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Governing Through Owners: How and Why Formal Private Property Rights Enhance State Power

In recent years, many Western governments and organizations have pressed developing nations to build robust private property institutions and have made large sums available for such property-related projects. One of the central justifications that policymakers and theorists provide for this strategy is that it will increase the economic power and freedom of individuals, thereby making them less vulnerable to the state.

In this Article, I argue that in many cases, precisely the opposite is true: the formalization of private property rights actually makes owners more vulnerable to the state and enhances the state’s governance powers over them. When property rights are formalized, the state gains the power to define the scope of those rights. This, in turn, provides the state with opportunities to impose significant burdens on owners. A system of formal private property rights serves as a mechanism through which the state can allocate responsibility to individuals on a mass scale for a wide variety of tasks, including some of the state’s core governance functions. Because many of the state’s core governance functions are territorially defined (such as maintaining peace and order within the territory, defending the territory from external threats, and providing infrastructure), this phenomenon appears most clearly in the case of private property rights in land. A network of landowners is a useful (and sometimes crucial) tool that lets a state govern locally in the farthest reaches of its territory, even when it lacks the capacity or will to use other more formal tools for governance, such as governing by bureaucracy or license. Thus, it is useful to think of the state’s power to define property rights in a manner that includes obligations to carry out core state governance functions as itself a mode of governance. I call this governing through owners.