Transaction Costs Too Expensive to Maintain Rights

While rights and economics appear to be significantly distinct from one another, Richard Posner attempts to align these two concepts by emphasizing the importance of property rights in modern microeconomics. He considers property rights, defined as the right to exclude others from a scare resource, as absolute since “the right cannot be extinguished or transferred without the owner’s consent” (70). Posner argues that rights are more protected under the economic approach than the utilitarian model. However, I am a little skeptical to accept his claim because the consideration of rights as absolute is determined by transaction costs. Transaction costs undermine rights because if the transaction cost is perceived as too high, these rights seem virtually nonexistent. Posner states that absolute rights only exist with low transaction costs. High transaction costs make absolute rights inefficient because they prevent voluntary transactions from occurring. 

Although Posner places a high importance on the idea of rights absolute, Posner concedes that the property rights’ heavy dependence on transaction costs “give rights less status than many ‘rights theorists’ claim for them” (71). Since property rights are so susceptible to transaction costs, is Posner saying that rights aren’t as important as we consider them to be? By placing rights at a lower status under the principle of wealth maximization, how do we ensure that economic theory is better equipped to safeguard our rights?