Evonomics: land as property? Come again!

[Tony Gosling]

You Don’t Own That! The Evolution of Property


Get off my lawn.

http://evonomics.com/ownership-evolution-property/
By Steve Roth

In a 
<http://evonomics.com/did-money-evolve-you-might-not-be-surprised/>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.


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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


</DryAndDweebyAccountingSpeak>

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 ­ 
<http://www.asymptosis.com/does-the-liberal-arts-model-deliver-life-success.html>somewhat 
surprisingly to me ­ the envy of the world.

Before leaving, I have to give full props here to 
Matt Bruenig, who 
<https://www.google.com/search?q=%22matt+bruenig%22+%22property+rights%22+violence&oq=%22matt+bruenig%22+%22property+rights%22+violence&aqs=chrome..69i57.13406j0j7&sourceid=chrome&ie=UTF-8>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.

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