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Describe how clearly defined and enforced property rights are essential to a market economy.

Norway is the world's richest country; average per capita incomes $84,290
Norway is the world's richest country; average per capita incomes $84,290



Market Economy
The market economy is characterized by the voluntary exchange of goods and services in the absence of any government intervention or centralized planning.

Property rights
A property right is the exclusive authority to determine how and by whom a particular resource is used.
  • More broadly, property rights may be seen as a bundle of separate and distinct rights over a particular good — including at least the right of personal use, the right to demand compensation as a prerequisite for its use by other people, and the right to transfer any or all of these rights to others (either permanently by sale or temporarily through some form of contractual arrangement).
  • Property rights may be exercised by governments through their designated officials (public ownership or public property) as well as by private individuals and other sorts of non-governmental organizations (private property). (as defined by "A Glossary of Political Economy Terms")

In an economy with little to no regulation, it is crucial that an indiviual or business rights are clearly stated so that they are recognized in any case of a discrepancy.
Burundi, the world's poorest nation with average per capita incomes $170
Burundi, the world's poorest nation with average per capita incomes $170


What Makes Countries Rich or Poor? Jared Diamond, The New York Review of Books, June 7, 2012.

Reviewing a new book by Daron Acemoglu and James A. Robinson entitled Why Nations Fail, Jared Diamond points out that nations succeed economically because of the presence of "good institutions" which may be defined as "laws and practices that motivate people to work hard, become economically productive, and thereby enrich both themselves and their countries" (p. 70).




Diamond further lists the specific institutions that motivate people economically:
  • protection of private property rights
  • predictable enforcement of contracts
  • opportunities to invest and retain control of money
  • open exchange of currency

Click here for a link that lists nations that have the best (or the worst) property protection policies. Notice how many of the nations listed as among the worst are also well known for their serious economic problems.

Click here for a classroom activity game which simulates the role of property rights in the classroom.

Multimedia.pngClick here for a video lecture discussing property rights in a market economy.
Multimedia.png Click here for a link to a John Stossel Interview with Peruvian Economist Hernando de Soto, who describes the importance of individual property rights.

womens history.jpgIn many nations, property rights are denied to women, making it difficult for them to prosper independently. Click here for a color coded map of the world showing the areas where women have more and less property rights.

multicultural.pngClick here for an interesting essay discussing African Americans and their historically denied property rights.

multicultural.png Click here for an explanation of Japanese-American agricultural property seizure during World War II.

lessonplan.jpgClick here for a lesson plan on property rights.
Works Cited:
Economy Watch http://www.economywatch.com/market-economy/
A Glossary of Political Economy Terms http://www.auburn.edu/~johnspm/gloss/property_rights