Property Rights

Property is best understood as a set of rights (or entitlements) to assets. Although most definitions of property follow the Roman tradition in emphasizing [Page 755]the relationship between people and things, it is more accurate to think of property rights as a complex group of relationships among people with respect to things, because property rights impose obligations on nonowners as well as conferring rights (and sometimes obligations) on owners.

Property has taken on a wide range of forms across cultures and across time. In all its forms, however, property is a political institution. It allocates authority over assets to individual people, groups, or legal entities comprised of individuals. Those who possess that authority have greater freedom of action within the range or sphere of their authority than they do outside it as well as greater freedom (within that same sphere) than others.

Property is distinct from possession. Possession is a de facto relationship of control between people and things that need not entail recognition or acceptance by others. Property is a relationship of control, whether legally codified or not, that commands a significant degree—not necessarily complete—of recognition and respect by others.

The most fundamental distinction between forms of property is that between common and private ownership. The Roman historian Tacitus contrasted the system of private property that was developed in Roman society with the German practice of common ownership of land and centralized distribution of livestock. Although the practice of common ownership with respect to some things is culturally widespread and historically persistent, in modern usage the term property is usually applied to private property.

Three attributes define a distinctively modern form of private property that is widely viewed as the standard form and sometimes taken to be the only “true” or “legitimate” form of property. In this form, the kind of entitlement that we normally call a property right entails: (a) the right to make use of the things over which one has ownership more or less as one sees fit, (b) the right to exclude others from using the things one owns, and (c) the right to alienate the things one owns by transferring one's entitlements to those things to others.

These three attributes of this form of property rights are distinct from one another conceptually and separable from one another in practice. Moreover, each of these three attributes can be more or less absolute. For example, an owner may be entitled to absolute discretion in the way in which he or she uses his or her property, or the owner's right to use may be subject to limitations or regulations imposed by others. The same variability in an owner's discretion—in the “absoluteness” of ownership rights—applies to the right to exclude others and the right to transfer one's property to others.

The range of things over which property rights have been held is vast. It is likely that historically, the first substantial kind of asset over which property rights were held was livestock. Roman law, which is a major source of concepts and legal provisions regarding property, restricted the scope of ownership to tangible things, whether movable or immovable, and even today many people associate the notion of property closely with tangible things, especially land. For centuries, land was the preeminent object over which property rights were asserted and it remains one of the most important objects of property claims. During the past several centuries, however, intellectual property (in forms such as ownership of patents and copyrights) and financial assets have come to rival and perhaps surpass land and other tangible assets in importance as objects of property rights. It is also important to remember that for nearly the whole of human history, human beings have been the objects of legally recognized property rights, and that even today, in the absence of formal legal recognition, many human beings are subject to de facto virtual ownership.

...