John Locke, Property Rights, and Economic Theory
Henry, John F., Journal of Economic Issues
Institutionahsts, as well as economists of various heterodox stripes, are familiar with the bastardization process as it has been used to defuse (and defame) authoritative individuals who posed a serious challenge to prevailing orthodoxy. Perhaps the best example of this process is the manner in which Keynes's general theory was vulgarized and eventually accommodated to the "neoclassical synthesis." This same tactic, however, has been used to undermine the essential theories (and therefore teachings) of a host of potentially seditious thinkers. Leo Rogin once characterized Jean Baptiste Say's "interpretation" of Adam Smith as follows:
. . . Say put Smith's theory in order in the same way that a cautious spouse puts her husband's trousers in order when she turns them upside down and empties them of their valuables. It is much safer that way. So Say "purged Smith of 'dangerous thoughts'" [Rogin 1956, 209].
The principal way in which this bastardization process works is, first, to lift the theory out of the specific social context which that theory was attempting to elucidate and which framed that theory; second, to rid the theory of all institutional forms and constraints; and, third, to "convert" the theory into terms acceptable to and understood by conventional (orthodox) thinkers. The theory, in other words, is separated from the specific institutional and social relations of the economy that both prompted and informed that theory and then subjected to analysis and modification as an ideal and abstract structure. In this fashion, all theory is placed on the same, non-social, non-historic foundation as that of neoclassical theory and can then be adjusted to accommodate the timeless equilibrium strictures of neoclassicism. It is much safer that way.
Here, I evaluate the standard argument that John Locke provided a theoretical foundation to the eventual development of neoclassical economics, particularly with regard to the relation among property rights, economic behavior, and theory. The extent to which modern neoclassical theory is traceable to Locke is arguable.(1) What is not arguable is that some portion of the argument is claimed to be traceable to Locke, in particular his position on property rights and the relation of such rights to scarcity, efficiency, exchange, and optimizing behavior [see Buchanan 1993; Vaughn 1980].
This paper attempts to (1) specify the neoclassical argument on the formation of property rights; (2) analyze Locke's actual position on this issue; and (3) juxtapose Locke's position to the neoclassical argument, demonstrating the significance of the differences between Locke and the neoclassical position on Locke. Three issues will be emphasized: "embeddedness," the significance of the "waste" (or unappropriated land, excluding the commons) and its relation to exit from markets, and the property rights that are consistent with Locke's general scheme.
Before proceeding, a caveat is in order. In the long-standing debate on "what Locke really said," one finds the "extreme" positions taken by C. B. Macpherson , who sees Locke as the originator of "possessive individualism" and unlimited capitalist appropriation, and James Tully , who portrays Locke as something of an egalitarian. In the "middle" we have the works of Richard Ashcraft , Neal Wood , and Alan Ryan , among a host of others. I am not sufficiently a Locke scholar to participate meaningfully in this debate, and that is not my intent. Ryan's words seem appropriate in this regard, however: "Works outlive their authors, and take on lives their writers might be perturbed to see." And, "to see Locke as no more than an apologist for capitalism is ludicrous; to suggest that wilder minds in other ages would see him as such, and side with him or against him for that reason is not" [Ryan 1984, 4, 48].
I do believe that there are aspects of Locke's general theory that are not contestable, once the context within which they were written is understood, and it is on the basis of these elements that I will make my case. …