The Right to Private Property

Juan Lara


Section 7 of the Constitution of the Commonwealth of Puerto Rico equates the right to the enjoyment of property with the right to life and liberty. The Magna Carta of the Puerto Rican political community dictates that “no person shall be deprived of his liberty or property without due process of law.”

Puerto Rico is not the only society to recognize and guarantee the right to private property; on the contrary, this is a widespread practice in societies that base their collective life on political democracy and economic liberty. The Fifth Amendment to the Constitution of the United States, one of the world’s leading democracies, states that no person shall “be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.”

Private property, which entails the individual and exclusive enjoyment of physical and intangible assets by natural and moral persons other than the State, is inseparable from economic liberty, which is the right of every individual to make decisions of production, exchange, and consumption in the pursuit of his own welfare, without any impediment other than the minimum standards necessary to guarantee the rights of others.

Economic liberty, in turn, is the guiding principle of the free-market economy, which has proven to be the most dynamic and efficient form of social organization to address the big questions that make up the “Economic Problem:” what to produce, how much, how, and, for whom? These questions summarize the complex social fabric of deciding on the efficient use of scarce productive resources, the development of innovative technologies, and the distribution of goods and services among members of society. The free-market economy is the most successful economic system known so far in the history of humankind, operating through the decentralized coordination of the actions of free individuals by an “invisible hand”: The market.

In the free-market economy, people not only own objects of personal use, such as housing, clothing, food, and many others that produce security, satisfaction, and enjoyment, but they also own productive resources: land, raw materials, machinery, factories, proprietary knowledge (such as patents), and enterprises of all kinds. The right to private control and use of these resources provides the guarantee of obtaining the benefit of the products derived from those resources and, simultaneously, creates a powerful incentive for the efficient use by each owner of the productive capacity that constitutes the basis of a country’s economy.

Aristotle, perhaps the best known of the philosophers of ancient Greece, said that what does not belong to anyone is not cared for in the proper way because everyone presumes that someone else is taking care of it. This lack of incentive to efficiently take advantage of a productive resource that is nobody’s property, but “everybody’s” in an abstract form, was one of the great problems of the central economic planning system that finally failed in the former Soviet Union.

However, the right to private property, like all rights, has limits; one of them is that excessive concentration of property is contrary to economic liberty and the efficient operation of the free-market economy. The market system presupposes the free concurrence of many individual economic agents who compete among themselves for the economic opportunities that arise; this, in turn, presupposes a broad population of enterprising agents, for which it is necessary that the ownership of productive resources is not concentrated in a few hands. In the United States, for example, the laws criminalize attempts by an economic agent to monopolize a market, which is the same as trying to concentrate control of business management in himself at the expense of other competitors and consumers.

Modern societies also recognize another limit to private property, which is the right of the State to expropriate resources from natural or moral persons for a public purpose, such as, for example, for the construction of a road or a dam. As indicated above, the constitutions of Puerto Rico and the United States dictate that any expropriation that can be justified on this ground must be accompanied by just compensation for the owner.

Even with the constitutional and legal protections that exist to guarantee the right to private property, there are controversies about the way in which governments and courts enforce these. In Puerto Rico and the United States, fair compensation of property owners in expropriation processes is not always complied with, which ends up resulting in the dispossession, or taking, of a private asset by a public entity. It is a citizen’s duty to monitor these practices and apply pressure through all existing legal mechanisms to eradicate them.

Dr. Juan Lara is Professor of Economics at the University of Puerto Rico, author of several articles and book chapters, and a frequent columnist in the press.

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