Frances Coppola and Daniel P. Ellsberg on Property Rights

People of libertarian persuasion are often very keen on the idea that Government should "defend property rights". Their view is that the assets they own are theirs by natural right, and it is the Government's job to defend that right....

But Government doesn't "defend" property rights, anyway. It creates them. The natural law is "I'm bigger and stronger than you are, so I'm having that". Government, pressured by people who believe that things they have are theirs by right even if they can't defend them, creates laws that say that what you have, you own, and no-one else can have it however big and strong they are. And it creates the legal infrastructure to enable those laws to be enforced. Well, more or less. Too often those laws are not enforceable in practice, not just because people don't have enough money to enforce them, but because it isn't easy to define what we mean by "ownership" or "property".

The legal infrastructure created by Government to protect individual "rights" incorporates within itself the right for Government to take some of the property of its citizens in order to fund itself. But our libertarian friends are horrified by the idea of taxes, especially capital taxes. Government taking your property from you by force is a betrayal of what they regard as the primary function of Government, namely to "defend property rights". This is illogical. Without taxes, Government could not function and the laws created by Government could not be enforced - including the "property rights" beloved of libertarians. Confiscation of property by Government is necessary if it is to "defend" the right to own property.

I find this view bizarre. As I've noted before, there are no "natural" property rights. The law of the jungle, which is the law that holds when all other laws are unenforceable, says that the only property you "own" is what you can defend....

What our libertarian friends really want is for Government to "defend" the property rights that they would LIKE to have - namely that what they have, they own, and no-one - not even Government - can take it from them. I don't have any problem at all with the idea of Government defining and enforcing an alternative set of property rights that are more "just" than the law of the jungle, if that can be done. But to claim that these are "natural" property rights and Government is merely "defending" them is simply wrong. If property laws are more "just" than the law of the jungle, it is ONLY because Government makes them so. And if Government can impose "just" laws regarding property ownership, why should it not impose "just" laws in other areas too? The problem is, of course, that the "just" property rights beloved of the libertarian right conflict with other "just" laws, such as the right of workers to a living wage, and the right of those who cannot work to the means to live. But why should laws that primarily benefit the rich override laws that primarily benefit the poor?

Coppola Comment
A question of justice
Frances Coppola


Daniel Ellerman has a book entitled Property and Contract in Economics: The Case For Economic Democracy. It is a free download here.

This book presents a modern version of the old Labor (or Natural Rights) Theory of Property and of an Inalienable Rights Theory that descends from the Reformation and Enlightenment. Together these theories re-solve the basic problem of distribution in the sense of giving a basis for the just appropriation of property and a basis for answering the question of who is to be the firm, e.g., the suppliers of share capital as in conventional capital, the government as in socialism, or the people who work in the firm as in the system of economic democracy (or labor-managed market economies). While these theories address old questions in economics, they do so in an entirely different manner than conventional economics which renders the questions as being about value or price theory (instead of about property rights and contracts). This book is now out of print and the rights have reverted to the author.

See also Daniel Ellerman's paper, Rethinking Common vs. Private Property

The purpose of this paper is to suggest a rethinking of the common-versus-private framing of the property rights issue in the Commons Movement. The underlying normative principle we will use is simply the basic juridical principle that people should be legally responsible for the (positive and negative) results of their actions, i.e., that legal or de jure responsibility should be imputed in accordance with de facto responsibility. In the context of property rights, the responsibility principle is the old idea that property should be founded on people getting the (positive or negative) fruits of their labor, which is variously called the labor or natural rights theory of property[Schlatter 1951].[1]

For instance, the responsibility principle is behind the Green Movement’s criticism of the massive pollution and spoliation by corporations that don’t bear the costs or legal responsibility for their activities. Ordinary economics shows that markets do not function efficiently in the presence of these “negative externalities” but the responsibility principle shows that there is injustice (i.e., the misimputation of responsibility) involved as well, not just inefficiency, and that aspect is overlooked by conventional economics.

The current economic system institutionalizes forms of social irresponsibility that go far beyond the topic of negative externalities. Indeed, the forms of socialized irresponsibility embodied in Wall Street capitalism are behind the current economic crisis, although the roots are much older. In recent decades, the American model of Wall Street capitalism has been promoted as an “advanced” model of a market economy to be emulated not only in the industrialized countries but also in the post-socialist and developing worlds. Hence the current crisis provides the opportunity to finally discredit the idea that this “advanced” form of socialized irresponsibility should be emulated by anyone. That is the topic of the next section.

But our main point goes much deeper than just a tamed or reformed version of capitalism; it goes to the form of private property behind the system. The ideology of the current system seems to have convinced those on both the Left and Right that the current system is based on the principles of private property so that anyone who opposes the current system is an “enemy of private property” itself, as the Commons and Green Movements are often portrayed (and as some members of those movements may portray themselves). We will see that practically the opposite is true.

Like the old system of chattel slavery, the current property system is “a” private property system but it is grounded on violating the very responsibility principle upon which property appropriation and other juridical imputations are supposed to rest. And when private property is refounded on the responsibility principle (or the labor theory of property) then a very different system emerges where firms are worker cooperatives (or similar workplace democracies) where people will appropriate the positive and negative fruits of their labor. Moreover this refounding of property on the responsibility principle provides no basis to treat the products of nature as if they were ordinary private property.

The rethinking of private property will take place in two steps: (1) the undoing the “brain-washing” ideology that the usual form of enterprise is based on “private ownership of the means of production” and (2) the application of the responsibility principle to the human activities of the people working in any enterprise where they are inalienablyde facto responsible for both the positive and negative results of their activities. After two sections on those two steps and a section on the notion of inalienability, we show how the corporation can be re-constituted from these first principles. Then we conclude with the negative application of the labor theory of property to the products of nature (natural resources) where some common ownership arrangement is required (rather than ordinary private ownership) so that the equal claims of future generations can be respected.