The Present Economic System

THE PRESENT ECONOMIC SYSTEM § 1. The place of private property. § 2. Nature of property. 5 3. Relation of wealth, property, and capital. Some theories of private property. Origin vs. justification. § 6. Limitations of private property. 7. Limitations of bequest and inheritance. § 8. Social expediency of private property. I 9. The monetary economy. 10. The competitive system. § 11. Limitation of competition by custom. § 12. Effect of modern forces upon custom. 13. Adam Smith's influence. § 14. The wage-system.

§ 1. The place of private property.

Of fully equal im portance with material wealth in determining the economic power of a people is the social system under which the nation lives. This is the term applied to the whole complex of in stitutions and arrangements in which and by which people live together in society. It is the embodiment of the opinions, ideas, and habits of life inherited by each generation from its forebears. It is, indeed, a people's whole state of civiliza tion, with its political, economic, intellectual, scientific, re ligious, and esthetic aspects.

The most important economic aspect of the existing system is, broadly speaking, the institution of private property. So closely connected with this that they are hardly more than different phases of the same thing are the use of money (the monetary economy), the wage system, and competition as a mode of distribution. "The institution of private property" is the general expression for the way in which men in the modern state make use of their own energies and of material wealth within the nation. We live in a regime of private prop erty, and all our economic problems are affected by that fact. The determination of the exact boundaries of private property 544 makes up a large part of the politico-economic problems which the people in each generation have to solve. A large share, possibly, in a certain sense, every one of the economic problems that are discussed involve change, limitation, defini tion, or, more radically, abolition of present laws of property.

Broadly understood, as above, therefore, determination of the nature of private property is the essential problem in eco nomic legislation.

§ 2. Nature of property. Property means ownership. and ownership is the abstract noun expressing the quality of possessing a thing. Correspondingly, owner is the Anglo-Saxon equivalent of "proprietor." Property thus. fundamentally, means, not an object held or possessed, but the right in or belonging to a person to control something that he owns. Ownership is a legal right to control under certain conditions.' Physical possession of an object is not necessarily ownership.

The law makes between property rights and equitable rights some subtle distinctions, which have their reason in the his tory, if not in the logic, of the law, but which are not essential to economic discussion. In some states this distinction has been in large measure abolished. What interests us are the rights (claims) that men have to the control of wealth and services, whether by technical law these are called legal or equitable, and this right is what is meant by "property" in our discussion of it.

There are different kinds of ownership. It may be private, as that of individuals, families, partnerships, or corporations; or it may be public, as that of nations, states, counties, cities, and towns, owning such things as public buildings, parks, highways, the Adirondack forest reserve, or the Erie Canal. These two kinds are equally effective as against the claims of outsiders, but the rights of those inside the circle of ownership differ. For example, the rights of one shareholder against I See Vol. I, pp. 264-267.

another, or the rights of one member of a family as against another, are not the same as the rights against outsiders. Private property is the characteristic feature of our present industrial society, but it exists side by side with public prop erty and with many intermediate grades between private and common property.