This paper attempts set forth systematically some of the knowledge questions that determine certain strategies for institutional change.
This paper is an introduction to property theory including the invisible hand mechanism which handles the initiation and termination of property rights in an on-going private property market economy. The Fundamental Theorem is that when Hume’s conditions of no involuntary transfers and no breached contracts are fulfilled, then the Lockean principle of people getting the fruits of their labor, i.e., imputing legal responsibility in accordance with de facto responsibility is satisfied. The major application is to the current system of a private property market economy based on the renting of persons, i.e., the employment contract.
This is a reprint of the paper in the Journal of Economic Issues in Sept. 2014.
The Great Debate between capitalism and socialism is now in the dustbin of intellectual history, but Marxism still plays an important role in sustaining the misframing of the questions so that the defenders of the present employment system do not have to face the real questions that separate that system from a system of economic democracy. In that sense, Marxism has become the ultimate capitalist tool.
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.