ECON Lecture 3.2: Capitalist Property Rights and Natural Law
Overview of Capitalism and Private Property Rights
Context of Lecture: This session, specifically Lecture of Chapter , focuses exclusively on the property rights of private individuals within a capitalist system. It distinguishes itself from future lectures that will address socialism.
Definition of Private Property: Private property, or the private ownership of property, refers to the ownership of both personal and business property.
Personal Property: Items intended for personal use, such as a private car or house.
Business Property (Means of Production): Assets used to generate income or run a business, including stores, factories, equipment, trucks, and other capital goods.
The Three Interlocking Rights of Private Property
To legitimate a claim of ownership under a capitalist system, three specific, interlocking rights must exist concurrently. No single right is sufficient on its own.
1. The Right of Control and Exclusive Use
Definition: The owner has the ultimate authority to decide how the property is utilized.
Exclusivity: Third parties (e.g., friends or associates) do not have the right to demand use of the property.
Example (The Car): If you own a car, you decide where it goes. Even if three friends outnumber you and vote to go to the beach, while you need to go to work, your ownership right overrides their vote. You have the right of control.
Discretion: An owner may choose to let others use their property, but the decision remains solely with the owner. Others cannot exert rights against the owner’s will.
2. The Right to Acquire or Transfer Property
Voluntary Acquisition: An individual has the right to buy property (like a car) if they choose, but cannot be forced to do so.
Voluntary Transfer: If an owner wishes to get rid of their property, no one can force them to keep it. This includes the right to sell or give the property away.
3. The Right of Restitution for Damages
Legal Obligation: If a third party damages private property, they are legally obligated to compensate the owner for those damages.
Privacy of the Right: The right to claim restitution belongs exclusively to the owner of the property.
Hypothetical Example (Mr. Smith): If Mr. Smith damages a student's car, the professor has no legal standing to sue Mr. Smith for those damages because the professor does not own the car. Only the student, as the owner, holds the right to restitution.
Scope and Categories of Property
General Definition: Property constitutes any external thing in the world that is subject to ownership.
List of Ownable Items: Items that can be legitimately owned include cars, money, stocks, bonds, houses, boats, computers, businesses, trademarks, copyrights, and patents.
Exclusion of Human Beings: Human beings cannot be owned. Under this system, human beings own themselves, which precludes their classification as property for others.
Unownable Externalities: Certain things cannot be owned due to practical or physical limitations of containment and delineation:
The Atmosphere: Air moves freely and cannot be "boxed up" or marked with boundaries to define where one person's ownership ends and another's begins.
The Oceans: Water in the ocean sloshes and moves with tides and currents, making it impossible to mark off and maintain specific sections of the water itself.
Moving Rivers: Like the ocean, the water in a river is constantly moving elsewhere. While the riverbank (the land adjacent to the water) can be owned, the flowing water itself cannot.
Tangible vs. Intangible Property
Property is classified into two primary categories based on physical presence, similar to the distinction between goods and services.
Tangible Property: Property that has a physical reality and can be touched (e.g., a car, a physical computer).
Intangible Property: Property that is a conceptual right and cannot be physically touched, despite having significant value.
Checking Accounts: While you can touch a checkbook or a keyboard, the account itself is a conceptual ledger entry. The bank keeps track of ownership in an accounting system rather than placing specific money in a box with your name on it.
Trademarks: Visual symbols or slogans used to delineate products. Examples include:
Coca-Cola: The specific red stripes, the font of the letter "C," and the slogan "Things Go Better With Coke."
Nike: The "Swoosh" symbol.
Ford Motor Company: The blue oval with "Ford" written in script.
McDonald's: The "Golden Arches."
Other Intangibles: Stocks, bonds, patents, and copyrights.
Natural Law and Negative Rights
Capitalism treats private property as a natural right, grounded in the philosophy of Natural Law.
Natural Law Definition: The belief that certain rights are inherent in human nature and are discoverable through reason rather than through revelation (religious texts like the Bible). While some believe these rights are granted by a higher power, they are fundamentally identified through human logic.
Negative Rights: A right to be free from the arbitrary interference of others, including the government or signaling the state.
Examples: Freedom of religion, freedom of speech, and freedom of association (found in the first of the US Constitution, known as the Bill of Rights).
Application: Having freedom of religion means you can practice your faith (Muslim, Baptist, Catholic, Atheist, etc.) on your own property without harassment.
Limits of Negative Rights: You have the right to be left alone, but you do not have the right to interfere with others.
Example (Sacrifice): A religion that requires kidnapping and sacrificing virgins is not protected because it violates the rights of another. Rights are for non-interference, not for affirmative actions that harm others.
John Locke and the Origin of Property
Modern capitalist property theory is largely attributed to the English philosopher John Locke, specifically his work "The Second Treatise on Government" published in .
Self-Ownership: Locke argues that every person owns themselves by natural right. Because ownership implies control and the right to sell, and no one would grant another the right to own them, reason dictates that slavery is illegitimate.
Parental Rights: Parents do not "own" their children. They have rights to control them until the child reaches the age of reason (defined typically as ). A parent cannot, for instance, sell a child to a scrap yard for as they might an old car, because the child owns themselves.
Original Acquisition: The process of turning unowned nature into private property.
Lockean Labor Theory: Mixing one’s labor with unowned property makes it yours.
Examples:
Fishing: If Mr. Smith catches a fish in an unowned river through his labor, the fish becomes his. Neither the professor (Mr. Petrono) nor anyone else can claim it.
Harvesting: Plucking wild grapes in a forest or hunting a wild deer.
Transfer of Property: If not acquired through original acquisition, property must be acquired through a voluntary transfer to be morally legitimate.
Methods of Voluntary Transfer:
Sale: Buying an item (e.g., a computer) from a store.
Gift: Giving a car to a missionary.
Inheritance: Receiving a house from parents after their death.
Illegitimate Ownership: Any acquisition involving stealing, fraud, or threats is non-voluntary and therefore morally invalid.
Chain of Title and Verification
Theory of Legitimate Ownership: Capitalism posits that through a perfect chain of titles, every current owner’s right could be traced back to a legitimate voluntary transfer or an original acquisition.
Practical Application:
Real Estate: Involves extensive registries. Finding the "rightful owner" of a condo or house often involves lawyers searching through paperwork as thick as a dictionary to trace ownership back through the years to original owners.
Registered Assets: Cars, stocks, and bonds use titles and registry systems to track ownership transfers.
Cash: Possession is generally equated with ownership because it is difficult to prove a specific bill belongs to someone, although tracking serial numbers is a theoretical way to establish title to specific currency.