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Liberal Property for Skeptics, Part 2


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.

The first part of my reply to cautious readers of A Liberal Theory of Property (Cambridge, SSRN) focused on the question whether liberal property – premised on the three pillars of carefully delineated private authority, structural pluralism, and relational justice – deserves to be the lodestar of property law reform. My positive answer (here) may still leave readers with a follow-up skeptical worry: that liberal property’s happy humanistic vision might end up as a distracting utopia.

The concern of utopia emerges in different ways and emphases from the responses of Nestor Davidson, Rashmi Dyal-Chand, Katharina Pistor, and Ezra Rosser. As Pistor observes, although there are many instantiations of property law that meet the demands of liberal property, the gap between this ideal and actually existing capitalism is indeed significant. Readers of these four responses – and maybe their authors – may worry that this gap renders the exercise futile or even distracting.

Rosser and Davidson raise the risk of futility. Thus, Rosser writes that my vision of property is hard to fault because I deliberately avoid the messiness separating this vision from how property is lived in even wealthy liberal democracies, and that “such exercises in pure theory risk being dismissed as merely self-indulgent.” Similarly, Davidson says that whereas “it is genuinely hard to quibble with the vision,” we do not live in that world in which “the is and the ought can, somehow, eventually genuinely harmonize.” Focusing on property’s categories – property types, as I call them – he raises doubts as to the ability to reconcile property’s messy reality with the commitment to autonomy that should, per my account, guide property’s structural pluralism. Thus, rather than normatively coherent default categories, Davidson perceives property types as focal points for contestation. He therefore insists that we must veer “less into the realm of justification and more into the more participatory aspects of democratic theory.”

But the distinction between participatory democracy and the realm of justification is not as sharp as Davidson presents it, at least not in the context of normatively resilient concepts such as property. Davidson correctly writes that with no omniscient liberal watchmaker in place, we are left with “imperfect legislatures, courts, agencies, private actors, and other legal stakeholders who look to the forms as one venue to win arguments, play out politics by other means, and muddle through making sense of irreconcilable values and practical problems.” I agree that the grammar of democratic politics is not one of pure reason. Democracy is messy, the power of the better argument does not always settle our public debates, and the relative weights of power and reason are likely to diverge across different participatory polities. But friends of democracy as a core humanistic value converge at perceiving a sheer power- or interest-based understanding of democratic politics as a pathology. Healthy participatory democracy implies that winning arguments depends, at least partly, on their justificatory power.

This is why A Liberal Theory of Property is not only “a call to arms” as Davidson correctly reads it. As the first part of my reply indicates, this book seeks to reconstruct the meaning (or, rather, the meanings) of private property, and thus change the terms of some of our debates. Because property is a concept of popular use, it is, as Rosser writes, “a good place to fight some of the most significant battles over what society values.” Re-negotiating the social meaning of property can be a potent means for such political action because it affects, to some extent, the power of various claims of owners and thus their actual influence. Our public understanding of property shapes people’s vision of the rights of owners, their expectations of owners, and the limits of what they perceive to be the legitimate interests of owners. It defines the realm of normatively powerful demands for, and objections to, government action, as well as the realm of claims that are perceived as merely self-centered, and thus publicly inconsequential.

The impact of these claims and objections may indeed be limited. Successful reforms require the skills and devotion of social activists as well as the mobilization of the oppressed and underprivileged. No normative theory of property can substitute for political action. But in a vibrant democratic environment, reforming the prevalent understanding of good property can make some difference. This is why I hope that A Liberal Theory of Property would push social scientists to develop tools for empirically assessing the performance of existing property systems in terms of people’s self-determination, and not only their welfarist consequences (24, 68, 247).

Such tools may be helpful, to give one example, because property features in internationally influential indices, such as the Ease of Doing Business Index, the Global Competitiveness Report, and The International Property Rights Index. Currently, the indicators these indices employ mostly presuppose the Blackstonian conception of property, which Pistor properly dubs “illiberal property.” But if the impact these indices have on decisionmakers is as significant as they claim, then supplanting or at least supplementing these indicators with autonomy-based ones may do some work in convincing both true friends of property and those who present themselves as such to follow reformers by pushing our existing, quite imperfect, property systems closer to the liberal ideal. After all, politics is not, and surely should not be, immune from the power of reason.

Nor is constitutional adjudication. Shaking-up the Blackstonian presupposition may dramatically affect cases, such as the forthcoming Supreme Court decision in Cedar Points Nursery v. Hassid, dealing with the constitutionality of a regulation that grants farm labor unions a limited right of access to an employer’s property. Liberal property is particularly careful in delineating the private authority of owners of means of production so that owner-employers’ authority must not include excessive powers that may impinge upon workers’ basic rights. This is why, A Liberal Theory of Property repudiates, not only from the perspective of labor law, but also from that of liberal property, the Lechmere, decision, on which the Cedar Points petitioners rely. Ownership of factories, farms, and other types of both tangible and intangible property that serve as means of production must not include a right to exclude labor organizers and activists, insofar as such an exclusion might jeopardize the workers’ right to unionize that is entailed by the liberal commitment to relational justice (199).

But do we have the luxury, as Dyal-Chand puts it, to adopt this utopian vision? Both Dyal-Chand and Pistor raise important concerns regarding the environment in which property law is situated, which may impinge upon the vision of liberal property and might even render its pursuit distracting. Both responses helpfully contextualize property law and its liberal ideal in the larger legal, social, and environmental setting. Liberal property cannot address all these important concerns – property theory is not a theory of everything. But it does, as I hope to show in the remaining paragraphs of this reply, point in all the right directions.

Dyal-Chand focuses on the crises of systemic racism and of climate change, which exemplify the repercussions that can flow from property law. Regarding systemic racism, she rightly insists that for a property system to claim to be just, it must not adhere, let alone follow, a vision that protects racial status and other privileged identities as property. With respect to climate change, she calls for a sobering recognition that our planet is a limited resource, which implies a permanent measure of restraint and the collective management of systemic externalities. Restraint must lie, Dyal-Chand argues, at the core of property, even if “it limits the exercise of property rights in pursuit of self-definition.”

Pistor’s concerns are different. But they also look at property’s context. Pistor observes that A Liberal Theory of Property “calls for change that is more radical than the title suggests” due to two features of the realities of the existing neoliberal order. To succeed, she claims, a liberal property law would have to overturn two disturbing features of this order. First, it should prevent owners from turning attendant social resources conferred by law – notably, the financial safety nets that central banks provide – into a means of extraction. Second, it must restrict the ability of owners to opt out of its animating principles, so as to avoid the devastating ramifications of hyper-globalization’s legal and regulatory competition.

Parts of Dyal-Chand’s and Pistor’s concerns actually fall within the three pillars of liberal property. Thus, as Dyal-Chand writes, the “idea of self-definition, which includes guarantee of property access on grounds of relational justice (even as between private individuals), provides a powerful basis for addressing some of the ills resulting from structural racism.” By the same token, Pistor’s claim that law should deny the creation of new property rights for the sole purpose of creating scarcity and thereby securing personal gain, squarely fits into liberal property’s first pillar: because property’s private authority should be carefully circumscribed in line with its autonomy-enhancing service, the accumulation of capital must not be sanctioned or supported as an end (56). But Dyal-Chand’s and Pistor’s concerns go beyond property theory, highlighting the indispensability of the state’s supportive background regime.

A Liberal Theory of Property does not ignore the state and its responsibilities to ensure people’s health, education, and means of subsistence, which are surely more basic than property to personal self-determination. For property law to deliver its ideal of enhancing people’s self-authorship, it must rely on a just background regime that affords everyone the material, social, and intellectual preconditions that are needed to enable people to become and remain self-determining individuals. This is why the book’s defense of the liberal ideal of property is explicitly qualified: property is fully justified only in a genuinely liberal polity, and its legitimacy is necessarily contingent on the performance of a background legal regime that supports the enhancement of autonomy (2, 39-40, 72).

Setting the details of this regime is a task that goes beyond the scope of property theory – property theory need not prescribe a specific welfare, health or education policy. But pointing to the indispensable features of this regime is nonetheless required. Thus, while A Liberal Theory of Property does not attempt to settle the debate as to whether the state should ensure that everyone have sufficient or rather equal substantive opportunities for self-determination, it does prescribe that property’s legitimacy depends on the degree the legal system it belongs to complies with the requirement of justly distributing property’s potential empowerment (74). Similarly, although property theory need not articulate a blueprint for antitrust law, it is significant to insist that such blueprint must depart from the prevalent exclusive focus on consumer welfare and target concentrations of private power (71).

I still think that a theory of property need not, and should not, purport to become an overall theory of justice or of the state. Yet, Pistor and Dyal-Chand correctly imply that the background regime needed to sustain liberal property goes beyond the concerns of distributive justice and market power. And while its specific details again need not be part of property theory, they are right to insist that the viability of liberal property depends on these additional critical commitments.

Liberal property should, as Pistor writes, be embedded in a monetary order that makes money widely available to facilitate broad participation in free markets. Moreover, it should be, as she further argues, shielded from illiberal imports by revising its choice of law doctrine so as to prevent citizens from shopping for illiberal property law elsewhere and enforce it back home.

Both requirements are indeed crucial. Because the availability of money is significant to people’s ability to self-determine, the liberal state must take some responsibility for its broad supply. Likewise, since the viability of the background regime that secures property’s legitimacy depends on owners’ Rawlsian obligation to support just institutions, liberal property’s structural pluralism does not authorize property instruments that facilitate tax avoidance or the avoidance of owners’ obligations to their creditors. A genuinely liberal law must thus repudiate choice of law rules insofar as they respect such instruments, which undermine these civic responsibilities and therefore contravene liberal property.

Likewise, liberal property should be adjusted so as to ensure, as Dyal-Chand claims, that it does not implicitly authorize devastating environmental externalities and that it allows sufficient space for vindicating the right of self-determination of victims of systemic racism and their descendants. Because these critical concerns are systemic, they require, as she notes, collective knowledge and collective action. And because liberal property must attend to public commitments of distributive justice, democratic citizenship, and aggregate welfare (144-45), they should indeed affect its architecture.

Thus, where our aggregate welfare is threatened by climate change, environmental concerns may well require individual and collective restraint. They may justify curbing excesses of current owners so as to ensure the right to self-authorship and thus to viable ownership of future generations (74). They may further justify rethinking the scope of objects subject to private property. Liberal property implies that there need to be some objects – not necessarily material – that people should be able to form plans about and thus to self-determine. But it by no means implies a demand to either shrink or refrain from expanding the public domain. In fact, it recognizes that the objects of property may change across time and space (28).

Systemic racism is even more obviously pertinent to the background regime of liberal property. To see why, I need to briefly address the liberal theory of property transitions, which Michael Heller and I call “the liberal property pact”. In general, liberal property law endorses a principled bifurcation of the universe of property transitions. Sudden dramatic changes undermine the contribution of property to people’s ability to plan and should thus be treated as compensable takings. Moderate and gradual regulatory changes, by contrast, can be seamlessly accommodated since they do not threaten property’s autonomy-enhancing function and are necessary for property to face its ongoing justificatory challenge (213).

 Things are dramatically different, however, where the changes at hand target past injustices or their current repercussions. In such contexts, the liberal property pact substitutes this stability-sustaining doctrine with one which unapologetically destabilizes holdings of morally tainted entitlements. It is no coincidence that history is full of examples of valuable property privileges abolished without any compensation. Even significant and abrupt changes, such as the abolition of slavery or the Fair Housing Act, need not – indeed must not – prompt compensation. Rather than fostering within the citizenry a complacent attitude toward the legitimacy of existing property law, a liberal property pact seeks to cultivate an attitude of cautious – maybe even suspicious – acceptance of the moral propriety of positive law, while anticipating, indeed expecting, its moral improvement (233-35). Dyal-Chand’s firm rejection of rules protective of racial status and other privileged identities as property can, and should, find its proper home in the liberal property pact.

Indeed, like Britton-Purdy and Grewal’s critique that prompted my reference, in the first part of this reply, to the law of democracy, Dyal-Chand’s and Pistor’s responses help refine and enrich the features of the autonomy-enhancing background regime, which is required in order to render the promise of liberal property viable. The success of liberal property is by no means guaranteed. But it is not bound to fail. I understand the caution; both property and liberalism have failed us before, so some suspicion is in place. But property is not going anywhere and its liberal vision is empowering. Pistor observes that A Liberal Theory of Property “could have hardly come at a more prescient time” and I hope she is correct (I am writing these words on January 20th…). If failure is not preordained, then a jurisprudence of hope may fit well to passionate reformers such as the seven respondents, whose thought-provoking challenges I have tried to address in this reply. I am deeply indebted.