When you think about how to measure whether or not the institution of private property is functioning correctly, there are two different approaches you can take.
1.) A property rights approach, in which property ownership is an intrinsic good, that is, a good unto itself, because each person (or some persons, as it usually goes) has a discrete right to property ownership. These typically come bundled with theories of property acquisition (how you turn ‘stuff in the world’ into ‘private property’) and in many cases the acquisition theory is linked with the right. One example is the Lockean labor-mixing theory, wherein you metaphysically blend yourself into stuff to turn it into property, and thereby have a right to that property; there are also lots of ‘desert theories’, whereby you work with things and then come to deserve them by nature of having worked with them, and thus have a right to that property. In this vein of theorizing, property is functioning correctly when people’s right to own appropriately acquired property is protected by various institutions.
2.) A social function approach, in which property ownership is an extrinsic good, which means that it is good only insofar as it affects goods outside itself. Another way to put it would be that property ownership is instrumental, and that it is a ‘good’ thing only when it is supporting some higher good. There are a variety of higher goods you can imagine the institution of private property to support — order is a common one, so is human flourishing. This view of property requires no affinity with any particular acquisition theory; it is concerned with what the existing institution of private property is for. In this vein of theorizing, property is functioning correctly when it is maximally serving the good it contributes to, such as human flourishing.
What you have here are two distinct sources of justification for the institution of private property. The trouble with the first is that all that is required for property transactions and the resultant circumstances to be just is for property rights — the right to acquire and own property — to be protected. Operating under this sort of theory alone, you can easily have situations of profound wealth inequality arise which must be understood as ‘just’, because property rights theories are concerned with the process of acquiring and owning property, not the correct use of property.
That would be bad enough. But the greater issue with that form of theorizing is that it makes people indifferent to the terrible circumstances that result from procedurally-just property transactions. Because property transactions are viewed as just based on whether or not individual rights to acquisition and ownership are respected (regardless of how the outcomes effect the community at large), these theories reinforce the idea that justice can be achieved in terms of individual, procedural choices. If everyone has their right to acquire and own property equally protected — that is, if everyone is guaranteed by the state that they can buy and sell and own just the same as everyone else — then justice has been served. All that is required to say that we have a just proprietary situation is that everyone has the same protection of rights. But these theories do not provide for a consideration of the flourishing of whole communities in real, material terms. In other words, heavy commitments to property rights approaches to ownership reinforce the phenomenon of the modern, ‘buffered self.’
The ‘buffered self’ is a form of identity which is closed off from other persons; you are your own sovereign, you are free, you have rights, and your dignity rests upon your invulnerability. Proprietary theories that view justice as a matter of your personal, individual rights being fulfilled play into this isolated self by remaining totally agnostic to the good of the community. They divorce the meaning of property from property itself. Instead, they commit themselves to no meanings, only procedures, and do not view justice as a matter of total community outcomes, only individual ones, and only in terms of particular discrete rights.
On the other hand, property theories that view property as an instrument for the communal good militate against this ‘buffered identity’ by contextualizing individual actions and procedures (such as property transactions) in the impact on the community at large. It’s pretty hard in set-ups like these to think to yourself, ‘doesn’t matter if I wind up with 500 million times the wealth of everyone else in my county due to this transaction, because I did it fair and square, and it’s my right.’ Instead you think, ‘so long as there are a lot of people without much who aren’t able to live good lives because I’ve got all this money to myself, I’m not actually entitled to all of it.’
These are stark explanations of the two different mindsets, but the point is this: the liberal property rights theories you hear in political discourse these days are not only bad because of what they produce materially (see: inequality), but also because of the ideology they factor so seamlessly into: namely, the idea that justice is merely a matter of individual procedural rights and protections, and that we have no need to factor the flourishing of our communities into the question of justice.