The Difference Between a Proprietor and a Sovereign

Right to exclude vs. ultimate arbitrator

Many people assert that if the state was abolished but private property was not then landlords would effectively become the state. They both hold a territory that they can exclude people from. A proprietor can tell their tenants what to do while they are on their property. Taxes seem similar to rent. Laws are like the rules of a rental contract. A proprietor may defend their property with force. There seems to be a lot of similarities between a proprietor and a sovereign.

According to the Encylopedia: sovereignty, is the ultimate overseer, or authority, in the decision-making process of the state and in the maintenance of order.

While a proprietor is just someone that owns something. Which means they have the right to exclude others from the thing they own.

Right to Exclude vs. Ultimate arbitrator

Just because someone is a proprietor and has the right to exclude people from the land of the proprietor does not mean the proprietor is the final decider of disputes between themselves and anyone on their land. While a sovereign by definition is the highest authority over his territory.

Fundamentally the main difference between a sovereign and a proprietor is that no one may interfere within the sovereign’s territory, such that resolution of disputes between an occupant of a sovereign’s territory and the sovereign are decided by the sovereign and can’t be interfered with by others. While disputes between proprietors and occupants of their land may be arbitrated by a third party.

A sovereign may punish people with imprisonment or even the death penalty and not have third parties interfere with their decision. A proprietor has to be careful how he treats people even on his own land because he may not be able to prevent interference by others in disputes between him and the occupants of his land.

A sovereign is the supreme political authority over the people in his territory without any interference from outside sources. A proprietor only has the right to exclude people from his property but interactions between a proprietor and others even on his own land may be interfered with by others to protect people on his land. A sovereign is the monopoly provider of law in its territory. A sovereign is the ultimate arbiter between itself and people in its territory. A sovereign can decide in its own favor when adjudicating these disputes. Further, a sovereign can use its power to grant itself sovereign immunity. That is a sovereign can exempt itself from the law allowing it to claim ownership over everyone in its territory. A proprietor does not own the people on his property and may be held accountable for injuring people on his property. It is the difference between control over things control over people.

Control Over Things vs. Control Over People

Morris R Cohen points out that having control over things does give some control over people in respect to those things. Cohen compares the bargaining power of modern day workers to the bargaining power of medieval subjects.

The character of property as sovereign power compelling service and obedience may be obscured for us in a commercial economy by the fiction of the so-called labor contract as a free bargain and by the frequency with which service is rendered indirectly through a money payment. But not only is there actually little freedom to bargain on the part of the steel worker or miner who needs a job, but in some cases, the medieval subject had as much power to bargain when he accepted the sovereignty of his lord. Today I do not directly serve my landlord if I wish to live in the city with a roof over my head, but I must work for others to pay him rent with which he obtains the personal services of others.

In Roman law, there was a legal distinction between control over people and control over things. Control over things was called dominium, and control over people which was called imperium. This got blurry under the Roman institution of slavery with slaves being both things and people. Assuming slavery is abolished we can make a clearer distinction between control over things and control over people.

It is true that control over things can impact others. A farmer that justly owns land may justly exclude people from his crops. That is, he may control people enough to exclude them from his land. However, that is the limit of his justified control over people. The farmer can’t just kill anyone that steps on his land without risking the high likelihood of interference by others in response to that action.

So far I have been mainly talking about definitions. But what is there to stop a proprietor from becoming a sovereign? Especially if there was no established sovereign to stop a proprietor from becoming a sovereign.

Could a Proprietor Become a Sovereign Through Voluntary Contracts?

In theory, a landlord could buy up a bunch of land, rent to tenants, and require tenants to sign contracts that required all disputes to be arbitrated by the landlord or his agents. Another scenario would be neighbors coming together to contractually form a sovereign government that they agree to pay taxes to and to let this government be the final arbitrator of disputes in its territory. In theory, both of these scenarios could be possible. However historically this is not how sovereign states form. Which means they are unlikely to form that way in the future. Jared Diamond in his book The World Until Yesterday points out:

The French philosopher Jean-Jacques Rousseau speculated, without any evidence to back up his speculations, that governments arise as the result of rational decisions by the masses who recognize that their own interests will be better served under a leader and bureaucrats. In all the cases of state formation now known to historians, no such farsighted calculation has ever been observed. Instead, states arise from chiefdoms through competition, conquest, or external pressure: the chiefdom with the most effective decision-making is better able to resist conquest or to outcompete other chiefdoms.

States historically formed when one group conquered another or when the elite monopolized security and used this monopoly to establish sovereignty. Proprietors could not enforce contracts that prohibited tenants from using other arbitrators without already establishing sovereignty that prevents eager competitors from providing arbitration and protection. There are mechanisms that discourage proprietors from monopolizing and becoming sovereigns. The following paragraphs will discuss the mechanisms that discourage proprietors from becoming sovereigns either voluntary or involuntary in more detail.

Competition and Market Size

There have been times in history when proprietors have become sovereigns, for example, kings. Kings codified sovereignty with the Treaty of Westphalia, and became sovereigns and proprietors at the same time. So there clearly have been proprietors that were sovereigns. Yet, not all proprietors are sovereigns. What would stop this from occurring again? Especially if there were no established states to stop them. Well, states formed when markets were small. Smaller markets are more easily dominated by a few or even just one producer. This likely made it possible for monopolies in markets for security to emerge. These monopolists then became the largest landlords and eventually colluded via treaties like the Peace of Westphalia to respect each other’s territorial sovereignty. Once monopolies are established they tend to have what economist call “lock-in”. That is monopolies tend to persist even after the conditions that allow them to emerge have gone away. Now that markets are much larger there would likely be much more competition and it would be much harder for monopolies in security to form. For more on this read Anarcho-Capitalism and Statist Lock-In by Bryan Caplan.

Economies of Scale, Proprietors vs. Sovereigns

States tend to scale up more economically than land ownership. That is states probably can operate more efficiently by growing large, under some conditions. Populations that generate most of their income from labor and exchange can be taxed more efficiently when the state rules larger areas with more people under their rule.

That is because the cost of establishing bureaucracies to tax labor and exchange likely does not increase as fast as the incomes from taxes when the tax jurisdiction grows. This could explain why states often grow to encompass whole language groups. It is costly for laborers to learn a new language so they tend to stay in the regions that speak their language. Emigration to escape high taxes may seem less attractive if you have to learn a new language. So expanding the tax jurisdiction beyond a language region many not gain as much taxes as taxing a whole language region. For more on this see A Theory of the Size and Shape of Nations by David Friedman.

At the time of writing this, the two largest landowners in the world that were not monarchs were John Malone with 2.2 million acres in second place was Ted Turner at 2 million. Though this is larger than many micro-nations, like Monaco, Liechtenstein, Vatican City, San Marino, Luxembourg and the like, but it is nowhere close to the size of a typical nation-state. Further much of their land is not connected together or is unpopulated. This indicates it is likely very hard for landlords to scale up to the size of nation-states, that often rule whole language regions. The more land a person buys in the area the more valuable the land gets to both the potential land monopolist and their competitors. This makes it costly to buy up large tracts of contiguous land. Smaller territory size limits the individual landlord’s power to prevent interference in disputes between themselves and their tenants. This means it would be hard for landlords to establish monopolies over law and dispute resolution.

Cost of Exit, Proprietors vs. Sovereigns

As already mentioned these large private landlords that acquire land through purchasing rather than conquest, do not own continuous tracks or whole language regions like states often do. The difference in cost between moving across the street verse moving to a new language region is significant. So compared to a nation state moving off of a landlord’s property would be a low-cost option for the tenant if the tenant did not like how the landlord treated them. This limits a landlord’s ability to impose his will on his tenants.

Profit Incentive

Though states do have the incentive to collect more taxes, since there is less migration between language regions than within, once a state dominates a whole language region it will tend to have less incentive to provide better services than their neighbors to attract taxpayers. Further, some states impose expatriation taxes, continue to tax citizens after they have left the country or have other methods to discourage emigration to prevent taxpayers from leaving. While proprietors have an incentive to attract tenants by treating them well and offering them services at an affordable price because the cost of exit from landlord tends to be low. Imposing high rents, erroneous exit fees, or poor services would discourage new tenants from moving in.

Historical Examples of Proprietors Prior to State Enforcement of Property Rights.

There are historical examples of landlords in societies without sovereigns that could not prevent third party arbitration in cases involving himself and their tenants. In Medieval Iceland there was no sovereign and no monopoly in the enforcement of the law, they relied on private enforcement. Yet proprietors were not sovereign. Disputes between landlords and tenants could be arbitrated in court. Even if that landlord was a chief that provided protection and arbitration in his area. The Icelandic Sagas record some of the events that people of the time found interesting. For example, Hrafnkels Saga is about Hrafnkell, an early settler of Iceland, who was a proprietor and also a chieftain. In Medieval Iceland, a chieftain was a provider of protection and not a sovereign. Hrafnkels killed one of his tenant servants for a trifle. The servant’s father and his cousin got the help of another chieftain and successfully prosecuted Hrafnkels and defeated him. This is a plausible tale of a proprietor that tried to act like a sovereign in a society without sovereigns and was prevented. Against the chieftain’s counsel, the cousin then decides to let Hrafnkels and his henchmen go free instead of killing them. A choice that comes back to haunt the cousin later. However, this anecdote shows even in this primitive legal system with private enforcement, proprietors could not rely on being free of interference regarding disputes with their tenants.

Summary

In summary, the differences between proprietors and sovereigns are: Proprietors have the right to exclude others from their property but not prevent interference in the disputes between himself and his tenants. Proprietors have control over things but not control over people. Proprietors likely can not become sovereigns except when markets are small and there is little competition to prevent collusion and monopoly. Proprietor ownership does not scale as well as sovereign territory, so proprietors tend to have much smaller territories than sovereigns. This makes the cost of getting away from an unfavorable proprietor low compared to getting away from an unfavorable sovereign. Profit incentives encourage proprietor to do things to serve tenants rather the other way around like sovereigns. It is not just theory that proprietors have difficulty becoming sovereigns, historically there have been proprietors that were unable to achieve sovereignty in societies that relied on private instead of public law enforcement.