Primitive Property Rights “Primitive” societies –Preliterate No effective government No complex economy –Still exists “Archaic” societies –Preliterate –No longer exist Combine for analysis

Does economic model of human behavior apply to “primitive” societies? “Formalists” - it does and they study market- like behavior “Substantivists” - it doesn’t because no true markets existed It does under modern definition of economics which has expanded to include –Non-market behavior –Institutional structures Law Information Transactions costs

Underlying theory of “law and economics” studies Law is an instrument for maximizing social wealth or efficiency –Large body of literature in modern context –Also applies to primitive societies Assumes “rationale economic man” –Cognitive process is not important, rather –Are consequences of human behavior consistent with “economic theory”

Characteristics of “primitive societies” Cost of information is high –Transactions costs models apply –High cost to assess risk Little privacy –Social setting is kinship groups for all activities –Makes all members informers

Posner’s Model No effective government Limited variety of consumer goods –Food is primary Limited trading outside kinship group Consumption goods perishable Negligible private gains from innovation Population is immobile Richard A. Posner Senior Lecturer in Law University of Chicago Law School

Insurance Principle Insecure and variable food supply –Accumulation of capital not possible Food is perishable - crops and game Women - monogamy dominates because women are a form of capital Prehistoric female images focus on reproductive capacity

Insurance Principle Redistributive ethic –“A” has a surplus of food –“B” has a shortage of food –A “gives” food to B A’s motivation? If in future roles are reversed, B will give to A I hope brother-in- law “A” had better luck than I did! Missed again - ha, ha B A

Insurance Principle This exchange is not a “market” transaction –No benefits from division of labor A form of insurance Generosity becomes a highly valued trait, e.g. –Debts never expire Gifts are reciprocal Reduces “free-riding Mammoth hunters

What are the “property rights” implications of Posner’s model? Zapotec Rug:

Legal Aspects Fundamental legal processes of any legal system –Promulgation of substantive rules –Resolution of disputes

Property Rights Exist based on scarcity –Exchange value –Cost of enforcement –No right if cost exceeds value

Property Land –If no scarcity land in general will be open to all –Highly fertile land near settlements Usufruct right

Usufruct Right based on possession (use) Protected by its use Terminal type of “estate” –Terminal based on failure to use –Can pass on to heirs or transfer to family members –Can’t “sell”

Application of model Low demand for land –Surplus given away, not used to “buy” land –To do so would be politically destabilizing Primary evidence of ownership is possession –High information costs reduce efficiency of markets

Application of model Temporal distortions –Possessor interest provides incentive to take more resources than needed –Not a problem because it’s cheaper To move to new lands when game is scarce To move to new lands when productivity declines