Property as Propriety

• Publication year: 2021

77 Nebraska L. Rev. 667. Property as Propriety

667

Gregory S. Alexander*

Property as Propriety

TABLE OF CONTENTS

I. Introduction ........................................... 667
II. Propriety and Entrepreneurship in the Nineteenth
Century: The Vested Rights Doctrine .................... 669
A. Vested Rights as Proper Order: Fletcher v. Peck ..... 673
B. Community and Competition: The Charles River
Bridge Case ......................................... 679
III. Propriety in the Welfare State: The "New Property" . . . 685
A. Institutional Changes in Property ................... 685
B. Changes in the Idea of Property in the Welfare
State ............................................... 687
C. The Origins and Development of the "New
Property" ........................................... 689
D. The Dilemma of the New Property and Property-as-
Propriety ........................................... 694
IV. The Twitching Corpse of Propriety ...................... 698

I. INTRODUCTION

What is property for? For many, maybe most American lawyers, the question is virtually self-answering. Property has and, at least in our society, always has had one core purpose, one constant meaning: to define in material terms the legal and political sphere within which individuals are free to satisfy their own preferences, free from governmental coercion or other forms of external interference. Property is

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the foundation for the categorical separation of the realms of the private and public, individual and collectivity, the market and the polity.

The economic expression of this preference-satisfying conception of property is commodity. Property satisfies individual preferences most effectively through the process of market exchange, or what lawyers call market alienation. The exchange aspect of property is so important in American society that many Americans are apt to view "property" as synonymous with "commodity."

It wasn't always so. As the dominant way of understanding property, the commodity conception is, in fact, a relative latecomer in American legal thought. What preceded it was an understanding that I will call "property-as-propriety." The core of this conception is the idea that property is the material foundation for creating and maintaining the proper social order, the private basis for the public good. The proprietarian tradition, whose roots can be traced back to Aristotle, takes seriously the idea that the common good can be defined in substantive terms. That is, it presumes that not all forms of social order are normatively equal but that some are morally superior to others.

Just what the proper social order is has been an enormously controversial issue throughout American history. The existence of different substantive conceptions of the proper social order means that there have been multiple, sometimes contradictory versions of the proprietarian conception of property in American thought. The Puritans' "Shining City on a Hill," for example, was quite unlike the quasifeudal social order described in antebellum Southern texts defending slavery, yet both were proprietarian. More strikingly, the recent communitarian movement is based on the same proprietarian premise that was the intellectual foundation for the Southern slave system, a social order that modern communitarians otherwise abhor.

What all of these different versions of proprietarian thought share is a commitment to the basic idea that the market order is not necessarily the proper social order. Proprietarians do not understand the public good to be whatever social order emerges from the spontaneous working of the market. They regard the market as a realm in which individuals are too vulnerable to the temptation to act out of narrow self-interest rather than, as proprietarian principles require, for the purpose of maintaining the good of the entire community.

This is not to say that the proprietarian tradition is fundamentally anti-market. Many versions of proprietarian thought sought to reconcile propriety with the existence of the market. Indeed, in some instances, social propriety was used as the basis for treating as a commodity "assets" that our society regards as utterly non-commodifiable on moral grounds. The legal defense of slavery in the antebellum

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South again furnishes an example.(fn1) What characterizes proprietarian thought is commitment to a normative conception of the social good that is prior to the market. Proprietarian regimes are not necessarily non-market regimes, but neither are they laissez-faire regimes. The commitment to propriety requires that the market, to the extent that it is deemed to conflict with or to threaten the social good, be subordinated to the latter. The proprietarian tradition rejected the presumption that the scope of the market should be unlimited, and it did not resort to the familiar market-failure problems of monopoly or externalities to justify collective restrictions on market freedom.

The idea that the central purpose of private property is to protect the proper public order rings oddly in modern ears. We are so used to thinking of property as market commodity that it seems difficult to imagine that property might be intended to benefit anyone other than the owner. We are limited not only by the pervasiveness of market exchange in virtually every sector of modern life but also by the fact that the very notion of the public good seems anachronistic to modern sensibilities. Establishing that property-as-propriety was a prominent idea of American legal thought is one objective of this Paper. Two historical examples, one from our quite recent past, the other more distant, will illustrate the influence of this conception of property. The idea of property-as-propriety sheds new light on these historical episodes of doctrinal development.

Moving from past to present, this Paper has another objective. The second objective is to establish the continued influence of the proprietarian conception in current legal thought and legal doctrine. That conception certainly is no longer the dominant one, but it is present nevertheless.

II. PROPRIETY AND ENTREPRENEURSHIP IN THE

NINETEENTH CENTURY: THE VESTED

RIGHTS DOCTRINE

One of the stock historical stories about the development of American judicial doctrines concerning property during the nineteenth century is the shift from a "vested rights" conception of property to a "dynamic" conception.(fn2) Indeed, virtually the entire story about judicial protection of property interests from legislative regulation

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throughout the nineteenth century seems to be the cyclical rise and fall of the so-called vested rights doctrine. James Willard Hurst expressed the now-standard theme with his customary succinctness when he stated, "We identify no legal development more sharply with the nineteenth century than the judicial protection of 'vested rights.'"(fn3)

Boiled down to its basic outline, the story goes as follows. Implemented by the contract clause of the federal Constitution during the first half of the nineteenth century, the vested rights doctrine at first protected the first wave of American entrepreneurs. These men (for they were all men) invested, with active government encouragement, in enterprises that fueled the nation's economic expansion. Later, as investment in public utilities like bridges, roads, and canals became more potentially profitable and attracted increasing amounts of private capital, courts shifted course, overriding vested rights where they conflicted with the interests of new entrants in enterpreneurial enterprises. Courts sacrificed holders of stable forms of property to protect investors in dynamic forms of property.

In the second half of the century, the story continues, courts reverted back to a strongly provested rights position in order to protect entrepreneurs whose interests by now were well established. The constitutional tool for effecting this second incarnation of the vested rights doctrine was the due process clause of the Fourteenth Amendment, enacted after the Civil War. The key to understanding this phase of the doctrine, like the first, we are told, is a judicial desire to protect particular economic interest groups.

In contrast with this version of the story, I will argue that the emergence and decline of judicial protection for vested rights in the antebellum period reflected a dialectic between two strands of pro-entrepreneurial discourse. One was the discourse of old Federalists like Chief Justice John Marshall and their neo-Federalist heirs such as Joseph Story. These men supported legal protection of entrepreneurial activity that legislatures created by granting to private investors monopoly privileges for the construction of roads, canals, bridges, and other public improvements. Federalist-Whigs welcomed entrepreneurial activity of this sort for political as much as for eco-nomic reasons: it was, in their view, conducive to preserving the proper political order against the rising threat of popular democracy. To emphasize the fact that it was not hostile to entrepreneurialism as such, this Federalist-Whig discourse is more accurately termed "entrepreneurial republicanism."(fn4) Standing on the other side were Jacksonian supporters of entrepreneurial activity. The most notable judicial figure in this group was Marshall's replacement as Chief Jus-

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tice, Roger Taney. These men, whom I will call democratic entrepreneurs, spoke the language of equal entrepreneurial opportunity. They opposed legal protection of existing monopolistic property interests as both anti-development and undemocratic.

For all of their differences, these two groups shared two basic beliefs. Most conspicuous was their unequivocal embrace of entrepreneurial activity. Both sides favored rapid...