prior probability

Nozick valiantly tries (alas, without success) to solve the stubborn problems of blackmail and criminal threats in the last subsection of Chapter 4 (pp. 84-87) of Anarchy, State, and Utopia. How? By drawing a distinction between positive-sum, value-producing “productive exchanges” (in which both parties are made better off by the exchange) and negative-sum, value-destroying “non-productive exchanges” (in which only one of the parties is made better off by the exchange). Although this familiar game-theoretic distinction is intuitively appealing, it is not of much help in the case of blackmail. After all, just because a victim of blackmail may feel betrayed and exploited by a blackmailer’s threat to reveal the victim’s secrets, the victim does, in fact, receive something of value if he pays the blackmailer: the latter’s silence. Worse yet, Nozick neglects the reciprocal nature of the blackmail problem: if the blackmail victim had not engaged in disgraceful conduct…

In our previous post, we saw Nozick’s “limited compensation rule” for risk-producing activities: in a state of nature, such activities should be allowed, but compensation must be paid if the risk materializes and a third party is injured by the risky activity. But what about the poor man problem? What if the person engaged in the risky activity is so poor that he is unable to pay compensation? Should he be prohibited from engaging in the risky activity in the first place? Nozick will address these questions in the next to last subsection of Chapter 4 (pp. 78-84).

To begin with, Nozick recognizes the reciprocal nature of the poor man problem. Simply put, if we forbid a poor man from engaging in a risk-producing activity because he is unable to pay compensation when someone is injured, this prohibition imposes a harm on the poor man because we are…

Nozick identifies a “serious problem” (his words, not ours) for the natural rights tradition in the eighth subsection of Chapter 4 (pp. 73-78): the problem of risk. (Hey, what about “uncertainty” as opposed to risk?) From a moral perspective, how should we classify activities that generate only a small risk of moral boundary crossings? Every human activity, no matter how benign its motivation or useful its consequences, carries some risk of injury to self and to others, and yet, as Nozick correctly states (p. 75): “It is difficult to imagine a principled way in which the natural rights tradition can draw the line to fix which probabilities impose unacceptably great risks upon others.” (By the way, doesn’t this criticism also apply to Nozick’s point about fear earlier in the chapter?) For his part, Nozick presents on pp. 75-76 three possible ways of dealing with such small-risk activities in a (Lockean)…

Up to now, Nozick has been grappling with the following question: Why not permit all boundary crossings provided compensation is paid? Nozick, however, switches gears and addresses the opposite question in the seventh subsection of this chapter (pp. 71-73): Why not prohibit all boundary crossings to which the victim has not consented to in advance? It is here, in my view, where Nozick provides the most persuasive answer to both questions. In two words: transaction costs! To sum up: when the parties are able to freely negotiate ahead of time the price of a wrongful act or moral border crossing (i.e. a low transaction cost situation), we should allow boundary crossings so long as compensation is paid. By contrast, when ex ante negotiations would be too costly or impractical to take place (i.e. a high transaction cost situation), then moral border crossings should be flat out prohibited and punished…

For most of Chapter 4, Nozick has been wondering why all wrongful acts are not allowed so long as compensation is paid. Here, in the sixth subsection of this chapter (pp. 65-71), Nozick presents (to his mind) his strongest argument against a permissive or compensation-based view of morality: the argument from fear. In the words of Nozick (p. 66): “Some [types of boundary crossings] we would fear, even knowing that we shall be compensated fully for their happening or being done to us.” This fear argument does not apply to all border crossings; only to those wrongful acts (such as rape, assault, and other forms of physical violence) that generate fear and apprehension. Nozick thus concludes that fear-inducing acts must be prohibited and punished as public crimes. (Presumably, non-fear-producing acts should be allowed so long as compensation is paid.)

Although the fear argument is plausible, three complications trouble us. One…

The fifth subsection of Chapter 4 (pp. 63-65) returns to the first of Nozick’s two theoretical questions (p. 63): “why not allow any boundary crossings provided full compensation is paid?” (Nozick will revisit his second question, “why not prohibit?”, later in the chapter.) Here, Nozick identifies two potential problems with such a permissive or compensation-based system of enforcing rights. One problem is that property rights would not be secure or stable, for in the words of Nozick (p. 64), “Anyone [could] seize a good, thereby coming to ‘own’ it, provided he compensates its owner. If several people want [the same] good, the first to seize it gets it, until another takes it, paying him full compensation.” (An economist, however, might be puzzled by this objection, since goods under such a permissive system would end up gravitating towards their highest-value uses! This simple economic argument, of course, is bullshit, since it…

We are now ready to resume our review of Anarchy, State, and Utopia. The fourth subsection of Chapter 4 (pp. 59-63) contains an extended digression into retributive and deterrence theories of punishment. Nozick takes a probabilistic approach to punishment (pp. 59-60), an approach which is music to our ears: “A person’s option of crossing a [moral] boundary is constituted by a (1 – p) chance of gain G from the [wrongful] act, where p is the probability he is apprehended, combined with the probability p of paying various costs of the act [if caught].” According to Nozick (p. 60), these costs include C, the payment of compensation to the victim; D, the emotional costs to the wrongdoer of being caught and tried; and E, the financial costs of getting caught and going to trial. As Nozick notes (p. 60): “Prospects for deterrence look dim if…

Before we press on with our review of Nozick’s masterpiece Anarchy, State, and Utopia (ASU), we want to say a few words on why Nozick is worth reading and why we are so excited about Nozick’s ideas, especially Chapter 4 of ASU, despite the many criticisms of Nozick’s work we have made thus far. Recall from our previous post Nozick’s distinction between “Compensation Systems” (consisting of moral boundaries that can be crossed so long as compensation is paid) and “Prohibition Systems” (consisting of moral boundaries protected by strict prohibitions against any non-consensual boundary crossings). Doesn’t this distinction look a lot like the existing legal distinction between civil liability and criminal liability?! That, in a nutshell, is why we are so fascinated by ASU, for Nozick is actually trying to answer a hard theoretical and practical question in law: Why are some harmful acts crimes, while others are mere torts