University of Hertfordshire

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Much of the “Economics of Property Rights” Devalues Property and Legal Rights

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  • Geoffrey Hodgson
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Original languageEnglish
Pages (from-to)683-709
Number of pages27
JournalJournal of Institutional Economics
Early online date9 Feb 2015
Publication statusPublished - 1 Dec 2015


Legal theorists and other commentators have long established a distinction between property and possession. According to this usage adopted here, possession refers to control of a resource, but property involves legally sanctioned rights. Strikingly, prominent foundational accounts of the ‘economics of property rights’ concentrate on possession, downplaying the issue of legitimate legal rights (Von Mises [1932] 1981, Alchian 1965, 1977, Barzel 1994, 1997, 2002). Some authors in this genre make a distinction between ‘economic rights’ and ‘legal rights’ where the former are more to do with possession or the capacity to control. They argue that ‘economic rights’ are primary and more relevant for understanding behaviour. But it is argued here that legal factors – involving recognition of authority and perceived justice or morality – have also to be brought into the picture to understand human motivation in modern societies, even in the economic sphere. As other authors including Hernando De Soto (2000) have pointed out, the neglect of the legal infrastructure that buttresses property has deleterious implications, including a failure to understand the role of property in supporting collateralized loans for innovation and economic development.


This article has been published in a revised form in Journal of Institutional Economics, This version is free to view and download for private research and study only. Not for re-distribution, re-sale or use in derivative works. © Millennium Economics Ltd 2015

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