Thia essay is about property and ownership. As background I will provide a brief summary of the conclusions of the first essay in this “Invisible Hand” series which examined the physical object nature of our money and some of the unfortunate consequences of that nature.
All money in history (and pre-history) has been considered to be or to represent physical objects such as a basket of grain, a cow, a coin, or a paper bill. Today most money is in computer accounts and though it zips around the world from account to account at almost the speed of light, it still is treated as if it were a physical object of some sort. Because we treat money as if it were a physical object, anything which is true of physical objects in general will also be true of money. This obvious point is ignored by economists and others who talk and write about money, even though it is the most important truth about money. The importance of the physical object nature of money cannot be overstated. What follows are some consequences of that physical object nature.
First, money is like other physical objects in that it can be taken from its owner against that owner’s will; by force, fraud, or stealth and it can also be lost or destroyed. This means that you need to suspect almost everyone of trying to get your money by fair means or foul.
Second, money must be amoral because all inanimate physical objects are amoral. Even animals are amoral, in that they have neither an ethical sense nor morality, especially when they are used as commodity money. You can use your physical object money for anything, good or bad.
Third, the money supply is independent of the supply of goods and services for sale because the supply of one physical object is independent of the supply of other objects.
Fourth, money falsely simulates a zero-sum game in monetary transactions because the money gained by one party must be lost by some other party or parties. Money makes us think that other people can gain money at our expense and that we can only gain money at their expense. It makes us treat others as if they were competitors, rivals, opponents, or even enemies.
Fifth, money is almost impossible for a society or nation to control. In every nation that attempts to limit, regulate, or tax trade a black market comes to exist; and organized crime flourishes in all nations.
Sixth, money transactions are two-party interactions. Two-party interaction is inherently unstable because if one party gets an advantage in power such as having more money, the stronger party can use that power to gain still more advantages. This is particularly true of money. The old saying “them as has, gets” is true. Possession of money does make getting more money quite a lot easier. Naturally, the weaker party in such two-party interaction will eventually want to end the interaction. Thus the relationship is unstable.
Keeping that review in mind, let’s consider property and ownership.
As usual I turn to Wikipedia. I figure that will provide us with something of a consensus as to meanings for the concepts we take up and it’s a source you can check for yourself if you suspect that I am misrepresenting something. Remember that I do make mistakes from time to time.
Property is generally referred to as “something owned.” Ownership generally refers to rights and duties with respect to property, so the two concepts really make no sense by themselves… Thus we consider them together. But if each is defined in terms of the other we have a real problem.
Wikipedia’s definition of property is QUOTE “property is one or more components (rather than attributes), whether physical or incorporeal, of a person’s estate; or so belonging to, as in being owned by, a person or jointly a group of people or a legal entity like a corporation or even a society.” UNQUOTE
As you can tell, property by this definition is an aspect of ownership.
Wikipedia’s definition of ownership is QUOTE “Ownership of property may be private, collective, or common and the property may be of objects, land/real estate, intellectual property, or people.” UNQUOTE
Not very satisfactory as a definition at all. The next sentence, however, brings in the law and the concept of rights.
QUOTE “Determining ownership in law involves determining who has certain rights and duties over the property. These rights and duties, sometimes called a ‘bundle of rights’, can be separated and held by different parties.” UNQUOTE
But in both sentences, the concept of property is prominent.
One must assume that definitions of ownership and property are similarly entwined in the study of economics and the other social sciences.
Wikipedia confirms this in its page on “property rights (economics)” with the statement, QUOTE “In economics, property usually refers to ownership (rights to the proceeds generated by the property) and control over a resource or good.” UNQUOTE
Not a stand-alone definition by any means but it brings in the concepts of “control” and “rights.” We can use those.
With the failure of Wikipedia, we must resort to thinking. Yes, I’d rather just copy something rather than think it out for myself. But when the lazy way fails us we have to do the work for ourselves.
We know that there are various forms or categories of property with three being real estate, personal property, and intellectual property. We also know there are a wide range of owning parties including individuals, families, businesses, religions, and clubs. The law is also prominent in defining and explaining what can be owned and what ownership entails. Lastly, there are some primitive societies that do not have the concepts of property and ownership. With these clues, let’s see what we can discover.
Does ownership and property require that some human being be involved? That would appear to be the case. Even when the thing doing the owning is a state or a corporation or the society as a whole, some human being will be making decisions concerning ownership and property with regards to things owned by that non-human entity. In other words, there are human beings involved in matters concerning ownership and property.
Next, we ask if there are other entities or people involved besides those which are identified as owning the property (whatever owning and property may mean). Again, that would appear to be the case.
Therefore we can conclude that property and ownership are aspects of human interaction and therefore are dealt with by human culture and norms for interaction. Property and ownership are aspects of interaction; so we could begin our definition of property and ownership by saying each is a set of norms, rules, laws, or standards for interaction which… and so forth. Personally I would prefer the word “norms” as it is the most general and inclusive of the terms in this case but I am biased by my background in sociology.
I noted earlier that there were some primitive societies which lack concepts of ownership and property. Having been heavily involved in bringing up children I can assure you that toddlers also lack the concepts of ownership and property. You may have all sorts of supporting documentation and official approval of your property rights to an object and a toddler will completely ignore them. Therefore, property and ownership are not built into the laws of physics, chemistry, and biology. Many animals may be territorial in that they fight other members of their species to keep them away from some locations but the other members of that species can and do contest any such attempt to keep them away. So we know that property rights and ownership are human products which we have thought up or invented and thus own collectively as our intellectual property. (Yes, that way of putting it is supposed to be funny.) The fact that property and ownership are human inventions allows humanity to ignore property and ownership, and it also allows humanity to have a host of different ways of operationalizing the concepts, however they are defined.
Well, that takes a load off our minds. We will not be violating nature’s laws in coming up with our own understanding and definitions for property and ownership since they are all in the mind anyway. Our definitions will not be something which can be disproved. However, just like every other attempt to define either property or ownership or both, there is no means of demonstrating that our definition is correct. The best we can hope for is to provide a definition for each idea that is useful, which is a way of viewing the concepts, and helps us to understand and better arrange matters. It helps that the physical properties of an object are not affected by a change in the ownership of that object.
The interaction between owners of some item of property and some non-owners of that property appears to require that both owner and non-owner agree in principle that ownership and property do exist. Otherwise, we are back into the toddler situation.
Therefore, we can conclude that unless property and ownership are agreed upon by the members of the society or economy, there is no property and no ownership. We conclude that property and ownership are what the relevant people think those concepts mean whether they can express those thoughts as definitions or not. People reveal what they consider ownership and property to be by their behavior.
In societies with a level of technology and division of labor above the primitive there is ownership and property. This implies that property and ownership are important to agricultural and higher economies. If the concepts were not important, there would be some agricultural societies without the concepts of property and ownership.
The prominence of the law in matters having to do with property and ownership suggests that property and ownership are means of dealing with conflict. That is, the interests of owners and non-owners of instances of property appear to be in conflict. The law always deals with conflict. Therefore, the norms concerning the interaction related to property and ownership must provide ways to overcome or minimize that conflict or society would fall apart.
The consequences of money being a physical object should also apply to physical objects which are considered to be property. That means that property can be taken from its owner against the will of the owner by fraud, force, and stealth. That would explain why the law is so prominent in ownership and property interaction and why property and ownership relationships involve conflict.
We have already shown that the nature of physical object money (POM) simulates a zero-sum game in that what one party gains some other party or parties must lose. Since some physical objects can be property, that same situation or relationship would appear to apply to property, especially inasmuch as money is considered to be a form of property. We know that such a relationship encourages behavior which does harm in the economy and the society as a whole. Therefore, POM simply exacerbates or makes worse a situation which already has an inherent conflict.
Things that can be owned (other than slaves) are also amoral, even ideas are amoral. Ownership and property can be used for any purpose whether good or evil.
Under what circumstances would one need to claim something as property that one owns? The simplest answer would be when doing so results in a gain or prevents a loss of something needed. If that is the case, as it would appear to be, then the relationship of an owner to a non-owner would appear to give some advantage to the owner with respect to the non-owner regarding the property. This brings us back to that two-party instability problem again. If owning property confers an advantage in interaction, one might use that advantage to gain a still greater advantage. This creates an inherent instability. So we know that ownership and property destabilize an economy.
Property and ownership also simulate a zero-sum game relationship in that what property one party owns other parties do not own. In most cases to gain ownership of some item of property means that some other parties have lost ownership. This simulation is false, of course, but it still affects how people feel and act. This zero-sum game relationship also fosters conflict.
Ownership and property require social norms to support them. That is, if I claim to own some designated object and everyone else ignores my claim then I have no ownership of that object. It’s the toddler thing again. There is nothing that I can do as an individual to establish that special ownership relationship to some object unless the norms or rules of the culture support that relationship in my case. For example, if I was a slave in in 1850’s Alabama and I used my own labor to catch a fish; my owner could claim that fish for his dinner, over my objections. The community would support my owner. The fact that I did not use any other property of my owner’s to catch the fish except my own physical body would not matter, nor would the fact that no one owned the body of water in which the fish was swimming. Thus, something is property and ownership is established only by consensus among the community members.
We have discovered some interesting and depressing things about ownership and property. These concepts reflect conflict, instability, suspicion, amorality, and the use of force and fraud. But of course you already knew that there is and always has been conflict, instability, suspicion, amorality, and the use of force and fraud with respect to property and ownership throughout history. In fact, these conditions constitute most of history as it is written.
We have established that ownership and property are part of power relationships. They are concepts in support of one party having power with respect to other parties. Now that’s neither good nor bad in and of itself. It’s the context in which the power relationship exists that determines whether the result is some form of oppression. In the context of an agricultural society, slavery is a natural outcome of the concepts of property and ownership. In the context of an agricultural society, totalitarian government is a natural outcome. We also get such things as poverty and insane projects like building pyramids or war. In other words, the concepts of property and ownership will be misused to do more harm than good. If you don’t believe that contention please explain why Ireland exported food during the potato famines without using the concepts of property and ownership. Industrial societies may derive more benefit from the concepts than the harm done but that would be difficult to prove.
We have, earlier in this series, pointed out the role of the POM context in the existence of poverty and war. We made a case that neither poverty nor war would exist in a non-POM economy. The modern economy produces far more consumer goods and services than are needed to meet people’s basic needs for food, clothing, shelter, medical care, and education. War harms every nation whether they win or lose and war is terribly expensive; thus no non-POM economy would support a war of aggression. So the POM context may be a part of the problems evidenced with property and ownership.
Let’s look at power relationships first. We all begin life with almost no power at all. We are completely dependent, weak, and profoundly ignorant. Yet despite that power imbalance with our mothers we seem to do just fine. We get the necessities if she does. So a power imbalance is not necessarily a bad thing in and of itself. What is there about the relationship between mother and child that makes this power imbalance almost always a safe thing for the child? We could say that because the mother loves the child she would never do anything to harm the child, at least not on purpose. But to put it more generally, the mother sees her own best interests as being supported by anything that promotes the best interests of the child. There are social rewards from having a child that prospers and is happy. There are social costs for having a child that is sickly, infirm, and unhappy. The context of the mother and her child is such that whatever rewards the child will reward the mother and vice versa. They do not treat the situation as a zero-sum game because they do not experience their relationship as a zero-sum game.
Do we have other such unbalanced power relationships in modern society? I think we do. Let’s take the case of the players on a team and their coach. In schools and to some degree in some professional teams, the coach has power with respect to the players. This is especially true in the academic setting and at the younger ages. Both players and their coach want the team to win. If the players play well the coach can take some credit for that. If the team plays poorly, many will blame the coach. So again we have a situation in which what benefits one party also benefits the other party and what harms one party harms the other. We frequently find cases in which the players and their coach form strong bonds of affection and respect.
Next we can consider the military. Here we also have great power imbalance. When the military is not fighting, the relationship is exploited by the more powerful. But when combat is at hand or in progress, the context changes from a win/lose, zero-sum game to a win/win or lose/lose non-zero-sum game. The members of an infantry platoon depend on each other to survive: If the commander screws up, they can all suffer. If the men screw up, the commander can suffer. So the commander wants the men to be healthy, strong, well fed, rested, and skilled. He wants them to be able to perform at optimum levels. The men want the commander to be all those things as well so he can make the right decisions in plenty of time. You will note the difference is once again being in a context in which one cannot succeed without the other also experiencing success. The fact is that the same people in the same power relationship in the same organization can change in a short time from that power relationship producing exploitation to one of support.
There are also the musical director/conductor and musicians, movie-making crews and their directors, and finally, professors and their graduate students with a great power imbalance and parallel interests.
Perhaps you can see where I’m going with this. Power imbalances will happen and can become extreme but that’s only a problem when there are conflicting interests. The power imbalances that are inherent in property and ownership interactions do not have to result in conflict, exploitation, and oppression. They do not have to result in the application of force nor do they have to encourage fraud. And how do we prevent conflicting interests? How do we prevent zero-sum game relationships? We do that by adopting a non-POM.
With a non-POM, every action can generate income or reduce future income, thus converting all interaction into a win/win or lose/lose relationship. This means that in a non-POM economy there is no such thing as a zero-sum game relationship. All interaction is win/win or lose/lose. The powerful cannot benefit themselves at the expense of the weak. Those with extensive advantages derived from property and ownership would certainly use those advantages, but would use them to benefit everyone else. That’s the nature of a true free market interaction: Everyone wins.
Therefore in a non-POM economy the advantages in division of labor attendant on property and ownership are great because no one has a money motive to resist or limit those advantages and everyone has a money motive to enhance and maintain those advantages. To the degree and extent that those advantages benefit the owners, they also benefit others.
I am confident that this fact is not at all clear to most of my readers so I will go into that point in some detail.
Remember that with non-POM, one gains money by causing consequences which benefit others. In order to trace consequences from action, one must follow logical chains of causation. For example, if I give a hammer to my neighbor who uses that hammer to fix his roof and prevent it from leaking; I have done something which provides benefits to my neighbor and his family. Now compare a culture with no property and ownership with a non-POM culture. In the culture with no property and ownership, the hammer has no association with me any more than any other object I might have touched. It’s just there. If the neighbor simply takes the hammer and fixes his roof there is no connection with my actions since when not in my grasp, I have no power over the hammer. My actions are not causal. Therefore I would not have an increase in the money in my account as a consequence of the improvement in shelter for my neighbor. In a non-POM culture, the hammer, being my property and my owning it, means that my transference of possession to my neighbor is causal. Therefore, my action does merit pay.
In the no property and no ownership culture, I would have no motive to give the hammer since I would get no benefit from that action. I would have no motive to protect the hammer from harm or destruction or loss since it would not benefit me unless I was using it myself. I would have no motive to produce capital goods to give to others.
Also, without ownership and property, there is no responsibility for what is done with goods. That is, since the hammer was never property and never owned by me, I have no responsibility for what anyone does with that hammer. Everyone else was always free to take the hammer at any time for any reason to do anything with it whether good or bad. I had no interest in controlling or otherwise limiting what was done with the hammer. It is not associated with me.
In a non-POM economy, ownership and property mean that all labor, goods, real estate, and ideas are associated with those who owned that property. One’s actions with regards to one’s property are causal. Benefits experienced can be attributed to a causal chain traced back through many people, each of whom can be compensated for their role in bringing about those benefits.
Because non-POM uses ownership and property, the society can give credit and assign responsibility clearly rather than ambiguously.
We didn’t mention or draw attention to that responsibility aspect above so we should do so now. Just as one can easily be credited with benefits when property and ownership are strong, one can just as easily be held responsible for harm that is consequent to one’s actions. In a non-POM economy, such harm results in reduced pay for all those whose actions were part of the causal chain. If that was my hammer that was used to murder my neighbor’s wife, then I bear part of the responsibility for her death. It will not matter that she could have died some other way. It will not matter that her husband could have used one of his golf clubs as a bludgeon instead. My future income will be reduced by some amount as a result of my minor contribution to her death. If there were no property and ownership then I would not be held responsible for what happened.
In other words, non-POM really doesn’t work without the concepts of property and ownership. They are fundamental to such a system. It is also revealing that the property rights have nothing to do with conflict. I am sure that you recognize that much of common law (and other law since then) has a lot to do with property and ownership. You also realize that ownership and property can be very complicated in the law, as various parties strive to gain advantages and limit vulnerability. The concept of a limited liability company is a clear example. There are many courses in law school and many specialties in the practice of the law that relate to property and ownership. Almost anything one does in business will have something to do with property and ownership since business is largely concerned with transferring ownership and fulfilling contracts. The mere fact that money is part of a transaction means that property and ownership are involved. In every case, the law is involved to provide conflict resolution. The interests of the parties are in conflict. Coercion and the power of the state are used to try to prevent a total breakdown of the economy and the society. Without those laws and regulations and the voluntary compliance of the vast majority of people, the system under which we live would fly apart.
That is not the case with a non-POM economy. There is no need for the law in non-POM since there is no conflict of interests. One cannot benefit at the expense of someone else. The mutual interdependence of human beings is fully recognized and acknowledged in a non-POM economy by the contexts in which people act. This lack of conflict means that property and ownership can be extremely simple in a non-POM economy. Non-POM eliminates the complications consequent to thousands of years of trying to get the best of the other fellow in property and ownership.
You have no doubt noted that the idea of property and ownership without law sounds very strange to the point of being well-nigh impossible. That strangeness is a product of your having lived only in societies and nations with POM. The idea that property and ownership requires laws and coercion is a product of POM.
Ownership and property in a non-POM economy boil down to this, if one assumes responsibility for something which is not owned, one owns that thing. Ownership is individual, never joint or collective. Ownership may be transferred with the consent of both individuals. The owner of a thing may take any action with respect to that thing. You must be able to exercise significant control over anything you own. Otherwise responsibility for that thing is impossible.
Notice how simple this makes matters. With respect to physical objects such as a hammer, the owner may do anything with the hammer. The owner may deny any or all other people from using the hammer in any way. Likewise, the owner may share the hammer with any and all other persons. The owner’s so called rights with respect to the hammer are unrestricted. Similarly, the owner’s responsibility for the hammer is also unrestricted. He is responsible for making sure no harm comes to others through the agency of the hammer. His responsibility continues even if ownership of the hammer is transferred to someone else. Once one owns something, responsibility is permanent though it is reduced as the ownership chain lengthens.
If one owns a hammer and keeps it locked in a tool chest in a locked basement then the responsibility would be greatly reduced should someone break into the basement, pry the lock off the tool chest, seize the hammer and commit some crime using the hammer. If the owner was confronted by a robber who threaten to kill the owner unless the owner did not resist the robber’s taking physical possession of the hammer, there would likely be no loss of future income at all to the owner should that hammer be used in the commission of a crime.
If one is to own something one must be able to exercise some control of that thing. Picture the business UPS, United Parcel Service, with all their trucks. The company owns the trucks. But if the same business were in a non-POM economy, the drivers would own the trucks. The company would own nothing at all. UPS is not a person in a non-POM economy regardless of Supreme Court rulings. So when a driver begins his shift, he assumes responsibility for the truck and control of the truck and owns the truck. When he ends his shift, if he passes the truck on to another driver, that ownership also passes to the next driver. But since the truck was owned by the first driver at one time, he still bears some responsibility for what the second driver does with the truck. Therefore, the first driver would want to make sure that the second driver was not drunk or sleepy or emotionally stressed before transferring control.
About those definitions of property and ownership: In a non-POM economy they don’t matter at all, it’s only with POM that they become a matter of grave importance. In a non-POM economy, one can observe that people treat property as owned, private, and individual but it doesn’t matter what the observer thinks the definitions are, since the definitions won’t affect how the people in that economy act.