Primitive Property Rights

• “Primitive” societies– Preliterate

• No effective government

• No complex economy

– Still exists

• “Archaic” societies– Preliterate

– No longer exist

• Combine for analysis

Does economic model of human behavior apply to “primitive” societies?

• “Formalists” - it does and they study market-like behavior

• “Substantivists” - it doesn’t because no true markets existed

• It does under modern definition of economics which has expanded to include– Non-market behavior

– Institutional structures• Law

• Information

• Transactions costs

Underlying theory of “law and economics” studies

• Law is an instrument for maximizing social wealth or efficiency– Large body of literature in modern context

– Also applies to primitive societies

• Assumes “rationale economic man”– Cognitive process is not important, rather

– Are consequences of human behavior consistent with “economic theory”

Characteristics of “primitive societies”

• Cost of information is high– Transactions costs

models apply

– High cost to assess risk

• Little privacy– Social setting is kinship

groups for all activities

– Makes all members informers

Posner’s Model• No effective government• Limited variety of

consumer goods– Food is primary

• Limited trading outside kinship group

• Consumption goods perishable

• Negligible private gains from innovation

• Population is immobile

Richard A. PosnerSenior Lecturer in

Law

University of Chicago Law School

Insurance Principle

• Insecure and variable food supply– Accumulation of capital not

possible• Food is perishable - crops and

game

• Women - monogamy dominates because women are a form of capital

Prehistoric female images focus on reproductive

capacity

Insurance Principle

• Redistributive ethic– “A” has a surplus of food

– “B” has a shortage of food

– A “gives” food to B• A’s motivation?

• If in future roles are reversed, B will give to A

I hope brother-in-law “A” had better luck than I did!

Missed again - ha, ha

B

A

Insurance Principle

• This exchange is not a “market” transaction– No benefits from division of labor

• A form of insurance• Generosity becomes a highly

valued trait, e.g.– Debts never expire

• Gifts are reciprocal• Reduces “free-riding

Mammoth hunters

What are the “property rights” implications of Posner’s model?

Zapotec Rug: http://www.celerina.com/home.html

Legal Aspects

• Fundamental legal processes of any legal system– Promulgation of substantive rules

– Resolution of disputes

Property Rights

• Exist based on scarcity– Exchange value

– Cost of enforcement

– No right if cost exceeds value

Property

• Land– If no scarcity land in general will be

open to all

– Highly fertile land near settlements• Usufruct right

Usufruct

• Right based on possession (use)• Protected by its use• Terminal type of “estate”

– Terminal based on failure to use

– Can pass on to heirs or transfer to family members

– Can’t “sell”

Application of model

• Low demand for land– Surplus given away, not used

to “buy” land

– To do so would be politically destabilizing

• Primary evidence of ownership is possession– High information costs reduce

efficiency of markets

Application of model

• Temporal distortions– Possessor interest provides

incentive to take more resources than needed

– Not a problem because it’s cheaper

• To move to new lands when game is scarce

• To move to new lands when productivity declines