International
Property Rights Index
2017

I. Property Rights: The Essence of Liberty

  1. Property Rights: The Essence of Liberty

  2. IPRI Structure

  3. Methodology

  4. IPRI 2017 Country Results

  5. IPRI-Population

  6. IPRI and Gender

  7. IPRI and Development

  8. IPRI Cluster Analysis

  9. Final Remarks

  10. References

  11. Appendix​

 

I. PROPERTY RIGHTS: The Essence of Liberty

“In a free government, almost all other rights would become worthless if the government possessed power over the private fortune of every citizen” US Supreme Court Declaration,1897 (Chicago, Burlington & Quincy R.R. v. Chicago, 166 U.S. 226)

Property is the substance of a free society. It is the foundation of the citizenship’s ability to control its own life and to strive to shape its own destiny. Property rights protect all other rights, because property enables citizens to be independent and hence capable of self-government. As Arthur Lee of Virginia stated on 1775[1]:

The right of property is the guardian of every other right and to deprive the people of this, is in fact to deprive them of their liberty”.

The discussion of the role of private property is longstanding: Aristotle[2] (1988 [c.330BCE]) argued that private property promoted human virtues like responsibility and prudence, enhanced self-possession and therefore the practice of self-control – a positive force that suited a person for citizenship; John Locke[3] linked the discussion to the state of nature and gave a moral defense of the legitimacy of unilateral appropriation in what is known as the First Occupancy theory; Hegel[4] connected property ownership to self-development and individual freedom; while Bentham[5] considered property as a creature of law; and John Stuart Mill[6] defined individual property as a “primary and fundamental institution (…) the economical arrangements of society have always rested.

Beyond the theoretical and philosophical discussions, empirical evidence also affirms the relevance of property rights. These rights are the border guards of an individual’s ability to live as they wish- they limit the power of the state to control livelihoods and impose social controls. As the Hungarian economist Janos Kornai observed:

The further elimination of private ownership is taken, the more consistently can full subjection be imposed[7]

Equally important, are those observations that relate to the relevance of private property as the most important bulwark of privacy. As Chicago’s University Professor, Richard Epstein, expresses “private property gives the right to exclude others without the need for any justification. Indeed, it is the ability to act at will and without need for justification within some domain which is the essence of freedom, be it of speech or of property[8], showing that unavoidable link between property and liberty.

One of the most fertile and complex areas of debate around property rights is liberty. In this sense, creating a property system becomes a highly useful institution for a society, as it works to protect and to foster individual liberty.[9] In this view, individual liberty is the most important appropriation a system of property rights must protect, following the creation of the moral consciousness and the essence of our symbolic values that frame our sense of living. 

Following Hayek[10] in The Constitution of Liberty, we should define at least two terms, Freedom: as the ability to do what we consider right (innate); and Liberty: as the government concession of freedom, creating the opportunity to exercise social rights. Hayek also differentiates between liberty: the ability to do everything that is not forbidden, and liberties: the prohibition of everything that is not explicit. Hayek favors the negative concept of freedom (avoiding discretionary coercion) as the concept becomes positive when it is exercised. Liberty does not assure any special opportunity; it leaves to our discretion the decision related to the use we will make of the circumstances in which we find ourselves. This way, liberty produces more benefits for the discipline it imposes than for the opportunities it offers.

On the other hand, property is the basis of freedom of contract, which is simply liberty in action. Without freedom to exchange, a third party, generally the government, places all exchanges at the discretion of the political-bureaucratic ruling class. Freedom is more than the right to own property or the right to make transactions, to exchange, to buy and sell. But once the citizens lose the right to own they drop the ability to control their own lives[11]. Property rights and market economies are vital rocks to political freedom. Private property gives people a place to stand if they must resist the government. Market economies and private property allow citizens to build up resistance to government pressure.

This way property rights nurture economic growth and social development. As property rights engender innovation and productivity they are the most effective mechanism to guarantee civil rights and civil liberties, giving rise to what Pipes[12] defines as the co-sovereign citizen, as in modern democratic and liberal republics sovereignty is also an attribute of citizenship and not only of the nation-state.

Finally, it should be noted that property rights are human rights. Private property rights are the rights of humans to use specified goods and to exchange them. Any restraint on private property rights shifts the balance of power from impersonal attributes toward personal attributes and toward behavior that political authorities approve. That is a fundamental reason for preference of a system favoring strong private property rights: private property rights protect individual liberty.[13]

As described previously, the property rights are more than the mere ownership of things. By being connected to liberty property rights allow individuals and societies to express their values and beliefs in the world, creating prosperity and the creation of a virtuous circle of human life in society.

 

 

[1] Lee, Arthur, 1775.  An appeal to the justice and interest of the people of Great Britain in the present dispute with America, 4th edition. New York. P.14

[2] Aristotle, 1988 [c.330BCE]. The Politics Stephen Everson (ed.), Cambridge: Cambridge University Press

[3] Locke, J., 1988 [1689]. Two Treatises of Government. Peter Laslett (ed.), Cambridge: Cambridge University Press

[4] Hegel, G.W. F. 1967 [1821], The Philosophy of Right, T.M. Knox (trans.), Cambridge: Cambridge University Press

[5] Bentham, J., 1843. Principles of the Civil Code.[http://www.laits.utexas.edu/poltheory/bentham/pcc/index.html]

[6] Mill, J. S., 1909 [1848]. Principles of Political Economy with some of their Applications to Social Philosophy. W. J. Ashley (ed.) London: Longmans, Green and Co. [http://www.econlib.org/library/Mill/mlPCover.html]

[7] Quoted in Skidelsky, Robert. 1997. The Road from Serfdom. New York: Penguin. P.99.

[8]   Epstein, Richard 1985. Takings. Cambridge, Mass.: Harvard University Press. P. 66.

[9] Freyfogle, E.T., 2010. “Property and Liberty” Harvard Environmental Law ReviewVol.34(1):75-118 [http://ssrn.com/abstract=1024574 or http://dx.doi.org/10.2139/ssrn.1024574]

[10] Hayek, F.A. 1996[1959] “Libertad y Libertades” in Los Fundamentos de la Libertad, Barcelona: Unión Editorial. Cap. 1, pp.31-46 (The Constitution of Liberty)

[11] Bovard, James 2000.  Property and Liberty. Foundation for Economic Education. Articles (Justice) Sep. 01, 2000. (https://fee.org/articles/property-and-liberty/)

[12] Pipes, R., 1999. Property and Freedom.New York: Alfred A. Knopf and London: The Harvill Press.

[13] Alchian, Armen A. Property Rights (http://www.econlib.org/library/Enc/PropertyRights.html)