Thursday, November 18, 2010

A Question on Property Rights

This was a question I wrote to kick off a recent Society of Economic Thought meeting:

In many ways the very reality of an economic system depends upon how ownership is structured. It is the existence of property rights and the way they function in a society that determine who gets to make decisions and how those decisions are made, and since economics is fundamentally about decisions, this of course affects how the entire economy will work.

I think everyone in this room is acutely aware of the fact that there are some huge differences in how we all think economies should be structured, and I think that most of these differences ultimately boil down to questions about how ownership should work. There are an incredible amount of viewpoints on the matter. There are people who think that everything should be owned by the state because it's efficient, like in socialism or fascism. Communists think that property should be abolished completely in its current form, and everyone should be able to use everything. Some people think that workers should own the capital they use to produce goods, which is called syndicalism. Noam Chomsky is a famous modern advocate of this view.

Many people think that individuals should privately own property and that's basically your conventional capitalist viewpoint, but even within that viewpoint there are many shades of gray as to how firm individual property rights should be, as well as a multitude of ways that that private ownership of property can be done. You can have it as a trust from the state to individuals because that's the most productive way to generate resources for the state, which is effectively the mercantilist viewpoint. Or, you could make it so that one king effectively owns everything but leases it out for the same reason a mercantilist state would... because it increases his wealth and power. Sometimes people hold that individuals are the fundamental owners of their property, but that there can be exceptions to that if the situation requires them. In other words, many of us believe that ownership isn't absolute. And even if we do hold that individual property rights are absolute, which system do we use to justify that and determine who owns what?

Does each person own their property by mixing their labor with it, like Locke argued? Is property ultimately just about who has the biggest guns? Or like my uncle says, are we kidding ourselves because possession is 9/10 of the law? Is all property just theft? How far back do property rights go? Should we be concerned with say, giving the property we stole from the Native Americans back to them, or is there a certain point where we just accept the current distribution of property because it’s expedient to do so? Are property rights ultimately subject to a sort of practical truncation after restoring them becomes costly and difficult? I mean, these are only a few ways to think about and justify individual property rights, but I think you get the idea… it’s complicated. What even qualifies as property has changed over time. For example, people used to be able to own other people. You can’t do that anymore. And whether people should be able to own ideas is still an extremely contentious issue today.

So what I want you to really think about is.... how historically has property been structured, and why did past societies structure it that way? How is property structured in today’s world, and why is it structured this way? And most importantly, how should property be structured, and why should we structure it that way?

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