Private property

Property owned by non-governmental legal entities From Wikipedia, the free encyclopedia

Private property is a legal designation for the ownership of property by non-governmental legal entities.^[1] Private property is distinguishable from public property, which is owned by a state entity, and from collective or cooperative property, which is owned by one or more non-governmental entities.^[2] Private property is foundational to capitalism, an economic system based on the private ownership of the means of production and their operation for profit.^[3] As a legal concept, private property is defined and enforced by a country's political system.^[4]

History

In absolute antiquity, the native Mesopotamians had no term for the concept of property. The majority of legal documents from Mesopotamia, however, are overwhelmingly concerned with the proper disposition of what modern people would call "property" and with ensuring legal, unchallengeable, and fair treatment of individuals with property claims. While there were no laws prohibiting the alienation—that is, the buying and selling—of land, written records from Mesopotamia indicate a tendency against it. Measures were taken to keep land within a family and to prevent it from being broken down into plots too small to be viable agriculturally.^[5]

Written discussions of private property arguably emerged in the Western tradition at least as far back as Plato.^[6] Before the 18th century, English speakers generally used "property" to refer to land ownership. In England, "property" came to have a legal definition in the 17th century.^[7] Private property, defined as property owned by commercial entities, emerged with the great European trading companies of the 17th century.^[8] The issue of the enclosure of agricultural land in England, especially as debated in the 17th and 18th centuries, accompanied efforts in philosophy and political thought—by Thomas Hobbes (1588–1679), James Harrington (1611–1677), and John Locke (1632–1704), for example—to address the phenomenon of property ownership.^[9]

In arguing against supporters of absolute monarchy, Locke conceptualized property as a natural right that God had not bestowed exclusively upon the monarchy. In his labor theory of property, Locke stated that property is a natural result of labor improving upon nature, and thus, by labor expenditure, the laborer becomes entitled to its produce.^[10] Influenced by the rise of mercantilism, Locke argued that private property was antecedent to, and thus independent of, government. Locke distinguished between "common property", by which he meant common land, and property in consumer goods and producer goods. His chief argument for property in land ownership was that it led to improved land management and cultivation compared with common land.

In the 18th century, during the Industrial Revolution, the moral philosopher and economist Adam Smith (1723–1790), in contrast to Locke, distinguished between the "right to property" as an acquired right and natural rights. Smith confined natural rights to "liberty and life". Smith also drew attention to the relationship between employee and employer and identified that property and civil government were dependent upon each other, recognizing that "the state of property must always vary with the form of government". Smith further argued that civil government could not exist without property, as the government's main function was to define and safeguard property ownership.^[10]

In the 19th century, German economist and philosopher Karl Marx (1818–1883) provided an influential analysis of the development and history of property formations and their relationship to the technical productive forces of a given period. Marx's conception of private property has proven influential for many subsequent economic theories and for communist, socialist, and anarchist political movements and has led to the widespread association of private property, particularly private property in the means of production, with capitalism.

In the 20th century, theories of private property were further developed within the tradition of classical and economic liberalism.^[11] Libertarian economists such as Ludwig von Mises and Friedrich Hayek emphasized the role of private property as a foundational institution for economic calculation, market coordination, and individual liberty.^[12] Building on earlier natural-rights arguments, some theorists such as Murray Rothbard explained property rights as originating through first use and continuing through voluntary exchange between individuals, independent of state authority. In this view, often associated with anarcho-capitalism, property rights are seen as the basis for a system of law and social order that can emerge without centralized government, with markets and contractual arrangements providing the primary mechanisms for the allocation and transfer of resources.^[13]

Legal and real-world aspects

Private property is a legal concept defined and enforced by a country's legal and political institutions.^[4] Theories of property rights differ regarding whether such rights originate from law, custom, contract, or natural rights. The area of law that deals with the subject is called property law. Governments typically fund the courts, law enforcement agencies, and administrative institutions that enforce property law through public revenues. Defence of property is a common method of justification used by defendants who argue that they should not be held liable for any loss or injury that they have caused because they were acting to protect their property. Courts in many jurisdictions have recognized limited rights to use force in defense of property, subject to statutory and judicial restrictions.

In many jurisdictions, governments impose taxes on property ownership. A property tax is an ad valorem tax on the value of a property, usually levied on real estate. The tax is levied by the governing authority of the jurisdiction in which the property is located. It may be imposed annually or at the time of a real estate transaction, such as in a real estate transfer tax. Under a property tax system, the government requires or performs an appraisal of the monetary value of each property, and the tax is assessed in proportion to that value. The four broad types of property taxes are land, improvements to land (immovable human-made objects, such as buildings), personal property (movable human-made objects), and intangible property.

The social and political context in which private property is administered determines the extent to which an owner can exercise rights to it. The rights to private property often come with limitations. For example, local governments may enforce rules about what kind of building may be built on private land (building codes) or whether a historical building may be demolished. Theft is common in many societies, and the extent to which central administrations will pursue property crime varies enormously.

Some forms of private property are uniquely identifiable and may be described in a title or certificate of ownership. The rights to a property may be transferred from one owner to another. A transfer tax is a tax on the passing of title to property from one person or entity to another. An owner may request that, after death, private property be transferred to family members through inheritance. In certain cases, ownership may be lost in the public interest. Private real estate may be confiscated or used for public purposes, for example, to build a road.

Theory

The legal framework of a country or society defines some of the practical implications of private property. There is no expectation that these rules will define a rational and consistent model of an economic or social system. Although contemporary neoclassical economics, currently the dominant school of economics, rejects some of the assumptions of the early philosophers underpinning classical economics, it has been argued that neoclassical economics continues to be influenced by the legacy of natural moral theory and the concept of natural rights, leading to the presentation of private market exchange and private property rights as "natural rights" inherent in nature.^[14]

Economic liberals, defined as those who support a private sector-driven market economy, consider private property to be essential for the construction of a prosperous society. They believe private ownership of land ensures that the land will be put to productive use and that its value is protected by the landowner. If owners must pay property taxes, this forces them to maintain productive use of the land to keep taxes current. Private property also attaches a monetary value to land, which can be used for trade or as collateral. Therefore, private property is an important part of capitalization within the economy.^[15]

Socialist economists are critical of private property in the means of production, as socialism aims to replace it with social ownership or public property. Socialists generally argue that private property relations limit the development of productive forces once production becomes increasingly collective, and some socialist theories maintain that economic functions traditionally performed by capitalists could be carried out through collective or social ownership. Socialists generally favor social ownership either to eliminate class distinctions between owners and workers or as a component of the development of a post-capitalist economic system.^[16]

In response to the socialist critique, the Austrian School economist Ludwig von Mises argued that private property rights are a prerequisite for what he called rational economic calculation and that the prices of goods and services cannot be determined accurately enough to allow efficient economic calculation without clearly defined private property rights. Mises argued that a socialist system, which by definition would lack private property in the factors of production, would be unable to determine appropriate price signals for the factors of production. According to Mises, this problem would make rational socialist economic calculation impossible.^[17]

In capitalism, ownership can be viewed as a "bundle of rights" over an asset that entitles its holder to a strong form of authority over it. Such a bundle is composed of a set of rights that allows the owner of the asset to control it and decide on its use, claim the value generated by it, exclude others from using it, and transfer ownership of it to another holder.^[18]^[19] In Marxian economics and socialist politics, a distinction is made between "private property" and "personal property". The former is defined as the means of production involving private ownership over an economic enterprise based on socialized production and wage labor, whereas the latter is defined as consumer goods or goods produced by an individual.^[20]^[21] Before the 18th century, "private property" usually referred to land ownership.

Criticism

Private property in the means of production is the central element of capitalism criticized by socialists. In Marxist literature, private property refers to a social relationship in which the property owner takes possession of anything that another person or group produces with that property and capitalism depends on private property.^[22] The socialist critique of private ownership is heavily influenced by the Marxist analysis of capitalist property forms as part of its broader critique of alienation and exploitation in capitalism. Although there is considerable disagreement among socialists about the validity of certain aspects of Marxist analysis, the majority of socialists are sympathetic to Marx's views on exploitation and alienation.^[23]

Socialists critique the private appropriation of property income because such income does not correspond to a return on any productive activity and is generated by the working class; it represents exploitation. The bourgeoisie, the property-owning (capitalist) class, lives off passive property income produced by the proletariat (working population) by their claim to ownership in the form of stock or private equity. This exploitative arrangement is perpetuated due to the structure of capitalist society. Capitalism is regarded as a class system akin to historical class systems like slavery and feudalism.^[24]

Private ownership has been criticized on non-Marxist ethical grounds by advocates of market socialism. According to the economist James Yunker, the ethical case for market socialism is that because passive property income requires no mental or physical exertion on the part of the recipient, and its appropriation by a small group of private owners is the source of the vast inequalities in contemporary capitalism, social ownership in a market economy would resolve the major cause of social inequality and its accompanying social ills.^[25] Weyl and Posner argue that private property is another name for monopoly and can hamper allocative efficiency. Through the use of taxation and modified Vickrey auctions, they argue that partial common property ownership is a more efficient and just way to organize the economy.^[26]

The justifications for private property rights have also been critiqued as tools of empire that enable land appropriation.^[27] According to academic commentator Brenna Bhandar, the language implemented in property legislation dictates colonized peoples as unable to effectively own and utilize their land.^[27] It is suggested that personal rights are interchangeable with property rights; therefore communities that utilize communal methods of land ownership are not equally validated by private property ideals.^[28] It is also argued by critical race theorist Cheryl Harris that race and property rights have been conflated over time, with only those qualities unique to white settlement recognized legally.^[29] Indigenous use of land, focusing on common ownership, is distinguished from private property ownership and Western understandings of land law.^[30]

References

[1]
McConnell, Campbell; Brue, Stanley; Flynn, Sean (2009). Economics. Boston: Twayne Publishers. p. G-22. ISBN 978-0073375694.
[2]
Gregory and Stuart, Paul and Robert (2013). The Global Economy and its Economic Systems. South-Western College Pub. p. 30. ISBN 978-1285055350. There are three broad forms of property ownership – private, public, and collective (cooperative).
[3]
Zimbalist, Andrew; Sherman, Howard J.; Brown, Stuart (October 1988). Comparing Economic Systems: A Political-Economic Approach. Harcourt College Pub. pp. 6–7. ISBN 978-0-15-512403-5. Pure capitalism is defined as a system wherein all of the means of production (physical capital) are privately owned and run by the capitalist class for a profit, while most other people are workers who work for a salary or wage (and who do not own the capital or the product).
[4]
Bertrand Badie; Dirk Berg-Schlosser; Leonardo Morlino (2011). International Encyclopedia of Political Science. Sage Publications. p. 2132. ISBN 978-1412959636. Private property cannot exist without a political system that defines its existence, its use, and the conditions of its exchange. That is, private property is defined and exists only because of politics.
[5]
, encyclopaedia.com
[6]
Garnsey, Peter (2007). Thinking about Property: From Antiquity to the Age of Revolution. Ideas in Context. Vol. 90. Cambridge University Press. p. 1. ISBN 978-1139468411. Retrieved 2018-08-28. The defense of private property has been a feature of philosophical, theological and legal discourse from antiquity to the present day. [...] I begin with Plato's thoughts on property in the Republic [...].
[7]
The Meaning and Definition of "Property" in Seventeenth-Century England, by G. E. Aylmer, 1980. Oxford University Press. Past and Present, No. 86 (Feb. 1980), pp. 87–97.
[8]
Compare: Bertrand Badie; Dirk Berg-Schlosser; Leonardo Morlino (2011). International Encyclopedia of Political Science. SAGE Publications, Inc. p. 2132. ISBN 978-1412959636. Oliver Letwin, a British conservative theorist, observed that the private sector had to be invented. This occurred with the great European trading companies, such as the British and Dutch East India companies, founded in the 17th century. Notions of property before the Renaissance assumed that different actors had different relations to the same property.
[9]
Thompson, Paul B (2014). "agriculture". In John, Barry (ed.). International Encyclopedia of Environmental Politics. Routledge. p. 8. ISBN 978-1135554033. Retrieved 2014-08-05. [D]ebates [on enclosure] […] laid down many of the basic terms for political debate about private property, and especially property in land.
[10]
Property Rights in the History of Economic Thought: From Locke to J.S. Mill, by West, Edwin G. 2001. Property Rights: Cooperation, Conflict, and Law, ed. Terry Lee Anderson and Fred S. McChesney, Princeton University Press, 2003, Ch. 1 (pp. 20–42).
[11]
Fukuyama, Francis (1992). The End of History and the Last Man (PDF). New York: The Free Press (A Division of Macmillan, Inc.). p. 44. ISBN 0-02-910975-2.
[12]
Rosser, Jr ., J. Barkley; Rosser, Marina V. (2004). Comparative economics in a transforming world economy (PDF). Cambridge, Massachusetts: The MIT Press. p. 9. ISBN 0-262-18234-3. Retrieved 29 May 2026.
[13]
Mises, Ludwig von (1935) [1920]. Hayek, F.A. (ed.). Economic Calculation in the Socialist Commonwealth. London: George Routledge & Sons. pp. 52–53. ISBN 0-945466-07-2. {{cite book}}: ISBN / Date incompatibility (help)
[14]
O'Hara, Phillip (2003). Encyclopedia of Political Economy, Volume 2. Routledge. pp. 782–783. ISBN 0415241871. The derivation of natural moral theory has provided the foundation for the use of economic theory to support specific ideological viewpoints. The main strength of the legitimating role of economic theory is that it allows one set of ideological viewpoints to posture as if their conclusions were unbiased scientific conclusions, while those opposing them were merely expressing their value-laden opinions. At its apex, this tendency has justified laissez-faire economic policies as if they were based on natural laws. Always behind the legitimization activities of economists is the belief that markets are 'natural' institutions and market outcomes are natural outcomes, and the institutions necessary for markets, such as private property rights, are 'natural rights'.
[15]
Connell, Shaun. "Property Rights 101: The Foundation of Capitalism Explained". Capitalism Institute. Archived from the original on 29 October 2012. Retrieved 25 October 2012.
[16]
The Political Economy of Socialism, by Horvat, Branko. 1982. Chapter 1: Capitalism, The General Pattern of Capitalist Development (pp. 15–20)
[17]
ZERA (2013). "The Socialist Calculation Debate". economictheories.org. Retrieved 2020-03-21.
[18]
"Property Rights and Capitalism" (PDF). Archived (PDF) from the original on 2018-04-22. Retrieved 2018-03-18.
[19]
"Property Law 440" (PDF). Archived (PDF) from the original on 2018-11-13. Retrieved 2018-09-28.
[20]
Gewirth, Alan. (1996). The Community of Rights. University of Chicago Press. p. 168
[21]
Capital, Volume 1, by Marx, Karl. From "Chapter 32: Historical Tendency of Capitalist Accumulation": "Self-earned private property, that is based, so to say, on the fusing together of the isolated, independent laboring-individual with the conditions of his labor, is supplanted by capitalistic private property, which rests on the exploitation of the nominally free labor of others, i.e., on wage-labor. As soon as this process of transformation has sufficiently decomposed the old society from top to bottom, as soon as the laborers are turned into proletarians, their means of labor into capital, as soon as the capitalist mode of production stands on its own feet, then the further socialisation of labor and further transformation of the land and other means of production into socially exploited and, therefore, common means of production, as well as the further expropriation of private proprietors, takes a new form. That which is now to be expropriated is no longer the laborer working for himself, but the capitalist exploiting many laborers."
[22]
"Glossary of Terms". Marxists Internet Archive. Archived from the original on 1 June 2023. Retrieved 2 March 2017.
[23]
Arnold, Scott (1994). The Philosophy and Economics of Market Socialism: A Critical Study. Oxford University Press. p. 50. ISBN 978-0195088274. Though socialists have disagreed with Marx about how to conceptualize the notion of class, about the dynamics of class societies, and indeed about a whole host of other matters, most socialists seem to be broadly sympathetic to his views about what is wrong with the capitalist (free enterprise) economic system and, by implication, capitalist society ... Marx's critique attributes two systemic evils to capitalism's economic system: alienation and exploitation.
[24]
O'Hara, Phillip (2003). Encyclopedia of Political Economy, Volume 2. Routledge. p. 1135. ISBN 0415241871. Property income is, by definition, received by owning property ... Since such income is not an equivalent return for any productive activity, it amounts to an entitlement to a portion of the aggregate output of others' productive activity. The workforce produces output but surrenders part of it to people who have nothing directly to do with production. Arguably, this occurs by a social system to which those in the workforce have never given their full consent, i.e. that of private property. Alternatively, it occurs by a structure of power to which the workforce is subject: property income is the fruit of exploitation. The fact that it is essential to capitalism makes the latter a class system akin to such other historical cases as slavery and feudalism.
[25]
Yunker, James (1977). "The Social Dividend Under Market Socialism". Annals of Public and Cooperative Economics. 48 (1): 93–133. doi:10.1111/j.1467-8292.1977.tb01728.x. From the human point of view, the return paid to non-human factors of production is unearned and equivalent to a gift of nature. It is the personal appropriation of this gift of nature by a small minority of society under contemporary capitalism that establishes the ethical unworthiness of capitalism and the desirability of a socialist transformation...The employment of capital instruments and natural resources in economic production requires no personal hardship or exertion from any human being. The economic services provided by these factors of production are not corporeally inherent in human beings. The opposite is true of labor services, which can only be provided through the physical and mental activity of human beings...the really grossly exaggerated personal incomes in society are dominated by property income, and this source of inequality would be abrogated by the equalization of property income distribution.
[26]
Posner, A.; Glen Weyl, E. (2018). "Property is Monopoly: Creating a Competitive Market in Uses Through Partial Common Ownership". Radical Markets: Uprooting Capitalism and Democracy for a Just Society. Princeton: Princeton University Press.
[27]
Bhandar, Brenna (2018). "Introduction: Property, Law, and Race in the Colony". Colonial Lives of Property. Duke University Press.
[28]
(Cosgel, Murray, and Miceli 1997; Kuhlmann 2000, 162–65; Metcalf 1995). From Cooper, Davina (Summer 2007). "Opening Up Ownership: Community Belonging, Belongings, and the Productive Life of Property". Law & Social Inquiry. 32 (3): 625–644.
[29]
Harris, Cheryl (June 1993). "Whiteness as Property". Harvard Law Review. 106 (8): 1707–1791. doi:10.2307/1341787. JSTOR 1341787.
[30]
Keenan, Sarah (2010). "Subversive Property: Reshaping Malleable Spaces of Belonging". Social & Legal Studies. 19 (4): 423–439. doi:10.1177/0964663910372175. S2CID 73565524. Archived from the original on 2023-09-06. Retrieved 2023-06-23.

Private property

History

Legal and real-world aspects

Theory

Criticism

See also

References

Further reading

External links

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