December 6, 2010 1:47PM

Cato Unbound: Property Rights in Social Democracy

This month at Cato Unbound, Daniel Klein touches on a topic I’ve long found fascinating — Where do property rights come from? Although he doesn’t answer directly, he does challenge one popular modern idea, namely that property rights are merely grants of permission by the state, which retains a residual ownership. This idea, which Klein terms “overlordship,” I find disturbingly popular among my left‐​of‐​center friends.

While the state is certainly tasked with enforcing the claims commonly called property rights, I have a hard time agreeing that the claims themselves — as opposed to their enforcement — are produced only, or primarily, by the state. Consider three objections.

First, there have been plenty of societies where the state is either nonexistent or else a very different creature from the one we know today. Yet those societies have had moral claims about personal and even real property all the same. (This is where one of this month’s contributors, David Friedman, should have plenty of interesting thoughts to add, thanks to his work on stateless societies.) In societies like these, social norms about property didn’t vanish. They were just enforced through other means.

Second, as I said in the pitch text this month:

[I]f the government stopped existing tomorrow, would you still own your property? A simple answer might be: You’d hope so. Even if you didn’t have any guarantees of it, you could still make the moral claim, couldn’t you? Or does it really all depend on the state, whose disappearance would throw your ownership claim into confusion?

I doubt very much that anyone would renounce their property claims and consider themselves paupers if the state were to disappear. Yes, our money would be worthless, but our money really is a creation of the state, and no one can sensibly deny it. Property in other things, though, would remain, even if our enforcement mechanisms suddenly became a lot cruder, less effective, and costlier, which they might well do if the state were to vanish. (On the other hand, Friedman makes medieval Iceland look pretty attractive, especially compared to its contemporaries.)

Third, people of all political persuasions continually observe instances where they think that the state has behaved wrongly in its treatment of property rights. If the state were the true owner of all property in society, and if our property rights were merely the assignments it temporarily made, we would have very little ground to object to any state actions at all. Did the state just raise taxes? We can’t object. Did the state just lower taxes? Again, we can’t object, and by the very same token: The state is the real owner, after all, and it may gift its property as it thinks best.

No one reasons this way. And it gets worse, particularly when we consider removing the property rights of defenseless minorities. That should be fine, right? Their property was only a temporary assignment, wasn’t it? And the owner — the state — can do as it pleases?

One possible objection here is that a democracy wouldn’t allow such a re‐​assignment, but people making this objection appear to have more faith in democracy than I do. And what if their faith were disappointed? Even if the majority approved of it, I’d like to have some justification for saying the state had done wrong here. And clearly I do.

It seems to me that our real moral intuitions on the nature of property, as on so many other things, are that (1) the state must be able to account for its actions on principles of abstract justice, (2) we are competent to think about state actions as potentially either good or bad, and (3) we can and should change the course of the state’s behavior to be more in keeping with our ideas of justice.

It’s clearly a further leap from all of this to an individualistic account of property rights, but that’s where Klein is heading. Along the way he takes some possibly surprising shots at social contract theory, too. Libertarians who have been feeling complacent as they read these lines would do well to read Klein’s full essay, which might just shake them up.