On the economy of concepts in property.

• Author: Smith, Henry E.

Concepts help economize on information. Conventional wisdom correctly associates conceptualism with formalism but misunderstands the role concepts play in law. Commentators from the Legal Realists onward have paid insufficient attention to the distinction between concepts and the categories they pick out (or, to borrow from philosophical semantics, the intension and extension of legal relations). Even though two concepts may identify the same category, they can differ greatly in terms of information costs. This Article applies tools of cognitive science to explore the economics of legal concepts. Both the mind and the law are information-processing devices that manage complexity and economize on information by employing concepts and rules, the specific-over-general principle, modularity, and recursion. These devices work in tandem to produce the economizing architecture of property. As in cognitive science, we expect simplicity of description and generality of explanation to coincide. This Article then applies the cognitive theory of property to longstanding puzzles like the role of baselines--such as nemo dat ("one cannot give that which one does not have") and ad coelum ("one who owns the soil owns to the heavens above and the depths below")--the notion of title, and the function of equity as a safety valve for the law. The theory developed here provides a more elegant description of the law, better generalizes to new situations, and therefore helps to explain and justify the robustness of traditional baselines in property law. The cognitive theory also allows one to reconcile reductionism and holism in property theory, as well as static and process descriptions of the contours of property.

INTRODUCTION I. WHAT IS A LEGAL CONCEPT? II. A COGNITIVE THEORY OF PROPERTY A. Concepts and Rules B. The Specific-over-General Principle C. Managing Complexity with Modularity 1. Varieties of Modularity 2. Nonmodularity as a Theoretical Baseline D. Recursion and Generativity E. Towards an Architecture of Property III. APPLICATIONS A. Nemo Dat and Other Baselines B. Law Versus Equity C. Complexity and the Conflict Between Reductionism and Holism CONCLUSION INTRODUCTION

Legal conceptualism has long been in bad odor, and nowhere more so than in property. Yet, outside of law, concepts are part of the basic furniture of our mental life. Accordingly, concepts--including the concept of a concept--have been analyzed by disciplines like philosophy and cognitive science.

This Article will reevaluate the role of concepts in property using the tools of cognitive science. These tools help explain how the mind is shaped by its limits, which limit the use of context. I will present parallels between cognitive science and the information-cost theory of property.

For our purposes, general concepts economize on information cost, because they pick out large classes of entities or situations at once. The related notion of general ideas, or "abstraction," has been important in political and economic thought. For example, de Tocqueville recognized that despite being imperfect, general ideas are useful in a complex society:

The Deity does not view the human race collectively. With one glance He sees every human being separately and sees in each the resemblances that makes him like his fellows and the differences which isolate him from them. It follows that God has no need of general ideas, that is to say, He never feels the necessity of giving the same label to a considerable number of analogous objects in order to think about them more conveniently.... General ideas do not bear witness to the power of human intelligence but rather to its inadequacy.... General ideas have this excellent quality, that they permit human minds to pass judgment quickly on a great number of things; but the conceptions they convey are always incomplete, and what is gained in extent is always lost in exactitude. (1) Hayek put great weight on abstractness as necessary for spontaneous order, including the one he saw arising in the common law. (2) Hayek believed that the common law was based largely on earlier custom that had proven itself and evolved in practice. (3) Through the common law, dispersed knowledge could produce results that no single mind could achieve on its own. Although Hayek overestimated the evolved nature of the common law and the role that rules, as opposed to standards, play in legal regimes, (4) I argue that in the hybrid systems we do see, the basic setup of law relies on general, abstract--and formal--rules for the reasons recognized by de Tocqueville and Hayek. This recognition of the limits of the mind and the law suggests a theory of when formalism makes sense.

By drawing on philosophy and cognitive science, this Article shows how law and economics can help explain legal concepts. Concepts both in law and outside it respond to the same kinds of costs and benefits and a similar need to manage complexity. Property law helps organize the activity of many minds by furnishing a platform through which people navigate relations with others with respect to things. Concepts within property law manage the complexity of those interactions and economize on information costs.

The Article offers a sketch of how a cognitive theory of property might work. Part I shows how legal concepts can be analyzed with the tools of philosophy and psychology. Like concepts generally, legal concepts can be regarded as ways of presenting things in the world. Part II presents some tools from cognitive science that have been useful in modeling the mind's methods of economizing on information. These include, in addition to concepts and rules, the specific-overgeneral principle, modularity, and recursion. Concepts and other formal devices of property law suppress some context for a reason: they manage complexity by organizing the world into components whose internal workings are only partially visible to the rest of the system. Partial information hiding allows such components to be selective "black boxes." The most obvious, though not exclusive, set of such components are the "things" that property defines.

Part III applies the cognitive theory developed here to several puzzling issues of baselines in property, including the nemo dat principle ("one cannot give that which one does not have"), the ad coelum rule (that a landowner owns "to the heavens above and the depths below"), the notion of title, and the role of equity as a modification of the law. These baselines receive a more elegant and more generalizable description, which helps explain and justify their robustness in the law. This analysis also illustrates how the cognitive theory reconciles in-principle reductionism in property theory with "pragmatic holism." The Article concludes with observations about the role of formalism in property and how that role is illuminated by the cognitive analysis of concepts.

1. WHAT Is A LEGAL CONCEPT?

   In philosophy and psychology, concepts are far from an obstacle to thought: they allow for prediction, communication, and abstract thought, when a mass of particulars is not useful. Concepts organize particulars into useful sets--or, to borrow the terminology of psychology, concepts pick out categories. Although it is sometimes easy to forget--and the Legal Realists appear sometimes indeed to have forgotten-concepts are not the same as the things those concepts pick out.

   What is the relationship of concepts to categories? Some philosophers regard concepts as functions from states of the world to sets of objects. Such a function is called an "intension." The set of things denoted is sometimes called an "extension." The meaning of a word can be associated with intensions or extensions, and either choice has many implications. (5) For our purposes, it is enough to note the different roles played by intensions and extensions. An intension, roughly like a concept, mediates between the world (or possible worlds) and sets of objects in the world or worlds. An intension is modeled as a function from worlds to referents; it is a way of picking out referents.

   Returning to word meaning, a word is associated both with functions from worlds to referents and with those referents themselves--intensions and extensions. Consider a famous example. The expressions "morning star" and "evening star" both refer to the planet Venus--they have the same extension--but they have two different intensions. (6) Both phrases have an intension that takes us from states of the world to the planet Venus--the same extension. But the way of getting there is different. (7)

   The distinction between different intensions that have the same referent emerges in epistemic contexts--sentences that describe mental states like belief. "John believes that the morning star is a planet" does not entail "John believes that the evening star is a planet" (nor vice versa). Further, the sentence "the morning star is the same object as the evening star" is informative. Thus, concepts are not the same as the categories they pick out.

   In short, concepts matter in epistemic contexts. This is significant for legal scholars because legal relations have their form based in part on people's cognitive limitations. With full knowledge (as in the zero-transaction-cost world or de Tocqueville's divine perspective), we would have less need to distinguish intensions from extensions. Beliefs about the morning star and the evening star would coincide, and it would be less important to distinguish each idea from the object Venus. Similarly, in the legal realm, there would be no need to distinguish actual legal relations from sets of legal consequences holding between individuals. Legal relations could be as articulated as one wished and their consequences could be achieved by any route that would get there. Legal concepts as intensions (which, I argue, is at least a good analogy if not the correct analysis) would coincide completely with...