ABSTRACT
The inability of economists to differentiate between possession and ownership has prevented them from realizing that only ownership-based societies are char-acterized by genuine economic activity. And it is this lack of insight that is responsible for the absence of a genuine economic theory to this day. This claim may sound presumptuous. However, it can be argued that it has found the support of Harold Demsetz, one of the founders of new institutional economics. While Demsetz ambiguously identifies the ownership-based society with capitalism, he notes: ‘Although our theoretical ideas about capitalism have improved as mainstream economics developed, they have never matured into a theory of capitalism’ (Demsetz 1998, col. 144a).
