Constitutional political economy: Property claims in a dynamic world

Constitutional political economy concerns the legal foundations of the market. One central component of that legal infrastructure relates to property rights over objects and circumstances. The idea of ''takings'' causes one to focus on the conditions under which regulatory actions call for compensation to those who imagine that their property rights have been taken. A dynamic economy is alleged here to be one in which legal processes must carry the burden of discovering when particular parries have an interest that can be said to constitute a proper ty right requiring compensation. That is, objects and circumstances are nor protected because they are ''property.'' Rather, those objects and circumstances that are protected become, by virtue of that protection, ''property.'' The task for the economist is to understand the perverse incentives to flow from a compensation requirement on all instances of institutional change concerning landed property. A further task is to incorporate a dynamic concept of property rights into general equilibrium models of economic systems.