WHY "PROPERTY" ?

-- By SamWells - 13 May 2010

Property is not a thing. And it isn’t even a person’s relationship with a thing. We are told that property consists in a relation between multiple people with respect to a thing. Very well. But what does that even mean? Property class tells us that it means, mainly, the right to exclude. Why? The textbook gives us a pair of explanations: labor and efficiency.

Labor

Locke explains property as flowing from an intrinsic right to the fruits of one’s labor. Just as there is a right to exclude unwanted interference from one’s body, there is a right to exclude unwanted interference from the things with which one’s body has mixed itself. Labor, Locke says, is a mixing of the body or mind with the object of labor.

While there is an element of truth here, there is but an element. First, mixing labor with a library book creates no right in it. The same goes for a public sidewalk. Second, an individual’s ability to engage in labor is self-generated. Talent and hard work help, but education and the investment of others, along with access to material ingredients needed to make something real, must all exist outside the self. These things come from others, and from nature. Labor cannot be the sole origin of property.

Efficiency

All of us have read Demsetz in property class. You know the article. Exclusive ownership by an individual can avert the tragedy of the commons. In communal ownership, people selfishly take more than their optimal share. If overhunting will deplete everyone’s stock of fur-bearing animals in the long run, the only way to reign in harmful individual behavior in the short run is to assign each person a small tract of hunting land, bringing the results of bad behavior home to roost.

This does make sense, I admit. Given a scenario in which overconsumption will deplete future supplies, present needs should not trump future needs, and private ownership makes this somewhat more apparent. But what if use now will not deplete future supply? Ideas, knowledge, and technology are not depleted when used. Other resources are so plentiful that all people alive could not exhaust them. Examples include corn and wheat, or toothbrushes. These are all cheap, and plentiful.

Also, Demsetz’s theory does not explain the allocation of resources among groups of owners. His article does not explain how a system of private ownership can balance the needs of one person against those of another. The fur-hunting example has two flawed premises. First, property borders can move. Working from his assumption that there are advantages to disadvantaging others, the natural results of physical delineation would be warfare for territorial expansion. Although the long-term supply problem may be solved, this occurs at the expense of actors in the present. Second, hunting quotas imposed by the tribal government could also be used to limit overconsumption, without necessitating land ownership or geographic conflicts.

Competition

Many businesspeople, if not our law textbooks, would say that property serves an allocative function, allowing markets to maximize net utility. Property assigns ownership to whoever does what it takes to gain control over a thing. Sometimes this is trickery, but usually it is socially beneficial labor. Wealth, as a reward for good deeds and hard work, provides a framework for competition between individuals, making manifest a scale. This increases net wealth, by placing value on it.

This explanation meshes nicely with an evolutionary theory of sexual selection, in which mate choice depends on displays of flashy material goods. Whether this justifies property depends on whether or not you think differential discrimination among mates is better for humankind than the material waste is bad. Assuming that human beings are more valuable than apes, and that sexual selection facilitated that marked improvement, sexual selection has been a good thing. However, like most beneficial processes, selection can spin out of control and harm the very organisms that it helped create. A large, colorful tail can make a bird vulnerable to hawks. A contest to win a desirable mate can destroy the happiness or boon that was sought as the reward for victory. Similar things happen in human society.

Aside from our gradual destruction of the earth and its ecosystems, this can be seen in the unhelpful distribution of new wealth created by society. For maximizing well being, how much wealth is owned matters less than how much wealth is owned by the poorest segment. For young, healthy members of society, almost no correlation exists between wealth and happiness. For the old, the infirm, and the impecunious, additional wealth improves life in tangible, significant ways. In the system as it stands, new wealth goes not to those who would benefit from it, but to those who already have the capital needed to gather more resources. This failure of the competitive system is built into the system via the incentive structure that made it exist in the first place.

I don’t think that any of the frameworks outlined above really explain why property must exist the way it does. Labor, efficiency, and competition do not give to “property” that sense of reality that one would hope for in a basic “right.” Perhaps property does not exist at all, in and of itself, but is an illusion.

If property rights are illusory, they may still be useful. They have power. If this is true, perhaps a better starting point would be in actual human need. Lack of shelter, food, and context in which to exercise creativity could provide an alternative basis for the assignment of new property rights. Our focus then would shift from the advantages of keeping people from having what might be ours to the universally beneficial results of an expansion of the productive community. Deprivation might be turned into fresh opportunity, with benefits that accrue to everyone. If need bears no relation to ownership, I think our system must produce results contrary to its ultimate purpose.

OLD VERSION, WITH MOGLEN'S COMMENTS:

WHY IS EXCLUSIONARY OWNERSHIP THE RULE?

By SamWells - 21 Feb 2010

Property describes not a relationship between a person and a thing, but a relation between people with respect to a thing. Property is power. An owner can arbitrarily choose to exclude others from activities utilizing a thing, or else include them.

Sometimes, with respect to some people.

Exclusion is unfair on its face, to me, given its implication that, no matter how much more good something might provide to a non-owner, the owner has no duty to share.

That supposed unfairness "on its face" is not obvious, which is what I suppose on-faceness is supposed to be about. Presumably there are people who would be able to make good use of my apartment, my toothbrush, and my law degree. Is it "unfair on its face" that I am not compelled to share each with them?

Why, then, does society promote and enforce exclusion? Three explanations predominate:

EXPLANATIONS:

1) INDIVIDUAL RIGHTS

There exists a right to the fruits of one’s labor. Labor is the process by which a person’s body or mind acts on an object. An individual has the right to exclude others from impinging on her body and a corresponding right to exclude others from the results of her labor.

2) EFFICIENCY AND EXTERNALITIES

An efficient system should internalize costs imposed on others as externalities in order to ensure responsible, economized use of resources. Exclusion of all but one actor from the use of a resource can eliminate the tragedy of the commons. If others are allowed access to a resource, the amount available to an actor at time B depends not on how much the actor saved from time A to time B, but on how much the group saved or used up from time A to B. If one or more members can be expected to take more than their optimal share (and selfishness is common), the only way to prevent a shortage for oneself is to do the same, but before the others. The result is over-consumption. A like effect applies to production: if one can capture benefits created by others, one will not make an effort to do the work oneself.

3) COMPETITION

If others can be excluded from the accounting of profits from work, the resulting accumulation makes comparisons possible. Comparisons allow competition, and competition breeds excellence and the creation of more wealth. Many see this wealth as an absolute good. Because property is measureable, it becomes meaningful, and therefore plentiful. Those who have less seek to catch up to those with more, and those with more seek to pull farther ahead for fear of falling behind. Because competition operates on a sliding scale, with no baseline, productivity does not halt prematurely at “enough.”

Maybe, but these appear to me to be primarily straw men. They are justifications presented for the propriety of wealth. The primary justification for ownership of the ordinary property of ordinary people is that we regard control over the minimal material resources of daily life as integral to the dignity of all human beings. In a place so poor in the slums of Bangalore, where I have some very extraordinary friends, that children do not have shoes, a girl of five will have her toothbrush, though she lives in community with 2,100 people who share one toilet.

THESE EXPLANATIONS BETRAY FLAWS:

1) INDIVIDUAL RIGHTS

While an individual does have a right to the fruits of her labor, a simple, unadorned act of will has never created an iota of wealth. Education, family environment, technological advances, income, social background, and other factors all combine to contract or expand the range of opportunities available to someone. This occurs independently of one’s will. No one can choose who they are at birth.

At a macro scale, the immense stockpile of financial power held by the upper 1% of society does not increase in value through the owner’s labor. It increases through returns on investment. No connection exists between this property and the owner’s body, and yet exclusion is allowed. Exclusion, then, cannot be truthfully derived from individual rights.

That didn't follow. It was just sleight of hand. You offered an insufficient argument and defeated it, but that had no effect on the proposition you inadequately defended.

2) EFFICIENCY AND EXTERNALITIES

Within the sphere of an individual's property, greater efficiencies often do result. Outside that sphere, however, externalities are not captured. The larger the system of concentration, the greater the internal efficiency, but the larger the negative externalities imposed on others by that system. This problem is exacerbated when a consolidated owner is opposed by many small actors, because the multiplied costs of communication required to collectively bargain can exceed the benefit of the transaction to the small actors. No internalization then occurs. gu

If this isn't blowsy bushwah it too much resembles it. You should rewrite for clarity.

Consider the following concrete scenario: it is easier for the public to enforce a fee to cover the $1 cost imposed by an act of throwing garbage on the ground in a park than it is for a homeowner to collect $1 for each piece of garbage thrown over a fence into her backyard by a neighbor. The park, a system of communal ownership, makes internalization of the cost of littering more efficient than internalization in exclusive land ownership.

What? How is it "easier"? Why does the "fee" have to be the same for both acts? On this account, there should be more litter on private property, where it is "hard" to get adequate damages, than there is on public property, where the state "easily" collects littering fines. Why do we see the opposite?

3) COMPETITION

Possibly, placing value on wealth does tend to create wealth, because it engenders continuous competition. This competition, however, produces anxiety and jealousy, and feelings of inferiority in the game's losers. Moreover, increased net wealth only adds value to society if the wealth added creates actual well-being in its recipients. For young, healthy members of society almost no correlation exists between wealth and happiness. In one study, psychologists found that “economic indicators were extremely important in the early stages of economic development, when the fulfillment of basic needs was the main issue. As societies grow wealthy, however, differences in well-being are less frequently due to income, and are more frequently due to factors such as social relationships and enjoyment at work.” Additional wealth and increased happiness do correlate, however, for those suffering from ailments and disabilities. Money can cushion the blow dealt by a loss of mobility due to old age. With these considerations in mind, I would conclude that added wealth brings happiness only to those who need it (the poor/old), and offers little to those who have enough (the rich). When exclusion gives to the wealthy and takes from the poor, it does not serve the highest good.

WHAT GIVES?

If the common explanations do not fully account for the primacy of exclusion, what does?

Property is only that over which the state recognizes one’s control.

No. That entirely ignores the whole subject of informal property, coommons production, etc.

Who controls the state? The upper class, because they are the politicians, or else those who exert control over them through wealth. The result? Redistribution does not occur. It is called by most people either morally wrong (point 1) or economically inefficient (points 2 and 3). This justifies the wealth of the wealthy and sooths the economic pain of the poor through sublimation. In this way, the system is sustained.

Maybe that's right, although it's a pretty thin theory. But it doesn't have anything to do with what went before, it isn't a conclusion resulting from your argument, and it doesn't feel very compelling, even to me, and I take it I'm supposed to agree with it.

This feels to me like the first draft of an essay that needs basic reshaping. From the outset, the propositions you put forward need better and more exacting editorial testing. The sequence needs reconsideration. We now have a relatively open basic question: why is property? A weak set of arguments in favor of some possible explanations are supposedly knocked down by weak arguments: a fight where everyone's in the tank. A conclusion that does not grow out of the argument, and does not answer the original question, is then tacked on. If the original question is one you think can be answered in less than 1,000 words (which I rather doubt it can), you have no words to waste: question, followed by answer. An effort to show that there is no answer, that property is a snare and a delusion, is also possible, probably also not in 1,000 words. But if that is to be tried, absolutely precise control over sequence and articulation has to be achieved.