The State and Legal Order, Legal Order Without the

StateDr. Tom G. Palmer

Atlas Economic Research FoundationCato Institute

September School of Social Sciences and Political Philosophy

CADIKonrad Adenauer Stiftung

Bucharest12.September.2011

Is the State Necessary for Freedom and Order? Some argue that it is a logical necessity, e.g.:

There must be a system of defense of life and liberty and of adjudication or disputes That system must have a final arbiter A final arbiter must have a monopoly

Without a monopoly of coercive power, it is not possible to induce people to behave properly

Only a state can overcome the transactions costs involved in creating public goods

Is the state is necessary to achieve personal identity?

Passports Birth Certificates

Some Believe the State Is

Responsible for….Everything

“Government is 'implicated' in everything

people own. . . . If rich people have a great deal of

money, it is because the government furnishes a system in which they are entitled to have and keep

that money.”Professor Cass Sunstein

Cass Sunstein

The presumption is that all “Surplus” is Attributable to the

StateBut without a surplus, no state could

be formed in the first place….

“What is a State?”

“a state is that human community which (successfully) lays claim to the monopoly of legitimate physical violence within a certain territory, this ‘territory’ being another of the defining characteristics of the state.”

Max Weber, “Politics as a Vocation” [1919]Max Weber (1864-1920)

How is Wealth Acquired?

“There exist in the world only two great parties; that of those who prefer to live from the produce of their labor or of their property, and that of those who prefer to live on the labor or the property of others…”

--Charles ComteLe Censeur Européen

An Organization of the Political Means

Franz Oppenheimer (1864-1943)

The “economic means” and the “political means”:“There are two fundamentally opposed means whereby man, requiring sustenance, is impelled to obtain the necessary means for satisfying his desires. These are work and robbery, one's own labor and the forcible appropriation of the labor of others.”“The state is an organization of the political means.”

--Franz Oppenheimer, The State

What Economic Means Must Precede the Political

Means?

A Memory of the Conflict in an Old Story

“And Abel was a keeper of sheep, but Cain was a

tiller of the ground.”Genesis 4, 1-16

Empires of Nomads over Cultivators

The Role of the Middle East….

From Roving Bandits to Stationary Bandits

Mancur Olson 1(932-1998)

“If the leader of a roving bandit gang who finds only slim pickings is strong enough to take hold of a given territory and to keep other bandits out, he can monopolize crime in that area – he can become a stationary bandit.”

--Mancur Olson, Power and

Prosperity

Maximizing Gross Domestic Product (GDP) or Capturing the “State

Accessible Product” (SAP)“The ruler…maximizes the state-accessible product, if necessary, at the expense of the overall wealth of the realm and its subjects.”

“the state-accessible product had to be easy to identify, monitor, and enumerate (in short, assessable), as well as being close enough geographically….”

--James C. Scott, The Art of Not Being Governed (2009)

A Case Study: The Norman State, 911

Hrólfr, aka Duke Rollo of Normandy

The Norman Conquest of England: 1066

Characteristic Features of Modern

StatesMonopolization of Law

Replacement of Customary Law by Imposed LawClaim to “Sovereignty”

Creation of an “Underlying Nation”Systems of Social Control – Weights and Measures,

Compulsory Schooling, Passports, etc.Creation of “Non-Exclusive ‘Public’ Goods” and

Monopolization of Their ProvisionSystemic “Rent Seeking”

A look at the problem of sovereignty

“Majesty or sovereignty is the most high, absolute, and perpetual power over the citizens and subjects in a

Commonwealth…”“Custom acquires its force little

by little and by the common consent of all, or most, over

many years, while law appears suddenly, gets its strength

from one person who has the power of commanding all.” Jean Bodin, Les Six livres de la République, 1576

As such, the sovereign is

defined to be the source of law and

therefore above the law

Spoliation/Rent-Seeking

The Significance of Concentrated Benefits and

Diffused Costs

Is the State Necessary?

Earlier I discussed social welfare, so let’s consider public goods generally, including law and order and defense

Public GoodsLet’s start with public goods generally, then

move to some particular cases, including law and order, and defense against

aggression

Defining Characteristics of

Public Goods1. Non-Rivalrous in Consumption2. Non-Excludable (or, more

modestly, exclusion is costly)

Rivalrousness of Consumption is a Function of Group

Size1. Consumption of a swimming pool is

nonrivalrous, up to some point, creating a “Club Good”

2. Bundling rivalrous and excludable goods with nonrivalrous goods is a common means of utilizing common means of exclusion and pricing for private goods

Perhaps voluntary provision can provide

social welfare, but what about “free ways”?

Maybe not, but what about “pay ways”?Most roads are constructed without state

financing.Toll roads are financed by users.A great deal of “infrastructure” is

provided through fully voluntary action.

De Jasay’s “Ethics

Turnpike”Rectitude

Altruism

Kantian Interest

Tribalism

Supergame

Straddle

Social Contract

Existence is a Proof of

Possibility

Even the American legal system is more competitive, less monopolistic, and more voluntary than most people think Bail Bondsmen

and Bounty Hunters

“Private Security Firms”

Locks and Self-Defense

Etc., etc., etc.

If voluntary provision of public goods is impossible,

why is it so common?

What are some preconditions to

voluntary provision of a liberal legal

order?

Distinction between the services of

1. Providing rules and decisions

2. Providing enforcement of rules and decisions

Relying on restitution rather than retribution

A social order relying on cross-cutting loyalties

Something to consider…

1. If the existence of a legal system is itself a public good, and the public goods argument for the necessity

of the state is correct, then the state could not be created voluntarily, through a social contract, but

could only be imposed by force2. Moreover, all citizens would have incentives to shirk

and to free ride off of the voluntary contributions of others, meaning that the state could not be

administered democratically through voluntary action

“All of us, without exception, carry this inherited poison within us, in the most varied and unexpected places and in the most diverse forms, often defying perception. All of us, collectively and individually, are accessories to this great sin of all time, this real original sin, a hereditary fault that can be excised and erased only with great difficulty and slowly, by an insight into pathology, by a will to recover, by the active remorse of all.”

--Alexander Rüstow, Freedom and Domination

Alexander Rüstow (1885-1963)