Natural & Property Rights (I): Building Blocks of Social Order
Foundations for any monetary economy
As we talked about in Money (I), human society runs on interdependence, which we express through systems of exchange rooted in ownership rights—because, fundamentally, you can’t make a deal about something unless you have rights over it, isn’t it? Ownership, in this context, extends even to promises and contracts; you have to “own” the ability or rights to make that commitment.
Socially, this sets the stage for property rights—claims tied to resources or assets, some of which can be traded in financial, economic, or social relationships, often representing the fruits of one’s labor1. These rights intersect with natural rights sphere, grounded in the fundamental idea that simply by existing as human beings with the same dignity, we are entitled to certain intrinsic, inalienable rights—life, liberty, and property23. These rights are central to shaping the values and ethical norms that keep a community’s order together—they form the moral and basis for legal glue of a society that respects ownership and exchange4, ensuring transactions honor individual rights while aligning with the broader social community framework5.
But before we continue...
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Property rights also serve to manage externalities6 , those unpriced costs or benefits that spill over from private transactions into society at large7. Essentially, property rights help internalize these externalities by aligning incentives. Take, for example, a factory that pollutes a river—which is common property: the pollution impacts the downstream community, but clear property rights can clarify both the factory's obligations and costs if it oversteps, as well as the community's right to clean water and other possible rights attached to that common property. This mechanism helps define what can be exchanged, under what terms, and by whom, fostering more transparent and efficient transactions that enhance trust within the community.
In a modern monetary economy in which we live, we can break down property rights into two main categories: the rights tied to monetary representation itself—whether it’s a commodity, cash, or bits in a digital ledger database—and the rights and conditions associated with the valuable assets exchanged in the markets. Every transaction is fundamentally a two-way street: the payer provides money (which represents 50% of the exchange), and the payee provides the asset(s) in return, comprising the other half.
In essence, when you make a payment, you’re swapping bundles of property rights. On one side, there’s money, the universally accepted medium of exchange in the economic community, and on the other, there’s the asset being purchased, each part with its own set of rights and obligations. Simple enough, but crucial for the entire socio-economic system to function smoothly.
Defining components
Property rights are basically the invisible social contract that says, “This is mine, that’s yours, some things we share with equal rights (or not), and here’s how we get to interact with them”. As Singer (2000)8 points out, these rights aren’t just about owning “things”—they’re really about relationships. It’s the entitlements and obligations that come with ownership, and those form the bedrock of how we, as a society, manage our stuff. So, let’s break down the key components of property rights and see what they actually mean—or could mean in places where they don’t exist yet—in today’s world.
Object of Property (What’s Owned)
First off, the object of property is whatever the property rights are tied to—whether it’s something physical, a digitally represented asset, or even something less tangible, like a contract. Merrill and Smith (2001)9 call this the “thingness” of property. You know, the thing that you can identify and say, “Yep, that’s mine”. This institutional agreement around property rights reduces information costs because if everyone knows what’s being owned, it’s easier for individuals, entities, and potential markets that facilitate its exchange to manage it.
Historically, property rights were focused on physical objects—land, houses, stuff you can touch. But the internet changed that game. Suddenly, intangible assets, often recorded on digital data ledgers, are just as important. What you can own now isn’t just about what you can hold in your hands but also what exists in a digital database somewhere.
Let’s look at the types of property you can own, whether representing a tangible or intangible asset, and whether digitally represented or not:
Identity with natural rights
Arguably, identity is the most important property you can have because it defines you—it’s your self-ownership. It’s who you are, the property from which all other ownership flows, and how society recognizes you. It’s the foundation for everything else you own, giving you proof of personhood and status, ensuring your identity is acknowledged and respected with the same dignity as anyone else’s—at least when we’re talking about personal identity.
Individual Identity. It refers to the data that says, “That’s me”. Name, family data, birth certificates, biometric data, health records etc.—these are the credentials that establish proof of personhood and connect to social status.
Social identity graph. It’s essentially how you define yourself in relation to others—all the informational traces that reflect your membership in social community groups. In the digital world, it’s your profiles, online footprints, and everything from shared posts and conversations to likes, images, videos, and others. It’s the stuff that makes up your public or semi-public persona. So, when you comment on a forum, like a tweet, or share a meme, you’re contributing to this graph. Every like and post adds another layer to how the world sees you online.
Credentials. These are the records that prove you’re entitled to something tied to your identity—whether it’s access to services, communities, or benefits. They can be transferable or non-transferable, and they verify specific qualifications or social rights in different contexts. Think professional licenses, academic degrees, or even governance tokens for voting in a community. Basically, they’re your access keys to certain privileges, whether it’s running a business, proving you went to college, or having a say in a democratic process.
Intellectual property. These are contracts that tie ownership rights to your identity for creative and productive stuff—think copyrights, patents, trademarks, and trade secrets. They’re basically how you prove you own your work, whether it’s a movie, a song, or a brand logo. So, film rights, music rights—anything like that—can be digitally managed and monetized. It’s the paperwork behind getting paid for your ideas, ensuring you control how and where they’re used.
Monetary assets
Money. It’s the kind of property with the most collective power, thanks to money’s built-in relational aspect. It’s a fixed asset in nominal terms, used to facilitate exchange transactions. This could be any commodity, physical cash, electronic ledger representations, or even newer forms like cryptoassets, stablecoins or alternative digital currencies. All forms of money are, at their core, symbolic representations and/or denominators of value (purchasing power).
Valuable assets
Economic assets. It applies to both the inputs and the final outputs used and consumed in the exchange activity of an economic community.
Human capital. The most important and dynamic asset class—people's skills, knowledge, creativity, and potential for value creation. Unlike machines, human capital can innovate, adapt, and compound returns through learning and collaboration.
Energy and natural resources. Finite or renewable Earth-based material and energy stocks, nature's initial balance sheet, with inherent potential for economic value generation, requiring human technological intervention to extract, transform, and utilize.
Capital resources. Accumulated economic infrastructure that amplifies human productive capacity. Buildings aren't just structures; they're productivity multipliers. Technologies, such as computers, aren't just tools; they're economic leverage points that transform input-output ratios.
Final goods and services. These are the finished products of the economic machine, ready to be consumed or used as inputs for something else that represents the culmination of production processes. Think single-use items, like a bag of potatoes or an hour of massage therapy, or durable capital resources, like your car—end products that can also double as tools for more production in the ever-churning economic ecosystem.
Economic contracts. Here we’ve got agreements that define rights and obligations between parties—employment agreements, service contracts, rental deals, partnership agreements, etc. These contracts lock down the terms of future asset exchanges, monetary or non-monetary, making sure everyone knows what’s expected. They provide clarity and legal enforceability.
Financial contracts. These include various financing-related assets:
Equity. Ownership stake with governance rights. You're not just buying a piece of paper; you're buying a fractional claim on future economic potential, with a vote in how that potential gets realized.
Fixed-income. Temporal value transfer mechanisms: someone with excess monetary capital lends to someone with productive (or speculative) ideas, agreeing on a return, with or without interest. Interest rates reflect the price of future economic coordination and risk. Examples of these are fixed-income instruments like your loans, mortgages, and repos.
Risk hedging. Financial instruments designed to mitigate potential economic or speculative risks by converting uncertain potential losses into more predictable cost streams. Examples include derivatives like futures or options contracts, and insurance policies.
Real and digital assets. Assets that span both the physical and intangible worlds—from commodities like oil and gold to real estate, fine art, and rare collectibles like stamps or sculptures. Some exist purely in the digital realm, yet all represent real value, grounded in utility, cultural significance, or properties like scarcity. At their core: real assets are tangible stores of wealth—property, commodities, or infrastructure—that create value beyond their intrinsic non-monetary use, while digital assets capture economic value through code in digital protocols.
Commons assets
Commons. These are shared resources that a community collectively manages. We're talking about natural resources like fisheries and forests, cultural stuff like folklore and historical sites, and knowledge commons like open-source software. It includes digital content like wikis, urban spaces like parks and sidewalks, global assets like the atmosphere or deep oceans, and even genetic heritage like crop varieties. Basically, it's anything too big or important for one person or private entity to own, so the community—local or global—needs to step in to take care of it.
Bundle of Rights (How it’s Owned)
So, once you’ve decided what the property actually is, the next step is figuring out how you—or anyone—can actually own it. Property rights come with a whole bunch of entitlements and obligations, some written down in laws and contracts, and others just assumed by social norms. These rights—some clearly defined, others more implied—can be divided, held by different people, and recombined. Whether they function depends on the community recognizing and accepting them. It’s like splitting up a pizza: different people hold different slices, but it only works if everyone agrees on who gets what, what they can do with it, and how it all fits together.
You’ve got your explicit rights, which are the ones that are formally codified (standardized or not) and somehow registered10—like the right to sell your house or lease it out. These are the rights that are recognized and enforceable, which is key to a functioning, trustworthy system. Then there are the implicit or informal rights—the ones that aren’t written down but still matter based culture, tradition, or social norms. For example, the expectation that if you buy fruit to eat and it’s rotten, you can exchange it for good fruit or get your payment back.
Why make these rights explicit? It’s all about trust and transparency. The more you spell out the rights, the less room there is for misunderstandings or disputes with strangers. If your lease says you can live in an apartment for 12 months, that’s explicit. But there’s also the implicit understanding that the apartment should be, you know, habitable. Clearly defined rights lay out the rules so everyone knows how to play the game. It makes it easier to play fair, better cooperate when needed, avoid conflicts, and keep transactions running smoothly.
Think of these rights as individual “sticks” in a bundle. If you own a property outright, you hold all the sticks. But in a rental situation, you might only hold a few—you get to live there, but you can’t sell the place or knock down the walls. This flexibility allows for all sorts of creative arrangements, like timeshares (where different people have rights to use a property at different times) or mineral rights (where someone owns the surface land but another entity owns the rights to the stuff underground). The bundle concept helps make resource allocation more efficient by letting different parties tap into various aspects of ownership.
Within the bundle of rights concept, there is extensive literature exploring its possibilities. Honoré's 196111 seminal work stands out as one of the most widely used frameworks for classifying the ownership rights, identifying eleven key rights:
Right to possess: The right to exclusive physical control of the property. It’s the "get your hands off my stuff" right. You can exclusively control the thing, which is great until you realize you now have to store it somewhere.
Right to use: The right to personally use the property. Also known as “ius utendi” for those who like their rights with a side of Latin. You can personally use the thing, assuming you can figure out how it works.
Right to manage: The right to decide how and by whom the property shall be used. The “you're not the boss of me” right, except for this thing, where you are indeed the boss. You decide how and by whom the thing is used.
Right to income: The right to receive income generated by the property. If the thing makes money, it's your money. If it doesn't, well, that's your problem too.
Right to capital: The right to sell, modify, or destroy the property. It’s the “it's my party and I'll sell/modify/destroy if I want to” right. Yes, you can even burn it all down, legally speaking (but please don't).
Right to security: The right to expect to remain owner indefinitely, with immunity of expropriation. Not to be confused with immunity from your own bad decisions.
Power of transmissibility: The right to pass on the property to one's successors. The “beyond the grave” power. You can pass the thing along with all its problems.
Absence of term: The idea that ownership doesn't automatically expire. Ownership doesn't come with an expiration date. It's not yogurt, it's forever.
Prohibition of harmful use: The duty to refrain from using the property to harm others. The “with great power comes great responsibility” clause. You must prevent the thing from harming others, which is harder than it sounds.
Liability to execution: The liability to have the property taken away for repayment of debt. The “you can't take it with you, but they can take it from you” right. Your ownership can be forcibly ended to pay your debts.
Residuary character: The right to expect the rights to revert to you when other's limited rights come to an end. The “what goes around, comes around” incident. There are rules for what happens when limited rights in the thing expire. Spoiler: they usually come back to you.
Honoré’s list is solid, but it’s definitely sparked debate. Some argue that rights like the ability to change or destroy an object should stand on their own, while others think they fall under the broader right to capital. This debate even extends to money: should the right to regulate the creation or destruction of currency be guaranteed to someone, should it naturally emerge, or should it be something no one controls and that everyone has equal access to? Maybe, same for its distribution?
Other frameworks, like Singer’s Entitlement Model (2000)12, add in considerations like natural rights—the right to equal opportunity or a minimum level of welfare. Then there’s Schlager and Ostrom’s work (1992)13 , which focuses on how property rights apply to common-pool resources, like fisheries or forests, where the ownership stakes are shared by a community.
The big takeaway here is that property ownership isn’t just “this is mine, that’s yours”. It’s a flexible bundle of rights that gets shaped by the fact that we live in a community, and we depend on each other. So, it has to balance private interests and incentives with the broader good. The clearer and explicit we make those rights, the better—it’s about transparency, trust, and keeping property management fair and efficient.
Property Regime (Who Owns it)
Now that we’ve covered the bundle of rights, it’s time to dig into how these rights play out in different property regimes. You know, because the way you own something isn’t always as simple as just holding the title. Depending on the context, ownership can look very different—whether it’s private property, common property, club goods, or public goods. These regimes shape how communities handle ownership and resource management as a human right, balancing individual, corporate, and community interests/ incentives. And yes, this is where we get into the real mechanics of how things get owned, managed, and (hopefully) not ruined by overuse, making property systems both fair and effective.
PRIVATE PROPERTY. It is the classic “this is mine, that’s yours” scenario. You get exclusive rights over a resource—whether it’s land, a car, or that oddly specific supermarket basket full of goods you just bought. You can possess it, use it, exclude others from using it, and even transfer it to someone else. This system fuels economic productivity and innovation. When people have secure ownership, they’re more motivated to invest in maintaining or improving their exclusive and rival property—it’s basic self-interest, and it works. And that’s not just good for the owner—it’s good for everyone. Private property rights make resource allocation more efficient because owners tend to know what to do with their stuff better than a distant government official with a five-year plan.
COMMON PROPERTY. It is the stuff everyone can use—non-excludable but still rivalrous, meaning it can run out if overused. Think of a fishery or a forest: anyone can access it, but if you take too much fish or chop down too many trees, the whole community, or potentially the world suffers. It’s not a free-for-all; it needs collective management to keep from collapsing. Elinor Ostrom14, the Nobel laureate, showed that communities can actually manage these resources pretty well—better than top-down governments or free markets—if they have clear rules, monitoring, and ways to enforce them. So, yeah, managing common resources sustainably is possible, but it takes coordination. Did you know we now have the best technology to enable that coordination while respecting both individual and community sovereignty?
CLUB GOODS. These are excludable but non-rivalrous resources, which means you can keep people out, but if someone’s in, their use doesn’t reduce availability for others. Think of a private park or a members-only golf course. The trick with club goods is balancing access. You let in enough people to keep things running efficiently, but not so many that it gets overcrowded. It’s a model that works well for subscription services too—like those streaming platforms that everyone shares passwords for. The beauty here is that, as long as you manage access, everyone benefits without overuse15.
PUBLIC GOODS. These are the things that everyone gets access to, and using them doesn’t stop anyone else from enjoying them too. Clean air or public parks—all classic examples. Public goods are a challenge to manage because they’re non-excludable and non-rivalrous. You can’t stop people from using them, and it doesn’t matter how many people use them, they’re still there. But that also means public goods are ripe for the “free-rider” problem, where people benefit from something without contributing to its upkeep. To avoid that, you need collective action and governance—whether it’s local communities managing a park or coordination between different communities to enforce things like air quality regulations. It’s all about making sure these resources remain available for everyone without getting overused or neglected.
Registry and Governance
So, we’ve covered property rights and the fun part—who owns what and how they get to use it. But the real power play? It’s all about who controls the property registry and sets the governance rules around those rights, whether the holder manages it directly or indirectly when an outside authority manages it, who can govern and resolve disputes if things go sideways. The registry is where the magic happens—it’s the ledger that verifies ownership, “This is yours, that’s theirs”, and tracks transfers when things change hands. Whoever runs the registry pretty much controls the game.
The entities in charge of these registries—whether it’s the government or private players—get to dictate the terms of ownership, enforce property rights, and resolve conflicts. This is crucial for maintaining the stability and functionality of any economic system. Take land ownership, for example. The standard practice is a community’s land registry providing indisputable proof of ownership, reducing fraud and making property transactions more efficient. Institutions that protect property rights aren’t just paper-pushers; they’re essential for driving economic development by lowering transaction costs and building an environment where trusted exchanges, investment, and growth can happen16.
In practice, the power to manage and maintain registries usually ends up concentrated in state-backed institutions. Sure, this centralization can streamline things and keep the rules consistent, but it also opens the door to corruption, power abuse, and inefficiency. In a lot of developing countries, the absence of a reliable property registry and governance system slows down economic growth, making it hard for people to use their assets for things like getting credit or making meaningful investments.
And it’s not just governments playing this game. Private entities like Meta control important private registries, such as social identity data of 3.98 billion17 people worldwide who interact monthly on their platforms. This includes their conversations, search histories, shared information, and files. Meta's control over user data has significant implications for privacy, security, and market power, illustrating how control over registries, whether public or private, translates into substantial influence. This centralization of data by private organizations can lead to issues like data breaches, misuse, and monetization of personal information to influence public opinion and democracies, significantly impacting user privacy and autonomy.
If property rights are the foundation of property ownership, associated rights, and exchange in monetary economies, the key question of our times, which we will explore in the following chapters, is:
Can we leverage emerging distributed ledger technologies to express property rights in a way that organizes and coordinates monetary economies more efficiently, with more self-sovereignty for each entity and community?
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Externalities are economic side effects or consequences of exchange activities that affect other parties without this being reflected in the costs of the goods or services involved. They often result from the divergence between private and social costs or benefits.
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