The Evolution of the Property Relation

Property has been a trope in the formulation of ideal social arrangements since the compilation of the Old Testament (Nelson 2010). It has served as a rationale for revolution in Locke’s writings, and a defense of the status quo in Burke. The norms associated with property, responsibility and independence, have been alternately celebrated (Pocock 1975) and reviled, when understood differently as acquisitiveness and accumulation, in the work of Rousseau and Proudhon. The ownership of property has been the justification for representation in government, and for the separation of powers (Nedelsky 1990). The foundation of political and economic arrangements, government and market, has been based on concepts related to property. The objective of this project is to trace these meanings of property historically for a better understanding of their conceptual foundations, institutional manifestations, and normative dimensions. Ultimately, this long-term analysis of property provides a contribution to the methodology of historical institutional economics, including the history of political and economic institutions as well as the associated systems of meaning. By expanding the field of study to include debates, the most astute defenses and critiques become part of the object of study, deepening understanding of institutional specificity and ongoing changes. Such a complete consideration of property as paradigm is necessary to undertake systematic critique and consideration of alternatives.

The concept of property has particular importance in the predominant paradigm of contemporary economics, as well as salience in contemporary politics. The protection of property rights and limited government has the status of a veritable mantra in both contexts. In the longer history of political economy, the importance of property as an institution rests on its philosophical and moral foundation (Waldron 1988), ancient custom (Pocock 1975), as well as its importance in provisioning (Hodgson 2001b, 284, 287–288, 299–301, 308–309). With the emergence of the market, property has become a central organizing concept of modern liberal economies. In the context of this chapter, property is also important as an illustration of historical institutional methodology. A similar methodology is used by political scientists, such as Wolfgang Streeck (2009) and Paul Pierson (2004), social theorists (Pels, Hetherington, and Vandenberghe 2002), as well as institutional economists (Greif 2006; Hodgson 2001b). The ultimate goal of this chapter is to frame a methodology which can inform participants in modern institutions about their origins and rationales, as well as provide insights and levers for modifying and improving them. That is, the objective is to inform a deeper version of modern participative democracy, which is beyond electoral politics, to provide transparency as opposed to opacity (Meister 1990).

The relationship between property and the state is long standing, if complex. According to a Hobbesian perspective, property is the creation of the state. By contrast, according to Locke, property can provide the rationale for rebellion against the state. For New Institutional Economics, protection of property is the most important function of the state to promote economic growth. For Smith, property is an indicator of the stages of development of the state and society (Pocock 1979, 155, 158; Taylor 2004, 47–48. 82, fn.12; Hont 2005, 101–102, 419–443). For Marx, property is a determinant of class position, and the structure of the state.

The notion of “property” in the discussion so far has emphasized its social, collective nature, in contrast to its usual conception as an object in mainstream economics. To further this consideration, this chapter focuses on the public/private divide, and its role in the stabilization and routinization of social and economic processes that assure the reproduction of institutions. In Classical Liberal Theory, individual private property is the limit of the state, and the demarcation of the public/private divide (Horwitz 1992, 10–11). Categories themselves have histories, and awareness of the shifts of meaning over time is important for understanding their role in institutional foundation, identity formation, and in scientific inquiry (Edwards 2011, 336–337; Glickman 2011, 226–227; Koselleck 2002). Dichotomies, in particular, can stabilize concepts with ambiguous meaning (Poovey 1998; Scott 1988, 5–7). The role of categories is particularly important in institutional methodology, which focuses on the linguistic dimension of establishing institutions, the role of science, including law, along with the historical evolution of institutions.

Property cannot be exchanged or valued without money, and the potential for property as a store of value is only realized with money, as Locke recognized. The definition of money is the subject of commentary among many theorists, including Aristotle and Locke, as well as Smith, Marx, and Keynes. For example, Aristotle, Smith, and Marx distinguished between use value and exchange value of a commodity, or oikonomia and chrematistics respectively in Aristotle’s terms, only the latter of which was expressed in monetary units (Marx 1970, 27). Money is often defined by its functions, as a unit of account, a medium of exchange, and a store of value, by modern theorists. Wray sees money as the debt of the government, which is accepted in payment of taxes (Wray 2012, 261–281). Kindleberger notes the ambiguity of the definition of money, even in the nineteenth-century Money School in England (Kindleberger 1989, 60–65).

Property is a central aspect of the modern liberal nation-state, along with the individual and money. There is a widespread understanding of property as a concrete object, which is at the complete discretion of the owner. This form of property is a foundation of the independence and autonomy of that individual. The allocation of that property is the source of income, a reward to the owner for his judicious decisions to increase its market value. Such a system allocates property to its highest and best use, for the society as a whole. This system achieves prosperity and happiness for the nation as an unintended outcome of individual decisions made for each individual’s own self-interest.

The debates regarding the nature of property persist, both historically and in the present in the legal profession, and between the legal profession and the conventional public understanding (Ackerman 1977; Dagan 2011, 40). The paradoxical nature of property rests in the apparent objectivity of it, its “thinginess,” compared with its social, institutional dimensions (Singer 2000). The most common image of property is from Blackstone’s notion of ownership as “sole and despotic dominion” or Coke’s image of “a man’s home is his castle” (Singer 2006, 314, 332). Different schools of legal thought can be differentiated depending on the definition of property as an object owned by an individual compared with a social relation (Banner 2011, 45–72, 94–108, 257–275; Nedelsky 2011). For some textbook authors, the “thing of property [is] the depersonalized subject matter of the legal relations” (Smith 2014, 7).