This article was published in the Autumn 1999 issue of Formulations
by the Free Nation Foundation

Markets Can Furnish Law

a Reply to Roy Halliday

by Richard O. Hammer

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I thank Roy Halliday for his appeal "Let’s Discuss the Amount of Coercion Needed in a Free Nation," in the previous issue.1 Roy did what I wish more FNF participants would do, in that he recognized the views of other participants and solicited discussion on our differences. Here I respond, telling three differences between Roy’s stance and my own.

First, I do not agree that a decision needs to be made concerning the circumstances in which free-nation law will use force.

Suppose, for example, that a free nation gets established and that Roy and I both live there—but we live in different communities within the free nation. Then, if a crime happens in Roy’s community, the way Roy and his community handle it is their business, not mine.

The response to a crime concerns me only if I am somehow involved, if I am: accused of the crime, the victim of the crime, or if I am networked to either the accused or the victim, perhaps through family ties or mutual insurance. Otherwise it is none of my business. The industry of law enforcement in a free nation might provide a full spectrum of responses. Roy can buy what he wants. I can buy what I want.

I contend that a new free nation could start and run successfully even if the system of law were never completely specified ahead of time. Consider the US system of law. Notice that it runs along, century after century, providing better protection than most systems of law—even though it was never perfectly specified at the outset. It was patched together by committees who did the best they could. We can do the same, striving not for perfection, but for a system that we bet will run better.

Second, I disagree on a deeper level. Roy invites debate, on the circumstances in which enforcement of law is justified, as though he thinks such a debate is appropriate. But I believe a debate on this topic is no more appropriate for free-nation libertarians than a debate on the topic of which drugs the citizens of a free nation should be allowed to consume. The very notion that the citizens of a nation need to get involved in deciding some issue suggests a majority-rule frame of thinking. I believe there is no point in debating the character of any goods or services, including law, which we expect to be delivered by markets.

Third, Roy almost completely overlooks the power of ostracism. I believe ostracism could be used to punish criminals or to compensate victims, whereas Roy seems to believe violence must be used to accomplish these ends.2

Roy does give ostracism a few passing nods. He says that "anyone who is deciding whether to commit a crime should ... consider...the effects upon his reputation" and "the possibility that he might be ostracized or boycotted..."3 Further, a victim who wants to "get some satisfaction without violating anyone’s rights" could make the offenders "feel ashamed by publicizing their crimes", or could "try to persuade others to isolate a criminal from society."4

Roy’s picture of ostracism seems lame, although typical for an American. To show how I believe the state has crippled Roy’s confidence that markets can supply law, I offer an analogy with a person who grew up in the Soviet Union, who has no confidence that markets can supply pencils. If you ask this person to imagine how he could get a pencil in a free nation, he might reply that he could "try to persuade others" to work in the occupations which collaborate to produce pencils. But, we who grew up where markets have long been free to produce pencils know it is simpler than that. Pencils are available almost everywhere, in large variety, for a trifle. The same would be true for ostracism in a free nation.

It seems to me that Roy must build his idea of a free nation this way: He starts with a society modeled upon the American society in which we were raised, in which the state both gives itself a monopoly in enforcing law and cripples the power of ostracism. Then he removes the state as an enforcer of law—but he leaves in place all the acts of state which cripple ostracism. Now that is a sure way to create a picture of lawlessness.

To be fair, Roy has lots of company. I believe most libertarians, including those whom he cites, join him in failing to notice the ways that the state eases crime by crippling ostracism. I have listed those ways, enough times I hope.5 Ostracism in a free nation would be potent. It could be lethal.



1 Formulations Vol. VI, No. 4 (Summer 1999).
2 "Law and Violence," Formulations Vol. VI, No. 1 (Autumn 1998).
3 Ibid., p. 39.
4 Ibid., p. 40.
5 "The Power of Ostracism," Formulations Vol. II, No. 2 (Winter 1994-95); "Locks in Layers: Security Through Win-Win Connections," Vol. III, No. 4 (Summer 1996); "Gateway to an Altered Landscape: Law in a Free Nation," Vol. VI, No. 1 (Autumn 1998), pp. 18-19.

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What Is a Market Transaction?

a Reply to Richard Hammer

by Roy Halliday

Richard Hammer has a lot of confidence in the ability of the market to solve problems and to provide goods and services—including the services of law creation and law enforcement. Consequently, he contends that "a new free nation could start and run successfully even if the system of law were never completely specified ahead of time."

I share his confidence in the market, and I agree that the system of law for a free nation does not have to be completely specified at the outset. But I believe that certain principles need to be agreed upon if there is to be one single system of law and one market for law in the nation. In particular, I believe we need to agree on what is a market transaction and what isn't.

We need to agree on the basic legal principles of a free nation because these principles define the scope of the market. Is the buying and selling of slaves a market function or not? Is the mafia practice of putting contracts out on the lives of their rivals a market practice or not? Is the corporal punishment of individuals a market function or is it something that hampers the market? Is private ownership of land consistent with the market or does it hamper the market?

In general, libertarians believe that acts which initiate aggression are not market transactions. But we don't agree on whether corporal punishment and imprisonment of criminals or compulsory restitution and extraction of debt repayments are such acts. So we don't agree on what is a market transaction with regard to punishment and restitution. It is not logical to pass the buck to the market to solve these legal problems until we agree on which overall market we are referring to. Are we referring to an overall market that includes a slave market a la Randy Barnett who advocates enslaving debtors? Are we referring to an overall market that includes a market for administering corporal punishment of criminals a la Murray Rothbard? Are we referring to an overall market that includes both of these markets? Or are we referring to an overall market that excludes both of these markets a la the self-defense paradigm that I advocate?

Richard Hammer has more confidence in the power of ostracism than I do. Maybe his confidence is justified. I don't know. I am more concerned with the overall market and the effects that it would have on the use of ostracism. If the overall market includes markets for corporal punishment and imprisonment of criminals and a slave market for debtors, there would be less need for voluntary acts of ostracism than there would be if the overall market excluded these markets. D

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