Revue Européenne du Droit
Liberal Property and Just Markets
Issue #4
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Issue #4

Authors

Hanoch Dagan

Revue européenne du droit, Summer 2022, n°4

Property is one of the core building blocks of the market economy. Therefore, assessing the current as well as any possible reconfiguration of the market necessarily invokes, explicitly or implicitly, a conception of property. Too often, however, both defenders of existing markets and their critics take this premise of their accounts for granted. Both tend to implicitly rely on what in property theory is known as the Blackstonian conception, in which ownership implies “sole and despotic dominion.” 1 Property, however, need not and should not be shaped around this (in)famous understanding. 

In this short Essay I offer a sketch of a competing conception of property, which I develop in my new book, A Liberal Theory of Property 2 . Property on this view is an autonomy-enhancing institution; one of the major legal tools that serve the primary commitment of every liberal polity to secure and facilitate people’s foundational right to self-determination (not to be confused with their negative liberty). As such, liberal property requires law to facilitate in each important area of human action and interaction a diverse set of stable frameworks of private authority (property types, as I call them) so that people can set up – on their own or with the cooperation of others – long-term plans. Property can be legitimate, I argue, if (1) the private authority constituted by these property types is properly circumscribed in line with their service to people’s autonomy; (2) they all comply with relational justice; and (3) law’s background regime both assures ownership for everyone and secures to us all the material, social, and intellectual preconditions of self-authorship.

The Blackstonian conception of property fits – or, more precisely, is presupposed by – certain visions of the market. But once it is supplanted by this conception of liberal property, these attendant visions, which perceive markets in either libertarian (or “neoliberal”) or welfarist terms, no longer follow. In their stead a genuinely liberal conception of the market emerges, in which markets are structured so as to serve their liberal, namely: autonomy-enhancing, telos.

Neither the liberal conception of property nor the liberal conception of the market is a panacea for at least two reasons. First, as noted, liberal property and liberal markets necessarily rely on a robust autonomy-enhancing background regime. This means that true friends of property and the market must be committed to safeguard the continuous functioning of this regime. Furthermore, while the liberal conceptions of both property and the market present themselves as charitable interpretations of the laws in modern-day market societies, these laws fall short – at times quite significantly short – of these ideals. This means that rather than reaffirming the status quo, these liberal conceptions point out to these pitfalls and offer directions for their remediation. 

The challenge on both fronts is admittedly awesome. For the vast majority of people here and now property and markets generate and perpetuate inequality and dependence. Critics of property and markets are thus correct to resist the quietism that threatens overfriendly accounts. But they should also be careful not to miss out on the great humanistic promise of genuinely liberal property and markets. These liberal ideals can and should be our lodestar for critically and constructively examining our disturbing reality by providing a normative vocabulary for evaluating central doctrines and offering directions for urgent reforms.

Liberalism

The terms “liberal” and “liberalism” have different connotations in different intellectual and public settings, so I should begin by briefly clarifying what I take them to mean. Liberalism, in my understanding, is premised on the conviction that people – all people – are entitled to act on their capacity “to have, to revise, and rationally to pursue a conception of the good.” 3 They deserve to have some control over their destiny, “fashioning it through successive decisions through their lives.” 4 Free individuals should be able to plot their own course through life – to have some measure of self-determination 5 .

To be sure, taken to its extreme, a conception of self-authorship (or self-determination; I use these terms interchangeably) in which one constructs in advance a “narrative arc” for one’s life is a form of unfreedom. But that does not lead to the conclusion that freedom requires making freestanding decisions at every fork in the road. Our life story is neither a script fully written in advance nor a set of unrelated episodes. Rather, autonomous people characteristically make decisions in a piecemeal fashion, choosing both long-term and short-term pursuits. Self-determination allows – to some extent even requires – opportunities for people to alter their plans and even, sometimes, to replace them completely.

Autonomy requires appropriate mental abilities. It also necessitates a measure of independence. But autonomy is not guaranteed by merely a structure of negative rights 6 . As Joseph Raz famously argued, autonomy is also dependent upon both material conditions and a sufficiently heterogeneous inventory of alternatives 7 . This lesson explains why in a liberal polity people are entitled to a system of law supportive of their ability to shape a life they can view as their own, rather than merely one that respects their capacity for uncoerced choice.

Liberal Property

Property is intimately related to autonomy, because property is not just about provision, although that is also important. Rather, property is first and foremost about having some authority over resources, namely: the normative power to determine what others may or may not do with the resource. This means that property both empowers people and disables them, enhances their self-determination while also rendering them vulnerable. Therefore, the liberal conception of property focuses on both property’s autonomy-enhancing service and the vulnerabilities it generates.

First, the happy side. Property is conducive to people’s self-determination because, as noted, self-determination is an intertemporal achievement; it consists in planning and carrying out projects, which requires a temporal horizon of action. Property follows suit by conferring upon people some measure of private authority over resources; a normative power to determine what others may or may not do with their resources. This temporally-extended authority over things (both tangible and intangible) dramatically affects people’s ability to plan and carry out meaningful projects, either on their own or with the cooperation of others.

Liberal law further augments property’s autonomy-enhancing potential because it constitutes a variety of stable frameworks of interpersonal cooperation, that is: different property types which support divergent forms of interpersonal relationships that people can choose from. Thus, properly configured, property law functions as an empowering device for self-authorship, enabling people to act upon their own goals and values, their objectives, and their life plans. By conferring on individuals the power to invoke differing property types and to employ them in the service of their life plans, a liberal property law makes a crucial contribution to people’s ability to realize their right to self-authorship.

Alas, indispensable as it is, this autonomy-enhancing service is also the source of property’s daunting legitimacy challenge. By proactively empowering owners, property law generates new normative powers, which imply new liabilities. Because it is the law which renders non-owners vulnerable to such powers, law must be accountable to the subjects of the powers it instantiates. Property’s legitimacy challenge is therefore onerous. With no good justification, law’s demand that non-owners defer to owners’ authority regarding what to do with an object seems arbitrary and indeed unjust. 

*    *    *

The ambition of A Liberal Theory of Property is to show that this drama of property need not be a zero-sum game. For this to be the case, I argue, property’s architecture must closely follow its justification.

Liberal property justifies the private authority it vests on owners only insofar as it is indeed critical to people’s self-determination, which the state is obligated to facilitate and everyone must respect. Non-owners are justifiably subjected to these powers of property because as such – that is, as crucial means of self-determination – these powers deserve respect from our fellow human beings due to our foundational right of reciprocal respect for self-determination.

This means, however, that the legitimacy of any given property system at any given time and place hangs on its performance as to property’s autonomy-enhancing telos. A genuinely liberal property law proactively augments people’s opportunities for both individual and collective self-determination, while carefully restricting their opportunities for interpersonal domination. This is why the notion of private authority, which fairly characterizes property simpliciter, cannot possibly exhaust the idea of liberal property. 

*    *    *

This complicated nexus between property and self-determination also implies that liberal law cannot adopt the familiar “division-of-labor approach,” in which property is supplemented by a background mechanism of tax-and-redistribution that is supposed to take care of its autonomy-reducing potential. To be sure, such a background regime, which secures the fundamental preconditions of personal self-determination, such as health, education, and means of subsistence, is (as I argue shortly) indispensable for property’s legitimacy. But it is insufficient. Because property has an irreducible role in structuring people’s interpersonal interactions, which in turn have a freestanding significance in their self-determination, a genuinely liberal law must shape its property regime in accordance to property’s autonomy-enhancing telos.

Thus, a liberal property system cannot be contented with one form of property. In order to foster autonomy-enhancing pluralism, property law offers a variety of frameworks for both individual and communal self-determination from which prospective owners can choose. 

By the same token, a truly liberal property law is also always attentive to the concerns of non-owners. It ensures both that no private authority can be claimed that is in excess of what is required for owners’ self-determination, and that such authority must be consistent with the self-determination of others 8

Hence, the three pillars of liberal property, which render it dramatically different from its Blackstonian counterpart: carefully delineated private authority, structural pluralism, and relational justice. 

Carefully Delineated Private Authority

The first, and maybe most dramatic, feature of liberal property, is that the private authority it confers on people is carefully delineated, so that it is properly tailored to its service to people’s autonomy. There are two aspects to this constitutive element of liberal property law. 

The first addresses the concern of under-inclusiveness, and thus requires that property’s empowerment potential must not be limited to some. This requirement implies that property law relies on a robust background regime, which should guarantee everyone the material, social, and intellectual preconditions of self-authorship. 

Such a background regime is indispensable because property’s justificatory challenge is not limited to the moment of its creation. Rather, it continuously resurfaces, haunting property throughout its life in law. The reason for this is partly due to certain features of property – notably accession – which imply that property leads to more property and thus tends to generate greater inequality and vulnerability; and it is also due to the dynamics of the market, which further exacerbate this predicament.

Reference to this background regime does not mean that a theory of liberal property is a theory of everything just, of course. But because this onerous justificatory challenge is property’s starting point, liberal property does point out to some of the features of a just background regime necessary for property’s legitimacy. 

Thus, to give one example, since – as with money and utility – the marginal autonomy-enhancement of each additional unit of property is likely to be diminishing, liberal property requires law to impose the costs of the ongoing maintenance of this background regime on those who are particularly well-off. The duty of the well-off to cover these costs is not only grounded in their (Rawlsian) obligation to support just institutions; it is also a precondition to the legitimacy of their own property rights. 

*    *    *

The second feature of the requirement that property’s private authority be carefully delineated addresses the worry of over-inclusiveness, namely: the concern of generating forms of private authority that cannot be justified by reference to their service to self-determination. It thus prescribes that owners’ private authority should be circumscribed in line with its potential contribution to owners’ self-determination.

In other words, in a truly liberal regime, property’s telos is important not only for justifying owners’ authority, but also for delimiting its scope and prescribing its content. Thus, where property’s contribution to autonomy is indirect – as in commercial property types – owners must not have an exacting private authority.

This prescription entails dramatic implications for anti-trust law: it implies its reorientation from focusing on consumer welfare to targeting concentrations of private authority and capital accumulation. 

A similarly critical upshot reconceptualizes the content of ownership of the means of production and thus the notion of the workplace. Employers’ ownership of the means of production is conventionally understood to entail the management’s power to govern, to justify a hierarchical structure of employees’ subordination, and to preclude claims for worker’s voice. But for liberal property, all these inferences are both wrong and misleading. This lesson will be critical to my remarks on labor markets. 

Structural Pluralism

Property law as we know it does not follow the monistic picture of a Blackstonian dominion. Rather, law persistently offers a deeply heterogeneous inventory of relatively stable property types. Different types are governed by differing animating principles, so that each offers a distinctive balance of property’s intrinsic and instrumental values: independence, personhood, community, and utility.

For liberal property, this observation is not a discretionary add-on, but rather an essential design principle. Property should be structurally pluralistic, because this architecture is necessary for property to fulfill its autonomy-enhancing function. We should cultivate the heterogeneity of our existing property law since a multiplicity of property types facilitates the rich diversity of interpersonal relationships needed for adequate self-determination. 

Such a repertoire of property types creates a menu of viable opportunities for both individual and collective self-determination. Law’s facilitation of this pluralism is crucial, because collective action problems, bounded rationality, and cognitive failures imply that a lack of proactive legal support undermines many types of interactions, and, thus, people’s ability to pursue their own conception of the good.

Liberal property law is therefore appropriately heterogeneous, and it pays close attention to the design of these property types’ inside affairs, and thus to their governance regimes. Such governance mechanisms are needed in order to facilitate a variety of forms of interpersonal relationships in ways not possible without such enabling legal infrastructure. This is particularly true for common property types, which offer important contributions – both instrumental and intrinsic – to people’s self-determination. 

Indeed, liberal property requires law to instantiate and support, for each major category of human action and interaction, a diverse repertoire of property types, each governed by a distinct animating principle, meaning a different value or balance of values.

The ideal form of liberal property law secures intra-sphere multiplicity, namely: enough and sufficiently distinctive property types within each familiar category of human activity. (Think of condos, co-ops, common-interest communities, joint tenancies, leaseholds, and trusts as examples of the existing inventory of land-ownership.) For property types to be autonomy-enhancing, they should be partial functional substitutes for each other. They need to be substitutes because choice is not enhanced with alternatives that are orthogonal to each other; and their substitutability should not be too complete because types that are too similar also do not offer meaningful choice.

Relational Justice

Just as property’s structural pluralism relies on its autonomy-enhancing telos, so do the many manifestations of liberal property’s third pillar of relational justice – namely: reciprocal respect for self-determination.

Thus, fair housing rules that prohibit discrimination in the sale or rental of residential dwellings are not external to property law, as they are often presented. Interpersonal discriminatory practices are objectionable per se, regardless of whether the state takes care of its obligations of distributive justice and democratic citizenship. Refusing to consider a would-be buyer of a dwelling merely because of her skin color, for example, fails to respect the individual on her own terms. Property law must not authorize social relationships that reject the equal autonomy of the person subject to discrimination. 

Accordingly, liberal property follows the prescription of relational justice and sets limits on owners’ right to exclude. Relational justice cannot be adequately grasped within the formal conception of equality that underpins Blackstonian property, which abstracts away the particular features distinguishing one person from another. Respecting the other’s self-determination necessarily requires respecting their characteristics, constitutive choices, and circumstances, thus summoning a substantive, rather than formal, conception of equality.

By the same token, reciprocal respect for self-determination is not limited to a negative duty of non-interference that is the correlative of others’ right to independence. Respect for others’ self-determination is hollow without some attention to their predicament. This is what explains and indeed justifies many of the affirmative duties and burdens that accompany ownership in numerous contexts. 

Notice that again all these implications of law’s commitment to relational justice are not exogenous impositions on liberal property; quite the contrary. Owners’ claim of legitimate private authority and recruitment of the coercive power of the state for its vindication is premised, as I’ve contended, on people’s obligation to reciprocal respect for one another’s self-determination. Therefore, compliance with this obligation is the sine qua non for property’s legitimacy. Relational justice is thus part and parcel of property’s liberal raison d’être.

Just Markets

The three pillars of liberal property, which I’ve just sketched, undermine the Blackstonian conception of property and its concomitant conceptions of the market. In A Liberal Theory of Property, I attempt to go a bit further than that. Building also on my work-in-progress on liberal contract 9 , this book offers a preliminary vision of the market, which does not rely on markets’ putative efficiency and is surely divorced from its neoliberal understandings. Just like its building blocks of property and contract, I argue, the market can be legitimate, and can even be just, if – but only if – it is structured as to best enhance its contribution to autonomy.

Markets are complex social institutions heavily dependent on, if not strictly constituted by, a thick legal infrastructure. This infrastructure facilitates the regular production and distribution of goods and services through contracts, in which money, property rights over goods, and entitlements regarding services are transferred between agents. Markets are potentially conducive to people’s self-determination, because they allow individuals the mobility that is a prerequisite for self-determination, and they expand the options available to individuals to function as the authors of their own lives.

Markets, more specifically, enable the liquidation of existing holdings and thus facilitate people’s right to exit: to withdraw or refuse to further engage, to dissociate, to cut themselves out of a relationship with other persons. Exit, in turn, is crucial to autonomy because open boundaries enable geographical, social, familial, professional, and political mobility, which are prerequisites for a self-directed life. 

Markets further extend this autonomy-enhancing function by broadening the scope of choices between differing projects and ways of life. They facilitate people’s ability to legitimately enlist one another in the pursuit of private goals and purposes and create a structure that multiplies the alternatives people can choose from. Genuinely liberal (that is: autonomy-based) markets would enable the individual to act – on her own or with the cooperation of others – upon her own goals, values, objectives, and her plan of life, without subordination to any other individual or subjection to any collective decision-making procedure. 

*    *    *

Markets with the primary goal of autonomy enhancement will have several characteristics, and (as usual) my aim is to draw the liberal ideal of the market that can serve as our lodestar of criticism and reform. So let me conclude this Essay with a brief description of what a properly liberal market looks like. 

Autonomy-enhancing markets must allow universal participation since exclusion and discrimination would undermine their raison d’être. They should also set limits on the power to alienate whenever it erodes – as, for example, some noncompetes do – our ability to rewrite our life story and start anew. Such markets should proactively ensure meaningful choices in each major sphere of human action and interaction. However, this injunction of intra-sphere multiplicity must be curtailed where cognitive, behavioral, structural, and political economy reasons imply that more choice may actually reduce autonomy 10

Moreover, when markets are structured to serve autonomy, market relationships are governed by rules that require reciprocal respect for self-determination, meaning that market interactions must be governed by relational justice. Furthermore, since preference satisfaction is understood to be instrumental to the markets’ ultimate value of autonomy, the law of the market must avoid the commodification of people and interpersonal relationships. It should thus employ, in some subsets of the settings it governs, the techniques of incomplete commodification, which ensure that these market interactions retain a personal aspect.

These last prescriptions are particularly pertinent to labor markets, which are often – and justifiably – presented as Exhibit A to the injustices property and markets generate and perpetuate. They imply that the law of the market must promote and support workers’ collective bargaining as well as ensure workers’ inalienable rights dealing with topics such as workplace safety, minimum wage, working hours, and non-discriminatory treatment. They also require that the authority of owner-employers must not include excessive powers that may impinge upon these basic workers’ rights. For example, ownership of factories, farms, and other types of both tangible and intangible property that serve as means of production must not include a right to exclude labor organizers and activists, insofar as such an exclusion might jeopardize the workers’ right to unionize.    

Finally, just as with the idea of liberal property, the idea of a liberal market is particularly careful not to marginalize the broader picture, in which the justice of the market is partially dependent upon a background regime that guarantees the conditions of individual self-determination. Rather than striving to exclusivity, the law of the market, in this view, is attuned to its distinct autonomy-enhancing tasks of enabling mobility and expanding choice, while acknowledging the indispensable role of other social institutions in enabling these vital functions. 

*    *    *

The success of liberal property is by no means guaranteed. But it is not bound to fail. I understand the caution; both property and liberalism have failed us before, so some suspicion is in place. But property is not going anywhere and its liberal ideal is empowering. If failure is not preordained, then a jurisprudence of hope may well be in place.

Notes

  1. William Blackstone, Commentaries on the Laws of England *2 (Univ. of Chi. ed. 1979) (1765-69).
  2.  Hanoch Dagan, A Liberal Theory of Property (Cambridge University Press, 2021).
  3. John Rawls, Justice as Fairness: A Restatement 19 (2001).
  4. Joseph Raz, The Morality of Freedom 369 (1986).
  5. This commitment requires that we respect each person’s right to self-authorship; it does not denigrate a choice of a non-deliberative life, and it emphatically does not suggest that such respect is conditioned upon the accomplishment of a worthy life plan.
  6. See H.L.A. Hart, Between Utility and Rights, 79 Colum. L. Rev. 828, 836 (1979).
  7. See Raz, supra note 4, at 372, 398.
  8. Both prescriptions require the application of qualitative judgment and both must (as is usually in law) apply to broad categories. See further Dagan, supra note 2, at 128-42, 159-73.
  9. See Hanoch Dagan & Michael Heller, Choice Theory: A Restatement in Research Handbook on Private Law Theory 112 (Hanoch Dagan & Benjamin Zipursky eds., Edward Elgar 2020).
  10. On these substantive limits on multiplicity (and why they must be considered), see Hanoch Dagan & Michael Heller, The Choice Theory of Contracts 128-30 (2017).
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