Friday, August 28, 2020

My Disagreement with Murray Rothbard

I have been working on a book based on my past blog posts. The current chapter deals with my criticism of Rothbard's historical work and the attitude behind his approach to it and other things, the view that political disagreement is ultimately war not argument (my terminology, not his). 

At the end of the chapter, I point out that the question of whether Rothbard's work is honest is relevant to whether you should trust him but not to whether his views are correct and has nothing to do with our real disagreement. Here is my current draft of that part of the chapter. 


Our important disagreement, about which I do not think he ever commented, had to do with differing views of how the law of an anarcho-capitalist society would be produced. His was that the law would be the product of libertarian philosophy. Since there was, in his view, one correct answer to what the law should be, everyone would agree and so all courts would accept the same law.

 [I]t would not be very difficult for Libertarian lawyers and jurists to arrive at a rational and objective code of libertarian legal principles and procedures based on the axiom of defense of person and property, and consequently of no coercion to be used against anyone who is not a proven and convicted invader of such person and property. This code would then be followed and applied to specific cases by privately competitive and free-market courts and judges. (Rothbard [1965], 208[1])

There are, in my view, two problems with this. The first is that, as the history of libertarianism makes clear, libertarian thinkers disagree on many features of a just legal code. To take only the most obvious ones, some libertarians, such as Ayn Rand, support laws protecting intellectual property, others oppose them. Some libertarians, probably most, believe that abortion should be legal, since a woman is the owner of her body. Others argue that it should be illegal, since the fetus has rights that should be protected.

One might attribute these disagreements to intellectual error on one side or another, and that is probably how most of those involved in such controversies see them. But it should be obvious to anyone who has made a serious study of the law that there are many legal questions to which philosophy gives no clear answer. Consider, for example, the question of what the penalty ought to be for theft. If the convicted thief is merely required to give back what he stole, theft becomes a profitable activity, since not all theft is detected: Heads you win, tails you break even. So the penalty must be something more than that.

How much more? Rothbard’s answer was that the thief must give back twice the value he stole, but he never offered any convincing reason why it should be two rather than three or ten.[2] The rule is supposed to apply to all societies, but in a society where theft is hard to detect it will still leave the thief with a profit hence will not deter theft. That is one example of the problem, but any thoughtful legal scholar or law student could offer many more. 

The second problem with the idea of deriving law from philosophy is that it ignores the problem of making it in the interest of courts to follow that law. In market anarchy, courts and rights enforcement agencies are private businesses. They can be expected, like private businesses in our society today, to try to maximize their profits. Rothbard seems to be assuming that, once the philosophers have determined what the law should be, everyone else will choose to accept it. That might make sense if one believes both that the philosophers can show what is right and that morality is such a strong force that, once what is right is shown, everyone will want to act accordingly. But if that were true there would be no need for law and law enforcement.

I have a different solution to the problem of producing libertarian law in a market anarchist society, one which uses the self-interest of the courts and their customers rather than ignoring it. In my version, each individual is the customer of a rights enforcement agency that sells him the service of protecting his rights and arranging for his disputes to be settled. Each pair of rights enforcement agencies whose customers might interact agrees in advance on a private court and agrees to accept its verdict in conflicts between their customers, an agreement enforced the fact that they are repeat players. If my agency refuses to go along with a judgement against its customer today, yours will act similarly tomorrow. Fighting is a lot more expensive than litigating and produces less predictable outcomes, so both agencies will prefer to keep the agreement.

Private courts are profit maximizing businesses, so want to produce the system of legal rules and procedures that rights enforcement agencies will want to buy. Right enforcement agencies are profit maximizing businesses, so want to use courts with rules and procedures that their customers want to live under. Individuals are choosing rights enforcement agencies, in part on the basis of the legal rules of the courts they patronize.

It follows that the private courts will want to produce legal rules that individuals want to live under, just as private firms in our society want to produce products that their customers want to buy. In our present political system politicians want to pass laws that voters approve of, but the voter is neither able to observe and compare alternative legal systems nor to choose among them, since his vote has a near zero chance of affecting the outcome of an election. Under market anarchy, the individual can see how the legal rules of different private courts are working out and can choose among them by his choice of what rights enforcement agency to hire. He cannot, of course, have unlimited choice, since they have to be rules that other rights enforcement agencies are willing to accept, but he has much more control, hence more reason to make an informed choice, than in our system.

It follows that the laws produced under market anarchy will tend to be welfare maximizing ones. If libertarians are correct, those will tend to be libertarian. There is no guarantee that the legal system will be perfectly libertarian. But then, there is no way to guarantee the outcome of any set of institutions. The reasons to expect the laws to be reasonably libertarian depend neither on philosophers solving the problem of deducing oughts from is’s or on courts and enforcement agencies acting on philosophy rather than self interest. Only on economics.


It turns out that Rothbard did comment, in at least one place, on the difference between his view of an anarcho-capitalist legal system and mine, as was pointed out to me by David Gordon, who I have been corresponding with in order to make sure I do not misrepresent Rothbard. David is at the Mises Institute, a Rothbardian institution, and has been very helpful. 

But although Rothbard notes that I do, and he does not, assume that different courts may judge according to different legal rules, he does not deal with the central question of why we would expect the legal rules of a market anarchist society to be libertarian ones. His only answer to that question is: 

"Within the anarchist camp, there has been much dispute on whether the private courts would have to be bound by a basic, common law code. Ingenious attempts have been made to work out a system where the laws or standards of decision-making by the courts would differ completely from one to another.7 [footnote to my book]But in my view all would have to abide by the basic law code, in particular, prohibition of aggression against person and property, in order to fulfill our definition of anarchism as a system which provides no legal sanction for such aggression."

That is an evasion — proof by definition. He sets up his system, courts adopt rules that permit aggression, and he gets to announce that it isn't anarchism, which has no effect on what they are doing. And by his initial definition it still is anarchy, since courts are not supporting themselves by taxation, hence are not governments. It just isn't libertarian anarchy.

If you find the argument convincing, imagine the same argument by someone on the other side. Someone says what he is in favor of is "Just Statism." You object that, for one reason or another, the state will not act justly. He responds that in that case it is not Just Statism, which is what he is proposing.

[1] Rothbard, Murray N. [1965]. “The Spooner-Tucker Doctrine: An Economist’s View,” reprinted in Egalitarianism as a Revolt Against Nature and Other Essays , pp. 205-218. Auburn, AL: Ludwig von Mises Institute, 2000.

[2] An extended discussion of the issue from Rothbard’s The Ethics of Liberty has been excerpted and webbed on the Mises Institute site. Readers may decide for themselves whether they disagree with my claim that it offers no convincing defense of his position.


William H. Stoddard said...

It seems to me that on one hand, courts would not have to enforce the same rules in all details (any more than different state courts now have to do so), but they would have to be bound by what might be called a metalaw defining the relations of courts to each other and to their clients (including, for example, the "full faith and credence" principle of the U.S. Constitution). But on the other hand, courts that did not accept that metalaw would have to be shut down, by force if necessary, and in doing so the other courts would take on some of the characteristics of a state.

David Emami said...

As you touched on with the part about theft penalties, even among libertarians who completely agree about things, there is going to be disagreement about the proper level of risk of wrongful punishment. For example, many if not most libertarians are against the death penalty, but I don't look on that as a libertarian view via principle. It's a judgment that the risk of an innocent person being killed is too high to take. Some people -- I expect a small but non-zero number -- will decide that *no* risk of wrongful punishment is acceptable and want a legal system with no post-crime action at all, intending to rely entirely on their ability to deter attackers and protect themselves, sort of like the "armadilos" in Vinge's "The Ungoverned", just with much less firepower.

Eric Charles said...

David- changing subjects completely. In light of the Bob Murphy's podcast featuring you and George Reisman recently, do you recall the exchange you had with George a few years back on some forum regarding his theory of profit that he discusses with Murphy extensively? I think it may have been on some libertarian forum that may no longer exist.

David R. Henderson said...

Excellent. I did note a few errors in grammar, though.

David Friedman said...

I am afraid I do not remember that.

David Friedman said...


Impossible. What were they?

Anonymous said...

Did Rothbard ever discuss the work of John Hasnas?

Steven E Landsburg said...

Everything you say here is so patently correct and reasonable (and also so characteristically well expressed) that it's depressing to think that it even has to be said.

One addition: To determine the correct punishment for theft, it does not suffice to know how hard it is to catch the thieves. One also needs to need something about the risk tolerance of the marginal thief, which requires empirical work.

Anna said...

"David Friedman said...

Impossible. What were they?"

The only one I noticed was in the second paragraph. You said "this views".

And Steve Landsburg used "need" instead of "know" in his comment's last paragraph.

Steve, also you'd need to know something about the marginal level of unpunished theft any given society is willing to tolerate.

S. F. Griffin said...

"To determine the correct punishment for theft, it does not suffice to know how hard it is to catch the thieves. One also needs to need something about the risk tolerance of the marginal thief, which requires empirical work."

Do we not also need to know how much risk people are willing to be exposed to due to miscarriages of justice? It is a complex set of preferences that need to be balanced. It is probably best to co-ordinate them all via a market.

David R. Henderson said...

When I get time later, I can point out the other couple of grammar mistakes. But here's one:

I have a different solution to the problem of producing libertarian law in a market anarchist society, one which uses the

"which" should be "that"

Doctor Mist said...

Both Landsburg and Griffin comment that we also need to know something about various participants’ risk-tolerance. But I’m not sure that’s part of David’s calculus, as I think it would matter only if your desire was to minimize crime, say for moral reasons, rather than to return the economically/consequentially optimum result. If the expected return/loss from crime is zero, then in some sense it does not matter that a given thief might nevertheless choose to take the risk. Statistically, such criminals will be the losers.

The part where David’s model gets tricky is in the extraction of penalties. If the correct punishment for crime is ten times what was stolen, and the perp does not *have* that much, you have to resort to debt bondage or something. This makes it all seem more complicated, but of course if the invisible hand is operating we can imagine that the penalty will be adjusted to optimality no matter how multidimensional the space.

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