Person:

Smith, Henry

The relationship between property and morality has been obscured by three elements in our intellectual tradition. First is the assumption, which can be traced to Bentham, that property is a pure creature of law.' An institution assumed to be wholly dependent on law for its existence is unlikely to be infused with strong moral content. Second is the related tradition, also Benthamite, of examining questions about property law from a utilitarian perspective. 2 Utilitarianism is, of course, a moral theory. But in its modern applications, based on price theory and cost-benefit analysis, it adopts a framework largely indifferent to questions of individual rights and distributive justice, which many consider the hallmarks of a moral perspective. Third is the tradition, stronger perhaps in academic circles than in popular thought, that associates property with immorality. Starting with Proudhon's slogan that "property is theft,"' and building through Marx and Engels with their call for the abolition of private property,4 this tradition has put property on the defensive in the minds of those drawn to thinking of public policy in moral terms. This Essay seeks to challenge the conventional wisdom that dissociates property and morality. We hope to establish two propositions. First, no system of property rights can survive unless property ownership is infused with moral significance. By this, we mean that the differentiating feature of a system of property-the right of the owner to act as the exclusive gatekeeper of the owned thing-must be regarded as a moral right; intentional violations of this right, either by unlicensed invasions of owned things or unconsented takings of owned things, must be regarded as immoral acts. Second, the modern American legal system, at least with respect to this core aspect of property, does in fact adopt such a moral perspective. Our claims are based on the following fundamental aspects of property: Property is a device for coordinating both personal and impersonal interactions over things. Consequently, property rights must be communicated to a wide and disparate group of potential violators; these rights are in rem.5 Because property rights need to coordinate the behavior of large numbers of unconnected people, they must be easily comprehended and must resist possible misinterpretation. Law, including criminal prosecution and civil enforcement actions, is almost certainly inadequate to achieve this degree of coordination and compliance. Self-help, such as erecting fences and hiring guards, is also too feeble to assure the required degree of near-universal respect for property rights. Property can function as property only if the vast preponderance of persons recognize that property is a moral right, and this requirement has important consequences for the study of property. For property to serve as an in rem coordination device, the morality upon which it rests must be simple and accessible to all members of the community. We do not attempt here to outline any theory of the origins of property. We do argue that the imperative of in rem coordination places significant constraints on the kind of morality upon which property must rest. Again, we do not offer any fully developed theory of the content of such a morality. But it seems highly unlikely that such a morality will be captured by many forms of utilitarianism. Pragmatism is too uncertain, and casespecific cost-benefit analysis too demanding and error-prone, to supply the kind of robust and widely accepted moral understanding needed to sustain a system of property. Because the type of morality that will support a system of property rights must be suitable for all members of the community, to say that the essential quality of property is captured by the familiar metaphor of the bundle of sticks is also implausible. When it comes to the public definition of property rights, the metaphor implies that the content of property rights continually mutates from one context to the next as legislatures and courts add new sticks to the bundle and take others out. Such a process would make impossible the maintenance of a system of simple moral duties comprehensible to all. Likewise, if the core of property law must rest on a simple foundation of everyday morality, property is unlikely to be wholly the creature of law. If we are right about the necessary connection between property and morality, then Bentham is almost certainly wrong that property arises wholly from law.6 Human rights, including rights of bodily security and integrity, are another realm in which rights are widely held not to be wholly dependent for their existence on the state. We will argue that property rights and human rights have much more in common than is often supposed. In particular, both types of rights are "in rem," in the sense that they create corresponding obligations of noninterference on a very large and unspecified mass of dutyholders.7 Moreover, given the communication problems associated with creating and maintaining such large-scale duties, the content of the respective rights must remain correspondingly simple. "No punching" is the direct analogue of "No taking." If property is grounded in simple moral principles recognized by all members of society, then one can say property is immoral only by standing outside the existing social system. This stance, of course, is characteristic of the socialist revolutionaries who have excoriated property: they typically have been outsiders seeking to overthrow the existing social order. We do not offer the in rem nature of property rights as a theory of the morality of property. But recognizing the features of morality that make possible a system of in rem rights helps explain the relationship of morality and property. Nor do we claim that the traditional everyday morality that supports property extends to the refinements required when we move beyond simple exclusion rights and in rem dutyholders. Beyond the core of property, the simple robust morality supporting exclusion rights gives way to more pragmatic situational morality. In these more rarified contexts, decision makers can afford to let other moral considerations in, including the case-by-case pragmatism characteristic of modern utilitarianism, if so desired. At least the communicative cost constraints from core property do not stand in the way. Part I of this Essay will consider the relation of property and morality in general. We will argue that, as in the case of human and civil rights, the in rem nature of property rights requires support from very simple and robust moral intuitions. To coordinate expectations among unconnected people through the mediating device of a thing, property must draw on a type of morality that calls for more than pragmatic balancing. In Part II we consider a number of areas of property law that illustrate the role moral intuitions and condemnation play in modern American property law. Part III will consider how situational morality plays a role in refinements to the core exclusionary regime of property law. We also argue that these refinements are just that-refinements-and do not undermine the need for the morally grounded exclusion rights at the core of property.

1. As Bentham put it, "Property and law are born together, and die together. Before laws were made there was no property; take away laws, and property ceases." JEREMY BENTHAM, THEORY OF LEGISLATION 111-13 (C.K. Ogden ed., Richard Hildreth trans., Harcourt, Brace & Co. 1931) (1802).
2. Id. at 1-4.
3. PIERRE-JOSEPH PROUDHON, WHAT IS PROPERTY? 13 (Donald R. Kelley & Bonnie G. Smith eds. & trans., Cambridge Univ. Press 1994) (1840).
4. KARL MARX & FREDERICK ENGELS, THE COMMUNIST MANIFESTO: A MODERN EDITION 52 (Verso 1998) (1848) ("[The theory of the Communists may be summed up in the single sentence: Abolition of private property.").
5. Thomas W. Merrill & Henry E. Smith, Optimal Standardization in the Law of Property: The Numerus Clausus Principle, 110 YALE L.J. 1, 8 (2000).
6. BENTHAM, supra note 1, at 111.
7. See J.E. PENNER, THE IDEA OF PROPERTY IN LAW 29-30 (1997) (defining in rem duties and rights).

This article explores an alternative filing system between joint and individual filing, here termed "intermediate filing." Under such a system, instead of allowing couples to "split" their income as joint filers or forcing them to file as individuals, intermediate filing presents couples with a choice of individual filing as a default or fractional splitting. The ratio of the split would govern both tax treatment and property division (broadly defined) on divorce. The article shows that such a system carries with it various advantages in terms of equity, efficiency, and simplicity. In particular, the article analyzes the impact of the choice of intermediate versus joint versus individual filing on the tax treatment of nonmarket labor and the process of marriage formation. The analysis of intermediate filing also leads to a thought experiment on the role that sharing plays in the taxation of married couples and of multiple-taxpayer groups more generally.

Many social theories claim to have the human being at their center. That has been more a matter of theory than practice in many of those theories. But in the case of Carol Rose’s scholarship on property it could not be more true. In many of her works, Carol develops sophisticated theories about property by focusing in on characters. While they are sometimes humorous and colorful, the characters capture something important about human nature, and Carol, like an older tradition that we could learn a lot from, explores property through the lens of human nature. In it she finds many twists and turns. I will focus on how the characters of the ninny and the scoundrel call for crystals and mud1—bright line rules and vague standards, yes, but quite a bit more than that. In Carol’s view a variety of the tragedy of the commons with crystals and mud leads to endless cycling between crystals and mud.2 At the end I will argue that human nature may also lead to a sort of equilibrium in the law, an equilibrium we could associate with the traditions of law versus equity. But for that to occur we do need some significant degree of moral consensus, upon which we can ground our equitable interventions. This need for moral consensus takes us back to Carol’s insights about human nature and to her humanistic bourgeois view of property based on narrative. Carol points out that famous accounts of property from Locke and Blackstone to Demsetz all involve a view—or views—of human nature.3 All of them ground a picture of property in self-interest, possible enlightened self-interest, but then import covertly a more cooperative or even altruistic aspect of people when it comes time to set up the property system.4 A system of private property requires collective action, and a world of narrowly rational utility maximizers—a character Carol once called “RUM” with, I think, the British meaning of “odd” in mind5—would have a difficult time getting the system off the ground. 1 Carol M. Rose, Crystals and Mud in Property Law, 40 STAN. L. REV. 577, 577–78, 587 (1988) [hereinafter Rose, Crystals and Mud] (describing the “characters” who muck up bright line rules to include “ninnies, hard-luck cases, and the occasional scoundrels who take advantage of them”). 2 Id. at 595–604. 3 Carol M. Rose, Property as Storytelling: Perspectives from Game Theory, Narrative Theory, Feminist Theory, 2 YALE J.L. & HUMAN. 37, 38–39 (1990) [hereinafter Rose, Property as Storytelling]. 4 Id. at 38–40. 5 Carol M. Rose, “Enough, and as Good” of What?, 81 NW. U. L. REV. 417, 417–22 (1987) (introducing the fictional character “Rational Utility Maximizer,” or “RUM”).

In his pioneering work on transaction costs, Ronald Coase presupposed a picture of property as a bundle of government-prescribed use rights. This picture is not only not essential to what Coase was trying to do, but its limitations emerge when we apply Coase’s central insights to analyze the structure of property itself. This leads to what we term the Coase Corollary: in a world of zero transaction costs the nature of property does not matter to allocative efficiency. But as with the Coase Theorem itself, the real point is the implication for a positive transaction cost world: we need to subject the notion of property to a comparative institutional analysis. Because transaction costs are positive, it is no accident that property is defined in terms of things as a starting point, that uses are grouped under exclusion rights, and that in rem rights are widely employed: these features of property receive a transaction cost explanation. Simple lumpy packages of property rights motivated by transaction costs form an important baseline that furnishes presumptive answers to bilateral use conflicts. A more thoroughly Coasean approach points back to a picture of property more like the traditional one furnished by the law.

Contract theory has long been preoccupied with the common law. Contracts is taught in the first year of law school along with the other “common law subjects.” The rise of the modern view of contracts as involving mutually dependent undertakings—as opposed to the earlier independent covenants model—was carried out by the common law courts. Contracts are usually enforced with damages, the classic common law remedy. From proto-realists like Holmes, through the realists and their successors in law and economics, theorists have emphasized the law and downplayed the special role of equity, as developed over the centuries by Chancery and building on a tradition of thought going back at least to Aristotle. Equity is treated either with disdain as useless moralizing or with impatience as a mere proto-version of freewheeling contextualized inquiry that the law courts should be engaging in without artificial constraints of a separate “equity.” Whether they have been anti-moralists, formalists, realists, or consequentialists, commentators have been quite unified in their preference for contract law over equity. This orientation to the common law, narrowly conceived, is even true of Charles Fried’s landmark book Contract as Promise, which did much to bring a moral approach to contracts back into the spotlight. In this Essay I will argue that Fried conceded too much to the conventional exclusive focus on the common law, but that once we recapture an older tradition of equity, the central role of morality in contracts comes more clearly into view. Equity is the missing dimension from contract theory. This older tradition uses equity as a structured safety valve to deal with the opportunism arising from the simple structures of the common law. At the same time, equity as a safety valve can be justified on both deontological and consequentialist approaches to contract law. Thus, the Kantian and utilitarian views of contract can converge at the descriptive level. If so, then the disagreement between promise theorists like Fried and legal economists is a foundational rather than a descriptive one.

Legal concepts, like concepts generally, help economize on information. Conventional wisdom is correct to associate conceptualism with formalism, but misunderstands the role concepts play in law. Commentators from the Legal Realists onward have paid insufficient attention to the distinction between intensions – functions from worlds to categories – and extensions – the categories themselves. Concepts that pick out the same category can differ greatly in terms of information costs. This Article applies some tools of cognitive science to explore the economics of legal concepts. As in cognitive science, we expect simplicity of description and generality of explanation to coincide. Specifically, both the mind and the law can be regarded as information-processing devices that manage complexity and economize on information by employing concepts and rules, the specific-over-general principle, modularity, and recursiveness. These devices work in tandem to produce the economizing architecture of property. The cognitive theory is then applied to longstanding puzzles like the role of baselines such as nemo dat (“one can give that which one does not have”) and ad coelum (“one who owns the soil owns to the heavens above and the depths below”), the notion of “title,” and the function of equity as a safety valve for the law. The cognitive theory also allows one to reconcile reductionism and holism in property theory as well as static and dynamic explanations of the contours of property.