Law, Endowments and Property Rights

摘要

Private property rights are crucial for personal welfare and economic development. Adam Smith (1776 [2000]) stressed that private contracting is a critical prerequisite for the voluntary, mutually beneficial exchanges that foster specialization, innovation and economic growth. Hayek (1960, p. 140) argued that protecting private property rights is vital for preventing coercion, securing liberty and enhancing personal welfare. More recently, a growing body of empirical work demonstrates a strong positive association between the degree to which countries protect private property and economic development (Knack and Keefer, 1995; Hall and Jones, 1999). The security of property rights, however, is not a natural occurrence; rather, it is an outcome of policy choices and social institutions. Any government strong enough to define and enforce property rights is also strong enough to abrogate those rights (North and Weingast, 1989). Thus, protection of property rights requires finding a balance between 1) an active government that enforces property rights, facilitates private contracting, and applies the law fairly to all; and 2) a government sufficiently constrained that it cannot engage in coercion and expropriation. Besides the explicit codes and formal enforcement organizations associated with defining, defending and interpreting private property rights and contracts, property rights are also shaped by the "moral and ethical" norms governing human interactions. Thus, in this paper, the term "property rights" refers to the degree to which a broad set of policies, legal and political systems, and informal norms define and protect private property, apply the law equally to all and limit government interference in private contracting.