prior probability

That is the title of the paper, available here via SSRN, that I will be presenting this weekend at the Winter Institute for the History and Philosophy of Economics at the University of Austin (UATX). My paper is an updated version of two previous paper I wrote: one titled “Coase’s Parable,” which was published in the Mercer Law Review in 2023; the other, “Modelling the Coase Theorem,” published in the European Journal of Legal Studies in 2013. In my updated paper, I revisit Ronald Coase’s cattle trespass hypothetical and explore the origins of his counter-intuitive insight that harms are a reciprocal problem, an idea that I now call “Coase’s axiom.”

This weekend, I will be attending and presenting my work on Ronald Coase, who is considered the founder of “law & economics,” at the Winter Institute for the History and Philosophy of Economics at the University of Austin (UATX), a private non-profit university founded in 2021 whose motto is “the fearless pursuit of truth.” Stay tuned. I will provide additional updates soon.

How do our Anglo-American common law principles inform social contract theory? Would any of the three fictional social contracts of Hobbes, Locke, or Rousseau, for example, be enforceable from a purely legal perspective? Recall from my previous post the four common law elements of legally-enforceable agreement: A. offer and acceptance (mutual assent), B. consideration, C. capacity, and D. lawful purpose. With this legal background in mind, below are my tentative thoughts:

A. Regarding the first element, can there really be mutual assent in the state of nature? Alas, all social contract theorists just assume the existence of voluntary mutual assent. But in truth, we really don’t know if either the offer of the social contract or its acceptance was, in fact, voluntary or, what is more likely, if they (offer/acceptance) were made under duress. After all, when you stop to think about, how can our dire situation in the state of nature — a state of war, according Hobbes and even Locke — not be a state of duress? Also, since the social contract is a pre-political instrument — it was supposedly negotiated in the state of nature — then who exactly is the “offeror”? In other words, even if there was mutual assent, the social contract looks more like a non-enforceable oath than a “contract”!

B. Next, regarding the second element, consideration is a legal doctrine that helps us distinguish legally-binding and enforceable contracts from “mere promises” or gifts, which are not enforceable, and for this crucial element to be met, each party must give up something of legal value — like money, goods, or services — to the other. In addition, a promise to refrain from acting (forbearance) is deemed something of legal value under the doctrine of consideration. In the case of the social contract, we are supposed to be giving up our natural liberty in exchange for protection from the state, but this observation begs the question, is our natural liberty in the state of nature really a God-given pre-political right (i.e. we have a moral right to enjoy our natural liberty) or is it just an empirical description of the state of nature (i.e. we can do whatever we want in the absence of a duly-established government to enforce its laws on us)? And either way, how much liberty did we really have in the state of nature?

C. Regarding the third element, capacity refers to a person’s ability to form a binding contract: they must be of sound mind amd of legal age; they must understand the terms and consequences of the agreement. But what about children and non-human animals? Does the social contract apply to them? As it happens, contract law allows minors to rescind their contracts when they reach the age of majority, but how does one opt out of a Hobbesian or Lockean or Rousseauian social contract once it comes into play? On the contrary, if there is one thing that social contract theorists of all stripes have in common it is this: they do not allow anyone the right to opt out of the social contract once it is formed!

D. Lastly, regarding the fourth element, an agreement is void and unenforceable if its purpose or subject matter is immoral, fraudulent, or against public policy, or if injures a third party. On this note, what if the so-called “social contract” were better seen, not as a legitimate deal among equals to keep the peace, but as just a glorified form of extortion: your liberty or your life!

Point of order: However the substance of the so-called “social contract” is described (i.e. as extortion or a legitimate deal), my tentative observations above are just a short sketch of a more formal paper that I am working on. In the meantime, I will conclude my series on “Social Contracts and the Law” with one last observation (for now): the term “social contract theory” is a misnomer to the extent it implies a master or single “social contract” that all social contract theorists agree on. In reality, however, it is better to use the term “social contracts” (plural), for there are as many strands of social contract theory as there are social contract theorists! As a result, instead of assuming we are dealing with one composite or master social contract, each of these proposed social contracts must be scrutinized on its own terms.

Is the so-called “social contract” of social contract theory a valid or legally-enforceable agreement? At common law, the four key elements of a contract are as follows:

• Offer & Acceptance (Mutual Assent): A clear proposal by one party (offeror) and an unconditional agreement to its terms by the other (offeree), showing a “meeting of the minds” or shared understanding.
• Consideration: Each party must give up something of legal value (a promise, an act, or refraining from an act) in exchange for the other’s promise or performance.
• Capacity: Parties must be legally competent (e.g., not minors, mentally incapacitated) to enter the agreement.
• Legality (Lawful Purpose): The contract’s objective must be legal and not against public policy.

What happens when we apply these four common law elements of contract law to the social contracts of Hobbes, Locke, and Rousseau? Stay tuned, for that is what we are going to do in my next post!

This past weekend I concluded my series on the paradox of politics, which I began in October of this year. Among the many political theorists we surveyed were Thomas Hobbes, John Locke, and Jean-Jacque Rousseau, all of whom are deservedly famous for developing a strand of political philosophy known as social contract theory. Although this influential political theory has many variants (see here, for example), a common thread is a fictional collective agreement or “social compact” in which individuals in a state of nature consent, either implicitly or explicitly, to surrender some, or even all!, of their natural liberties and freedoms to the government in exchange for protection, order, and the maintenance of property rights. Although social contract theory has played a pivotal role in modern political philosophy, does good political philosophy make for bad contract law? More specifically, what happens when we view social contract theory from a purely legal or common law lens? What, in a word, is the legal status of the social contract, and does the answer to this question depend, in turn, on whose social contract we are talking about? Would any of the fictional social contracts postulated by Hobbes, Locke, or Rousseau, for instance, be legally valid or enforceable under modern contract law doctrines, and if so, what would constitute a material breach of the social contract, and what would the proper legal remedy be? These are just some of the questions that I will explore starting tomorrow (17 December).

Shout out to my youngest daughter, Adys, for introducing me to Laufey’s music!

I will begin a new series of blog posts in the next day or two. In the meantime, here is a compilation of my previous 12 posts on the political theories of Rousseau, Rawls, and Nozick:

1. Rousseau recap
2. Rousseau’s god
3. Sparta or Athens?
4. Rousseau’s sleight of hand
5. Rawls preview
6. Beware of Rousseauian wolves in Rawlsian clothing
7. Beware the tyranny of Rawlsian justice
8. Rawls’s empty idea of equal liberty
9. Nozick’s takedown of Rawls’s difference principle
10. Nozick’s slam dunk: the Wilt Chamberlain argument
11. Nozick’s sandcastle
12. Political philosophy as art

“We are all libertarians …” –Dr. Julia Maskivker

Although Nozick’s valiant pincer movement against Rawls is vulnerable to counter-attack (as we saw in my previous post), Nozick is right about two things: (a) liberty matters, and (b) any attempt to achieve equality — whichever metric we use to measure equality — will come at the expense of liberty. To conclude (for now), I would only add the following additional observation: any attempt to achieve a well-ordered society (“law and order”) will also come at the expense of liberty. As a result, the $64 question is, how much liberty are we prepared to give up in order to achieve other worthy goals, such as equality, safety, or “justice”? And more broadly, is the law-liberty dilemma a “soluble” problem?

My tentative conclusion is, no it is not. Everyone (and every group) must decide for itself how much liberty he (or in the case of a group, it) is willing to trade off in exchange for equality, safety, etc., or vice versa, how much equality, safety, etc., one is willing to trade off for liberty. That is the paradox of politics in a nutshell, and as I see it, there is no scientifically “falsifiable” answer (in the Popperian sense) or single solution to this question. It’s all a matter of preferences, or perhaps aesthetics.

And on this note (aesthetics), I like to compare the great minds I have surveyed thus far — Hume and Smith, Locke and Nozick, Rousseau and Rawls — to the “Old Masters” of our Western art tradition. By way of illustration, just as many accomplished artists from different eras — Caravaggio, El Greco, and Gauguin come to mind — have painted the same pivotal moment in the life of Jesus in different ways, the famous “Agony in the Garden of Gethsemane” that took place between the Last Supper and Jesus’s arrest, so too have the great minds of political philosophy presented their own original portraits of liberty.

For Nozick, for example, liberty is the absence of coercion or interference from others, especially the state. For Rawls, it is the first of his two principles of justice: “an equal right to the most extensive basic liberty compatible with a similar liberty for others.” And for Rousseau, it is obedience to the general will. Yes, we are all libertarians, but how much? Which of these competing conceptions of liberty is the “right” one? For my part, I am inclined to agree with Nozick. Rousseau’s general will is too dangerous, while Rawls is just a Rousseauian wolf in classical liberal clothing. Nozick’s nightwatchman state is not just the lesser evil; it is my aesthetic ideal.

“Individuals have rights, and there are things no person or group may do to them (without violating their rights).” –Robert Nozick

Thus far (see here and here), we have presented the first flank of Nozick’s powerful pincer attack on Rawls: the Wilt Chambelain Argument. Today, we will scrutinize his other flank: the Side Constraint Argument.

In summary, “side constraints” impose strict limits on what we can and cannot do: they are absolute and inviolable Kantian moral rules (such as “don’t kill the innocent”, “don’t steal”, etc.) that prohibit any individual or group, including anyone in the government, from taking or redistributing any “holdings” that have not been acquired unjustly. Side constrains are thus absolute and inviolable because they act as a bright-line barrier or moral boundary: we are not allowed to violate these Kantian moral rules under any circumstances, even if violating them would promote more utility on balance or achieve a worthy goal (like saving more lives). [1] (N.B.: Footnotes are below the fold.) But even if you are a good Kantian, Nozick’s Side Constraint Argument is vulnerable on several fronts.

(Before proceeding, it is worth noting that Nozick would extend the protection of this absolute and inviolable Kantian barrier to non-human animals and that his argument for doing so is a highly creative and ingenious one: Nozick asks us to imagine the possibility of an alien race of “superbeings” who “stand to us as it is usually thought we do to animals” (Nozick, ASU, p. 45, emphasis in original). In other words, even if humans are morally superior to animals, moral side constraints should apply to human-animal interactions as they do to human-human interactions, for if there were such an alien race of superbeings — like the Vulcans in the fictional Star Trek sci fi series — and if they were to ever come into contact with us, wouldn’t we want them to follow Nozick’s side-constraint view of morality in their dealings with us? [2])

Putting aside Nozick’s extension to non-human animals (what about insects, plants, or simple singled-celled organisms, for example?), I am obliged to point out some additional soft spots in Nozick’s second flank. In brief, Nozick is vulnerable to counter-attack on several fronts. One is the source question: what is the ultimate source of his moral side constraints? The other is the content question: what do these moral rules consist of? Are these constraints limited to mere non-aggression, for example, or do they impose an affirmative duty to help the poor or rescue persons in peril? In short, we still have to determine the source and pinpoint the content of Nozick’s side constraints. Alas, here is where Nozick’s second flank, like an elaborately-carved sand castle against the tide, begins to collapse.

Let’s consider the content question first. Above and beyond Nozick’s paradigmatic moral rule “don’t kill the innocent”, what else do these side constraints consist of? For Nozick, these side constraints are limited to mere “non-aggression” — or in Nozick’s own words (ASU, p. 33), “the existence of moral side constraints … leads to a libertarian side constraint that prohibits aggression against another” — i.e. abstaining from the use of force, from theft and fraud, and from enslaving others. [3] Nozick does not, in other words, impose an affirmative duty to help the poor. But why does Nozick curtail his otherwise attractive picture of moral side constraints this way? [4] Also, even if we accept Nozick’s limiting principle (side constraints = non-aggression), how should we define “aggression”? Are surveillance cameras, for example, a form of aggression? [5]

Now, let’s consider the source question. Aside from “because I say so”, what is the ultimate source of Nozick’s side constraints? For Nozick, the source of his side constraints is based on our “moral agency” and our ability to plan for the future. [6] But if moral agency and the ability to make future plans are the source of Nozick’s side constraints, this grounding ends up undermining his defense of animal rights, since it is debatable whether non-human animals ponder the meaning of their lives or have any moral agency themselves. (After all, what other non-human animals, aside perhaps from beavers and octopi, are able to formulate long-term plans?) Worse yet, Nozick not only undercuts his defense of animal rights; he also neglects the social dimensions of human life (e.g. family, church, village, etc.), for in reality it is not “I” in isolation or “me” acting alone who gives meaning to my life; it is my relationships with others that give meaning to my life. [7] However hard we may try, we don’t give meaning to our own lives; others do!

But the main problem with Nozick’s Side Constraint Argument is this: it is impractical and dogmatic. That is, even though side constraints are supposed to be limited to non-aggression, the problem is that Nozick defines the concept of harm so broadly that his non-aggression principle becomes too inviolable and too absolutist to be of any practical use. To see why, let’s return full circle to Nozick’s Wilt Chamberlain Argument. According to Nozick, any attempt to tax Wilt Chamberlain’s earnings would be a form of unjustified state-sanctioned violence in contravention of the non-aggression principle! Why? Because, for Nozick, government taxation is worse than theft; it is a form of forced labor. After all, if the government can’t force you to give up x hours of your personal time per week to help the needy, then why does the government have the right to take the equivalent of x hours of your weekly paycheck to produce the same result? [8]

In short, if side constraints prohibit taxation, then how are essential public goods like courts, cops, and the common law to be financed? Nozick’s famous answer to this question is the “nightwatchman state”, i.e. a minimal government limited to enforcing contracts and to protecting people from force, theft, and fraud. But this formulation poses as many line-drawing questions as it answers! Should, for example, a contract for the purchase and sale of animal meat be enforced? After all, Nozick himself would extend his non-aggression principle to our treatment of non-human animals. If so, what has happened to the value of liberty? Also, how should “fraud” be defined? Does the prohibition against fraud include an affirmative duty to disclose all relevant information? More broadly, how many policemen, soldiers, and wardens should the nightwatchman state hire? How many surveillance cameras, if any, are consistent with the concept of liberty?

Are we thus back to where we started when I began this series on the paradox of politics? I will conclude my series with some final observations (for now) about the law-liberty dilemma in my next post.

To pick up where I left off in my previous post: Robert Nozick’s “Wilt Chamberlain Argument” is a devastating takedown of the difference principle. To see why, recall Rawls’s main motivating rationale when he wrote A Theory of Justice, i.e. the reason why he thinks social inequality is unjust unless it somehow works to the advantage of the least-advantaged members of society:

Those who have been favored by nature, whoever they are, may gain from their good fortune only on terms that improve the situation of those who have lost out. The naturally advantaged are not to gain merely because they are more gifted, but only to cover the costs of training and education and for using their endowments in ways that help the less fortunate as well. No one deserves his greater natural capacity nor merits a more favorable starting place in society. (Rawls, A Theory of Justice, p. 87, reprinted in Cohen 2018, p. 697)

In other words, our social status is largely a result of luck, especially the cards we were dealt with at birth. We cannot control, for example, who are parents are. Nor can we control in which country we are born in or whether we are born healthy or with a disability. But these are precisely the variables in the genetic lottery that determine our social status, i.e. how much our good or bad fortune we will have in life! [1] The genius of the Wilt Chamberlain Argument is that Nozick accepts this genetic lottery argument at face value. After all, the fact that Wilt Chamberlain was such a great athlete was, in large part, a result of his good luck in the genetic lottery. [2]

Furthermore, Nozick’s Wilt Chamberlain Argument is simple, intuitive, and irrefutable:

Let us suppose … everyone has an equal share [of society’s wealth] …. Now suppose that Wilt Chamberlain is greatly in demand by basketball teams, being a great gate attraction. (Also suppose contracts run only for a year, with players being free agents.) He signs the following sort of contract with a team: In each home game, twenty-five cents from the price of each ticket of admission goes to him. (We ignore the question of whether he is “gouging” the owners, letting them look out for themselves.) The season starts, and people cheerfully attend his team’s games, they buy their tickets, each time dropping a separate twenty-five cents of their admission price into a special box with Chamberlain’s name on it. They are excited about seeing him play; it is worth the total admission price to them. Let us suppose that in one season one million persons attend his home games, and Wilt Chamberlain winds up with $250,000, a much larger sum than the average income and larger even than anyone else has. Is he entitled to this income? Is this new distribution D2, unjust? If so, why? (Nozick, ASU, p. 161, reprinted in Cohen 2018, pp. 716-717)

Thus the Wilt Chamberlain Argument not only shows why inequality is inescapable, i.e. why most pattern-based or end-state distributions are unstable; it also shows why such inequality is totally consistent with social justice! (ASU, pp. 160-164) To see why, let’s walk through each step of Nozick’s argument:

1. Everyone begins at time T1 with an equal share of society’s wealth.
2. As a result of Rawls’s genetic lottery, one person, Wilt Chamberlain, turns out to be a super-talented basketball player.
3. Fans want to see Chamberlain play ball and freely pay him an extra 25 cents per ticket to watch him play during the regular season.
4. At time T2 (the end of the season), Chamberlain ends up with $250,000 more than any other player in the league, while the fans who paid the extra 25 cents per tickets are collectively $250,000 poorer.
5. The last step in Nozick’s argument is a rhetorical question: is not the resulting inequality from Chamberlain’s contract “just” or fair? This is a rhetorical question because how can it not be? After all, if enough people freely want to pay an extra amount of their money to see their favorite player, then why shouldn’t the player be able to keep that extra money?

Alas, there are two possible blind spots with Nozick’s slam-dunk argument: what if the team decides to breach its contract with Wilt Chamberlain? In that case, Chamberlain could resort to self-help (not play the following season unless he is paid), or he could sue his team in a court of law to enforce his contract. [3] Yet courts are expensive to operate, and contract law (whether based on model legislation like the UCC or common law principles) doesn’t just arise out of thin air. Isn’t it “just” or fair, then, that Wilt Chamberlain be required to pay for this legal infrastructure out of his earnings?

Also, why doesn’t Wilt Chamberlain have a moral duty to share some fraction of his earnings with some less fortunate souls, say poor kids who would like to play basketball or with disabled children who are unable to play basketball altogether? Here, however, is where the second flank of Nozick’s pincer comes into play: Side Constraints. (To be continued …)

[1] Rawls goes even further: like a good Communist, he assumes that “the distribution of natural talents [is] a common asset ….” (Rawls, Theory of Justice, reprinted in Cohen 2018, p. 696)

[2] Of course, Wilt Chamberlain’s playing ability was also due to his own efforts, but let’s assume for the sake of argument that Rawls’s genetic lottery is the determining factor in Wilt Chamberlain’s greatness.

[3] Or, in the likely event the contract has an arbitration clause, Chamberlain could go to arbitration.