Running Head: Property Rights
Katia C. McNeely (Gilliam)September 13, 2010University of Maryland University CollegeDMBA620 Section 9042|
Economics is the study of theories related to the utilization of goods and services (Encarta Dictionary). In layman terms, economics is how supply and demand controls the reallocation of resources. With the utilization of theses good and services there has to be a system in place to monitor the process. The exchange of goods and services are conducted through the exchange of property rights. Property rights are “the exclusive authority to determine how a resource is used” (Alchian, n.d.). These types of exchanges are primarily found and used in capitalist society; where economic freedom is more prevalent. Economic freedom is the “right of individuals and organizations to pursue their own interests through voluntary exchange of goods and services under the rule of law” (Scott, 2009). Armen Alchian and Paul Rubin authored articles located in the Concise Encyclopedia of Economics; that explore the importance of property rights and the interdependence of property rights and the law. Alchian establishes that to have an efficient or prosperous capital economic system, a “strong property rights system” must be in place. In a capitalist society it is commonly understood that supply and demand, determines the value of a property right. The more sacred a resource, the more valuable it becomes. Also, by having an efficient property rights system the likelihood of decimating a resource is greatly reduced. When you have common ownership rights there are no rules to regulate the use of certain resources. The opponents of Alchian’s position feel that human rights are often usurped by property rights; that the use of certain resources are to the detriment of the greater good. However, a resource is only as valuable as the demand for its usage. Rubin’s article discusses the importance of having an...