Skepticism and Freedom: A Modern Case for Classical Liberalism / Edition 2

by Richard A. Epstein

Overview

With this book, Richard A. Epstein provides a spirited and systematic defense of classical liberalism against the critiques mounted against it over the past thirty years. One of the most distinguished and provocative legal scholars writing today, Epstein here explains his controversial ideas in what will quickly come to be considered one of his cornerstone works.

He begins by laying out his own vision of the key principles of classical liberalism: respect for the autonomy of the individual, a strong system of private property rights, the voluntary exchange of labor and possessions, and prohibitions against force or fraud. Nonetheless, he not only recognizes but insists that state coercion is crucial to safeguarding these principles of private ordering and supplying the social infrastructure on which they depend. Within this framework, Epstein then shows why limited government is much to be preferred over the modern interventionist welfare state.

Many of the modern attacks on the classical liberal system seek to undermine the moral, conceptual, cognitive, and psychological foundations on which it rests. Epstein rises to this challenge by carefully rebutting each of these objections in turn. For instance, Epstein demonstrates how our inability to judge the preferences of others means we should respect their liberty of choice regarding their own lives. And he points out the flaws in behavioral economic arguments which, overlooking strong evolutionary pressures, claim that individual preferences are unstable and that people are unable to adopt rational means to achieve their own ends. Freedom, Epstein ultimately shows, depends upon a skepticism that rightly shuns making judgments about what is best for individuals, but that also avoids the relativistic trap that all judgments about our political institutions have equal worth.

A brilliant defense of classical liberalism, Skepticism and Freedom will rightly be seen as an intellectual landmark.

Product Details

ISBN-13:	9780226213040
Publisher:	University of Chicago Press
Publication date:	06/01/2003
Series:	Studies in Law and Economics
Edition description:	1
Pages:	320
Product dimensions:	6.00(w) x 9.00(h) x 0.90(d)

About the Author

Richard A. Epstein is the James Parker Hall Distinguished Service Professor of Law at the University of Chicago Law School and the Peter and Kirsten Bedford Senior Fellow at the Hoover Institution. He is the author of a number of books, including Simple Rules for a Complex World and Principles for a Free Society, and coeditor of The Vote: Bush, Gore, and the Supreme Court, published by the University of Chicago Press.

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Skepticism and Freedom

A Modern Case for Classical Liberalism

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By Richard Allen Epstein

University of Chicago Press

Copyright © 2004 Richard Allen Epstein
All right reserved.
ISBN: 9780226213057

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Two Forms of Skepticism
Lawand Everything
the study of law in the united states can no longer be regarded as an autonomous discipline, if it ever was. To its credit, lawis nowa net importer of scholarship done in a wide range of contiguous disciplines: anthropology, biology (both evolutionary and social), economics, feminism, government, history, literary theory, philosophy, psychology, and sociology. This massive importation from other disciplines offers a sharp, systematic contrast to the incremental process of hunch and analogy characteristic of the common lawmethod. The story of the common lawruns as follows. Cases, not principles, are said to be the dominant focus. Generalizations were viewed warily lest any court go beyond the secure factual base for its decision. Only when a consensus accrued over time could some overarching precedent gain a measure of permanence. Each branch of law was treated as though it rested on its own separate bottom. Intuitions abounded; results were often justified by earnest appeals to fairness and justice, only to be easily parried. The skepticism toward systematic theory made it quite possible for judges andscholars to take first one approach to labor law, and a second to product liability. Different legal subjects were carefully distributed into self-contained legal boxes, devoid of any overriding theoretical structure linking one substantive area of law to another.
Given this ad hoc approach to legal issues, intelligent legal reform turned on incremental improvement of existing bodies of law, based on the difficulties in application that emerged through practice and experience. The diligent lawprofessor sought to iron out the inconsistencies that crept into the decisional law, or to suggest some modest statutory reform of a problem that proved especially thorny in practice. The development of the Uniform Commercial Code from the extensive case lawof sales, secured transactions, and negotiable instruments offers one successful illustration from the 1950s and 1960s. But any search for comprehensive first principles was, if thought of at all, dismissed as an idle pastime, the indulgence of airy philosophers, but not worthy of professional lawyers.
Yet appearances can easily deceive. However limited the pretensions of the common law lawyers, the results of their halting method were uniformly far more impressive than my description of this ad hoc process suggests. Sometimes intuitions are good; sometimes judges extend sound principles by careful analogies; sometimes the parts cohere in spite of the particularistic aims of the judges. Although it is premature to celebrate the virtues of "one case at a time," an incremental approach to case law issues allows for a conversation over the centuries to which many contribute but in which no one voice dominates. It is easy to find unresolved disputes on hard questions of little practical consequence: issues that really matter do get decided one way or another, and are not just allowed to linger. It is also foolish to overlook broad areas of defensible consensus on matters of great practical importance.
The common lawpresents a deceptive subject matter. Its sprawling case-by-case development suggests that the subject is one in which the dominant virtue is judgment—that is, the capacity to intuit which cases fall on which side of some imaginary line. The haphazard organization of the materials looks to be the antithesis of any systematic theory. Again, however, appearances on this matter are deceiving. No one can pretend that thousands of individual decisions can be reconciled into a unified whole. Nor can one insist that the judicial articulation of reasons for decisions will always prove persuasive after searching examination. But, that said, I am convinced that behind the endless array of discrete cases lies a series of coherent principles whose value in application survives the multiple false turns of judicial reasoning. Properly pruned and refined, these principles allowus to establish a complete and well-defined set of relationships between private individuals that meet simultaneously the practical concerns of ordinary individuals, the moral concerns of philosophers, and the efficiency concerns of economists. Properly extended, this body of lawallows one to tackle the still more difficult question of the proper relationship between the individual and the state. Put most simply, the material of the common lawforms a vast depository of the raw data (which no moral philosopher could hope to duplicate by unaided reflection) needed to fashion a sound set of legal rules for our political and social institutions. And when that task is done, the final product stands in stark contrast to the general statist outlook that until recently had come to dominate both twentieth-century political thought and, more important, twentieth-century political behavior. With the start of a new millennium, it is more imperative to set out the basic outlines of the system. In doing so, I hope to transcend the judicial origins of the basic system, and to demonstrate that the principles articulated here are defensible against the multitude of hard challenges raised about this viewof the relationship between the individual and the state.
In dealing with this issue, the claim is meant to cover more than the laws and institutions of the United States. Over the past years, I have spoken on these topics in places as diverse as Belgium, Brazil, the Czech Republic, Germany, Great Britain, Israel, NewZealand, South Africa, and Switzerland. I have talked and argued with lawyers, economists, and political scientists from around the globe. The legal systems and cultural traditions that I have encountered differ very much from ours and from one another in their historical backgrounds and their legal terminology. Their legal codes necessarily contain variations on matters of statutory form and implementation. For example, all these nations may have systems for licensing drivers, but the requirements may well vary from nation to nation. Yet I have never once found that geographical separation, cultural differences, historical accident, or variation in administrative schemes has impeded dialogue across these borders.
More concretely, my intellectual outlook has more in common with a small government libertarian in some remote corner of the world than it does with my liberal Hyde Park neighbors, near the University of Chicago, who remain devotees of the modern welfare state. I suspect that the same statement can be made by traditional social democrats or modern feminists, looking at local and worldwide discourse from their own perspective. Powerful ideas, like new fashions, move quickly across geographical and cultural boundaries, for good or for ill. Different settings simply bring forth newcircumstances that illustrate a theory and test its limitations. Cultural and political differences do not create impassable barriers to discourse, but offer opportunities to test general principles in newsettings. People often disagree, but their serious disagreements turn on substance, not on terminological oddities. I may well be wrong in what I believe. But I am definite in my opinions and, if wrong, have no desire to be wrong in a small way. I should be disappointed if the principles I defend are simply regarded as inappropriate for Bombay, Moscow, or New York because of some local nuance of which I am unaware. Better to be flat wrong across the board so that everyone can learn from my mistakes.
Deductive Truths about Human Nature?
These opening assertions necessarily commit me to a form of legal universalism, which stands in apparent contrast to the cautiously skeptical approach of the common lawyer. From whence can that position arise? And howmay it be defended? Many thinkers, typically in the natural law tradition, who preach the gospel of universalism do so from the vantage point of deductive truth. It is easy to say (as I emphatically do not) that all just legal rules are necessarily immutable across time and space; that they are known through the application of pure reason or intuitive apprehension, or by some combination of these two unruly bedfellows. Sometimes these rules are said to be "immanent" in social relations—a learned word that conceals far more than it reveals. Empirical evidence counts for little in assessing the soundness of these rules whose normative punch is said to make resistance futile. It is this form of moral inevitability that Kant seems to have in mind when he writes: "Empirical principles are wholly unsuited to serve as the foundation for moral laws. For the universality with which such laws ought to hold for all rational beings, without exception (the unconditional practical necessity imposed by moral laws upon such beings) is lost if the basis of these laws is taken from the particular constitution of human nature or from the accidental circumstances in which such nature is placed."
This form of natural lawthought has often been associated with conservative strands of thought, although there is no necessary reason for treating that level of conviction as the handmaiden of the status quo ante: a radical could argue that major social changes are required because existing societies have adopted legal rules that violate natural lawprinciples (as indeed they often do). To the extent that I have flirted with the natural lawtradition, it has been not exclusively as a defender of some established legal practice, but often as a critic of the status quo, nowin the form of the welfare state. But even when natural law is given a reformist or radical slant, it has been consistently vulnerable to attack by lawyers and social critics whose sociological and historical orientation quickly draws them to the differences in time, space, and culture. Legal rules are not proved like mathematical theorems; nor are they found like elements in the periodic table. These laws are, we are constantly reminded, contingent rules that evolve with time in accordance with the tastes and the needs of society. The most famous war cry on behalf of this realist tradition is Holmes's, who said (but did not practice) that "[t]he life of the law has not been logic: it has been experience." In more modern lingo, these rules are regarded as social constructions made by its members from within a society, rather than commands imposed on society from without, be it by nature or by God. The effort to find common elements within a legal system, let alone across legal systems, is often derided as hopeless nonsense or facile generalization. Instead, scholars in countless specialties can take a certain perverse delight in showing how particular outcomes stymie and frustrate the general theories which natural lawyers strived to achieve but could never reach. Far from dealing with the power of logic and the fear of self-contradiction, we are dealing with a pliable set of social materials that generates an incredible diversity of legal rules across time and locations.
The challenge facing the conservative intellectual is to reestablish the soundness of his position without falling into the deductive traps that sap credibility from the natural lawtradition. I think that it is possible to do this by beating the sociological approach at its own game. It is evident that the natural lawapproach is exposed to two kinds of objections, one logical and the other sociological. The former point is that the natural law theorist cannot show any linkage between what is natural and what is good. The second is that the natural lawtheory cannot explain the oasis of universality, given the wide variety of practices found in societies that have functioned successfully over time. Nor can it take into account the corrosive effects that the irreducible uncertainty in human and natural events has on the operation of any system that claims to talk in the language of deductive truth.
Human Desire and Human Good
The initial step in this inquiry is to establish some relationships between natural or human events and some normative test of the good. Within the naturalist tradition, one quest has always been to find ways to link some abstract conception of the good to the desires or wants of discrete individuals. The most common form of the proposition, articulated in definitional form, is that "A desires X" is treated as an equivalent to "X is good," or "X is desirable." A moment's reflection shows that this simple effort to reduce the normative to the natural fails. There are obvious differences in meaning between the two expressions, as the former appears to refer to the condition of the thing itself and the latter to one person's viewof it. Practically, a giant roadblock is the common case where A desires X and B desires not-X, so that X becomes both good and bad in itself. Likewise, there is no contradiction in saying that something that someone desires is undesirable. It becomes important, in a sense, to relearn the lesson taught by David Hume—that major legal truths are not deductions from empirical facts or natural laws—for the passage of more than 250 years has not allowed us to derive logically propositions that contain "ought" from those which contain only "is."
This logical objection, however, hardly shows that there is no lower-level connection between individual desire and a responsible conception of the good. Thus, it would be odd to assert that X is good because A dislikes it, or bad because A likes it, or oddly that X is good because no one likes it. The obvious response is that the mere fact that A likes X counts as a reason why X should be regarded as a good, even if that reason is not conclusive in and of itself. Simply put, we can establish ceteris paribus that the desire of A for X is presumptive evidence of the goodness of X. We might have to work a bit to deal with how these desires are formed— a topic taken up in detail in chapter 5—but most of the objections to this simple proposition are better understood as weakening the inference, not undermining it altogether. In addition (in a theme that dominates this book), it is strictly necessary to showhowthis approach can take into account the desires of all individuals to avoid the problem of differing sentiments.
Some cases seem easy. If A likes X, and everyone else is indifferent as to whether X is or is not the case, then the inference that X is good appears to hold. And if all persons should prefer X to not-X, then the case for X's being good is stronger still. The hard cases, therefore, all involve situations in which there is a difference of opinion about the merits of X, and here the philosophical literature never did span the gap between the individual and social judgments of desire. But within the economic tradition, that extension has been made. Often X is not the outcome of a particular instance, but rather the articulation of some general rules of conduct. The rules then become desirable to the extent that all people prefer X to not-X, which is another way of stating the usual condition of Pareto superiority: somebody is better off and no one is worse off. And by a like measure, we have a trickier job in reaching this conclusion by saying that the winners like X enough such that they could compensate those who prefer not-X and still come out ahead. In effect, these subjective evaluations of various states of affairs, when coupled with compensation (real or hypothetical), offer a sensible way to link natural states of affairs with some ethical judgment as to their overall desirability. The definitional ploy to link desire and desirability may fail, but the presumptive link between them can be established. The core of good sense of the naturalist position remains on the choice of criterion: to link up questions of good and bad with some natural state of the world.
Necessary and Contingent Truths
The second step in defending a revised natural lawposition lies in exposing the ambiguity in the word "contingent" as a way to describe the social truths or social constructions of a given time and place. Here the critical ambiguity comes from the failure to distinguish between the logical and empirical use of the term. I would freely concede that all social truths about legal rights and duties are "contingent" in the logical sense that they are not derived from some inevitable principles, the truth of which can be denied only on pain of self-contradiction. Political and moral theory, however, need not be "contingent" in the empirical sense, which stresses their irregularity and unpredictability, or even the unexpected twists of circumstance and history.
Once we no longer treat political and legal theory as a matter of pure logic, or even, one might add, as being governed by the universal laws of physics, the challenge is to identify those empirical regularities across time, space, and culture to which any viable legal system will have to respond. That task is far harder indeed if the question is to explain the fall of the Roman Empire, the rise of Christianity, or the failure of democracy in China. Those events were so sweeping in nature that it becomes well-nigh impossible to identify some set of repetitive pattern of events into which these transformational historical moments fall. Without that backdrop it becomes far harder to isolate some common element that demonstrates the regularities in human behavior that shaped these events. But, in dealing with the more prosaic acts of buying and selling, marrying and divorcing, educating and working, the huge size of the sample makes it possible to find the elements of order hidden in the swirl of human events. Finding these regularities is not simply a matter of consulting some legal text, or even some grand economic theory. Indeed, the first part of the task is simply the collection and organization of information, which is howthe natural lawyers began. In their effort to define, for example, the contract of sale, or to specify the duties of both buyer and seller, they did not begin with deductive abstractions. Rather, they observed how these transactions took place successfully on a daily basis, and then sought to recount and classify what they observed, much as the early biologists did when they organized members of the plant and animal kingdom into different groups and species. Their guiding principle was that things ought to be as they commonly are, so that customary practices and natural law went, from the earliest time, hand in hand.
Nor does this procedure run smack into the Humean gap by insisting on the functional connection between "is" and "ought," for, again, no one is (or should be) claiming any necessary connection between the two. Rather, the appeal rests on a test of durability: those principles and practices that endure generally do so because they serve well the communities of which they are a part. The claim is that any system that broadly flunks either or both the tests of social welfare—customary practice or cost-benefit analysis—is not likely to stand the test of time. The connection between the two lies in the way in which customs, at least within close-knit communities, gravitate to the solution that a sound cost-benefit analysis would dictate. The presumption, therefore, is that what ordinarily is the case ought to be the case, so that the natural ways of doing business become the desirable ways of doing it. Or as the ancient lawyers used to say in defining water rights: water ought to flow where it flows.
The reliance on classification and the implicit normative value of standard practices offers an additional reason why the term "natural," in its less mysterious sense of regular or commonplace, exerted such a strong hold over legal theory in its formative period. This older method may require a certain degree of imagination, but it has the great virtue of using the knowledge acquired in ordinary life as the source of legal definitions and legal rules, a process that I defend in chapter 5, which is devoted to moral incrementalism. Any more ambitious effort to understand and deal with legal matters requires a mastery of what these earlier scholars learned and accomplished, just as the wonders of modern biomedical technology still require a working knowledge of gross anatomy that has been accumulating at least from the time of Galen.
Yet it is quite clear that an understanding of legal rules does not end with classification and observation. When these are understood, there is an inescapable tendency to aim at articulating the fundamental principles around which the particulars are organized. Natural law thinkers, both in lawand philosophy, thought that their method was equal to this task, for the term "natural," as in natural reason, is often used to justify certain practices like self-defense, or to condemn others as unnatural acts.
To take but one example, Aristotle resorted to this practice on numerous occasions. But his intuitions were all too often far off the mark. Thus he decreed that the increase in wealth through household management is "natural," but that which is obtained through the retail trade is "justly censured; for it is unnatural, and a mode by which men gain from each other." Here Aristotle adopts what might be called a "principle of mutual exploitation," which does the Marxist one better by opening the way to attack transactions from which both sides benefit. By his lights usury is of course the worst sin of all, because money is meant to facilitate exchange, such that it is unnatural for it to be lent, it appears, at any interest at all. The howlers in this set of propositions are a source of stunned embarrassment. Retailing should be praised to the extent that it allows for gains from trade, which relieve the pressure on the household to make shoes from leather and clothes from textiles. Forward transactions in money (for example, business lines of credit and home mortgages) are the staple of an exchange economy. Let the term "natural" be pressed into causes so ignorant, and it is no wonder that the term falls into disgrace.
Philosophical fashions have, however, a way of working themselves pure within the law. The rhetorical flourishes remain, but the need to decide cases within the framework of an established set of social practices prevents the well-socialized lawyer from engaging in Aristotelian fits of fantasy. From Roman times to the present, knotty legal points have often been evaded by an appeal to natural law, natural reason, and natural right. Justinian grandly wrote that "[t]he law of nature is that which she has taught all animals; a lawthat is not peculiar to the human race, but shared by all living creatures, whether denizens of the air, the dry land, or the sea." This general proposition operates at all the critical junctures within a legal system. It is natural obligation that requires parents to raise and protect their children. The acquisition of property by capture is described as the natural mode of acquisition. The same logic covers self-defense: "So if I kill your slave who is lying in wait to rob me, I shall be safe: for natural reason allows a person to defend himself against danger."
Nothing here has the same loopy feel as Aristotle's denunciation of usury and the retail trade. But that said, the methodology of natural law nevertheless starts to look shaky. Invocation of the "natural" looks more like a placeholder for an explanation, and less like an explanation in and of itself. And any forthcoming explanation introduces clear consequentialist overtones. Parents (in large part because of their genetic connection) have the strongest interest in the welfare of their children and are best positioned to offer them optimal protection. Acquisition of property by possession gives things an easily identifiable owner, who can then preserve or consume, develop or sell the thing in question. The use of force in self-defense both deters aggression and forces the assailant, not his victim, to bear the costs of harm. To be sure, the these twin explanations showa certain level of tension: in the case of self-defense, for example, the emphasis could either be on the overall social reduction in violence or, more specifically, a correction of the imbalance between the parties that was worked by the assailant's wrongful act. But the difference in emphasis does not lead to any obvious contradiction in outcome, for each explanation gains in strength when it is reinforced by the other.
At this point the central challenge is to come up with a simple and coherent set of principles that explain both the common and diverse elements across legal systems. Here I think it best to begin with those elements that are common, and then move to those that account for the evident diversity across cultures and over time.
Twin Impulses to Universalism: Scarcity and Self-Interest
In our constant fascination with the regulatory or cost-benefit state, it is easy to forget that these issues of basic social order occupied a much larger place in earlier legal and philosophical systems than they do to-day. The use and limits of self-defense, for example, occupied a central place in early deliberations, and it should be regarded as a useful window on some larger enterprise, by seeking to identify those contingent facts on which the main outlines of any sound legal order must rest. So the effort to find the key to human institutions required a different approach, one which relies less on deductive economic theory and more on the contingent regularities of human nature. H. L. A. Hart is very much in this tradition when he writes: "It is merely a contingent fact that human beings need food, clothes, and shelter; that these do not exist at hand in limitless abundance; but are scarce, have to be grown or won from nature, or have to be constructed by human toil."
In this connection, the key external feature to which any sound legal and social system must respond is the condition of scarcity, which ensures that human wants always exceed the means to satisfy them. That scarcity in turn has a powerful influence on the kinds of living entities that will survive and prosper. In a word, it is those individuals who develop a keen sense of self-interest that survive.
The pursuit of individual self-interest—I will address the key qualification in a moment—presupposes that individuals have objects of their own that they wish to achieve, based on who they are and what they need. Any theory of natural lawmust therefore ask what things individuals value and howmuch they value them. On both frontiers we must confront the inexorable tug of subjective and objective valuation. In one sense, both individually and collectively, we are confident that we can make some objective valuations of what is good and bad. Those things that supply the resources allowing us to survive and flourish count as goods. Those things that frustrate our life plans count as bads.
Ordinary language captures this common impulse quite nicely when it speaks of "goods," not as some philosophical abstraction, but as a synonym for "merchandise," as in "dry goods" whose sale is covered, naturally, by the Sale of Goods Act. There is in general very little difference in sentiment across individuals as to what items count as goods and what count as bads (household "junk" is a nice borderline case, some of which is thrown out while some is kept as memorabilia). Stated otherwise, our common biological origins help shape the patterns of socialization whereby most people most of the time tend to value the same things, either positively or negatively. Food counts as a good; poison counts as a bad, at least if we have to consume it ourselves. The line between goods and bads, such as waste materials, is fairly strong. The market for emissions controls is strong. The market for pollutants is nonexistent.
With that said, there is a second sense in which valuation is subjective. Individuals all have different circumstances and endowments. Nothing says that all individuals value all goods, or dislike all bads, in the same way or with the same intensity. In this regard, value turns out to be subjective. Left to their own devices, different individuals will take a given sum of cash and spend it on different goods on a trip to the supermarket. The positive prices for the goods in question can be maintained even if most people value the goods at less than their cost, so long as those who value them at above cost can be found in sufficient numbers.
The question then becomes howthese goods can be matched with their proper owners, and for that task nothing compares with the marketplace, which allows individuals to sort themselves by their purchasing decisions. The same can be said about other key life choices, from marriage to business, as well. It does not take an exact knowledge of the preferences and tastes of any person to understand that his choices will not be distributed evenly across any population. Yet our knowledge of the variance in the population is enough to caution us about collective solutions for the allocation of goods and services, or for the central dictation of social relations. When common lawjudges say that the value of goods and services received in exchange is for the parties to evaluate, they do not commit themselves to the proposition that valuation is so arbitrary that it lacks any internal coherence. They rest on the proposition that individuals should be given their head in organizing their own lives because they are likely to have better knowledge—which need not be perfect knowledge— of what their own self-interest requires than any one who might choose to act on their behalf.
The exact meaning of self-interest is worth a brief discussion. In its crudest form, the term could be construed atomistically to mean that persons will satisfy whatever appetites they have in the short run, wholly without regard to the welfare of other persons. Self-interest, taken in this uncritical sense, is hardly enlightened, but rather constitutes a polite way of describing persons as being merely selfish. A moment's reflection should indicate that this account does not even appear to apply to most animals (which care for their young), and in any event does not capture anything like the full richness of human experience. Evolution, which has taken place over countless generations, can hardly stop dead in its tracks in a single generation. Individuals are not born full grown into this world, but are raised as part of families and larger communities in which (as every coach knows—"There is no 'I' in 'Team' ") human interaction and cooperation count every bit as much as the competition and rivalry that are wrongly said to constitute the full range of self-interested behavior. The parent who is indifferent to the fate of his or her helpless children may well take actions that prevent them from reaching maturity and thus continuing the cycle of life. Children who do not learn how to share trust within the family can rarely function well outside of it. Parents have to take into account the welfare of their children, and for parents to do that they have to take into account the welfare of each other. Throughout it all, they must be able to interact with extended family and larger groups in ways that allow them to obtain sufficient caloric intake to discharge the ordinary functions of life, and to resolve their differences in ways that do not fatally compromise their bodily integrity and their ability to carry out purposive activity.
Self-interest, then, is inclusive of those with whom one has a genetic bond; it certainly includes the capacity to feel love to another individual so as to facilitate raising family; it presupposes an ability to engage in some cooperative behavior with strangers; and it covers the ability to avoid force inflicted by others every bit as much, if not more, than the use of force against others. The exact ways in which these cooperative and familial tasks are discharged may differ in detail from place to place and culture to culture; and they surely depend in large measure on the means of production and exchange available at any stage in human development. But, with all that said, the elemental imperatives place powerful constraints on what individuals are allowed to do to, for, and with each other. It is quite inconceivable (in the practical, not the logical sense) to envision a society in which parents are routinely allowed to abandon their young; in which the use of force within the community prompts no social disapproval; in which promises are as easily broken as kept; or in which all individuals are encouraged to freeload off the efforts of others.
Indeed, experimental and psychological research on the issue of group interests indicates the power of self-interest. Mancur Olson's classical exposition of the theory of group behavior asserts that self-interested individuals will not necessarily advance the interest of the group they are a part of. Unless coerced, or tempted with some private benefit, they have a tendency to free ride with respect to goods that they prefer to acquire. When that tendency is universalized, goods and services that everyone wants become just those goods that no one will voluntarily and unilateral supply. "Indeed, unless the number of individuals in a group is quite small, or unless there is coercion or some other special device to act in their common interest, rational, self-interested individuals will not act to achieve their common or group interests." That theory has, as Olson well understood, clear application to group activity at the political level, for it suggests the unhappy conclusion that rational, self-interested individuals would never cooperate with each other in order to achieve a collective end, of which peace and good order is the most obvious. As he observes, notwithstanding the appeals to patriotism and national ideology, as strengthened by the bonds of common culture, "no state in modern history has been able to support itself through voluntary dues or contri-butions." The simple logic is that each individual can receive the public benefits (which are by definition nonexclusive) whether or not he contributes labor or resources to support them. But every person is in exactly the same position, so that all persons refuse to cooperate so that nothing gets produced even though these same players would by their own lights have been better off if all of them had contributed to the preservation of public goods from which each would benefit.
Thus if each of one hundred people could contribute goods and services worth fifty dollars that produce one hundred dollars, shared equally, then if everyone participated, the total cost of five thousand dollars would yield ten thousand dollars in benefits. However, since each person can feast on the contribution of others even if he makes none himself, the prediction is that all will hold back unless a powerful state force coerces them to act in their collective benefit. But that model presupposes that the consequences of holding out leave one no worse off than he was before. Yet in nature the failure to cooperate can often lead to death, so that any individuals who learn to cooperate with each other have a better chance of survival than the pure egotists who brave it alone. Cooperation among kin offers obvious genetic advantages. And since evolution is, by definition, a most imperfect instrument, the usual principles of natural selection should lead to some, probably normal, distribution of tastes on the willingness to cooperate, in which cooperators will on average be more likely to survive than noncooperators. The net result is that there is no reason to accept the radical Hobbesian account of individual selfishness, or its corollary that a state of nature is productive of an anarchy that can be curbed only with a unitary state governed by an absolute sovereign. Quite to the contrary, one of the great dangers of the centralization of power is that it tends to sap informal methods of social control of their strength. Individuals exhibit higher levels of cooperation in unregulated environments when their prior breaches of legal rules are not subject to legal sanctions. Evidently, faced with success or failure on their own, they develop cooperative strategies.
But it hardly follows that every person must follow these informal rules all the time for any society to survive. Hence some individuals will always seek to disobey the rules, or, even better for them, to carve out exceptions and privileges to general rules of unquestioned validity. Some individuals might wish to abandon their young, or at least impose the cost of raising their own children on others; some individuals seek to use force to their own ends while holding all others to the general prohibition. Some individuals seek to evade their own promises, while holding others to theirs; some individuals seek a privileged status that allows them to live off the resources owned and gathered by others. For every good rule, there are impulses for a fewprincipled exceptions and a thousand unprincipled ones.
It is from insights as simple as these that the practical case for the ordinary and general rules of individual liberty, private property, and contractual obligations is born. The process here was not deductive, but followed, ironically perhaps, an evolutionary path that once again hearkens back to the implicit logic of the common law. The basic distribution of rights and duties were, like speech and grammar, learned and obeyed before anyone could formalize their content. As Hayek stressed so often and so well, they did not arise from some central plan created from on-high. "[R]ecent developments in evolutionary theory and supporting empirical research provide strong support for the assumption that modern humans have inherited a propensity to learn social norms, similar to our inherited propensity to learn grammatical rules." In their original form these norms evolved by a process of trial and error, such that those primitive groups unable to control excessive egoism within their ranks did not survive in competition with those who could present a more unified front to the rest of the world.
Those instincts should survive, at least in attenuated form, as extended familial groups become larger political institutions. But the instincts become much more jumbled, for the old loyalties remain even as newones are added. Today we have, or should have, a greater awareness of the social and economic reasons that lie behind the legal rules. Our cautious evolutionary sense should warn us against lurching from one extreme to another. Just as we need to have private institutions, so we must be sure that we understand the role and scope for public institutions. The enduring need to maintain cooperative behavior places limits on the extent to which the important legal rights speak only of separation and exclusion. If homes are private, streets and rivers are likely to be held in common. If the use of force is to be prohibited, the maintenance of order by force and the collection of tax revenues to fund these public endeavors is strictly required. The constraints may appear to be slight, but they bind with a great deal of power.
The Sources of Variation
This discussion thus far still leaves open the question of howone can account for the extensive variation in observed legal rules and practices in a world that respects, albeit for consequentialist or utilitarian reasons, these natural lawrules. At this point, the best way to get a handle on this situation is to stress the limited objective of the original natural law theorists, which was to explain the basic set of relationships that defined rights and wrongs between people. The system thus did well in delineating these rights, but at a philosophical level it had little if anything to say about the choice and articulation of remedies once a violation to those rights had been threatened or realized. It is with respect to the choice of remedies that we can locate much of the variation in the structure of legal rules across cultures and over time.
Any responsible effort to deal with this ever-recurrent remedial issue requires an appreciation of the ubiquity of midlevel trade-offs and the serious questions of institutional design they create. A simple sale may go astray. What remedy should be afforded the innocent party? Even if valuation is subjective, some collective measurement has to be made about damages. In the first instance, this practice might be left to the parties. But in some cases they will be silent and some legal intervention will have to sort out the mess. An unflagging allegiance to subjective value opens the way for the aggrieved party to inflate his losses without fear of contradiction. So virtually every legal system places some form of "objective" constraint on valuation in order to control that abuse. We are forced to abandon the ideal measure of damages as unworkable and substitute some serviceable proxy in its place.





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Table of Contents

Acknowledgments
Introduction: Why Classical Liberalism?
1: Two Forms of Skepticism
2: The System of Liberty
3: Moral Relativism
4: Moral Incrementalism
5: Conceptual Skepticism
6: A Preference for Preferences
7: Metapreferences, Relative Preferences, and the Prisoner's Dilemma Game
8: Behavioral Anomalies
9: Cognitive Biases
Conclusion: Staying the Course
Notes
Table of Cases
Index