Does Contract Enforcement Require Government as a Backstop? By David Henderson

Recently, Arnold Kling has been arguing that even when contract enforcement is totally private, it requires government as a backstop. He wrote:

Taking existing institutions as an existence proof for the feasibility of an-cap is not a valid argument. The fact is that eBay exists in a world with government. People who use eBay probably assume in the background that if a situation comes up where they think that they are getting shafted they can take the other party, or eBay itself, to a government court. That court will resolve the dispute, and everyone understands going in what that process will consist of.

His view is plausible a priori and, indeed, it used to be my view.

That is, until I read and reviewed Edward Peter Stringham’s new book, Private Governance: Creating Order in Social and Economic Life. My review is published in the Jan/Feb 2016 issue of The American Conservative and, unfortunately, does not appear to be available on line.

Why did Stringham’s work change my mind? Here’s the relevant passage from my review: