Introduction
Private property is more than just a legal category; it is the foundation of debates over the common good and efficiency. Economic Analysis of Law (Law & Economics) examines how regulations shape human behavior and welfare. In this article, we will analyze how various traditions—from utilitarianism to the Austrian School—define the role of the state, the limits of ownership, and contemporary regulatory challenges in the age of AI. Readers will discover why axiology precedes economics and how psychology influences the public acceptance of legal reforms.
Economic Traditions and Efficiency Models
The foundations of legal thought were established by the realism of Thomas Hobbes, who saw the law as the "sword of the sovereign" protecting against the chaos of a "war of all against all." In this view, law serves as a prosthesis for cooperation, and a person's value is reduced to their market price. Conversely, utilitarianism (Bentham, Mill) defines optimal property rights as a tool for maximizing "the greatest happiness for the greatest number," which can be used to justify the redistribution of goods.
Modern science operates with precise efficiency models. The Pareto criterion assumes improvement only when no one loses, while the Kaldor-Hicks model allows for changes where the gains of the winners outweigh the losses of the losers. A breakthrough came with the Coase Theorem: in a world without transaction costs, the initial allocation of rights does not matter for efficiency. In reality, however, costs do exist, which is why the law should minimize barriers to private contracts by "mimicking the market."
The Austrian School, Taxation, and Psychology
An alternative is provided by the Austrian School (Mises, Rothbard), for whom property is the ethical backbone of society and an essential carrier of information. Without private titles to the means of production, profit and loss calculation is impossible, leading to economic chaos. From this perspective, taxation is perceived as "legal plunder" and an act of aggression against property, in contrast to the neoclassical view, where a tax is a price for state services or a corrective tool (Pigouvian taxes).
Modern legislation is being redefined by behavioral economics. Kahneman and Tversky’s research on loss aversion proves that people react more strongly to having goods taken away than to potential gains. This explains why tax reforms face such intense social resistance. Property, therefore, has a powerful psychological component that can cause theoretically efficient solutions to fail in political practice.
From Human Rights to the Digital Era and AI
The relationship between property and human rights has evolved from the Lockean recognition of property as a natural right toward its modern subordination to the "common good." The dispute over public goods and environmental protection highlights this tension: neoclassicists advocate for emission taxes, while Austrians see the solution in the strict enforcement of private property rights among neighbors. According to them, the "tragedy of the commons" results from resources belonging to no one, rather than a lack of regulation.
Today’s empirical legal analysis verifies norms using hard data. In the era of digitalization and AI (DORA and MiCA regulations), we are entering the age of RegTech, where the effectiveness of law depends on model architecture and data quality. Sound financial regulation must be proportionate and technologically neutral. A key element of stability is the bail-in mechanism, which shifts the costs of bank failures to private creditors, protecting taxpayers and privatizing systemic risk.
Summary
Is it possible to reconcile the primacy of the individual and their property with the need to protect shared resources? An analysis of different economic schools shows that the search for an ideal model is a constant balancing act between freedom and responsibility. Modern law must combine classic property protection with contemporary data analysis tools and psychology. Perhaps true efficiency lies in the harmony between individual liberty and care for our common heritage, which remains an open challenge for the architects of future institutions.
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