Praxeology, property rights, and contracts
On the main Mises.org site, Dmitry Chernikov blogs about how praxeology effectively presupposes property rights of free, acting people. I agree with his basic stance on the origin of property (which I argued for here, although I don't agree that his plan for appropriation is desirable), and I think there is more to be learned from this line of reasoning.
Dimitry mentions the problem of knowing what one person is thinking inside their mind. Property rights are a means to an end of exclusive control over one's environment, so some purposeful action can occur. Without exclusive control (at the least, over one's own body) no purposeful action by that person is possible. So how do we make sure other people don't claim exclusive control over the things we need? We have to come to some common agreement with them. In formal terms, these are contracts.
Of course, most contracts are explicit. Neighbors don't need formal contracts to keep them from stealing from each other's houses, after all. Nevertheless, there is a common understanding between neighbors that stealing is violation of their property rights. This agreement, from the point of view of praxeology, is no less real than a formal law ratified by all owners of houses which declares theft illegal.
Without exclusive control over property, people cannot cooperate. Contracts, therefore, are necissary for cooperative action to take place. The very act of cooperating with someone presupposes some common agreement, no matter how ill-defined. Even two neighbors who refuse to speak to each other have an agreement, as the act of not interacting is as much cooperation as anything else.
With this view, I say that the state neither created contracts, nor property. The state can enforce contracts, (third-party enforcement of contracts often requires formal, written agreements), but it did not invent them. It could not have, because they originate with cooperative action itself.
So who should be the one to enforce a contract? The state can try, but it is aware of the many implicit agreements between acting people? Of course, no one is completely, but some people are certainly better to serve as judges than others. Radically different cultures are certainly not well poised to judge the outcomes of each other's contracts. I propose that the arbiter of any agreement should be one chosen by those entering the agreement. Only they know who would serve them best, or if they desire arbitration at all. The state cannot supply them with effective arbitration for the same reason it cannot effectively supply them with shoes: It lacks both the dispersed, Hayekian knowledge scattered throughout society, and the Misean price signals to rationally allocate its arbitration services.