Wednesday, October 19, 2011

Not moving in the right direction... at least at the turn of the 19th century

Adam Smith, 1776: "They ["great landed estates"] are founded upon the most absurd of all suppositions, the supposition that every successive generation of men have not an equal right to the earth, and to all that it possesses; but that the property of the present generation should be restrained and regulated according to the fancy of those who died perhaps five hundred years ago."

Thomas Jefferson, 1789: "The course of reflection in which we are immersed here, on the elementary principles of society, has presented this question to my mind; and that no such obligation can be transmitted, I think very capable of proof. I set out on this ground, which I suppose to be self evident, that the earth belongs in usufruct to the living; that the dead have neither powers nor rights over it. The portion occupied by any individual ceases to be his when himself ceases to be, and reverts to the society. If the society has formed no rules for the appropriation of its lands in severality, it will be taken by the first occupants, and these will generally be the wife and children of the decedent. If they have formed rules of appropriation, those rules may give it to the wife and children, or to some one of them, or to the legatee of the deceased. So they may give it to its creditor. But the child, the legatee or creditor, takes it, not by natural right, but by a law of the society of which he is a member, and to which he is subject."


David Ricardo, 1817: "The produce of the earth - all that is derived from its surface by the united application of labor, machinery, and capital, is divided among three classes of the community, namely, the proprietor of hte land, the owner of the stock or capital necessary for its cultivation, and the laborers by whose industry it is cultivated. But in different stages of society, the proportions of the whole produce of the earth which will be allotted to each of these classes, under the names of rent, profit, and wages, will be essentiall different."


  1. Daniel,

    If you think that quotes from three people are representative anything that is (except for their personal viewpoints at the time they wrote what they wrote).

    Anyway, if we were to adopt the views above, this means anything is up for grabs - including all the property rights or property-right like things which the less than rich have gained for themselves. Indeed, there was a time in the Goldberg v Kelly era when that sort of thing was a little more explicit than it is today, but I'd say a property interest in this or that benefit is the way most people see things.

  2. You are not allowed to sell or donate your estate if you are about to die. Seems like a sensible law.

  3. I can understand how an individualist may not recognize the idea of inheritance.

    And that's because individualists live in their fantasy world of natural law, and deem anything outside their preference to be "outside natural law". How convenient. Too bad there is no such thing as natural law and too bad man is not a natural creature - origins of human societies are not in "social contracts" signed in the "state of nature", but through deliberate forced artifices and customs. The laws that Smith and Jefferson favour are just as much of "social artifices" as those laws which are not deemed "natural law".

    Those of us who understand the corporate nature of man realize that what many of us do is not done for ourselves, but for our children and their children. My distant relatives grow certain trees that will not mature until long after they are dead, and they only do so, because the trees' produce will be highly valuable to their children in three decades. This is common human practice, and the law reflects it.

  4. re: "if we were to adopt the views above, this means anything is up for grabs - including all the property rights or property-right like things which the less than rich have gained for themselves"

    It most definitely doesn't mean that, Gary. The point is there was a time when the problems associated with the concept of property rights were deeply appreciated within liberalism: joint production, externalities, first appropriation, etc. Smith is rife with discussion of these things. I've quote Madison and Jefferson both previously on these ideas.

    Through the nineteenth century as property democratized (a good thing - a fulfillment of what Smith and Jefferson hope for), its problems were less commented on until the anarchists and the socialists toward the end of the century (and their critiques obviously had major flaws themselves). Ironically, as liberalism was moving out of a "natural rights" view of the world in other spheres, we adopted more of a "natural rights" view when it came to property than we did previously.

  5. I'm not sure I understand the point of this post.

    I don't think Prateek is right that Jefferson and Smith are making the undefendible argument he ascribes to them. He's right that natural rights libertarians and utilitarians have different views on inheritance though.

    Daniel last comment is quite right. Ricardo sought to vilify landlords while not vilifying capitalists. His arguments were inconsistent. Marx extends Ricardo in a consistent manner and vilifies both. Of course I don't agree with either of them, but they're consistent.

  6. I should have attached commentary. My last comment was "the point of this post".

    There was a time when the complexities inherent in "property" were very much appreciated by liberals. That went away to a large extent in the 19th century, and Ricardo was a big part of that by shifting economics so heavily towards questions of distribution. Not that those questions didn't need to be answered. They did. But it changed the tenor of the debate and it really took until the twentieth century to stop taking property rights as a given and start re-exploring some of the complexities.

    It certainly wasn't meant to be a post about inheritance taxes.

  7. I find it interesting that you think that given your view on macroeconomics and microeconomics. You have always defended Krugman's view that macroeconomics should be separate and not derived from or closely related to microeconomics.

    Ricardo's shift to talking about distribution was a shift to more of a big-picture view.

  8. "It most definitely doesn't mean that, Gary."

    It is basically a "nothing is sacred" approach; tradition by itself protects nothing in other words. So yes it does. My point is only controversial if you think that some particular order of things is sacrosanct.

  9. Current,

    Once the Corn Laws had been repealed (1846) do you think Ricardo would have had such antipathy to the landlords? Obviously he died well before that happened.

  10. An interesting book on this subject, that's relatively recent, is Martha C. Howell's 'Commerce before Capitalism in Europe, 1300-1600.' She's a historian, I think at Harvard, and has done quite a bit of archival research into the changing meaning of property in the Low Countries. For instance, she argues that market transfers of land were not seen as legitimate and were often annulled by courts. If you tried to sell your land, you were seen as abandoning responsibility to future generations. The origin of the word Mortgage (dead hand, or dead pledge) comes from the perceived responsibility of the current generation to maintain estates. My guess is that this - not whether inheritance is legitimate - is what these guys are talking about. (This is why Alchian is important, as an aside)

  11. A quick note on Howell's book: she definitely has a Marxoid bent, so she goes into a whole 'exchange before capitalism wasn't really exchange but elaborate gift giving' spiel, but you can ignore that.

  12. That sounds fascinating - thanks. Could you clarify the point about Alchian? I'm not sure what you're getting at, but I'm not deeply familiar with his work either.

  13. Alchian's very good at emphasizing the sociological root of economic institutions and decision making. E.g., from 'The Property Right Paradigm': "What is owned are rights to use resources, including one's body and mind, and these rights are always circumscribed, often by the prohibition of certain actions. To "own land" usually means to have the right to till (or not to till) the soil, to mine the soil, to offer those rights for sale, etc., but not to have the right to throw soil at a passerby, to use it to change the course of a stream, or to force someone to buy it. What are owned are socially recognized rights of action"

    Legitimacy is important - property doesn't exist separate from others' opinion about how you use resources. This seems to be what Smith & co are talking about, and was (perhaps) neglected for a long time within economics post-Ricardo.

  14. Prateek Sanjay,

    I meant to write something like this earlier, but had no time.

    There are some things that are clearly universal about property - rules concerning transfer, priority, what is and against public policy, etc. - that is the general questions that are asked about how property functions. But many of the specifics are fairly culturally and temporally defined. For example, as of, hmm, 1948 I think, the Supreme Court has stated that you cannot have enforceable racial covenants in real property in the U.S. Not respecting such is a fully good thing I would say.

    tempora mutantur nos et mutamur in illis


    I read her monograph on marital property in the low countries (covering roughly the same time period) some years ago; the basic argument being that there was a shift from custom to contract to define the terms of such (and with it changes in what marital property means to the various participants involved in its production, transfer, etc.).

    Anyway, I can't recall if she talks about this, but more broadly during the shift from the High Middle Ages through the Renaissance/EMP custom becomes less of a factor as opposed to contract in significant part because of the shift toward writing over the oral. Indeed, this is seen in the efforts to create lineages in writing throughout much of Europe during the period in question by various royal and princely families* - Rudolf IV being a fairly over the top example (he traced his family back to Julius Caesar, etc.). You're going to get a different mix of things going on in as far as property rights are concerned where the oral is favored over the written (as was the case throughout much of Europe during Middle Ages) as opposed to a system where what is written is of greater importance.

    *Not surprisingly as the Roman world becomes less of a world of oral tradition (think the 7th century BCE) and more one of written documents (3rd century BCE) then you see the same thing in it as well. There is always a lot of pressure in such societies where writing comes to dominate over some period of time to create "first in time" rights.

  15. Ryan,

    I think it is fair to say that Smith's notion of property rights, their evolution, etc. comes substantially from Hume. There is a very rich section in Book III of the _Treatist..._ where Hume goes on at some length about such things.


All anonymous comments will be deleted. Consistent pseudonyms are fine.