Property

Abstract

Property rights are as fundamental to economics as scarcity and rationality. Unless some human agency has the right to control the use of whatever resource is in question nobody can set prices, and there will be no incentive for anyone to calculate costs of production. In much of their work, economists can, and do, take it for granted that everything of value (both tangible goods and intangible objects such as skills) has an owner, and that the owner’s powers of control will correspond to the motivational assumptions of orthodox economic theory. That the free market and ‘the liberal conception of ownership’ (Honoré 1961) imply one another is obvious enough, and rightly allows most economists to feel free to leave the nature of ownership to others, while they tackle the intricacies of market interactions. Although Mill and Marx accused their contemporaries of discussing economics as if all the world had the legal institutions of the North Atlantic seaboard, the accusation is not wholly just – and both of them willingly exempted Smith in any case. For many purposes, the economy an investigator is concerned with can be assumed to have the legal background of the countries of the North Atlantic littoral. Nor have economists been reluctant to broaden their interest in property. Speculation about the possibilities of socialism, the analysis of the economics of slavery, inquiries into the agriculture of developing countries and very much more besides have all provoked investigations into the effects of particular systems of property rights. Defences of the free market based on individual private property (Buchanan 1985), explorations of the outlook for workers’ cooperatives (Vanek 1970), assessment of the efficiency of American slavery (Fogel and Engerman 1974) and the literature provoked by Coase’s demonstration of the irrelevance to overall welfare of the distribution of property rights are only a fraction of what economists have done.