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Can competitive law work?

It’s no good. Every time I think about Jonny’s sun-kissed fringe. Every time I think about Dallaglio’s try-setting run. Every time I think about that little girl at the airport, at 4:30am, holding up a homemade picture of the England rugby team framed in red tinsel, I feel like blubbing. Even now, as I write this, I’m filling up again. What a game.

I think it’s something to do with having children. You just start becoming emotionally incontinent about everything. Or at least that’s what has happened to me. But enough of this nonsense. I shall ask Mr Micklethwait to try to cure me by email.

But his post below set me thinking about something else. Having waded through various anarcho-capitalist tomes, in the last few months, there’s something I’ve found particularly unsatisfying about them all, as they babble on about private courts, private arbitration, and private police. Where’s the beef!

You hear tantalising snippets about successful anarcho-capitalist societies in fourth century Germany, in eleventh century Ireland, and in fifteenth century Iceland, but rarely, if ever, do you actually get to see the beef. What would an anarcho-capitalist society actually be like? And if it’s such a good thing, why didn’t the German, Irish, and Icelandic experiments sweep the world? Yes, those with the biggest spears, swords, and addictive philosophies, imposed their coercive natures upon the rest of us, and their useless miserable parasitical states. But even anarcho-capitalists will admit that even the worst dictator needs the support of the broad mass of his state’s population, or at least their grudging acceptance, in order to survive. Otherwise, as revolutions like the recent one in Georgia have shown, the dictator is curtains. So where’s the beef? Show me anarchist law successfully in action, and then maybe I will believe. And yet there it was before me, all the time, like that big “W” swaying in the breeze before Phil Silvers in ‘It’s a Mad, Mad, Mad, Mad World’.

The typically Anglospheric state guards its ‘right’ to administer all internal state justice with a ruthlessly monopolistic intent. Except in one place. In this one small area you can deliberately break a man’s leg, in front of tens of thousands of potential witnesses, and you will suffer nothing more than a curt dismissal from a patch of grass. In this one small area you can punch a man until he’s unconscious, and kind men on television will accuse you of nothing more than a ‘wee bit of nonsense’. And in this one small area, legal decisions are routinely made which change people’s lives forever, but which are inapplicable to anywhere but this one small area, and even then for only a small time period typically less than half a day.

I am of course talking about ‘The Pitch’, that sacred Valhalla, from the concrete on the five-a-side soccer pitch at Wilmslow leisure centre, in Cheshire, to the verdant turf of the Telstra stadium, in the rugby world cup championship decider, in Australia. Here, men are men, flexible rules of the game are iron laws of reckoning, and small furry creatures from Alpha Centauri are tired and emotional, after the long trip to the game, from Alpha Centauri.

Am I stretching a point? Probably. But could this be a key? Could ‘Sports Law’ one day become the foundation stone of anarcho-capitalist law? Let’s take a look at it. Dr David Friedman is covered. If you’re a football player who doesn’t like one set of laws, you simply move to another form of football laws which you do like. And you can do this on the field right next door, whether they’re playing soccer, rugby union, rugby league, American football, Australian football, or even table football, if you fancy going back to the warmth of the clubhouse.

Professor Rothbard is covered. All the players or teams pay a competitive sports administration board (FIFA, the Rugby Football Union, the National Football League), to provide private judges, or referees, to adjudicate on the law. Even within these administrations these private judges compete to satisfy teams better than other private judges, under the same administration, so that they can officiate at the really big games and get the highest fees and advertising sponsorship.

Even Professor Hoppe is satisfied. Should a really difficult decision go beyond the ability of the appointed private adjudicator, this adjudicator goes up to a final arbitrational court, or as he’s more often known these days, the ‘television referee’. The television referee virtually always enjoys an unchallengeable respect within the game, and his decision is always accepted as binding and final, without the need for any further arbitration. Even in the worst cases of rough justice, the final result of the game always stands, regardless of any post-game televisual analysis.

Notice how quick and inexpensive this law is, compared to the years and cost it takes the monopolistic state to bring even the simplest case to trial. It is virtually instant. There may occasionally be a 10 second conference, with more minor adjudicators, or as they’re sometimes known, linesmen, and possibly a 60 second decision going to the final binding arbitrator, up in the Gods.

But then, that’s it. It’s decided, and everyone on ‘The Pitch’ obeys the legality of the decision, and moves on. Except on very rare occasions. And if some player should lose his rag, and his team-mates remain unable to restrain him from prolonged legal dissatisfaction, he almost always pays for it afterwards in a total loss of respect for either his opinion or his inability to control his own temper.

Notice, also, that little in the way of policing is required. The referee makes a decision, and that’s it. Self-restraint and the need to save face in the ‘society’ of the game, gets most players obeying ‘The Law’, though occasionally team-mates and linesmen, acting as proxy-police, are needed to suppress hotspots of dissent. Notice also how powerful this effect of self-restraint becomes, before the face of this flimsy anarchist law. You’ve got a six-foot-five, 32-inch-waisted, nineteen-stone man, pumped with adrenaline, who has just had his testicles gouged with a bullocking boot, who has retaliated in kind, and who is shouting and remonstrating at an eleven stone referee, and yet the merest display of a red piece of plastic and the point of a finger gets this beast of a man to turn, to walk away, and to obey the instruction to leave ‘The Pitch’. Okay, so he’s often unhappy, and lip readers refuse to reveal what he’s saying on family television, but he does ultimately do what he’s told, even if kicking some form of bench, or bench official, on his way off.

So speedy inexpensive legal decisions, competitive judges, competitive systems of law, the lack of a need for much policing, binding second level arbitration, legal stability, and a complete acceptance of all parties as to the ultimate legitimacy of ‘The Law’. Ladies and Gentlemen. I give you a fully-functioning anarcho-capitalist legal system, in action. It can work.

49 comments to Can competitive law work?

  • A small point, but an important one: considering that rugby (especially in England, and most recently Down Under) is played in conditions of damp near-darkness, how would you ever have SEEN “Jonny’s sun-kissed fringe”?

  • Abby

    This is a facinating question, one that goes to the heart of my disagreement with the anarcho-capitalist argument.

    To me it seems that capitalism cannot thrive without property protection and the enforcement of contracts, but that the rule of law is not something the market can itself create.

    The anarcho-capitalist argument seems to fall apart on the issue of enforcement. The difference between laws and informal rules is that law is force-backed. Sports associations are able to enforce their rules and penalties through fear of expultion from the mutually-benificial enterprise. But where is the analog of this incentive in the “real world” context?

    Criminals commit theft and fraud and ignore their contractual obligations because there is an economic incentive to do so. By what mechanism can this incentive be reversed without the force of law?

    Also, at what point does such a rule-making body become a state?

    I’m not closed to the argument, mind you, but this seems to be a fatal flaw.

  • First, unrelated: are six security digits really necessary? They take two mind-moments to type, whereas three digits might only require one.

    Secondly: if the player beats up the ref and keeps playing anyway, he’ll be hauled off by the real-worl police and thrown in real-world jail.

  • Long before the police arrive the player who attacks the ref would be subdued by other players and would no longer be able to work his trade until damages were assessed and restitution made that was acceptable to all. The police are superfluous and external to the system but do have jurisdiction to enforce their laws in their ways.

    “Sports associations are able to enforce their rules and penalties through fear of expultion from the mutually-benificial enterprise. But where is the analog of this incentive in the “real world” context?”

    It’s the oldest of systems, the refusal of a community to do business with one who is shunned for crimes against the community. What has made this difficult during the period of expansion for the past few centuries is that the size of communities was too great for reputation systems to work. That seems to be changing as we become better connected. There has been quite a lot of recent work on reputation systems that seems to address this issue.

  • Julian Morrison

    Why didn’t the ye olde anarchy meme sweep the world? My guess: there was no such meme. Systems of government were either subsumed within national identity, or as invisible from within as water to a fish. The claim “we could do it like they do it” would get a response of either “whuh? government?” or “but we’re us, we do it this way”. To use V.Postrel’s terminology: all societies back then were intensely stasist – especially the anarchies. Cultures were defined by heredity and by their traditions. Such a situation does not foster either “cultural imperialism” or capitalist innovation/expansion.

  • Rothbard’s much-vaunted competitive law has been – to continue the sporting metaphor – kicked into touch by Hernando de Soto’s rather powerful argument that the secret of the West’s success with capitalism depends on western countries NOT having competitve and local law but rather unifying all laws into One Law. One Law allows assets to become abstracted into capital through a unified system of description, enabling a greater range of possible transactions than competitive law. It also allows for a greater division of labour than competitive/local law. Competitive/local laws cannot ‘speak’ to each other in meaningful enough ways to allow this range of transactions. Rothbard overlooks this.

    Caveat: this is specifically PROPERTY law, and not other law, so there’s scope for local differences. For instance, a player may be able to punch and kick on a rugby field (for how much longer?) but they can’t murder their opponents, so there are laws applicable universally.

    Check out de Soto’s book ‘The Mystery of Capital’ for the more detailed dirt than my nanoprecis above.

  • Julian Morrison

    Abby: “Criminals commit theft and fraud and ignore their contractual obligations because there is an economic incentive to do so. By what mechanism can this incentive be reversed without the force of law?”

    There is an old equivalent to the sporting punishment “permanently not welcome to play with us”. That is: outlawry. If you ignore the law, the law ignores you back. No sensible person would give an outlaw food, work, or shelter. The aggrieved party would be free to pursue vendetta against them. If one were to shoot an outlaw, it wouldn’t count as murder.

  • Julian Morrison

    S. Chapman: If I recall, even before “one law” from the state, there was “the law merchant”, one law concerning property, between traders.

  • Abby

    Julian,

    This scarlet letter system you speak of strikes me as very inefficient: Would it not require large transaction costs?

    Capital markets, with their complex and ingenious financial innovations, are built upon strong investor confidence: the belief that agreements will be honored. Even unsophisticated investors (who would otherwise hide their money in their matresses) can invest, confident of a degree of protection.

    Because the market trusts that certain variables will remain constant, such as that the U.S. government stands behind its debt obligations, or that contracts will be enforced upon pain of asset forfeiture, a substantial amount of risk (and its attendent cost) is eliminated from the system. Who would lend to mortgage-seekers without the guaranteed ability to forceably reposses the collateral? They may do it, but the interest rates would be far higher.

    As things stand, the market does not have to bear the transactional research costs of trying to identify and blackball the legion of identity-shifting thieves and con-artists who would no doubt roam around evading their scarlet letter status. This inevitability would introduce a costly and systemic degree of uncertainty into economic transactions.

    Assuming that the scarlet letter would stick, how would this trade embargo be enforced? Wouldn’t there always be someone willing to do business with the thief, to buy from or sell to him if the price is right? They would deny him credit surely, but refuse an economically advantagous trade?

    The market may be able to create some degree of protection for itself, but not I think the sort of protection that force-backed, involuntary law provides. Business would be much riskier, and the system less efficient.

  • Julian Morrison

    Abby: even with the state, markets are vulnerable to bad-guys doing bad things. And chasing them down often has huge transaction costs. (Taxes for police and courts, lawyer’s fees, private detective’s fees, the cost of accountants to audit for fraud, etc.) People scam lenders, sign contracts they have no intention of obeying, take payment in advance and then scarper without delivering the goods. The state does not prevent it, anarchy would not prevent it. What both systems do is provide disincentives.

    You say “As things stand, the market does not have to bear the transactional research costs of trying to identify and blackball the legion of identity-shifting thieves and con-artists who would no doubt roam around evading their scarlet letter status. This inevitability would introduce a costly and systemic degree of uncertainty into economic transactions.”

    You misunderstand outlawry. Outlaws are blackballed from legal recourse. It’s an emergency fallback last resort solution, for those rare cases where somebody openly flaunts justice eg: by admitting guilt but refusing to go to court, by going “on the run”, or by refusing to pay up on an agreed resitution. The normal case would be that the victim, having caught the crook, takes him to court and gets a judgement, and the crook pays up.

    If someone actually does get outlawed, on account of refusing all reasonable chances to setle the matter like a civilized person, they are utterly at the mercy of everyone and anyone. I suppose in such a case, the aggrieved party would typically hire “Knuckles” Luigi’s collection agency to acquire repayment, the hard way. Or just gun the crook down and sue their estate.

    The state system is far weaker in it’s “ultimate sanction”. The fraudster goes to jail – at his victims’ expense! This repays his crimes how, precisely?

  • Rothbard’s much-vaunted competitive law has been – to continue the sporting metaphor – kicked into touch by Hernando de Soto’s rather powerful argument that the secret of the West’s success with capitalism depends on western countries NOT having competitve and local law but rather unifying all laws into One Law. One Law allows assets to become abstracted into capital through a unified system of description, enabling a greater range of possible transactions than competitive law. It also allows for a greater division of labour than competitive/local law. Competitive/local laws cannot ‘speak’ to each other in meaningful enough ways to allow this range of transactions. Rothbard overlooks this.

    Rothbard did not argue for competitive law.

  • Involuntary statist law has universal coverage. In anarcho-capitalist competitive law, insurance premiums replace taxes, with the rates varying depending on what exactly you are doing (working as an accountant and operating a skydiving business will have vastly different rates, for instance).

    Screwing up without coverage carries risk of being blackballed in whatever reputation systems exist. And the poor can’t afford coverage for much, so your profession choices are limited by capital and credit available to you. Guilds and syndicates are the natural response for pooling capital in higher premium trades under such a system; you end up with them as gatekeeps that pre-screen risk pool applicants, and pool capital for premiums.

    The actual amount of human liberty available under such a system may or may not be greater than under, say, pre- or post-New Deal American law, at least so far as ability to practice the profession of ones choice and participate in various markets.

    Seeing as how no one has ever been able to implement something so sophisticated or fast as an Internet implementation of such concepts, we can’t really say which has more liberty as yet in practice.

    But layering such reputation, arbitration and insurance systems on top of existing statist law may be the best way to go anyhow, as a whole-cloth implementation post-revolution somewhere, with the requisite social niceties to make it work, isn’t likely to happen.

    And such layering has already started in some very small ways. I’ve been involved in some related computer science research for a number of years, but probably only Dale Amon would be interested in the nitty gritty, as there are no products as such yet. :-)

  • Patrick W

    As a child I used to enjoy reading Judge Dredd. Some of you may have seen the dreadful film that followed. This had instant justice of the sports referee variety. An empowered individual reviews the offence, decides on guilt or innocence and delivers punishment immediately. It works for sport because the worst that will come of it is a potentially wrong result on the field and the game must flow. In the real world who could accept granting some ‘supercop / referee’ type the power to send you to jug for a long stretch before you had even sobered up?

  • Andy Wood

    The anarcho-capitalist argument seems to fall apart on the issue of enforcement. The difference between laws and informal rules is that law is force-backed. Sports associations are able to enforce their rules and penalties through fear of expultion from the mutually-benificial enterprise. But where is the analog of this incentive in the “real world” context?

    Have you read David Friedman’s book The Machinery of Freedom?

    Your question is answered there.

  • Dale Amon

    Dave: Yep, and I am at a legal disadvantage in that area called an NDA, so if any discussion is to occur, I will leave it to He-Who-Paid… who is also a reader here. Or at least Jim does drop in on occasion…

  • Johnathan Wilde is quite correct, Rothbard did NOT advocate ‘competative law’. Rothbard derived law from ethical theorising and insisted that it was natural and universal. What he actually advocated was that the _enforcement_ of the law be administered privately and polycentrically. The law itself however would be the same everywhere in Rothbard world.

    David Friedman, on the other hand, does advocate competative law. He has no time for ethics or philosophy more generally and insists that the content of the law be determined by market demand.

    For those who may be confused about the difference; help is at hand. A short pamphlet freely available online from the Libertarian Alliance website ‘For a New Libertarianism: Problems and Perspectives in Ayn Rand, Murray Rothabrd and David Friedman’ by Paul Coulam clarifies the contrasting problems of each system in a way little short of genius.

  • Apologies for the rather less than genius like spelling errors in the above. :-(

  • Andy Duncan

    Kim du Toit writes:

    A small point, but an important one: considering that rugby (especially in England, and most recently Down Under) is played in conditions of damp near-darkness, how would you ever have SEEN “Jonny’s sun-kissed fringe”?

    :-)

    Good point.

    Abby writes:

    Also, at what point does such a rule-making body become a state?

    David Friedman’s ‘The Machinery of Freedom’ and Uncle Murray’s ‘For a New Liberty’ cover the issues of enforcement well, better than I ever could, but on the question of the rule-making body becoming a state, I think my ridiculously overstretched analogy breaks down on the subject of FIFA. Whereas Dr Friedman envisages the rule-making body being a competitive insurance company and Professor Friedman imagines that ‘natural law’ will be universal, based on a priori ethics, to be interpreted by competitive courts, a body like FIFA has almost become a state in its own right, one without borders, almost a world government of the type socialists would like to see, with all the associated problems of such a thing. I fear I should stop there, as I don’t think I’d stop talking about FIFA until at least 10,000 words were consumed, and the bandwidth police, those most powerful of law enforcement agencies, would come get me :)

    Michael Williams writes:

    Secondly: if the player beats up the ref and keeps playing anyway, he’ll be hauled off by the real-worl police and thrown in real-world jail.

    Never seen it happen. Don’t think I ever will see 29 rugby players stand by while an idiot pummels the ref. It used to be the case in my glorious fourth team second row days, that laying even a solitary finger on the referee got you a sine die life ban. I can’t speak for soccer. Maybe it has disciplinary problems because of the state-like nature of FIFA?

    The police, to give them a crumb of credit, are also loathe to get involved in sporting disputes. The white line marks the end of their territory, a line which they are pleased to stay short of. Even in boxing, where premeditated and repeated punches to the head have often ended in death, in something which a court could easily describe as murder, the offending boxer often carries on in normal life without even the merest hint of jail term.

    BTW, some of the hardest most unscrupulous, some would even say law-bending, players I ever saw or got gouged by on a rugby pitch, were policemen. Fortunately, the golden rule of rugby, that if a referee sees a punch thrown on a marshy wintry pitch without cameras present, he will then ignore another one thrown in the opposite direction, often proves effective in such situations. Hammurabi’s law code, in action; a punch for a punch.

    Ah, the warm wintry comfort of front five skullduggery! ;-)

    back40 writes:

    There has been quite a lot of recent work on reputation systems that seems to address this issue.

    Do you know of any good books on the subject?

  • Dale Amon

    Speaking of FIFA… there was a feature on the other night about a local supporters club being up in arms because the club owner sold the land to developers, and they say FIFA agreements don’t allow this and if FIFA won’t DO SOMETHING, then the government should REGULATE it.

    We’ve got some very sad people here.

  • Dale Amon

    Whoops… as soon as I posted I realized that was the FA, not FIFA they were angry at. My mistake.

  • Dave

    The police may be loath to get involved in sporting disputes but they do reguarly have to do so, especially when there has been a serious injury.

  • Ian

    This is an interesting concept, but I don’t think any game works when everyone wants to be referee.

    Re: the anti-spam security number, I dont mind the six digits but it is out of the tabbing sequence, i.e. should be between URL and Comment boxes.

  • Andrew Duffin

    Andy Duncan:

    “the worst dictator needs the support of the broad mass of his state’s population, or at least their grudging acceptance, in order to survive”

    Which of those, in your judgment, did Stalin enjoy?

  • Andy: your e-mail address is bouncing. Please e-mail me with one that works.

  • Josh

    Andrew:

    If I’m not mistaken, Stalin did enjoy a fair amount of popular support. Most Russians had no idea what was happening in Ukraine or Siberia, and Stalin defended them against the Nazis.

  • It occurs to me that since property law has a natural geographic monopoly (see De Soto’s “Mystery of Capital”), and criminal and tort law would have problems of universal coverage for the very poorest in a competitive law system, we might not see such a beast on this green earth.

  • Andy Wood

    It occurs to me that since property law has a natural geographic monopoly (see De Soto’s “Mystery of Capital”)…

    I don’t recall De Soto ever addressing anarcho-capitalist legal systems in The Mystery of Capital. His book makes a comparison between Third World legal systems and Western ones. Anarcho-capitalism was never mentioned.

    The message I took from the book was that prosperity depends on the ability to secure title to your property, and to prove that you possess such title to a would be creditor.

    It’s probably true to say that De Soto assumed that such a service would be supplied by governments, but I don’t remember him making any argument which implied that, say, David Friedman’s protection agencies couldn’t supply that service.

    Although, I suppose if he did have such an argument, it wouldn’t have been necessary for him to make it since most of his target audience have probably never even heard of anarcho-capitalism.

    …criminal and tort law would have problems of universal coverage for the very poorest in a competitive law system…

    Not necessarily.

    1. If compensation claims are treated as transferable property, then a victim will have a valuable asset to sell.

    2. Looking at the production of other goods, it’s those goods produced by the market that are high quality and in abundance, those produced by government are poor quality and in short supply. Unless you can identify any serious free-rider problems, why should law be any different?

  • My point was that the function of providing an indusputable clear title is a natural monopoly in any given geographic region. Anything else would create uncertainty and chaos.

  • “Rothbard did not argue for competitive law.”

    Yes he did. For a New Liberty has a whole chapter on it. It was his solution to the problem of not having a state to legislate. He did defend common law, but as he acknowledged, common law doesn’t cover everything by a long way.

  • Yes he did. For a New Liberty has a whole chapter on it. It was his solution to the problem of not having a state to legislate. He did defend common law, but as he acknowledged, common law doesn’t cover everything by a long way.

    Did you actually read this chapter? Here is what is actually says:

    It is now clear that there will have to be a legal code in the libertarian society. How? How can there be a legal code, a system of law without a government to promulgate it, an appointed system of judges, or a legislature to vote on statutes? To begin with, is a legal code consistent with libertarian principles?

    To answer the last question first, it should be clear that a legal code is necessary to lay down precise guidelines for the private courts. If, for example, Court A decides that all redheads are inherently evil and must be punished, it is clear that such decisions are the reverse of libertar­ian, that such a law would constitute an invasion of the rights of redheads. Hence, any such decision would be illegal in terms of libertarian princi­ple, and could not be upheld by the rest of society. It then becomes necessary to have a legal code which would be generally accepted, and which the courts would pledge themselves to follow. The legal code, simply, would insist on the libertarian principle of no aggression against person or property, define property rights in accordance with libertarian principle, set up rules of evidence (such as currently apply) in decid­ing who are the wrongdoers in any dispute, and set up a code of maxi­mum punishment for any particular crime. Within the framework of such a code, the particular courts would compete on the most efficient procedures, and the market would then decide whether judges, juries, etc., are the most efficient methods of providing judicial services. [...]

    Of course, in the future libertarian society, the basic legal code would not rely on blind custom, much of which could well be antilibertarian. The code would have to be established on the basis of acknowledged libertarian principle, of nonaggression against the person or property of others; in short, on the basis of reason rather than on mere tradition, however sound its general outlines.

    It is quite clear that Rothbard does not argue for competitive law like Friedman does. One of the main problems with introducing radical ideas to people, including libertarians, is the inability to overcome pre-conceived notions. I hate to say, “Read the book” in response to any question, and I try my hardest not to do so on my blog either, but often this is the only way get principles across. It was evident by the posts in reaction to Andy Duncan’s review of The Machinery of Freedom that people were willing to dismiss ideas different from their own based solely on their own biases.

    And by “Read the book” I mean read it skeptically, with rational critical analysis. Don’t simply skim it or read other people’s reviews of it or try to get a ‘general feel’ of it. Question every sentence, raise alternate possibilities, propose arguments against the author’s ideas, and skewer every slip-up.

    In a decentralized legal system, one of the most important questions is whether or not there needs to be a single legal code with private enforcement, or whether people would actually be able to actually buy laws against prostitution, drugs, etc. This is *the* biggest difference between Rothbard’s and Friedman’s versions of free-market law.

    Rothbard never argued for competitive law, in any of his works. There was an underlying objective ethical principle which he believed all law should be based on, resulting in a generally accepted legal code: the non-aggression principle.

  • Richard Garner

    I’ll second Jonathon’s post above: Rothbard never argued for competitive law. For instance, in adition to _For a New Liberty_, he also said in _Power and Market_,

    “While ‘the government’ would cease to exist, the same cannot be said for a constitution or a rule of law, which, in fact would take on in the free society a far more important function than at present. For the freely competing judicial agencies would have to be guided by a body of absolute law to enable them to distinguish objectively between defense and invasion. This law, embodyingelaborations upon the basic injunction to defend person and property from acts of invasion, would be codified in the basic legal code. Failure to establish such a code of law would tend to break down the free market, for then defense against invasion could not be adequately achieved.”

    As libertarians we all believe that there should be a body of law that reflects libertarian principles. Libertarian anarchists do not disagree with this – the very reason they are anarchists follows from their view that there are somethings that people should not be allowed to do, so they are bound to oppose a legal system that would allow such things.

    The question the libertarian anarchist asks, though, is whether or not the state itself would be illegal under a libertarian legal system.

    To Paul Coulam: I think that the Rothbard/Friedman distinction divides anarcho-capitalists. However, rather than stressing a difference between the two views, I am a compatablist: Their views are compatible.

    David Friedman describes how an anarcho-capitalist system might function. Rothbard describes how he would like it to function. This does not imply that Friedman would not prefer it to run like Rothbard hopes, with an entirely libertarian legal code.

    In addition, Rothbard tried to argued that it is plausable that an anarchist society would produce a libertarian legal code, not through economic arguments, but through historic ones, pointing to the relatively libertarian common law, and the objectivity obtained in the Lex Mercatoria. Friedman, on the other hand, used economic arguments to show what laws are likely to emerge. Whilst he conceded that in some areas the emerging legal rules would be non-libertarian, he did argue that there is good reason as to why they would be mostly libertarian, due to market failures related to supplying non-libertarian laws as a private good. Friedman basically said that a market for law would be more likely to supply efficient law than a state would, and that there is an odd coincidence between laws economists say are efficient and laws that libertarians say are just. Friedman’s arguments, then, might explain why the common law and other customary legal systems do have such strong libertarian aspects to them.

    And, in the end, the minimal statist will say that it is wildly utopian that an anarchist society will produce a libertarian legal code, and so a state is necessary to do it. The anarchist response is that the very existence of a state would stand in violation of that legal code. The second anarchist response would be that it is wildly utopian to assume that a state will produce a libertarian law code: It is not enough to simply says that because we need an objective libertarian legal code we need government, since we have no good reason to believe that a government would produce one, nevermind be compatible with such a legal code’s very existence. After this the issue becomes simply a matter of economic debate as to which the best way to produce a relatively libertarian legal code would be, and so the debate falls back into the hands of Friedman.

    PS, Paul: Great talk last Sunday!

  • Abby

    Assuming one could establish a system of competitive law given the stability of pre-existing system, it is indeed difficult to imagine such a system yeilding a superior result without an agreed upon constitutional framework and a universal, libertarian bill of rights. Today the majority tyrannizes through its votes; I understand that market forces may discourage this, but surely the market is influenced by non-economic, anti-libertarian preferences?

    Competitive systems of law could also result in hegemony of the most market-responsive system. (A large business would want to have some unity in the law to which it binds itself). But wouldn’t such power accretion cause these successful legal systems to ultimately muscle out competitors until they dominated discrete, continuous geographical areas, i.e., a state?

    It doesn’t seem that one can depend on an agency which has aquired power to allow that authority to be challenged: Where power is concerned there appear to be incentives to act which are beyond economics. I am reminded of Lord Acton’s astute observation …

  • Abby,

    Assuming one could establish a system of competitive law given the stability of pre-existing system, it is indeed difficult to imagine such a system yeilding a superior result without an agreed upon constitutional framework and a universal, libertarian bill of rights. Today the majority tyrannizes through its votes; I understand that market forces may discourage this, but surely the market is influenced by non-economic, anti-libertarian preferences?

    Would non-economic, anti-libertarian preferences be more successful in a monopoly environment or in a competitive environment?

  • Julian Morrison

    I think people’s “anti-libertarian preferences” would evaporate pretty quick, when they got the choice of Eternal Drug War Law Inc. at $1000 a month, or Non Agression Law Inc. at $10.

  • Abby

    I take your point, Jonathan, but I do think that both systems would present threats to individual liberty.

    In the US, decisons based on the Bill of Rights are often deeply unpopular, such as the protection of offensive speech (or note the current majoritarian fury over the Court’s implicit contention that the 14th Am. demands the recognition of same-sex marriage).

    If these basic freedoms cannot be protected in a competitive law system, then what is the point of removing the state? Oppression probably feels the same no matter who is dispensing it.

    Also, it is difficult to see how competitive law succeeds where common law has failed. Both systems are flexible (the common law is something of a love-worn “ship of Theseus”) and foster competition of ideas, but common law principles must appeal to the reason of other judges through time, while acceptance of competitive law would depend on appeal to the ephemeral appetites of the masses.

    Relying for justice on the reason of the market seems like relying on the popularity of fast food to determine what foods are good for you. The market can tell us what people like, but it doesn’t seem to be able to tell us what is right.

  • Relying for justice on the reason of the market seems like relying on the popularity of fast food to determine what foods are good for you. The market can tell us what people like, but it doesn’t seem to be able to tell us what is right.

    That is an excellent point, and it is probably what a Rothbardian critic of Friedman would argue. Rothbard did base his vision on “what is right” – the non-aggression principle as the standard of a common legal code, with enforcement and judgment made on the market.

    However, Friedman would probably respond that yes, the market-dominating laws might not be libertarian laws, i.e., that perhaps people would in mass numbers choose to prosecute heroin users. However, he argues that such laws would be expensive to enforce as Julian’s example above shows, and thus, in the end, libertarian laws would dominate.

    Remember, the relevant question is not, “Would a market based legal system be perfect?” but rather, “Would a market based legal system be an improvement over a monopolistic legal system?”

    If you argue that perhaps a market based legal system might not tell us what is right, I would argue that a monopolistic legal system is many magnitudes worse in this regard. Today, the law is an ass, and with a monopolistic system of compulsion, right and wrong are thrown aside and the main driving force is power, not justice. Sure Constitutions might provide a check on power for a while, but how long? As David Friedman wrote, “It took about 150 years, starting with a Bill of Rights that reserved to the states and the people all powers not explicity delegated to the federal government, to produce a Supreme Court willing to rule that growing corn to feed to your own hog is interstate commerce and can therefore be regulated by Congress.”

    The US Constitution is dead; it has been dead since 1861 and some would argue before that. More than that though, it is simply a piece of paper. It cannot secure rights, nor provide justice. Only people can. Would you rather have a monopoly provider or be able to choose your provider?

  • Andy Wood

    My point was that the function of providing an indusputable clear title is a natural monopoly in any given geographic region. Anything else would create uncertainty and chaos.

    But why?

    De Soto’s book (which you referenced the first time) doesn’t supply an argument for that conclusion.

  • Abby is absolutely correct in her analysis, competitive law is a conceptual nonsense as the Rothbardians have always spotted. Friedman who, whatever his merits as an economist, disdains philosophy and fails to see that his competitive law system is nothing more than semantic cover for the status quo.

    In a competitive law system what priniciple is violated should any bunch of thugs calling themselves a ‘law firm’ choose to pass a ‘law of taxation’ and then go and extort money from their neighbours? This is what we have now, the ‘law firm’ in question calls itself a state and it has already out competed its rivals in the market of opportunity costs.

    Competitive law is a chimera, we will not have libertarianism until libertarian _principles_ of justice are broadly held. Friedman’s solution merely amounts to some rearrangement of _institutions_ not principles. This will not, in itself, be enough to secure libertarianism as the failure of the American constitution has shown.

    PS. Richard, thank you, its always nice to be appreciated.

  • matt

    One thing I really like about this analogy is that it relies on people being “football” players. This is highly appropriate to libertarian thought, given that most seem to assume that people are competitive utility-maximizers. Even more to the point though- the “framework for utopia” (an idea that nobody’s mentioned but everyone seems to be talking about) has that tiny little addendum, that full authoritarian property rights must be granted, and fraud laws must be enforced.

    In case I’m not being clear, I think Libertarianism at least requires people to play with a round ball and a goal, as well as assuming (typically) that everyone can kick.

  • Andy Wood, I was refering back to this bit posted by Steve Chapman above:

    Rothbard’s much-vaunted competitive law has been – to continue the sporting metaphor – kicked into touch by Hernando de Soto’s rather powerful argument that the secret of the West’s success with capitalism depends on western countries NOT having competitve and local law but rather unifying all laws into One Law. One Law allows assets to become abstracted into capital through a unified system of description, enabling a greater range of possible transactions than competitive law. It also allows for a greater division of labour than competitive/local law. Competitive/local laws cannot ‘speak’ to each other in meaningful enough ways to allow this range of transactions. Rothbard overlooks this.

    Caveat: this is specifically PROPERTY law, and not other law, so there’s scope for local differences.

    My point, whether De Soto makes it in this form or not, is that certainty of title, and hence ease of capital formation, is greatly increased if there is no question about where title to property is verified for a geographic area. If there may be competing, possibly conflicting, registries of land ownership for an area, I’m going to have a lot more trouble gaining the confidence that YOU indeed do own a bit of land to give you a mortgage for it.

    Property title, and hence property law, have a natural geographic monopoly. Examples or theoretical arguments for property title working when there is not a monopoly provider are welcome.

    I just can’t see how modern financial systems could have come to be (or could function) without a monopoly property registrar per jurisdiction (in the US it’s at the County level. It doesn’t matter who has the property registrar monopoly for a particular area, but I challenge anyone here to show me an industrialized or post-industrial nation without one).

    And if you could manage to overcome that, you’re still left with universal coverage issues in criminal and tort law. If the poor have no recourse in cases of criminal or other damage, you’re system of competitive law will NOT last very long before you experience a revolution. Unless you’ve also somehow managed to not have any poor people, which while nice, would be a trick to pull off.

  • Abby

    I agree with Friedman’s criticism of the US constitution. I also agree with Paul that a framework of liberty can only be sustained if such principles are widely defended. If a people choose placidity in the face of tyranny then they do not deserve, and will not have, their freedom.

    The US constitution is today a weakly wielded tool, but its latent potential remains. If the people could be convinced that freedom, in all of its dimensions, must be protected, then a structure exists to implement ideas both old and new: Revolution would not be a prerequisite for transformation. As such it is far more likely to happen, given the general dislike of immediate, radical change.

    I also suspect that Friedman did not make his conclusory observation within the last couple of years. Wickard v. Filburn, the case he cites, has been limited sharply and is increasingly questioned from a constitutional standpoint. The New Deal model is fast losing its intellectual grip on the Court. In US v. Lopez, the Court struck down an economic regulation of private conduct as exceeding the authority of Congress — for the first time in sixty years.

    There is great upheaval today in the US legal culture, particularly in the context of government encroachment into the sphere of individual liberty. The guarantee of “life, liberty and property” in the 14th Am., has been recently endowed with a greater meaning. Last term Justice Kennedy wrote for the Court:

    Liberty protects the person from unwarranted government intrusions into a dwelling or other private places. In our tradition the State is not omnipresent in the home. And there are other spheres of our lives and existence, outside the home, where the State should not be a dominant presence. Freedom extends beyond spatial bounds. Liberty presumes an autonomy of self that includes freedom of thought, belief, expression, and certain intimate conduct. The instant case involves liberty of the person both in its spatial and more transcendent dimensions.

    The devotion of the American people to their Constitution is deep, and the Supreme Court’s interpretation of it is a potent form of persuasion.

    I accept your skepticism, and you are right, but it is not wrong look for ways to square the ideal with the possible.

  • Abby

    Also, this language from the Court in the abortion context suggests that it searchs for a new, more expansive understanding of liberty:

    Our Constitution is a covenant running from the first generation of Americans to us and then to future generations. It is a coherent succession. Each generation must learn anew that the Constitution’s written terms embody ideas and aspirations that must survive more ages than one. We accept our responsibility not to retreat from interpreting the full meaning of the covenant in light of all of our precedents. We invoke it once again to define the freedom guaranteed by the Constitution’s own promise, the promise of liberty.

    The Constitution is not dead, I think, it seems to be merely asleep.

  • Tom Bridgeland

    First, a question, in contact sports where refs ignore a punch, and also ignore the retaliation, how do players who get a reputation for that kind of thing get treated by other players, both on their own team and by opponents? Do players with a reputation for violence get pummeled preemptorily?

    Next, in regard to the question of Rothbard’s universal legal code vs. Friedman’s competetive code, I don’t see the necessary conflict. An overarching theory of justice can result in many different interpretations at the local level as local judges and juries reflect the conditions and opinions of their prticular locale. We see that now in the various Anglo countries, where a similar legal background has resulted in differences at the local level. Even in the same locale different industries have quite different rules governing their behavior. The complexities governing the real estate industry compare to the much simpler rules in auto sales for example. Within an industry different rules pertain in different locales as well. Water law in dry agricultural zones is very finely tuned compared to in water law in more rainy areas, for example. All this arises under the same general theory of law in response to the needs of the people as they themselves see it. Common law judges and juries are well suited to formulating law to suit local needs as long as basic protections against force and fraud are respected.

  • Andy Wood

    If there may be competing, possibly conflicting, registries of land ownership for an area, I’m going to have a lot more trouble gaining the confidence that YOU indeed do own a bit of land to give you a mortgage for it.

    I don’t see how you get to that conclusion.

    Suppose my neighbours and I have all hired different protection agencies to protect our land and each pair of agencies has an agreement to settle their disputes in a different court. Thus, my disputes with one neighbour will be settled in court A, my disputes with another will be settled in court B.

    As far as the security of my title is concerned, why should it matter that disputes with different people will be settled in different courts. Surely what matters is the reputation of my protection agency in defending my title?

    Defending property titles and adjudicating property disputes may be natural monopolies, but it’s not obvious to me that they should be.

    I don’t think De Soto’s point about the advantages of a unified system of description is relevant to that argument. To suppose it is is to confuse natural monopoly with industry standards. CDs are all of a uniform size; CD players all play the same sized CDs. Neither CDs nor CD players are supplied by a monopoly; they’re both supplied on a competitive market.

    And if you could manage to overcome that, you’re still left with universal coverage issues in criminal and tort law.

    I thought I’d answered that point the first time you made it.

  • No, you just went off about some kind of fungible annuity for poor folks who win damages.

    I’m talking about the difficulty in a stateless competitive law society of providing EVERYONE with legal services.

    I guarantee you that no one really wants old miss jones who can’t afford a security service to have no recourse if she get’s burgled or raped.

    Don’t get me wrong, I’ve been taking a devil’s advocate position, as I’d much prefer to live in an anarcho-capitalist society such as we’re talking about.

    I see the main obstacle (hardest problem) to be how do we handle the wanted free-riders in such a system. This is the reverse of the normal free-rider problem, where you don’t want them. No just society would not want a poor pensioner or such to be able to call the cops or free-market equivalent.

    The seemingly universal solution to this problem has been forced taxation and a statist legal monopoly.

    An orphan and widows Defense Fund charity, in a literal sense? Donate to the HandiCops? Social rituals such as “well, now that you can afford your own liability insurance, you’re a man now son”?

    I keep nagging on the topic because I see it as the primary problem that needs good brainstorming, and ‘elevator pitch’ short, refined answers to nay-sayers objections (“read the book” doesn’t cut it for propaganda use!)

    But don’t worry Andy, you’ve made good points about the topics you touched, and we’re on the same side!

  • David – the answer to your concern about revoluntion in AC is simple: the poor will be easily able to afford protection, because providing it is very cheap. I have calculated, for instance, that the US is currently spending about $460/year on police, courts, and administration. Given the fact that a lot of that is enforcement of victimless crime, and given that it is almost certainly inefficient, I anticipate that in anarchy protection would be available for no more than $10/month.

  • As for property registration – well, maybe it is a natural monopoly. Maybe not. I can’t see as it matters much wrt to anarchy. We already know that there are many things that essentially everyone will agree on: i.e., “Murder is wrong”. So that will be a more-or-less universal law in anarchy, regardless of the number of providers. It will be universal because of what human nature is, not because there is only one provider. Similarly with property: there may be multiple registrars, or maybe not. If there are, you can expect that they will agree on practically everything (well not exactly “agree”… more correctly, they will be compatible – one can assert a property and the other have no opinion on it; what they cannot have is two incompatible notions about the same property). There may be small areas of dispute; anything more would be unstable and lead to bad customer service and thus customer pressure to change. If it turns out that multiple registrars really can’t cooperate, or are uneconomic because it is such a simple thing to do, then maybe there will be a monopoly. And that’s fine – nothing in anarchist thought says there can’t be monopolies on things other than force.

  • Andy Wood

    No, you just went off about some kind of fungible annuity for poor folks who win damages.

    Actually, I made two points, both of which Friedman makes in response to your question.

    The second one was that the market provides goods more cheaply and in greater abundance than the government.

    Notice that under the present system, the poor, and the middle classes for that matter, receive a worse service from the government than they do from the market. The rich can opt out of government services much more easily – whether through private health and education, or barricading their property with high walls and barbed wire.

    An orphan and widows Defense Fund charity, in a literal sense?

    Why not? Didn’t the friendly societies provide such a service for health care before the NHS?

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