Theories of Property Law: Labour, Occupation and Economic

Introduction:

The term property is sufficiently comprehensive to include every species of estate, real and personal, and everything which one person can own and transfer to another. It extends to every species of right and interest capable of being enjoyed as such upon which it is practicable to place a money value. Some define “property” very broadly as a “a legal relationship” where there are three persons in that relationship.

The State will suppress the civil liberties of the third person to the extent they fail within the scope of the property held. This is basic to the concept of property that is the notion that the person who holds the property being entitled to exclude another from access to the property which is sanctioned by the State. The question of why the State will protect a person’s property interest and the means of obtaining a property interest have as a background particular philosophies which provide the justification for how we distribute and allocate property in our society. We will discuss 3 theoretical justifications for property i.e.:

Labour Theory:

The most prominent and influential thinker for the Enlightenment in the field of property rights was John Locke.  According to Locke, man owns himself, and by extension, everything that he produces. His famous theory of labour argues that by mixing work with nature, the resulting goods will necessarily belong to the worker. This theory suggests that a person is entitled to the full produce of their labour. The basis behind this theory is that a society should encourage labour and property should be distributed according to one’s productivity. The theory is based on the approach that originally all property was owned in common but people had the right to appropriate this property by co-mingling their labour with it.

Locke published his ‘Two Treatises of Government’ in 1690 (Locke, (1690) 1988)[1]. In the second treatise, he presents his labour theory of property acquisition, which was fundamentally different from the widely-practiced approaches of divine right, royal patronage, or traditional limited access to common property. It attempts to justify the establishment of private property outside of social context (i.e. without approval of one’s peers or neighbours) and governmental regulation. Today, many of the same arguments are used to justify resistance by existing owners of private property and users of public property to governmental interventions in their rights of ownership.

In Locke’s state of nature, the commons exist as a true common property resource, as characterised by Bromley (1991, 1998)[2]. The state of nature is not a lawless wilderness or an open access free for all; the state of nature is utilised and governed to achieve a particular set of objectives by following certain rules assigning rights and duties.

The labour theory on equity grounds would curtail the establishment of new private rights. Utilitarians, arguing on efficiency grounds (Demsetz, 1967)[3], would advocate for the expansion of private rights as scarcity increases. Utilitarian analysis can also complement the labour theory’s focus on anthropocentric use-rights by accounting for existence values, other non-use values, and biocentric values. Locke’s argument that labour establishes the property right makes sense if, like Locke and his contemporaries, one sees humankind as made in the image of God, and human activity as the extension of God’s will on earth. Absent this religious sentiment, the labour theory of acquisition becomes nothing more than property acquisition based on first occupancy.

Occupation Theory:

The most influential albeit inconsistent[4] French thinker of the Enlightenment, Jean-Jacques Rousseau, elaborated a theory of property based on first occupation justified by labour. He held that the first appropriation is mutually recognised, and that unequal distribution is due to the different abilities of man.[5] This is largely in line with Locke’s ideas; however, Rousseau departs from the Englishman, by assuming that shortage and unequal distribution will result in conflicts.

This theory suggests that the party who is the original discoverer and occupant of property was entitled to dispose of those assets. This approach has the advantage of certainty and security as the person in possession can retain possession until someone else shows a better title. This philosophy is reflected in the law of property. If a person retains possession of land over a long period of time this may make this possessory title unassailable by the original owner. This is based upon the concept of adverse possession of land. If you squat on land for many years and the true owner does not remove you from the property in some circumstances you may be acknowledged as ‘owning’ the land. To put an end to this Hobbesian “free for all”, the people concluded a social contract, which also regulates appropriation. Thus, Rousseau does not attach too much importance to who owns what: he is more interested in the fact that the individual acknowledges exclusion.[6] Exclusion, however, cannot be guaranteed in the state of nature, and the French philosopher ends up with creating a strong State, which subordinates individual rights of ownership to the community, and the State becomes the sole owner. This resembles Hobbes’s Leviathan, but it can be distinguished by the fact that according to Rousseau, the State represents the general will of its citizens, and its main objective is to oppose inequality.[7]

Economic Theory:

The economic theory, the main thinkers of which are John Stuart Mill, David Ricardo, Adam Smith, Jean- Baptiste Say and Thomas Robert Malthus, supports the view that private property creates the environment where maximum productivity is created based upon the profit motive. The economic theory supports the profit motive and the incentive it provides for developing and seeking out ideas and process to support productive activity. This view is based upon belief in the distributive and controlling influence of the market.

History suggests that the market is not a perfect vehicle and often the profit motive will create over-supply, under-supply, monopolies and other non-productive arrangements. This theory gives little credence to broader social interests. It may be in the personal economic interest for a person to maximise profits by exploitation of people and the environment which may be to the long – term detriment of those factors for the society as a whole.

Why would a democratic state protect property interests and property rights?

Property rights are vital for generating economic development.[8] Democracy strengthens property rights, because property rights protection enhances democratisation or democratic stability, or that other factors affect both democracy and property rights systematically. Although there are strong arguments indicating that democracy affects property rights, a large literature in the social sciences suggests that property rights and other ‘free market institutions’ are preconditions for democracy, rather than consequences of democracy. One straightforward way to define property rights is ‘[T]o say that an individual has property rights over something simply means in a legal and practical sense – that an individual can say that a thing belongs to him and others will act accordingly’ (Leblang, 1996: 7).[9]  Property rights ‘create an incentive to channel individual economic effort into activities that bring the private rate of return close to the social rate of return’ (North and Thomas, 1973: 1).[10] Private property exist within multiple and highly variegated cultural and institutional complexes and policies; property is part of the vast system of social relations, cultural relations, and material contexts. Comprehensive property rights protection also reduces transaction costs and the risk of economic transactions, thereby allowing for efficiency-enhancing specialisation of labour and subsequent trade (North, 1981, 1990)[11]. Property rights enforced by a well-functioning legal system are particularly vital for inter-temporal transactions, as they enable actors to make credible promises. Various empirical studies find that property rights protection enhances income level and economic growth (Torstensson, 1994[12]; Knack and Keefer, 1995[13]; Goldsmith, 1995[14]; Leblang, 1996[15]; Hall and Jones, 1999[16]; Acemoglu et al., 2001[17]).

Democratic systems often have institutionalised checks and balances, with, for example, independent judiciaries and separation of legislative and executive authority. Thus, democratic institutions provide a check on the arbitrary power of the State. Democratic regimes will less likely confiscate possessions and are more likely to provide a stable environment governed by efficient property rights structures’ (Leblang, 1996: 18)[18]. There is also a higher degree of political accountability in democracies. Democratic electorates can vote out leaders they are dissatisfied with the performance of. One would expect many citizens to value a stable, universal property rights framework. Property rights may enhance democracy through increasing development level, reducing inequality and through accumulation of economic resources outside the State’s control (Weimer, 1997: 9–10)[19]. Moreover, property rights protection increases the middle-income groups’ share of total income (Scully, 1991[20]; Weimer, 1997: 9[21]). This should widen and strengthen the middle classes economically, but also enhance their political clout. Several political scientists have argued that a strong middle class enhances democracy (for example, Lipset, 1959[22]). Thus, there are several channels through which property rights protection may increase the probability of having a democracy. Property rights are vital for long-run economic development, there is thus good reason also to believe that democracy is the political system that generates most prosperity in the long run.

Locke’s arguments that (1) claims to private ownership can precede the establishment of civil society and are therefore not beholden to the whims of civil government, and (2) the appropriate role of government is to protect private ownership rights against the behaviour and interests of other citizens have empowered political and social movements that desire to restrict the role of regulatory government. Locke’s theory buttresses the ‘takings’ clause of fifth amendment to the US Constitution, which reads ‘nor shall private property be taken for public use, without just compensation.’ In support of claims by private landowners to strong right against government intervention in their use of land.

In the Australian context the concept of communal ownership was discussed in the High Court case of Mabo v State of Queensland[23]. In that case the High Court acknowledged that the common law of Australia recognised a form of native title which provided for entitlements based upon laws and customs of tribal peoples. These entitlements were communal in nature that is they attached to the group rather than to the individual. This is an acceptance of communal rights though it is still a form of ownership. As the terms of this decision and subsequent legislation like the Native Title Act and its state equivalents take effect large parts of Australia will be held by groups of Aborigines under native title based upon communal ownership concepts.

How the State through legal institutions protect right to personality?

German law, for example, protects the body as an aspect of the right to personality. So, if interference occurs with excised parts of the body – such as the unauthorised destruction of sperm – the law will provide a remedy for a breach of the Persönlichkeitsrecht.[24] The way this is done is by recognising enforceable property rights in excised human material.[25]

Anglo-American law is less sophisticated in this regard. Our tendency has been to treat privacy and autonomy as one branch of protection, and property as another. Numerous examples of this can be given. Most notable is the experience in Oregon, where the state took the bold step in 1995 of embodying a personal property right in genetic information and DNA samples when used for anonymous research with the result that that unauthorised interference with either constituted a tort actionable at law.

In the United Kingdom, the Human Genetics Commission[26] issued its recommendations on protecting personal genetic data, but it too had eschewed the property paradigm in favour of an approach couched in the traditional concepts of ‘more and better consent’, and ‘adequate protection of privacy interests’.[27] This would not be so objectionable but for the fact that property rights are granted over human material. This happens all the time, and is actively encouraged by governments around the world. It happens, of course, through the mechanisms of intellectual property law, and primarily through the granting of patents.

The English Court of Appeal’s decision in Yearworth v North Bristol NHS Trust [28] that six men had, for the purposes of their claims against the trust, ownership of the sperm that had produced, has been described as a ‘landmark.’ The court decided that the men had ‘ownership’ (for the purposes of the tort of negligence) against the trust; that the men’s ‘ownerships’ grounded duties of a certain kind on the trust, such that the trust (but no other) owed the men a duty not to cause, by its negligence, damage to the sperm that would preclude the men from using it.

Conclusion:

Property is prior to the establishment of government, and governments are established to protect property: “government has no other end but the preservation of property.”[29] An interesting example in this sense is the formulation used by the Lithuanian Constitutional Court, which literally stated that “[t]he right to possess property is one of the most significant human natural rights.”[30]

Private property, wherever and however it exists, always exists and interacts with non-property forms of decision making, policy, and control; property is part of the total system of governance in society; property, as part of the total power structure of society, is both a dependent and independent variable.

Property can be defined as a “fundamental” right only if there is a clear distinction between inviolable fundamental rights and fundamental rights that do not enjoy the attribute of inviolability. In the constitutional texts, property belongs to the category of rights of economic character, and the content of its discipline. Constitutional provisions that have as an object the right of private property, have as a general principle the social function and not the owner’s freedom, and they sanction the need for the use of property for the benefit of all. The social function seems destined to be identified with the fairness of social relationships arising from the legal relationship created over the object, between the owner and one or more of the specified subjects. Guaranteeing and protecting the right to private property constitutes one of the substantial aspects of democratic society. Restrictions on the exercise of the right to property, justified by the general interest, should not affect the essence of this right, the disruption of which may lead to the full dismissal of the owner from the right of ownership

Bibliography:

• Haddad, Brent M., “Property Rights, Ecosystem Management, And Jock Locke’s Labour Theory of Ownership” (2003) 46(1) Ecological Economics
• Judge, Rebecca P., “Restoring the Commons: Toward a New Interpretation of Locke’s Theory of Property” (2002) 78(3) Land Economics
• Knutsen, Carl Henrik, “Democracy, Dictatorship and Protection of Property Rights” (2011) 47(1) Journal of Development Studies
• Pejo, Erida., “The right of property and its social function” (2017) 3(3) Academic Journal of Business, Administration, Law and Social Sciences
• Rostill, Luke David, “The Ownership That Wasn’t Meant To Be: Yearworth and Property Rights in Human Tissue” (2013) 40(1) Journal of Medical Ethics
• Samuels, Warren J., “Theories of Property” (1999) 33(1) Journal of Economic Issues
• Theories of Property. In Post-Communist Restitution and the Rule of Law (2009) (p.17). Budapest ; New York: Central European University Press.
• Weir, Michael, “Concepts of property,” (2001) 7(1) Article 6. The National Legal Eagle

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[1] Locke, J., [1690] 1988. Two Treatises of Government. Cambridge University Press, New York, p. 464.

[2] Bromley, Daniel. 1991. Environment and Economy: Property Rights and Public Policy. Oxford: Basil Blackwell.

• 1998. “Property Regimes in Economic Development: Lessons and Policy Implications.” In Agriculture and the Environment: Perspectives on Sustainable Rural Development, ed. Ernest Lust, Washington D.C.: World Bank.

[3] Demsetz, H., 1967. Toward a theory of property rights. American Economic Review 57 (2), 347/359.

[4] In his Discourse on the Origin of Inequality (1755), he held that “the fruits of this earth belong to all and the earth to no one”; in The Discourse on Political Economy (1755) he called the right of property “the most sacred of all citizens’ rights, and more important in certain respects than liberty itself”; in the Social Contract (1762), he wrote about the communities’ right to all, to which the individual’s right is always subordinated.

[5] Engerer, op. cit., p.28

[6] Ibid., p.29.

[7] Ibid., pp.29-30.

[8] North, D.C. (1990) Institutions, Institutional Change and Economic Performance (New York: Cambridge University Press).

[9] Leblang, D.A. (1996) Property rights, democracy and economic growth. Political Research Quarterly, 49(1), pp. 5–26.

[10] North, D.C. and Thomas, R.P. (1973) The Rise of the Western World: A New Economic History (New York: Cambridge University Press).

[11] North, D.C. (1981) Structure and Change in Economic History (New York: W.W. Norton).

• North, D.C. (1990) Institutions, Institutional Change and Economic Performance (New York: Cambridge University Press).

[12] Torstensson, J. (1994) Property rights and economic growth: an empirical study. Kyklos, 47(2), pp. 231– 247.

[13] Knack, S. and Keefer, P. (1995) Institutions and economic performance: cross-country tests using alternative institutional measures. Economics and Politics, 7(3), pp. 207–227.

[14] Goldsmith, A.A. (1995) Democracy, property rights and economic growth. The Journal of Development Studies, 32(2), pp. 157–174.

[15] Leblang, D.A. (1996) Property rights, democracy and economic growth. Political Research Quarterly, 49(1), pp. 5–26.

[16] Hall, R.E. and Jones, C.I. (1999) Why do some countries produce so much more output per worker than others? Quarterly Journal of Economics, 114(1), pp. 83–116.

[17] Acemoglu, D., Johnson, S. and Robinson, J.A. (2001) The colonial origins of comparative development: an empirical investigation. American Economic Review, 91(5), pp. 1369–1401.

[18] Leblang, D.A. (1996) Property rights, democracy and economic growth. Political Research Quarterly, 49(1), pp. 5–26.

[19] Weimer, D.L. (1997) The political economy of property rights, in: D.L. Weimer (ed.) The Political Economy of Property Rights (Cambridge: Cambridge University Press), pp. 1–19.

[20] Scully, G.W. (1991) Rights, equity and economic efficiency. Public Choice, 68(1–3), pp. 195–215.

[21] Weimer, D.L. (1997) The political economy of property rights, in: D.L. Weimer (ed.) The Political Economy of Property Rights (Cambridge: Cambridge University Press), pp. 1–19.

[22] Lipset, S.M. (1959) Some social requisites of democracy: economic development and political legitimacy. The American Political Science Review, 53(1), pp. 69–105.

[23] (No. 2) (1992) 175 CLR 1

[24] Bundesgerichtshof, 9 November 1993, BGHZ, 124, 52.

[25] Excised body parts that are not intended for another (such as transplant organs) or for return to the individual (such as stored sperm), are subject to the normal rules of personal property, ibid.

[26] Human Genetics Commission, Inside Information: Balancing Interests in the Use of Personal Genetic Data (May 2002).

[27] See also, Article 4 of the Universal Declaration on the Human Genome and Human Rights provides: ‘the human genome in its natural state shall not give rise to financial gains’, while Article 21 of the Council of Europe Convention on Human Rights and Biomedicine states: ‘The human body and its parts shall not, as such, give rise to financial gain’.

[28] [2009] EWCA Civ 37, [2010] QB 1.

[29] John Locke, Two Treatises of Government, Dent, c1924, pp. 163-4

[30] Lithuanian Constitutional Court (hereinafter LiCC), Ruling of 27 May 1994.