I discussed the libertarian non-aggression principle with Tom Woods on his show today, Episode 566:
Ep. 566 Why Are Some Libertarians Rejecting the Nonaggression Principle?
It’s become fashionable in libertarian circles to ridicule the nonaggression principle. Stephan Kinsella and I speak in its defense. This one is long overdue.
I was a guest today on the Mid-Life Criss podcast, episode 4, produced by my friend Jack Criss, of BAMSouth. We discussed my IP views, anarchy, and a few related matters.
“Stephan and I discussed his path to anarchism, the changing labels for the liberty movement, artificial intelligence, religion, world government, and prospects for the future of liberty.”
I discussed legislation and law with Tom Woods on his show today, Episode 557:
Ep. 557 The State’s Corruption of Private Law, or We Don’t Need No Legislature
Ever since we learned in school how a bill becomes a law, we’ve absorbed the idea that it’s normal for law to be imposed from the top down. But it’s possible, and indeed the historical norm, for law to emerge in a completely different, more libertarian-friendly way. Join me for a great conversation with Stephan Kinsella!
The State’s Corruption of Private Law, or We Don’t Need No Legislature
Stephan Kinsella, interviewed by Tom Woods
The Tom Woods Show, Dec. 17, 2015
Transcript
00:00:00
TOM WOODS: The Tom Woods Show, episode 557.
00:00:03
INTRO: Prepare to set fire to the index card of allowable opinion. Your daily dose of liberty education starts here, the Tom Woods Show.
00:00:13
TOM WOODS: Hey everybody. Welcome to another episode of the show. Stephan Kinsella is back with us again. There are so many episode topics I could cover with Stephan Kinsella, and today we’re talking about law and legislation. Is it possible to think of law other than as something that’s imposed from the top down by a bunch of legislators on society? That’s what we want to talk about because it’s important, has important ramifications, and I thought I haven’t done it yet. Doggone it; it’s episode 557. Let’s do it.
00:00:48
Stephan Kinsella is a libertarian legal theorist. He has pioneered in the study of intellectual property. I’m going to link to all kinds of material about Stephan at tomwoods.com/557. You can find out more about him at stephankinsella.com. Let me remind you because there’s been a little bit of confusion. I am giving away a free autographed book. You can look through my book selection at tomwoods.com/books. I am giving away a free autographed and personalized book to people who buy gift subscriptions to libertyclassroom.com this year, only for gift subscriptions.
00:01:28
It’s like when you go to Chili’s, which I don’t recommend, but if you go to Chili’s and you buy a $25 gift card, they give you a $5 gift card, it’s that kind of principle. So if you buy a gift, you get something for yourself. So I probably won’t be able to get it to you before Christmas, so don’t think of it as a gift to give to your recipient. You’ve already given your recipient a gift. It’s enough giving for one person. Keep the book for yourself. So just get the subscription at libertyclassroom.com and just drop me a line at tomwoods.com. Tell me what book you’d like, give me your address, and I’ll mail that baby right on out to you. All right, let’s talk now to Stephan Kinsella. Stephan, welcome back to the show.
00:02:08
STEPHAN KINSELLA: Thanks Tom, glad to be here.
00:02:09
TOM WOODS: This is a topic I get but I don’t fully get, and I say that as somebody who’s been a libertarian for a long time, and I want you to help us flesh out this topic of law and legislation as two different things that if we say that we don’t like legislation that doesn’t mean we don’t like law. What do these things mean? Can you have law without a centralized lawmaker that hands down authoritative statements that bind everybody in society? Is there another way of thinking about how law comes about? That’s what we want to look at today. We’re going to have a lot of links on the show notes page, so if this topic interests you, tomwoods.com/557 will have a whole bunch of stuff, some stuff by Stephan Kinsella, some stuff by Bruno Leoni and others.
00:02:57
All right, let’s set the stage here. Let’s bear in mind that obviously as anarcho-capitalists we don’t see a role for a legislature to begin with, but that’s not the central claim that’s being made here. I mean F.A. Hayek was not an anarchist, and yet he still spoke very favorably about what we might call judge – not judge-made law because that again sounds constructivist, but judge-discovered law. Give me the two-minute bird’s eye view, and then we’re going to take it apart.
00:03:29
STEPHAN KINSELLA: Well, let’s go back to what the term law means and why we use law because the word law is used in the physical sciences, in physics, and it’s used in the social sciences as well in different ways. I was just reading – listening to a great speech by a professor at Oxford about the famous scientist, James Clerk Maxwell, who’s a – I’m an electrical engineer background, so all double E’s, no Maxwell’s equations. So Maxwell is like one of the top brilliant natural scientists of all history really. I mean he’s up there with Einstein and Newton.
00:04:06
What he came up with in the 1800s was incredible. He unified electromagnetism and light theory, and his father wanted him to be a lawyer, and he said, dad, I’m going to pursue another kind of law. So I kind of like that because it shows that there’s this unifying idea of laws that we all search for in different realms of intellectual inquiry. But the physical laws are one thing. They’re physical laws you’re trying to discover according to the scientific method. And then we have laws, like what people talk about normally as it’s against the law to do A, B, and C.
00:04:47
Nowadays, because we have a heavily, legally positivistic culture and I can explain what that means, most people nowadays think in those terms, so they think of a law as a piece of paper with words on it that some legislature has written down what the law is just like people think of contracts, and I think we talked about this recently. They think of contracts as a piece of paper with words on it that announce what the contract is. So they identify the contract with the piece of paper. They identify the law with what’s written down in a statute. That’s what legislation is.
00:05:26
And sometimes you’ll hear the more simple-minded types talk about the law books, the law books. You’ll hear these common law court nuts or the income tax conspiracy types who will say that it’s not illegal to pay income tax because show me the law books. Show me the law. So they’re equating in their minds law with what’s written down on a piece of paper that was published by some authoritative body, the legislature, or the king or maybe God or maybe the Bible, whatever. So they’re thinking of law that way.
00:06:01
But this is not – and I think they think of that now because – and they didn’t used to, Tom. And you know a way lot more about history than me, so you might be able to fill in some of my meanderings or gaps on this issue. But the approach I like to take is this. Law in terms of legal law, in terms of normative rules that humans come up with to help us get along with each other in society, and basically all laws are property rights that determine who can use resources that we could otherwise conflict over.
00:06:35
So the question is what should the law be, which means who should the owner be? Who should win in this dispute? In older times, the conception of law was that there’s a sort of natural justice. There’s a background of what we call higher law, and we’re trying to do justice. So you have a judge or a court or a tribunal or an arbitral tribunal, someone who is appealed to because of their wisdom or their place in society, and the two or more contestants who have a dispute over who basically gets to own a given resource that’s in dispute – who’s going to get to own it?
00:07:12
And then the job of the judge is to do justice, that is, to try to find the right answer, and they try to do this. And over time, a body of law develops in a decentralized fashion. Now, this happened historically, Tom, and the two major periods would be in the Roman law period roughly from -500 to 500 – from -500 A.D. to – or B.C. to 500 A.D. like the thousand-year period of the German – I’m sorry, the Roman empire. And then the second period would be the English common law, which started developing around – I think probably around 1000, something like that. And it borrowed partly from the Roman law, which was preserved in part because of the codifications by Emperor Justinian and preserved I think by the Muslims and the Arabs for quite awhile during the Dark Ages.
00:08:06
So basically we have these two great systems in the world of law – the Roman law and the English common law. They are both systems which developed in a piecemeal, decentralized fashion, principles of law which were reached by an attempt by the people finding the rules to do justice. It doesn’t mean it’s perfect. It doesn’t mean it wasn’t tainted by state interference from time to time, but at least it was a system that arose out of the practical necessity of trying to resolve disputes in a fair manner.
00:08:42
So that’s what we have, these two big legal systems in the world: the common law, which is basically in place in England and its various commonwealths and the United States, and the civil law, which is the modern version of the Roman law in the European continental system. Other systems would be Sharia law and the canon law of the Roman Catholic Church, and the law merchant of the, say, 700 years ago, and international law is another big field. But the two big fields of private law in today’s modern world are common law and Roman law.
00:09:24
TOM WOODS: All right, let me ask you if this parallel works because in terms of how people understand these two models. When I think about socialism and capitalism and the extent to which people understand how they work, I can see how socialism in the classical sense of state ownership of the means of production is an easy system to understand. The state just directs production, period, simple. It’s not so easy for the average person to understand how capitalism works, the price system, the structure of production, the decentralized nature of it, the role of entrepreneurship, the role of prices. That’s more complicated for the average person.
00:10:01
They can see how order is imposed in the economy by one single entity in the form of socialism, but they don’t really understand how it works with capitalism. Well, likewise, with law in society, I think it’s easy for people to understand how legislation works. Lawmakers, so called, get together. They issue some legislation. They pass it into law, and it is imposed on all of us, whereas the decentralized kind of law that you’re talking about – it seems like it’s a series of decisions in particular cases. How does that go from a series of decisions in particular cases to general principles that we live by?
00:10:41
STEPHAN KINSELLA: Well, there’s partly a role of legal scholars here, so on the side you have the legal community, the law professors, the legal scholars who are analyzing the actual ongoing results of all of these decentralized decisions. And they try to summarize them and provide guides for them and to explain what’s going on. And when they notice inconsistencies in the law, they point it out and they basically nudge and they give criticisms, and these are taken into account by future judges and courts when they’re making further laws. So there’s sort of a feedback effect, so you’ll have a respected treatise by Coke or by – and nowadays we have the American Law Institute restatements of the law.
00:11:28
And they will basically codify what’s gone before in non-legislative fashion. It’s just a book, but it attempts to codify what is basically the essence of the law that’s developed, and they will suggest changes. They’ll say there’s a discrepancy here. There’s an unfairness here. And sometimes that will get picked up in the future, and on occasion, legislation will come in, and they will adopt those changes. The thing that’s happened is that, in the modern world – Hans-Herman Hoppe talks about this in his writings on democracy. He talks about how there are different institutions in society that the modern state, especially the democratic state, tries to co-opt and take over.
00:12:10
You have communication. You have defense and the courts and justice, education, and you – and welfare, and you have law. And that basically means that when we have a democracy, you start having more and more law produced in the – by democracy. Either the people vote, or their representatives just decree things. And over time, you have this body of private law, in Roman law or in the common law, and when I say Roman law I also mean the modern civil law in Europe. The civil law basically was started around 1800 when Napoleon started codifying – he got legal experts together to codify in the form of civil codes the existing principles that had been developed over centuries with Roman law and with European law in between the time of the end of the Roman empire and the time of the beginning of the modern codifications.
00:13:15
It was basically an attempt to clear away the clutter, scientifically codify the law, and make it legislation too. So you had that aspect of it, which is bad. But it was at least an attempt to codify what had gone before. So you have – the situation now is we have a private law system, which is based upon these organically bottom-up, decentralized legal decisions determined by legal experts and by neutral parties who were trying to do justice, trying to do the fair thing. And over time, a body of rules emerges, and with the help of legal scholars, it gets cleaned up and sometimes revised.
00:13:57
But what’s happened since the emergence of democracy is that we’ve begun to have a sea of legislation, just legislation is just being issued left and right over the last 100 or more years by the modern western democracies, and they gradually encroach upon the territory of the existing private law. They override it, and the law starts to take the form of just the edicts and decrees by a committee. Even the US Constitution, which was a general document and which was based in part upon a lot of evolved principles from the British constitutional system, is still a piece of legislation as is the entire federal code as is the statutes of the states. And these statutes – and in England this is happening too.
00:14:47
There’s more and more legislation that invades the territory of the common law, and what that means is when someone goes to court to ask a judge to determine the outcome of this case, this dispute, in the older system, the judge at least was oriented towards trying to do justice. So he would look at precedent, he would look at what the law had developed before, and he would try to do justice. And he might make new law when he did that, or he might just respect old law when he did that.
00:15:18
But nowadays, the job of the judge is not to do justice. The judge is more of a functionary. He’s like a civil servant whose job it is to interpret words written down by another branch of the government whether those words are just or not. So, for example, the big debate recently was over Obamacare, which is a purely – which is a pure creature of statute. It’s just a statutory creation just like the Social Security Act and the Immigration Act and the Americans with Disabilities Act, all these statutes that could not exist without legislation and statutes.
00:15:58
And so the question came to be to interpret some of the words in that statute about the state exchanges and that – the whole legality of this Obamacare depended upon that. The judges had to make a decision. As John Hasnas points out in his great classic article “The Myth of the Rule of Law” where he uses some of the reasoning of the crits, the critical legal studies guys, who claim that a lot of law is really oriented towards achieving goals that are not really stated on the surface. They’re not about justice.
00:16:35
His point is that a lot of law – there really is no objective answer. When the judge is faced with construing a case, and this is especially so when he’s interpreting legislation. If he’s trying to do justice in a common law context, he can resort to justice because that’s his job, and that’s the format of the common law that’s arisen. It was trying to do justice. But when his job is just to interpret words, then you can’t really blame the judge for just either punting or making an arbitrary decision or just going with what the words say, which may be totally unjust.
00:17:12
If the law says that the minimum sentence for the following non-crime is 35 years in prison, the judge has little discretion to do anything about that. So his job is not to do justice anymore. It’s just to interpret words written down on a piece of paper that came from another committee in the state.
00:17:30
TOM WOODS: All right, I want you to help me flesh this out in my mind here. I’m going to give you an example of – let’s say we have a couple of different judges, and let’s say we’re not dealing with centuries and centuries ago, but we’re dealing with a society that is run according to these sorts of principles today. Let’s imagine a society today, and in society today, of course, there are competing theories of justice, and there are competing views held by all different people. And I think most people who go through official legal training today hold views of justice that are completely removed from my own.
00:18:07
So we’ve got two judges, and one of them says that a person who is working for an employer and is earning $3 an hour is, just from the point of view of equity, being mistreated, and therefore, we can bring damages against the employer. Another judge says, hey, I have this case where somebody is being paid $3 an hour. This was a voluntary decision that improves the lives of both people, so I uphold this arrangement. How does a general principle binding us ever evolve out of this?
00:18:43
STEPHAN KINSELLA: Well, okay, so I would say first let’s contrast it to what’s going on now. In legislation, the legislature can just decree something. It doesn’t have to conform to reality. It doesn’t even have to be consistent with itself even. There could be inconsistencies. There can be vague terms, and often that’s done as part of the political bargain. They will – the Republicans and Democrats will intentionally agree on a vague term and punt it to the courts to figure it out later just to get the law passed.
00:19:10
Okay, so that’s the whole process. There’s no reason to expect that justice would arise from that. There’s no reason to expect that those legislated – those acts of legislation, those statues would embody justice. They might to the extent that they’re basically an attempt to codify what had been developed before. But if we look at the free market and the decentralized system, we have to imagine that we live in a somewhat of a free society and that the reason people go to legislate – sorry, go to judges or courts or arbitrators to resolve a dispute is because they have a preference for justice themselves.
00:19:51
They have a dispute, but they know they all have their own argument for their dispute, and they don’t want to have a war with each other. They want to live in some civilized fashion, so they’re going to try to do the reasonable thing, which is to submit their case to someone who is a neutral third party who can make a decision and so that they can go on with their lives.
00:20:15
That entire process supports and basically depends upon a more libertarian-ish view of the world because the only time you look for someone to resolve a dispute is when you’re opposed to disputes. And the only time you have a dispute is when you both want to use a scarce resource. So we basically have a propertarian conflict, and we have a desire on the parts of everyone – both parties, the court, and the community – that the right choice be respected. So the way these common law courts work is if you pick someone who makes crazy decisions, then, over time, he will be ignored and not – he won’t get repeat business. It’s almost an evolutionary thing.
00:21:01
So that’s part of it. Also, the nature of the common law and of the Roman law before it was that the discretion or the ability of the law finder was very limited. This is why you hear terms like – well, when you’re speaking out of turn in court. If – it’s called obiter dicta. If the judge, in the middle of the case, he’s deciding a case between John and James over who owns a cow, if he just has a paragraph in his opinion saying, and by the way, I believe that people should be taxed to support infirmities or something like that, that would be obiter dicta. It would not affect parties that were not parties to the case. It could not be general legislation, and if it was totally out of character, it would just be ignored by other judges.
00:22:00
These judges basically are trying to fit their decisions within the existing growing framework of justice that’s respected by everyone, and it does just happen to grow that way. If you look at the body of the Roman law that existed near the end of the Roman empire, or the body of the common law that existed at its height, it’s a really impressive series of practical attempts to do justice to work out ways that people can live with each other in a world of conflict. That’s the only way you could expect that it could be done. It could not be done when the state gets involved or when a committee of legislators just get together and announce their will.
00:22:39
TOM WOODS: All right, I want to ask you about what happens when, let’s say, there’s a new technology, like society wide that everybody uses. How could this type of system cope with that? We’ll do that after this message.
00:22:55
I’m going to tell you a little story, and it involves Murray Rothbard and me. When I was in college, I had to learn a lot of history on my own. It was not going to be taught in the classroom. Well, that’s a tall order for a young college student because how do I know what to study, where to study it, where to find what I was looking for? So, for instance, I wanted to know more about what happened to Robert Taft at the 1952 Republican convention. Had the nomination really been stolen from him by the Eisenhower people? Well, the next time I saw Murray Rothbard, I just asked him. What should I read about this?
00:23:29
And he said, oh, read Chesly Manly’s book, The Twenty-Year Revolution, a book only Murray Rothbard even knew existed. Now, most people can’t just go ask Murray Rothbard a question, and that’s why I created libertyclassroom.com so that you can learn the history that you should know. You can learn the economics that you should know, and have at your disposal a whole slate of pro-liberty faculty, ready to answer your questions, and teach you at your leisure. All our courses are downloadable for viewing or listening at any time you like.
00:24:04
You can learn US history from me. You can learn the US Constitution from Kevin Gutzman. You can learn Austrian economics from Jeff Herbener and, very soon, Bob Murphy, both guests of this program, and many other topics taught by many other awesome people plus so many other features. Never lose another debate. Maybe somebody should buy a subscription for that weasel, Michael Malice. So treat yourself this Christmas at libertyclassroom.com, and as I said, if you buy a gift subscription for somebody, I’ll also send you a free autographed book. Just write to me at tomwoods.com after you get that gift subscription, and I’ll send you whatever book you like, libertyclassroom.com, the history and economics they didn’t teach you.
00:24:47
All right, Stephan, I want to ask you. Let’s say we’ve got something like the internet, which completely revolutionized society. Doesn’t it seem as if it would be – I’m just playing devil’s advocate here, but doesn’t it seem as if it would be more efficient to have a centralized agency saying, okay, here are the rules we’re all going to abide by in using this new system? Doesn’t it seem like it would be slow and cumbersome? Would we have to all be standing around, waiting for the judges to reach a consensus haphazardly as cases are brought to them before we really know what the principles that we should be observing and using this technology are?
00:25:22
STEPHAN KINSELLA: Well, I see no reason to think that. First of all, as libertarians, our political system, our political principles are really pretty simple if you boil them down. It’s whoever owns a resource first has the better claim to it unless you made a contract with regard to it, in which case you can lose ownership, or if you harm someone else and you owe them compensation.
00:25:44
So those basic principles can help determine the ownership of resources, which is the only disputes there can be. As technology changes, there’s no reason to believe that these principles couldn’t adapt and be applied to new technological developments. In fact, that is what has happened in the past until the state stepped in and short-circuited it. So as a couple of examples – well, let’s take a recent example. In the 1980s, Bill Clinton, if I’m remembering my history right, approved a couple of laws that kind of froze the internet’s current system into place with this DMCA system, this takedown system that we have now, also with the safe harbor provision, which talked about ISPs, internet service providers.
00:26:35
Now it’s being used by YouTube and others and blogs, which no one knew about YouTube or blogs back then, but we’re kind of stretching these concepts to cover that. But the law is creaky, and it’s already out of date because it’s legislation, and legislation usually doesn’t have an expiration date except maybe I guess the security laws we have now have that luckily. But most legislation doesn’t have a sunset provision, so it’s going to last forever until it’s updated, and then they don’t usually update it in time.
00:27:06
So legislation is the problem that freezes things in place in the face of technological change, and we can think of tons of examples. The – at the dawn of the internet, common law was starting to evolve to take these things into account. There’s a case. I think it’s called Cubby v. CompuServe maybe from 1980s, and they – the courts were starting to use principles of common law trespass theory to analyze the right way to approach a case of a computer cyber hack, like if I hack into your computer, what is it? And so they were just using, stretching, bending, applying, analogizing the existing common law principles, and it was working fine.
00:27:56
I see no problem with that. Earlier in the 20th century, when the electromagnetic spectrum was discovered and it as realized it could be used for communications, people started broadcasting television signals and radio signals, things like. A common law was developing at that time that was going to – it was figuring out common law property rights in the electromagnetic spectrum, and this is detailed, by the way, in the great book by David Kelley and Roger Donway called Laissez Parler, Freedom on the Electromagnetic Spectrum or something like that. It’s one of David Kelley’s very nice little monographs.
00:28:39
But the FCC was created and came in and just monopolized everything and took it over, and now we have FCC with the fairness doctrine and all their other rules because they basically own the airwaves. They took it over, and they dole it out as they see fit, and they impose rules on the users, the major television networks, can’t have certain curse words, etc. because the government has expropriated the ownership of the airwaves themselves so – by legislation. So I would think that a better approach would be to let it develop according to the common law as it was doing just fine until the government intervened.
00:29:18
TOM WOODS: Wow. I don’t generally say that the guests – you are just hitting my questions out of the park, but I didn’t expect you to have such a good answer to that, to be honest with you, and I’m sorry if that comes out wrong. Stephan, how could you possibly have such a good answer? But it was pretty darn good. Now, earlier on, I made this comparison between socialism and capitalism, and I drew an analogy between legislator-made law and judge-discovered law in terms of how people understand how society works.
00:29:49
It’s easier to understand the centralized version than it is to see how the decentralized version could work, but I think the analogy can be taken even farther. And, in fact, in your article on this that I’m going to link to at tomwoods.com/557, you actually run with the idea of legislation itself as being a form of central planning.
00:30:09
STEPHAN KINSELLA: Yes. Now, that was an argument that Bruno – so Bruno Leoni was a brilliant Italian legal theorist, unfortunately murdered by one of his clients in his prime.
00:30:23
TOM WOODS: Is that what happened to him?
00:30:23
STEPHAN KINSELLA: Yep. When he was in his mid-to-late 40s, one of his clients murdered him, so very sad.
00:30:29
TOM WOODS: Wow. I didn’t know anything about that. Okay, so anyway, look at this. Look, you’re taking over the whole show here with all your insights. All right, go ahead.
00:30:35
STEPHAN KINSELLA: He stabbed him if I remember, but I’m not sure. Anyway, it was a shame because he was so brilliant. And what he did was he made an analogy between Hayek’s – the Hayekian version of the argument against socialism and made an analogy between that and legislation. So basically Hayek – you know the Misesian ideas that socialism can’t work well because you need a private – you need a free market in private property and trading of the capital resources to establish real free market prices, and those prices help us compare otherwise heterogeneous units, things that couldn’t be otherwise easily compared.
00:31:17
So it allows us to engage in economic calculation. It’s really a mathematical argument in a sense. Hayek built on that and sort of emphasized the role of knowledge and said that knowledge is tacit. A lot of things we know how to do we can’t explain to people, and – but when we act, that knowledge is embedded in sort of what we produce, and therefore it affects the prices. And so these price signals are kind of a way of conveying this tacit knowledge that otherwise couldn’t be conveyed and makes the economy work. That was Hayek’s spin on it, which I have some personal problems with, but I understand where he was going.
00:31:53
Leoni picked up on this and said that legislation is very much like that. Legislation is like central – it’s similar to central planning of the economy by a committee because it’s central planning of law by a committee. You have a committee that says here’s what the law should be. But because they can’t have the relevant information that’s tacitly spread across society, they can never make the right laws. I wrote that actually in my article, and I think that’s one of the things I would – I won’t say I retract, but I have backed off on it a little bit. I think I was a little bit too enthralled to the Hayekian version of the calculation argument, which I think is not as rigorous as I would like. I think there are some problems with it. There are some analogies that can be made, but we have to be careful how far we take this Hayekian knowledge problem and use it as a problem of legislation.
00:32:54
TOM WOODS: Well, given how radically different the system that we live under now is from what you’ve been talking about today, how does what you’ve been talking about today help us in any way? Can it help us to see our current situation more clearly? Is it something to shoot for? If so, how would we do that? Or is it just a pure intellectual exercise?
00:33:14
STEPHAN KINSELLA: Well, I think it’s good to – I mean legal theory is always helpful in terms of classifying the existing legal structure of society, and so I do think we need to treat legislation differently than the result of more spontaneous or common law-type processes. So we need to understand it, for one thing. And in terms of policy proposals, once you understand this, you develop basically a general hostility towards legislation as the way to make or to discover or find law. It would be advocating for a return to a more decentralized or common law system or even arbitration system, and to limit the power of legislation. So, for example, you could propose – we can advocate for a sunset provision where every piece of legislation that’s introduced has to automatically expire after a certain time unless it’s renewed.
You could have super-majority requirements. You could say that only legislation that’s a super majority. A more radical proposal would be something like this. Like in the US system, we have a constitution, which is a piece of legislation in a sense, but it’s at least general and somewhat noble in its goals. And you have a court who’s interpreting that, the Supreme Court and the federal courts, which is not common law exactly because they’re interpreting words on a piece of paper. They blend in justice concepts when they need to, but still they’re just interpreting it.
00:34:39
What you could do is you could say the job of Congress is to pass legislation, number one, that only affects the inner workings of the state. It’s not like replacing or supplanting private law that governs the relations between people. That could be more of a common law process, or the court could be – the legislature could be limited to passing a law that overturns a given court decision. So their job would be let’s say the Supreme Court comes up with Roe v. Wade or some decision that everyone is outraged by.
00:35:16
Well, you could let a majority of the state legislatures or the Congress, some kind of system like that – I think Marshall DeRosa actually proposed this in his great book when he talked about the Confederate constitution. You could say that the states – if three-fourths of the state legislators certify that they want this decision overturned, then that Supreme Court decision would be null and void. So it’s a type of nullification really, and it’s a clever way. It limits the legislature to just overturning bad judicial decisions, so that would be – instead of allowing them to write the law, they would be able to guide the process of the development of this quasi-common law that the federal courts engage in by just striking down the really bad or egregious decisions of the federal courts.
00:36:03
TOM WOODS: So it turns out that this line of discussion really can inform our current views of what direction we should be moving in and what would be good reforms, what would be the right way to go. So it’s not just an empty, speculative, intellectual discussion. So- and by the way, I love empty, speculative, intellectual discussions, nothing wrong with those, but it’s interesting that this really can bear some fruit; stephankinsella.com is your website. And you sent me a whole bunch of links today for people who want to read more about this, and they’ll all be at tomwoods.com/557. Is there anything left unsaid that, if said, would clear any remaining questions up?
00:36:44
STEPHAN KINSELLA: Just – maybe just two things. Number one, I would recommend – I don’t have time to read it now, but I have a blog post, which you can link to, about James Carter, this lawyer in 1884 in New York who was opposing the legislative codification of the common law of New York. He’s got a great quote, which is just great. So you’ve just got to read that. It’s in my blog post.
00:37:03
The other would be to be aware that, in addition to legislation in America, we have this huge thing called regulations, which are emitted by federal agencies, which are like quasi-legislation. And the length of the federal – the code of federal regulations – I lost count. It’s like 22,000 pages or something or maybe it’s more now, and they’re coming out all the time. So legislation is a problem in its pure form and also in its bastardized form where the legislature basically deputizes these agencies to emit quasi-legislation, which is sometimes even worse, and it sometimes had criminal implications as well. So we need to be ware – be wary of legislation and regulations, which are sort of a spin-off of that.
00:37:57
TOM WOODS: All right, and we will leave it off there. So tomwoods.com/557 is where you should go for all the stuff that we’ve been talking about and for links to Stephan, your website, stephankinsella.com. We’ll get your – are you on Twitter?
00:38:11
STEPHAN KINSELLA: I am on Twitter.
00:38:13
TOM WOODS: All right. Then in that case, your Twitter is also there. Everything people want to know about you within reason will be on that page. Thanks a lot, Stephan.
00:38:21
STEPHAN KINSELLA: Thank you, Tom.
00:38:21
TOM WOODS: All right, that will do it for another episode. I once again solicit ideas from you, and I’m sorry I can’t always respond. I deeply appreciate your suggestions, but if there’s a topic you’d like discussed, then send along a good guest for that topic, and I will certainly look into it. Again, I like to avoid scientific topics where I feel like I’m out of my depth. I don’t want to do that. But otherwise, I’m quite open to a wide array of topics. So please send your suggestions to me at tomwoods.com.
00:38:51
You’ll see there’s a contact tab, and I get that just like an email. So if there’s just a guest, you don’t even know a topic, but you just think it would be interesting for me to talk to a particular person, I’m game for that as well. But the ideal is the guest-and-topic combination. I could certainly use your input, and I certainly welcome it, especially from those of you who have been listening for a long time. I’ve gotten a lot of good ideas from you guys. In fact, I only heard about that weasel, Michael Malice, because somebody wrote to me about him. I hadn’t even heard of him before, and Judith Curry, who was really good this week likewise. I hadn’t been familiar with her, and I thought we had a wonderful conversation.
00:39:32
So thanks so much for playing this role in the show for helping me sometimes to brainstorm about ideas. So tomwoods.com is where you can submit your suggestion. If you want to scan and see what I’ve covered, tomwoods.com/episodes will give you the whole list of everything that has been done so far. All right, thanks for listening. See you tomorrow.
This is a discussion with Ash Navabi, an economics grad student at George Mason, who messaged me this question:
Hi Stephan. I’m having a conceptual problem distinguishing IP and tangible property.
In Against IP, you said that an IP right gives the IP owner “invariably transfer partial ownership of tangible property from its natural owner to innovators, inventors, and artists.”
But doesn’t this apply to every property right? If I own a tract of land, why can’t we say that if I ban you riding across it with your dirt bike, then I am claiming ownership over your dirt bike?
I decided to just discuss this with him for the podcast. We ended up veering into a couple tangential issues like auctions for trade secrets in an IP-free world, and so on.
Stephan Kinsella explains the importance of Rothbard’s theory of contract — a point I myself did not appreciate until this episode — and contrasts it with mainstream theories, which most libertarians think are the same as their own. We need to get these fundamentals right, so listen in and learn with me!
The Central Rothbard Contribution I Overlooked, and Why It Matters: The Rothbard-Evers Title-Transfer Theory of Contract
Stephan Kinsella, interviewed by Tom Woods
The Tom Woods Show, Ep. 547, Dec. 3, 2015
Transcript
00:00:00
TOM WOODS: The Tom Woods Show, episode 547.
00:00:03
INTRO: Prepare to set fire to the index card of allowable opinion. Your daily dose of liberty education starts here, the Tom Woods Show.
00:00:14
TOM WOODS: Hey everybody. Christmas is coming, and chances are you’re going to be doing a lot of online shopping. Well, why not get cash back at virtually all the retailers you’re going to be using anyway? Sign up for Ebates and you’ll get just that. Check it out through tomwoods.com/ebates.
00:00:30
Hey everybody. Welcome to another episode of the Tom Woods Show. We’re joined once again by Stephan Kinsella because today we’re talking about foundational issues related to libertarianism, and I can think of no one better to help us clarify our thinking on questions like this than Stephan. And ordinarily, as I would do in these episodes and as I’ve done in the past with Stephan, I would launch into a biographical discussion of the guest. But instead, I’m going to turn things over to Stephan and say, Stephan, what do you think people should know about you?
00:01:02
STEPHAN KINSELLA: Well, I was born in a little town in Louisiana.
00:01:06
TOM WOODS: I knew I shouldn’t have done this.
00:01:07
STEPHAN KINSELLA: I’m a libertarian patent attorney in Houston. How about that?
00:01:12
TOM WOODS: Oh, but you’ve done so much more. I want to know about your writings.
00:01:16
STEPHAN KINSELLA: Okay, so I am a practicing attorney, but I’ve written a lot on libertarian legal theory for the Journal of Libertarian Studies, and then I founded sort of a successor journal called Libertarian Papers, which is still ongoing, which I’m the managing editor of. And I’ve written some books, and I’ve written on intellectual property, both the legal side and the libertarian theory side.
00:01:42
TOM WOODS: I am going to be linking to everything that we talk about today in terms of articles that you’ve written and stuff like that. I’ll like to it at tomwoods.com/547. I spent last night actually reading some of your stuff that I hadn’t read before, and then all the way up to the moment I called you today I was reading your stuff. So I am very much in a Kinsella frame of mind right now, and I have to say, I want to get to this later. I was really struck by – I guess I hadn’t read – gosh, I hadn’t – I’ve read so much Rothbard, but it’s – I haven’t read it in the past week, and sometimes I forget what was in it.
00:02:22
And some of the insights are so interesting because they apply to current debates. I was interested to see that Rothbard I guess deals with the question of how do we confront problems in, let’s say – well, let’s just say this. Sometimes we don’t have a – what we might call a clean capitalism. Sometimes property titles are not legitimate because they – when you go back into the mist of time, you might be able to say that so-and-so stole it, and you’re an inheritor of stolen goods. But the difficulty is how can we know that today? We can’t always, and so does that mean that everybody holds his property only precariously, or it’s all questionable?
00:03:07
These are the sorts of complaints that left libertarians have made, and Rothbard addresses this as if he’s living in 2015 debating the same people I debate just exactly right, so I want to get to that later. But right now I want to talk about the issue of contract is so important for libertarianism, and I guess, frankly, even up until today, this very day when I read your discussion of the Evers-Rothbard title-transfer theory of contract I guess I just assumed that our view of contract was not all that different from the mainstream view, and I guess you learn something every day. How is the main – well, first of all, what’s a contract? And how does the mainstream try to justify the – basically forcing somebody to live up to his side of a contract?
00:03:56
STEPHAN KINSELLA: Right. And actually I think this is one of Rothbard’s sort of seminal contributions to political theory or legal theory, and it’s relatively unappreciated. It’s…
00:04:08
TOM WOODS: Yeah, you can say that again. I’ve been praising the guy for decades, and I didn’t appreciate it.
00:04:13
STEPHAN KINSELLA: I think it’s in the final chapter of The Ethics of Liberty if I’m not mistaken, which is – I think ’82 it was first published.
00:04:20
TOM WOODS: Yeah.
00:04:21
STEPHAN KINSELLA: Which fascinated me when I read it. And then it’s based upon a 1977 article by Williamson Evers in the Journal of Libertarian Studies, which Rothbard was the founder and editor of and which was the very first article. It was Volume 1 No. 1, so this was the first article ever published in the JLS, the article by Evers, on contract theory.
00:04:42
I later discovered – after I wrote a long article about this in 2003, I later discovered that in ’74, Rothbard had sort of had the germs of this idea in one of his earlier articles, the one you were alluding to so – which is fascinating. The standard understanding of contract, which I think most libertarians actually share in a sort of kind of crude way, is that a contract is a binding promise.
00:05:09
Now, legally speaking, if you get more precise, you can distinguish three things. You can distinguish consent from agreement and from contract. They’re all different things. Consent just means the person who has the right to give permission or to deny permission gives permission. That’s consent. We determine who can do this by deciding what property rights there are. So it’s really a propertarian kind of issue. The owner of a certain – their body or something else – has the right to permit or to deny others from using that thing. That’s just consent.
00:05:42
A contract is what we call in the law a binding agreement. So an agreement is just when people come to an agreement they say things that they’re going to do something, and if it satisfies certain requirements in the law, then it’s called a contract, which means it’s a binding agreement or it’s a binding obligation. So the standard view of contract is that it’s basically a promise of a certain type that is binding, and most libertarians think of this too. They’ll say that you have to keep your contracts. They view it as something you promise to do that has certain formalities like consideration or whatever that makes it legally enforceable. So the standard view of contract is a legally enforceable promise or agreement, and this is not Rothbard’s understanding.
00:06:30
TOM WOODS: Well, if a promise then is not really what’s at the heart of what makes a contract binding so to speak, what is the correct way to think about it?
00:06:40
STEPHAN KINSELLA: So Rothbard’s view, which again, I think he came up with this in ’74, and he was thinking from a Misesian point of view about the nature of property and a libertarian view about the nature of property rights. And then Evers elaborated on this, and then Rothbard built upon that, so it was really a collaboration between the two. And by the way, I have an interview with Evers on my podcast, which I finally was able to – after trying for years to reach him, finally last year he spoke with me about this, and he…
00:07:06
TOM WOODS: Wow. I didn’t realize that. I figured – I really thought he basically was unreachable at this point.
00:07:11
STEPHAN KINSELLA: I tried for years and finally he consented. I was able to do it, and it was fun to do it. It was great. I think it was important to do it. He basically confirmed my understanding of the chronology of this, of the idea. In any case, so Rothbard’s rooted in thinking of human action as the use of resources, right? And libertarianism is the property rights in resources, and what it means to have ownership of a resource is you can grant permission to others, or you can get rid of that resource. Like you can give it or sell it to another person by consent.
00:07:48
So he basically says that promises by themselves are not enforceable. It’s almost like a free speech issue. I’ll say I promise to do this to you or for you. That’s not in itself enforceable because it’s just a statement about your intention. You’re not committing aggression, so the other person has no right to use aggression against you to make you do what you said you were going to do.
00:08:07
But he said that if you own a resource, you do have the ability and the power to transfer it to someone else, and that really is what contracts are all about. And if you think about – if you understand the way the legal philosophers classify and understand contracts and the way the legal system treats contracts right now, the outcome is actually very similar. So, for example, in the civil law system, which is one of the two major systems in the world, and the common law is the other, contracts are called agreements that give rise to obligations.
00:08:42
And then there are two types of obligation: an obligation to do something or an obligation to give. Now, Rothbard would – I say I believe that contracts are really only to give, so the contract is just the exercise of power over the resource to transfer it to someone else. And in the law, if there’s an obligation to do something like to make a performance, to sing a song at a wedding, and if you don’t do it, guess what the remedy is? It’s almost never what we call specific performance. The judge would never compel someone to sing a song at a wedding for various practical reasons. Instead, they would say, well, you breached the contract, so you have to pay monetary damages.
00:09:20
So even in the case of an obligation to do something in the current legal system, it really boils down to a transfer of property, which is money in that case. So you could have reformulated the entire contract as just a transfer of titles to property, which is why I believe Evers called his article “Toward a Reformulation of the Law of Contract.” It’s a different way of viewing what contracts are.
00:09:42
TOM WOODS: Now, I want to raise a case of – or a doctrine that’s used in the mainstream because a lot of times there are things that libertarians believe that make perfect sense to us and are perfectly in line with our basic principles but that when they’re told to people who don’t have the foundation in our principles, they just sound crazy. Like if we talk about slander or libel or blackmail or whatever the way Walter Block does and you don’t have a foundation in libertarianism, you think this is just crazy.
00:10:13
And likewise, there is this doctrine of detrimental reliance that we hear in the mainstream. I think would seem like an equitable solution and a just foundation for obligation. If, for example, you make a promise to me and I organize my life on the basis that you’ll keep that promise and you don’t, then it seems that there would be cases when that promise could be enforceable as a contract. For example, I think you gave the example of a grandfather who promises that he’ll pay the college tuition for his granddaughter, and she goes ahead and arranges her life according to that expectation. And then if he suddenly decides to stop paying, well, has he breached the contract? Well, the way they might look at it is that this was a case of detrimental reliance.
00:10:57
Now, we would say I think that she wouldn’t be able to actually sue him or demand that he keep on paying, and yet she is very much inconvenienced. So it seems like that’s just kind of a shame for her, and maybe the mainstream is more human than the tough-as-nails libertarian alternative. How would you think about this kind of situation?
00:11:18
STEPHAN KINSELLA: Well, yes. So I think this is basically the result of a – I won’t say a statist legal system necessarily but a system that is not perfect and that did develop in the government courts. And so you have this doctrine of – there’s an ancient principle, Tom, in international law. It’s called pacta sunt servanda, so pacta sunt servanda is a Latin term used to describe the old doctrine that agreements are to be respected in international law, for example, which is why treaties between nations are considered to be legal and create international obligations under international law.
00:11:51
So there’s an intuitive practice among humans that, when you make a promise, when you make an agreement, it’s supposed to be – have effect. And the law generally does this, but then legal theorists struggle to explain why. Why should it have effect? And there’s different theories about why it should have effect. I actually think the promise to pay for tuition for a granddaughter could be enforceable, but under the title-transfer theory of contract. Basically you would view it as, if you made the correct transfer and you may have the right contract, the grandfather is giving his future money to the girl. So she’s the owner of that money at the appointed time, so there’s nothing wrong – there’s no inability to enforce the contract.
00:12:35
The standard legal justification, one of them is a doctrine of equity called detrimental reliance, which you mentioned, which is similar, by the way, to the legal doctrine of estoppel, which I’ve used in some of my rights theory, this idea of estoppel. The idea is that if you perform an action that other people rely upon to their detriment – in other words, they would be worse off – they’ve made some decision that makes them worse off if you don’t follow through with your promise – then it should be binding.
00:13:06
But as people have pointed out, Randy Barnett, by the way, who’s probably the other major libertarian legal theorist on the contract theory – he’s written on his own theory called a consent theory of contract, a lot of interesting stuff. It’s different than Rothbard’s, but he points out and other people have pointed out the problem with the idea of detrimental reliance is that it’s circular because there’s always a reasonable requirement. Like if you reasonably relied upon someone else’s promise, then it could be enforceable.
00:13:33
However, if the legal system never enforced promises, then everyone should know that, and it wouldn’t be reasonable to rely upon someone’s promise. So it’s really a circular doctrine, and that’s not the best way to defend the standard theory of contract being binding promises. What’s interesting about this, Tom, is I think it basically fits into the basic theory understanding of what libertarian principles are. Libertarian – and I think you mentioned this on one of your other shows the other day. I heard you talking about this.
00:14:04
You mentioned two of the three things I’m going to mention, that libertarianism basically can be defined by three principles. The first is original appropriation. That is, someone who homesteads an unused resource in the world has a better claim to it than anyone else. And the second is contract. That is, you can contractually transfer that resource to someone else, and then they are the better owner of it. And the third would be rectification or restitution. If you harm someone, you violate their rights, that might give them a claim to some of your resources to compensate them for the harm you did to them.
00:14:38
But using those three principles, you can basically identify in principle the ownership of any disputed scarce resource in the world. But this focus is a focus based upon scarce resources, and that’s why it’s different than if you view contract as binding promises, you have all kinds of people saying, well, someone can’t quit the Army if they join the Army. They made a promise after all. So you have the inalienability question that is easier to solve if you understand contracts as transfers of title to alienable property.
00:15:13
TOM WOODS: Let’s think then of the example of an actor who signs on with a movie company, and he agrees he’s going to do five movies with them over the next seven years. And if he were not to deliver on this, the company would suffer. He probably wouldn’t get paid, but the company would suffer. So what I want to know is, I want to know in the two cases – let’s say we’ve got just a regular American judge looking at a case like this where the guy made two movies and then he just stopped showing up and they couldn’t find him. How would they deal – how would they conceive of that contract? What would make that a contract, and what would make it – what would make his failure to live up to it actionable? And how would we look at a contract like that?
00:15:58
STEPHAN KINSELLA: Right. So in today’s sort of mainstream situation, the contract would be viewed as a legally enforceable obligation if it satisfied certain formalities, for example, if there had been consideration. That’s an old doctrine of the common law, which actually the civil law rejects and which I think we would reject as libertarians. You don’t need to have consideration – the idea of consideration is that you have to have an exchange for the contract to be binding. Each side has to give the other something in return. Otherwise, it’s not binding even if they’re not equal. That’s why they say even a mere peppercorn could be satisfied as consideration.
00:16:34
This is why you see in contracts quite often a fictional. I give you a dollar in exchange for this or $10, and actually that’s never transferred. It’s just there as a relic of this idea of consideration. So if you have consideration and valid cause and there’s no fraud and the parties are of age, these kinds of things, then the contract is a legally enforceable obligation, and if the actor doesn’t perform in the next movie, he’s in breach of the contract. And then the question is what’s going to be done about it? And as I said, courts almost never would order specific performance. That means the court wouldn’t order the actor to perform under penalty of contempt of court, which would be going to jail.
00:17:15
Instead, they would just say, well, you’re in breach of contract, so now you owe some damages. Okay, and quite often these sophisticated contracts have damages clauses where they specify what the damages would be, and the court will enforce that if it’s not called a punitive damage. So the court will only enforce it if it’s reasonable damage, and if there’s no damage clause, then the court would come up with a damage. They would say, well, how much did the breach of the contract cost the movie studio? And then – so they would end up ordering the actor to pay some money to the studio.
00:17:44
Under our theory, it would be almost the same result except the contract would simply say – it would be a set of conditional clauses. It would say movie studio transfers or agrees to transfer this much money to the actor in the future for appearing in a series of three movies or whatever. And the actor hereby agrees to pay the following amount of money to the studio if he doesn’t perform. So it would just be – it would cut right to the chase. It would just specify what the payments would be.
00:18:14
TOM WOODS: I want to jump to something that surprised me when I read it. This is in another one of your articles, and it has to do with the phenomenon of fine print, which more and more people have to deal with now because online we’re always clicking our agreement to terms and conditions. And sometimes they gray out the click box until you’ve scrolled through the whole thing so that they can say, look, you did actually look at it, and you’ve consented to it. But everybody knows, including the institution that’s asking you to consent to it, that nobody is reading that. Basically nobody is reading any of that, and you seem to suggest that that means that if somebody – because they could sneak in some crazy thing.
00:18:55
I mean let’s say they snuck in, oh, and by the way, if you use our site, we get half your income. Nobody would think that that was enforceable. So then how could any of it be enforceable if nobody is reading it? Is it based on a reasonable expectation of what’s likely in there?
00:19:12
STEPHAN KINSELLA: Right, so in standard legal theory – well, there’s a doctrine in the common law called meeting of the minds, which is the idea that when both parties have a common agreement as to what the terms are, there’s a meeting of the minds, and therefore, there’s an enforceable contract. That doctrine gets a little problematic with these fine print because there’s really not a meeting of the minds if no one’s reading and everyone knows this.
00:19:36
In the beginning, you asked me to define contract. A contract – notice I didn’t say it’s a written document. Libertarians tend to – and a lot of people tend to conflate a piece of paper with words on it as being the contract. It’s not. I think of that as just evidence of what the contract is because you can have an oral contract, right? People call it verbal. That’s actually a common mistake, by the way, calling a contract – distinguishing verbal from written. All contracts are verbal, right? They have words. It’s – oral is the contract that you don’t have written down on paper.
00:20:07
In any case, a contract can be oral. So then the question is what are the terms? And that means what did the parties really agree to? My only point is that in these click-wrap agreements, and some of them, by the way, are – like the shrink-wrap agreements where you would open a box with software. There was terms on the inside. You were held to have agreed to the terms on the inside of the box as soon as you tore open the plastic wrapper on the outside even though you hadn’t read it.
00:20:35
So if we stop thinking so mechanistically about what contracts are, you wouldn’t equate it with this piece of writing. So let’s just imagine that, in a contract buried near the end, there is a clause saying the person using my website hereby agrees to pay me $1000 a month for the rest of their life. Now, if you have a mechanistic view of contract, you would have to say that’s enforceable, but of course that’s absurd. And one way you can say it’s absurd is you can say that no contract can ever – no written contract can ever specify everything because there’s always some condition that could arise.
00:21:10
So then you have to go back to what’s reasonable or what the parties would have agreed to. So, in other words, there’s default conditions. There are gap-fillers. And I would say that one condition of a contract is a presumption of good faith on both parties and a presumption of good faith in enacting the basic terms and purposes of both parties. So it would not be good faith to sneak in a clause like that in a contract that has nothing to do with that kind of lifetime annuity payment. So that would be in direct violation or contradictory to the presumed good-faith term that governs the contract that both parties agreed to.
00:21:47
Like if you agree – if you’re negotiating with someone and you said, do you agree that we should negotiate in good faith? No one would say no, I’m not negotiating in good faith. So that’s a fair thing to assume that it’s one condition of the agreement. So my point is that we shouldn’t assume automatically that fine print that is snuck into these shrink-wrap and click-wrap agreements is necessarily enforceable because it’s not really agreed to by both sides.
00:22:15
TOM WOODS: All right, I found that interesting, and then another thing is the subject of debtor’s prison. This is obviously a theoretical issue at this point. There’s no chance debtor’s prison is coming back, and we’re not saying that it should. But I want to know on what grounds would we say that it shouldn’t? If somebody owes me a debt and just can’t pay it, well, you could see a certain logic by which, well, you’ve got to do something until you can pay it back because, in effect, you have stolen from me.
00:22:41
STEPHAN KINSELLA: Right, and this is where I disagree with Walter Block. We have – I think we have a podcast on this too where we discuss this issue too. And even Rothbard, even in that article, he I think slightly missteps on the debtor’s prison issue. What he says is that you do – you would view a loan, for example, as two title transfers. Like I give you $1000 now, and you give me $1100 in a year, $1000 plus 10% interest let’s say. So those are two title transfers. One is immediate, and the other is set a year in the future.
00:23:14
If the debtor doesn’t have the money in a year, then Rothbard says, well, theoretically he could be put in prison for stealing from the creditor. But – then Rothbard says, but that wouldn’t be just because that would be disproportionate. So he says that theoretically debtor’s prison would be justified, but it would be disproportionate punishment, so it can’t be justified.
00:23:35
I think he doesn’t even – he doesn’t realize that his own theory shows another way that we can say debtor’s prison is wrong, and that is that there is no theft because, if I’m a penniless – look, if I have $1100, then the ownership of that money automatically transfers by operation of the contract to the creditor. And then if I don’t turn it over, I’m actually basically kidnapping his property. I’m trespassing on his property. That would be a type of theft.
00:24:02
But if I’m penniless, there is no money to steal, and sometimes Rothbard and Walter I believe – they – it’s not clear which money they think of as being stolen. Sometimes they’ll say the originally $1000 was stolen because it was only given conditionally on the condition of being repaid later, and if it’s not repaid…
00:24:21
TOM WOODS: That seems right to me. How is that wrong?
00:24:24
STEPHAN KINSELLA: The problem with that is the – first of all, there are two separate title transfers. The $1000 transfer from the creditor to the debtor has to be unconditional because the purpose of it is to give it to the debtor so he can spend it. I mean the whole purpose of the loan is to give money to someone so they can use it for some project. And for them to spend the money, they have to own it. They have to own it unconditionally.
00:24:48
So the $1000 is transferred 100% unconditionally. The $1100 being transferred back is a future title transfer, which means it’s inherently uncertain, and there is a risk there that it might not exist. If it doesn’t exist, it can’t be stolen. So the $1100 can’t be stolen if it doesn’t exist, and the $1000 was not stolen. It was given with permission of the owner to the borrower.
00:25:13
TOM WOODS: Well, I mean maybe I’m supposed to accept that theoretically, but I just – I find that very hard. So that’s what makes it different from I’m going to let you use my apartment for a couple of months, and if you – I guess in that case you could pay in advance, and that would solve that problem. But is the idea that the apartment still exists? There’s no way I could spend the apartment and then claim I have no apartment to give back to you.
00:25:35
STEPHAN KINSELLA: Correct. The apartment still exists and has an owner, and actually I would say the apartment theoretically under a libertarian/propertarian theory – in a sense, the owner – the apartment has two owners for awhile. It’s basically co-owned by the original owner and by the tenant. It’s just that the tenant has limited ownership rights, limited in scope and limited in time. So at a certain time the full ownership reverts back to the landlord.
00:26:01
TOM WOODS: Say something about this controversy involving the basic guarantee to income only because – we don’t have to talk about the income aspect of it, but one of the foundational arguments in justification for it is that, because we can’t know for sure that the property titles that are in existence right now are just, if that the property – if we trace it back in history, was always transferred – acquired and transferred justly. There was no theft involved. There was no government subsidy or whatever. It’s hard to know today if people really are justly holders of their property. So we suddenly become agnostic about this, and this therefore means that we more or less assume everything is screwed up, so that means we have to have redistribution of some kind.
00:26:51
I mean I’m not caricaturing the argument. People could listen to – well, I’ll go back and look at what number it is. I’ll put it at tomwoods.com/547, a link to the episode where I basically debated Matt Zwolinksi on this. I’m sure you’re familiar with all this stuff. We don’t have to talk about the income aspect, but how do you deal with the objection that probably is well-founded that there’s a lot of property out there that, when you look through its history, it’s a fairly grim history, and so therefore, we should question the legitimacy of existing titles?
00:27:22
STEPHAN KINSELLA: I would deal with it the way Rothbard did in that 1974 article, which is, again, an amazing piece, the one where he lays out sort of the germ of this contract theory idea. And I noticed this when I was reading through it. It was published in two versions in 1974. In the first version, it touched a little bit on the issue you just brought up, but in the second version he published in a different book later the same year, he added a whole new paragraph where he explicitly deals with that issue. And I think he did it because someone must have called to his attention this problem. He could detect some of these left libertarians are making this argument, which I call sort of the original sin argument.
00:28:00
It’s the idea that if there’s a – they’re basically trying to say that the 1% or the rich west, their ownership of property traces back to some kind of problem in the past, some kind of theft, some kind of oppression, some kind of hierarchical exploitation. And therefore, they don’t really have a good claim to their property or can’t really complain if it’s taken away from them to compensate the poor or to engage in redistribution. So basically they’re just trying to find a flaw in your title to your property so that they can justify taking it from you.
00:28:35
Rothbard points out that, look, it’s in a sense hearkening back to the possession is 9/10 of the law dictum of the common law, right? We have a system right now where there are resources being currently possessed and use by people. Unless you can show you have a better claim to that resource than they do, then you need to let them own it unless they’re a criminal like the state or unless they actually use the state’s eminent domain maybe to get their resources. They have a better claim to that resource than anyone else, and they should remain undisturbed even if you could find that five generations before one of their, what we call in the law an ancestor in title, someone further back in the chain of ownership, one of them stole the property from someone else.
00:29:26
Unless you can show who really owns it, then the current person should maintain ownership of that property. So I agree totally with Rothbard on that, and it’s a very important insight, and it does deflate a lot of these claims. And by the way, the contract theory also helps to highlight the absurdity of a lot of these implied contract arguments, the social contract theory arguments. Sometimes libertarians will say that, well, even if everyone in the country agreed to be bound by the state, after a certain amount of time, next generations didn’t agree to that.
00:30:00
But even that original assumption granting that a group of people could agree to be bound by the state, it’s not really right because if contracts are just transfers of title to property, then their agreeing to be bound by a state doesn’t mean that they can’t change their minds later. So the contract theory plays into inalienability theory also. If you basically think of a contract as the exercise of dominion over a resource by its owner, then you understand there are two types of resources. There are bodies and there are other things that are acquired.
00:30:34
And our bodies are not something we can sell because we didn’t acquire our bodies like we acquire other scarce resources in the world. That’s a whole different argument, but it does play into that. But it does imply that a soldier who is in the Army has the right to quit just like someone working for a company has the right to quit.
00:30:53
TOM WOODS: I want to – you have so many things going on. You’ve got Libertarian Papers. You’ve got your website. You have a podcast. I want to know where people should go if they want unvarnished Kinsella, if they want to read more about what you’re doing. What’s the central location you send them to?
00:31:11
STEPHAN KINSELLA: stephankinsella.com.
00:31:13
TOM WOODS: Okay, and if you type in Stephen Kinsella, Stephan is going to come through the internet somehow and slap you in the face.
00:31:20
STEPHAN KINSELLA: I answer to anything now, Tom. I’m so used to it.
00:31:22
TOM WOODS: All right, well, fair enough. Well, stephankinsella.com of course will also be linked at tomwoods.com/547. All right, this is great stuff, and I have to think – I haven’t yet thought of the title for this – well, so to speak – the title for this episode. It’s – I have to get people to listen to it, and if I say it’s on contract theory they won’t, but they need to. And at the end, they’ll say I’m glad I listened to this episode. It’s one of these things I’ve got to somehow trick them into listening. There are books that people need to read, and they won’t realize it until they’ve already read them. This is an episode like that. They needed to hear this, so I don’t know. I’ve got to figure out some way to scam my listeners into clicking…
00:32:00
STEPHAN KINSELLA: Let’s call Ann Coulter and let her come up with the title. She’s good at titles.
00:32:02
TOM WOODS: Yeah, she could probably come up with a pretty good title. They’d click all right, but maybe that would be the last time they’d click. All right, Stephan, thanks a lot for doing this for us. We appreciate it.
00:32:11
STEPHAN KINSELLA: Thanks a lot, Tom.
00:32:12
TOM WOODS: All right, that’s Stephan Kinsella. Today is my debate with Michael Malice in New York City about Alexander Hamilton. It’s taking place at the General Society Library, 20 West 44th Street. Doors open at 7 p.m. I won’t be able to report back to you tomorrow on how things went because I’ve already recorded tomorrow’s episode in advance because I’m going to be out of town doing this debate you see.
00:32:36
So you’ll find out on Monday unless you are on my mailing list, and how fun it is to be on my mailing list. The best way to get on it is to get your free e-book Bernie Sanders is Wrong over at bernieiswrong.com, and that will automatically put you on that list so that I’ll be notifying you about future free books and future things that I’m up to and also what happened at the debate. So that’s all I have to say for now. Tomorrow, if all goes well, Walter Block will be on the show talking about how do we privatize rivers, lakes, waterways of various kinds, even oceans. Leave it to Walter. See you then.
In no particular order (okay, roughly chronological), and I realize this is weird and geeky (links provided where possible; others are apparently not online, a shame):
Berlin, Isaiah, Four Essays on Liberty (Amazon) (Oxford 1969)
Rosalyn Higgins, “The Taking of property by the state : recent developments in international law,” Académie de droit international. Recueil des Cours (1982), III, tome 176
F. A. Mann, “The Consequences of an International Wrong in International and National Law,” British Yearbook of International Law (1976) 48 (1): 1-65
Various articles by Richard Epstein (most not online), e.g. “Possession As the Root of Title”; Nuisance Law: Corrective Justice and its Utilitarian Constraints; Pleadings and Presumptions; The Social Consequences of Common Law Rules; The Static Conception of the common Law; Past and Future: The Temporal Dimension in the Law of Property
Great American Law Reviews (not online), Berring, Robert C., and Salley Gunderson, Editors (Birmingham: The Legal Classics Library, 1984–1990. Three volumes) selected pieces, including:
The Origin and Scope of the American Doctrine of Constitutional Law, James B. Thayer, Harv. L. Rev., 1893
Some Fundamental Legal Conceptions as Applied in Judicial Reasoning, Wesley Newcomb Hohfeld, Yale L. J., 1913
A Realistic Jurisprudence: The Next Step, Karl N. Llewellyn, Colum. L. Rev., 1930
Some Reflections on the Reading of Statutes, Felix Frankfurter, Colum. L. Rev., 1947
Toward Neutral Principles of Constitutional Law, Herbert Wechsler, Harv. L. Rev., 1959
The Problem of Social Cost, R.H. Coase, J. Law & Econ., 1960
The Supreme Court, 1960 Term-Foreword: The Passive Virtues, Alexander M. Bickel, Harv. L. Rev., 1961
Neutral Principles and some First Amendment Problems, Robert H. Bork, Indiana L. J., 1971
The Wages of Crying Wolf: A Comment on Roe v. Wade, John Hart Ely, Yale L. J., 1973
LBRY Inc., the startup behind a new blockchain-based content distribution platform, now has some serious intellectual and legal muscle on board with the addition of one of the country’s leading experts on intellectual property law.
Stephan Kinsella has joined the executive team of LBRY Inc. as Legal Advisor, helping the company navigate complex US and international copyright laws as they seek to radically upend the media industry. [continue reading…]
This is an impromptu discussion with my wonderful parents, Norman and Patsy Kinsella, who live in Prairieville, Louisiana. We did this a couple days ago, Oct. 1, on my 50th birthday. As sometimes happens in October in Louisiana, the weather starts getting nice around that time, and so we were sitting outside on the porch and when my dad got out his ballot to vote by mail in an upcoming election, I whipped out my iPhone and did a quick interview with them about politics that I thought might be of interest to some of my followers.
My article “What Libertarianism Is” (one of my personal favorites and I think one of my most important) has been translated into Portuguese, by Lacombi Laus: O Que é Libertarianism (29 Sept. 2015). Other translations of this and other works (into fourteen languages so far) here.
My article “
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