.

    However, it’s also important to note that at no point was this protection of things absolute. It’s absurd to suggest that shares and collaterised debt obligations naturally arise from a child saying ‘mine’ or ‘yours’ in respect of a toy. Other aspects of human psychology would regular this desire for control: attachment to people, social expectations, desire for respect, etc. These too would have been reflected in cultural conventions, despotic decrees and democratic laws.

    Even if we look specifically at the common law, favoured refuge of enterprising scoundrels, property rights don’t grant unrestricted right of use. As I mentioned above, property law doesn’t in generally protect the rights to actually do anything practical with your property. It’s not until you look at the tort of nuisance that the common law begins to consider what one ought to be able to do with one’s property without the interference of another.

    The law uses language such as ‘reasonable use and enjoyment of the land’ to describe the tort. Practically speaking resolve the dispute will involve the balancing of the interests of the plaintiff and the defendant (e.g. what is a reasonable amount of noise). This balancing will take into considering the context of the dispute such as the nature its location (e.g. is it a residentaial area or an industrial area?).

    The regulation of the use of property by governments is simply the democratisation of this balancing process. The reasonable limits on the use of property are set by the elected representatives of the whole community, rather than by the appointed judges who’s precidents are founded on the arguements of those wealthy enough to litigate to the highest courts. It also democratises the scope of the balancing as the interests of al electors, rather than just the property owning elite, becomes part of the consideration in deciding the limits of property rights.

    This brings me to the view that much of the momentum behind the libertarian movement comes from the wealthy minority who wish to undermine our system of democratic government (see also, infiltrating political parties to enact legislation and executive decisions that intentionally cause bad outcomes). They seek a world where the power of their wealth is maximised, where the owning property literally makes them lords of the land. Instead of a hierarchical aristocracy, there will be property rights and funded representatives for the wealthy elite, with lifelong employment-tenancy contracts and binding arbitration in the local lord’s court for the serfs.

    Then again, maybe I’ve been consuming too much dystopian fiction.

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