Game Rules and Property Rights Systems

Chapter 3, Section 4: Game Rules and Property Rights Systems

Like any sports, the competition aroused by scarcity also has its game rules. No game rules, no way to judge who wins. No winner, then no need to compete. Athletics has rules, so does tennis. Without the rules, victory or defeat cannot be decided. Even in the competition that strong prey on weak, there is a rule that winner lives and loser dies.

From the perspective of economics, the game rules for daily man vs. man competitions are laws, disciplines, customs, and etc. Just like the ones in sports games, these rules regulate and prohibit participants' certain behaviors during competition. That's to say, in social economic competitions, laws, disciplines, or customs, whichever it is has a mandatory method to define individuals' rights. Such definitions of rights form the property rights systems. In Volume 3 I will explain that, an arrangement to constrain competition is actually a contract arrangement, which is another angle to view the property rights systems.

(Translator: The ultimate game rule for competition is always violence. Although individuals have almost the same natural capabilities, the formation of collectives, or societies, brings about every possibility. Two shall triumph one, yet three may lose to two. With the development of motion and communication technologies, the distribution of violence converges towards monopolization, where individual's violence is negligible before the monopoly, no matter it's a democratic legal system or an autocratic military government. Soft violences, like credit discrimination or cooperated isolation that appears in disciplines or customs, rely on the violence monopoly as well, for example, a bad credited person cannot revenge the people that don't trust him, as he would get punished by a legal system. Upcoming discussions are all based on a monopolized utilization of violence.)

The systems of property rights are the game rules for competition, and a type of constraints on competitive behaviors as well. If discriminated cautiously, these rules are actually quite different. Private property rights is just one of it. It's even possible to classify all the systems into several categories and systematically analyze how the variation of each category would affect human behaviors. As are the contents of institutional economics, they will be detailed in Volume 3.

The word "property" is not simple. From the perspective of economics, property is economic good with human competition, which is slightly different from its legal definition. Legally, property usually means assets (especially lands and buildings); yet in economics, other than assets, it includes consumables as well. What consumables have in common with lands and buildings, is that they both are scarce and competitive.

Alchian made it perfectly that "property", competition, and scarcity, are indeed synonymous. Readers must spend more time pondering on this "synonymy" until they fully understand in our society competition is ubiquitous. Without grasping this general concept of competition, one can never achieve anything in economics.