The State and Legal Order, Legal Order Without the State

1. The State and Legal Order, Legal Order Without the State Dr. Tom G. Palmer Atlas Economic Research Foundation Cato Institute September School of Social Sciences and Political PhilosophyCADIKonrad Adenauer StiftungBucharest12.September.2011

2. 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

3. Is the state is necessary to achieve personal identity? Passports Birth Certificates

4. 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

5. The presumption is that all “Surplus” is Attributable to the State But without a surplus, no state could be formed in the first place….

6. “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)

7. 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 Comte • Le CenseurEuropéen

8. An Organization of the Political Means 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 Franz Oppenheimer (1864-1943)

9. What Economic Means Must Precede the Political Means?

10. 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

11. Empires of Nomads over Cultivators

12. The Role of the Middle East….

13. From Roving Bandits to Stationary Bandits “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 Mancur Olson 1(932-1998)

14. 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)

15. A Case Study: The Norman State, 911 Hrólfr, aka Duke Rollo of Normandy

16. The Norman Conquest of England: 1066

17. Characteristic Features of Modern States Monopolization of Law Replacement of Customary Law by Imposed Law Claim 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 Provision Systemic “Rent Seeking”

18. 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

19. As such, the sovereign is defined to be the source of law and therefore above the law

20. Spoliation/Rent-Seeking The Significance of Concentrated Benefits and Diffused Costs

21. Is the State Necessary? Earlier I discussed social welfare, so let’s consider public goods generally, including law and order and defense

22. Public Goods Let’s start with public goods generally, then move to some particular cases, including law and order, and defense against aggression

23. Defining Characteristics of Public Goods Non-Rivalrous in Consumption Non-Excludable (or, more modestly, exclusion is costly)

24. Rivalrousness of Consumption is a Function of Group Size Consumption of a swimming pool is nonrivalrous, up to some point, creating a “Club Good” Bundling rivalrous and excludable goods with nonrivalrous goods is a common means of utilizing common means of exclusion and pricing for private goods

25. 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.

26. De Jasay’s “Ethics Turnpike” Rectitude Altruism Kantian Interest Tribalism Supergame Straddle Social Contract

27. 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. Existence is a Proof of Possibility If voluntary provision of public goods is impossible, why is it so common?

28. What are some preconditions to voluntary provision of a liberal legal order? Distinction between the services of Providing rules and decisions Providing enforcement of rules and decisions Relying on restitution rather than retribution A social order relying on cross-cutting loyalties

29. 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 force 2. 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

30. “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)