The Evolution of Ownership….get off my lawn.
By Steve Roth (originally published at Evonomics)
You Don’t Own That! The Evolution of Ownership
Get off my lawn. (repost)
In a recent post on the “evolution of money,” which concentrated heavily on the idea of (balance-sheet) assets, I promised to come back to the fundamental idea behind “assets”: ownership. Herewith, fulfilling that promise.
There are a large handful of things that make humans uniquely different from animals. In many other areas — language, abstract reasoning, music-making, conceptions of self and fairness, large-scale cooperation, etc. — humans and animals vary (hugely) in degree and kind. But they still share those phenotypic behavioral traits.
I’d like to explore one of those unique differences: ownership of property. Animals don’t own property. Ever. They can and do possess and control goods and territories (possession and control are importantly distinct), but they never “own” things. Ownership is a uniquely human construct.
To understand this, imagine a group of tribes living around a common water source. A spring, say. There’s ample water for all the tribes, and all draw from it freely. Nobody “owns” it. Then one day a tribe decides to take possession of the spring, take control of it. They set up camp surrounding it, and prevent other tribes from accessing it. They force the other tribes to give them goods, labor, or other concessions in return for access to water.
The other tribes might object, but if the controlling tribe can enforce their claim, there’s not much the other tribes can do about it. And after some time, maybe some generations, the other tribes may come to accept that status quo as the natural order of things. By eventual consensus (however vexed), that one tribe “owns” the spring. Other tribes even come to honor and respect that ownership, and those who claim and enforce it.
That consensus and agreement is what makes ownership ownership. Absent that, it’s just possession and control.
It’s not hard to see the crucial fact in this little fable: property rights are ultimately based, purely, on coercion and violence. If the controlling tribe can’t enforce its claim through violence, their “ownership” is meaningless. And those claimed rights are not just inclusionary (the one tribe can use the water). Property rights are primarily or even purely exclusionary. Owners can prevent others from doing anything with the owners’ property. Get off my lawn!
When push comes to shove (literally), when brass tacks meet the rubber on the road (sorry, couldn’t resist), ownership and property rights are based purely on violence and the threat of violence. Full stop, drop the mic.
In the modern world we’ve largely outsourced the execution of that violence, the monopoly on violence, to government. If a family sets up a picnic on “your” lawn, you can call the police and they’ll remove that family — by force if necessary. And we’ve multiplied the institutional and legal mechanics and machinery of ownership a zillionfold. The whole world’s financial machinery — the immensely complex web of claims, claims on claims, and claims on claims on claims, endlessly and densely iterated and interwoven — all comes down to (the threat of) physical force.
There are obviously many understandings and implications to this reality (e.g. Where did your ownership claim originate? Who got excluded, originally?), which I’ll leave to my gentle readers. But I’d like to close the loop on the comparatively rather desiccated ideas of balance-sheet assets, and money, explored in my previous post.
When the one tribe takes control of the spring, they add that spring as an asset on lefthand side of their (implicit) balance sheet. Voila, they’ve got net worth on the righthand side! In standard modern terminology, the spring is a “real” asset — a direct claim on a real good, as opposed to a financial asset, which (by definition) has an offsetting liability on some other balance sheet — is a claim on that other balance sheet’s assets, is a “claim on claims.” The tribe’s asset — its claim to the spring and the output from the spring (capitalized using some arbitrary discount rate) — has no offsetting liability on other balance sheets. It’s a purely inclusionary claim. Right?
Wrong. It’s an exclusionary claim. Which means there is a liability, or negative net worth, on others’ balance sheet(s) — at least compared to a counterfactual fable in which all the tribes have free access to the spring. “Real” assets — balance-sheet entries representing direct claims on real goods (even your claim to the apple sitting on your kitchen counter) — have offsetting entries on the righthand side of the “everyone else” or “world” balance sheet. A truly comprehensive and coherent accounting would require first assembling such a pre-human or pan-human world balance sheet. Practically, that’s utterly quixotic. Conceptually, it’s utterly essential.
So while the distinction between real and financial assets can have conceptual and analytic value, it’s important to realize that the claims behind real and financial assets are far more similar than they are different. A deed to land — the legal instrument encoding an exclusionary claim — is quite reasonably viewed as a financial asset. There is an offsetting balance-sheet entry elsewhere, if only implicit. Donald Trump certainly views the deeds he “owns” as financial instruments, fundamentally similar to his stocks and bonds. Just: the legal terms of those financial instruments — the inclusionary and exclusionary rights they impart — vary in myriad ways. (Aside: economists really need a biology-like taxonomy of financial instruments, categorized across multiple dimensions. Where’s our Linnaeus?)
Balance sheets, accounting, and their associated concepts (assets, liabilities, net worth, equity and equity shares) are the technology humans have developed to manage, control, and allocate our (violence-enforced) ownership claims, a crucial portion of our social relationships. At first the balance sheets were only implicit — when the tribe first laid claim to the spring. But humans started writing them down and formalizing them, tallying those ownership and obligation relationships, thousands or tens of thousands of years ago. (Coins weren’t invented till about 800 BC.)
When some clever talliers started using arbitrary units of account to tally the value of diverse “assets,” and those units were adopted by consensus, we got another invention: the thing we call money. Like ownership rights, the unit of account’s value is maintained by consensus and common usage among owners and owers. But like ownership, its value is ultimately enforced by…force.
Balance sheets. All is balance sheets…
I find it distressing that this kind of deep and fundamentally necessary thinking about ownership and property rights is absent from introductory (and ensuing) economics courses — both textbooks and coursework. Likewise concepts like value, utility (carefully interrogated), and yes: money (ditto). I don’t think you can think coherently about economics if you haven’t carefully considered these issues and ideas. It’s that kind of deep and broad, ultimately philosophical, thinking, in the context of a broadly-based liberal-arts education, that makes American universities — somewhat surprisingly to me — the envy of the world.
Before leaving, I have to give full props here to Matt Bruenig, who delivered this clear and coherent Aha! understanding of ownership for me after I’d struggled with it for decades. It seems so simple and obvious now; others have certainly explained it before. I feel like a dullard for taking so long.
Cross-posted at Asymptosis.
2016 April 26
Enclosures? we don’t need no stinkin’ enclosures. All your property are belong to us!
I agree with the idea that more reflection is needed on the nature of property. Consider: If there is no property there can be no theft, so that if a person takes/consumes/destroys all he can from the commons he has not robbed anyone. .
The property-is-theft crowd says that everyone owns the commons so the destroyer has robbed others, but here they allow that ownership exists, though they deny private ownership.
Does each person own his/her body?
Does each own the fruit of his/her labor?
There are some things that each owns without need of asking consent from society(natural rights), other things require consent of others in civil society. Social constructs come into play in the area between the individual and the commons.
Some who deny natural rights of individuals seem to recognize natural rights of the collective/others/everyone/humanity when stating that property is theft even when acquired according to the laws of society.
So before we go further, do natural rights exist?
The concept of ownership was to me already clearly evident in high-school. it’s might makes right and conformance to he might. Gov’t owns all and can use whatever mechanisms it deems to allocate the sue of those resources, restrictions, etc. in return for supporting the gov’t … economically or politically doesn’t matter.
That was evident to me in high-school without any teaching of it at all… it was simply tracing how resources (property) ceased to be public and become “privately” controlled. An advent of whose tribe or which prince could enforce their possession by however, rhey obtained it., and then how they allocated it’s use among their tribe or “kingdom”.
What I’m thus most curious about is why Steve Roth didn’t figure this out for as long as he said it took him, even after it having been explained to him? What concept was he using to reject the explanations of realities? That is to me the over-riding question here.
Just a difference in definition:.
“ownership” is not a unique human construct at all… it is a human language single word that substitutes for the duplex AND’ed separate and distinct verbs with separate and distinct meanings “possession” and “control” One can call it a modified contraction of possession AND control.
Many human societies, even most in fact, at one time had no concept of having either permanent possession or permanent control of anything … even the baskets they wove or the fishhooks they made, or the crude stone tools used to scrape out logs to use as canoes were not their “own”, nor did they consider them their “own”.
Even in William the Conqueror’s kingdom the Baron’s did not own the land they used or it’s resources .. those were all permanent property of the King, The Baron’s were only given permission to use the king’s allocation of land to them only as long as the king deemed and he took whatever was produced by the land as his own and allocated the rest to the Baron’s that produced it from their land… etc. from Baron’s to Knights, on down the hierarchy all the way to Manor Lords, and from Lords eventually to Yoeman.
It was a quid pro quo arrangement .. delicately balanced by the King to retain control and retain possession in the event some other foreign king or kings attempted to take possession.. .
And that was as late as 1066 AD. Ownership was the king’s and king’s alone…. e.g. the physical power of might that could retain possession and control was the “owner” .. how they allocated it’s uses was the art of retaining possession and control.
This should be obvious for example when one nation overtakes another by war or any other means, all prior “rights” of residents ceases and new “rights” are deemed according to whatever the new possessor and controller deems. Sometimes prior tradition is used and sometimes it’s not, but it’s only a question of how the new possessor decides how they will retain control.
Thus among humans as among animals possession AND control have never been considered permanent conditions. And they are no more permanent today than they ever were. They are only as permanent as the gov’t (possessor) decides is necessary and expedient to retain control from within and avoid domestic residents from supporting a foreign entity that would like to take possession.
It is only cultural tradition and mutual agreement that distinguish what items are decided to “belong” to one person or family permanently, but then cease when their life ceases or are inheritable by their living heirs. Traditions vary as do cultures, and thus which items or “assets” are permanently allowed to be possessed and controlled during one’s life vary as well..
I’m not sure if the author is saying private property is “bad” because government enforces others attempts to seize such property through violence by violence of their own.
Normally, the value of private property is that the owner is then incentivized to improve that property, because he can be rewarded for such improvement. We have seen the negatives associated with common property as described in the concept of The Tragedy of the Commons, where no one is invested in preserving or improving common property, merely extracting value as quickly as possible.
Hans Hermann Hoppe has written an excellent book on private property ethics.