Disentangling Legal and Economic Concepts

by Stephan Kinsella on August 16, 2025

Dualism, Monism, Scientism, Causality, Teleology: Hoppe, Mises, Rothbard
The Great Fractional Reserve/Freebanking Debate
Fractional-Reserve Banking, Contracts of Deposit, and the Title-Transfer Theory of Contract
On Coinbase, Bitcoin, Fractional-Reserve Banking, and Irregular Deposits
UK Proposal for Banking Reform: Fractional-Reserve Banking versus Deposits and Loans
Musings on Fractional-Reserve Banking in a Bitcoin Age; Physicalist Shock Absorber Metaphors
Michael S. Milano, “Privacy and Fungibility: The Forgotten Virtues of Sound Money,” Mises Wire (07/05/2025)

It’s time someone do this. I was hoping someone else had or would, but I’ve given up finding anyone comprehensive and solid on this. I guess I’ll have to do it, if I find time. Maybe I can coax Bob Murphy into doing it with he: I am decent on economic methodology; he is deeper and better. We are both solid on austro-libertarianism: he is a libertarian, and I am the libertarian. And he is probably decent on law, and I am deeper and better. I may approach El Bobborino about this at some point. Or maybe Hülsmann or Hoppe. Or Konrad Graf. ¹

What I am thinking of something that has increasingly dawned on me over the years, and I’ve had to keep returning to it to help clarify some matter that confuse lots of people. I’ve had to do this with many issues over the years, for example in IP and contract reasoning, to explain why selling does not require owning (and owning does not imply the right to sell either); to understand this, you have to distinguish between descriptive economic concepts, like sale, exchange, possession (what Mises calls catallactic or sociological ownership), and normative/legal ones like (legal) sale/exchange/contract, and (juristic) ownership. This is necessary to develop a more coherent understanding of property rights and applications like intellectual property, contract theory, and so on.

In a way this endeavor is akin to Mises’s dualism which distinguishes between action (teleological, purpose-oriented) and behavior (causal), and which also recognizes different methods of analysis and study appropriate to each demesne of phenomenon—apriori analysis and deductivism vs. aposteriori analysis, inductivism, and empiricism—which also recognizes the epistemological priority of the former over the latter (physicists and causal scientists have to presuppose apriori truths to engage in causal enquiry—such as the assumption of time-invariant causation itself, as well as the scientific method itself, both of which are not subject to falsification or testing), ² as well as significant differences therebetween—apriori truths are undeniably true and apodictic (the universe exists; there is consciousness and a difference between observer and external reality; humans act; humans employ causally efficacious means to achieve ends; other categories of action like opportunity cost, profit and loss, value/demonstrated preference, time preference, and so on) but although they are synthetic and real and not empty, they tend to be very bare or sparse or if-then/ceteris paribus, requiring contingent empirical assumptions to make them useful and interesting an applicable to the real world, while aposteriori and empirical knowledge about facts and causal laws is always less certain (apodictic) and subject to falsification.

Bohm-Bawerk seems to gotten closer than anyone to realizing this is a real issue that needs to be sorted out, but the task is not complete.

You people better hope I live a nice long life so I am able to find time and motivation to turn my gaze to this and fix yet another problem area in austro-libertarian theory. ³

Anyway some things that need to be tackled are mentioned in Areas That Need Development from Libertarian Thinkers, such as negotiability, the enforcement of contracts and what “IOUs” mean (for that we need a reformed theory of contract, hinto schminto “The Title-Transfer Theory of Contract”), and an improved understanding of the distinct but equally important roles of both scarce (conflictable) ⁴, causally efficacious means of action, on the one hand, and knowledge, on the other; ⁵ economists, including Austrians, have given short shrift to the latter (now I know how the Holy Spirit feels), and they even have downplayed the crucial significance of the economic concept of scarcity; it seems to me that only Mises, and then Hoppe, fully integrated it into his economic and legal-normative-libertarian-political thinking, which is why he was able to see the problem with the idea of IP right way whereas Rothbard mangled it.

More elaboration to come. But for now, see: Eugen von Böhm-Bawerk, “Whether Legal Rights and Relationships Are Economic Goods,” George D. Huncke, trans., in Eugen von Böhm-Bawerk, Shorter Classics of Eugen von Böhm-Bawerk (South Holland, Ill.: Libertarian Press, 1962 [1881]), p. 57 et pass.; see also Gael J. Campan, “Does Justice Qualify as an Economic Good?: A Böhm-Bawerkian Perspective,” Q. J. Austrian Econ. 2, no. 1 (Spring 1999): 21–33, p. 24.

Kinsella, Legal Foundations of a Free Society [LFFS] (Houston, Texas: Papinian Press, 2023), “Selling Does Not Imply Ownership, and Vice-Versa: A Dissection,” pp. 279–81, “On Libertarian Legal Theory, Self-Ownership and Drug Laws,” p. 640; and distinguishing juristic from economic phenomenon, see idem, “The Title-Transfer Theory of Contract” (“contract law may be considered to be the legal analogue or normative support for the economic institution of exchange”).

This plays into issues like not only the nature of contracts are title transfers and not as binding promises or obligations, and then the related issue of how contractual “rights” should treated both legally and economically; and related issues like ownership of bitcoin, ⁶ as well as ownership of ideas/knowledge (IP). And issues like the difference between economic exchange and legal exchange, mirroring the distinction between possession and ownership (as normative support for possession), ⁷ and so on.