What Are the Similarities Between H. Demsetz's Theory of Property Rights and Modern Legal Positivism?
Year: 2025
Type: article
Abstract: Civil transactions consist of countless interactions between their participants, built around property rights. Economic exchange aimed at the alienation and acquisition of goods occurs continuously and is possible only due to the certainty of property rights to such goods that have material value. The certainty of property rights has a direct impact on the efficiency of the economic system. Traditional dogmatic approaches often view efficiency as a consequence of internal consistency, without paying due attention to external factors, a view that is questioned by modern legal research. In this paradigm, a comparison of two seemingly disparate schools of thought is particularly interesting: economic analysis, as exemplified by H. Demsetz, a representative of the Chicago School, and modern legal positivism. This approach aims to demonstrate the similarity of their ideas in understanding institutional change and the institutional environment in the context of legal effectiveness. The search for answers to questions about the effectiveness of law in relation to its social determinacy will never lose its relevance. Achieving individual goals with minimal costs, greater certainty, and predictability in any legal relationship is aimed at increasing overall social welfare and living standards. Thus, the research topic is relevant and practically significant. At the same time, the answers to questions about when and for what reasons property rights arise, what factors determine ownership structure, how incentives for efficient resource use are formed, how externalities are internalized, and which legal structures and instruments are most effective in achieving these goals remain unclear. In this context, this article argues that, despite differences in disciplinary foundations, both schools converge on a pragmatic and contextual understanding of the nature of law. Key common parameters include an approach to legal change based on socio-economic factors, as well as the recognition of the institutional environment and institutional change as conditions determining the effectiveness and form of legal institutions. In writing this article, a theoretical and analytical approach was employed, enabling the construction of logical models based on legal logic and economic analysis. Ultimately, it can be concluded that H. Demsetz's economic approach, which explains the endogenous evolution of property law, is aligned with the fundamental theses of modern legal positivism (as exemplified by H.L.A. Hart, J. Raz, and J.L. Coleman) regarding the determinacy of law not only by internal but also by external factors.
Source: Advances in Law Studies
Author: Igor' Kolosov
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W7117368283