Introduction

Orthodox economics neglects property theory in favor of value theory. In place of an explicit theoretical description of capitalist property relations, orthodox economists have built into price theory an imaginative array of myths, metaphors, parables, emotive definitions, conventional misunderstandings, and fallacies – most of which are theoretical expressions of capitalist ideology. This ideological superstructure, which substitutes for an accurate description of property rights, is not simply grafted onto an otherwise sound value theory. Serious work in capitalist economics, such as the Arrow-Debreu model of a “private ownership economy,” rests upon the assumed existence of certain “property rights” which turn out to be mythical.

We will be concerned with property myths and misunderstandings in capitalist economics; no broad and lengthy development of property theory will be attempted here. In the first section, we give a simple formalism for describing the creation and transfer of property. In the second section, we analyze the property structure of production and the distribution-of-the-product metaphor. Section three contains the main results of the chapter which concern the “ownership of the firm,” the “ownership” of the future profits of production, and “management's prerogatives” – all in the context of a capitalist private property market economy. The section entitled “Capital theory” applies these results to capital theory and analyzes the attempts to beg property theoretic questions with loaded value theoretic definitions. The final section – on general equilibrium theory – gives an impossibility theorem for profitable capitalist competitive equilibria – which, in turn, implies the failure of the attempt by Arrow and Debreu, and others to model a competitive equilibrium in a capitalist economy with decreasing returns to scale and positive profits.