Papers
in Property Theory and Political Economy:
Table of Contents
Papers
Inalienable rights and liberal-contractarian theories of justice—with applications to Rawls and Nussbaum. Liberal-contractarian philosophies of justice see the unjust systems of slavery and autocracy in the past as being based on coercion—whereas the social order in the modern democratic market societies is based on consent and contract. However, the 'best' case for slavery and autocracy in the past was based on consent-based contractarian arguments. Hence our first task is to recover those 'forgotten' apologia for slavery and autocracy. To counter those consent-based arguments, the historical anti-slavery and democratic movements developed a theory of inalienable rights. Our second task is to recover that theory and to consider several other applications of the theory. Finally the theories of justice expounded by John Rawls and by Martha Nussbaum are examined from this perspective. Slides for a talk on this paper.
Translatio versus Concessio: Retrieving the debate about contracts of alienation with an application to today's employment contract. Liberal thought is based on the fundamental question of consent versus coercion. The autocracies and slavery systems of the past were based on coercion whereas today's democracy in the political sphere and employment system in the economy are based on consent. This paper retrieves an almost forgotten contractarian tradition, dating from at least the Middle Ages, that based political autocracy and economic slavery on explicit or implicit voluntary contracts. Hence the democratic and antislavery movements had to hammer out arguments not simply in favor of consent and against coercion, but arguments based on the distinction between contracts to alienate (translatio) sovereignty versus contracts to only delegate (concessio) self-governance rights. They argued that the alienation contracts were in a certain sense inherently invalid so that those basic rights were inalienable even with consent. These inalienable rights arguments from the democratic and antislavery movements are also retrieved, arguments that liberal thought neglects when the basic question is simplistically posed as consent versus coercion. Finally, it is noted that the basic inalienable rights argument—that a de facto person cannot fit the de jure role of a thing even with consent—applies equally well to the employment contract which can be seen collectively as a contract for the employees to alienate management rights over their work to the employer or individually as the contract to rent oneself to the employer for limited periods rather than to sell oneself as in the self-enslavement contract. In conclusion, the paper considers various paths to get from the employment relation in a firm to a democratic firm where the members are the people working in the firm. This is a reprint from Politics & Society (Sept. 2005). (Click on title to open memo or paper.) See slides for a talk on this paper.
The Market Mechanism of Appropriation. A theory of property needs to give an account of the whole life-cycle of a property right: how it is initiated, transferred, and terminated. Economics has focused on the transfers in the market and has almost completely neglected the question of the initiation and termination of property in normal production and consumption. Yet the market also provides a laissez-faire mechanism: when the legal authorities do not intervene ("let it be"), then the initial right is, in effect, assigned to the first seller and the terminal liability to the last buyer. But does this mechanism satisfy the juridical principle of responsibility: assign de jure responsibility in accordance with de facto responsibility? The fundamental theorem states that if all transfers are covered by voluntary contracts and all contracts are fulfilled, then the laissez-faire mechanism satisfies the responsibility principle.
Hume Implies Locke: The Fundamental Theorem of Property Theory. There is an invisible hand mechanism in the property system that underlies the invisible hand mechanism in the price system. In the life-cycle of property rights, initiation--transfers--termination, the "invisible judge" imputes the initial rights and terminal liabilities according to the public part of the life-cycle, the contractual transfers. If the legal system does not intervene, then the invisible judge laissez-faire imputes the termination of a property right to the last buyer and the initiation of a right to the first seller. When the legal system does intervene to hold a trial, it attempts to implement the principle of imputing de jure responsibility in accordance with de facto responsibility (the juridical version of the Lockean "fruits of one's labor" principle). Hence the natural question is: under what conditions does the invisible judge satisfy the responsibility principle when no trial is held? Hume emphasized two basic conditions: that all transfers in property be voluntary contracts and that all contracts be fulfilled. The fundamental theorem for the invisible hand mechanism in the property system is that if Hume's conditions are satisfied, then the invisible judge imputes in accordance with the Lockean responsibility principle. The paper mathematically formulates and proves the theorem using vector flows on graphs.
Towards a Modern Theory of Property
Whither Self-Management? Finding New Paths to Workplace Democracy. Today, there is the real possibility that self-management and workplace democracy will follow socialism into the dustbin of history. But the connection of self-management to socialism was misconceived from the beginning. Workplace democracy has its own roots in the historical struggle against slavery and against autocracy. The paper reviews the history of the theory of inalienable rights that applies not only against the self-sale contract and the political contract of subjection but also against of the self-rental or employment contract, today's contract of subjection for the workplace. The paper concludes with the current debate about corporate governance. (Keynote Address for 12th Annual Conference of International Association for the Economics of Participation, July 8, 2004, Halifax Canada.)
On the Role of Capital in "Capitalist" and in Labor-Managed Firms. This paper outlines the "fundamental myth" about the structure of property rights in a capitalist economy, namely the idea that being the residual claimant in a productive opportunity is part of a bundle of property rights known as the "ownership of the firm." Residual claimancy is contractually determined so there is no such "ownership." The fundamental myth exposes a basic fallacy in capital theory that has hitherto escaped attention in the capital theory debates. (Reprint from: Review of Radical Political Economics, Winter 2007)
On a Difficulty in Welfare Economics: Numeraire Illusion in the Marshall-Pigou-Kaldor-Hicks Methodology. The Kaldor-Hicks criterion (potential Pareto improvement) and the careful treatment of consumer and seller surpluses have fostered a modern revival of an older Marshall-Pigou tradition of welfare economics. That tradition was based on the parsing of a potential change into a change in the size of some "social pie" measured in money (e.g., Pigou's "national dividend") and a change in the distribution of the pie. By characterizing an increase in the size of the pie (i.e., a Kaldor-Hicks improvement) as an "increase in efficiency," this modernized Marshall-Pigou-Kaldor-Hicks (MPKH) tradition seeks to transcend the strictures of the Paretian treatment of efficiency (which would require actual compensation of the losers so that the whole change was a Pareto improvement). Economists can then with clear professional conscience make the policy recommendation for the increase in efficiency and put to one side the question of compensating the losers as a separate question of equity. However, this whole efficiency-equity analysis turns out to be vulnerable to a simple redescription of exactly the same total change using reversed numeraires. Then the "efficiency" change and the "equity" change reverse themselves so the "policy recommendation" would reverse itself as well. The flaw is the "numeraire illusion" involved in concluding that transfers in the numeraire (e.g., the compensation) do not increase value since they make no change in the size of the pie as measured by the same numeraire. Changes in a yardstick will never be revealed by that yardstick—but are revealed by switching to a different yardstick (or numeraire). This result undercuts the major applications of the MPKH methodology in the standard Chicago school ("social wealth" maximization) of law-and-economics, cost-benefit analysis, policy analysis, and related parts of applied welfare economics. Slides for a talk on this topic.
The
Democratic Firm: A "Non-Economic" Approach to the Problem of
Distribution
On
the Role of Capital in So-Called "Capitalism": A Property Rights
Perspective on Capital Theory Controversies