Liberal Property for Skeptics, Part 1

PUBLISHED

Hanoch Dagan (@DaganHanoch) is the Stewart and Judy Colton Professor of Legal Theory and Innovation at Tel-Aviv University and Director of the Edmund J. Safra Center for Ethics

PUBLISHED

Hanoch Dagan (@DaganHanoch) is the Stewart and Judy Colton Professor of Legal Theory and Innovation at Tel-Aviv University and Director of the Edmund J. Safra Center for Ethics

This is part of our symposium on Hanoch Dagan’s book, A Liberal Theory of Property. For a concise version of Dagan’s argument, see this restatement. Image credit: Sam Abell, National Geographic.

In A Liberal Theory of Property (Cambridge, SSRN), I argue that in a liberal polity the primary commitment to individual autonomy, which must dominate property’s justification, also shapes its constitution and thus grounds its most fundamental legal contours.

Property both empowers people and disables them, enhances their self-determination while also rendering them vulnerable. Therefore, property requires constant vigilance. A genuinely liberal property law meets the legitimacy challenge confronting property by expanding people’s opportunities for individual and collective self-determination while carefully restricting their options of interpersonal domination. Appreciating both property’s autonomy-enhancing service and the vulnerabilities it generates is key to the three pillars of liberal property – the features that distinguish it from property simpliciter –  carefully delineated private authority, structural pluralism, and relational justice.

This ideal of liberal property is very different from the Blackstonian conception of “sole and despotic dominion.” Liberal property requires law to facilitate in each important area of human action and interaction a diverse set of stable frameworks of private authority (property types, as I call them) so that people can set up – on their own or with the cooperation of others – long-term plans. Property law can be legitimate and just, I argue, if (1) the private authority of these property type is properly circumscribed in line with their service to people’s autonomy; (2) they all comply with relational justice; and (3) law’s background regime both assures ownership for everyone and secures to us all the material, social, and intellectual preconditions of self-authorship (23, 244).

One core task of A Liberal Theory of Property is to persuade property skeptics not to give up too quickly on the ideal of liberal property.  To be sure, skeptics rightly insist that for the vast majority of people here and now property generates and perpetuates inequality and dependence. They are thus correct to resist the quietism that threatens overfriendly accounts of property. I therefore recognize that, after examining any given property system against the liberal ideal, one may conclude that it is doomed. This conclusion is called for whenever the likelihood of meaningful reforms taking place is negligible and the alternative is more acceptable (246). And yet, I nonetheless seek to convince critics that they should not miss out on liberal property’s great humanistic promise. Rather than the culprit, the ideal of liberal property should be our lodestar for critically and constructively examining our disturbing reality by providing a normative vocabulary for evaluating central doctrines and offering directions for urgent reforms.

I am indebted to David Singh Grewal & Jedediah Britton-Purdy, Nestor Davidson, Rashmi Dyal-Chand, Katharina Pistor, Ezra Rosser, and Lua Yuille for their thoughtful discussions of the book. Their generous and penetrating responses push back against my exercise of “radical reconstruction” of liberal property (244) by raising two main challenges. The first, which I address today, is whether liberal property is potentially self-destructive; the second, to which I turn in tomorrow’s post, is whether it might be a distracting utopia. These challenges are important and fair; and they help refine A Liberal Theory of Property‘s mission and vision as well as the background regime which is crucial for liberal property’s actual success.


Skepticism as to the viability of the ideal of liberal property to serve as the lodestar of property reform takes two main forms. First, wouldn’t liberal property tragically end up undermining its own moral foundations? Second, are these moral foundations indeed worthy of our loyalty and commitment?

Grewal & Britton-Purdy’s response presents a sophisticated articulation of what Albert Hirschman dubbed “the self-destruction thesis,” in which capitalism sows the seeds of its own destruction. They highlight the market’s scale dynamics in which concentrations of capital tend to grow and to “display dramatic concentration of wealth, market share, and, increasingly, market-shaping power.” Power is, of course, the key word here. Britton-Purdy & Grewal argue that the return-to-scale dynamics unleashed by property-holding democracy render the marketplace “(A) itself a site of domination, populated by large-scale enterprises and disempowered or dispossessed workers”; “(B) a site of market power that may reinforce scale dynamics”; and “(C) a source of political feedback and capture that supports oligarchy and harnesses the state to the regulatory reinforcement of scale.”

Britton-Purdy & Grewal recognize that A Liberal Theory of Property takes seriously these “tendencies,” which threaten to undermine its vision, by insisting on a background regime that regulates “the concentration, and the power, of capital ownership, through antitrust, corporate law, labor and employment law, and other means.” But especially given the last tendency (of political feedback) that “may be reinforced, ironically enough, by political institutions that have come to be associated with liberal pluralism,” they remain skeptical. This is why they put liberal property “into dialogue with Marxism” by positing to readers the alternative of the abolishment of private property in the means of production as a potentially superior strategy for contending with scale dynamics.

But before discarding liberal property, it seems advisable to both consider the parallel tendencies of a regime in which the ownership of the means of production is abolished and also ask whether we can further enrich liberal property’s inventory of means for confronting these devastating scale dynamic tendencies. 

The first inquiry is triggered by the familiar insight that institutional analysis must always be comparative. It requires the examination of an environment that goes beyond liberal property’s prescription of enriching law’s structurally pluralist repertoire with minoritarian or utopian property types, such as worker cooperatives, and properly addressing their possible entry barriers (78, 107, 109). The alternative to liberal property is indeed to abolish – eliminate – the option of private property in means of production. But then the question is whether leaving only the two remaining options of either state ownership or worker cooperatives would be immune from analogous tendencies, namely: power dynamics, which – although different from that of private property –  are no less (and maybe more) threatening.

The second inquiry follows one of the core propositions of A Liberal Theory of Property. Property, I claim, must be legitimated not only at the (real or imagined) moment of its creation, but throughout its life. Therefore, law must continuously ensure not only that the justified background conditions that make property legitimate persist, but also that the scope of the private authority that owners exert over nonowners continues to conform to its justificatory foundations over time (211). This last maxim implies that law must never be complacent with its existing inventory of means for curbing private power.

This is why, for liberal property, facing the trajectory of excessive market power (Britton-Purdy & Grewal’s category B) requires antitrust law to go well beyond its existing focus on consumer welfare maximization. A genuinely liberal antitrust law should follow the Brandeisian legacy by decentralizing economic power as a means of decentralizing authority, targeting all concentrations of private authority and capital accumulation (71).

Similarly, it may well be the case that the book’s brief reference to the proper limits of the authority of corporate directors and controlling shareholders (70) and the more extended discussion of employers’ proper authority (195-28) do not, or not always, suffice to address the predicament of disempowered workers (category A). In certain contexts, the German model of codetermination seems a particularly inviting starting point for rethinking the workplace (310 n.140). Furthermore, nothing in the core commitments of liberal property requires that workers would have, as the current default prescribes, no share in the production’s surplus value (299 n.7). Liberal property can accommodate the possibility – frequently pressed on me by my colleague Roy Kreitner – of substituting this default with a different one.

Finally, Britton-Purdy & Grewal correctly insist that the devastating contingency of self-destruction cannot be properly confronted without addressing their category C of insidious “political feedback.” This point is part of a broader critique, regarding “the artificiality of trying to think about the economy without thinking at the same time about the state, and in equally basic terms.” I will take on – and largely accept – this broader proposition in the second part of my response. At this point, it is enough to concede their more specific claim, which made me regret for not including in the book some text on political money. Fortunately, I have discussed this matter elsewhere, so a few sentences may suffice here.

Money indeed corrupts our politics. But the idea that this is necessarily the case does not follow. Because preferences (alongside with reasons, of course) are relevant to politics, money can play a legitimate role in politics if, but only if, it reliably expresses the intensity of citizens’ preferences. A genuinely liberal regime would design a mechanism that converts money into a valid form of communicating citizens’ preferences and their relative intensity.

For such a “clearinghouse of money for political causes” to properly deal with the threat of corrupting political feedback, it must not apply only in political campaigns (on which the current regulation solely focuses). Rather, it must encompass all forms of spending and giving money for political causes, namely, it should equally apply to the regulation of interest group lobbying. To perform its task, the clearinghouse would readjust the size of political donations and expenditures so as to offset the artificial augmentation of these preferences due to the diminishing marginal utility of money. It would further use the money thus collected from the better-off in order to match every dollar spent by the worse-off with some money that can offset the reverse effect, namely, ensure that even small amounts spent by the poor on political causes will still reflect their more intense preferences.

Taken together, liberal property’s substitution of the hegemony of Blackstonian ownership with a multiplicity of property types that are all properly limited by its inherently relational conception of autonomy, its subscription to Brandeisian antitrust policy, and its reform programs as per the authority of owners of the means of production and per political money, suggest a third, and final response to Britton-Purdy & Grewal. Rather than pitting private property against state property, A Liberal Theory of Property seeks to change the terms of the debate by reconstructing the meaning (or, rather, the meanings) of private property. In other words, as Pistor observes, the liberal property ideal offers “a third way between capitalism and socialism as we know them.”


Yuille is not worried about the sustainability of the autonomy-enhancing ideal of liberal property, but rather about the ideal of autonomy itself. Indeed, for Yuille, the problem is my “deep commitment to autonomy,” which – even in my “rehabilitated” version – is “a myth,” and a dangerous one at that.

Autonomy is a myth, she argues, because the human condition is not one of self-determination. Following Martha Albertson Fineman’s “vulnerability theory,” Yuille insists that we are always, under all circumstances, subject to the vagaries of the world and are always co-determining and co-authoring, so that “dependence and reliance (the vulnerability)” is the “universal and constant human condition.” Because autonomy is neither real nor “realizable,” this myth of autonomy is not only false but also pernicious: it “obscures the mutually constitutive interplay among law, economy, and society,” and thus “fuels the fetish that imagines markets as some neutral, natural space.”

Therefore, Yuille warns readers from being seduced by autonomy’s “self-indulgent appeal” and risk coopting with property’s “core curriculum,” which “advances a neoliberal political/neoclassical economic ideologies and values as the only possibilities.” Instead, with Albertson Fineman, she claims that there is “only one response to the physical, mental, metaphysical, and institutional fact of universal constant vulnerability: resilience.” We must “become embedded in, and interdependent on, social relationships and institutions that produce the resources that allow people to deal with their vulnerability.”

Yuille does not specifically say what she expects from a law that supports such resilience. But she resists, I assume, any legal regime that facilitates or even tolerates the abuse of people’s vulnerability. Therefore, she must agree to the significance of liberal property’s first and third pillars, in which (respectively), owners’ private authority – the source of nonowners’ vulnerability – is carefully circumscribed, so that it does not go beyond its contribution to self-determination, and it furthermore complies with the prescriptions of relational justice so as to ensure that ownership does not offend the maxim of reciprocal respect for self-determination (20). Yuille probably also endorses liberal property’s background regime, discussed earlier and elaborated in tomorrow’s post, which arguably produces the resources that “allow people to deal with their vulnerability.”

So what else may be missing so as to justify rendering liberal property a pariah? Maybe Yuille detects no difficulty in its prescriptions, but only in its autonomy-enhancing aspiration; the “myth” as she repeatedly calls it. The difficulty cannot be with the (deeply misguided) association of liberalism and its ideal of autonomy with an independence-based atomism. Yuille recognizes that I firmly reject atomism. My account of liberal property subscribes to a radically different vision: of self-determination – both individual and collective – which is premised on the deep interdependence of our practical affairs (123). The reason why she perceives what I see as an ideal to be a myth may thus be that she rejects my commitment to begin and end the normative analysis with individual people and their rights.

This is a commitment I still urge her to endorse. To be sure, as I write in A Liberal Theory of Property (43, 53), people are partly constituted by their participation in a community and by their relationship with other members. They cannot be the sole authors of their lives, and their autonomy is indeed constrained by social and cultural embeddedness. That is the human predicament. But people must nonetheless be entitled to remain the ultimate navigators of their own self-determination (isn’t this what one means when saying that they should be able to deal with their vulnerabilities?). And they should be entitled to occasionally take a critical perspective on their communities and even their identities, or else we end up silencing critique of, and celebrating embeddedness in, oppressive settings. If these propositions are as obvious as I take them to be, it follows that the inevitable constraints on people’s autonomy need not be celebrated, nor need the value of limiting them while expanding their rights for self-determination be disparaged.

Exactly because, as Yuille correctly argues, property law assigns power in relationships of inevitable interdependence and thus “ranks and positions” people in society, “draws their horizons of possibilities,” and “steers their agency” – property law must be autonomy-enhancing. In other words, the main jurisprudential claim of A Liberal Theory of Property – that both property and the market are legal constructs, which are ultimately accountable to considerations of justice and legitimacy (13-16, 181-82) – prompts its core normative thesis: property law must proactively expand people’s opportunities for individual and collective self-determination while restricting options of interpersonal domination (67-78). Liberal property cannot undertake this task on its own. A background regime, which will be the focus of the second part of my reply, is indispensable for its viability. Our existential interdependence also explains why I will embrace Dyal-Chand’s and Pistor’s responses that highlight the robustness of this collectivist regime. But the same reasons that underlie my reply to Yuille explain why I hope to convince Dyal-Chand that this regime must not “prioritize the collective over the individual,” but rather be ultimately accountable to individual people – all people – and their rights to self-determination.

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