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On Property Theory

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  • David Ellerman

Abstract

A theory of property needs to give an account of the whole lifecycle of a property right: How it is initiated, transferred, and terminated. Economics has focused on the transfers in the market and almost completely neglected the question of initiation and termination of property in normal production and consumption (not in some original state or in the transition from common to private property). The institutional mechanism for the normal initiation and termination of property is an invisible hand function of the market — the market mechanism of appropriation. Does this mechanism satisfy an appropriate normative principle? The standard normative juridical principle is to assign or impute legal responsibility according to de facto responsibility. It is given a historical tag of being "Lockean," but the basis is contemporary jurisprudence, not historical exegesis. Then, the fundamental theorem of the property mechanism is proven, which shows that if "Hume's conditions" (no transfers without consent and all contracts fulfilled) are satisfied, then the market automatically satisfies the Lockean responsibility principle — i.e., "Hume implies Locke." As a major application, the results in their contrapositive form, "Not Locke implies Not Hume," are applied to a market economy based on the employment contract. I show that the production based on the employment contract violates the Lockean principle (all who work in an employment enterprise are de facto responsible for the positive and negative results), and thus Hume's conditions must also be violated in the marketplace (de facto responsible human action cannot be transferred from one person to another — as is readily recognized when an employer and employee together commit a crime).1

Suggested Citation

  • David Ellerman, 2014. "On Property Theory," Journal of Economic Issues, Taylor & Francis Journals, vol. 48(3), pages 601-624.
  • Handle: RePEc:mes:jeciss:v:48:y:2014:i:3:p:601-624
    DOI: 10.2753/JEI0021-3624480301
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    Cited by:

    1. David Ellerman, 2016. "The Labour Theory of Property and Marginal Productivity Theory," Economic Thought, World Economics Association, vol. 5(1), pages 1-19, March.
    2. David Ellerman, 2015. "On the Renting of Persons: The Neo-Abolitionist Case Against Today's Peculiar Institution," Economic Thought, World Economics Association, vol. 4(1), pages 1-20, March.
    3. David Ellerman, 2014. "On a fallacy in the Kaldor–Hicks efficiency–equity analysis," Constitutional Political Economy, Springer, vol. 25(2), pages 125-136, June.
    4. David Ellerman, 2016. "Reply to Commentaries on ‘The Labour Theory of Property and Marginal Productivity Theory’," Economic Thought, World Economics Association, vol. 5(2), pages 44-61, September.

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