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