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How Do Property Rights Develop?

November 22, 2013

I have an interest in economics as you can probably tell.  I try to focus most of my policy analysis on practical effects but my curiosity is piqued and I cannot help but think about how the abstract notion of property arises.   I think that I may be getting some handle on this concept.

I should say that philosophers and others have been dealing with the concept of property in the abstract for quite some time.  I have not done due diligence in discovering the philosophy that already exists on this topics to grant any authority to my thoughts.  My purpose in writing this essay is mostly to figure out some of these issues for myself.  As you read this (if you continue) then you should keep in mind that almost everything I’m going to say is wrong.  If you want to learn about these concepts, read other people, but by reading this essay you may learn more about me and my individual philosophy.

The first principle that I’m working with is that broad comprehensive theories on this concept and others like it are inevitably going to be wrong particularly if they are simple.  One of the things that reading the works of Frederick Pohl has convinced me is that people make the best decisions they can when it comes time to make a decision and the individual decision making process is complicated.  This hodge podge of individual decisions interact with each other to create social interaction.  There does exist valuable rules respecting social interaction but the concept of property results from an extraordinary complex and dumb set of human interactions.  I am of the conviction that property rights are a mistake of human invention in that there was never a conscious effort to create them and that their development has been and will continue to be haphazard.

In my amateur reading of these concepts I have found a wide variety of philosophical positions discussing them.  They seem to generally be extremely simple philosophies.  Hopefully this is just how they are portrayed to the uneducated (such as myself) and if I would undertake a serious discovery of present philosophy (I won’t) then I would discover much more nuance in most of the popular theories.

I once was trying to justify a philosophy I held based on how primitive society would have (in my mind) created something.  A friend of my helpfully pointed out that this effort was bullshit because of the amazing ignorance modern society has of primitive society.  Things that would make sense in the abstract to a modern thinker are likely wrong because of the inevitable ignorance of said modern thinker.  Even contemporary study by modern societies of primitive societies reveals such a wide range of behavior to make generalizations of all primitive societies (include some that we will never know about) guesses, at best, doomed to be wrong in many particular instances.

Given this knowledge of my own ignorance I don’t think that it is wise to take what seems to me to be the traditional path to understanding these concepts: building them up from assumed first principles about human behavior and how the concept of property would arise if one would just place humans with no history (personal or social) together in a hypothetical world.  Instead for my own personal understanding I shall attempt to discover how my contemporary society views and utilizes this concept even if this will never provide a cohesive or simple theory of property.  It may not even provide a usable theory as tautologies are not very enlightening but it might.

Also a natural concept of property and property rights does not exist despite some people’s insistence that it does.  Slavery is an appalling thought to modern peoples (though it still very much exists) but for the majority of recorded history it was an accepted and expected practice.  It would perhaps seem obvious to modern philosophers that people have a natural right to their own bodies but that would be hardly a natural sentiment for perhaps the majority of people who have ever lived.  While there are no natural property rights, I believe it is inevitable that societies will have formal or informal property rights as a matter of practicality.  Property rights are therefore something to be expected and will naturally exist but any particular set of property rights is not more or less natural than any other particular set of property rights.  This will be an overarching idea in the development of my philosophy regarding property rights.

Another important thing to remember is that ownership is a term that has different meanings.  If I were to steal your car you would still maintain formal ownership of the vehicle but I would have effective ownership.  If I drive your car for ten to fifteen years (however long it lasts until it needs to be scraped) then your formal ownership would mean nothing while on the other hand if I am quickly caught (or perhaps not so quickly) and prosecuted for theft and you receive your vehicle back and perhaps some other restitution then your formal ownership means a lot.

Property rights are important.  It is useful and pleasant to have some security in the goods and services that one relies on.  The more fear I have of being turned out of whatever shelter that I have, the more stress I will have, the less stability and predictability I will have in my life, and the less likely I am to make investments in my home that will bring long term benefits.  Thus the more secure I am in my home, the healthier and prosperous I will be.  Similar concepts also apply to other forms of property (owning a car brings economic and social benefits, being secure with family heirlooms provides my emotional health, et cetera).

Because of the importance of property rights it is useful to look at what they are.  In a sense US law gives everybody equal property rights but, none the less, in practice property rights are unequal.  Someone who rents his or her house is less secure in his or her shelter then somebody who owns his or her house and this has the effects stated above even though neither person is singled out in law individually or by class to have more or less rights.  The discreprency comes from artifacts of history both in how the law respects property and in how both individuals arrived at their particular circumstances.  It is important to note that in a capitalist society (at-least) there will never be complete practical equality regarding property rights.  The law and practical effects will always lead to an unequal situation for individuals in a population.

Both people in the above example have rights and responsibilities spelled out in law and often also in contract.  It is only by law, compact, and tradition that actors obtain formal property rights and it is often through action that people obtain a direct ability to exploit property.  It is the combination of these two that make up the entirety of social property rights and the nature of these rights is individual to a particular society and reflects the historical and practical facts for that particular society.  The nature of property rights are thus also always changing without respect to any inherently natural form.  A society through social processes changes the nature of property rights constantly.  It is good to talk about what they are and the benefits and weakness of a particular paradigm of property rights as well as alternatives.  I assert that no scheme is inherently inferior or superior, just or unjust, solely based on tradition or novelty.

Individual property rights are quite important.  The more property rights one has, the more secure the person will be and the more economic freedom the person will have.  This increases the expectation of prosperity, health, and other measures of wellbeing.  Property rights also affect political and social rights.  The more secure one is, the more one has ones basic needs met, and the less time one has to spend obtaining, securing, or expanding these two, the more one can spend time in other activities and, generally, the more effective one will be in them.  Thus a capitalist society will never achieve true equality under the law because of the inherent inequality of property rights in capitalism.  Either the benefits of capitalism are worth the detriments of capitalism or something else should eventually be adopted but in important ways capitalism limits individual freedom for many people (whether there can be a society with complete freedom for everybody is another question).

Shays’ Rebellion provides a useful parable about property rights.  In the Massachusetts Colony one had to own property in order to have voting rights (a de jury connection between property and political rights as opposed to the more de facto connection that I discussed above).  Shay was a tenant farmer in western Massachusetts meaning that he didn’t own the land by title to which he farmed but for all practical purposes he owned the farmland he farmed but he had to pay annual rent to a landlord in Boston who did nothing of practical importance for Shay.  The landlord only made money from the property that Shay worked and made profitable only because of fortune.

When revolution broke out Shay fought in the revolution supported by his landlord (who, unlike Shay, directly detrimented from the recent British policies imposed on the Colonies) and probably had to provide some of the equipment he used in the army himself.  While he was away fighting his farm fell into disrepair and became unprofitable.  After returning from the war to his farm, Shay was begging to rehabilitate the land but his landlord raised rents (to help pay for his expenses accrued during the war) and at the same time the legislature in Boston (in which Shay’s landlord had a vote and Shay did not) raised taxes on tenant farmers (to help pay for expenses that the State accumulated during the war).

Shay became disgruntled over his perceived injustice of the new taxes (after all didn’t he just fight a war where a major theme was the injustice of raising taxes on people who were not represented in government) and over his desperate economic situation.  He hobbled together a group of similarly disgruntled tenant farmers, attacked a federal armory, and took some merchants hostage.  The farmers wanted land redistribution where people who actually farmed the land would own it and not have to pay rent to people who owned the land for no reason other than fortune.  The Massachusetts militia defeated these rebels and the event would affect the forging of the US Constitution but the heart of the rebellion was about property rights.

The rebels wanted to change the property rights to those that seemed to them to be more beneficial to themselves and more just but the government who represented those with better property rights wanted to protect traditional rights.  (At the time I probably would have favored a one-time redistribution of land, at-least to the veterans).  The political decision was decided by force of arms but this example demonstrates both the importance of property rights (which, in this case, the property rights regime hindered economic growth) and the fact that property rights exist from individual circumstances governed by practical facts in a context of a paradigm for property rights broadly in society.

The paradigm in which individuals acquire and lose property and property rights is constantly changing.  I’m sure one can find constant rules that help determine and shape how this evolution happens regardless of the society but it is my guess that each such rule is not dominant by itself and that broad rules of how property rights are created in society and how they evolve are not going to apply in every society.  This is a conclusion limited in its usefulness but it assists in understanding the justice and practicality of changes to a property rights paradigm.

If I would come up with general rules they would be very much unspecific.  I think property rights are necessary in a human society because there needs to be (or at-least there will be) rules, formal or informal, about who controls the use and the benefits of what property.  I don’t see much use in a polity at large understanding the full philosophy and history regarding property and property rights in general but I see an important use of having some members of a society learned in such things.  I also see a use for a polity at large to discuss the particular regime of property rights in their society and to discuss changes to that regime.  I also thinking that understanding how property rights work in a particular society is very useful for understanding anything social about that society.

As far as my society is concerned there are changes to our regime that I favor (some for practical reasons and others for moral reasons but often a combination of the two).  I favor increased rights for home renters either through government legislation, tenant unions, or both.  There probably exist several radical land redistribution policies and/or radically different home ownership rights but I don’t know what they are.  These are two examples but every economic policy affects the property rights regime to some degree.

In my thinking about these specific policies I am uninhibited by an ideological domination on what property rights should be, what natural property rights are, an unwillingness to deviate from tradition, or an eagerness to embrace novelty.  There are commentators that profess the importance of property rights and the need for government to safeguard them.  In this I agree with them but I disagree with them when they use that argument for keeping property rights static because they are allegedly the natural property rights (would this mean that the right to own slaves was once a natural right and if so then what changed?).

I agree with Adam Smith that the goal of governments in preserving and protecting property rights often serves the wealthy in defense of their privilege from usurpations of wealth by the poor.  This stems from the fact that the economically and politically powerful tend to be the same and tends to want to keep a social structure that maintains their privilege.  The conventional wisdom that the current property right regime is the best and most just should be challenged but the wisdom that ample property rights are important both to individuals and to political freedom is sound.

From → Economics, Philosophy

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