Academic journal article Iowa Law Review

How Spontaneous? How Regulated?: The Evolution of Property Rights Systems

Academic journal article Iowa Law Review

How Spontaneous? How Regulated?: The Evolution of Property Rights Systems

Article excerpt


There has been a longstanding debate in the judicial and academic literature about the role of custom and law in the formation of various property rights systems. For these purposes, I shall stress the opposition between custom and law, and not their similarities, which is consistent with my focus on the early emergence of property rights systems. With regard to their differences, it is best to think of custom in its earliest sense, where it functions as an application of general natural law principles, a phrase that is not in entirely in good order today. The point of this stipulation is not to resolve a longstanding debate on whether natural law conforms to reason or to common practice, both within and across social settings. Instead, it is quite sufficient to say that these two approaches are mutually reinforcing in the broad run of cases, such that the emergence of a rule that responds to both imperatives enjoys an extra measure of permanence and legitimacy.

What then, for these purposes, is "natural law"? In this discussion, I use the phrase to address two issues. The first treats natural law as a mode for creation of legal rights and duties. The second is a powerful but often underappreciated feature of natural law rules: under a natural law system, the state cannot become the titleholder to any form of property, for the simple reason that there is no organized state in a state of nature.

Starting with the former, the emphasis is on the mode of creation, and not its legal or ethical content. The term "natural law" is intended to highlight the simple proposition that these "prepolitical" rights and duties develop prior to the formation of a formal state, which, in its Austinian1 and Weberian2 sense, exercises a monopoly of force within the jurisdiction. The norms that emerge are decentralized, both in their creation and enforcement. Down the road these norms help legitimize the transition to a territorial state, which need not rise to the size and complexity of the modern nation state, but also encompass smaller city states that have defensible borders marked by defensive walls.

Within these newly emergent states, legal actors can consciously adopt and ratify substantive norms that have already achieved a fair measure of community durability and legitimacy. Durability is relatively easy to measure, by looking at the period that a particular norm has lasted, subject to, as will always be the case, small incremental adjustments at the edges. Legitimacy is always more difficult to assess, but for these purposes, it is established by satisfying the following simple condition: the loser in a particular dispute is willing to accept the outcome because he respects the decisional process and thus regards the norms it produces as working in his long-run interest.3

Any such situation is likely to prove stable so long as, for the disappointed litigant, the long-term gains from continuing in the practice exceed the shortterm losses in a particular dispute.4 That disappointed litigant (or his allies) could form that last judgment from either selfish or benevolent reasons. That actor could think that the loss in one case will lead to victories in future disputes, or will lead, alternatively, to higher overall levels of output, which, going forward, he will share with other members of that community. Given that we are in pre-state mode, the communities in question are often tribes or clans. Accordingly, any given actor has affective ties to a large fraction of individuals with whom he repeatedly interacts, measured by a shared genetic inheritance, which reduces, but does not eliminate, conflicts of interest.5 For these purposes, the exact mixture of the influence of moral judgment and pragmatic self-interest does not matter, assuming that these two forces can be disconnected. What does matter is that the emergent customs and practices in the state of nature cannot be treated as a consequence of conscious deliberation and supervision by the state. …

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