President Obama recently touted the epitome of distributive justice. President Obama declared that,

If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business. you didn’t build that. Somebody else made that happen.

The reason why this is so important is because it has serious implications for how we, as a people, perceive of property rights -and more importantly, the justification of being able to have property rights.

Obama’s tune is monotone, at best; we have heard the same melody before. Elizabeth Warren declared the following,

there is nobody in this country who got rich on his own. Nobody. You build a factory out there, good for you, but I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers that the rest of us paid to educate.

What is the basic philosophical idea at play here? Well, it deals with the nature of property and the implications that property has on the individual and society at large. There are two issues that will be subject to our evaluation; first, ownership and the corresponding elements of justice and market efficiency; and second, the issue of fairness in justice and the potential negative consequences that may actualize for large segments of society.

The theories of property are both complex and vague. I mean, have you ever thought about why we own property? Or, more significantly, how we are able to own it (how we are justified)? Some philosphers (such as David Hume [1739] 1888, pp. 484–98)) have suggested that property only makes sense under conditions of scarcity and that the corresponding relations that are created under the conventions of free agents, establish and fortify this necessity. One possible problem with this view is that there are things that do not fall under the guise of scarcity; things like intellectual property, or owning certain complex financial tools when altered by no time constraints -however, those things can be said to fall under the set of “property.”

Others have argued, following Hume’s lead, that it all comes down to some-type of economic and social conflict resolution-generating system. That is, that a society needs to, or has an interest in, avoiding conflict and systems that create outcomes that are less than desirable (this could be efficiency, equality, etc…). With situations of conflict, cooperation, production, and exchange are virtually impossible; so, the necessity of a convention that automatically resolves such conflict is the establishment of private property norms (Benn and Peters 1959, p. 155). This view has its weaknesses, because all it establishes is that there ought to be some rules -not necessarily private property. Indeed, several human societies have existed for millennia without the need for anything akin to modern property laws. The argument, however, that I would make to support Benn and Peters is that private property is the most efficient system possible and the only self-directing automatic system that can be created with respect to individual perception and action — assuming the existence of randomness (more on this later).

Before proceeding, a distinction must be made regarding the types of property that exists. The types of property that exists include: private, collective, and common property. In a common property system, resources are governed by rules that ensure the consistent availability and use by all or any members of the entity that possesses the property. A tract of common land, for example, may be used by everyone in a community for grazing cattle or gathering food, but it can exclude others who do not meet the criteria or are not part of the controlling entity.  Collective property is a very different. Here, the community as a whole, determines how important resources are to be used. These determinations are made on the basis of the social interest through mechanisms of collective decision-making  —anything from a leisurely debate among the elders of a tribe to the forming and implementing of a Soviet-style ‘Five-Year Plan’ is included in the set of collective property ( Waldron 2012).

Some philosophers and historians point out that private property is a relatively new system and that it still relies on a vast and secure set of social rules. The owner of capital is still subject to both the usability permissions granted him by society, and the protections given him by society. So, property owners, in many instances, are free to own property but they cannot often do whatever they want with it. Also, if a property owner’s resources are under siege, he can request the assistance of the police free of charge for the protection of his property! Obviously, there is a point to be had here. Some anarcholibertarians would merely point out that the police should be paid by the land owner in question, but that would open up the door to a whole slew of incentives where the poor may become mere chattel to be trampled under the feet of the rich and powerful. The fact that society is essential for the propagation of property rights both in how the rights are structured and how the rights are preserved creates a philosophical divide amid absolute ownership and conditional ownership (i.e. rents).

It is also important to be aware of the fact that property and collective influence is not all or nothing. As previously explained, in a modern society there are common property rules that transcend even the most free market society; these rules allow society to benefit in immense ways -consider a park or a road, for example.  There is also collective property that has special rules excluding members of society whom do have a interest in the property (e.g. military bases), yet the people still benefit from it.

The previous two paragraphs form the standard justification upon which  Mr. Obama and others rely. That is, that private property is not absolute anyway, and that the positive externalities create incentives and systems that are necessary to a efficient, happy, and free society (I am sure that equality is also included as a “good” incentive).  To decompose the structure of contingent ownership, we need to evaluate what are the  theoretical justifications. The view that society has contributed a collective effort to ensure that that various conditions are conducive to the ability for individuals to possess objects, have rights to their inventions, or sell a good that they have produced, relies on what I call the “Inverted Lock” and the argument from Rawls.

The Inverted Lock (derived from John Lock’s theory of property) holds that society has a share of ownership in all goods produced within that society given that society has, directly or indirectly, mixed their labor with the various system and structures that directly give rise to other forms of property.

The position held by John Rawls entails that we should not be concerned so much about ownership of property but the aspects of justice that attach themselves to how property effects those who are the least well-off. Furthermore,  the advantages to those who profit from private ownership outweigh the costs to the underclass in many instances. The total amount of suffering, the high level of poverty, and the economic/political problems associated with the exploitation of the underclass calls into question the necessity for institutions to protect or allow for private ownership of property.

In response to the justification by Rawls, if we take the individual rather than a notional entity like ‘the social good’ as the focal point of moral justification, then there ought to be something we can say to each individual why the institution we are defending is worthy of her support. Otherwise it is not at all clear why she should be expected to observe its rules (except when we have the power and the numbers to compel her to do so). Additionally, as an aspect of justice, the incentives that are commonly created under a system of centralized ownership or conditional ownership of property, allow for tyrannical exploitation of resources, poverty, and market inefficiencies. In fact, history has largely demonstrated that the power structures present in the government tend to exploit collective systems rather than compliment them. The consequential argument that the harm done to the underclass by private property warrants its removal or regulation, is largely false. Since more countries have adopted free market and private property systems, the level of income for all classes is higher, the standard of living is significantly higher, the innovation level is leaps and bounds ahead of competing systems, the productivity of such a society is progressive, average life expectancy is higher, and, as Milton Friedman pointed out, the level of political freedom is significantly higher -thus, the ability to alter the rules that dictate the use of property is rendered null. Obviously, the consequentialist must be concerned about these points (in fact, when considering the political implicates and such, it seem fairly obvious that a system that abolishes private property is less preferable than one that may pose the risk of unfairness). If private property involves the wiser and more efficient use of resources, it is because someone has exercised virtues of prudence, industry, and self-restraint. People who languish in poverty, on this account, do so largely because of their idleness, profligacy or want of initiative. Now, theories like this are easily discredited if they purport to justify the actual distribution of wealth under an existing private property economy (Nozick 1974, pp. 158–9; Hayek 1976).

In considering the Inverted Lock, it is interesting to see how proponents of free market principles usually point to Lock in justifying private property (recall that Lock felt that as an extension of self-ownership, one may own something by possession, and the integrating of labor in with the object owned). However, the question that must be answered for this argument to hold waters is: can someone own something merely by having inspired or contributed to its actualization? Or, maybe, does indirect labor in terms of inspiration, contribution, or protection entail ownership under the lockean principle? It appears that it does, yet to a very limited extent. The first part of Locke’s philosophy involves individuals satisfying their needs out of the common largesse in this virtuous and self-reliant way. The second part involves their exchanging surplus goods that they have appropriated with one another; rather than saying that such surpluses lapse back into the common heritage, Locke allows individuals to acquire, grow, or make more than they can use so that markets become possible and prosperity general (Lock 1689, II, paras. 46–51). With markets and prosperity, however, comes inequality, avarice and envy, and the third and last stage of Locke’s account is the institution of government to protect the property rights that have grown up in this way (ibid., II, paras. 123 ff.)So, it appears that Lock would claim that government protection and contribution by way of infrastructure only protects the right of individuals to fulfill their fundamental duty of self-preservation.  Government cannot hold the right of self preservation given that government is a mere amalgamation of people and systems.

There is another issue to be had here. The claim that others can own parts of something given that someone had done something to contribute to the creation of someone else’s property, establishes a risky regression argument. First, were this true, then no direct ownership of anything is possible regardless of the system created -this is because the system would be prosaic and terminally weak in bother enforcement and economic incentives.  The regression disallows any system to be established within the context of ownership; even collective ownership requires that a line of demarcation be drawn for things like: control, transfer and, benefit is derived from the object in question. This problem renders collective ownership null and contingent upon the actions of  all others forever in time.

The next point of contention deals with the fact that private ownership is not absolute and that it requires collective participation. Hume touches on this subject,

I observe, that it will be for my interest to leave another in the possession of his goods, provided he will act in the same manner with regard to me. He is sensible of a like interest in the regulation of his conduct. When this common sense of interest is mutually express’d, and is known to both, it produces a suitable resolution and behaviour… (Hume 1978 [1739], p. 490).

This brings me to my final conclusion. In connection with Hume and Smith, I would argue that  private property meets the necessary and sufficient conditions of efficiency. Mainly, that a system of private ownership allows for “Pareto-improvement” by ensuring that resource use is allocated to its maximal potential and that waste, poverty, and environmental destruction are natural and marginally acceptable predicaments. The negative consequences of these ‘predicaments’ are necessary to the stabilization and direction of the system -the system actually, given that it is automatic, benefits form the negative externalities and spillovers (stabilizers).

It is important to note that the reason for why a system of private property creates ‘Pareto-improvement’ lies in our nature. The inherent self-interest that drives men to seek resources for his betterment, well-being, and pride ensure that strife and contention of goods will always persist. To mitigate such strife, as Hume and Peters theorized, we establish systems that tend to progress toward optimization of conventions and coordination. This falls in line with the economic calculation problem: Is a given ton of coal better used to generate electricity which will in turn be used to refine aluminum for manufacturing cooking pots or aircraft, or to produce steel which can be used to build railway trucks, which may in turn be used to transport either cattle feed or bauxite from one place to another? In most economies there are hundreds of thousands of distinct factors of production, and it has proved impossible for efficient decisions about their allocation to be made by central agencies acting in the name of the community and charged with overseeing the economy as a whole. In actually, existing socialist societies, central planning turned out to be a way of ensuring economic paralysis, inefficiency and waste (Mises 1951). In market economies, decisions like these are made on a decentralized basis by thousands of individuals and firms responding to price signals, each seeking to maximize profits from the use of the productive resources under its control, and such a system often works efficiently. Such efficiency is seen only in decentralized and privatized markets; this is because private markets provide a mechanism through which human selfishness and rapaciousness is naturally allocated. The allocation in question, establishes strong incentives to play by rules and to produce, innovate, and act morally in a way that creates conditions that provide for a future or immediate payoff.