Private Rights to Property: Property Rights

Private Rights to Property
by John W. Allen

. . . no person shall be . . . deprived of life, liberty, or property without due process of law; nor shall private property be taken for public use, without compensation.
U.S. Constitution, Amendment V, 1791

The theory of the Communists may be summed up in the single sentence: Abolition of private property.
Communist Manifesto, 1848

In its broadest meaning, property is commonly said to include anything that people value–physical objects such as land, buildings, automobiles, household furnishings, jewelry, books, clothing, machinery and inventories; financial assets such as bank balances, stocks, bonds and business equities; and our selves, our labor skills, intellectual powers and faculties. But the term property also is used to refer to the rights to use, enjoy and transfer property. These rights usually are called property rights, and thus the terms property and property rights often are used interchangeably. (See end note #2.)

Property rights in effect are rules and bounds that govern interpersonal relations with respect to objects of value. They are socially acknowledged rules of action. Ownership of property is associated with three rights–the right to use the property, the right to enjoy or bear the consequences of use and the right to transfer rights. Let us examine these rights individually.

The right to use an object means the owner determines if, when, where and how an item shall be used. In the case of an automobile, whether it is used or kept in the garage; where it will be driven, at what time, for how long and at what speed; the extent of its maintenance and all other aspects of use are decided exclusively by the owner. Such choices, of course, are constrained by the identical right of others to the exclusive use of their private property. For example, I may not park my auto in your yard without obtaining that right from you.

Second is the right to enjoy or bear the consequences of the selected use of property. For example, if a parcel of land yields a crop, the benefits that flow from this crop, whether in the form of consumption or cash, shall be captured by the owner alone. Of course, this right also means that if people use their resources in ways that are wasteful, the owners alone bear the loss.

Third is the right to transfer (dispose of) the rights to property to another. If owners of businesses wish to cease operation and sell their building, equipment, inventory, mailing lists, name and other assets of the enterprise, the terms of the transfer of their rights shall be determined only by their holders, i. e., parties to the exchange.

Such transfers need not be total or permanent. The lease of a residential dwelling is an example of the owner transferring to tenants only some rights for a specified period. Moreover, continued access to these rights is contingent on certain conditions. The tenants may have the right to occupancy, but they may be precluded from subleasing, housing pets or using the property as a place of business. Certainly, timely payment of the rent will be an important condition of continued occupancy.

To own property is to own a bundle of rights. Further, the exchange of goods is not so much trading objects as it is exchanging the bundle of rights to these objects. In everyday conversation it is common to refer to the bundle of rights as property rights, but by this expression we mean rights to property and not rights of property. Some argue that property rights conflict with human rights, but this is a false distinction because property has no rights; the only rights are those of humans to property. Avoid this verbal trap, and keep clear the precise meaning of property rights.

Ownership of Property Rights

Private property rights may be shared by more than one individual as in partnershipsand corporations.

Public property, by contrast, is controlled by agents of the government through the political process. Some public properties are reserved for exclusive use by government officials or employees. Examples are military installations, courthouses and post offices. Some public property is controlled by the government for direct use by the public at large. These communal properties are available to all users on a first-come, first-served basis. Streets, sewers, seashores, rivers, forests, parks and wildlife are examples.

Constraints on Property Rights

Some constraints on private property rights are formalized in law. Others areinformal, the result of custom or voluntary acceptance. Formal rules range from constraints on how property is used to outright prohibition of ownership. Examples of constraints are zoning, building codes, licensing, price controls and environmental and safety regulations. An easement providing government with access to utilities that traverse private property is another example. Private deed restrictions concerning design and size of dwellings, density and other features of land use are examples of formalized constraints arranged by voluntary associations and enforced by government. In most economies even rights to an individual’s own labor services are subject to limitations and may take many forms. Some examples are the prohibition of growing any or too much of certain crops, licensing requirements or otherwise limiting the number in certain occupations, migration and travel restrictions, minimum wages, minimum and maximum ages for working, maximum hours of work and specification of working-condition standards.

Constraints often outlaw the ownership of selected drugs and weapons. Consumption of alcohol by minors typically is prohibited. Discharging firearms within city limits usually is prohibited. In most contemporary societies, the ownership of one person by another person (slavery) is absolutely prohibited. Persons may not even voluntarily sell themselves into perpetual servitude. However, in recent years it has been possible (though within strictly defined guidelines) for persons to transfer parts of their bodies–blood, eyes, heart, kidney–or to sell or will their bodies to science.

Certain objects are precluded from private ownership in the name of the public interests. They are held in trust for the public at large, and their use is controlled by agents of government. Examples include some radio waves, some seashores, the continental shelf, some forests, minerals on public lands, some parks, some wildlife, the atmosphere and usually, though not always, rivers. Some of these are not privately owned because it is difficult to specify or uneconomic to enforce property rights to objects such as the atmosphere, running waters, the open sea and migratory wildlife such as whales and fish. These resources are deemed by the political process as common property and are not subject to private ownership.

Some private property rights enforcements are informal and may be nothing more than mutual acknowledgment among people as to what is neighborly or honorable. Even without threat of third-party enforcement, it is customary for neighbors to confine their pets, to avoid creating offensive odors and to select acceptable times for creating unavoidable disturbances from lawn mowers, power tools and parties. Bagging rather than burning leaves and the tidy disposal of refuse are common practices among neighbors. To behave otherwise invites reciprocal disregard for property rights and privacy and a breakdown of social harmony.

For many people an agreement or contract, whether oral or written, is to be honored–not because of the threat of sanctions but simply because it is right. While formalized contract laws protect the interest of trading parties, voluntary acknowledgment of the sanctity of a contract is another example of an important informal constraint on interpersonal behavior with respect to objects of value.

Controversy over the role of government in society and over public policies is often about the appropriate extent to which private rights to property shall be limited. Another source of heated controversy is proposed changes in the structure of property rights, changes that have profound effects on the social and economic lives of people and nations. The consequences of changes in the structure of property rights are important and far reaching.

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