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Property Rights: Establishing Ownership

This is part one of a four-part series on private property rights.

“If history could teach us anything, it is that private property is inextricably linked with civilization,” said Ludwig von Mises.

Private property rights are one of the bedrocks of modern society. The strongest philosophical case for private property rights comes from classical liberalism. Not to be confused with the modern notion of “liberal” politics, classical liberalism is a political ideology that emphasizes individual rights, limited government, and economic freedom.

This school of thought was heavily influenced by the work of Adam Smith, and it evolved and branched off into different sects as other economists and philosophers contributed their theories. Today, many American political beliefs and traditions can be traced back to classical liberalism, including commonly held views on property rights.

This series will explore the origins, issues, and significance of our private property rights system. Before discussing the evolution and value of property rights, it is first important to understand the different forms of property ownership and the various ways property can be obtained.

Property ownership takes one of two forms – public or private. Public property is owned and maintained by the government (or a social collective). Private property is owned and maintained by a private citizen (or a group of private citizens).

Moreover, people obtain property in four ways: 1) first possession, 2) exchange, 3) gift, or 4) theft. How property is obtained is fundamental to establishing ownership and property rights. Therefore, theorists are interested in answering the question, “Before civilization, how did property rights first develop?”

During the 19th century, classical liberal theorists engaged in “state of nature” thought experiments, which relied on premises about human nature to describe the series of events that led people out of uncivilized chaos into a system of governance. Through these endeavors, they sought to describe the process by which property was obtained and property rights developed.

Two of the most famous state of nature philosophers were John Locke and Thomas Hobbes.

John Locke conceptualized the idea of first possession. According to his state of nature theory, the earth’s resources exist as a divine gift for man’s use. Man can take ownership of unclaimed property in the common domain through the “first use” principle.

Under the Lockean doctrine of property rights, ownership is justified through labor, or use; when an individual applies his labor to extract property out of the common (public) ownership, he becomes the rightful owner of that property.

Locke wrote, “Everyman has property in his own person; this nobody has any right but himself. The labor of his body and the work of his hands we may say are properly his.” As man transfers his labor to property, ownership also transfers.

However, Locke was clear that this mechanism only exists for unclaimed property; once first possession has occurred, humans have a natural right to their possessions because such property is needed to maintain and preserve their lives, and the government must protect and enforce these rights. In this way, first possession becomes the catalyst for both obtaining property ownership and property rights.    

In contrast, philosopher David Hume argued that property rights were established as an emergent order. His arguments were based on Thomas Hobbes’ view of the state of nature, in which humans were driven by self-preservation. Hume described a state of constant war and strife as people fought over property. Over time, this fighting became fruitless and peace emerged.

According to Hume, property rights were inherently arbitrary as people took ownership through both moral and immoral actions. He rejected first possession as a moral claim to private property and believed property rights could only be established under the law after the dust of conflict had settled. In this “last man standing” view, government would protect property rights for the perceived winners of the property ownership battle.

While these two views present opposing explanations for the origin and evolution of property rights, they are not incompatible. The Lockean view is best understood as how property first came to be, while Hume’s argument underlines the evolution of property after first possession. Hume developed his property rights doctrine around the issue of scarcity, recognizing that people have unlimited wants for limited resources. In this view, property rights are an institution of order needed to facilitate trade.

Establishing ownership and exclusive property rights is fundamental to the exchange and utilization of property. Similarly, how a society views the origin of property influences its development and the system of governance it accepts. Once ownership has been established, a framework for the uses and transfer of property must be created.

Part 2 >>


Meet the Author

Raheem Williams is a research specialist for the Center for the Study of Public Choice and Private Enterprise (PCPE). He is also the founder of The Policy, a public policy forum with an emphasis on empirical analysis. Read his bio.

raheem.williams@ndsu.edu


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Raheem Williams   Economic Principles   Private Property


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