Notes on Property in Commons (draft)

[I’m publishing this draft work-in-progress here to make it easier to get feedback. Feel free to leave a question or comment]

Elinor Ostrom makes the point that commons-pool resources and commons property are different animals. Any particular commons resource can be held under a variety of different property regimes or property law systems. But commons resources and commons property are often confused and used interchangeably.

Resources vs Rights

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The Bundle of Rights

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ijc2012-2012003-001

Bundles, Systems, and Holders of Property Rights (Schlager and Ostrom 1992)

“…most institutional analysts are familiar with the Schlager and Ostrom work on property rights (Schlager, Edella, and Elinor Ostrom. “Property-rights regimes and natural resources: a conceptual analysis.” Land economics (1992): 249-262.). In this piece, they lay out a conceptual map for bundling of various types of property rights with a goal of showing that ownership is more than a simple binary division. Their revised table (from a 1996 book chapter) looks like this:” http://michaelschoon.com/2013/09/25/

property roles and bundles of rights - Ostromspace

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property-rights bundle - big

The Bundle of Property Rights — Click to enlarge (californiarealestatecourses.com/lawcourse/lesson2/L2S1Nar.htm)

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Estates—Rights in real property which are or may become, possessory

1. Freehold estates—exist for an indefinite period of time

a. Fee estates (a fee, an estate in fee, estate of inheritance)

(1) Fee simple absolute—the greatest degree of ownership.

(2) Fee simple defeasible—can be defeated by some condition subsequent

2. Less-than-freehold estates (a leasehold estate)—exists for a determinable period of time—a form of personal property.

a. Estate for years

b. Estate from period to period (e.g., month-to-month)

c. Estate at will

d. Estate at sufferance

[from  Real Estate Trainers, Inc..Legal Aspects of Real Estate]

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Concurrent Estates (tenancy in common, joint tenancy, tenancy by the entirety)

Leasehold

Condominium

Trust (private, charitable, beneficial, etc.)

Beneficial Interest

Community Land Trust

Public Conservation Area

Private Conservancy

Easement

Doctrine of Mortmain

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Do collective property rights make sense? Insights from central Vietnam

Abstract

We draw on empirical results from three case studies of property rights change across forest and fisheries ecosystems in central Vietnam to investigate the circumstances under which collective property rights may make sense. A generic property rights framework was used to examine the bundles of rights and associated rights holders in each case, and to assess these arrangements with regard to their contextual fit, legitimacy and enforceability. The cases illustrate the interactions between private and collective rights to lands and resources, and the trade-offs inherent with different mixes of rights.

1. Introduction

Responding to the challenges of rural poverty and environmental sustainability requires a flexible mix of individual and collective property rights. Resource-based activities shift, depending upon, among other things, household needs, local ecologies and market opportunities. For these reasons, conventional categorization or advocacy of private, collective or public rights rarely account for the complex realities found in particular places (Barry and Meinzen-Dick 2008; German and Keeler 2010). Many property rights arrangements tend to enclose specific areas or reduce some people’s access to specific goods. Overlapping but differentiated ‘bundles of rights’ (Schlager and Ostrom 1992) and hybrid property regimes can offer a more effective lens for understanding property rights complexity. In the context of a mixed public-private or collective rights situation, such bundles of rights may be related to access, withdrawal, management, exclusion and alienation of resources, or parts of a resource, through time and space (Barry and Meinzen-Dick 2008). Farmers or fishers may advocate for part of a bundle of rights (extraction, for example) with other rights residing with the collective or the state (management or alienation, as an example). Sensitivity to circumstance or context reveals that individual, collective and public property rights each have merits (Evans et al. 2010). The challenge for the resource manager, donor or policy-maker is to ‘read’ when and where different rights regimes may be appropriate to support poverty alleviation and sustainable rural livelihoods more generally.

Vietnam has moved from forms of collectivization and state ownership that began in the late 1950s to an ambitious ‘renovation’ program leading to individual land titling in the late 1980s (Do and Iyer 2008). The Doi Moi period (or ‘renovation’) aimed to transform a centralized, state-planned economic system into a more decentralized, market-oriented system whereby the private sector would become the main engine of growth1. One aspect of these reform policies was to devolve authority over production decisions to farmers and enterprises, and to establish property rights (for agricultural land and in some cases for individual households to manage forest areas) to encourage investment and provide a form of collateral for rural dwellers (Sunderlin et al. 2008). The majority of Vietnam’s 90 million people have access to small amounts of land (1–2 ha), particularly in rural, agriculture-focused areas (where 72% of the population lives) (HDR 2009). Policy reforms in the 2000s (e.g. changes to the 2003 Land Law and Fisheries Law) recognized the role for collective rights, once again, to manage forest areas and fishing grounds. However, in the context of increasing privatization of land and marketization of rural production, the contextual fit, legitimacy and enforceability of collective rights has been uncertain…

Insights from the cases highlight how the needs and aspirations of individuals and households do not easily conform to conventional property rights narratives (private vs. collective) or the implementation of policy prescriptions that emerge from these narratives. Results of the analysis contribute to common property theory by showing how local actors may choose to collectively manage and use natural resources (forest lands and aquatic resources in this case) as part of a broader strategy to obtain individual bundles of rights (which may include access, withdrawal, management, exclusion and alienation of resources, or parts of a resource) within the context of a collective rights policy framework.

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Beyond Markets and States: Polycentric Governance of Complex Economic Systems, by Elinor Ostrom (2009 Nobel Prize lecture slides)

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Individual garden plots on soviet collective farms

The sovkhozy tended to emphasize larger scale production than the kolkhozy and had the ability to specialize in certain crops. The government tended to supply them with better machinery and fertilizers. Labor productivity (and in turn incomes) tended to be greater on the sovkhozy. Workers in state farms received wages and social benefits, whereas those on the collective farms tended to receive a portion of the net income of their farm, based, in part, on the success of the harvest and their individual contribution.

Although accounting for a small share of cultivated area, private plots produced a substantial share of the country’s meat, milk, eggs, and vegetables.[citation needed]Although never more than 4% of the arable land in the USSR, private plots consistently produced roughly a quarter to a third of agricultural produce. Private plots were among many attempts made to restructure Soviet farming.[citation needed] However, the weak worker incentives and managerial autonomy, which were the crux of the problem, were not addressed.[citation needed]

The private plots were also an important source of income for rural households. In 1977, families of kolkhoz members obtained 72% of their meat, 76% of their eggs and most of their potatoes and eggs from private holdings. Surplus products, as well as surplus livestock, were sold to kolkhozy and sovkhozy and also to state consumer cooperatives. Statistics may actually under-represent the total contribution of private plots to Soviet agriculture.[4] The only time when private plots were completely banned was during collectivization, when famine took millions of lives.[5] 

http://en.wikipedia.org/wiki/Agriculture_in_the_Soviet_Union

Soviets Pushing Food Production On Small Individual Plots

news.google.com/newspapers?nid=1873&dat=19821019…

Soviet law allows country and city dwellers alike to farm as much as one half a plots,— and the yield per acre far outstrips that of state and collective farms.

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Party, State, and Citizen in the Soviet Union: A Collection of … – Page 258 – Google Books Result

The collective farm member’s personal household plot 57. use of a plot of land adjacent to their house as a vegetable garden, orchard, or to meet other needs.

Under the Collective Farm Charter (1935), individual farmers were permitted to keep small garden plots and a few animals for domestic use, and to sell surplus production in local free markets. http://encyclopedia2.thefreedictionary.com/collective+farm

Bibliography

See R. W. Davies, The Soviet Collective Farm (1980); W. Hinton, The Great Reversal (1989); A. Etzioni et al., ed., The Organizational Structure of the Kibbutz (1980).

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owners lavished more care and effort on their own crops than on collective or state fields. Comparative Economic Systems: Transition and capitalism alternatives – Page 96 – Google Books Result

Self-Sustainability of Subsidiary Household Plots: Lessons for

region actually was a combination of collective, state, and individual farming. Subsidiary household plots (lichnyye podsobnyye khozyaystva in Russian) culti ….. hectare, while the average yields in Russia are 18-20 centners per hectare. ….. Durgin, F., “Household Garden Plots,” RSEEA Newsletter, 13, 3, September 1991
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The Meaning of Property “Rights:” Law vs. Economics?“Given the importance of property “rights” in economics, it might be expected that there would be some consensus in economic theory about what property “rights” are. But no such consensus appears to exist. In fact, property “rights” are defined variously and inconsistently in the economics literature.”
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Analysis: Cuba’s derechos de superficie: Are they ‘real’ property rights?

A derecho de superficie is a derecho real over land that does not belong to its holder (the superficiario), but that the owner of the land in question concedes while retaining the title (dominio, or ownership) to the land itself. The superficiario is thus allowed to build and/or plant on the land while the laws acknowledge his own rights over the buildings or structures and plantations so emplaced as independent from the title holder or land-owner’s rights. Superficie rights are usually only temporary in nature. Once the superficie rights expire, when the term stipulated in its title (the grant or concession creating it) runs its course, or when it is otherwise extinguished, a reversion takes place and the owner of the land takes title to the buildings or improvements made on his land by the superficiario.

Over the past few years, the derecho de superficie has been enjoying a comeback in a number of countries — in Spain, in Argentina, even in China. And the Cuban Civil Code’s provisions on this topic are often cited as an example by those who urge their countries’ legislatures to make superficie rights part of their laws.

One of the reasons behind this resurge is intrinsically tied to societal models that, even if presently evolving (some faster than others), seek to keep the direct ownership of land in the hands of the state, such as Cuba.

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Pensacola Beach is actually located on a barrier island in Escambia County, connected to the mainland Pensacola and Gulf Breeze by the Bob Sykes bridge. The land belongs to the Federal Government by virtue of a 1947 deed which leases it to the businesses and residents in 99 year increments, making them long-term leaseholders through the Santa Rosa Island Authority, instead of property owners. http://www.gibbons-realty.com/pensacola-beach-homes-and-condos/

Santa Rosa Island Authority

Pensacola Beach, is owned by Escambia County, Florida, and is under the direction of the Santa Rosa Island Authority (SRIA). The SRIA was created by the Florida legislature in 1947 under Chapter 24500. The SRIA does not receive tax support from the taxpayers of the county. It is fully funded from rental fees collected from business and residences on the beach.

The Authority is made up of six members, five are named by members of the Escambia County Board of County Commissioner and whose term is the same as the commissioner who appointed them. The sixth member is elected by the registered voters on Pensacola Beach. The sixth members’ term is two years.

Because of restrictions placed in the legal document from the United States government, land may not be purchased on Pensacola Beach; instead property is rented by the Island Authority for varying periods of time.

Pensacola Beach is about 1,474 acres, which make up approximately 30% of Escambia County on Santa Rosa Island. Pensacola Beach is about eight miles long and a quarter mile at its widest. At the present time 60% of Pensacola Beach is public use or public service land with the remaining 40% rented for residential and commercial use.

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Open access vs. the commons

When Hardin (1968, p. 1244) asked his readers to “[p]icture a pasture open to all,” he was referencing an ungoverned open-access regime from which nobody could be excluded. Yet by calling the resulting collective action problem “the tragedy of the commons,” the notion of common property became conflated with the lawless (or law-free) condition of open access. The distinction between open-access and common property was made decades ago by Ciriacy-Wantrup and Bishop (1975) and has been reiterated by Ostrom (e.g. 1999, pp. 335–336; see also Schlager and Ostrom 1992) and others (e.g. McCay 1996, p. 113; Dagan and Heller 2001, pp. 556–557; Eggertsson 2003, pp. 75–76). Yet confusion on this point has yet to be fully eradicated. Recognizing that nearly all “private” property is actually owned (or at least used) by groups, such as households or firms, offers one way around this blind spot. These everyday examples of non-tragic commons lead us to ask not whether common property is feasible at all, but rather under what circumstances and at what scale.

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Lee Anne FennellUniversity of Chicago Law School, lfennell@uchicago.edu
Abstract

Elinor Ostrom’s work has immeasurably enhanced legal scholars’ understanding of property. Although the richness of these contributions cannot be distilled into a single thesis, their flavor can be captured in a maxim I call Ostrom’s Law: A resource arrangement that works in practice can work in theory. Ostrom’s scholarship challenges the conventional wisdom by examining how people interact over resources on the ground – an approach that enables her to identify recurring institutional features associated with long-term success. In this essay, I trace some of the ways that Ostrom’s focus on situated examples has advanced interdisciplinary dialogue about property as a legal institution and as a human invention for solving practical problems. I begin by highlighting the attention to detail that characterizes Ostrom’s methodology. I then examine how Ostrom’s scholarship yields insights for, and employs insights from, property theory. Next, I consider the question of scale, an important focal point of Ostrom’s work, and one that carries profound implications for law. I conclude with some observations about interdisciplinarity as it relates to research on the commons.

Keywords

anticommons; commons; interdisciplinarity; models; scale; semicommons

We the People, Inc.

Libertarians, conservatives, and rich people are always saying government should be run more like a business. Here are some very businesslike ideas they probably won’t like.

I think society should encourage everyone to own a little bit of land and a modest domicile, free of tax. But since the public is the granting authority of ownership rights (and also the judicial and policing authority of those rights), our doctrine should be that there is an implied public easement on all land and structures that prohibits various kinds of public nuisance and environmental harm (actually this is already implied, but too narrowly).

Perhaps we should also have a federal rent on all land above a certain “homestead exemption” value, something like the Land Value Tax (LVT) proposed by Henry George. This would be an even stronger way to assert the public interest in all our land and resources. We should have a federal tax on non-renewable resource use, too, not just on carbon.

Coste social del monopolio. Monopoly's Social ...

Monopoly’s Social cost. (Photo credit: Wikipedia)

I also like an idea I got from Nate Blair that the public can rent out patent and copyright monopolies instead of granting them free gratis, especially if the rent is in the form of a royalty on profits rather than an up-front cost. Since it is We the People who grant and guarantee patent and copyright rights, why should we not reserve some rights and benefits to the people?

In some cases we may want to buy back patent rights on medicines and other things that have a compelling social value to insure they will be available at or near the cost of production. As Nate writes:

Another great innovation would be for society to attempt to value the social benefit of an innovation, particularly in the field of medicine, and then make an offer that the innovator couldn’t refuse.For example, inventor of an HIV immunization could earn 10 billion in profit, but the social cost of monopolizing the treatment that some people cannot afford may equal 50 billion. Society could offer an award of 20 billion, like XPRIZE; accepting the prize would mean transferring the rights to society (to the commons) so that everyone could be treated at the marginal cost. The innovators get 10 billion more than they would have under the “free” (monopolized) market, and society has made a 30 billion dollar economic/societal profit. —Nate Blair

Patent rights in the United States during the ...

Patent rights on radio (Photo credit: Wikipedia)

Related PRA 2.0 Posts

Sermon on the Land

Animal husbandry, 2300 BC

Animal husbandry, 2300 BC (Photo credit: Marcel Douwe Dekker)

At the risk of being labeled a communitarian fundamentalist, and preaching at you, I think that our first duty both to ourselves and to this world is to participate in a localized, sustainable, self-reliant (within a global system of balanced, recursive self-reliance and interdependence), community of peers. Without a community that achieves a certain threshold of economic self-reliance, security, and basic independence for its members, either in urban or rural settings (but without being too large to be personally intimate and nurturing), one tends to become a victim, a serf, or even a slave, caught in a trap; and thereafter to sink deeper and deeper into tragic compromises of ones values and actions. This can happen even to talented high achievers. It has been called the rat race.

And without a certain degree of geographic localization of such communities, even if not technically required for solidarity, production, or economic self-reliance, “unoccupied” parts of the commons tend to get robbed. Even if resources are considered common property or non-property, belonging to all, good stewardship is seldom an absentee role.
English: Private Property.

(Photo credit: Wikipedia)

Husbandry is also not the work of strangers. I have seen this in many situations over the years. And that’s why I agree with Aristotle that private property (conditionally, within reason) can promote virtue. But this only applies to property that is occupied or tended in a way appropriate to its type and in a way that is responsible to society and to future generations. Abuse, neglect, and absentee ownership are anathema.

I understand of course that many people don’t want to be tied to a particular place–people are increasingly mobile and globally oriented– and I think that’s fine as long as the rest of us are enough in number to keep the local places–all the city blocks, the paddocks, and the wide-open wild spaces– looked after, tended to, and deeply cared for.

Amen?
Poor Richard
Packard plant

Packard plant by Ashley Dinges, on Flickr

Related articles

All Ownership is Conditional

GWMNM private property sign

GWMNM private property sign (Photo credit: Wikipedia)

Almost all property ownership is conditional, and it always has been. This thousands-of-years-old legal doctrine is seldom appreciated or understood by modern activists, politicians, economists, or even by lawyers.

Some think private property is the cornerstone of civilization. Others criticize the institution of private property, finding in  it the root of all evil. They may hold the institution of private property responsible for all manner of social injustices and environmental ills. The alleged evils of private property are often attributed to the underlying legal system in which property ownership is established and enforced. Sometimes it is argued that private property should be abolished and/or that alternative legal frameworks, such as a “law of the commons” need to be established through legislation.

But the law of the commons and the doctrine of conditional ownership are already fundamental parts of our legal system, and have been since remote antiquity, leading me to think that our problems are less structural than maybe cultural or psychological.

It shouldn’t be surprising that political thinkers tend to see remedies to social and environmental problems in political terms, economists in economic terms, philosophers in philosophical terms, and so on, without any of them giving a lot of thought to legal history.

Because the doctrine of conditional property in existing law is so little understood outside a fairly small circle of scholars, and because the commons are constantly being despoiled,  privatized, and mismanaged, people tend to assume that our legal framework is deficient in this area.  So they naturally assume that we need new laws to protect the commons, rather than looking at existing law and asking why it is under-utilized. But if we don’t understand the the ways that existing law can  protect the commons, how will we be able to protect that important part of our legal heritage from attack by corrupt courts and legislatures? And that part of our legal heritage most certainly is quietly under attack, right under our noses. We may loose it before many of us ever even knew it existed.

The confusion about private property ownership is exacerbated by theories about “natural rights” and “natural law”, which have little or no basis in our actual legal system, but belong instead to the theoretical justice systems of  philosophers. Natural law (as in philosophy, not natural science) and natural rights theories have been advocated by conservative and liberal thinkers alike, in various historical contexts, to affirm or dispute the authority of kings or governments, and in general to dispute existing laws they didn’t like. Nature’s law (sometimes also mashed up with “divine law”) is different things to different people. Examples can be found in nature for anything from symbiosis to cooperation to violent territorial conquest. Natural law theories are often simply attempts by one group to dispute the prevailing legal authority of another group by appealing to a vague, transcendental authority. Thus natural law theories are now most commonly used by anarcho-capitalists and neo-libertarians to dispute the authority of civil law to regulate their economic activity.

In most Anglo-American jurisdictions, the body of  law includes constitutional law and

statutory law” enacted by a legislature, “regulatory law” promulgated by executive branch agencies pursuant to delegation of rule-making authority from the legislature, and common law or “case law“, i.e., decisions issued by courts (or quasi-judicial tribunals within agencies) (http://en.wikipedia.org/wiki/Common_law#1._Common_law_as_opposed_to_statutory_law_and_regulatory_law)

The term “civil law” has several different connotations (one being a distinction from criminal law), but in the map below it is used to mean “a legal system inspired by Roman law, the primary feature of which is that laws are written into a collection, codified, and not (as in common law) determined by judges.” (Wikipedia/Civil law)

Legal Systems of the World (via WikiMedia)

Color Legal System Type
Civil law
Common law
Custom
Fiqh
Common law and Civil law

Contrary to the above map, I would characterize the US as a hybrid system of constitutional law, civil law, and common law; but of the three, common law may very well be the most powerful and the least appreciated.

Law in the West may be inspired or influenced by romantic interpretations of  nature (the law of the jungle, survival of the fittest); or by ethical, moral or religious teachings; or by scientists, philosophers, economists, politicians, jurists, etc.– but the law is not ruled, over-determined, or limited by any of those influences. Law is a complex bit of sausage-making that has been evolving for thousands of years. We have a legal heritage that one age and culture has passed to the next since even before the times of ancient Greece and Rome. The US, for example, did not start all over from scratch with a brand new legal system after the US Constitution was adopted. For the most part we continued to follow English Common Law. Ironically, many new laws which are established by parliaments, legislatures, executive agencies, courts, etc. are created in ignorance of, and often to the detriment of, the existing body of  law, especially the common law. Conservative efforts often harm the law by elevating private, special interests above the general welfare. Liberal efforts often harm the law by trying to reform a legal system they don’t adequately appreciate or understand, and by putting the structural cart of law before the functional horse of human behavior.

Upper portion of Hammurapis’ stela (Wikimedia)

When activists, political thinkers, and economists criticize the mainstream conventions of property ownership they often fail to realize that they are objecting to various implicit defaults and assumptions about ownership in common practice today. But those customary defaults are by no means the only arrangements permitted and protected under most modern legal frameworks.

The terms and conditions of a specific transaction or instance of ownership may be codified in legal terms and placed in deeds, titles, contracts, etc.. “Standard” legal language is used to convey the standard, default assumptions. But alternative, atypical terms and conditions of ownership can be legally codified as well — without any structural changes in our legal, political, or economic systems. Activists and reformers often blame a legal system they may not adequately understand for the ways in which the system is most commonly being used by the individuals and interest groups in society.

In other words, ownership problems may be rooted more in the philosophy, psychology, and behavior of individuals, groups, and cultures than in the technical structure of our legal systems– at least that seems to be the case in the modern Western nations I am most familiar with.

Our oldest known legal code is the Code of Hammurabi  — a  Babylonian law code of ancient Mesopotamia, dating back to about 1772 BC and found on the Hammurapis’ stela. “Nearly one-half of the Code deals with matters of contract, establishing, for example, the wages to be paid to an ox driver or a surgeon. Other provisions set the terms of a transaction, establishing the liability of a builder for a house that collapses, for example, or property that is damaged while left in the care of another. ” (Wikipedia)

Here are some samples of conditional property laws from the Code of Hammurabi:

36. The field, garden, and house of a chieftain, of a man, or of one subject to quit-rent, can not be sold.

37. If any one buy the field, garden, and house of a chieftain, man, or one subject to quit-rent, his contract tablet of sale shall be broken (declared invalid) and he loses his money. The field, garden, and house return to their owners.

38. A chieftain, man, or one subject to quit-rent can not assign his tenure of field, house, and garden to his wife or daughter, nor can he assign it for a debt.

39. He may, however, assign a field, garden, or house which he has bought, and holds as property, to his wife or daughter or give it for debt.

[Hammurabi’s Code of Laws  Translated by L. W. King]

Under Western legal systems (that evolved largely from English common law and Roman civil law),  ALL ownership is conditional. The relationship between an owner and the  thing that is owned is a form of custody.

Despite what we naively call “absolute” private ownership, the entire bundle of property rights is never held by any one owner. There are always multiple stake-holders with legal and equitable interests in any resource, even when the majority of the bundled rights are in the custody of a private owner. One  interest that is always present, both in law and equity, even when temporarily delegated to private custodians, is the public interest. The public interest includes public health, the public welfare, the sustainable viability of the ecosystem, and the interests of future generations, among other things.

Bundle of rights likened to a bundle of sticks (Wikimedia)

A private owner who holds a deed to property that conveys what in the US we call a “clear, unencumbered, fee-simple absolute title” is nonetheless subject to the rights of others to have unobstructed views, access to other property, or a neighborhood free of public hazards and nuisances. There are literally dozens of rights that others may have to or over some aspect of my private property.

In ancient times, one of the stakeholders that was always included in any ownership arrangement , even if only implicitly, was the king (and sometimes a deity). That is the origin of the legal doctrine of  conditional property ownership. Today however, in modern Western societies, the legal rights and equity interests once reserved by a sovereign or deity are now vested collectively in we, the people.

As a blogger comments at Commoning, “All property relations are conditional – the concept of absolute ownership is an idea that serves a logical function in some liberal jurisprudence and a misleading rhetorical device for various uninformed libertarians with no social conscience.”

The principle of conditional property ownership  is explicit by contract or implicit in many of our legal doctrines, such as:

Ironically, Western legal systems are doctrinally and structurally more aware and protective of these third-party and public interests than are most of those who use the system to conduct their business and enforce their property rights (and most of those who criticize the legal system for the sins of those who use it antisocially).

A liberal defense of private property

The concept of private property, like a stone axe, a hammer, or a gun, has utility even if it can also be abused. Aristotle writes, in Politics:

“For that which is common to the greatest number has the least care bestowed upon it. Everyone thinks chiefly of his own, hardly at all of the common interest; and only when he is himself concerned as an individual. For besides other considerations, everybody is more inclined to neglect the duty which he expects another to fulfill; as in families many attendants are often less useful than a few.”

This is not armchair philosophy. It it something we have all seen in our own lives. Certainly there are exceptions, but what Aristotle describes is as close to a law of human nature as I know. I have often seen it play out among family members, friends, co-workers, and commune members.

In some Soviet state-run farms, individuals and families were given small plots to grow their own food. It turned out that the productivity per acre was far greater on those hand-tended private plots than in the large fields where the latest scientific methods were used. “The size of the private plot varied over the Soviet period but was usually about 1 acre (0.40 ha).  … However, the productivity of such plots is reflected in the fact that in 1938 3.9 percent of total sown land was in the form of private plots, but in 1937 those plots produced 21.5 percent of gross agriculture output.”  https://en.wikipedia.org/wiki/Kolkhoz

Plato (left) and Aristotle (right), a detail of The School of Athens, a fresco by Raphael. Aristotle gestures to the earth, representing his belief in knowledge through empirical observation and experience, while holding a copy of his Nicomachean Ethics in his hand, whilst Plato gestures to the heavens, representing his belief in The Forms. (Wikipedia)

Aristotle says further:

“It is evident then that it is best to have property private, but to make the use of it common… And also with respect to pleasure, it is unspeakable how advantageous it is, that a man should think he has something which he may call his own; for it is by no means to no purpose, that each person should have an affection for himself, for that is natural, and yet to be a self-lover is justly censured; for we mean by that, not one that simply loves himself, but one that loves himself more than he ought; in like manner we blame a money-lover, and yet both money and self is what all men love. Besides, it is very pleasing to us to oblige and assist our friends and companions, as well as those whom we are connected with by the rights of hospitality; and this cannot be done without the establishment of private property, which cannot take place with those who make a city too much one [referring to Plato’s idea of the ideal Republic (city) holding all property in common]; besides, they prevent every opportunity of exercising two principal virtues, modesty and liberality. Modesty with respect to the female sex, for this virtue requires you to abstain from her who is another’s [referring to Plato’s idea for the Republic’s ruling class to hold all their wives and children in common]; liberality, which depends upon private property, for without that no one can appear liberal, or do any generous action; for liberality consists in imparting to others what is our own.” (Aristotle, The Politics, II.v.)

It is very interesting that Aristotle says “it is best to have property private, but to make the use of it common.” He goes on to extol the virtues of sharing and hospitality, and to propose that they are virtues only thanks to private property. Elsewhere he talks about using universal education, and not collective ownership as Plato proposed, to achieve the common good.

By defending private property I am not suggesting that Garrett Hardin’stragedy of the commons” is inevitable. Far from it. Few commoners are as stupid as Hardin seems to think. In most cases commoners understand that their enlightened self-interest lies in protecting the commons from abuse and managing it sustainably. Even if they neglect their own responsibilities to the commons and cause problems, others are likely to intervene. Self interest will move us to regulate each other if not ourselves.

Nor am I suggesting that all property should be private. The public interest is best served by a diversity of conditional ownership relations for different applications, and even a diversity of ownership forms for the same applications. For example we should probably have a combination of private farmland, community farmland, and national farmland. On the other hand, we should probably not, as a rule, have private wetlands, coal mines, or oil fields. But here again, few rules are without exceptions, as in the case of the Nature Conservancy‘s wetland holdings. The Nature Conservancy is a private corporate entity that purchases and encloses natural habitats and excludes spoilers.

One thing that Aristotle never contemplated was the form of  “private” ownership practiced by capitalists and their immortal and often trans-national corporations. The virtues that private ownership may promote in people and communities are entirely absent from balance sheets and quarterly reports. The perpetual and amoral ownership by capitalist corporations is so different from the kind of conditional private ownership practiced by people that it should have another name. It should probably be called property tyranny.

The biggest problems associated with ownership are not about privacy, enclosure, or exclusion per se but about the degrees, arrangements, and durations of those things. Both private and public enclosure of property can work for or against the public interest depending on the circumstances. Something I like to call “preemptive enclosure” is a means of using conditional enclosure of the commons, by the commons, for the commons. Conservation easements, land trusts, and Creative Commons copyrights are just a few examples.

In my opinion it is not in the public interest for the majority of land or durable property in a state to be held in direct public ownership. I agree with Aristotle that individual custody and stewardship of property promotes moral virtues. It is also consistent with the principle of subsidiarity. The Oxford English Dictionary defines subsidiarity as the idea that a central authority should have a subsidiary function, performing only those tasks which cannot be performed effectively at a more immediate or local level. This especially applies to the custody and management of property where absentee ownership is one of the most common sources of problems. Private ownership is still always subject to conditions (via common, statutory and administrative law) to protect public interests such as public safety, conservation, and sustainability.

Structure (law) vs practice (application)

In my opinion the greatest problems of ownership in practice are:

  • absentee, idle, or disinterested ownership
  • extractive ownership
  • ownership in perpetuity
  • excessive concentrations (actually just another variety of absentee ownership)

None of these are entirely structural (that is, dictated by our legal or economic system). They are behavioral as well.

The legal and institutional structures of society are formalized, normative reflections of the aggregate psychology (implicit associations, cognitive and cultural biases, assumptions, etc.) and behavior of the people. The structures of society have a degree of normalizing influence, but if the structures are changed without the underlying cultural assumptions and biases being changed, the old behaviors will tend to return. For example, a revolution or redistribution of wealth may only have a temporary effect– the previous social, political, or economic disparity may re-establish itself within the new structures, adapting the new structures to the old behaviors. History is full of examples, including the US “experiment in democracy”, which has come  “full circle” from a revolution against a partnership between the British Crown and the East India Company (and other “royal-chartered” mercantile monopolies) to our present domination by a corrupt political class in partnership with global corporations.

Abolishing private property or redistributing wealth by structural reform alone might possibly result in an eventual return of the same behaviors in new structural guises. On the other hand, changing our practice within the existing legal framework would probably result in a gradual change of the structural framework to reflect our new behavioral norms, almost as a matter of course.

However, promising new styles or designs of conditional ownership are gradually being introduced into public awareness. One example is called “generative ownership:”

“[Generative] ownership designs are aimed at generating the conditions where all life can thrive. From the Greek ge, generative uses the same root form found in the term for Earth, Gaia, and in the words genesis and genetics. It connotes life. Generative means the carrying on of life, and generative design is about the institutional framework for doing so. The generative economy is one whose fundamental architecture tends to create beneficial rather than harmful outcomes. It’s a living economy that has a built-in tendency to be socially fair and ecologically sustainable.

“Generative ownership designs are about generating and preserving real wealth, living wealth, rather than phantom wealth than can evaporate in the next quarter. They’re about helping families to enjoy secure homes. Creating jobs. Preserving a forest. Generating nourishment out of waste. Generating broad well-being.”  (Majorie Kelly,  The Emerging Ownership Revolution)

Our existing legal framework has many mechanisms for protecting the commons, but we often fail to use the legal tools we have at our disposal. We sit by while corrupt regulators give away public property and resources to corporations. Why? Our legal system does not dictate that. Could our addiction to cheap energy and consumer goods have anything to do with it?  We could encourage private property owners to trade various kinds of rights to their properties in exchange for tax breaks. Or we could impose tax penalties or fines on owners who mange their property in ways that harm the public good. Why don’t we do this more intensively and consistently? Could our lifestyles have more impact on our environment and our economy than our legal system does?

Intellectual Property (IP)

In the domain of intellectual property (IP), the traditional, default form of ownership of creative or intellectual works was “all rights reserved”. Ironically, those very terms expressed the idea that individual rights (plural) made up a bundle of rights that could be separated and distributed among various stakeholders. Eventually, within the existing framework of copyright law,  conditionality of ownership came to be explicitly defined by various forms of conditional copyright such as the GNU General Public License or Creative Commons license. Organizations like GNU and Creative Commons perform a valuable public service by codifying formerly atypical forms of IP ownership in legally defensible terms (largely a question of adequate specificity and formality) and making those well-crafted legal templates available for public use.

(via Wikipedia)

It is crucial to understand that those new forms of copyright grew out of practice conducted under the existing legal framework. The existing framework was extended (to the extent it changed at all) in a direction established by practices adopted in the free/open software community. We did not make legislative changes to the copyright framework which then unleashed new forms of enlightened social behavior.

However…at the same time that  free/open communities and peer-production communities have been hacking copyright for the benefit of the commons, the corporate world,  especially big entertainment, has succeeded at introducing novel structural defects into the copyright law framework–excessive durations, unreasonable fair use limitations, disproportionate penalties for infringement, and inadequate forms of due process in enforcement. They are structural defects because they undermine the public interest in favor of predatory and monopolistic corporate interests and there are few if any short-term behavioral remedies or alternatives short of opting out of participation in the production and consumption of corporate media content. This is a very limited remedy under the current conditions of monopolization of the industry.  Appropriate structural remedies would include breaking up the media monopolies and returning the terms and scope of copyright and fair use to something like their original specifications, thus restoring greater conditionality. The new forms of  “industrial strength”  copyright law are recent inventions that break with all former legal doctrine. Unlike the commons-oriented copyright extensions which are consistent with conditional property traditions, the industry IP proposals aim at near-absolute exclusive ownership of IP in perpetuity. The introduction and persistence of such structural aberrations depend on the corruption of our political and judicial institutions. Both have become captive to global monopoly capitalism. Thanks to its excessive concentration of wealth, global monopoly capitalism is sometimes able to assert its preferred legal framework — might makes right — over that of the people.

In the absence of a successful structural defense or reform of the copyright framework, the commons-oriented community may have little alternative but to opt completely out of the corporate media framework. In the long term the creative, co-operative working class has the skills and abilities to build an entire media counter-economy and infrastructure from the ground up. In that event we can one day turn to the old media industry and say “Be my guest–keep all your crappy IP to yourself.”

Atlantic salmon. Salmo salar. (Wikipedia)

But patents are another story. Biotech moguls like Monsanto are patenting genetically engineered (GE) and genetically modified (GM) organisms and then loosing them upon the world to spread their Frankenstein IP far and wide. Once their patented-gene-carrying pollen infects your organic corn, soy, or alfalfa your crop may belong to them. Indian farmers tried to tell Monsanto to shove their mutant seeds only to find natural seeds and seed saving outlawed by trade agreements and treaty (WikiLeaks has documented US State Department diplomats working directly for Monsanto). Next it will be GE/GM animals like transgenic salmon that will “escape” into the wild (accidentally, of course) to infect wild populations with patented genes.

That makes the increasingly popular corporate practice of trademarking ordinary English words like “face” seem almost innocuous by comparison.

Needless to say all of this flies in the face (oops) of common law and common sense. Remedies to protect the commons and the public interest from this Trojan-IP invasion will almost certainly need to be served with a side-order of civil disobedience.

Real Property

In the case of real estate and other tangible property the conditionality of ownership can be asserted through deed restrictions, covenants, easements, trust agreements, purchase and lease agreements, contracts and other means. Such arrangements are strongly supported by US courts if the terms are adequately specified and formalized. Many states now have legislatively created conservation easement programs and trusts for various public assets. But such things are perhaps more commonly implemented by non-governmental organizations like nature conservancies, community land trusts, non-profits, worker cooperatives, and individual philanthropists. If the legal framework has changed at all, it is only to the extent that practice has paved the way.

It is our footpaths, as more and more of us practice a new kind of behavior, that gradually are trodden into law. It is easy to make the logical and philosophical error that behavior follows law, that the law prescribes and constrains our behavior, because that is often our most personal, proximate, and visceral perspective. But the reverse is true. Our collective behavior, over generations and eons, becomes structurally crystallized in our laws and institutions. To change our laws in the right way, the natural and organic way, we must first change ourselves and our practice.

However, there are several practical (not structural) obstacles to the wide use of atypical conditional property arrangements for types of property other than IP (although atypical IP probably had similar issues early on). One problem is related to purchases and investments financed by third parties such as banks, retail finance companies, mortgage companies, and venture capital firms. The middlemen in property transactions tend to be very conservative about the conditionality of ownership. They want to retain as much of the bundle of rights that law and custom allows until the mortgage or other credit terms are satisfied. It may only be after a property transaction is “paid in full”  that a purchaser will be free to define an atypical distribution of rights for the property in question. This situation will change as atypical transactions and ownership models become more common, and as more investors and financial middlemen come to understand and tolerate such arrangements (or in the case of public-spirited institutions, even to favor them).

Another major problem is the shortage of attorneys who are familiar with atypical property ownership models and the range of legal instruments that can be used to implement alternative forms of conditional ownership that serve the public interest and the commons. My work in the 1970’s researching the legal foundations for conservation easements and community land trusts exposed me to the lack of depth in property ownership expertise that existed in the legal and philanthropic communities. My recent exposure to the history of the Daniel Pennock Democracy School and the Community Environmental Legal Defense Fund (CELDF) convinces me that the situation has improved but little in the past three or four decades. Hopefully that is finally about to change with the CELDF’s new programs and other “Law of the commons” projects that are in the making.

The real tragedy of the commons

Those parts of our legal system that deal with the law of the commons and conditional property ownership are weak or rusty not by design but from disuse. Whose fault is that? Is it a failure on the part of bad, selfish, and greedy people? Sure. But it is also a failure of progressives and liberals (including liberal lawyers, judges and scholars) who are well-intentioned but legally naive and who fail to look outside the box of prevailing legal norms.

In addition to the behavioral issues I’ve mentioned, there are clearly some real structural defects in our legal framework that have accumulated through the influence of powerful and corrosive special interests on our political and judicial system. Examples are the perverse trends in commercial IP law, industry-rigged environmental and regulatory law, and the unprecedented doctrine of corporate person-hood with its perpetual ownership and freedom from inheritance tax liability. All this stuff is relatively new in legal history and it has happened on our watch.

“It is not wrong to say that the nature and intent of a society reveal themselves in the legal and customary concepts of property held by the various members and classes of that society. These property concepts do not change without an incipient or fundamental change in the nature of the society itself. The history of property relations in a given society is thus, in a way, the history of the society itself .” (Schurmann 1956: 507, Properties of Property: A Jurisprudential Analysis)

Our ancient legacy of conditional property law is well known to capitalists, and they are actively chipping away at it all the time. Few liberals even know this body of law exists,  but the common law is as much a part of our commons as our creative works and our ecosystem. And we are sorely neglecting it. Whose fault is that?

If you want to be a steward of the commons, it will help to begin with some knowledge of the common law of ownership. The resources below are some of the best places I know to start.

Poor Richard

Related posts on PRA 2.0

Important Resources

Public Trust Doctrine

The public trust doctrine has its roots in the ancient Roman concept of natural law that held certain things, including the shores of water, were by their nature common to all. Opinion of the Justices (Public Use of Coastal Beaches), 139 N.H. 82, 87 (1994).

The doctrine was adopted under English common law that the tidelands and navigable waters were held by the king in trust for the general public. Id. These public rights were vested in the colonies of America, and following the American Revolution, all the rights of the king vested in the several states, subject to the rights surrendered to the national government by the Federal Constitution. Shively v. Bowlby, 152 U.S. 1, 14-15 (1894).

New Hampshire holds in trust its lakes, large natural ponds, navigable rivers and tidal waters for the use and benefit of the people of the State. State v. Sunapee Dam Co., 70 N.H. 458, 460 (1900). Navigability is not the sole test of whether a river is held in trust, but “when a river or stream is capable in its natural state of some useful service to the public because of its existence as such, it is public. Navigability is not a sole test, although an important one.” St. Regis Paper Co. v. New Hampshire Water Resources Board, 92 N.H. 164, 170 (1942). With regard to large ponds, the Supreme Court adopted a portion of the Massachusetts Ordinance of 1647 to find that a “great pond…containing more than 10 acres of land” is included with the public trust. Concord Manufacturing Co. v. Robertson, 66 N.H. 1, 26 (1889), See also RSA 271:20 (defining state-owned public waters to include all natural bodies of fresh water having an area of 10 acres or more).

The uses and benefits subject to the public trust are not limited to navigation and fishery, but include other benefits. Various cases have held that the public trust encompasses “all useful and lawful purposes”, “what justice and reason require”… See Opinion of the Justices, 139 N.H. at 90-91. http://des.nh.gov/organization/divisions/water/wmb/rivers/instream/documents/ag_opinion.doc

 

Property, Commoning and the Politics of Free Software by Massimo De Angelis and J. Martin Pedersen (@|Commoning|, excerpted from The Commoner, Issue 14, Winter 2010)

“In legal and philosophical terms, property relations are relations between people with regard to things. In this way, the organisation of a commons is encoded in its property rules, which structure its use, access and decision-making rights and responsibilities accordingly. Property, then, is central to debates about commons and commoning: how do commoners relate to each other with regard to a given resource (land, code, rivers, forests, hills, cars) and how is a commons defined vis-a-vis the rest of the world? Questions such as class, gender and other hierarchies, environmental justice, sustainability and spirituality are relevant here. Most of these social dynamics – most of the time, even on the “outside of capital”– turn on property relations: who has access to what (tools, resources, land), when and under what conditions, who gets to decide and how are decisions made?

“Often, however, property is juxtaposed to commons – as if commoning was a negation of property. Unfortunately, this view presupposes and consolidates a very narrow understanding of property, where the general is conflated with the particular. Property relations are not only exclusive, private property rights as instantiated within capitalist democracy (that is, a particular conception of property). As a jurisprudential concept, property can be used to understand, analyse, reflect upon and organise social relations with regard to things in any context (this is the general conception of property). The conflation of the general with the particular, which conceals the historical and anthropological fact that property can be and is understood (very) differently, takes on a further dimension in colloquial talk. We have come to accept that property is stuff: things that we own, and that we own exclusively. As a rhetorical device in privatisation arguments it is very powerful because it invokes feelings that are close to home, literally. We say things like “this house is my property”.

“Similarly, privatisation arguments in the context of immaterial goods and resources invoke the same passions and feelings: this text or this source code “is the property of Microsoft”. Such a conception of property is not only a conflation, but furthermore hides the complexity of the social relations that property arrangements circumscribe and give rise to.

“It is obvious that social, cultural and political practices define any given property regime, hence analytically exploring property relations gives us an insight into the relation between the socio-cultural and the law. It is precisely at this level that commons are created and organised – and through the language of property we can articulate practices of commoning into property protocols (rules and agreements) that can provide stability of the commons on the inside and protection against threats of capital’s enclosure from the outside. Self-determination and autonomy begins by taking the law into your own hands. (Property, Commoning and the Politics of Free Software)

Properties of Property: A Jurisprudential Analysis (pdf), by J. Martin Pedersen (The Commoner, Issue 14, Winter 2010)

“No doubt the eighteenth century preferred rational treaties expounding the theory of property to
historical essays describing the theories of property. But … we … know that the institution of property
has had its history and that that history has not yet come to an end … We begin with the knowledge
that there must be as many theories of property as there have been systems of property rights.
Consequently we abandon the search for the true theory of property and study the theories of the past
ages. Only thus can we learn how to construct a theory suitable to our own circumstances” (Schlatter
1951: 10).

Property Rights in the Commons: The ubiquity of mixed systems (extracts from Ostrom’s Law: Property Rights in the Commons)

Ostrom’s Law: Property Rights in the Commons, Lee Anne Fennell (University of Chicago Law School) International Journal of the Commons, Vol 5, No 1 (2011).

Blackstones’s Commentaries on the Laws of England

The Commentaries and and some of Blackstone’s other work is the main source of my background in common law. I poured over Blackstone for nearly a year while I was researching the legal foundations for community land trusts and conservation easements. This is probably the greatest single record and repository of humanity’s common legal heritage and it is easily readable by educated laypeople. Various abridgements and online texts are available.

“The Commentaries were long regarded as the leading work on the development of English law and played a role in the development of the American legal system. They were in fact the first methodical treatise on the common law suitable for a lay readership since at least the Middle Ages. The common law of England has relied on precedent more than statute and codifications and has been far less amenable than the civil law, developed from the Roman law, to the needs of a treatise. (Wikipedia/Commentaries)

“When the Commentaries were first printed in North America (1772) 1,400 copies were ordered for Philadelphia alone. Academics have also noted the early reliance of the Supreme Court on the Commentaries, probably due to a lack of US legal tradition at that time.  Robert Ferguson notes that “all our formative documents — the Declaration of Independence, the Constitution, the Federalist Papers and the seminal decisions of the Supreme Court under John Marshall — were drafted by attorneys steeped in Sir William Blackstone’s Commentaries on the Laws of England. So much was this the case that the Commentaries rank second only to the Bible as a literary and intellectual influence on the history of American institutions”. Even today, the Commentaries are cited in Supreme Court decisions between 10 and 12 times a year.

“Within United States academia and practise, as well as within the judiciary, the Commentaries had a substantial impact; with the scarcity of law books on the frontier, they were “both the only law school and the only law library most American lawyers used to practise law in America for nearly a century after they were published”. Blackstone had drawn up a plan for a dedicated School of Law, and submitted it to the University of Oxford; when the idea was rejected he included it in the Commentaries. It is from this plan that the modern system of American law schools comes. Subscribers to the first edition of Blackstone, and later readers who were profoundly influenced by it, include James Iredell, John Marshall, James Wilson, John Jay, John Adams, James Kent and Abraham Lincoln.” (Wikipedia/Blackstone)

Related Resources

Organizations and Websites focusing on “The Commons”

  • The Community Environmental Legal Defense Fund CELDF works with communities to establish Community Rights – such that communities are empowered to protect the health, safety, and welfare of their residents and the natural environment, and establish environmental and economic sustainability.
  • Democracy School Online, (The Community Environmental Legal Defense Fund)
  • The School of Commoning “a growing worldwide community of people participating in the global and local commons. We support the developing commons movement, as well as interested organizations and individuals, with well-organized knowledge resources and educational programs on commoning and the commons.”
  • International Journal of the Commons  “The International Journal of the Commons (IJC) is an initiative of the International Association for the Study of the Commons (IASC). As an interdisciplinary peer-reviewed open-access journal, the IJC is dedicated to furthering the understanding of institutions for use and management of resources that are (or could be) enjoyed collectively. These resources may be part of the natural world (e.g. forests, climate systems, or the oceans) or they may emerge from social realities created by humans (e.g. the internet or (scientific) knowledge, for example of the sort that is published in open-access journals).”
  • On the Commons/Commons Magazine “a network of citizens and organizations that champions the cause of the commons on many fronts. Our mission is to advance a new worldview by naming, claiming, protecting and expanding the commons for the good of all.”
  • Commons Law Project “We must find new ways to protect our planet from the unsustainable growth imperatives of neoliberal economics and politics.  This will require a new architecture of “green governance”―laws, public policies, and social practices that can honor human rights and commons-based management of natural resources large and small…”
  • The P2P Foundation, Category:Commons “What we share. Creations of both nature and society that belong to all of us equally, and should be maintained for future generations. The Commons has the potential to replace the commodity as the determining form of re-/producing societal living conditions.”
  • Helene Finidori’s Blog “Rethinking Sustainable Development in terms of Commons.” Helene is a trail blazer.
  • Commoning (blog) ~ property relations and the architecture of commons ~  (appears to be inactive now but contains a lot of excellent material, especially on property law)
  • Democracy School Online, (The Community Environmental Legal Defense Fund)

The Property Problem

E.F. Schumacher...Small is Beautiful...

Many of my peers (and some of my betters) on the left seem determined to blame our economic ills on our notions of property and ownership.

(These comments were prompted by Interview: On Marvin Brown’s ‘Civic’ Economics of Provision on the P2P Foundation blog)

I agree with placing the major emphasis of economics on fair distribution and provisioning human needs (as E. F. Schumacher put it, “Economics as if people mattered”) but I often find arguments against “property” per se to be problematic:

1. Most ordinary people today are used to property and are threatened even by well intentioned efforts to replace it with less familiar paradigms.

2. Property isn’t just part of an economic theory, it is deeply embedded in law throughout the world. This creates a very high barrier for alternatives.

3. Slavery was a serious misapplication of property law, but the fix is a relatively simple declaration: People shall not be property.

4. Some argue that things like natural resources should not be property. But it can also be argued that public property is a designation of property rights that helps civic society define resources as part of its common-wealth and to protect them from private enclosure or abuse.

5. The concept of property has a lot of utility. It may sometimes be broken or misapplied in certain ways, but I think it can be more easily fixed than replaced with something new. The main fix is to emphasize conditionality. Ownership is actually a “bundle” of severable rights. Some rights are held by the nominal owner, but some are held by others with various equitable or social interests. This divisible bundle of rights is well established in Western common law (I’m not familiar with oriental law) but it is not well established in the public mind. We need to educate people about their own legal “roots” before we decide to replace thousands of years of common law with something new and untested.

Arrangements worked out over centuries and millennia often embody strategies for resolving ambiguity and complexity that are themselves ambiguous and complex.

Too many well-meaning reformers fail to observe the “if it aint broke don’t fix it” rule and the “don’t throw the baby out with the bath water” rule. If we fail to properly correlate causes and effects, we often fix the wrong thing and/or produce unintended consequences (sometimes known as “shooting oneself in the foot”).

Property law is probably as complex as a motorcycle, and fixing it is more like motorcycle maintenance than philosophy.

One thing I have learned about private vs community property: even in a common-property household or community, chain saws should be privately held. It only takes an instant to dull a chain whereas expert sharpening is non-trivial. The guy who messes up the chain should be the same guy that has to sharpen it and should be the only guy who gets hurt because of it.

Poor Richard

Private Property, Taxation, and Corporate Personhood

Dear cons, neocons, and libertarians:

Your notions of private property, property rights, and taxation seem a little naive to me.

I am not a lawyer but I know something about the laws of real property (real estate law). I proposed and lobbied for the Tennessee Conservation Easement Act of 1981 and some TN legislators and lawyers considered me one of the state’s best experts on property law at the time. While my legal, historical, and philosophical knowledge of property ownership mainly concerns real property, many of the same principles apply to personal property, too.

I am a progressive, but several of my close friends have been Ayn Rand Libertarians, “lazy-unfair”capitalists (thanks to Natural Lefty for that turn of phrase), and free-market fundamentalists. If I  mis-state any of your beliefs please correct me.

The arguments I have seen  in support of absolute private property ownership fall into two categories: appeals to natural law and appeals to utility.

I. The appeal to “natural law” and “natural rights“. Libertarians and some conservatives view private property rights as the foundation from which all other natural rights extend. There are several problems with this:

 

From The Jungle Book by Rudyard Kipling. (Click image for full quotation)

 

A. Despite the musings of many erudite (if old-fashioned) philosophers, in the state of nature there is but one right: “might makes right” (Vae victis). Any other right can only be the result of imposing positive (artificial) law.

B. In the state of nature there is but one law: “might makes right” (Vae victis), again. Any other result can only be:

1) another case of imposing positive (artificial) law, or

2) the “law” of unintended consequences (this includes all biological and physical laws such as gravity, etc.)

C. In nature, possession is 100% of the law. The only private property is that which one can take and hold by force. If you can take it from someone else it becomes yours. If they can take it back or induce you to give it back it is theirs again. Natural social behavior might seem to introduce more laws, such as in the “law of the pack” and “pecking order”, but in nature these are simply either:

1) proxies for force which must be regularly backed up by force–there is no court of law, or

2) they are the product of genetically encoded, involuntary, instinctive responses to chemical or physical signals as in the case of social insects and bacteria.

D. Without the rule of law, predictably and impartially managed by society, property is nothing but a temporary possession maintained by private force. If the existence and persistence of private property depends upon a public legal infrastructure, then private property as we know it is a public creation. The public, which creates the “privateness” of the property and preserves it by force of law, always has a proprietary interest in any such property–by the principle of natural law! If this is too hard to wrap your head around, consider this–in any contest between private force and state force, the state wins. The only exception is a successful revolution or coup (Good luck with that!).

E. Many of the philosophers who have argued for “natural law” have conflated it with divine law, nature simply being a proxy for the divine creator. This attitude has passed by inheritance to modern-day conservatives and libertarians. Property, once the divine right of kings, is now the divine right and manifest destiny of whoever has the latest legal claim. In this tradition, the owner has an absolute (thus divine) right to his property which supersedes all other claims. The public interest, the interests of future generations, or the survival of the planet be damned. There are two problems with this argument:

1) This is thinly veiled religion which, in the possible absence or indifference of the necessary deity, amounts to little more than anarchy.

2) This “absolute” natural right can be magically dissolved by signing a piece of paper, just as any other so-called natural right of man can be signed away or even automatically abdicated simply by accepting casual employment. This reveals that the natural right, just like the natural man (the supposed “king of his castle”), is actually nothing more than chattel (from the word cattle–in law, any movable property; also used to refer to slaves, wives, and minor children).

 

Many of the categories above include additional rights or attributes not listed. (Click image for article on “Bundle of rights”)

 

II. The appeal to utility

A. Proponents of the absolute right to private property claim that it promotes the common good in the same way that greed supposedly promotes the common good in the “free market”. They rely on an  “invisible hand” to make everything work out for the best even if each person acts purely out of greed, ambition, paranoia, malice, delusion, or any other form of vice, depravity, or pathology.

B. To be fair, they assert that an owner will always act in his own best interest and that the utility of absolute private ownership follows from this (with a little invisible helping hand still required). They assert that an owner will rarely fail to act in his own self-interest. However, only if every property owner acted in his fully enlightened self-interest could the appeal to general utility succeed. That test is clearly unmet. Most owners are not only unenlightened they are predictably irrational. The “rational agent” theory has been fully discredited in psychology, sociology, neuroscience, and even in economics (which tends to fall somewhat behind the curve in theories of human behavior).

C. Science has debunked the invisible hand  for failing to deal with irrational agents, externalities, and information asymmetry:

1. Nobel Prize economist Joseph E. Stiglitz wrote:

“Adam Smith, the father of modern economics, is often cited as arguing for the “invisible hand” and free markets: firms, in the pursuit of profits, are led, as if by an invisible hand, to do what is best for the world. But unlike his followers, Adam Smith was aware of some of the limitations of free markets, and research since then has further clarified why free markets, by themselves, often do not lead to what is best. As I put it in my new

book, Making Globalization Work, the reason that the invisible hand often seems invisible is that it is often not there.

Whenever there are “externalities”—where the actions of an individual have impacts on others for which they do not pay, or for which they are not compensated—markets will not work well. Some of the important instances have long understood environmental externalities. Markets, by themselves, produce too much pollution. Markets, by themselves, also produce too little basic research. (The government was responsible for financing most of the important scientific breakthroughs, including the internet and the first telegraph line, and many bio-tech advances.)

But recent research has shown that these externalities are pervasive, whenever there is imperfect information or imperfect risk markets—that is always.

Government plays an important role in banking and securities regulation, and a host of other areas: some regulation is required to make markets work. Government is needed, almost all would agree, at a minimum to enforce contracts and property rights.

The real debate today is about finding the right balance between the market and government (and the third “sector”—non-governmental non-profit organizations.) Both are needed. They can each complement each other. This balance differs from time to time and place to place.[11] (Wikipedia: Invisible Hand)

 

(click image for article on “Invisible Hand”)

 

2. Noam Chomsky, while acknowledging the intelligence of Smith’s thesis, wrote:

Throughout history, Adam Smith observed, we find the workings of “the vile maxim of the masters of mankind”: “All for ourselves, and nothing for other People.” He had few illusions about the consequences. The invisible hand, he wrote, destroys the possibility of  a decent human existence “unless government takes pains to prevent” this outcome, as must be assured in “every improved and civilized society.” It destroys community, the environment, and human values generally—and even the masters themselves, which is why the business classes have regularly called for state intervention to protect them from market forces.[12] (Wikipedia: Invisible Hand)

3. The political economist E.K. Hunt:

[Hunt] criticized markets and the externalities emerging from market exchanges as being a route for self-advancement at the expense of social good. Hunt helped contribute to the literature on heterodox economics, helping to coin the term “invisible foot” in contrast to a presumably beneficient “invisible hand”. Hunt wrote:

“If we assume the maximizing economic man of bourgeois economics, and if we assume the government establishes property rights and markets for these rights whenever an external diseconomy is discovered [the preferred “solution” of the conservative and increasingly dominant trend within the field of public finance], then each man will soon discover that through contrivance he can impose external diseconomies on other men, knowing that the bargaining within the new market that will be established will surely make him better off. The more significant the social cost imposed upon his neighbor, the greater will be his reward in the bargaining process. It follows from the orthodox assumption of maximizing man that each man will create a maximum of social costs which he can impose on others. D’Arge and I have labeled this process “the invisible foot” of the laissez faire … market place. The “invisible foot” ensures us that in a free-market … economy each person pursuing only his own good will automatically, and most efficiently, do his part in maximizing the general public misery. “(Wikipedia: Invisible Hand)

D. Without an invisible hand, the only interested party left around to represent the common good, the public interest, future generations, and the planet, and “to promote the general welfare” (as per the Preamble to the US Constitution), is (no big surprise to progressives) the public. The public interest is a proprietary interest in a portion of the bundle of rights which make up ownership. The public owns this proprietary interest by virtue (as stated before) of natural law!

E. For the appeal to utility to succeed, owners must put their property to its “highest and best use”. This condition is clearly not satisfied. The proponents of absolute private property rights often argue that it is government interference, (zoning, environmental regulation, nuisance laws, etc.), which prevents private owners from achieving the highest and best use of their property, and that such interference is a “taking” of their property. There is law on both sides of this argument and owners are free to file their claims in the proper court of jurisdiction– the venue which they argue is the only proper source of remedy.

Corporate ownership of property

Corporations are chartered by state law. Originally, the justifications for corporate existence were 1) to carry out a specific, narrow set of activities which the state agreed would serve a public need, and 2) to limit the personal legal liability of the investors and operators which might otherwise inhibit achieving  that public good for which the corporation was chartered. Classic examples are the early railroad corporations and hospitals. These served fundamental public needs and the liability issues acted as serious impediments to private developers and operators.

Today, the typical corporate charter includes a catch-all “or for any other legal purpose” article. Now, if corporations were intended to operate “for any other legal purpose”, the entire idea of a charter listing the intended purposes is entirely superfluous. Obviously, a corporation was originally intended to operate only for a very limited set of explicit, pre-defined purposes and those purposes were expected to serve an explicit, pre-defined public need, not simply any private purpose that a corporation might improvise from day to day.

In addition to limiting liability (thus removing a disincentive to meeting a critical public need) the state grants certain other privileges (not rights) to the corporation which are essential to conducting its business:

1. The privilege of acting as a party to such legal contracts as may be necessary for the conduct of its explicit, pre-defined business activity.

2. The  privilege of owning such tangible and intangible property (such as cash, real property, and intellectual property) as may be necessary for the conduct of its explicit, pre-defined business activity.

Now, unless an explicit pre-defined public need is to be served, what is the incentive for the state to specially limit the normal legal liabilities of the corporate investors and operators, including the liabilities incurred by its power to enter into contracts, and to grant it the privilege to hold property in perpetuity without any of the taxes that natural people and families must pay to transfer property among themselves and their successive generations? There are none. Such a charter, uncoupled from any explicit, pre-defined, compelling  public need, would serve no legitimate purpose for the state, and could only be considered a form of fraud, graft, or corruption.


Any extra grant of rights to a corporation beyond those described above, or any post hoc, improvised expansion of its scope of operation, is a direct contradiction of the core raison d’etre of corporations and is blatantly contrary to the public interest.

The privilege of corporate property ownership is subject to an explicit lien held by the state in the form of the corporate charter and the explicit Constitutional duty of the US Government, whose boss is the We The People,  to serve the public interest and to promote the general welfare.

Nevertheless, over the years government was motivated to liberalize the purposes for which a corporation might be granted a charter because it could impose double taxation by taxing both the corporate income and the dividends paid to investors. This was little more than institutionalized bribery–the state granted perpetual property ownership and limitations of liability in exchange for double taxation.

It has not been a fair exchange. In the intervening years since chartered purposes were broadened to include such things as “making shit loads of money” and “any other legal purpose”, corporations have grown increasingly powerful and the contribution of corporate taxes to the public treasury have steadily eroded away.

The Corporate Tax Dodge

By Cassandra Q. Butts, April 10, 2004

The news that more than 60 percent of U.S. corporations failed to pay any federal taxes from 1996 through 2000 when corporate profits were soaring and that corporate tax receipts had fallen to just 7.4 percent of overall federal tax revenue in 2003 – the lowest since 1983 and the second-lowest rate since 1934 – is an outrage. But it should come as no surprise to anyone who has been paying attention to national tax policy over the past few years. The General Accounting Office (GAO) report also found that an astonishing 94 percent of corporations reported tax liability of less than 5 percent of their total income during the same time period…

With Tax Day (April 15) fast approaching and the Bush administration continuing to make the case that the Bush tax cuts have benefited American families, the GAO report could not be timelier in painting a far less rosy picture. Both the GAO study and the historical record support the conclusion that any benefit working families have received from the Bush tax cuts has been more than offset by the additional tax burden they must bear because corporations no longer pay their fair share of taxes.

As the GAO study documents and the historical record proves, corporate tax dodging is directly linked to the reduction of corporate tax revenues. Corporate tax receipts dropped from an average of 4.8 percent of GDP during the 1950s to 1.3 percent of GDP in FY2003. Treasury Department figures show that actual corporate income tax revenues fell 36 percent from FY2000 to FY2003. And while the statutory corporate income tax rate is 35 percent, the effective corporate tax rate – the actual share of corporate taxes paid on corporate profits – has averaged just 26 percent since 1993, according to the Congressional Research Service…

Estimates of the cost of corporate tax loopholes have been projected at upwards of $50 billion a year, according to Citizens for Tax Justice.

As corporate tax receipts decreased, payroll taxes, the most regressive of all taxes, increased dramatically. Specifically, payroll taxes increased from 1.6 percent of GDP in FY1950 to 6.8 percent of GDP in FY2002, surpassing both corporate income taxes and excise taxes in their contribution to total federal receipts. This rise in payroll taxes represented a 30 percent increase in the contribution of payroll taxes to overall federal revenues.

At the same time, individual income taxes also increased in the past half century as both a percentage of GDP and in their relative contribution to total federal tax receipts. Individual income taxes rose from 5.8 percent of GDP in FY1950 to 8.3 percent of GDP in FY2002.

During the Bush-Cheney years, the largest corporations (now transnational entities with no allegiance to the US) completed the process of taking the US Government (at its own invitation) captive, as both Thomas Jefferson and President Dwight Eisenhower had predicted they would.

The original reasons for corporate existence and corporate privileges have gradually dwindled away. The only justification that remains, according to conventional wisdom, is jobs. That justification is false. The corporate enterprise has no inherent advantage as a creator of jobs other than its advantage in destroying unincorporated employers and self-employment by leveraging its special advantages of perpetual life, limited liability, market monopolization, and corrupting political influence to force out competition. This is diametrically opposed to the long term public interest and maintaining a balance of power between popular sovereignty (democracy) and rule by the wealthy (plutocracy).

“The word plutocracy is derived from the ancient Greek root ploutos, meaning wealth and kratos, meaning to rule or to govern.”

“Before the equal voting rights movement managed to end it in the early 20th century, many countries used a system where rich persons had more votes than poor. A factory owner may for instance have had 2000 votes while a worker had one, or if they were very poor no right to vote at all. Even artificial persons such as companies had voting rights. In the US, it would take until 1945 before persons living on welfare and persons in personal bankruptcy would get voting rights.” (Wikipedia)

Michael Moore’s recent movie, “Capitalism – A Love Story” mentioned secret reports that Citigroup circulated to their wealthiest clients explaining a concept they called “plutonomy” –a blend of pluto– (wealth) and economy. A plutonomy is a system in which economic growth is both powered by and consumed by the rich. In other words, a plutonomy is a society of the rich, for the rich, and by the rich.

The Secret Citigroup Plutonomy Reports:

“We [Citigroup]… posit that:

➤ The world is dividing into two blocs – the plutonomies, where economic growth is powered by and largely consumed by the wealthy few, and the rest.

➤ We project that the plutonomies (the U.S., UK, and Canada) will likely see even more income inequality…”

Full report:  Citigroup-Oct-16-2005-Plutonomy-Report-Part-1

“Revisiting Plutonomy: The Rich Getting Richer

➤The latest Survey of Consumer Finances, for 2004, has been released by the Federal Reserve. It shows the rich continue to account for a disproportionately large share of income and wealth in the US economy: the richest 10% of Americans account for 43% of income, and 57% of net worth. The net worth to income ratio for the richest 10% of Americans increased from 7.4x in 2001, to 8.4x in the 2004 survey. The rich are in great shape, financially.

➤We think the rich are likely to get even wealthier in the coming years. Implication 2: we like companies that sell to or service the rich – luxury goods, private banks etc. Favored names include LVMH and Richemont.”
➤RISKS — WHAT COULD GO WRONG?
Our whole plutonomy thesis is based on the idea that the rich will keep getting richer. This thesis is not without its risks. For example, a policy error leading to asset deflation, would likely damage plutonomy. Furthermore, the rising wealth gap between the rich and poor will probably at some point lead to a political backlash. Whilst the rich are getting a greater share of the wealth, and the poor a lesser share, political enfrachisement remains as wasone person, one vote (in the plutonomies). At some point it is likely that labor will fight back against the rising profit share of the rich and there will be a political backlash against the rising wealth of the rich. This could be felt through higher taxation on the rich (or indirectly though higher corporate taxes/regulation) or through trying to protect indigenous laborers, in a push-back on globalization — either anti-immigration, or protectionism. We don’t see this happening yet, though there are signs of rising political tensions. However we are keeping a close eye on developments.

According to Jamess at the Daily Kos Blog on 10/04/09

“Those [Citigroup] reports, since leaked, plainly discuss the power of the Plutonomy in America, and how it would only strengthen, as long as the “the rest us” (the non-plutonics) could be kept in the dark about the Plutonomy existence, its role, and its over-arching control in the American Economy”

Even though the Plutonomy (the top 1%) control over 50% of the net worth in America — they don’t control the Votes!

The thing they most fear is the principle of “one person — one vote”.

You see despite their extreme wealth and power, they only have 1% of the vote; “the rest us” control the other 99% of the votes.

We, the People

Plutocracy and plutonomy are not the same as democracy and they are not compatible with democracy. They are antithetical to democracy and the liberty of  “We, the People“.

The Preamble to the US Constitution reads:

“We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.”

Plutocracy and plutonomy produce ever greater concentrations of wealth (private property) in fewer and fewer hands. If one wanted to design a system or process by which a democracy would gradually be subverted and transformed into an aristocracy or oligarchy, (society dominated by small elites) plutonomy would be perfect for the job.

Wikipedia: Oligarchy

The word oligarchy is from the Greek words “ὀλίγος” (olígos), “a few” and the verb “ἄρχω” (archo), “to rule, to govern, to command”…  Oligarchies have been tyrannical throughout history, being completely reliant on public servitude to exist. Although Aristotle pioneered the use of the term as a synonym for rule by the rich, for which the exact term is plutocracy, oligarchy is not always a rule by wealth, as oligarchs can simply be a privileged group, and do not have to be connected by bloodlines as in a monarchy.

Economic Inequality

Economists and political scientists tend to agree that a certain amount of economic inequality and disequilibrium is good for a society. It stimulates fluidity, creativity, competition, and motivation. Most economists and political leaders have also come to agree that too much inequality is bad. Monarchy, monopoly and plutonomy represent too much inequality.

Beyond some point, the greater the disparity of income and concentration of wealth (private property) in a society, the greater the degree of servitude of the masses. Mass servitude is not what the US was founded for. That was not the original meaning or original intent of the Constitution. No version of originalism dares claim such an intent.

At some point, the greater the inequality of income and concentration of wealth (private property) in a society becomes, the less healthy, happy, and free the people of that society are.

A study published in 2009[1] has shown that negative social phenomena such as shorter life expectancy, higher disease rates, homicide, infant mortality, obesity, teenage pregnancies, emotional depression and prison population correlate with higher socioeconomic inequality. (Wikipedia: Economic Inequality)

Thus, almost every aspiration expressed in the Preamble of the US Constitution is directly thwarted by the unlimited concentration of wealth.

The principle tool the public has to prevent the excessive concentration of wealth is taxation.

Taxation

 

Law and Taxation: balancing public and private interests

 

The natural, proprietary interest which the public retains in all private property is the basis of the people’s right to tax income, property, and inheritance. If tax rates are too high, the burden may stifle economic activity. If rates are too low, especially in the top tiers, concentrations of wealth may grow large enough to stifle activity in the lower economic tiers (plutonomy). Democracy can not endure if we abuse the power of taxation, nor can it  endure if we use this power too little.

At big holiday gatherings at my grandparents’ house, meals were eaten at two tables–the grown-ups’ table and the kids’ table. There is a social parallel:

At the kids table, political conversations are ideological–ideals are black and white and principles are expressed as simplistic clichés, such as “Government is not the solution, government is the problem”, and “Taxation is theft”. For every complex problem there is a simple solution.

At the grown-ups table, ideals are tempered by reality, complexity, and  pragmatism. Simplistic ideologies and sophomoric theories are subjected to historical and empirical criticism. Black and white values become shades of gray when seen in terms of complex trade-offs between various competing interests. At the grown-ups’ table, the social confiscation and redistribution of wealth through taxation is not an evil in and of itself. It is founded on natural law and it can be used to establish justice and balance. It is an evil only if carried too far.

The potential for evil lies equally in taxing too much or too little.

Well-regulated taxation is as fundamental to the preservation of democracy as the rule of law.

Corporate Personhood

The 14th Amendment of the US Constitution says:

Section 1. All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.”

Corporations are neither born nor naturalized and thus are neither people nor citizens. They are also not citizens in that they are not issued passports and they do not have the right to vote.

If corporations were persons, then by virtue of the “equal protection” clause of the 14th Amendment, all rights and privileges afforded to corporations, such as immortality and limited liability, would have to be extended to all natural persons as well.

Corporations are not persons. They may act as artificial or virtual persons for the purpose of contracts and holding property, period. This is a limited, artificial, legal device created by statutory law–not one created either by natural law or the US Constitution.

There are a few narrow ways that corporations may act similar to persons. But there are many ways in which corporations, special interest groups, and rich persons are all very different from ordinary working persons.

As the Citigroup plutocracy reports correctly point out, the money is on one side and the votes are on the other side. To remain free and democratic, we must steer the bus of state between the ditches of public tyranny and private tyranny.

Anyone is free to argue, with their speech or their vote, that any particular exercise of taxation, zoning, environmental regulation, or other public-interest restrictions on the absolute ownership of private property are bad public policy. However, the argument that all such exercise of law is categorically evil is patently absurd and has no place at the grown-ups’ table. And when wealthy corporations, big associations, or rich people bribe or buy politicians or spend millions on propaganda designed to trick average working Americans into acting against their own enlightened self-interest, that kind of behavior is un-American.

That is not speech. That is not democracy. That is information warfare, and those who commit such acts are enemy combatants.

Poor Richard

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