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22/23Property Law
THE CONCEPT OF PROPERTY
Section 1. THE UTILITARIAN THEORY
Justifications of property on utilitarian grounds are at least as old as David Hume, the
eighteenth-century Scottish empirical philosopher. In Hume’s treatment, the utilitarian argument
is at once an answer to Locke—property is not a natural right but a product of civil society—and
a justification of property—civil society needs a concept of property in order to operate. See L.
BECKER, PROPERTY RIGHTS: PHILOSOPHIC FOUNDATIONS 57–64 (1970); Berry, Property and
Possession: Two Replies to Locke-Hume and Hegel, in PROPERTY 89–95 (J. Pennock & J.
Chapman eds., Nomos No. 22, 1980). The following extracts expand on Hume’s ideas in two
different directions: the first from the great utilitarian philosopher Jeremy Bentham, emphasizes
how dependent property is on society; the second, by a modern economist, emphasizes how
important property is for maximizing the wealth of society: [p*133]
J. BENTHAM, THEORY OF LEGISLATION
111–13 (R. Hildreth ed. 1864)1
The better to understand the advantages of law let us endeavor to form a clear idea of
property. We shall see that there is no such thing as natural property, and that it is entirely the
work of law.
Property is nothing but a basis of expectation; the expectation of deriving certain advantages
from a thing which we are said to possess, in consequence of the relation in which we stand
towards it.
There is no image, no painting, no visible trait, which can express the relation that constitutes
property. It is not material, it is metaphysical; it is a mere conception of the mind.
To have a thing in our hands, to keep it, to make it, to sell it, to work it up into something else;
to use it-none of these physical circumstances, nor all united, convey the idea of property. A piece
,of stuff which is actually in the Indies may belong to me, while the dress I wear may not. The
ailment which is incorporated into my very body may belong to another, to whom I am bound to
account for it.
The idea of property consists in an established expectation; in the persuasion of being able to
draw such or such an advantage from the thing possessed, according to the nature of the case.
Now this expectation, this persuasion, can only be the work of law. I cannot count upon the
enjoyment of that which I regard as mine, except through the promise of the law which
guarantees it to me. It is law alone which permits me to forget my natural weakness. It is only
through the protection of law that I am able to inclose a field, and to give myself up to its
cultivation with the sure though distant hope of harvest.
But it may be asked, What is it that serves as a basis to law, upon which to begin operations,
1 First edition 1811.
S614 CONCEPT OF PROPERTY Ch. 7
when it adopts objects which, under the name of property, it promises to protect? Have not men,
in the primitive state, a natural expectation of enjoying certain things,-an expectation drawn from
sources anterior to law?
Yes. There have been from the beginning, and there always will be, circumstances in which a
man may secure himself by his own means, in the enjoyment of certain things. But the catalogue
of these cases is very limited. The savage who has killed a deer may hope to keep it for himself,
so long as his cave is undiscovered; so long as he watches to defend it, and is stronger than his
rivals; but that is all. How miserable and precarious is such a possession- If we suppose the least
agreement among savages to respect the acquisitions of each other, we see the introduction of a
principle to which no name can be given but that of law. A feeble and momentary expectation
may result from time to time from circumstances purely physical; but a strong and permanent
expectation can result only from law. That which in the natural state was an almost invisible
thread, in the social state becomes a cable.
Property and law are born together, and die together. Before laws were made, there was no
, property; take away laws, and property ceases.
As regards property, security consists in receiving no check, no shock, no derangement to the
expectation founded on the laws, of enjoying such and [p*134] such a portion of good. The
legislator owes the greatest respect to this expectation which he has himself produced. When he
does not contradict it, he does what is essential to the happiness of society; when he disturbs it, he
always produces a proportionate sum of evil.
DEMSETZ, TOWARD A THEORY OF PROPERTY RIGHTS
57 (79) AM. ECON. REV. (Papers & Proceedings) 347 (1967).
When a transaction is concluded in the marketplace, two bundles of property rights are
exchanged. A bundle of rights often attaches to a physical commodity or service, but it is the
value of the rights that determines the value of what is exchanged. Questions addressed to the
emergence and mix of the components of the bundle of rights are prior to those commonly asked
by economists. Economists usually take the bundle of property rights as a datum and ask for an
explanation of the forces determining the price and the number of units of a good to which these
rights attach.
In this paper, I seek to fashion some of the elements of an economic theory of property rights.
. . . If the main allocative function of property rights is the internalization of beneficial and
harmful effects, then the emergence of property rights can be understood best by their association
with the emergence of new or different beneficial and harmful effects. . . .
I do not mean to assert or to deny that the adjustments in property rights which take place need
be the result of a conscious endeavor to cope with new externality problems. These adjustments
have arisen in Western societies largely as a result of gradual changes in social mores and in
common law precedents. At each step of this adjustment process, it is unlikely that externalities
per se were consciously related to the issue being resolved. These legal and moral experiments
may be hit-and-miss procedures to some extent but in a society that weights the achievement of
efficiency heavily, their viability in the long run will depend on how well they modify behavior to
accommodate to the externalities associated with important changes in technology or market
values. . . .
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