Go here for an abstract of Libertarianism, Law and Economics, and the Common Law by Todd Zywicki. I've previously had positive things to say about another of Zywicki's articles in which he supported a strong concept of rule of law (see here). I am also pleased to be able to recommend this article where Zywicki describes his intellectual biography from libertarian philosophe to common law (and economics) principled pragmatist. In short, a Ronald Coase vs. Murray Rothbard smackdown.
Well, not quite. Zywicki begins by setting up Coase as the quintessential agnostic of initial property rules (because, after all, in a world of free bargaining and low transaction costs the right to use property will always go it to the one who values it most highly). Only inconsistent uses of property are normatively important, not what constitutes property.
Next, Zywicki takes Rothbard as the vindicator of the right of absolute ownership of self and property against all comers; in other words, the proponent of the belief that initial property rules are normatively important and legally protected. However, Rothbard isn't as purely a natural rights philosopher as many take him because even he waters down the idea of property--the right to exclude every physical invasion from my property--when he allows for trespass by radio waves and high-flying airplanes. Turns out that what Coase permits under the rubric of use and Rothbard allows by defining property downward come to pretty much the same thing. Or, as Zywicki puts it: "Despite his best efforts to articulate simple bright-line rules, Rothbard’s clear rules inevitably collapse under the weight of a multitude of ad hoc exceptions."
Zywicki then moves into the real world, a world where transaction costs may be, as indeed they sometimes are, quite high. And here's where we find the reason for Zywicki's growing appreciation for the common law. Sometimes there's simply not enough time to bargain over the right to use; the hoary example of a boat owner attempting to tie up at a privately owned dock as the storm grows ever more dangerous provides the example. In such a case the economic perspective of Coase breaks down because
Zywicki goes on to consider reasons why forced transactions and creating a strict products liability regime regardless of contract are bad ideas from a law and economics perspective as well as inconsistent with a libertarian view of property. These ramifications are, however, beyond the scope of my interest. Instead, I want to discuss the normative justification for either perspective. In other words, why should there be property rights and why should other principles such as prevention of waste occasionally trump them? (Or why shouldn't they, for that matter.)
Zywicki provides his answer but I find it insufficient: "The implicit normative purpose of the common law is to further interpersonal coordination and maximize the surplus of social living more than it is the protection of individual rights." But what justifies this? In other words, why should the State provide a coercive legal regime that would ever privilege social "surplus" over property rights?
Rather than answering this question in a blog post I'll let any reader who's made it this far know that this is essentially the issue that I'll be addressing at two conferences over the course of 2013. For some hints at my thinking you can look at my Consideration in the Common Law of Contracts (abstract here) and Principled Pluralism and Contract Remedies (abstract here). Until then, you can let me know what you think should be the answer, if indeed there is.
Well, not quite. Zywicki begins by setting up Coase as the quintessential agnostic of initial property rules (because, after all, in a world of free bargaining and low transaction costs the right to use property will always go it to the one who values it most highly). Only inconsistent uses of property are normatively important, not what constitutes property.
Next, Zywicki takes Rothbard as the vindicator of the right of absolute ownership of self and property against all comers; in other words, the proponent of the belief that initial property rules are normatively important and legally protected. However, Rothbard isn't as purely a natural rights philosopher as many take him because even he waters down the idea of property--the right to exclude every physical invasion from my property--when he allows for trespass by radio waves and high-flying airplanes. Turns out that what Coase permits under the rubric of use and Rothbard allows by defining property downward come to pretty much the same thing. Or, as Zywicki puts it: "Despite his best efforts to articulate simple bright-line rules, Rothbard’s clear rules inevitably collapse under the weight of a multitude of ad hoc exceptions."
Zywicki then moves into the real world, a world where transaction costs may be, as indeed they sometimes are, quite high. And here's where we find the reason for Zywicki's growing appreciation for the common law. Sometimes there's simply not enough time to bargain over the right to use; the hoary example of a boat owner attempting to tie up at a privately owned dock as the storm grows ever more dangerous provides the example. In such a case the economic perspective of Coase breaks down because
The transactional context is a bilateral monopoly situation that converts this from a positive-sum market transaction to a zero-sum or even negative-sum rent-seeking transactions. The two parties are using real resources—their time and energy—bargaining over the division of the spoils within a bilateral monopoly context not bargaining for an efficiency-enhancing transaction.Rothbard presumably would think that a sunken ship is simply the price to pay for inviolate property rights; thus, it is here that the common law provides some common sense by permitting the boat owner to tie up his foundering craft for subsequent payment of the market price and any damages. Prevention of waste trumps the right to property under a narrow set of circumstances.
Zywicki goes on to consider reasons why forced transactions and creating a strict products liability regime regardless of contract are bad ideas from a law and economics perspective as well as inconsistent with a libertarian view of property. These ramifications are, however, beyond the scope of my interest. Instead, I want to discuss the normative justification for either perspective. In other words, why should there be property rights and why should other principles such as prevention of waste occasionally trump them? (Or why shouldn't they, for that matter.)
Zywicki provides his answer but I find it insufficient: "The implicit normative purpose of the common law is to further interpersonal coordination and maximize the surplus of social living more than it is the protection of individual rights." But what justifies this? In other words, why should the State provide a coercive legal regime that would ever privilege social "surplus" over property rights?
Rather than answering this question in a blog post I'll let any reader who's made it this far know that this is essentially the issue that I'll be addressing at two conferences over the course of 2013. For some hints at my thinking you can look at my Consideration in the Common Law of Contracts (abstract here) and Principled Pluralism and Contract Remedies (abstract here). Until then, you can let me know what you think should be the answer, if indeed there is.
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