2. A positive analysis of rights

The idea that rights are a product of exchange lies at the foundation of almost all normative rights theories since Locke (1690), in the sense that everybody is hypothesized to have the same rights, and that as a condition for retaining those rights people agree to respect that same set of rights for others. The exchange is that each person agrees to respect the rights of others in exchange for having those rights themselves. In the real world, however, not everybody respects the rights of other people, and individuals often act opportunistically when they have the chance to violate someone else's rights for their own personal gain. Even when there is general agreement on the rights people should be able to exercise, not everyone will be able to exercise those rights unconditionally.

In a positive analysis, people are able to claim and exercise rights because they have the power to do so. Your right to maintain possession of your television rests not only on a legal structure that says you have that right, but also on the condition that you keep your house locked when you are away to prevent burglars from entering and stealing it, and perhaps periodic police patrols by your house coupled with the threat that if someone does steal your television, an investigation has some chance of identifying the thief and exacting some punishment. Even in this case, some people who claim to have the right to televisions they purchased will lose them to theft, and despite any claim the original purchaser might make to a right, the thief will be in actual possession of the television and will de facto have the right to use the stolen television. Why? Because the thief has the ability to claim and use the television, regardless of any claims the victim might make that the thief is not the person who has the right to use it.

In a situation where there is little in the way of institutionalized policing to enforce rights, the ability to use physical force will weigh heavily on the rights people can exercise. A thief might take the opportunity to rob a frail individual, but might be more reluctant to rob someone more physically imposing. The thief might even be more reluctant to break into the house of the physically imposing individual than a frail individual, fearing that if the thief were found out the victim would use his strength to exact a greater punishment than a frail individual would be capable of doing. Individuals can multiply their strength by sticking together. Someone might be more willing to claim and exercise a right to walk through a potentially dangerous (or even unknown) neighborhood with a group of friends than to walk there alone. Similarly, individuals might protect themselves against burglary by advertising themselves as members of a group. Ethnic groups might develop this reputation, and in places where lawlessness is common in contemporary societies people can join gangs, Sobel and Osoba (Reference Sobel and Osoba2009) note. Potential burglars who might consider breaking into an individual's house might be more reluctant if that individual was a known member of a gang, and that the entire gang would be ready to retaliate against transgressions against any of their members.

With an institutionalized police force and rule of law everyone is in a position to claim a larger set of rights – a set of rights that is so widely observed in wealthy societies that they may be taken for granted. Anecdotally, in the early 1990s I attended a conference in Guatemala and was talking with one of the locals who was going to another conference in another country in a few weeks. The Guatemalan told me, ‘I need to find someone to stay in my house when I am gone, because in Guatemala if you leave your house unoccupied for a week, when you get back someone else will be living in it, and it is really hard to get them out.’ At the opposite extreme from the Guatemala anecdote, many people own second homes or vacation homes in the United States that they leave unoccupied for months at a time, confident that when they are ready to return their property will be waiting for them, unmolested. However, in other neighborhoods in the United States break-ins and burglaries are common. The risks are heavily location-specific. Some neighborhoods are known as high-crime areas where people will have a smaller set of rights they actually can exercise than in other neighborhoods where residents can claim and exercise a larger set of rights.

3. Rights and entitlements

Some readers have argued that this view of rights confuses rights and entitlements. There is a semantic issue here because of the tendency to view rights from a normative perspective. The economic theory of rights is not a normative theory. Further, the term positive is used in two different ways when discussing rights. In the distinction Berlin (Reference Berlin and Berlin1969) makes between positive and negative rights, positive rights in Berlin's sense means a claim over resources, such as the right to food, or education, or health care. Positive rights for some imply an obligation for others to satisfy those positive rights. This is consistent with Sen's (Reference Sen1985) capabilities approach to rights, which would give individuals rights to the resources to allow them to be fully-functioning members of society. Negative rights convey to people the right to be left alone and not have their rights violated by others. The positive (versus normative) approach to rights taken in this paper includes both positive and negative rights in the sense Berlin uses the terms.

Positive rights imply an obligation on others to fulfill them, so a positive right is a claim on the resources of others. Positive rights are more descriptively called entitlements, because the holder of the right is entitled to resources provided by other people. The economic theory of rights includes entitlements – positive rights – as rights if those who claim the right are able to enforce the claim. As a matter of semantics, if someone wants to say that positive rights are really entitlements and not rights, the distinction is valid. But, if people have rights to the extent that they are willing to claim them and able to enforce them, positive rights are rights. The person who claims the right to food stamps and receives them has the (positive) right to that entitlement.

In a discussion of property rights as defined by A.M. Honoré, Hodgson (Reference Hodgson2013: 223–225) comments that Alchian (Reference Alchian and Bruner1977) defines property rights in such a way that ‘. . .if a thief manages to keep stolen goods then she acquires a substantial property right in them. Alchian's definition of property neglects the concept of rightful ownership.’ He then quotes Barzel (Reference Barzel1994) on property rights, and comments that Barzel's definition ‘. . .removes the question of legal title from the definition of property.’ The economic theory of rights developed here follows in the tradition of Alchian and Barzel, consistent with common phrases such as might makes right” and “possession is nine-tenths of the law.” These common phrases oversimplify the economic theory of rights developed here, but they do share some commonality, and to use the phrase Hodgson uses to describe Alchian's ideas, this economic theory of rights neglects the concept of rightful ownership. Ownership, as used here, means that an individual is able to make and defend a claim to a right, without any normative judgment as to whether that ownership is rightful.

In the context of the thief, if someone discovers the person who took her television and asks for it back, but the person now in possession of it refuses, and no outside enforcer is able to retrieve the television, the person now in possession of the television has usurped the right to it. Such a transfer of property seems, on the surface, to be “wrong,” but consider the “land reforms” that took place in Peru in 1969 or in Zimbabwe under Mugabe beginning in 2000. In both cases, people who believed they were rightful owners of land prior to the reforms had their land taken and given to other people who were then the new owners. This differs from the television example only because (1) readers are likely to consider the television example within a context of a clearly-defined property rights system familiar to them, and (2) the transfer of property was undertaken by a government rather than an individual.

Compare the television example to government income taxation. People earn income by selling the property they own, or their labor that they own, in voluntary exchanges with others; yet third parties, through the coercive tax and transfer system enforced by government, are able to claim a right to a share of people's incomes. One person's right to food stamps, for example, is possible only because the tax system forcibly takes property acquired through voluntary exchange from others.

This is not an argument for ignoring the way the law defines rights, or moral conceptions of rights people should have. However, it does leave open the issue of examining the rights that people can claim and exercise. Is there such a thing a squatter's rights? Do some people have the right to own other people? As in Alchian's view, the normative concept of rightful ownership is set aside to examine from a positive perspective the rights people actually can exercise. That would include the de facto right to use a television a person has taken from someone else, if the previous owner is unable to reclaim it, the right to use land the government forcibly transfers from a previous owner through land reform, if the previous owner is unable to reclaim it, or even the right to own another human being.

To offer an uncomfortable example, one reader asks, “A rapist may indeed have the power to rape a woman, but does that make it a right?” The answer is that if an individual can make a claim and enforce it, then it is a right. Consider slavery, where the owner would have such a right over the body of a female slave, or the example of the “comfort women” that Japan enslaved during World War II, giving its military men the right to, as that reader said, rape them. As defined here, the Japanese soldiers had that right over the bodies of the comfort women, and those women had no right to refuse them.

While contemporary normative views on rights find examples like this repulsive, slavery was a common institution until a few hundred years ago. From a positive point of view, slave owners had the ability to make and enforce claims of ownership over other individuals while the slaves were not able to enforce a claim of self-ownership. The economic theory of rights is a positive theory about the rights people actually can claim and defend, regardless of the judgments that normative rights theories might make about those claims.

4. Claiming and defending rights

Reciprocity plays a role in the rights people are actually able to claim and exercise. People may keep an eye out for their neighbors, and someone who lives in a neighborhood may be completely safe walking there, whereas a stranger may be at risk for assault. Reciprocity extends to the point that neighbors will be willing to come to the aid of people who have earned their respect, whereas those who have acted in a way to earn the contempt of their neighbors will find those neighbors indifferent – or even aggressors who will violate the claimed rights of those individuals. People will defend their neighbors with the idea that were those people in a similar situation their neighbors will come to their aid.

A person can purchase a bicycle and claim the ownership right over it, but if that person leaves it parked in some areas overnight, by morning the purchaser will no longer be able to exercise that ownership right, and a bicycle thief will the one actually exercising the right the purchaser claims. Someone who is able to keep her bicycle locked in a garage is in a better position to actually exercise the right of bicycle ownership than someone who must park her bicycle in a public area. The person who parks her bicycle in a public area is more likely to retain the right of ownership if she is on good terms with others in that vicinity who will keep an eye on it when she cannot.

Normatively, one might want to conclude that everyone has the same rights, but in a positive sense, some people are able to claim and protect a broader set of rights than others. An economic theory of rights seeks to explain what rights people actually are able to exercise, and as a by-product, to explain why some people are able to exercise a broader set of rights than others.

Some people do, in fact, have the right to make claims on the resources of others, whether it is in the form of government redistribution, which forces some to pay taxes to transfer resources to others, or in the form of theft, in which some people have the power to simply take what others believe belongs to them. While some people see a distinction between these two activities – government transfers and theft – it is not so clear to others. Rothbard (Reference Rothbard1982: 163) says, “It would be an instructive exercise for the skeptical reader to try to frame a definition of taxation which does not also include theft. Like the robber, the State demands money at the equivalent of gunpoint; if the taxpayer refuses to pay, his assets are seized by force. . .”

One reader of this paper commented that this economic theory of rights confuses “rights” in the negative sense with “powers” or “claims” in the positive sense, but the approach taken here includes those powers or claims as the rights that people actually can exercise. It is not a confusion: it is the recognition of the ability of a person to make and enforce a claim. The person who can claim the right to food stamps – obtaining food from the coerced payments made by others – has a right to that food just as much as the person who speaks out against the government using the right to free speech. Note that in some places, people do have the right to claim food at the expense of others, but do not have the right to speak out against their governments. The comingling of negative rights with powers or claims in this economic theory of rights is deliberate. It describes the ability of a person to make and enforce a claim.

One can see that in the absence of any institutional protections of rights the ability to claim and exercise rights will depend on one's own ability to enforce those claimed rights, perhaps with the help of others, because in some cases others are willing to come to the assistance of the person claiming the rights. Family members might be willing to join together, and people who see their neighbors’ property being stolen might be willing to intervene to stop the theft. This will be driven largely by feelings of reciprocity. I will look out for my neighbor's interests now with the hope that my neighbor will do the same for me should I be in a similar situation in the future. The exchange amounts to a social contract – discussed more critically below – where people implicitly respect each others’ rights and come to the defense of others in the contracting group when their rights are threatened.

Contracts for rights protections are sometimes more explicit. Some people live in gated communities with security guards, some people pay security companies for burglar alarm systems, and some people hire personal bodyguards. In societies with institutionalized rule of law people's rights are secured by government police and government courts. Even in these societies, some people are able to exercise a broader set of rights than others. Some people are more at risk to have their lives taken through murder; others are better protected. Some people are more at risk to have their property stolen; others are better protected.

5. Exchange as the basis for rights

To examine the way in which exchange relationships form the basis for rights, consider a two-person setting in which there is a strong person and a weak person. The strong person is in a position to overpower the weak and take any property owned or produced by the weak person, and even to kill the weak person. In this setting the strong person can take anything produced by the weak, but there will be little to take because the weak person will have no incentive to produce anything, knowing that it can just be taken by the strong. The two are in a position where they can make a Pareto-improving bargain. The strong person could promise the weak, for example, that he will only take 20 percent of what the weak person produces, leaving the other 80 percent for the producer. If the promise is credible, the weak person will now have the incentive to produce and get 80 percent of that production, and the strong person will get 20 percent in exchange for respecting the right of the weak person to the other 80 percent. Such an agreement may be unlikely from behind a veil of ignorance, but in the real world nobody is behind a veil of ignorance, and when compared to the status quo both the strong person and the weak find themselves better off.

For this agreement to actually pay off, the strong person's commitment to limit his take to 20 percent must be credible, and this suggests the role that constitutional rules play in constraining those with power. The benefit goes not only to those without power, but also to those who wield power. Constitutional rules are in this way a fundamental part of an exchange model of government. This idea can be developed further, as a theory of the economic foundation of government, Holcombe (Reference Holcombe1994) and Barzel (Reference Barzel2002) note, but this exchange model of government is peripheral to the present paper's focus on rights.

The exchange relationship proposed in this two-person example illustrates that people can claim and exercise rights as a result of exchange and agreement, making all parties better off. The weak person respects the strong person's rights because of the threat that the strong person can use force to protect those rights, and the strong person respects the weak person's rights because the weak person pays the strong person to do so. The exchange gives well-defined rights to everyone, and everyone has an incentive to respect those rights, but the example shows that not everyone has the same rights. Thinking of the starting point for exchange as the situation in which nobody recognizes the rights of anyone else, this example shows that a Pareto improving exchange can be made that does not provide the same rights to all parties, even though all parties receive some rights. This is no different from other exchange opportunities economists analyze, and economists recognize that while all parties enter into an exchange only if they believe they benefit, this does not imply that the gains from trade are shared equally.

A substantial literature on the evolution of rights is consistent with the approach taken here. Demsetz (Reference Demsetz1967) notes that the benefits of clearly-defined property rights also come with a cost to enforce them – a key point in the economic theory of rights. People will claim and enforce rights only when the cost of enforcing them is less than the benefits they get from the claimed rights. Demsetz uses as an example the development of property rights to hunting grounds among Native Americans as the growing fur trade raised the value of the hunted animals. The same principle applies to any right. People will claim the right to free speech only if the benefit of the right is greater than the cost of enforcing it, and some governments make speaking out against the government so costly that most people forego trying to exercise that right. Similarly, people might recognize the right of the Mafia, or a local gang, to a share of their incomes, as in the example of the weak and strong discussed above, because trying to enforce a claim to that share of their incomes is more costly than just giving it up as “protection money.” The Mafia, or the gang – or even the government – can make the claim, and enforce the claim to take a share of people's incomes.

People have incentives to develop mutually advantageous rights systems on their own. The development of a system of rights does not require that those rights be imposed by an outside authority. This is the basis of the exchange model of rights. Benson (Reference Benson1990) describes how law merchants developed as private institutions designed to facilitate exchange for the mutual benefit of those covered by the law, and Leeson (Reference Leeson2007, Reference Leeson2011) describes the governance of pirate organizations that emerged and functioned without any outside enforcing agency. Rights structures can and do emerge spontaneously. However, Benson (Reference Benson1990) notes that in many cases, a privately-developed structure of laws and rights has then been taken over by government. This has happened, Benson explains, not because the government could do a better job of defining and enforcing rights, but because those in government had the power to take over and control those institutions.

How did government gain its control over institutions, and give itself a monopoly over the legitimate use of force? Those in government had the power to take over those institutions from the people who created them. Every government in the world was created by someone seizing power by force, either by invading and taking over other people, or by overthrowing the existing government to seize power. The United States government, often cited as an example of a limited government that recognizes people's natural rights to life, liberty, and the pursuit of happiness, was created by a war to depose the existing British rulers and replace them with another government that would itself rule by force. Olson (Reference Olson2000) notes that governments of all types have the incentive to allow their citizens to be productive, so those in government can share in that productivity. It is more profitable, as Olson describes it, to be a stationary bandit and establish a permanent government, than to be a roving bandit. Government is then in a position to assign and enforce people's rights.

As North, Wallis, and Weingast (Reference North, Wallis and Weingast2009) note in their discussion of institutions developed to control violence, some people can have the power to claim and exercise more rights than others. Whether some people should have rights that others do not is irrelevant to the rights people actually are able to exercise. The differential outcomes described in the two-person example, or in the example of the Mafia demanding protection money, are Pareto improvements from the situation in which people do not recognize each others’ rights, and are stable in the sense that neither party has an incentive to abandon the agreement. If the balance of power is altered between the individuals, the party gaining power might want to renegotiate the agreement, which could destabilize it, but with the agreement in place, both parties benefit and the agreed-upon rights will be stable as long as conditions do not change.

6. Rights and government

Now introduce into the two person framework from the previous section additional people, and change the names slightly so that the weak person will be called citizens and the strong government. Some of the new people added to the framework will see that the citizens are producing wealth that potentially could be plundered, so the citizens will face the threat of outside predators. But the productivity of the citizens is also the source of the government's income, so those in the government will have an incentive to protect the productive capacity of their citizens, because doing so protects their own source of wealth, as Holcombe (Reference Holcombe2008) discusses. The introduction of additional players into the two-party framework sets up a natural exchange of protection for tribute between citizens and their government. Government wants the tribute, but also has an incentive to provide the protection to protect its source of income. Citizens want the protection, so even though they might prefer not to pay the tribute, they view the exchange of protection for tribute as preferable to the alternative of no protection and no tribute, because then they would be at the mercy of outside predators. The government's exchange of protection for tribute with its citizens makes both citizens and government better off than they would be without that exchange, and explains the existence of government within a framework of mutually advantageous exchange.

Holcombe (Reference Holcombe1994) and Barzel (Reference Barzel2002) extend this exchange model of government to discuss government activities beyond national defense, and to discuss the constitutional framework that enforces the exchange. This exchange model of government is capable of further development to explain in a positive setting why government does what it does, and how institutions make that exchange a stable outcome. While other extensions to the framework can be imagined, the basic framework just described is sufficient to develop a positive economic theory of rights.

7. Government and the use of force

Governments do many things, but everything the government does is based on its ability to use force to get citizens to comply with its demands. So, as Yeager (Reference Yeager1985, Reference Yeager2001) notes, coercion is the only reason for government to exist. If people would voluntarily pay what the government says they owe in taxes, the voluntary payment would mean there would be no reason for government to force people to pay. If people would voluntarily comply with government regulations, there would be no reason for government to compel them to do so. This is true regardless of the degree to which one believes the government acts in the public interest. No matter how much one likes what the government does, and supports its activities, the only reason for government to exist is to force people to do things they would not do otherwise. If they would voluntarily do what government demands, government would be unnecessary.

Sometimes the role of coercion in government is viewed within a normative contractarian framework as pointing to the conclusion that government acts to overcome free rider problems and prisoners’ dilemma situations to make citizens better off, so one normative take on this is that citizens agree to be coerced. This idea goes back at least to Hochman and Rodgers (Reference Hochman and Rodgers1969) in the economics literature, but is implicit in all social contractarian analyses of government activity. So, it is worth emphasizing, as Yeager (Reference Yeager1985, Reference Yeager2001) does, that the social contract is a purely hypothetical construct. In fact people did not agree to any contract, and in fact government does force people to comply with its mandates. Perhaps people should agree to be coerced, if one wants to take a normative view of government, but in fact people did not actually agree to be coerced. Government uses its power to force people to comply whether they want to or not, and this applies just as much to those who support their governments’ activities as it does to anyone who might be opposed.

The two-person example in the section above illustrates that everyone can be better off agreeing to abide by the government's terms, but it works out that way in the two-person example because the strong person can use force against the weak person if the weak person tries to back out of the agreement. What holds that two-person agreement together in the previous section is the strong person's ability to use force to maintain it, and this is no different from a government's ability to use force to make its citizens comply with its mandates, even if the citizens generally favor those mandates. Whether they support or oppose them, government uses force to generate compliance.

8. Rights and exchange

The economic foundation of government is the exchange of protection for tribute, so the rights people are able to exercise are a product of that exchange. This points directly to the conclusion that people have rights to the degree that they are able to exchange with others their willingness to respect them. Government forces citizens to participate in that exchange, but what differentiates government from other predators is that government frames the terms of the exchange in such a way that citizens are better off cooperating with government than fighting it. In terms often used in the public choice literature, government is a stationary bandit, not a roving bandit, as Usher (Reference Usher1992) and Olson (Reference Olson2000) note. The stationary bandit has the incentive to protect the productivity of those whose resources are being taken.

If government protects rights as a part of an exchange of protection for tribute, then one would expect that citizens who have more to offer government would get more in return. More productive citizens, who can pay more tribute, would therefore find themselves in a position where they can claim and exercise more rights. Congleton (2010) describes the evolution of democratic government in Europe as the result of an interaction between those in government, which originally meant the royal family, and others outside of government. As those outside government gained a stronger bargaining position they were able to claim increasing rights, eventually turning the royal family into figureheads as economic power shifted toward the economic elites, causing power to shift toward elected representatives.

One would expect that the police powers of the state would offer a greater level of protection to those who pay more in tribute so that, to return to earlier examples, upper-income people would find their televisions and bicycles better protected by the police power of the state than those with lower incomes, because the government cannot extract as much tax revenue from the poor. One should not be surprised to find legal systems in which people who appear before government courts have the option of being represented by attorneys they hire themselves, so that the rich can get better legal representation than the poor. One should not be surprised to find that interest group politics substantially determines government policies, and that paid lobbyists can direct government policy to benefit their clients.

If rights are a product of the exchange of protection for tribute, one should not be surprised to see that those who pay the most in tribute are able to exercise rights beyond the reach of those who pay the least. The Industrial Revolution brought with it the ability of individuals to amass great fortunes, not through their political and military power as was the case prior to the Industrial Revolution, but through their economic power. As those outside of government gained wealth, and therefore, were paying more in tribute, they also gained additional rights, and governments became more democratic because those with economic power were in a position to demand it. In the aftermath of the financial crisis that began in 2008 some people complained that governments were bailing out the financial industry fat cats – the one percent, as the language was used – at the expense of the 99 percent who were paying the costs. If people are able to claim rights in exchange for their payment of tribute, then one would expect the benefits conveyed by government to go to those who pay the most. Upper-income people pay the tribute, so those are the people who have the right to receive the bailout funds. Cronyism that benefits the economic and political elite is a direct implication of the economic theory of rights.

9. Rights, exchange, and coercion

Ultimately, the rights people can exercise are those they are in a position to claim and enforce, and in a social setting the enforcement of rights is undertaken primarily by collectives rather than individuals. Largely this means government, but it can also mean clubs, religious organizations, gangs, families and other collectives that will be willing to claim and enforce rights for their members. As Sobel and Osoba (Reference Sobel and Osoba2009) note, gangs often arise for precisely this reason, because their members’ rights are not well-protected by government. The doctrine of continuous dealings may lead some rights to be self-enforcing, as Telser (Reference Sobel and Osoba1990) notes. People respect the rights of others because they see the advantages of continuing to engage in mutually beneficial activities. Thus, Axelrod (Reference Axelrod1984) notes the cooperation can evolve even in prisoners’ dilemma situations, when repeated interaction means individuals must weigh a one-time gain from not cooperating against the cost of discouraging the other from wanting to continue the interaction. Benson (Reference Benson1990) notes that commercial law emerged through private organizations in just that way, to encourage mutually-advantageous continuing interaction.

One way that people can claim and exercise rights is by backing that claim with a credible threat that government stands behind it. For example, citizens follow government traffic laws and stop and red lights partly because the government threatens to penalize those who run red lights.Footnote ¹ However, nobody is surprised when the president's motorcade stops traffic in all directions and runs through red lights, even though this is a clear example of one person being able to exercise rights not available to others, because that person's exercise of rights is backed by the force of government. Nobody is surprised when members of Congress by-pass airport security screenings that are required of ordinary citizens. Nobody is surprised to hear that law enforcement personnel tend to overlook infractions committed by their own members, or that they abuse their ability to use force, because they can.Footnote ²

When the ability to exercise rights depends on being able to defend them, the ability to use – or credibly threaten to use – force will be a big determinant of what rights people are able to exercise. Those who have the force of government behind them will be in a better position to claim and exercise rights than those who do not. In a society characterized by rule of law, ordinary citizens do have the force of government backing their rights to a substantial degree, so even ordinary citizens will be able to claim and defend a substantial bundle of rights. As the examples in the previous paragraph suggest, however, those who actually hold that power of exercising government coercion will often find themselves in a position to exercise a broader set of rights than others, and often will find themselves in a position to violate the claimed rights of others, even though they claim and protect those same rights for themselves.

People who are in a position to write the laws are in a position to write them so that the authors are favored. People who are in command of government power are in a position to use that power to their advantage. This is the coercive element behind a positive analysis of rights. Force sometimes must be used to protect rights, so those in the position to marshal the greatest amount of force can exercise the broadest array of rights. The use of force tells only a part of the story of the economic theory of rights. If one were looking at roving bandits, it would be nearly the whole story, but with a stationary government, the framework presented earlier shows that government has an incentive to protect people's rights, because in doing so it protects their productivity and protects the government's source of income.

The exchange of protection for tribute means that government will protect people's rights in exchange for the benefit it receives back in the form of tribute. So, as the previous section notes, people who are more productive, and thus can contribute more in tribute, will receive more protection in return. The benefits that economically powerful interest groups are able to receive from those with political power are well-documented, for examples, by Schweizer (Reference Schweizer2013) and Stockman (Reference Stockman2013). Even when nominally everyone has equal protection under the law, some people will be more protected than others, and some people will be able to freely engage in activities that, if undertaken by others, would subject them to legal penalties.

In democracies, one factor that can facilitate gaining power over the force of government is wealth, which can be used to support candidates in elections. People with wealth can get themselves elected, and can contribute to the election of their sympathizers, who will then be indebted to those who contributed to their elections. Thus, there is a close relationship between wealth and power. Those with wealth and power want to maintain both, so there is a positive line of reasoning that explains why democracies rely heavily on income taxes – which hinder those with high incomes but low wealth from joining the class of the wealthy – rather than on wealth taxes. From an equity standpoint, one might argue that people should be able to keep the income they earn from their productivity, but that accumulated wealth produces inequality of opportunity, and one generation away, gives people wealth and power they did not earn, and possibly do not deserve. However, the economic theory of rights suggests that those with wealth and power have the incentive to maintain their relative positions, which argues for income rather than wealth taxes.

A positive economic theory of rights says that people have rights to the degree that they are able to claim and defend them. It does not suggest that everyone has the same rights; rather the implication is the opposite. Some people will be in a position to claim and defend more rights than others. And, it does not specify what rights people do, or should, have. The rights they have depend on their ability to claim and exercise them.

10. Why do people have rights?

This analysis of rights suggests that there are three overlapping ways in which people can claim and enforce rights. First, they can make agreements with others to recognize each others’ rights and not to violate them. Second, they can unilaterally claim them and use their own strength to enforce them. Third, an outside agent – most commonly, government – can enforce the rights individuals claim.

In the first case, individuals agree to respect each others’ rights. The example used earlier of the two people, one weak and one strong, shows that some parties may have a stronger bargaining position than others when determining what rights people have, and an agreement to respect each others’ rights does not necessarily imply that everyone ends up with the same rights. As with any exchange, the gains from trade are not necessarily equally divided, and some people could end up with more rights than others by starting from a stronger bargaining position.

In the second case, people can claim rights regardless of whether others agree, if they have the power to enforce the claim. On a small scale, a strong person could take property claimed by someone weaker and the weak person may have no recourse. On a larger scale, someone may have command over sufficient economic resources that the person can hire others to help protect any claimed rights. This second case has elements in common with the first, in that the hired enforcers would be in agreement to accept their roles as enforcers, and with hired enforcers others might accept the claimed rights, seeing that the claimant has the power to make good on the claim and exercise those rights. However, accepting that status quo is different from agreeing to it, and without agreement it is possible that others would move to upset someone's claim to rights that they view as illegitimate, if there were any signs of weakness in the claim. The person claiming the rights would have to be in a position to continue providing benefits to the hired enforcers beyond what those enforcers could expect to receive if they withdrew their support from their benefactor.

In the third case rights are enforced by outside enforcers, such as governments or gangs. Rather than the claimant claiming the rights based on that individual's ability to enforce the right, the claimant claims the right because an outside enforcer has made a credible promise to enforce the right. Automobile owners in the United States and Europe (and other places) typically do not have to guard their own cars because if the car is stolen, the government will work to get the car back from the thief and to punish the thief. The government's threat is sufficient to deter many (but not all) automobile thefts. Here again, this case shades over toward the second, in that those with more political power, or those who pay more in tribute to the government, are likely to find that they are able to exercise a wider scope of rights, and that even for rights everyone claims, those with power and wealth will find their rights better protected. For example, despite a widely-recognized right to life, although politicians have been assassinated, there have been no serial killers of politicians, as there have been for prostitutes, because government is more likely to pursue people who violate the rights of those who are politically well-connected than those who are unlikely to pay much in taxes or be active participants in the political process.

While recognizing the role that power and coercion play in determining which rights people are able to claim and exercise, one must also recognize that even the amount of force that one can marshal to protect one's rights is determined by what one can exchange with others to either agree to respect those rights, or to offer to others who may aid the claimant in protecting the claimed rights. People who have more to offer – to government, to gangs, to other associations – will be able to claim and exercise a broader set of rights.

11. Natural rights theories

Natural rights theories are normative and make the case that people are endowed with natural rights that they should be able to exercise. Natural rights theorists might argue that it is a positive theory insofar as people do have natural rights, as a positive proposition, even though they are sometimes prevented from exercising them. There is no inconsistency between this view of natural rights and the framework set out in this paper, because the economic theory of rights is a framework for explaining what rights people actually are able to exercise. Although this paper says people only have those rights they actually are able to exercise whereas a natural rights theorist might say some people have rights they are prevented from exercising, this seems like an issue of semantics rather than substance. As a purely positive theory, the economic theory of rights looks only at rights people are able to exercise, and takes no position on whether people should have other rights that they are unable to exercise.Footnote ³

Natural rights theories have a long history, going back at least to John Locke (1690). Prior to Locke, Thomas Hobbes (1651) argued that without a government to set the rules, the result would be anarchy, where life would be nasty, brutish, short, solitary, and poor, and a war of all against all. Hobbes saw no alternative to escape this dreadful state of affairs except to unite individuals under a social contract in which everyone agrees to abide by the rules of the sovereign. The arguments in this paper are Hobbesian to the extent that they do not recognize any natural rights; only those rights people can enforce themselves, or following Hobbes, that the sovereign will grant and enforce for them.

As a rhetorical device natural rights theory is persuasive. The success of the American revolution is some evidence, and in the centuries since the idea of human rights has become well-enough established that some governments are willing to make accusations of rights violations against other governments. People have been persuaded to accept the Lockean vision of rights, and to this extent, normative theories do influence the rights people actually can exercise. Rothbard (Reference Rothbard1982) develops an objective theory of ethics based explicitly on Locke's concept of self-ownership,Footnote ⁴ and Rand (Reference Rand1961) develops an objective ethics along similar lines – although without the explicit Lockean foundation – by developing a set of ethical principles people must follow to survive. The point in recognizing these ideas is not to argue either for or against them, but to note that they have a substantial following in the twenty-first century. Because of their acceptance, normative theories of rights do in part determine the rights people can actually claim and enforce, even though they do not explain the rights people actually can exercise.

12. Contractarian theories of rights

Contractarian theories of rights are explicitly normative, in that they argue that people should have the rights that everyone agrees to, based on a hypothetical standard of agreement. Even if an agreement were actually to take place, that offers no guarantee that people will not violate the rights everyone agrees they should have, making this a normative – not positive – theory. Rousseau (Reference Rousseau1762, Book IV, Ch. 1, no. 2) says that people have the rights that conform with the general will, as determined by democratic decision-making. Buchanan and Tullock (Reference Buchanan and Tullock1962), Rawls (Reference Rawls1971), and Buchanan (Reference Buchanan1975) develop models of hypothetical agreement that determine the rights people should have. The contractarian framework can be used to argue what rights people should have, and like natural rights theories can have an influence on what rights people actually can exercise, but contractarian theories do not claim that they explain the rights people are able to claim and exercise.

Normative rights theories are not completely irrelevant to the positive rights people have, because the rights that are widely respected in a society are in part driven by the normative views of other citizens who can choose to respect them. Religious theories of rights are likely more influential than theories by philosophers such as Locke or Rawls, and socialization guides people's behavior in many areas, including the set of rights they respect. Cultural norms partially determine positive rights. But socialization might also push people to respect certain rights of people individuals view as part of their group while not recognizing those same rights for outsiders. Normative rights theories can influence the positive rights people actually are able to exercise, but there is a clear difference between any normative theory of rights and the actual rights people are able to exercise.

13. Intellectual property: an interesting case

Protection of intellectual property makes an interesting case for the analysis of rights. First, it is an example of a type of right people claim, but that is routinely violated. In the early twenty-first century software piracy and the unauthorized use of digitally recorded music provide two good examples. People claim rights to those types of intellectual property, but are unable to enforce their claims, so in fact they are unable to exercise the rights they claim. The rights they have are narrower than the rights they claim they should have. However, a normative property rights argument can be made that people should not have rights to intellectual property anyway. Kinsella (Reference Kinsella2008) argues, based on a Lockean natural rights theory, that people have a right to the use of the property they create with their labor, but a right to the use of property does not imply a right to the value of the property. For example, if someone buys a house, they have a right to use the house but they have no right to the value of the house. If the value of the house declines, the owner's rights have not been violated. If one uses the intellectual property of another, for example by copying a computer program that person wrote or copying and playing a song that person recorded, Kinsella argues that the copier has not deprived the creator of the program or song of any use, and so has not violated that person's rights. Yes, the copying can lower the value of the intellectual property. However, if property rights convey a right to use the property, not a right to its value, the person who uses intellectual property created by someone else does not deprive the creator of being able to use it, so no right is violated.

Some would consider “intellectual property rights” to be rights violations rather than rights protections. If a guitar owner has the right to use the guitar as she chooses, copyright law may be prevent her from using her guitar to play a song she knows (without paying a fee to the music publisher), so the copyright infringes on the right of the guitar owner to use her own property. Playing someone else's song does not deprive the creator of the song from the ability of using it, but copyright does deprive the owners of musical instruments from some uses of their property.

The point of bringing up these examples is not to argue whether people should have a right to intellectual property, but to show the ambiguity in the real-world application of normative rights theories. There are two sides to the intellectual property rights issue. Using someone else's idea does not deprive the creator of the ability to use the idea, so it is not stealing, following one view. Meanwhile, the idea that using the intellectual property of another without that person's permission is stealing is widespread, and protected by law around the world, even if it is widely violated.

Some creators of intellectual property are more successful than others in their abilities to claim and defend a monopoly over the right to use their ideas. By law, the creators of a fashion designs have no rights to their intellectual property, because fashions do not enjoy the legal protection of patents or copyright. One can write a computer program and use the force of government to prevent others from using that intellectual property. One can design a new dress, or a new shoe, and government stands aside and lets anyone who wants to copy and sell the same design. The fashion example shows the uneven protection government offers to the creators of intellectual property. Culinary recipes are not protected by patent or copyright either, so a chef can design a new recipe and anyone can copy it, whereas a drug company can design a new recipe for a medication and have it protected by a patent.

One would think that if people have rights to their intellectual property, the ideas of chefs and fashion designers would be protected to the same extent as the ideas of computer programmers and pharmaceutical manufacturers, but they are not. As a purely positive theory, the economic theory of rights says that computer programmers have some rights to their intellectual property, to the extent that they can defend their claims, whereas fashion designers and chefs do not, without passing judgment on who should have those rights. This economic theory of rights explains what rights people actually can exercise, not what rights they should be able to exercise.