Political Theory

Re: how can non-consensual participants be bound by the decisions of private courts

Maxliberty — Tue, 19 Aug 2008 14:47:50 GMT

david_z:
It becomes far less economical the second he decides to fight back. a BAR is a very effective weapon. If he's cunning enough to con a lot of people in this manner, he's probably wise enough to think about the repercussions of his actions, and take measures to protect himself from enforcement.

Just try specifically addressing the question. Are contracts that allow enforcement clauses allowed or do they violate some prinicple that you are trying to articulate.

If your arguement is solely that you think other options will be more economical then the market can decide. I am not trying to guess what the optimal form of contract is just if you think that enforcement of contracts is wrong.

Re: how can non-consensual participants be bound by the decisions of private courts

David Z — Tue, 19 Aug 2008 06:32:28 GMT

Maxliberty:
The underlying question is why am I not allowed to have a contract that has an enforcement clause? As far as the ownership question well that is the prupose of the contract regarding the house, it's the enforcement that is a problem from your point of view.

You can have a contract that says I'm your slave. That doesn't make it tolerable. One of the risks inherent in doing business is default risk, and it can certainly be insured against especially in tandem with some other mechanisms, like ostracism, blacklisting, etc. If the party in question has debtors, himself, the injured party can certainly subrogate the offendors claims to these receipts. If he's truly as black-and-white guilty as your argument presumes, his debtors shouldn't have any problem diverting their payments to the subrogor, after all, why continue paying money to a known criminal? If the offendor then challenges this subrogation, well, he has to either initiate the violence, himself, (at which point its clearly appropriate to resist with force) or he can take it back to the court that initially ruled against him where he will likely lose.

Maxliberty:
Not everyone is concerned with ostracism.

They are, when it works. Ever hear of Law Merchant. Quite effective in dealing with scofflaws, until it was co-opted by the Crown.

Maxliberty:
Imagine the whole world is a free society, do you think a person who has a bad reputation in one place can't simply go somewhere else with a new identity and start again

Asked, and answered. Re-read the thread.

Maxliberty:
or if he makes enough money he lives like a king off his scam. Plenty of people will associate with him just because he has money irregardless of what his reputation might be.

*if* he makes enough money. He'd need to scam an awful lot of people, all at once, for an awful lot of money. Moreover, it's likely that interactions with "outlaw" status would be to an extent, prohibited by whatever agencies you're using to protect your own assets.

Maxliberty:
This is a lot more complicated than me sending five guys over to throw him out of the house. So why wouldn't people adopt the more economical solution?

It becomes far less economical the second he decides to fight back. a BAR is a very effective weapon. If he's cunning enough to con a lot of people in this manner, he's probably wise enough to think about the repercussions of his actions, and take measures to protect himself from enforcement.

Re: how can non-consensual participants be bound by the decisions of private courts

Maxliberty — Mon, 18 Aug 2008 21:45:57 GMT

david_z:

What you have here is a condition where "ownership" of the house is in question. Perhaps a free market doesn't tolerate this sort of arrangement? I haven't given it too much thought, but it seems to me that in your example, like the present, when you buy a house on loan, you're not actually the owner of the house; the lender is. So,the question is, who owns the house? You can easily solve the problem by maintaining ownership of the house until and unless a predetermined sum is paid.

There are ways around this, I believe, that don't involve the outright use of force, only the exercise of ownership rights. A person who is publicly accused of such theft, should find it very difficult to interact with other people, assuming their protection/insurance agencies frown (severely) on dealing with people who refuse to submit to judgments or to lawfully contest accusations. In this sense, it's possible to besiege the thief, in a figurative (or, literal) sense. He can't leave, because when he's on someone else's property, that person or their agent can certainly apprehend him. He will have a hard time buying things because he's a known liability. Service providers might, in sympathy and for posteriority's sake, shut off his utilities, etc...

I have a flight to catch, shortly. Don't dismiss brevity of my response with unwillingness to continue dialogue.

The underlying question is why am I not allowed to have a contract that has an enforcement clause? As far as the ownership question well that is the prupose of the contract regarding the house, it's the enforcement that is a problem from your point of view.

Not everyone is concerned with ostracism. Imagine the whole world is a free society, do you think a person who has a bad reputation in one place can't simply go somewhere else with a new identity and start again or if he makes enough money he lives like a king off his scam. Plenty of people will associate with him just because he has money irregardless of what his reputation might be.

david_z:
In this sense, it's possible to besiege the thief, in a figurative (or, literal) sense. He can't leave, because when he's on someone else's property, that person or their agent can certainly apprehend him. He will have a hard time buying things because he's a known liability. Service providers might, in sympathy and for posteriority's sake, shut off his utilities, etc...

This is a lot more complicated than me sending five guys over to throw him out of the house. So why wouldn't people adopt the more economical solution?

Re: how can non-consensual participants be bound by the decisions of private courts

David Z — Mon, 18 Aug 2008 19:58:36 GMT

What you have here is a condition where "ownership" of the house is in question. Perhaps a free market doesn't tolerate this sort of arrangement? I haven't given it too much thought, but it seems to me that in your example, like the present, when you buy a house on loan, you're not actually the owner of the house; the lender is. So,the question is, who owns the house? You can easily solve the problem by maintaining ownership of the house until and unless a predetermined sum is paid.

There are ways around this, I believe, that don't involve the outright use of force, only the exercise of ownership rights. A person who is publicly accused of such theft, should find it very difficult to interact with other people, assuming their protection/insurance agencies frown (severely) on dealing with people who refuse to submit to judgments or to lawfully contest accusations. In this sense, it's possible to besiege the thief, in a figurative (or, literal) sense. He can't leave, because when he's on someone else's property, that person or their agent can certainly apprehend him. He will have a hard time buying things because he's a known liability. Service providers might, in sympathy and for posteriority's sake, shut off his utilities, etc...

I have a flight to catch, shortly. Don't dismiss brevity of my response with unwillingness to continue dialogue.

Re: how can non-consensual participants be bound by the decisions of private courts

Maxliberty — Mon, 18 Aug 2008 19:26:49 GMT

david_z:

Maxliberty:
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....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

I'm not sure what you mean by "entities"... Unsuspecting third parties would quickly find themselves in financial distress (i.e., without doing due-diligence)

There is a strong disincentive, in a free market, towards anonymous transctions, because (as you note) the risk is generally higher. Insofar as anonymous transactions occur, they will probably command a premium. It's more difficult, for instance, for a brand new eBayer to sell something for top-dollar compared to an established seller.

So why is it a violation of some principle to have contracts that are enforced? I think that I have already stated that the options you mentioned would most likely be available and many others we haven't even discussed. Your arguements imply that enforceable contracts will not happen or that they are a violation of some unstated principle.

Re: how can non-consensual participants be bound by the decisions of private courts

JAlanKatz — Mon, 18 Aug 2008 17:19:08 GMT

I notice that social ostracism works quite well for enforcing compliance with norms in the orthodox Jewish community. If I do something uncalled for in New York, and move to the Jewish community in Denver, I'll hear about it there.

Re: how can non-consensual participants be bound by the decisions of private courts

David Z — Mon, 18 Aug 2008 17:01:30 GMT

Maxliberty:
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....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

I'm not sure what you mean by "entities"... Unsuspecting third parties would quickly find themselves in financial distress (i.e., without doing due-diligence)

There is a strong disincentive, in a free market, towards anonymous transctions, because (as you note) the risk is generally higher. Insofar as anonymous transactions occur, they will probably command a premium. It's more difficult, for instance, for a brand new eBayer to sell something for top-dollar compared to an established seller.

Re: how can non-consensual participants be bound by the decisions of private courts

Maxliberty — Mon, 18 Aug 2008 16:28:47 GMT

david_z:

Maxliberty:
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.

After having already lost a great deal of money, (by virtue of an obligor's default on contract) you're suggesting that it would be profitable to expend even more money to wage a private war against the other party? Cuckoo. Violence as a means of "dispute resolution" is really only profitable when the costs can be distributed largely among parties which have no claim to the profits.

I do not mean to suggest that all conflicts will be resolved peacefully, only that the incentive for violence as a means to resolution is severely diminished.

The simplest example is party A lends money to party B to build a house with the house as collateral. Party B refuses to pay but wants to keep the house. Per the contract Party A sends his enforcers to evict Party B. This isn't that expensive as oppose to say Party A losing $100,000. party B will be hard pressed to find much support for his apparent theft. So enforcement in this case is not likely to be very expensive. In some cases the costs of enforcement outweighs the benefit. This happens all the time in small disputes where the dollar is so small it is easier for people to write off the loss. Again, my point is that to universally rule out any particular option in a free society is pointless. Why shouldn't a free market have more than one way of dealing with contracts, including enforcement. What principle is violated by having an enforceable contract?

Re: how can non-consensual participants be bound by the decisions of private courts

David Z — Mon, 18 Aug 2008 15:36:44 GMT

Maxliberty:
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.

After having already lost a great deal of money, (by virtue of an obligor's default on contract) you're suggesting that it would be profitable to expend even more money to wage a private war against the other party? Cuckoo. Violence as a means of "dispute resolution" is really only profitable when the costs can be distributed largely among parties which have no claim to the profits.

I do not mean to suggest that all conflicts will be resolved peacefully, only that the incentive for violence as a means to resolution is severely diminished.

Re: how can non-consensual participants be bound by the decisions of private courts

Maxliberty — Mon, 18 Aug 2008 14:51:30 GMT

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.

Re: how can non-consensual participants be bound by the decisions of private courts

David Z — Sun, 17 Aug 2008 21:52:23 GMT

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?

Re: how can non-consensual participants be bound by the decisions of private courts

Maxliberty — Sun, 17 Aug 2008 21:47:42 GMT

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.

Re: how can non-consensual participants be bound by the decisions of private courts

Anonymous Coward — Sun, 17 Aug 2008 21:26:36 GMT

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?

Re: how can non-consensual participants be bound by the decisions of private courts

Maxliberty — Sun, 17 Aug 2008 18:48:40 GMT

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.

Contract default is definitely insurable but that doesn't mean every contract would qualify or be practical for insurance.

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.

Re: how can non-consensual participants be bound by the decisions of private courts

David Z — Sun, 17 Aug 2008 17:50:30 GMT

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.