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Singer, Joseph

How should we think about property and property law both descriptively and normatively? This article suggests we consider this question by focusing on justifications for the estates system which limits the bundles of property rights in land that are recognized by the legal system. Thomas Merrill and Henry Smith have usefully argued that what they call the "numerus clausus" principle is justified because it lowers the information costs of property. While there is a lot to this argument, I suggest that if we look, not only at the traditional rules governing future interests but at all the statutes that regulate property and market relationships, as well as the social customs embodied in our property institutions, we can see that our legal system regulates the bundles of property rights that can be created and enforced, not only to improve efficiency, but to shape the contours of social relationships so that they comply with the norms defining a free and democratic society.

Some of those regulations attempt to prevent the negative externalities that flow from unregulated property bundles, such as the current financial crisis which appears to have been caused by the marketing of subprime, variable rate mortgages that were securitized into incomprehensible packages whose real market value hidden from purchasers who took unreasonable risks in buying them. But other laws regulating property bundles are based on norms that define our way of life, such as those that outlaw property relations characterized by feudalism, slavery, indentured servitude, or racial and religious restrictions on land ownership. Still others protect consumers by setting minimum standards for property and other market transactions.

This approach to property differs from the traditional alienability approach, the legal realist bundle of rights approach, the efficiency approach, the libertarian and liberal egalitarian approaches, and the personality, human flourishing, and virtue ethics approaches by framing descriptive and normative inquiries about property and property law by reference to the quasi-constitutional, structural role that property law plays in defining the appropriate contours of human relationships in a free and democratic society.

It is common to view "the free market" and "government regulation" as opposites. This way of framing policy and legal questions suggests that regulation inevitably deprives us of freedom. But another word for "regulation" is "the rule of law." The opposition of markets and regulation makes it easy to forget that markets are defined by a legal framework that sets minimum standards for social and economic relationships.

We can better appreciate the legal framework of markets by remembering that regulation was needed to abolish feudal relationships, to prohibit relations of servitude, slavery, and racial inequality, and to spread access to property by redistributing property rights from lords to tenants and slave holders to slaves. Libertarian calls for deregulation fail to recognize the extent to which regulation was needed historically to create a society of free and equal persons with widely dispersed property ownership. Regulations are also needed to define property rights and to protect individuals from fraud and unfair or deceptive practices in market transactions. Libertarian ideals actually support a great deal of supposedly liberal legislation.

Further, Americans demand regulations that go far beyond those championed by libertarians, as evidenced by the consumer protection laws and myriad regulatory statutes in force in every state, as well as in federal law. Although Americans tend to talk like "small-government" libertarians, we legislate like liberals. Minimum standards regulations do not deprive us of freedom; rather, law promotes both freedom and democracy by outlawing social and economic relationships that are "subprime" because they fall below the minimum standards acceptable for human relationships in a free and democratic society. It is time we acknowledged the regulations we too often take for granted. If we do that, we can debate what those laws should be, rather than focusing on a false debate about whether they should exist at all.