Barzel on Property Rights
| Nicolai Foss |
… an individual’s net valuation, in expected terms, of the ability to directly consume the services of the asset, or to consume it indirectly through exchange. A key word is ability: The definition is concerned not with what people are legally entitled to do but with what they believe they can do.
Notice how different this is from other (older) economic conceptions (e.g., Furubotn & Pejovich, Alchian, Demsetz et al.) which have typically categorized property rights into usus, usus fructus and abusus rights (and the right to sell these rights), often keeping a legalistic connotation.
In contrast, Barzel’s definition of property rights disconnects property rights from any legal connotation (the law is of course relevant for enforcement, but not for the definition of the concept itself). Moreover, to Barzel a property right is essentially an expected stream of net utility.
The expectational component is clearly a useful innovation (see how Barzel puts it to use in the paper cited above). However, it comes as a cost of perhaps muddling things. Thus, the reason why property rights are valuable is exactly that they imply “the ability to directly consume the services of the asset, or to consume it indirectly through exchange” — that is, use rights and income rights. However, why not call these “abilities” property rights (as in the older property rights tradition in economics), and why call the overall subjective valuation of these rights “property rights”?