The Question of Property

For Hume, property was the result of a learning process in the course of which people accept the reciprocal exclusion of scarce goods. In order to guarantee exclusion, they either developed behavioral norms or established the state as the guarantor of property after a transitional phase of privately organized property protection. Thus, Hume indirectly recognizes, that property, as every institution does, consists of (at least) one general rule and one enforcement mechanism. In the market economies, private property includes the rules of private (decentralized) disposition over assets and private liability for possible losses; the major sanctioning mechanism is the state guarantee of property provided as a public good. Within this guarantee of property, decentralized disposition and liability are controlled by additional market-economy institutions. Thus, according to Williamson (1992:28f), (imminent) competition on the commodity market forces efficient disposition of resources and the capital market exercises financial, organizational and contextual control. Details of decentralized disposition and liability can be negotiated and additional mechanisms developed for the observance of these principles on the various markets and in accordance with ownership guarantee. This includes the bilateral contract, as well as its enforcement by means of private arbitration tribunals.