I was having an argument about private courts until I ran aground here...
...
ME:If we continue the example I gave, if I deliver my part of the contract and you don't, I can't see how you can take me to court. If in a competitive system of courts, one court consistently gave apalling rulings it wouldn't be in 'business' for much longer.
HIM: We're disputing the discharge of the contract. As far as I'm concerned, you haven't fulfilled your side of the deal; as far as you're concerned, I haven't.You've taken the matter to Acme Private Courts ltd, who've ruled in your favour. I've taken the matter to Big Dave's Judicial Services & Legbreakings ltd, who've ruled in my favour.In what way is either of us bound by the judgement of the other?
ME: And if you don't wish to be bound by the rulings of private courts then I guess you wouldn't mind being branded an outlaw?
HIM: As far as I'm concerned, you're the outlaw. I don't recognise the authority of your court to brand me anything.(and neither does Big Dave's Personal Security Services ltd, to which I am a long-standing subscriber).
Help, Dr. Phil, my head hurts.
Irish Liberty Forum
"The program of liberalism, therefore, if condensed into a single word, would have to read: property" -Ludwig von Mises, Liberalism
Here's a radical idea: neither of you are bound to the decision rendered in either court.
Some of us might go so far as to suggest that even if you agree on the venue, the guilty party can't be forcibly compelled to accept the judgment against him. The question then arises, what is the disincentive to breaking contracts, the glue that would hold together a voluntary society?
Social ostracism works to an extent, insofar as anyone who A) accepted a venue for settling the dispute, and then B) refused to abide by the judgment, would probably find it very difficult to transact business with anyone in the future, at the very least, others would stop offering credit and he'd have to pay in full, in advance, because the record of his actions indicate that his word (that he'll pay you in 30 days) is not worth a thin dime.
I could probably go on at length on this topic, but let's start with this.
=====
David Z
"The issue is always the same, the government or the market. There is no third solution."
This sort of possibility would be obvious to all arbitration services. They would contract ahead of time on a neutral third arbitrator who both would consider the final word on any issue where they disagree. Essentially, it would be an appeal. Even if they had for some reason not thought of this possibility beforehand, it could still be solved in the same way - by agreeing on a third arbitrator which both sides will recognize and enforce the decision of.
I think Rothbard discussed this sort of problem in either For a New Liberty or The Ethics of Liberty, though I could be wrong. I'm fairly certain it is also in Chaos Theory.
Firstly, this is a stupid hypothetical. The contract will specify who will arbitrate it in the event of a conflict between two courts. All courts do is ascertain who is in the wrong, so that the claimant can prove to the rest of society that they are not themselves aggressing against the defendant. The right to restitution lies with the victim. The court is merely the enforcer. So if the aggressor is guilty and refuses to submit to any court, well all they are doing is demonstrating their guilt. He can whine all he wants about being "branded", but if he has violated someone else's rights he will become an outlaw from the minute he refuses to submit to judicial procedures. So, his "point of view" is irrelevant, whingy protestations to the contrary notwithstanding. If a court is indeed corrupt and commands no respect from any other court or member of society, then he is correct, it has no such authority. However, if it is a normal, functioning court and has no such reputation, all he is doing is demonstrating his guilt.
-Jon
The chill that you feel is the herald of your doom! Irenicus' Diaries.
david_z: Here's a radical idea: neither of you are bound to the decision rendered in either court. Some of us might go so far as to suggest that even if you agree on the venue, the guilty party can't be forcibly compelled to accept the judgment against him. The question then arises, what is the disincentive to breaking contracts, the glue that would hold together a voluntary society? Social ostracism works to an extent, insofar as anyone who A) accepted a venue for settling the dispute, and then B) refused to abide by the judgment, would probably find it very difficult to transact business with anyone in the future, at the very least, others would stop offering credit and he'd have to pay in full, in advance, because the record of his actions indicate that his word (that he'll pay you in 30 days) is not worth a thin dime. I could probably go on at length on this topic, but let's start with this.
This comes up a lot with people who don't think this process through. When you enter into a contract more than likely you will agree upon a mechanism for resolution of conflict regarding the contract. What the contract specifies for the resolution will be how its resolved and in most cases will always include some enforecment mechanism for breech of contract.
For those of you who think social ostracism will be sufficient to enforce contracts without other enforcement you are in fantasy land. The idea that everyone will know the extent of what everyone else's history of contract compliance is ridiculous. A serial violator of contracts could change their name, move to a different area and whole host of other reasons why making contracts without enforcement will be very very rare.
Maxliberty: This comes up a lot with people who don't think this process through. When you enter into a contract more than likely you will agree upon a mechanism for resolution of conflict regarding the contract. What the contract specifies for the resolution will be how its resolved and in most cases will always include some enforecment mechanism for breech of contract. For those of you who think social ostracism will be sufficient to enforce contracts without other enforcement you are in fantasy land. The idea that everyone will know the extent of what everyone else's history of contract compliance is ridiculous. A serial violator of contracts could change their name, move to a different area and whole host of other reasons why making contracts without enforcement will be very very rare.
LULZ.
This is precisely the sort of objection I've come to expect from people who don't think the process through.
Let's take the serial contract violator! As if. Credit and goodwill don't flow from freaking fountains. Given this objective fact of reality, until and unless one has established some worth reputation, he'll find it difficult to obtain either. Do you remember the "great deals" you got on mortgage applications, credit cards, store credit, auto loans, etc., when you were 18 years old, had never held a steady job in your life, and had no proven income or demonstrated propensity to repay loans? This is what it would be like, every single time the "serial violator" would have to start from scratch. And the more frequently he welches on contracts, the more likely it is that his reputation will precede him in the future.
Let's take the point about the insufficiency of social ostracism. In some markets (I seem to recall stories about investment bankers, brokers, and commodities traders) welching on even a single contract can effectively end your career. If you think that the only reason, or even the principle reason, that contracts are fulfilled is because there's a gun behind them, I object that you are the one living in a fantasy land. Most people, most of the time, are honorable individuals with a sense of fairness and equity, they repay their debts because it is generally the right thing to do.
And that straw-man, about "everyone having to know everyone else's history of compliance"... Must we? This is a service that could be provided by the market, it would be similar to what credit-rating bureaus and insurance companies use to measure risk in the present system. They take what is known about you, from your public transactions and from information that you voluntarily provide (and you would voluntarily provide some level of information because it would be beneficial to establish goodwill) and act as a sort of clearing-house for risk. Banks or insurance companies could certainly handle some of these tasks with little difficulty or objection from among their customers.
One response to this sort of dilemma is to consider what happens in instances of decentralization of the provision of legal services in today's world. One might notice that there is no world court, and in cases crossing over international boundaries, it's often the case that no court has any legitimate jurisdiction. Accordingly, in trying to understand the possibilities and limitations of decentralized provision of legal services, it might be worthwhile to consider international law as a paradigm example. For more on this, Ed Stringham's book, Anarchy and the Law, is supposedly very good, though I haven't had the chance to look at it myself. I've had the chance to hear Ed lecture on this subject, though, and he brings up a lot of interesting ideas; it seems like it might be a good place to start.
Bruce Benson's books, The Enterprise of Law: Justice Without the State and To Serve and Protect: Privatization and Community in Criminal Justice, might also be worth checking out, as might parts of David Friedman's The Machinery of Freedom, and the work of a law student at the University of Chicago, Tom Bell, who has been involved in researching "polycentric law." Surely there's no consensus on exactly how these sorts of problems should be handled, which is why there are anarchists in the first place. But it's definitely an area that needs to be looked into more thoroughly.
Most importantly, I think, is the idea that investigating this issue is not solely an anarchistic exercise. If law can more be effectively provided in a decentralized manner than it can through the state system, that seems like something we'd want to know about, even if we weren't advocating the complete dissolution of government. And if there are hurdles faced by a decentralized system which could be avoided through centralization, anarchists might want to take account of the possibility that individuals would want to voluntarily enter into groups which would be able to centralize the provision of legal services.
If anyone's genuinely interested in pursuing this line of research, I'd love to hear about it! If you drop me a line, I can try to help you find resources which might prove helpful, whether in the form of reading suggestions, connections to others with like interests, or connections to professors who might be able to help you in ways that I can't. Also, this.
http://libertarian-left.blogspot.com/
david_z: Maxliberty: This comes up a lot with people who don't think this process through. When you enter into a contract more than likely you will agree upon a mechanism for resolution of conflict regarding the contract. What the contract specifies for the resolution will be how its resolved and in most cases will always include some enforecment mechanism for breech of contract. For those of you who think social ostracism will be sufficient to enforce contracts without other enforcement you are in fantasy land. The idea that everyone will know the extent of what everyone else's history of contract compliance is ridiculous. A serial violator of contracts could change their name, move to a different area and whole host of other reasons why making contracts without enforcement will be very very rare. LULZ. This is precisely the sort of objection I've come to expect from people who don't think the process through. Let's take the serial contract violator! As if. Credit and goodwill don't flow from freaking fountains. Given this objective fact of reality, until and unless one has established some worth reputation, he'll find it difficult to obtain either. Do you remember the "great deals" you got on mortgage applications, credit cards, store credit, auto loans, etc., when you were 18 years old, had never held a steady job in your life, and had no proven income or demonstrated propensity to repay loans? This is what it would be like, every single time the "serial violator" would have to start from scratch. And the more frequently he welches on contracts, the more likely it is that his reputation will precede him in the future. Let's take the point about the insufficiency of social ostracism. In some markets (I seem to recall stories about investment bankers, brokers, and commodities traders) welching on even a single contract can effectively end your career. If you think that the only reason, or even the principle reason, that contracts are fulfilled is because there's a gun behind them, I object that you are the one living in a fantasy land. Most people, most of the time, are honorable individuals with a sense of fairness and equity, they repay their debts because it is generally the right thing to do. And that straw-man, about "everyone having to know everyone else's history of compliance"... Must we? This is a service that could be provided by the market, it would be similar to what credit-rating bureaus and insurance companies use to measure risk in the present system. They take what is known about you, from your public transactions and from information that you voluntarily provide (and you would voluntarily provide some level of information because it would be beneficial to establish goodwill) and act as a sort of clearing-house for risk. Banks or insurance companies could certainly handle some of these tasks with little difficulty or objection from among their customers.
What you underestimate is the ability of people who will be a serial violator as a criminal activity. Without enforcement it becomes profitable to set-up entities or use unsuspecting third parties to obtain credit or goods and then simply violate the contract, not to mention ordinary people will now be tempted to try for the one big score. That is build up credit to a point maybe with a variety of people and then boom all at once violate all the contracts. A legal system that doesn't account for this is doomed to failure. Many people will risk ostracism to make a quick buck. Your underlying assumption is that the market place will not see enforcement as a superior solution to ostracism. Enforcement greatly reduces costs because it doesn't require for me to be an expert on every person I am doing business with. Things like loaning people money for large projects like houses or other business projects won't happen if you can't be guaranteed to use the house or other items as collateral.
I don't think anyone has posited this solution before, but here is my two cents...
Some arbitration contracts today put forth a sum of money to the private court, and upon successful completion of the contract, the money is returned.
For example, say I contract with another company for a very very large project. We agree to a private court for disputes in our contract, and both of us give a deposit to the court for, say $10k for each of us (in actually money or collateral). If the contract is completed successfully with no complaints, we both get our deposits of $10k back. If you build me a crappy bridge, I will go to court and likely not only get $20k, but you will suffer in terms of credit.
"Keynesianomics is a Ponzi scheme."
"You are correct in that Capitalism does not help with poverty, but it is only because it eliminates poverty altogether..."
"That wonderful strawman: greed."
Good call. I was too busy tearing down straw-men to worry about praxis. thanks
Morty:I think Rothbard discussed this sort of problem in either For a New Liberty or The Ethics of Liberty, though I could be wrong. I'm fairly certain it is also in Chaos Theory.
Could you point out the chapter(s) to me, please. Am currently "reading" the Ethics of Liberty audiobook. Cheers.
Fephisto:I don't think anyone has posited this solution before, but here is my two cents...
That's a really good idea, Fephisto.
Thanks for everyone else's two cents. Much appreciated.
Chapter 12 in For a New Liberty has a discussion of courts. I can't find the chapter in Ethics off-hand, but I thought I remembered it being in there, maybe chapter 19.
Fephisto: I don't think anyone has posited this solution before, but here is my two cents... Some arbitration contracts today put forth a sum of money to the private court, and upon successful completion of the contract, the money is returned. For example, say I contract with another company for a very very large project. We agree to a private court for disputes in our contract, and both of us give a deposit to the court for, say $10k for each of us (in actually money or collateral). If the contract is completed successfully with no complaints, we both get our deposits of $10k back. If you build me a crappy bridge, I will go to court and likely not only get $20k, but you will suffer in terms of credit.
Let's review the practical appliaction of your idea. You contract with me to build a bridge for $10,000,000 and we each deposit 10k with an arbitration court. So let's suppose I take your 10 Million and build a lousy bridge or no bridge at all and then you go to court and get my 10K and I get lousy get but I have maybe 5 million left over. The incentive is just too large to welch on the contract and take your money if there is no enforcement.
Let's say I took the idea further and required an escrow amunt equal to the amount of the project. So the contractor puts up 10 Million and when the project is completed he gets his 10 Million back plust he has the money you gave him. So from the builder point of view he has to tie up an equal amount of his own money for every project. The other contractor who deals with enforceable contracts doesn't have to do this so his capital structure is more liquid and he cna take on more projects than the builder who deals with non-enforceable contracts.
Having enforcement is economically superior than hoping the other guy will always come through with his part. Not to mention when there are legitimate disputes by one or both parties.
If you seriously think about these issue then use real examples of what you would do and take it through all the various scenarios and what you will discover is that most people will want contracts that can be enforced. So most contracts will have an enforcement mechanism.
Maxliberty:If you seriously think about these issue then use real examples of what you would do and take it through all the various scenarios and what you will discover is that most people will want contracts that can be enforced. So most contracts will have an enforcement mechanism.
For starters, it's pointless to debate the pedantics of arbitrary numbers. All you've done with your example is assume a number that is so large that Fephisto's position is invalidated. Nice job. Now, maybe Fephisto's example was a bad number to use, but that doesn't necessarily invalidate his thesis.
Maxliberty:Let's say I took the idea further and required an escrow amunt equal to the amount of the project. So the contractor puts up 10 Million and when the project is completed he gets his 10 Million back plust he has the money you gave him.
Look, you can set up (and knock down) as many straw men as you'd like. But it's getting old. And fast. You've completely ignored the very real possibility that contract default is probably an insurable risk.
Maxliberty:Having enforcement is economically superior than hoping the other guy will always come through with his part. Not to mention when there are legitimate disputes by one or both parties.
Economically superior? It costs money to "enforce" contracts. I imagine there are situations in which it would be more expensive to enforce, and others where it is less expensive. But that doesn't answer the question, you haven't justified the use of violence in seeking specific performance.
david_z: For starters, it's pointless to debate the pedantics of arbitrary numbers. All you've done with your example is assume a number that is so large that Fephisto's position is invalidated. Nice job. Now, maybe Fephisto's example was a bad number to use, but that doesn't necessarily invalidate his thesis.
I was pointing out that as a universal solution that was not possible. In a free society there will be a whole range of contracts with a wide variety of ways to resolve conflicts. My point is that to say that having contracts where parties will agree to an enforcement mechanism will also occur and is exactly what we would expect in many cases. There is nothing wrong with two parties agreeing how to resolve a conflict in advance of the conflict even if that method is not yours or my preferred one.
david_z: Look, you can set up (and knock down) as many straw men as you'd like. But it's getting old. And fast. You've completely ignored the very real possibility that contract default is probably an insurable risk.
david_z:Economically superior? It costs money to "enforce" contracts. I imagine there are situations in which it would be more expensive to enforce, and others where it is less expensive.
That is exactly right.
david_z:But that doesn't answer the question, you haven't justified the use of violence in seeking specific performance.
When one party breeches a contract then the other party is injured. This injury then becomes a property settlement issue wherin the injured party is entitled to receive compensation for their loss of property. The refusal to grant this to the other party is essentially theft. I am entitled to use force to retreive my property which someone else may have stolen by breeching the contract.
Maxliberty:Let's say I took the idea further and required an escrow amunt equal to the amount of the project. So the contractor puts up 10 Million and when the project is completed he gets his 10 Million back plust he has the money you gave him. So from the builder point of view he has to tie up an equal amount of his own money for every project. The other contractor who deals with enforceable contracts doesn't have to do this so his capital structure is more liquid and he cna take on more projects than the builder who deals with non-enforceable contracts.
You've never heard of a performance bond?
Pretty new idea, I mean they've only been around since the Middle Ages...
Even today a 'bonded' company doesn't have to tie up the amount of their bond but merely pay some other company to provide the money if they default on the contract. Kind of like insurance you see.
You are free to go with non-bonded people all you like, your level of risk is much different than my level of risk so I might only seek out tried and true professionals while you want to save a few bucks and get ripped off all the time. Doesn't mean you can go around shooting people because they used cheap cement on your new patio like you are advocating though.
Maxliberty:If you seriously think about these issue then use real examples of what you would do and take it through all the various scenarios and what you will discover is that most people will want contracts that can be enforced.
What, enforced by violence or the State?
Anonymous Coward: You've never heard of a performance bond? Pretty new idea, I mean they've only been around since the Middle Ages... Even today a 'bonded' company doesn't have to tie up the amount of their bond but merely pay some other company to provide the money if they default on the contract. Kind of like insurance you see.
I wasn't trying to invent something new . I was illustrating that there are some disadvantages to certain contractual arrangements and thus we would expect that there will and there is a variety of contractual relationships.
Anonymous Coward: You are free to go with non-bonded people all you like, your level of risk is much different than my level of risk so I might only seek out tried and true professionals while you want to save a few bucks and get ripped off all the time. Doesn't mean you can go around shooting people because they used cheap cement on your new patio like you are advocating though.
That is the point in a free society isn't it? That I should be able to choose the types of contractual relationships that I enter in to. What you are saying is that two parties can not enter into an agreement that has some sort of enforcement clause because you think it violates some principle. For example, I borrow money from someone to build a house and we sign a contract that says the house is collateral for the loan and if I default on the loan then the lender has the right to take the house if the agreed upon court rules against the defaulter and that force can be used if the defaulter refuses to leave. Why do you have a problem with that? Is it any of your concern what contract arrangement I make or are you saying I am not allowed to make that contract for some reason?
Anonymous Coward: What, enforced by violence or the State?
I think this thread is about private enforcement. I don't think anyone has mentioned the state.
Maxliberty:When one party breeches a contract then the other party is injured. This injury then becomes a property settlement issue wherin the injured party is entitled to receive compensation for their loss of property. The refusal to grant this to the other party is essentially theft. I am entitled to use force to retreive my property which someone else may have stolen by breeching the contract.
Breach. Anyways. The question is, what happens when both parties believe that the other party is the one in breach, both refusing to mediate or arbitrate a dispute.
So, what happens when that party, from whom you used force to retrieve your property, wants to file a grievance against you? Ultimately, the conflict ends up in court somewhere, right?
david_z: Maxliberty:When one party breeches a contract then the other party is injured. This injury then becomes a property settlement issue wherin the injured party is entitled to receive compensation for their loss of property. The refusal to grant this to the other party is essentially theft. I am entitled to use force to retreive my property which someone else may have stolen by breeching the contract. Breach. Anyways. The question is, what happens when both parties believe that the other party is the one in breach, both refusing to mediate or arbitrate a dispute. So, what happens when that party, from whom you used force to retrieve your property, wants to file a grievance against you? Ultimately, the conflict ends up in court somewhere, right?
There are two options for disputes, 1. We have a contract that specifies the dispute resolution which we both abide by. 2. We have a contract that specifies the dispute resolution which one side does not abide by. If one party refuses to abide by the cotract then the other party has two options forget about it and write it off or enforce the contract with force. So it does not have to end in the court it can end in the street.
What many libertarians have a problem accepting is that there is no guarantee that all conflict will be resolved peacefully in a free society. Violence shouldn't be universally viewed as an unacceptable means to resolve a dispute.
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