Property Theory of the Market

Abstract

The controversy between neoclassical-/formalist protagonists of an eternal homo oeconomicus and the substantivist proponents of non-market solidarity in tribal and feudal systems has never been solved because neither school can properly derive the admired or scorned calculative behaviour encountered in market operations. Here, property, as different from possession confusingly labelled “property” by neoclassical theory, is proposed as the progenitor of economic activity. Economic theory can only proceed if the barter paradigm is replaced by the property paradigm of interest, money and markets. The two opposing schools are not capable of defining property as a non-physical title with the peculiar capacity of being burdened and collateralised. These capacities allow the non-physical employment of a creditor’s property to back money as well as of a debtor’s property to secure credit. The lender’s temporal blocking of property costs him his free disposition of the title, the loss of which must be covered by the interest to be paid by the borrower.

Keywords: Neoclassical theory, markets, barter, Polanyi, homo oeconomicus

JEL Classification: P50, P140, D40, D46, B00, A10, K20