Liberal Property Law v. Capitalism

[Scot Griffin]

Here is a very interesting essay from Katharina Pistor, originally published at the Law and Political Economy Project, which I consider as a counter to the Law and Economics movement.

Pistor responds to Hanoch Dagan’s vision of a new “liberal” private property law consistent with the stated ideology of liberalism:

Against this background, Hanoch develops a theory of private property that is truly liberal in the original meaning of the term: a theory built on the principle of individual autonomy, or “self-authorship,” but also on structural pluralism and relational justice. This requires a legal order, a commitment to recognize and enforce only rights that meet these fundamental norms, which is why his is a theory of property law and not merely property. Property law confers rights on individuals, which they can use against the state, but, critically, also against fellow humans. A liberal property law, Hanoch argues forcefully, shall not condone the use of property rights to suppress others.

From this normative vantage point it is impossible to endorse private property rights as a Blackstonian “sole and despotic dominion.” “Law’s constitutive role in property law implies that it cannot abdicate its responsibility for any of its consequences” (p. 166). Neither is it sufficient to rely on the state’s regulatory and taxing powers to mitigate excesses of such a regime and distribute some of its gains, as advocated by Kantian theorists of property. Instead, Hanoch conceives of property law, and of private law in general, as relational law. Property rights exist only in relation to other individuals who hold equal rights to self-authorship. The right to exclude others may be protected when it comes to one’s home or intimate life, but not in the public sphere that owners of a business access when opening an inn or a shop. A liberal property law does curtail an imagined absolute right to exclude; such an absolute right does not exist. Property rights are conferred ab initio as rights that consider the equally deserving rights of others.

Pistor argues, correctly, that this re-envisioning of private property law is incompatible with capitalism:

In actually existing capitalism, property law is part of the essential tool kit for turning abundant resources into scarce assets, ready to be monetized and exploited for gain. As I argue in my book, this has been a powerful driver for the evolution of core features of private law over the past several centuries, including property law. Hanoch holds against this that a truly liberal order should not blindly endorse the private property rights of whoever has the best access to the patent office, courts, legislatures, or technology. It should afford only such rights that are commensurate with the value of a liberal property regime, namely individual autonomy, structural pluralism, and relational justice. It should also be open, I might add, to property rights that are cooperative and communal, whether or not they produce economic gain, or protect such rights in a head-on competition with claims that promise greater economic returns.

This accommodation, however, has not happened and will not happen within a capitalist order. The reason is that capitalism is itself rooted in an illiberal property regime. It is premised on private parties using the power of property the law confers on them to turn it into a means of extraction, and not only of labor, but also of social resources, including the financial safety nets that central banks provide, and even of law itself.

Pistor’s essay provides a link to the symposium site, which includes links to many other essays on the topic of liberal property law.

 

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