Taming Property

Whoever wants to know what is hidden behind the law will discover, I fear, neither the absolute truth of a metaphysics, nor the absolute justice of a natural law.  He who lifts the veil and does not close his eyes, will only find the hideous face of the Gorgon of power staring at him.

Hans Kelsen ¹

A proper understanding of the concept of property is at the heart of the effort to develop A New Capitalism Through Law.  Law has a constitutive power ² , and the evolution of the legal notion of property has played a fundamental role in the development of liberalism and capitalism as governance systems ³ .  

Property, in the Lockean tradition, is treated as a spontaneous institution originating from labor ⁴ .  Most economists start their analyses of the development of a market economy with some notion of hunters and gatherers acquiring “property” by hunting rabbits or gathering berries.  Then the hunters and gatherers meet and barter.  They agree on the quantity of berries required to get one rabbit in exchange.  Then money is introduced in the system to facilitate transactions ⁵ . The market economy is born.  

With such a starting point, what “property” means is never really addressed.  It appears as being merely the possession of things: rabbits or berries, obtained via labor or exchanged via barter prior to the advent of the market economy with prices and money.  The whole development process is presented as being purely gradual and “natural”.

With rare exceptions, economists consign a secondary or epiphenomenal role to law in their analyses ⁶ .  The four major schools of economic thought (classical economics, neoclassical economics, Keynesianism, and new institutional economics) generally confuse property and possession ⁷ .  They treat as synonymous the de facto possession of things (what civil law lawyers call détention), the legitimate possession of things (what is called possession in civil legal systems) and property – the legal title to property.  Yoram Barzel goes as far as considering that « you own today even the apples you intend to steal from your neighbor’s tree tomorrow » ⁸ .  The existence of « economic property rights » is proclaimed and (no-doubt…) opposed to « legal property rights » ⁹ .  

For my purposes, these analyses are inherently limited; if not useless.  They ignore the historical fact that the evolution of the legal system has been instrumental in the institutionalization of market and now capitalist societies ¹⁰ .  This is particularly the case for the evolution of modern property which is one of the cornerstones of the legal system and of liberal and capitalist societies.  The key constitutional moment in this regard has been the institutionalization of the modern concept of property, at the end of the eighteenth century.  For France, the detailed study of Rafe Blaufarb is illuminating.  When the French Revolution of 1789 remade the property system, it:

“laid the foundations of France’s new constitutional order and crystallized modern ways of thinking about polities and societies.  This revolution in property brought about a Great Demarcation: a radical distinction between the political and the social, state and society, sovereignty and ownership, the public and the private.  … The Great Demarcation left a legacy that extends far beyond the history of the French Revolution.  It created a distinctly modern way of seeing.” ¹¹

In the old property system, what is understood today as prerogatives ¹² being either “public” or “private” were mixed ¹³ .  Most “private” property (real-estate especially) entailed public duties and many “public” offices could be purchased.  Most of the Old-Regime complex corporate system of intertwined “public” and “private” rights and duties was destroyed during the night of August 4^th, 1789, with the abolition of “privileges”.  A tabula rasa ensued ¹⁴ .  

Then came the necessity to build the institutional structure of a new society.  The revolutionaries had to pry apart “power” (public) and “property” (private) and replaced tenurial landholding with absolute, individual ownership.  In so doing, they created modern property ¹⁵ .  The French revolution created the conceptual matrix within which modern political forms will be built and understood ¹⁶ .  But it is only a legal matrix, with no particular political form imposed upon the polity ¹⁷ .  Here lies the possibility to invent A New Capitalism Through Law.  

*     *

There are three ways of understanding modern property as it operates in the social system.  There is first the day-to-day conception of property as a right over things.  There is then the civil or common law understanding of property.  There is finally the constitutional dimension of property.  

In the day-to-day understanding of property, property is a direct relationship of the owner towards the object of property.  But even at this crude level of understanding, property is differentiated from possession.  It is widely accepted, for example, that if a thief effectively has the physical possession (détention) of the stolen good, she does not own it.  The dispossessed owner does.  Conversely, a tenant paying her rent legitimately possesses the rented apartment, but she does not own it.  The landlord does.  In both examples of illegitimate and legitimate possession, the owner does not have possession.  This shows how little possession has to do with property, contrary to the view shared by most property rights theorists and economists.  

There is then the private lawyer’s understanding of property.  In the civil law tradition, the crowning achievement in the institutionalization of modern property in France is the Civil Code.  The Code enshrined many of the fundamental principles of the French Revolution embodied in the 1789 Declaration of the Rights of Man and Citizen.  The disentanglement of “property” and “power” and the notion of full, absolute, property is pervasive throughout the Code ¹⁸ .

Article 544 of the French Civil Code provides that: 

“Property is the right to enjoy and dispose of things in the most absolute manner, provided it is not being used in violation of laws or regulations” ¹⁹ . 

The article appears contradictory.  The enjoyment and disposition in “the most absolute manner” can be seriously eroded by “laws and regulations”.  Is property still an “absolute” right, then?  In fact, the drafter of the Civil Code had to balance the constitutional rights of the property-owner with the needs of the polity ²⁰ .  What is meant by the article is that property, as a right of autonomy, entitles the owner to decide about the use of her property as a matter of principle, “laws and regulations” providing exceptions to this principle.  The principle is autonomy, the exception is legislative and regulatory heteronomy.  With the rise of the “social question”, the need to protect consumers and the environment, this heteronomy has gradually but substantially increased.  But property remains the same: a right of autonomy as a matter of principle with (changing) exceptions. 

In the common law tradition, property is now viewed as a “bundle of rights”.  It is a set of rights (to possess, to use, to manage, etc. ²¹ ) of the owner against others in connection with the object of property.  It is more sophisticated than the day-to-day perception and makes it possible to better understand the centrality of the concept of property in liberal and capitalist societies.  But it fundamentally misrepresents how property effectively operates in our world.  With property, what is finite at any point in time is not the set of prerogatives, the « bundles of rights ».  What is finite is the set of limitations to the right to property, to the autonomy it entails.  The autonomy of the property owner is the rule; the limitations of this autonomy via contracts or laws or other norms created via the political system limiting the uses of property are the exceptions.  Property is a right as a matter of principle with « bundles of limits », bundles of exceptions.  These limits change when the law evolves, depending on the demands made on the political system and its eventual reaction to these demands ²² .  Property is a default rule and is a one of the keys to the “private” and “public” decision-making processes in our society.  The owner is the decisionmaker as a matter of principle towards the use of his goods. 

For many objects of property, the impact of their use on others is rather limited.  What I do with my toothbrush is really of no importance or interest for anyone.  But for other objects of property, the autonomy of the owner translates into heteronomy for the non-owners.  It is particularly the case for productive assets, such as a farm or a factory.  The owner will determine who can work using the assets, i.e., who gets hired.  He will set, as a matter of principle, the production process, the rules to follow to use the property and, indirectly, their consequences over the workforce, society at large and the natural environment. 

Property is usually understood as a right of autonomy.  In reality, in numerous cases, this autonomy of the owner translates into heteronomy for the non-owners.  As a matter of principle, owners rule ²³ .  They set the mandatory rules to be abided by others when they use their property.  It is particularly the case for productive assets. It is via property that it is possible to create formally “private” legal orders ²⁴ which we call “enterprises”, at the local, and now global level ²⁵ .  

As a governmental system, capitalism thus translates legally into a specific form of legal pluralism ²⁶ .  “Private” governmental structures operate enterprises and rule the activities of those falling under their jurisdiction.  This is specifically the case for employees who, as sub-ordinates, see their activities ordered by the enterprises’ hierarchies.  Capitalism has been built on this prerogative conveyed by property.  It has now evolved into financial capitalism with the advent and spreading of the business corporation as the main legal instrument used  to concentrate productive assets.  Most large productive assets are now owned by corporations, individuals owning only derivative rights (shares or claims against funds directly or indirectly owning shares) issued by corporations ²⁷ .  It is this evolution in the structuring of the ownership of property which is at the origins of most of the issues requiring A New Capitalism Through Law. ²⁸

It is interesting to note how the ordering power of property was totally missed by private law lawyers trying to make sense of the development of large business firms as governmental organizations.  With industrialization, the size and issues created by enterprises increased.  In 1947, Paul Durand investigated the notion of « enterprise » from a juristic point of view.  In his view, the absence of a legal concept of the business firm – the enterprise – came from the fact that the drafters of the Civil Code imagined that the legal relationships arising from economic life would be constructed by free and equal individuals based on contracts ²⁹ .  They only anticipated economic liberalism and not corporate capitalism.  They did not, and could not, anticipate the future emergence of the large-scale business firm, which was built thanks to the business corporation, this “wonderful instrument of capitalism” in the words of Georges Ripert ³⁰ .  Durand’s conclusion was that the advent of the firm made it difficult to analyze it within a legal framework that did not anticipate it.  But in his analysis of the power relations within the firm, he was the victim of a simplistic understanding of property as a right over things.  He did not realize that what is concentrated within firms – property – amounts to a concentration of rights of decision- and rulemaking towards the use of the objects  of property.  When searching for the origin of the power exercised by and within firms, Durand ruled out that property could play any role: « property, being a right in rem over things, cannot explain a commanding power over people » ³¹ .  Similarly, Michel Despax, analyzing the business firm as a “nascent legal person”, wrote that one could not see how property, being a right over things, could explain the existence of a commanding power over people.  He continued working with the illusion that the source of this power lies in the employment contract, while acknowledging without explaining it the inherent contradiction between a contract among equals and the subordination created ³² .  As a consequence, these authors and many others trying to improve firm governance adopted the theory of the institution developed by Hauriou in public law.  They treated the power of managers in firms as “inherent” to their role, the firm being understood as an “institution”, a kind of community, a “collective” in need of leaders ³³ .  The leaders of these communities, of these groups of contracting parties having common interests, were then understood as overseeing the pursuit of the common good.  Given the state of present-day capitalism, it is hardly necessary to insist on how these intellectual constructions are inadequate.  They are merely legitimating corporate power by its “inherent” existence ³⁴ .  They ignore the fact that the power in the business firm does not emerge from the needs of a “community” and that, combined with common interests in the management of the enterprise, there are also interests in conflict.  

In fact, it is the notion of modern property which is at the core of the institutional structure of our Power System (something one can call “capitalism”), including the power of and in enterprises ³⁵ .  The easiest way to perceive how this came about is by considering the legal structure of a workshop before and after the d’Allarde Decree and the Le Chapelier Statute of 1791.  These texts are part of the Great Demarcation identified by Rafe Blaufarb.  

In the Old Regime arts et métiers system, the master’s productive capital (tools and equipment, raw materials, finished goods, etc.) were his individual property.  But he could not use and dispose of them as he saw fit.  Their use was subject to detailed regulation and discipline imposed by the relevant corporation.  The ability to use these productive assets derived from the mastership, not from property.  Property was necessary but insufficient to empower the owner to use these assets to produce and offer goods falling within the corporation’s monopoly.  A mastership was required, and it amounted to a share of the public authority granted to the corporation by the King ³⁶ .

This radically changed in 1791.  The d’Allarde Decree (March 2, 1791) abolished all the “maitrises et jurandes”.  The Ancien Régime corporations were abolished, and the authority of the master disappeared overnight.  In our workshop, the same tools and equipment, raw materials, finished goods, etc. were still in place and operated by the same individuals.  But the former master was now able to dispose of his property freely, without any of the restrictive rules of the corporation.  And the former master’s authority towards the workers now derived from the ownership of the means of production.  With no duty to provide minimum salaries, decent working conditions, limited working hours, and so on.  Of course, technically, employees now had contracts with their employer.  But they had no status, no collective rights.  Individual contractual bargaining was putting them in an inherently disfavored position ³⁷ .  Somehow, it was believed that free contracts among “equal” individuals would lead to an equilibrium.  But this disregarded the inequality in property rights – in rights of decision-making as a matter of principle towards means of production.  

The immediate effect of the disappearance of corporations was a serious erosion of wages.  Certain Parisian workers imagined they were free to collectively organize themselves to get higher salaries by creating unions.  They collectively agreed on the minimum pay they would ask their employers.  A few weeks later, on June 14, 1791, Le Chapelier went up to the podium of the Assembly to denounce “a contravention of the constitutional principles which abolished corporations“.  The Le Chapelier report insists on the key political dimension of this forced individualism: 

“In the State, there is only the particular interest of each individual and the general interest.  No one is permitted to inspire citizens with an intermediate interest, to separate them from the public good by a corporate interest….  It is up to individual-to-individual free agreements to fix the wage for each worker » ³⁸ .

Article 1 of the Le Chapelier Statute proclaims this clearly:

“The annihilation of all kinds of Corporations of the same status and profession being one of the fundamental bases of the French Constitution, it is forbidden to re-establish them under any pretext and in any form whatsoever. » [Emphasis added]

And article 2 insists:

“Citizens of the same status or profession, entrepreneurs, those who have open shops, workers and companions in any art whatsoever may not, when they find themselves together, appoint themselves either president, or secretaries, or trustees, hold registers, issue decrees or deliberations, form regulations on their alleged common interests. »

Here again, we clearly see the effect of the Great Demarcation.  In the post-revolutionary era, the economy is a purely contractual matter with no possibility to “form regulations on … alleged common interests. »  The target is the corporatist pluralism of the Old Regime. The new society must be built by contracts among individuals, each armed with their freedom of contract.  They were deemed to be equal in rights.  And their inequality in property rights was in no way perceived as legal inequality.  Still today, the intellectual laziness of understanding property as a right over things leads to serious mistakes in the analysis of the operation of the Power System by implicitly negating the legal inequality it is hiding.  

Property, however, is not a right over things: it is a right of decision-making as a matter of principle in connection with things with mandatory effects upon the non-owners.  It is a right making it possible for the owner to regulate the use of things without “deliberations”. It is the concentration of such rights into large corporate organizations which has led to a new configuration of the Power System, to a new form of capitalism.  But our understanding of its operation has not evolved accordingly.  This is in great part due to our poor understanding of the role of property in a constitutional perspective.

The constitutional dimension of property is thus the most important one when considering the possibility of institutionalizing A New Capitalism Through Law.  Property is part and parcel of a specific Power System within which sovereign rights are allocated internally via the constitutional dimension of property.  In this governmental system, owners are the decision makers as a matter of principle towards objects of property.  The mandatory rules applying to them are only derogations to this principle. Today, however, property has been reconfigured at the global level via corporate structures (groups of corporations and value chains) which are being used as the legal backbone for the structuring of enterprises.  This translates into a new World Power System which is unbalanced.  Public and private prerogatives in connection with the uses of objects of property are, in fact, supposed to work together.  Public rules (laws, regulations) come as derogations to the owner’s principle of autonomy.  But there must be some authority able to adopt these rules, these derogations to be able to tame property.  The distinction made in classical jurisprudence between private and public law, between private and public prerogatives, between economics and politics, has led to a reification of the underlying social ontology as consisting of a “market” to be regulated by a “State” ³⁹ .  But in a globalized economy, confronted with powerful “private” economic actors, there is no State; there is only a “States system” made of competing States.  The difficulty of the time is a lack of understanding that global capitalism amounts to the self-institutionalization of a new global legal pluralism evading this dichotomy between “public” and “private”.  Modern property has been institutionalized as a right of autonomy, a component of the freedom of the individual (owner) against the world at large.  But due to its concentration into large organizations via business corporations, it is now a major producer of heteronomy imposed on individuals, society, the State system, and the natural environment.  

To understand the role of property in the Power System, one must draw the consequences from the fact that, in a modern constitutional system of government protecting property rights, there are two sets of interacting rules.  One of the purposes of the Constitution is to define the operation of the branches of public government, usually via democratic institutions.  This is the most traditional way of understanding what a « constitution » is.  But the constitution also aims at protecting individual persons and minorities against potential governmental abuses.  

There is therefore a set of constitutional rules defining fundamental rights; rights of autonomy initially designed to protect individual persons.  These rights – freedom of thought, of movement, of religion, of association, the right to property and so on – are to some extent out of the reach of the political institutions created by the Constitution.  One of the Constitution’s purposes is to provide protection against unrestrained majorities obtaining control of the legislative and/or executive branches of government which otherwise would have minorities or individual persons at their mercy.  Constitutions are conservative in this respect.  They are written in such a way that even democratically elected majorities do not have total freedom to adopt any kind of legal or regulatory rules.  In the rules they adopt, majorities must preserve the fundamental rights which are placed out of their reach.  Courts, and Supreme Courts in particular, are here to ensure that such is the case.  All democratic liberal constitutional States thus combine both democracy and distrust for democracy ⁴⁰ .  

In this way, fundamental rights are somehow placed out of the reach of the public political institutions.  Individual persons benefit from a combination of freedoms and rights of autonomy allowing them to pursue their individual purposes.  The key point regarding property rights in a constitutional perspective is that they provide the legal basis for private governments in connection with the use of the objects of property ⁴¹ .  The introduction of modern property was an instrument to ensure individual autonomy, the ability to govern oneself and to make and implement one’s personal choices.  More appropriately, modern property has granted autonomy to owners to make use of their properties as they saw fit, without the constraints of a wealth of rules inherited from feudal and corporatist society.  The heteronomy of property rule was still there for non-owners ⁴² , but they had the theoretical possibility of becoming owners and thence access to more autonomy.  Whatever the merits of this construction, it has been grossly invalidated by the advent of the corporate economy.  Gigantic organizations structured using business corporations now concentrate so much property, so many rights of autonomy into “private” world governments, that the whole liberal construction is in total disconnect with the realities of the existing World Power System.  

Modern property rights lead to a very strange structure of the legal system, both domestically and internationally.  As a right of autonomy, property leads to an ability of rulemaking in connection with the use of the object of property.  Users of the object of property must abide by these rules made by owners.  But because they derive from a right of autonomy, these rules are not incorporated into the legal hierarchy of norms and are not subject to review.  They are binding and final for the users of property, with no possibility to challenge the use made of these subjective rights by the owner ⁴³ .   Because enforced constitutional rules protect property rights and property rights enable rulemaking, the rules created by owners are part of the constitutional legal system while escaping legal review, unless of course they are in breach of otherwise applicable rules applying as a matter of exception.  Rules of the house, factory rules, students’ rules ⁴⁴ , corporate codes and so on are law proper, mandatory, and enforceable rules created by owners because of their constitutionally protected property right over the factory or the house or any other object of property imposing heteronomy on the users of property.  At its roots, each constitutional legal system protecting property rights is necessarily pluralistic.  Beyond the law of the State, the law in the law books, the official law, the law taught in law schools, there are myriads of small-scale legal orders creating law because of constitutionally protected rights of autonomy, including property rights.  And this is “hard law”.  But these “private” legal orders are autonomous, thanks to the content and meaning of modern property which, in final analysis, was just the instrument of the substitution of one form of legal pluralism to another one.  

With globalization, some of these legal orders have now succeeded at conquering their autonomy with regards to both national and international laws.  It is their operations which lead to the emergence of a new World Power System in need of constitutionalization ⁴⁵ .

Being part of the constitutional structuring of society, property must be thought about in conjunction with the way legal persons operate in the legal system ⁴⁶ .  The relationship between “property” and “persons” is so central that, in his opening discourse presenting the draft of the Code civil to the French Conseil d’État, his main drafter, Portalis, stated that « all laws either relate to persons or to property, and to property for the utility of persons » ⁴⁷ .  But the persons then contemplated were individuals, physical persons.  Modern business corporations, which now benefit from most of the legal prerogatives of individuals, have never been contemplated in the constitutional structuring of society.  Business corporations were introduced into the legal system subsequently.  And they are essentially treated as being private persons having the same prerogatives as individuals.  The rights of decision-making as a matter of principle towards (large) concentrations of productive assets, however, are not the property of individuals anymore; they are the ones of corporations, of purely legal constructions, of artificial legal persons.  Individual shareholders only have derivative rights.  Of course, one easy way out of this serious issue is to consider that corporations are merely associations of individual persons, as the US Supreme Court does, for example ⁴⁸ .  But this goes against all the modern corporate law practice and jurisprudence.  This is so much the case that, in the words of Margaret Blair, “this raises questions about the Court’s understanding of what corporations are” ⁴⁹ .  Indeed.  The US Supreme Court’s position is in total contradiction with the effective operation of modern corporate law ⁵⁰ ,  modern corporations being in no way associations of individuals.  But there are veils some manifestly prefer not to lift…  And the US Supreme Court is not alone in its reluctance to address the difficult constitutional issue raised by the existence of the “private” power of business firms.  Accordingly, the most significant productive assets are managed by world private governments without any of the constitutional constraints which would be imposed by a world State.  These private governments fully benefit from fundamental rights initially designed for individuals only.  And at the same time, the ability of State governments to adopt laws to limit the damaging uses of property is being eroded by globalization.  

Two strands of thought have developed to try circumscribing this issue: Stakeholder Theory ⁵¹ , whose proponents attempt to improve the position of stakeholders in the decision-making processes of the firm.  The other is Corporate Social Responsibility (CSR) ⁵² . Its promoters attempt at improving the realization by enterprises that they have an impact over society and the natural environment and that it creates a duty for them to act responsibly.

Both these developments rightly point at the major governmental issue we face.  But they are way below what is required to address it.  They try to cure the symptoms but do not address the disease.  The reason for this is simple: corporate property rights are secured via formal, hard, constitutional law, whilst corporate duties towards stakeholders or society or the environment are expressed in soft and unenforceable terms ⁵³ .

The concentration of property rights via corporate vehicles may very well be legitimated for utility reasons.  But as a right of autonomy, these property rights do not deserve the same respect as a right of autonomy designed for individuals ⁵⁴ .  The chink in the armor of corporate property rights is precisely the fact that these rights were originally given constitutional status for individuals only.  In the context of corporate power and of its control, it is perfectly admissible to make them lose their subjective dimension and give them the objective dimension of what they are: sources of power ⁵⁵ .   The strong autonomy provided by property still makes sense when we are dealing with individual property.  But since property has become concentrated thanks to the introduction of limited liability corporations into the liberal legal system, we changed system and moved to a capitalist society.  It is a capitalism in which prerogatives originally designed to ensure the autonomy of individuals have been converted into prerogatives subjecting individuals to the heteronomy of “private” organizations.  Property in this context may very well take on a more objective dimension and be subjected to norms circumscribing the use which can be made of it.

Several strands of thought present themselves to address this issue at its root.

The first one is the notion of constitutionalization.  To develop A New Capitalism Through Law, a hint is offered by article 16 of the 1789 Declaration of the Rights of Man and Citizen: 

“Any society in which the guarantee of rights is not assured, nor the separation of powers determined, has no Constitution.” ⁵⁶

The constitution is not merely an instrument regulating the State’s activity.  A proper constitution must be a constitution of “any society”.  

Today’s society is global in many respects, and certainly with regards to the economy.  A Global State, however – and a global constitution – are nowhere in sight, and probably for the best.  Remains the possibility to think about alternative forms of constitutionalism, at the level of the firms themselves.  Constitutionalization would then appear as a welcome evolution in all the organizations exercising power, whether formally “private” or not.  In this perspective, the constitutionalizing process would be extended to the legal pluralism of legal orders deemed to be “private” but which in fact have a mixed nature ⁵⁷ .  The new constitutional question would then be clear: how can we subject firms to constitutional norms, making sure that they do perform their activities in compliance with the common interests of those affected, addressing fairly the interests in conflict, while preserving the rights of the individuals and environments involved? ⁵⁸   How is it possible in this new context to assure the guarantee of rights and a relevant and effective separation of powers?

This approach must be differentiated from the avant-garde sociological theory of “societal constitutionalism”.  It treats constitutions as being merely State-centered “political constitutions” which are deemed to be “limited to the political system” ⁵⁹ .  This is accurate if one understands property rights as being part of the political rights guaranteed by the “political” constitution.  But this is not the position of the proponents of societal constitutionalism who consider that there is “a multiplicity of societal constitutions, which are neither wholly public nor private [and] emerge in the various spheres, into which contemporary society is differentiated: economy, science, technology, media, medicine, instructions, transports etc.” ⁶⁰ These “societal constitutions” are treated as radically autonomous from “political constitutions”.  

World Power System analysis and societal constitutionalism clearly have a lot in common ⁶¹ .  But with regards to the institutions of capitalism, considering that there is, on the one hand a “political constitution” and on the other “a constitution of the economy” is a restrictive view of modern liberal constitutions as they are effectively operating ⁶² .  The ruling power of property owners, now concentrated into large world “private” organizations, has its roots in the provisions of the so-called “political constitution”.

The second strand of thought is linked to, but goes beyond, constitutionalism.  It suggests going as far as democratizing firms, proposing in particular the insertion of bicameralism to represent both labor and capital in firms’ government.  It certainly provides food for thought on the possibility to develop A New Capitalism Through Law ⁶³ . The challenge here is to identify the right equilibrium between more democratic government and the necessary constraints imposed by utility considerations. 

A third path is the possibility of granting legal personality to global firms under international law.  It would facilitate making them accountable for their actions at the global level, being understood that the groups of corporations and firms as such do not have legal personality under domestic laws and that, for a wealth of reasons, granting them legal personality under such laws is virtually impossible ⁶⁴ . 

Finally, accounting rules can be improved to integrate the cost of externalities in the measurement of the performance of the firm ⁶⁵ .  These rules, leading to the identification and measure of the costs imposed by the accounting entity over society and the natural environment could clearly be connected to the constitutionalization (and, possibly, democratization) duty.  The integration of externalities via improved accounting mechanisms should logically lead to increased stakeholder participation ⁶⁶ .

In conclusion, a proper understanding of the constitutional role of modern property and of its restructuring via corporate law leads to numerous fruitful strands of thought.  A New Capitalism Through Law could surge from them.

1. Die Gleichheit vor dem Gesetz Im Sinne des Art.  109 der Reichsverfassung [Aussprache], 3 VVDStRL pp.  54-55 (1927).  [Celui qui veux savoir ce qui se cache derrière le droit ne découvrira, je le crains, ni la vérité absolue d’une métaphysique, ni la justice absolue d’un droit naturel.  Celui qui soulève le voile et ne ferme pas les yeux, celui-là ne trouve que la hideuse face de Gorgone du pouvoir qui le fixe.]
   
2. On the constitutive role of law, see generally Simon Deakin, David Gindis, Geoffrey M. Hodgson, Kainan Huang and Katharina Pistor, Legal institutionalism: Capitalism and the Constitutive Role of Law, 45 Journal of Comparative Economics pp.  188-200 (2017); Simon Deakin, David Gindis, Geoffrey M. Hodgson, What is a Firm? A Reply to Jean-Philippe Robé, Journal of Institutional Economics pp.  1-11 (2021) and Jean-Philippe Robé, Firms Versus Corporations: A Rebuttal of Simon Deakin, David Gindis, and Geoffrey M. Hodgson, Journal of Institutional Economics, pp.  1-9 (2021).
3. A large proportion of the developments in this article derive from my recent book, Property, Power and Politics – Why We Need to Rethink the World Power System, Bristol: Bristol University Press (2020).
4. For example, Steve Pejovich, one of the gurus of the property rights analysis of economics, starts his « foreword » to The Elgar Companion to The Economics of Property Rights, Cheltenham: Edward Elgar (2004) edited by Enrico Colombatto with the sentence « From the beginning of recorded history, people have understood the importance of property for their survival ».  Armen Alchian, Harold Demsetz, Henry Manne, Douglass North, Richard Posner and Oliver Williamson are then listed among the founding fathers of the discipline.  
5. The fact, however, is that in anthropology, no example of a barter economy has ever been described, let alone the emergence of money from it.  E.g., David Graeber, Debt – The First 5,000 years, Brooklyn and London: Melville House (2011, 2012, 2014), pp. 21-41.
6. Geoffrey M. Hodgson, Much of the « economics of property rights » devalues property and legal rights, 11(4) Journal of Institutional Economics pp. 683-709 (2015), p. 685.  For a review of property rights economics, see Kirsten Foss and Nicolai Foss, Coasian and Modern Property Rights Economics, 11(2) Journal of Institutional Economics pp. 391-411 (2014). 
7. Sabine Hoffmann, Property, possession, and natural resource management: towards a conceptual clarification, 9(1) Journal of Institutional Economics pp. 39-60 (2013), p. 40.  See also Gunnar Heinsohn and Otto Steiger, Ownership Economics – On the foundations of interest, money, markets, business cycles and economic development, London & New York: Routledge (2014).
8. Yoram Barzel, A Theory of the State.  Economic Rights, Legal Rights, and the Scope of the State, Cambridge: Cambridge University Press (2002), p. 15.
9. See Yoram Barzel, Economic Analysis of Property Rights, Cambridge: Cambridge University Press (1989) and A Theory of the State.  Economic Rights, Legal Rights, and the Scope of the State, Cambridge: Cambridge University Press (2002).  Douglas Allen, who fiercely defends the importance of an economic approach to property rights, also considers that « possession is essentially another term for economic property right »; see also Allen who writes that « contrary to Hodgson’s claim that « it is impossible to understand capitalism … without an adequate conception of [legal] property », it is quite the opposite »; Douglas W.  Allen, Comment on Hodgson on Property Rights, 11(4) Journal of Institutional Economics pp. 711-717 (2015), p. 712.
10. See also Hanoch Dagan, The Limited Autonomy of Private Law, 56 The American Journal of Comparative Law pp. 809-833 (2008), at p. 814.
11. Rafe Blaufarb, The Great Demarcation – The French Revolution and the Invention of Modern Property, Oxford: Oxford University Press (2016), p. 1, 11 and 14.
12. The word « prerogative » meaning here in a general sense an exclusive or special right, power, or privilege.
13. Rafe Blaufarb, The Great Demarcation – The French Revolution and the Invention of Modern Property, Oxford: Oxford University Press (2016); Rutger Claassen, “Property and Political Power: Neo-Feudal Entanglements”, in John Christman (ed.) Positive Liberty: Past, Present, and Future, Cambridge: Cambridge University Press (2021).
14. Stéphane Rials, La déclaration des droits de l’homme et du citoyen (présentée par), Paris : Hachette (1988), p. 60.  
15. Rafe Blaufarb, The Great Demarcation – The French Revolution and the Invention of Modern Property, Oxford: Oxford University Press (2016), p. 5.
16. Rafe Blaufarb, The Great Demarcation – The French Revolution and the Invention of Modern Property, Oxford: Oxford University Press (2016), p. 11; François Furet, « Nuit du 4 août », in Dictionnaire critique de la révolution française, pp.  126-133, Paris: Flammarion (1988).
17. When reviewing the decision of the Mitterrand administration to nationalize banks and certain industrial groups, the French Conseil Constitutionnel decided that (recital 20) “it has not been established that the transfers of property and enterprises currently effected would restrict the scope of private property and freedom of enterprise to the point of disregarding the aforementioned provisions of the Declaration of 1789.” (Considérant 20) « il n’est pas établi que les transferts de biens et d’entreprises présentement opérés restreindraient le champ de la propriété privée et de la liberté d’entreprendre au point de méconnaître les dispositions précitées de la Déclaration de 1789. » (Décision n° 81-132 DC du 16 janvier 1982 | Conseil constitutionnel (conseil-constitutionnel.fr).  Implicitly, this means that, beyond an undetermined level of nationalizations, the right to private property would be undermined and the nationalizations would be unconstitutional, i.e., not in compliance with the fundamental matrix of private and public prerogatives which can vary, but to a point only.
18. Frédéric Zenati-Castaing, La propriété, mécanisme fondamental du droit, Revue Trimestrielle de Droit Civil, juillet-septembre, pp. 445-466 (2006), p. 446.  
19. La propriété est le droit de jouir et disposer des choses de la manière la plus absolue, pourvu qu’on n’en fasse pas un usage prohibé par les lois ou par les règlements.
20. Rafe Blaufarb, The Great Demarcation – The French Revolution and the Invention of Modern Property, Oxford: Oxford University Press (2016), p.  209.
21. Geoffrey M. Hodgson, Editorial introduction to « Ownership » by A.M.  Honoré (1961), followed by « Ownership » by A.M. Honoré, 9(2) Journal of Institutional Economics pp. 223-255 (2013), pp.  231-242.
22. See also Thomas W. Merrill, The Property Strategy, 160 University of Pennsylvania Law Review pp. 2061-2095 (2011-2012), p. 2069.
23. This is true on the “private side” of the Power System; on the “public side”, owning property was a requisite to citizenship under most of the constitutions between 1791 and 1848.  In all but 5 of the 57 years between 1791 and 1848, holders of property had greater political rights. William H. Sewell, Work and Revolution in France – The language of labor from the old regime to 1848, Cambridge: Cambridge University Press (1980), p.138.
24. Santi Romano, L’ordinamento giuridico – Studi sul concetto, le fonti e i caratteri del diritto, Pisa : Tipografia editrice Cav. Mariotti (1917), translated into The Legal Order, New York and London: Routledge (2017).
25. Jean-Philippe Robé, « Multinational Enterprises: The Constitution of a Pluralistic Legal Order », in Global Law without a State, pp. 45-77, G. Teubner (Ed.), Dartmouth (1997); « Enterprises and the Constitution of the World Economy », in 2 International Corporate Law, pp.45-64, Fiona Macmillan (Ed.), Hart Publishing (2003); “Conflicting Sovereignties in the World Wide Web of Contracts – Property Rights and the Globalization of the Power System”, in Soziologische Jurisprudenz, Festschrift für Gunther Teubner, pp. 691-703, Graf-Peter Calliess, Andreas Fischer-Lescano, Dan Wielsch and Peer Zumbansen (Eds.), Berlin: De Gruyter Recht (2009); « L’entreprise et la constitutionnalisation du système-monde de pouvoirs », in Baudoin Roger (Ed.), L’entreprise, formes de la propriété et responsabilités sociales, pp. 273-344, Paris : Editions Lethielleux/Collège des Bernardins (2012); Les entreprises multinationales, vecteurs d’un nouveau constitutionnalisme, 56 Archives de Philosophie du Droit pp. 337-361 (2013) ; Le temps du monde de l’entreprise – Globalisation et mutation du système juridique, Paris : Dalloz (2015); « Globalization and constitutionalization of the world-power system » in Jean-Philippe Robé, Antoine Lyon-Caen and Stéphane Vernac (Eds.), Multinationals and the Constitutionalization of the World Power System, with a Foreword from John Gerard Ruggie, Routledge (2016). 
26. Nikita Aliprantis, « L’entreprise en tant qu’ordre juridique », in Le droit collectif du travail. Etudes en hommage à H. Sinay, pp. 185, Nikita Aliprantis et F. Kessler (Ed.), Francfort : Peter Lang (1994).  Jean-Philippe Robé, L’ordre juridique de l’entreprise, 25 Droits pp.163-177 (1997).
27. See generally Jean-Philippe Robé, The Legal Structure of the Firm, 1(1)Accounting, Economics, and Law (2011). https://doi.org/10.2202/2152-2820.1001.
28. See generally Jean-Philippe Robé, Property, Power and Politics – Why We Need to Rethink the World Power System, Bristol: Bristol University Press (2020).
29. Paul Durand, « Rapport sur la notion juridique d’entreprise », in 3 Travaux de l’association Henri Capitant pp. 45-60 (1947), p. 45.
30. Georges Ripert, Les aspects juridiques du capitalisme moderne, Paris, L. G. D. J. (1951), p. 109. 
31. Id., p. 48.  On the combined evolution of the notion of property under civil and constitutional French law, see François Luchaire, Les fondements constitutionnels du droit civil, Revue Trimestrielle de Droit Civil pp. 245-382 (1982).  
32. Michel Despax, L’entreprise et le droit, Paris : Librairie Générale de Droit et de Jurisprudence (1957), p.  226.  
33. Paul Durand, « Rapport sur la notion juridique d’entreprise », in 3 Travaux de l’association Henri Capitant pp. 45-60 (1947), p. 56. 
34. But these views still have currency with the so-called « doctrine de l’entreprise ».  See Claude Champaud, Manifeste pour la doctrine de l’entreprise – Sortir de la crise du financialisme, Larcier (2011).  Champaud perceives the enterprise as a “fundamental societal cell” (p. 91), “a team and equipment” (p. 102), or even “the enterprise is, in essence, a material community, certainly but also human, that is to say a united social and cultural community and not just an economic entity” (p. 136).  It is a “socio-economic cell” (p. 158), “a place of collective life” (p. 159), a “societal community” (p. 150 and 288).  The firm is a form of community, a smooth place without asperities, “a symbiotic community of human interests…a place of daily and collective life, of collaboration, of common interests and shared hopes…a community of men and women united by collective interests” (p. 224).  And in the firm, “the CEO … is able to synthesize and prioritize information, to foresee, to feel the wind before it has come.  … He is a thinker who acts, a man whose charisma is enough to secure power and reassure those around him.  … no science or management technique is foreign to him” (p. 162).  For a critical review, see Jean-Philippe Robé, L’au-delà de la doctrine de l’entreprise, Cahiers de droit de l’entreprise, n°2, pp. 23-31 (2013).
35. On the notion of Power System, see generally Jean-Philippe Robé, Property, Power and Politics – Why We Need to Rethink the World Power System, Bristol: Bristol University Press (2020).
36. William H.  Sewell, Work and Revolution in France – The language of labor from the old regime to 1848, Cambridge: Cambridge University Press (1980), p.117.
37. See also Rutger Claassen, “Property and Political Power: Neo-Feudal Entanglements”,in John Christman (ed.) Positive Liberty: Past, Present, and Future, Cambridge: Cambridge UniversityPress(2021).
38. See generally Alain Plessis (Éd.), Naissance des libertés économiques – Le décret d’Allarde et la loi Le Chapelier, Paris : Histoire Industrielle (1993).
39. E.g., Rutger J. G. Claassen and Lisa Herzog, Making Power Explicit: Why Liberal Egalitarians Should Take (Economic) Power Seriously, 47(2) Social Theory and Practice pp. 221-246 (2021), p. 231.
40. John Hart Ely, Democracy and Distrust.  A Theory of Judicial Review, Cambridge: Harvard University Press (1980).  See also Léon Duguit, for who individuals’ rights limit the State’s sovereignty; in Léon Duguit, Les transformations du droit public, Paris: Hachette Livre (1913 edition), p. 27.  See also Jacques Chevallier, L’État de droit, Revue de Droit Public pp. 313-380 (1988), p. 365 and Stéphane Rials, La déclaration des droits de l’homme et du citoyen (présentée par), Paris : Hachette (1988), p. 373.
41. See generally Larissa Katz, The Regulative Function of Property Rights, 8(3) Econ Journal Watch pp.  236-246 (2011), Governing Through Owners: How and Why Formal Private Property Rights Enhance State Power, 160 University of Pennsylvania Law Review pp. 2029-2059 (2012), Property’s Sovereignty, 18 Theoretical Inquiries in Law pp. 299-328 (2017).
42. See in this issue Hanoch Dagan, Liberal Property and Just Markets, 3 Revue Européenne du Droit pp. [X] (2022).
43. MorrisR.  Cohen, Property and Sovereignty, 13 Cornell Law Quarterly pp. 8-30 (1927), Robert L. Hale, Coercion and Distribution in a Supposedly Non-Coercive State, 38(3) Political Science Review pp. 470-494 (1923), and Force and the State: A Comparison of « Political » and « Economic » Compulsion, 35 Columbia Law Review pp. 149-201 (1935).
44. Simon Whittaker, Public and Private Law-Making: Subordinate Legislation, Contracts and the Status of « Student Rules », 21(1) Oxford Journal of Legal Studies pp. 103-128 (2001).
45. Jean-Philippe Robé, « Multinational Enterprises: The Constitution of a Pluralistic Legal Order », in Global Law Without a State, pp. 45-77, Gunther Teubner (Ed.), Dartmouth (1997).
46. See generally Meir Dan-Cohen, Rights, Persons and Organizations: a Legal Theory for Bureaucratic Society, Berkeley: University of California Press (1986).
47. In François Ewald (Ed.), Naissance du Code civil, Paris : Flammarion (1989), p. 48. 
48. As done by the US Supreme Court in the Citizens United (558 U.S. 310 (2010)) and Hobby Lobby (573 U.S. 682 (2014)) decisions.
49. E.g., Margaret M. Blair, Of Corporations, Courts, Personhood, and Morality, 25(4) Business Ethics Quarterly pp. 415-431 (2015), p. 422.
50. Id.
51. See R. Edward Freeman, Strategic management: A stakeholder approach, Cambridge: Cambridge University Press (1984) and the subsequent literature.
52. See, for example, Reuven Avi-Yonah, The Cyclical Transformation of the Corporate Form: A Historical Perspective on Corporate Social Responsibility, 30 Delaware Journal of Corporate Law pp. 767 (2005).
53. A. Claire Cutler, Legal Pluralism and the “Common Sense” of Transnational Capitalism, 3(4) Oñati Socio-Legal Studies pp. 719-740 (2013), p. 730.
54. On this issue, see generally Meir Dan-Cohen, Rights, Persons and Organizations: a Legal Theory for Bureaucratic Society, Berkeley: University of California Press (1986).
55. See generallyEmmanuel Gaillard, Le pouvoir en droit privé, Paris : Masson (1985).
56. “Toute société dans laquelle la garantie des droits n’est pas assurée ni la séparation des pouvoirs  déterminée, n’a point de Constitution.”
57. See also Benoît Frydman, looking for “the possibility to build a kind of decentralized and necessarily pluralistic global public order”.  E.g. Benoît Frydman, Rapport de synthèse : la fragilisation de l’ordre public économique et le contrôle des acteurs privés dans un environnement globalisé, Revue Internationale de droit économique pp. 123-130 (2019), p. 128.  See also Gérard Farjat, Le droit, l’économie et le fondamental, 19(4) Revue international de droit économique pp. 431-455 (2005), p.447.
58. Jean-Philippe Robé, Antoine Lyon-Caen & Stéphane Vernac (eds.),Multinationals and the Constitutionalization of the World Power System, with a Foreword from John Gerard Ruggie, Routledge (2017).  This is not a fantasy.  The CEO of a global enterprise (Veolia) considers that the constitutionalization of firms’ governments would be an appropriate evolution; seeAntoine Frérot, Inviter toutes les parties prenantes à la gouvernance, Le Monde, 17 juin 2013.  
59. Angelo Golia Jr. and Gunther Teubner, Societal Constitutionalism: Background, Theory, Debates, Max Planck Institute for Comparative Public Law and International Law (MPIL) Research Paper No. 2021-08, pp. 7-43 (2021), p. 19.
60. Angelo Golia Jr. and Gunther Teubner, Societal Constitutionalism: Background, Theory, Debates, Max Planck Institute for Comparative Public Law and International Law (MPIL) Research Paper No. 2021-08, pp. 7-43 (2021), p. 19.
61. Larry Cata Backer, « The concept of constitutionalization of the multi-corporate enterprise – From body corporate to sovereign enterprise », in Jean-Philippe Robé, Antoine Lyon-Caen & Stéphane Vernac (eds.), Multinationals and the Constitutionalization of the World Power System, pp. 170-189, with a Foreword from John Gerard Ruggie, London and New York: Routledge (2017).
62. See also David Kennedy, The Mystery of Global Governance, 34 Ohio Northern University Law Review pp. 827-860 (2008), p. 854. 
63. See Isabelle Ferreras, Firms as Political Entities – Saving Democracy through Economic Bicameralism, Cambridge: Cambridge University Press (2017)and Hélène Landemore & Isabelle Ferreras, In Defense of Workplace Democracy: Towards a Justification of the Firm-State Analogy, Political Theory pp. 1-29 (2015).  See also Hanoch Dagan, Liberal Property and Just Markets, 3 Revue Européenne du Droit pp. [X] (2022).
64. See generally Régis Bismuth, « La responsabilité (limitée) de l’entreprise multinationale et son organisation juridique interne – quelques réflexions autour d’un accident de l’histoire» in L’entreprise mutltinationale et le droit International, SFDI, pp. 429-447, Paris : Pédone (2019).
65. See generally Richard Barker & Colin Mayer, How Should a “Sustainable Corporation” Account for Natural Capital? Saïd Business School Research Papers, RP-15 (2017).
66. See generally Richard Barker & Colin Mayer, How Should a “Sustainable Corporation” Account for Natural Capital? Saïd Business School Research Papers, RP-15 (2017).