The Limits of Liberty: Between Anarchy and Leviathan
By James M. Buchanan
- Ch. 1, Commencement
- Ch. 2, The Bases for Freedom in Society
- Ch. 3, Postconstitutional Contract
- Ch. 4, Constitutional Contract
- Ch. 5, Continuing Contract and the Status Quo
- Ch. 6, The Paradox of Being Governed
- Ch. 7, Law as Public Capital
- Ch. 8, The Punishment Dilemma
- Ch. 9, The Threat of Leviathan
- Ch. 10, Beyond Pragmatism
- Selected Bibliography
Continuing Contract and the Status Quo
The Ethics and Economics of Contractual Obligation
Preceding chapters offer a conceptual explanation of how social order might emerge contractually from the rational utility-maximization of individuals, social order that would embody a definition of assignment of individual rights and the establishment of a political structure charged with enforcing rules of personal behavior with respect to these assigned rights. Even if the contractarian framework is fully accepted, the analysis is applicable only in a community where persons live forever. Time has not been introduced into the model, and even in a community with permanent membership, the influence of time itself on rational choice would introduce complications.
One of the continuing criticisms of any contract theory of social order is closely related to the timeless attribute of the model. As noted earlier, many critics have opposed the contractarian explanation on the grounds that, historically and empirically, no formal contracting among individuals was observed to take place. More important, they have suggested that, even if some such original compact might have taken place historically, there is nothing which binds men who did not themselves participate in the contractual settlement, nothing that binds them to honor commitments which they could not personally have made.
This is an important and relevant criticism of a contractarian argument that has essentially ethical foundations, and which seeks to locate the legitimacy of social order in implicit contract. Contractual obligation, expressed by the willingness of individuals to behave in accordance with specified terms, depends critically on explicit or imagined participation. Individuals, having “given their word,” are “honor bound” to live up to the terms. This remains true even if, subsequent to agreement, these terms come to be viewed as “unfair” or “unjust.” Defection or violation runs counter to widely accepted moral codes for personal behavior. When existing rules for social and political order, including the definition of individual rights, are simply inherited from the past, no such moral sanctions may be present. It may matter little whether or not ancestors participated in a contractual settlement; there may be no strong honor-bound commitment transmitted intergenerationally in an individualistic social structure.
*73 Any ethical or moral basis for stability in rules and in institutions is severely weakened once participation is shown to be historically nonexistent and/or outside the memories of living members of the community.
This is the setting descriptive of the real world, and the question must be asked: Why will persons voluntarily comply with the rules and institutions of order that are in being? These institutions will, of course, include standards for enforcement along with punishment for violations. In the context of enforcement-punishment, however, genuinely voluntary compliance means little in itself. Almost any person will “voluntarily” comply with dictated patterns of behavior if he knows that departure from these patterns will be punished with sufficient certainty and severity. Of interest for our purpose is voluntary compliance independent of enforcement-punishment—behavior which can scarcely be observed. Nonetheless, it is clear that there is a relationship between potential voluntary compliance independent of enforcement-punishment and the resource investment that will be required to attain specified behavioral limits. It is through such a relationship that the structure of the existing “contract” becomes relevant, even to those who are recognized to be nonparticipants. Under what conditions are individuals most likely to adhere to the inherited rules of order, most likely to respect and to honor the assignment of individual rights in being?
This question can only be answered through an evaluation of the existing structure,
as if it were the outcome of a current contract, or one that is continuously negotiated. Individuals must ask themselves how their own positions compare with those that they might have expected to secure in a renegotiated contractual settlement. If they accept that their defined positions fall within the limits, they are more likely to comply with existing rules, even in the acknowledged absence of any historical participation. This approach offers a means of evaluating social rules, legal structure, and property rights. But one point needs to be made in passing. That set of rights which might be widely accepted as being within the limits of what we may call here the “renegotiation expectations” of individuals will not be uniform over communities and over time. As the analysis in Chapter 4 demonstrated, the contractual terms, including the mix among the several elements in the constitution, will depend directly on the personal differences that exist in fact or that are thought to exist. The degree and distribution of these differences will not be uniform as among separate groups. This suggests that there can be no resort to idealized general standards through which a legal or constitutional structure in a particular community at a particular stage of historical development might be judged. At best, an observer can make some inferences about existing institutions from his assessment of the behavior of individuals living under them.
The approach to contract taken in this book is economic, and, as shown earlier, there is an economic basis for constitutional contract among persons. There is, similarly, an economic basis for adherence to any existing set of rules, to those that define the status quo. This economic basis is not nearly so dependent on the fact of participation or on the historical existence of settlement as its ethical counterpart. On the other hand, there are individually rational economic reasons for default from any contractual agreement. In large-number groups in particular, individual utility-maximization will dictate defection from agreed-on contractual terms in the absence of enforcement provisions or unless constrained by ethical precepts. It is important to recognize that the strictly economic motivation for defection is not influenced by the presence or the absence of individual participation in contract. The individual who has personally entered into an advance commitment has the same strictly economic motivation for default as the person who inherits the contract from his forebears, or who finds himself in a setting without contractual foundations at all. It is the ethical constraints that may be sharply different as between these cases, not the privately rational economic choice, with rationality here measured in quantifiable economic dimensions.
In recognition of individual motivation for defection, any legal structure will include rules for enforcement and for punishment of violators. On strictly economic grounds, there is no a priori reason why an individual would defect more quickly from rules and institutions that do not fall within his reasonable renegotiation expectations set than from those that do. Even for the person whose assigned rights in the status quo seem to be more favorable than he could reasonably expect to secure in a genuinely renegotiated settlement, the incentive to violate law is present, provided he expects to be able to accomplish this unilaterally and to escape punishment. Again, in a strictly economic calculus, whether a person will violate the terms of existing contract, whether he will abide by the set of legal rules, institutions, and rights in being, will depend on his assessment of the probability of and the severity of punishment rendered by the enforcing agent. This expected value is directly dependent on the willingness of the community, acting through the protective state, to make commitments to enforcement and punishment. These commitments, in their turn, are functionally related to the levels of voluntary compliance predicted. And, as noted, these levels will depend on the strength of ethical constraints on individual behavior. Through this sort of causal linkage, we can trace the relationship between enforcement and the “distance” of the status quo from the set of “renegotiation expectations.”
Consider an example. Suppose that there is, in fact, an initial contractual settlement, and that only nominal violations are predicted to occur in early periods of the agreement. For a given resource outlay on enforcement, a specific degree of adherence to contractual terms is guaranteed. For purposes of illustration, say that only .001 percent of all behavior is explicitly violative of agreed-on rights. Time passes, and the structure of rights is not modified. But sons inherit fathers’ positions in the community, and sons no longer feel themselves ethically committed to the initial contractual terms. More important, the existing rules may not be within the set of renegotiation expectations of at least some members of the second generation. For both of these reasons, more sons than fathers will respond to the strictly economic motivations for default. With the
same enforcement, therefore, we should expect to find that the percentage of behavior that is violative of “social contract” rises to, say, .01 percent. That is to say, more persons will “break the law” unless it remains in their strictly economic interest not to do so.
There are two ways that the community might respond to an increasing “distance” between the status quo and the set of renegotiation expectations for a large number of its members. It may, first of all, increase resource commitments to enforcement, along with the accompanying moral commitments required, thereby making departures from the set of rights defined in the status quo more costly to potential violators. Second, the community may attempt to renegotiate the basic agreement, the constitutional contract itself, so as to bring this distance back to acceptable limits. As the analysis in subsequent chapters will show, the first alternative may be extremely difficult to implement, and, indeed, there may well be pressures for reducing rather than increasing enforcement-punishment commitments. In practice, the only alternative may be that of attempting to renegotiate the basic constitutional contract, at least along some of the margins of possible adjustment. Before such renegotiations can be discussed, however, we need to define the status quo more clearly.
Contractual Changes in the Status Quo
The whole set of rules and institutions existing as of any point in time defines the constitutional status quo. This set includes more than an imputation or assignment of private ownership claims, along with the rules under which these claims may be exchanged among persons and groups. The existing situation also embodies rights of membership in the polity, the collective organ of community, and this entity in its turn carries specified powers or rights to undertake the provision and financing of public goods and services. The constitutional status quo should not be interpreted to embody rigidity in social interaction. Shifts in individual claims may take place, provided that these are themselves processed through defined rules, which may also define the responses of the system to exogenous shocks. What is important is not stability but predictability; the constitutional status quo offers the basis upon which individuals may form expectations about the course of events, expectations which are necessary for rational planning.
The uniqueness of the status quo lies in the simple fact of its existence. The rules and institutions of sociolegal order that are in being have an existential reality. No alternative set exists. This elementary distinction between the status quo and its idealized alternatives is often overlooked. Independent of existence, there may be many institutional-legal structures that might be preferred, by some or many persons. But the choice is never carte blanche. The choice among alternative structures, insofar as one is presented at all, is between what is and what might be. Any proposal for change involves the status quo as the necessary starting point. “We start from here,” and not from someplace else.
The necessary recognition of this does not amount to a defense of the status quo in any evaluative sense as is sometimes charged. Privately and personally, almost any one of us would prefer some alternative structure, at least in some of its particulars. There is nothing Panglossian implied when we insist that improvements must be worked out from the status quo as fact. How can we get “there” from “here”? This is the appropriate question to ask in any attempt to assess proposed sociopolitical change. What qualities of legitimacy does the set of rights existing at any point in time possess, qualities that are present due simply to the fact of existence? This can be turned into a further question. Should the enforcing agent, the protective state, punish those who violate the set of rights defined in the status quo? Put in this way, the question almost answers itself. These rights are the only ones that the agent could possibly enforce, since no others exist.
If a clearly defined set of rights exists (and I shall simply assume this here; at a later point I shall examine problems that arise when ambiguities are present), and if this set is effectively enforced, how can change in structure, basic constitutional change, take place at all? In order to answer this question, it is necessary again to avoid the confusion in thinking of rights in terms of imputations of goods or resources among persons. This static model would suggest erroneously that the assignment of rights remains always a zero-sum game; hence, there could be no agreed-on modifications in structure. Contractual or quasi-contractual readjustments in basic constitutional structure are, by definition, impossible in this limited model.
In a dynamic opportunity-cost framework, however, contractual or quasi-contractual agreements might be struck which would include reductions in nominally measured values of the rights of some members of the community. If the predicted course of events over time should be such that these nominally measured values are to be reduced, those holding such vulnerable claims may accept present reductions in exchange for greater security. If the individual holder of a right or claim, defined in the status quo, comes to predict that this claim will be eroded or undermined unless the structure is modified, he may willingly acquiesce in some current reduction in this claim’s value as a means of forestalling the possibility of larger damage.
Such predictions may be based on imagined shifts in the natural distribution in anarchistic equilibrium which always exists “underneath” the observed social realities. This may be illustrated in a two-person numerical example. Suppose that A and B, in anarchistic natural equilibrium, secure final stocks of consumables measured at ten units and two units respectively. These stocks are net of the effort expended in defense and in predation. A disarmament contract is negotiated, and the postconstitutional imputation becomes fifteen units for A, seven units for B, with each person having secured the equivalent of an additional five units. This settlement continues to be in existence for some time, but let us assume that, after X periods, the relative strengths of the two parties are thought to change. Although the natural distribution, in anarchy, is no longer observable, let us suppose that A now thinks that the two parties would fare equally in genuine anarchy, that the distribution would, in fact, be closer to 6 : 6 than to the original 10 : 2. In such a situation, A may well recognize the extreme vulnerability of the 15 : 7 imputation in the status quo, its vulnerability to violation by B. In order to secure for himself some greater assurance that predictable order will continue, A may willingly accept a proffered change in nominal rights, a move to a new distribution, say that of 13 : 9.
The two-person model is, of course, somewhat misleading in that it tends to obscure the enforcement problem that arises critically only in large-number settings. In strict two-person interaction, enforcement is implemented through the continued threat of having the whole system plunged back into anarchy by any one of the two participants. In the large-number community, the comparable model becomes more complex. Here the changes that may be contractually or quasi-contractually reached arise not directly out of increased danger of individual violation of rights, since this danger will always be present, but out of the danger that the enforcing agent will become increasingly unwilling to punish violators effectively. A simple three-person model, an extension of the same illustration, may be used, although this is taken to represent a large- rather than a small-number setting. Assume that the three-man community, A, B, and C, finds that the imputation in anarchistic equilibrium is 10 : 2 : 2, and that, on settlement of the initial disarmament contract, this becomes 15 : 7 : 7, and that all parties accept these terms. Accompanying the contract is the appointment of an enforcing agent, the protective state, which is assigned the duty of insuring respect for the 15 : 7 : 7 imputation. As before, assume that time passes during which, relatively, the strengths of the separate members of the group are thought to change. Suppose that we reach a period when A thinks that a true reversion to natural equilibrium would be described roughly by a 6 : 6 : 6 imputation rather than the one in being. So long as A retains faith in the enforcing agent’s power and willingness to enforce the terms defined in the status quo, A has no worries and he will not voluntarily accept any change in his own nominal claims. He may come to recognize, however, that the enforcement contract also has a dynamic dimension. The agent may become increasingly reluctant to guarantee a set of individual rights as the relative positions of individuals diverge increasingly from what is seen to be the natural equilibrium in anarchy “underneath” the existing order. Hence, the linkage between shifts in the presumed or imagined natural distribution and the stability of rights represented by the status quo may be essentially identical in large-number and small-number communities.
In this discussion of the possible changes in the status quo distribution of rights, changes in the basic constitutional contract, I have emphasized the economic bases. I have not explicitly introduced the concept of justice, as this might or might not inform the attitudes of persons concerning the establishment of, or the changes in, structure. To the maximum extent that is possible I attempt to derive the logical structure of social interaction from the self-interested utility-maximization of individuals and without resort to external norms. Factually and historically, it may well be necessary that some notion of “social justice” or “social consciousness” characterizes the thinking of at least some part of the population if a society embodying reasonable personal freedom is to exist. I want neither to support nor to oppose this presupposition. My point is that I do not want to rely on the presence of such an attitude at this stage of the analysis.
It is useful to mention the concept of justice at this point, however, because in those situations where individuals may have rational economic reasons for accepting some reassignment of rights, where genuine constitutional change may be possible, the public discussion may be conducted in the rhetoric of “justice.” Even the advocates of structural change may not be fully aware of the rational or utility-maximizing motivation that lies at the base of their proposals. This offers a partial explanation of the behavior that is often observed in the scions of wealthy families, behavior which makes them appear to be more interested in “justice” than other members of the community. If individuals find themselves in nominal possession of ownership rights that they know to be insupportable in anything that might resemble genuine anarchistic struggle, they will perhaps recognize that the means of protecting their position is through some surrender of claims in a genuine constitutional rearrangement of rights. Such persons are quite likely to support proposals for constitutional rearrangements and to argue in support of these proposals in terms of justice, which may or may not be hypocritical at base.
*75 Arguments which may find their origins in rational economic calculation, which might otherwise be the basis for organizing genuine contractual or quasi-contractual modifications in the structure of legal order, when presented under the disguise of justice tend to attract support from those elements of the community whose primary motivation is to arrange preferred redistributions of rights among
others than themselves, and who make no pretense or effort to undertake contractually approved or Pareto-superior changes. The behavior of individuals in this latter respect is important in shaping modern governmental policy toward redistributions of individual property claims, but this behavior is not directly germane to the analysis here.
In considering individual behavior in support of basic constitutional change, a distinction should be made between human and nonhuman capital. To the extent that individual claims in the status quo take the form of ownership rights to nonhuman resources, the relative value of these claims may be readily separated from the value which inheres in the person, and which could, presumably, be more invulnerable in anarchy. The separation here is accentuated when claims to nonhuman resources are transmitted intergenerationally, in which case there may remain little or no relationship between the relative value of such claims and the relative share that the holders think they can secure in either genuine anarchy or in a renegotiated constitutional contract. On the other hand, and by contrast, if an individual’s claims to final goods are measured largely by his ownership of human capital, embodied in his relative skills, talents, or capacities, his relative standing in the natural distribution or in any renegotiated settlement might not diverge categorically from that which is observed in the status quo. There will not, of course, be any precise correspondence here. An individual’s skill as a concertmaster may be worthless in the Hobbesian jungle, and almost worthless in any renegotiated settlement that reduces substantially the specialized demands for concerts that emerge from the status-quo distribution of wealth. Even here there is, however, a categorical difference between human and nonhuman capital. An effective transfer of the rights to the product of human capital may be impossible since explicit behavior by the owner may be required. No such behavioral link exists between nonhuman capital and the person who holds rights to its product. Insofar as human capital takes the generalized form of physical and/or intellectual capacity, the relative ability of a person to survive in anarchy itself or to secure terms in renegotiations is likely to be mirrored somewhat closely in the status quo. From this we should predict that support for major structural changes in rights, along the contractual lines suggested, is more likely to be located among those who hold relatively large claims to nonhuman resources than among those who hold comparable claims to human capital.
Imposed Changes in Constitutional Rights
I have discussed the possible bases for contractual or quasi-contractual changes in the status-quo distribution or imputation of constitutional rights—the rights of persons in the community to claim ownership over physical resources, to undertake specified courses of action with respect to such resources, to participate in collective choice and in the sharing of governmentally provided goods and services—under the unstated presumption that only such contractual changes in structure can take place. This is parallel to the initial derivation of contract, the first leap out of the anarchistic jungle. As our earlier treatment suggested, the initial distribution
from which this initial step is taken could not itself emerge from contract; instead it must emerge in the opposing strength of persons in interaction, hence, the term “natural distribution.” The question now at issue concerns change in the initially assigned structure of rights, without a lapse back into anarchy. A structure of legal order exists, the status quo, even if none of the persons in the community share any sense of participation, directly or remotely, in the constitutional settlement. It matters little whether a settlement, as such, was ever made.
Why need a presumptive rule of unanimity be adopted for genuine constitutional change, even if the contractual metaphor for the emergence of rights be accepted? Alternative structures of legal order are equally or perhaps more deserving of moral-intellectual support. What is then wrong with an imposed and arbitrary shift in the pattern of individual rights toward some alternative structure that may, by certain external criteria, be awarded comparable or even superior merit to that which is reflected in the status quo?
These questions deserve careful consideration since they get us directly to a source of major confusion. They point toward the further question that is so often left unasked (and unanswered). If imposed and nonvoluntary changes in the structure of legal rights are to be made,
who is to do the imposing? What individual, what group of persons, what institution of collective decision-making, is to be granted the right (or power) to impose arbitrary and noncontractual changes in rights, to rearrange the distribution of property claims among persons away from that which exists? By what process can we derive such an ultimate right? In what primal contract?
It seems self-evident that if the status quo defines a structure of basic constitutional rights, these cannot be arbitrarily changed. To say this is possible would amount to semantic contradiction. If basic rights can be changed without agreement, they could scarcely be called either “basic” or “rights.” Consider an example in which a person holds what he thinks to be an ownership claim to, say, ten units of productive resource or capacity. Suppose that some external force or entity simply “takes” one-half of this endowment, reducing the patrimony to five units. In ordinary language this seems straightforward, but if the external entity or force holds the power to decide and to implement the change indicated, did the individual in question really hold the claim in the first place? Some revision in the ordinary manner of discussion seems to be required here. If the person in the example holds ten units subject to the taking of the external entity, he does not “own” these units in any basic constitutional sense. At best we might say that he “owns” these claims subject to arbitrary external interference or that these claims are nominal rather than real.
This issue is brought into focus by the familiar assertion that property rights are defined by and subject to change by the “government” or the state. As noted in Chapter 3, this amounts to saying that only the government or the state has rights, and that individuals are essentially parties to a continuing slave contract. This is the Hobbesian vision or model of the true relationship between the sovereign and the individual members of the community. The only meaningful contract here is the initial surrender of power to the sovereign in exchange for the order that is imposed and maintained. But this vision is contrary to the whole notion of constitutional contract among persons, each of whom disarms himself in exchange for some guarantee that his assigned rights will be accepted and that violations will be punished by an enforcing agent appointed for this limited purpose, the state. In this alternative conception of constitutional contract, which in these respects is more Lockean than Hobbesian, the enforcing agent is restricted by terms of the initial agreement. Individuals hold rights or claims vis-à-vis the enforcing agent as much as against other persons. The government is, itself, held strictly within the law of the constitutional contract.
I am not suggesting that individual rights cannot be modified coercively and without consent. Far from it. Simple evidence could not be thrown out in so cavalier a fashion. I am suggesting that rights which legitimately form a part of the expectations of a person or group can only be modified by agreement
if the constitutional contract, implicit or explicit, is not itself to be violated. But this basic contract, as with all contracts, may be violated by any of the parties. The analysis suggests only that such violations be recognized and discussed as such. There is no point in assuming the existence of something that simply does not exist. If “the government,” represented through the decisions of persons who arbitrarily modify the assigned rights of individuals, violates the basic terms on which the social structure operates, there is no requirement that its actions be “honored” with ethical sanctions. If “the government,” which is conceived as an enforcing agent for individual rights, itself captures powers to change the legal structure, individuals are deprived of rights and their existence becomes equivalent to that described in Hobbesian anarchy. Much of what we observe in the 1970s can pessimistically be described in precisely these terms. But because the basic set of rules has been eroded beyond recognition in many respects, there is no reason for us to refrain from discussing the elements of structure that might exist.
In this, as in other respects, my analysis lends potential support to modern-day anarchists, who deny the legitimacy of much of the action implemented by the governmental-bureaucratic apparatus. Legitimacy is “earned” by government’s adherence to the terms of the legal structure that allows individuals’ claims to remain within a set of reasonable renegotiation expectations, at least for most members of the community. If government oversteps these bounds, it is not “legitimate” in the strict definitional sense of the term, and its acts may be regarded as “criminal.” This conclusion follows regardless of the manner in which decisions are made, so long as unanimity is violated. To say that any act of government is legitimate because that act is sanctioned by a majority or a plurality of the community’s members, or by a majority or plurality of their elected representatives in a legislature, or by their elected, appointed, or anointed designates in executive or judicial roles, is to elevate collective or governmental institutions and process to a position superior to content. Unconstitutional behavior cloaked in the romantic mythology of majority will or judicial supremacy in some circumstances may proceed further than behavior which lays no claim to procedural rights.
Prior Violations and the Status Quo
The argument that I have presented above might seem persuasive in the context of a timeless model. If the structure of legal rights, described in the status quo, should have remained unchanged after an initial agreement, if there was, in fact, such an agreement made, and if participants remained as members of the community, there might be general acceptance of the principle that basic changes require the adherence of all parties. But our concern in this chapter is precisely with the problems that arise in the absence of some or all of these conditions. Specifically, we must ask (and answer) the question: What justifies the status quo when an original contract may never have been made, when current members of the community sense no moral or ethical obligation to adhere to the terms that are defined in the status quo, and, what is important, when such a contract, if it ever existed, may have been violated many times over, both by the government and by individuals and groups that may have succeeded in evading proper punishment? Does the presence of any one or all of these negations remove legitimacy from the status quo?
Again it is necessary to repeat the obvious. The status quo defines that which exists. Hence, regardless of its history, it must be evaluated as if it were legitimate contractually. Things “might have been” different in history, but things are now as they are. The fact that government may have violated implicit terms excessively and repeatedly does nothing toward modifying the uniqueness of the status quo. Prior violations may, however, make it more likely that the existing legal order diverges significantly from that set of orders which satisfy the renegotiation expectations of large numbers of persons in the community. Violations that remained unpunished in prior periods, whether by government or by persons and groups, make enforcement more difficult and provide an incentive for further violations.
Evaluation of the status quo as if it were legitimate may yield results in either direction. The set of rights in existence at any point in time may or may not deserve the putative legitimacy that it claims. If it does not, or more correctly, if there are aspects of this set that do not, there should exist means of adjustment which could be agreed on by all or substantially all of the members of the community. Adjustment that must be imposed coercively can scarcely represent in itself a restoration of “legitimacy” in any genuine meaning of the term. This sort of change would, instead, amount to still further violation of the implied contract.
Consider a situation where, due either to a change in the relative capacities of persons or to explicit past violations of an agreed-on set of terms, the status quo has come to define a set of individual rights that are clearly inconsistent with the renegotiation expectations of a large majority of the community’s membership. That is to say, the relative positions of persons cannot, through any stretch of the imagination, be reflective of the relative positions that might be attainable after a detour into anarchy and out again into a new constitutional contract. In this case, it should be rational for those who seem differentially favored in the status quo to accept reductions in the measured value of their assigned rights. If they do so, constitutional change can emerge through agreement, as previously discussed.
Those who are or may be differentially favored in the status quo may not, however, accept this as the rational course of action. Especially if they can control the activities of the enforcing agent, the government, they may consider their relatively advantageous positions invulnerable. They may be unconcerned about the alleged illegitimacy of the structure of individual rights in existence. It is this sort of setting that invites breakdown into disordered anarchy or revolution with a potentially new natural equilibrium in the offing followed by some new constitutional order. This is not to suggest that a rights structure may not survive and be enforced unless it mirrors, more or less accurately, one of the structures that might conceptually emerge in a renegotiation settlement. If “the government” is willing to enforce the status quo with sufficient determination, almost any set of rights can be maintained. But, in such a case, the state or government essentially becomes the enforcing agent for the coalition of persons whose rights in the status quo are unsustainable in plausible renegotiation. If “the government” is, at base, democratic in any ultimate sense, its activity in enforcing existing rights becomes more and more difficult as these diverge from the renegotiation expectations of large numbers of persons. Long-continued enforcement of unadjusted rights may become impossible. Agreed-on and quasi-contractual readjustment offers the only effective alternative to progressive deterioration in legal order, to continued violations of the implied contract by government and by individuals alike, to accelerated decline in the legitimacy of the whole constitutional structure, to general reduction in the stability and predictability inherent in the ordinary operation of the legal-political environment.
Insofar as they have discussed changes in status-quo imputations of individual rights, political economists have probably confused the issues. With only a few exceptions, political economists, along with other social scientists and social philosophers, have been unwilling to search for and to analyze the potential opportunities for voluntary or contractual changes in the constitutional order. Instead they have felt themselves obligated to propose changes that are derived from external ethical criteria, changes that are presumably to be imposed on the existing structure. This sort of discussion has tended to distract effort and attention from the less romantic but more productive approach involved in working out possible compromise modifications that would be agreeable to large numbers of persons in the community.
Specification of Rights in the Status Quo
I have referred variously to a “set of legal rights,” to a “distribution of individual rights,” to a set of “property assignments.” If the analysis is to have more practical relevance, it is necessary to be more specific. What are the descriptive characteristics of the structure? I have repeatedly warned against thinking of the structure of individual rights in terms of an imputation of either final goods or units of productive capacity among persons. This is a pervasive error that has been one of the reasons why political economists have neglected the problems discussed in this book. There is no constant-sum endowment of potential capacity to be somehow parcelled out among persons in the initial constitutional contract or enforced by the existing legal order. To adopt this as the paradigmatic basis for the analysis of the emergence and maintenance of a structure of property rights generates confusion from the outset. Individuals do not attain definitional identity with specifically measured endowments; they attain this through conceptual agreement, explicit or implicit, on a set of limits to their own behavior vis-à-vis one another. Within these limits, within “the law,” they are allowed to develop and to utilize their capacities, human and nonhuman, and to secure “goods” either through their own direct production or through exchange with each other. Included within these legal limits is participation in postconstitutional contracts, both in private and in public goods and services. In the latter, individuals may find it necessary to organize themselves collectively through political units and to impose on themselves decision rules that depart from unanimity, but rules which are themselves specified in the constitutional contract.
This summary is far from offering specific definition of the rights of an individual in any status quo. These depend both on the community selected for examination and on the time period chosen. No general set of individual rights can be derived independently in the approach taken here. In this sense, the whole analysis is relativistic. To define an individual’s rights in the status quo, the particular community would have to be examined closely to determine just what the ongoing “constitutional contract” actually is. This is not an easy task, but it must be basically empirical and not analytical. Again in somewhat general terms, an individual’s rights might be defined as that set of expectations about the relevant behavior of others in the community that is also shared by others in the community. Consider, for example, a right of land ownership. What does this mean? To “own” a parcel of land means that the owner expects others to refrain from using the land in certain ways and that others share this expectation, at least to the extent that they respect the penalties for violation. These attributes of ownership are required for the exchange of titles or rights. The status quo may be interpreted as the whole set of mutually shared expectations concerning the behavioral domains of individual members of the community, of variously organized coalitions and groups of individuals, including the political entity, the state.
There may, of course, be many ambiguities, uncertainties, and conflicting sets of expectations about individual spheres of allowable actions in any legal structure. Indeed almost all of the discussion of individual rights, human and nonhuman, as well as most of the practical litigation is aimed at the resolution of such ambiguities and conflicts. I have to this point deliberately refrained from discussing these because my main purpose has been first to derive the conceptual origins of social order on the presumption that rights are defined. I cannot, however, go further in analyzing structure without introducing problems raised by conflicts in definition.
One criterion by which we might evaluate any status-quo structure, a criterion that is wholly independent of qualitative value judgment, is offered by the amount of ambiguity and/or conflict among individual expectations. At one extreme, there is the model that we have to this point assumed, the model in which all rights are clearly defined and are acknowledged by all parties, including the enforcing agent. Violations may, of course, occur even in this model, but these are recognized as such, even by the violators, who are subject to punishment. Some uncertainty may be present even in this regime with well-defined rights. Particularly with respect to collective or governmental decisions on public-goods financing and provision, the individual may not be able to predict accurately his own final position on any specific collective outcome. This uncertainty is, however, consistent with the overall statement that rights are well defined since the rules for decision-making for the community are themselves clear, as well as the range over which such rules are allowed to operate. At the other extreme, we might conceptualize a setting where everything is in chaos, in which individuals have little or no ability to predict the behavior of others, including the government. The behavior of others may be wholly capricious, and the enforcing agent may or may not support nominal claims of the individual. In a certain sense, this extreme model might be less desirable psychologically for the individual than genuine anarchy because, in the latter, there does exist some predictability about final positions.
Any status quo will, of course, fall somewhere along the spectrum between these two extremes. Some ambiguities and conflicts will exist and, with these, individuals will not mutually share expectations about allowable and predictable behavior, either of each other or of the government. The individual “owner” of land who does not know whether his title is valid cannot predict with assurance just what behavior other potential claimants will undertake with respect to the land, and just what action the state may take to enforce rival claims. In the presence of such ambiguity, the value of “ownership” is reduced, and the exchange of rights becomes more difficult to implement.
The presence of ambiguity and conflict among individual claims is the source of major confusion about the protective-state role of government. To the extent that conflict emerges, adjudication of claims is necessary. Some search for and location of “the law” is required. In the process, the state, through its judicial arms and agencies, must make what appears to be quite arbitrary decisions of the either/or variety, decisions that are then imposed unwillingly on the losing parties to the dispute, and decisions which are subsequently enforced by the state. It is from observation of this sort of activity that the state is often described as
defining rights, as making basic law. But there is a vital difference between adjudicating emergent conflicts among parties when ambiguities arise and in defining rights ab initio or in initiating explicit changes in rights when there is no conflict to be observed.
There must be an adjudication role for the collectivity. The purpose is that of accomplishing peaceful and orderly settlement of disputes that appear around the various borders or edges of acknowledged agreement. Adjudication by the state is designed to prevent the introduction of physical force by the parties. The role of adjudication is related to, but distinct from, the role of the state as the enforcing agent. Well-defined rights require enforcement; violations must be policed and violators punished even when each person’s rights are acknowledged by everyone. In this sort of world, however, no adjudication of conflicts is required. The burglar does not seek to validate his legal claim on your “goods” through state judicial channels (at least not yet). When individuals disagree on their rights, however, when expectations diverge, adjudication is indicated. Each person behaves, or may behave, in exercise of what he claims as “his rights,” and, in doing so, he does not acknowledge that he is violating any status-quo assignment. He seeks adjudication because he feels that his own claims are legitimate in the status quo.
The status quo should never be interpreted as defining an equilibrium in the structure of individual rights and claims. As of any point in time, there will exist some mutually inconsistent expectations on the part of some parties to the “social contract,” and these will be on the way toward some resolution through formalized adjustment channels or otherwise. The equilibrium position toward which the system moves but never attains is closely analogous to that which has been described exhaustively in economic theory. Any system of rights will tend to be modified in the direction of some equilibrium in which lines dividing spheres of allowable actions are sharply drawn and in which individuals’ expectations become mutually consistent. This tendency remains even if the path toward such an equilibrium implies resort to physical force rather than formalized adjustment. Just as with the more familiar economic interaction, however, exogenous shocks will continuously shift the target toward which the adjustment process converges.
The theory of the stationary economy, that state characterized by full equilibrium, has been highly developed, so much so that economics as a discipline has often neglected the dynamic adjustment processes which represent the economy’s groping in response to a continuous series of external shocks. The comparable theory of the stationary legal structure, which would also be characterized by an equilibrium in which all individual and group rights are well defined and in which, as in the economy, all expectations are mutually shared, has scarcely been developed at all, and relatively too much attention has here been devoted to the dynamic adjustments in rights made necessary by the external forces of growth and technological change. As I have suggested, one possible criterion for evaluating any status-quo distribution of rights is its “distance from equilibrium,” its place along the spectrum between the extreme with well-defined rights and that of disorderly chaos when individuals’ expectations are maximally inconsistent. As in the economic theory analogue, equilibrium carries with it efficiency attributes. Any internal barriers or distortions that prevent the movement of the system toward the shifting equilibria reduce the efficiency of social intercourse.
Explorations in the Theory of Anarchy, ed. Gordon Tullock (Blacksburg, Virginia: Center for Study of Public Choice, 1972), pp. 27-38. For the development of a similar model which emphasizes the shift in the underlying structure of “fall-back” imputations consequent on changes in technology introduced because of association, see Donald McIntosh,
The Foundations of Human Society (Chicago: University of Chicago Press, 1969), pp. 242-44.
Public Choice 14 (Spring 1973): 43-68.
Western Economic Journal 9 (December 1971): 379-92.
Second Treatise of Civil Government (Chicago: Henry Regnery, Gateway Edition, 1955), pp. 116ff.
Journal of Law and Economics 2 (1959): 124-38. This is reprinted without change in my
Fiscal Theory and Political Economy (Chapel Hill: University of North Carolina Press, 1960).
W. H. Hutt should be mentioned as an important exception to mainstream political economists here. In a book written during World War II that has been too little known, Hutt proposed basic structural changes along strictly contractual lines. See W. H. Hutt,
A Plan for Reconstruction (London: Kegan Paul, 1943).