Property Rights Systems and the Rule of Law

Abstract

Property rights - rights to control, use, or transfer things (broadly conceived) - though not readily distinguished from other rights, comprise a category of rights that both strongly benefit from clear and well-designed legal rules and often are subject to chiseling from failures to follow legal rules or from ex post alterations of the rules. Governance systems that limit official discretion to impair property rights, that have institutions and rules that provide clear definition to property rights and that provide predictable and consistent applications of those rights, will accord with the rule of law and generally will also advance social welfare. Some systems will depart quite evidently from this pattern, to the detriment of those societies, allowing too ready changes in law at the discretion of too few officials, too unconstrained by law, as the example of Zimbabwe illustrates. But differences between the good and the bad will not be drawn along simple, discrete lines, a point made by comparing the Zimbabwe example with the United States. The systems most consistent with the rule of law will not be able effectively to bar all changes in the law or to eliminate official discretion. Instead, those systems will limit the avenues for change and the ambit of discretion in ways that make property more secure and impositions on it more predictable without reference to the identity of the individual official enforcing the law or the individual property owners subject to it.