A typology of property

Property is not a relation between men and an object. Rather, it is a relation between men and other men about an object. It is a set of implicit and explicit norms governing a set of rights over objects, who can do what to what object. My ownership of the computer I am typing this on affords me a series of rights about a set of actions I am able to take with this computer that others are not able to take.
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With this in mind, I want to propose a typology of property. Because property is defined by the relation of men amongst men, property can be differentiated by the different types of relationships amongst men. There are two sets of players in property, the owner(s) and the non-owners. By differentiating the non-owners there are three main categories which can be differentiated.  First, property where the non-owners are family and close friends.  Second, property where the non-owners are anonymous strangers.  Third, property where the non-owners are government.
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It is important to clarify that all property has all three relationships.  However, because each group of non-owners will treat the property differently it  is useful differentiating them as an analytic tool.  Family and friends rarely need explicit contracts governing their relationships.  Instead, repeated interaction is sufficient to generate incentives to prevent abuse of property.  Anonymous strangers require explicit contracts in order to ensure they do not abuse property.  Explicit contracts are insufficient to protect property from governments.  Instead, the government must be constrained by a series of norms which constrain its action set.
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Take, for example, a house.  With a house usually family is allowed to use it to a wide set of ends.  Of course, there are certain implicit rules, do not burn down the house for example.  However, immediate is generally given permission to raid the fridge, cook, sleep on couches, watch tv, etc.  Friends are typically a little more constrained.  Close friends might be able to enter and exit as they please, but usually the owner requires his presence for them.  However, no explicit contract binds them.

Anonymous strangers have a different set of rules for a house.  With the success of airBnB, we can see how renting a house to strangers differs from letting family members crash there.  There is an explicit contract detailing what the strangers may and may not do.  There is typically a defined way to resolve such disputes if they do arise.  Third party enforcement works for the anonymous strangers.
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Third party enforcement does not, on the other hand, work for government.  Because government has a territorial monopoly of force, they can choose to violate contracts if they wish.  Instead, government is constrained by two things; a set of norms which define acceptable actions for government and power relations among groups in the ruling coalition.
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Such a distinction is useful for analyzing economic growth.  Virtually all economists agree that contracts are stable in small homogeneous groups, essentially family and friends.  While there is disagreement over whether government is needed to enforce contracts among anonymous strangers, most evidence suggests markets can come up with mechanisms to enforce contracts among anonymous strangers.  However, ensuring a government does not plunder a populace is far more difficult.  Markets alone are unable to do so.
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While this typology is present in the works of many economists, Hayek differentiates between family and friends and strangers, Acemoglu and Johnson differentiate between strangers and government, it has never, to the best of my knowledge, been explicitly presented.  I imagine most of the dispute among economists is whether markets can enforce contracts among anonymous strangers without government.  However, as I believe a close reading of the evidence, the existence of international trade, and the sharing economy demonstrate, the real problem lies in constraining government.

 

 

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  • http://adamgurri.com AdamGurri

    With regard to the second distinction, I don’t think that the key question is whether contracts can be enforced among strangers. You are definitely correct that the literature and experience has demonstrated that voluntary mechanisms are possible and widespread. Instead, it’s a matter of whether you can stop strangers from breaking into your house and stealing your stuff without government, which to my mind is a separate question from how behavior within the context of transactions is disciplined. I’m not sure the answer is as clear there; certainly *some* sort of threat of force is often required.

    • Mark Lutter

      Just saw this. Fair enough. I would put that as a fourth category though.

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