This is the 30th anniversary of the publication of this paper, Property and Production, which laid out the whole property-theoretic analysis of production. I would not change a word today.
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 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.
This was my first (1972) publication in property theory. The normative part of the theory is essentially the same as what I would espouse today, but for the descriptive theory, I was still in the grip of the “fundamental myth” that the rights to the product are part and parcel of some existing property rights to some capital asset.
The purpose of this paper is to suggest a rethinking of the common-versus-private framing of the property rights issue in the Commons Movement. The underlying normative principle we will use is simply the basic juridical principle that people should be legally responsible for the (positive and negative) results of their actions, i.e., that legal or de jure responsibility should be imputed in accordance with de facto responsibility. In the context of property rights, the responsibility principle is the old idea that property should be founded on people getting the (positive or negative) fruits of their labor, which is variously called the labor or natural rights theory of property.