Law as a Regulated Private Good by Robin Hanson, September 2000

Many fear that totally private law would lead to war. To set aside such fears, we should consider private law subject to anti-trust regulation.

I have to agree with David that outlaw laws seem likely to lose customers without the need for much in the way of coordination among other laws. And I have to agree with Bryan that there is room for optimism that network effects are weak, so that little collusion would be required in the course of doing ordinary law business.

Nevertheless I have to agree with Tyler that collusion is a serious concern, one strong enough to deter most observers from endorsing fully private law. The payoff to laws from successfully colluding seems large, the possible harm to the rest of us seems very large, and the benefits of fully private law are not obviously large. Thus even a small chance of severe collusion seems enough to put most people off.

When we talk about the benefits of private versus public education or medicine, we do not usually consider the possibility of a war of all against all as an argument against the private versions. We instead assume something in the background keeps the peace under all proposals. But when we talk about private law, the specter of bloody war is invoked. This seems unfortunate, because if we consider private enforcement, adjudication, and choice of law under the same terms we consider private provision in other industries, the case for private law usually seems rather strong.

In most industries the extreme policies are unregulated private provision on the one hand and full public provision on the other, and the typical policy compromise is public regulation of private provision. This also seems a reasonable policy compromise to consider for law as well. Instead of familiar public provision of law or the proposed unregulated private law, let us consider regulated private law. And if the primary regulatory concern about laws is of large scale collusion leading to war and tyranny, then it seems we are talking about anti-trust regulation.

We should therefore consider the compromise position of private enforcement, adjudication, and choice of law, subject to anti-trust regulation by a central "government." And since defense against colluding laws seems to have substantial synergies with defense against invasion, a task that seems especially difficult to provide privately, it seems natural to give these two defense tasks to a central power.

Of course compromise may not seem as heroic as an ideologically pure extreme, but we shouldn't let the best be the enemy of the good.

One objection to this proposal is that a government simply could not be constrained to limit its actions to national defense and legal anti-trust. I think it might if the public conceived of these as the only legitimate functions of government.

Governments are roughly limited by public opinion, and in democratic governments the opinions that matter are more widely distributed. A defense-only government would probably have a lot of slack regarding details of how defense is run (though less under futarchy), but it would probably not cross visibly over into other areas of governing if public opinion were largely against such moves.

If public opinion always tends to evolve to favor the breadth and depth of intervention we now see, then it is only a matter of time before any place has a government roughly like ours. Even under fully private law, laws could look like governments, and collude into becoming them, if enough customers want that.

If, in contrast, public opinion responds to the history of what life has been like under some arrangement, and how people have fared under other arrangements, then there is more hope that positive experience with an arrangement may lead to stable public opinion in favor of it.