Property Premium

Property premium is the key concept in the system of property-based economics developed by Gunnar Heinsohn and Otto Steiger, together with Hans-Joachim Stadermann. It is an insight derived from the legal distinction between property and possession, which although a commonplace to jurists is a concept hitherto unknown and thus unused by economists.
The distinction between property and possession is used by Heinsohn and Steiger to classify forms of society. "Three distinctive systems of material reproduction are known to man: (i) custom or tribal societies, (ii) command or feudal societies and (iii) ownership- or property-based societies." [Heinsohn and Steiger, "Eigentum, Zins und Geld: Ungelöste Rätsel der Wirtshaftswissenschaft" (Marburg: Metropolis-Verlag, 20064), p. 471 (abstract in English).] The first two are based on possession, which is a physical, material concept. Property, on the other hand, is an abstract, intangible concept, and thus can only exist as a creation of law and within the realm established by the rule of law. Where such a regime of law is established, property arises; and it is accompanied by the phenomenon of property premium. "As soon as property is created it carries an unearned and immaterial premium, the property premium. This premium exists in addition to the physical use of goods or ressources ["sic"] in their possessional state and consists of two powers: (i) its capacity of backing the issue of money which can be created only in a credit contract and (ii) its eligibility to serve as collateral for obtaining credit." ["ibid."]
It is this property premium which explains the phenomen of interest. The issuer of money gives up his property premium by using his property to back the issue of that money; what he gains in exchange is interest. The borrower likewise foregoes property premium in engaging a loan, because he must back his promise of repayment with collateral, pledging his property as security for repayment of the loan. What he receives in return is liquidity premium, which is the capacity to cancel indebtedness. [ "The liquidity premium is a measure of a debtor's capacity to fulfil contracts, credit contracts and sales contracts alike. Money as the only asset to finally settle contracts, therefore, carries liquidity premium "per se". Other assets which are not money, from demand deposits over marketable debt titles to capital assets, have a liquidity premium bequeathed to them by the very existence of money and according to their degree of transformability into money." "ibid"., p. 472.] "Keynes's idea that interest is the payment for foregoing liquidity premium, therefore, falls short. The debtor's payment of interest materializes the creditor's property premium, while the debtor's property premium gives rise to liquidity premium." ["ibid.," pp. 471-472.]

This ingenious explanation for the existence of interest also demonstrates that interest is simply an aspect of property within the regime of private law. Within that regime it is inescapable; outside of it, in possession-oriented regimes whether tribal or communist, it is unobtainable.

Notes

External links

[http://books.google.nl/books?hl=nl&lr=&id=kL0ksNBJJbAC&oi=fnd&pg=RA1-PA67&dq=%22property+premium%22&ots=3TTfoxr8bJ&sig=wNvn4JXhe1YalHMZJwwlEZFLTPM#PRA1-PA67,M1 Heinsohn and Steiger, "The Property Theory of Interest and Money"]
[http://66.102.1.104/scholar?hl=nl&lr=&q=cache:IZos51AUhQIJ:www.iksf.uni-bremen.de/symposium/downloads/Heinsohn-Steiger-Symp.pdf+%22property+premium%22 Heinsohn and Steiger, "Collateral: The Missing Link in the Theory of the Rate of Interest"]
[http://66.102.1.104/scholar?hl=nl&lr=&q=cache:iQVkYqKwfHUJ:www.iksf.uni-bremen.de/symposium/downloads/Betz-Symp.pdf+%22property+premium%22 Betz, "The Property Theories of Bethell, Pipes and de Soto: Similarities and Differences in Emphasis to the Approach of Heinsohn, Stadermann and Steiger"]
[http://books.google.nl/books?hl=nl&lr=&id=TPa22fYkDSsC&oi=fnd&pg=PA490&dq=%22property+premium%22&ots=W-L2sSV7Rb&sig=GMg2mTOIAsgNbKp2zRx28Tvxsto Heinsohn and Steiger, "Interest and Money: The Property Explanation"]
[http://www.uni-konstanz.de/FuF/wiwi/laufer/kritik.pdf Läufer, "The Heinsohn-Steiger confusion on interest, money and property"]


Wikimedia Foundation. 2010.

Look at other dictionaries:

  • premium — pre·mi·um / prē mē əm/ n 1: the difference between the face value or par value of a security and its market price when the latter is greater compare discount 2: the price paid for an insurance contract equal to the cost per unit times the number… …   Law dictionary

  • Premium Appartement Rosenmöwe Sylt — (Веннингштедт,Германия) Категория отеля: Адрес: Seestr. 18, 2599 …   Каталог отелей

  • Premium Serviced Apartments — (Бангалор,Индия) Категория отеля: 2 звездочный отель Адрес: 827, 17th F1 …   Каталог отелей

  • Premium Kierland Guest Homes by Arizona Vacation Rentals — (Скоттсдейл,США) Категория отеля: 4 звездочный отель …   Каталог отелей

  • Property insurance — provides protection against most risks to property, such as fire, theft and some weather damage. This includes specialized forms of insurance such as fire insurance, flood insurance, earthquake insurance, home insurance or boiler insurance.… …   Wikipedia

  • Property tax — Taxation An aspect of fiscal policy …   Wikipedia

  • property insurance — Insurance in which the risk is that of the loss of property, as from fire, flood, windstorm, etc A contract of insurance whereby the insurer becomes bound, for a consideration in the form of a premium or premiums, to indemnify the insured for… …   Ballentine's law dictionary

  • Simon Property Group — Simon Property Group, Inc. Type Public (NYSE: SPG) Industry Real estate investment trusts …   Wikipedia

  • Woodbury Common Premium Outlets — infobox shopping mall shopping mall name = Woodbury Common Premium Outlets caption = Promenade at Woodbury Common location = flagicon|USA Central Valley, New York, USA opening date = 1985 developer = Chelsea Property Group | manager = owner =… …   Wikipedia

  • Castle International Premium Hotel — (Kushālnagar,Индия) Категория отеля: 2 звездочный отель Адрес: Ci …   Каталог отелей

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.