Private Property Rights ________________________________________________________________________________________________________________________________________________ Things are often described as "owned" by someone. You probably own books, sports equipment, and perhaps a car, but what does ownership mean? Generally it means that you have certain rights to use these things in certain ways. Fee-simple property rights, the broadest of private property rights, include rights to: (a) use a good as you choose as long as no one else's rights are violated; (b) trade or give these rights to other people; and (c) deny use of the good to others. Many property rights, however, are much more limited. For example, you cannot shoot trespassers on your land, nor may you raise hogs in New York City–or Des Moines, Iowa. You cannot abuse your pets, burn your house for the insurance money, or play extremely loud music all night long in your apartment. The list goes on and on. The critical point is that most property rights are circumscribed. How does anyone acquire property? John Locke, a seventeenth-century English philosopher, offered the labor theory of value to justify natural property rights. The labor theory of value asserts that human labor is the source of all value. According to Locke, mixing your labor with "gifts of nature" makes land and the crops it produces valuable. Thus, he viewed improvements to natural resources as ethical cornerstones for original property rights, which could then be legally transferred to others. The idea that mixing labor with natural resources creates property rights raises both moral and practical problems. Should those who encounter "gifts of nature" have property rights on a first-come, first-served basis? If you were the first to pour your blood into the sea, should the oceans and all their riches be yours? And what about rules for transferring property? Who should have property rights to things produced by employees? … by slaves? Should you own a piece of land, not by dint of personal effort, but because you inherited it from your parents who inherited it from their parents who bought it from the family who cleared the land? What if the family who cleared it murdered the previous owners? Should property rights become ever stronger over time, regardless of whether a property transfer long ago was legal or illicit? Difficulties posed by these types of questions for Locke's "natural rights" theory suggest a need for more practical foundations for property rights. Basing property rights on brute force would be both violent and inefficient. If your claims held only to the extent that you have the muscle to enforce them, too many resources would be absorbed protecting your rights and aggressively trying to take from others. To avoid such problems, we grant government a near-monopoly on the use of legitimate force. Most legal scholars would argue that your property rights are determined by law–what the law says is yours is yours; neither more nor less. Society can be viewed as specifying sets of rights by law and then redefining rights through changes in statutes or legal opinions. Property rights and legal rights are almost synonymous to economists. For example, zoning confers property rights that regulate how we may use land and buildings, traffic laws specify how we may drive our cars, and criminal laws limit how we may treat our neighbors. You cannot legally slander your neighbor, litter, or shout, "Fire!" in a crowded theater. Property rights are also implicit in laws establishing such things as welfare programs or tariffs on imports. Thus, laws govern the ways we use of both our own and our neighbors' property. Government in a capitalist society establishes who owns what and how ownership rights can be transferred. Naturally, changes in rights accompany changes in laws–just as laws create property rights, they can take them away. But too frequent legal changes may create uncertainty and discourage production and investment. Socialism is capitalism's most significant challenger. Socialism holds that most non-human resources should be owned by the state, acting as a trustee for all the people in society–and not by private individuals. Differences between capitalism and socialism also tend to be pronounced in specifying appropriate roles for government. Click on the link for an exploration of some of the differences between central planning (socialist) policies and laissez-faire (capitalist) policies.
	________________________________________________________________________________________________________________________________________________ Author: Ralph Byrns
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