1. Law Without the State In daily life today
In many societies, past and present
In the future
In Realspace
In Cyberspace

2. As it Now Exists Around Us
Systems of private norms
Why I don’t teach class stripped to the waist
Kissing as greeting: Brazil vs Hollywood
A system of rules, enforced by social pressure
International arbitration
Every family
Sign: “Becca’s Room Stay Out!”
Directed at her younger brother
Enforced by the threat not to play with him

3. Standard Modern Model of Law
Law made by Legislature and/or judges
Detection and prosecution of offenses
Public for criminal law—police and prosecutor
Private for tort law
Disputes resolved in government courts
Verdict enforced by government

4. Feud Law: A Different Model
Law enforcement private and decentralized
Historically common
Arguably most legal systems started that way
“Feud” has nothing to do with “feudal”
The words sound the same but are unrelated
In meaning and origin

5. The Logic of Feud Law If you wrong me I threaten to harm you
Unless you compensate me

6. For it to Work It Needs Some mechanism so that the threat
is more believable when you have wronged me
So that right makes might
Commitment mechanism
To make the threat believable even when costly
And even after the victim is dead
Mechanism to protect those too weak to believably threaten retaliation
Some way of ending feuds

7. Mechanisms for Right Makes Might
Saga period Iceland: Legislature, laws, courts
Rominchal gypsies: informal norms, friends support you if you are in the right, not otherwise
Somali: Traditional law, ad hoc court mechanisms
All of these solve two problems
Prevent the use of threats for deliberate extortion
And prevent individuals from acting as biased judges in their own case
For details of these systems see
Legal Systems Very Different from Ours
Draft webbed on my site: daviddfriedman.com

8. Commitment mechanisms
Pre-human: Territorial behavior in birds and fish
Human internalized commitment: Vengefulness
Human external commitment:
Maintain reputation to deter rights violations
Being a wimp is shameful, loses status
Success gains status, which is why there are volunteer enforcers in Icelandic, Commanche
Enforcing your rights after you are dead
Kin inherit your claim, enforce it, or …
Pre-arranged group does it: “diya-paying group”

9. Protecting The Weak Icelandic Solution Somali Solution
Tort claims are marketable, so …
If I don’t have the resources to enforce my claim
I transfer it to someone else who does
Somali Solution
Group formed by a mix of kinship and contract
Whose members share the right to collect damages
And the obligation to enforce claims

10. Termination of Feud What happens if Icelandic solution Somali solution
I think you wronged me, you disagree
You refuse to pay damages, I harm you
You view that as my wronging you, so …
Threaten to retaliate if I don’t compensate you
I disagree, refuse …
Endless feud?
Icelandic solution
Somali solution
Finnish Gypsy solution

11. Kaale (Finnish Gypsy):
Icelandic
Find someone powerful with a good reputation
Ask him to arbitrate
Accepting his verdict does not make you look weak
Rejecting it gives you a new enemy
Most feuds terminated quickly by court verdict or arbitration
Somali
Ad-hoc courts, local enforcement of verdicts
When too many people were being killed, both sides agreed to raise the diya (damage payment for killing)
Kaale (Finnish Gypsy):
Feuding families avoid each other
until everyone has forgotten what they were feuding over

12. Underlies Many Legal Systems
Anglo-American common law came from
Anglo-Saxon law, which was essentially
Icelandic system plus a king
Rabbinic law has evidence of fossilized feud
The role of the “Avenger of Blood”
Evidence of self-enforcement of claims
Islamic law (fiqh) includes jinayet
Law for killing or injuring
A claim by the victim or his kin for
Damages or retaliation
Roman law:
12 tables appear to refer to self help remedies
Early republic, plaintiff must drag defendant to court
Verdict gives him a right to seize, sell or execute, defendant

13. The Future: Law Without Government
Private firms sell the services of
protecting their customers’ rights
Settling their disputes
Each individual the customer of such a firm
How do we handle conflicts between customers of two firms?
I think you stole my TV, you deny it
My firm threatens force against you
You ask your firm for protection
Violent conflict?

14. Violence is Bad Business
If we settle conflicts by violence
Have to pay our workers for the hazard
Customers don’t want a shootout in their front yard
Nobody knows if his rights will be protected
Cheaper to agree to arbitrate
Pick a private court, both firms agree
To accept its judgment in future conflicts
What enforces that agreement?
The discipline of constant dealings: Repeat players
If I don’t accept the verdict when you win the case
You won’t accept it when I win
We are back fighting each other, and
Lose our customers to more sensible firms

15. Who Makes the Law? Legal rules are part of the package
That the arbitration agency sells its customers
Who sell it to their customers
So the arbitrators offer the rules the enforcers want
And the enforcers want the rules their customers want
Easy case: A change that benefits customers of both firms
Harder case: A change one firm wants, the other doesn’t
How much is it worth to firm A to get its preferred rule?
How much is it worth firm B to get its preferred rule?
Whichever is larger gets its rule, compensates the other
The result: The pattern of legal rules that
Maximizes the total benefit to those the rules apply to
Economically efficient law

16. Compare to Democracy No incentive for voters to be well informed
My vote does not determine the law I am under
Or how well it is enforced
So why pay the cost of figuring out what is better?
Almost impossible to compare the alternatives
I can’t compare the Obama administration of 2012
To the McCain administration of 2012
On the market, on the other hand
I can compare one car to another, or …
The law and enforcement my neighbor gets to what I get
And it pays to compare, because what I choose I get

17. Is Market Anarchy Libertarian?
The logic of the situation implies that
The legal rules will tend to be
The rules that maximize total benefits to all affected
Economically efficient law
Will that be law that respects liberty?
If enough people are willing to pay enough for oppressive law, the market will produce it.
But on average, liberty is economically efficient
It rarely is worth as much to me to violate your rights
As it is worth to you not to have your rights violated

18. Comparing Anarchy to Government
In each case, don’t assume outcomes
Ask not what laws you want from government
But what laws you can expect to get from government
And from anarchy
Under anarchy
The people who produce law have an incentive to produce good law
The people who enforce law, an incentive to do it well
Under government, neither is true
Just like the comparison between market and government in producing cars or food

19. Possible Problems Defense Against Nations
Cartelization of the rights enforcement industry
Market failure on the market for law

20. National Defense Defense against nations is a public good
If I stop an invasion or shoot down a missile
My neighbors share the benefit
So how does it pay me to do it?
Some public goods get produced privately
Tipping taxicabs (in the U.S.—don’t know about Brazil)
Charity
Indirect benefits: My web page
For a discussion of ways this might be produced, see my first book
The second edition is free on my web page
The third edition is $2.99 as a Kindle on Amazon

21. The Cartelization Problem
If there are only three rights enforcement agencies
They might decide robbery is more profitable than business
Agree not to compete for customers
Raise the price—because you have nowhere to go
Reinvent government
How many agencies there are depends
On economies of scale in the rights enforcement business
If the optimal size firm is 1/100th of the market
End up with 100 agencies, no cartel

22. Market Failure on the Market for Law
If you agree that I can sue you for polluting my air
My firm cares how much that is worth to its customers
Your firm cares how much it costs its customers
Neither cares how much it is worth to customers of other firms
Including ones living downwind of your factory
Who will be benefitted if my lawsuit makes you reduce your air pollution
So the firms may agree that I can’t sue you
Because that produces net benefits for their customers
But net costs overall
More generally, if the legal rule between A and B
Produces costs or benefits for C
The market may fail to produce economically efficient law
The same problem on the market for law that economists recognize in other markets
So the result is not always efficient law, but …
That problem is the exception on the private market, the rule on the public market

23. Anarchy in Cyberspace Public key encryption makes possible a world
Where all communication is private
Where nobody knows who pays whom what
Or who is talking to whom
Hard to tax or regulate things you cannot see
Contract enforcement is done by reputation
Digital signatures make it easy to find out
Whether I agreed to a contract
Who I agreed would arbitrate it
Whether I obeyed the arbitrator’s verdict
So Market anarchy may develop, arguably is developing, online

24. Suppose We End Up With Anarchy in Cyberspace, Government in real space
In a world where most stuff happens online
People mostly work online
Mostly buy digital goods
Mostly socialize online via virtual reality
It is now very easy to move
Since you take your address and URL with you
If one government doesn’t treat you right…
Vote with your feet
Governments are now just landlords

25. For Much More On All This
My Web Site: Contains links to: The Machinery of Freedom 2nd edition, free pdf 3rd edition $2.99 Kindle on Amazon Legal Systems Very Different From Ours Draft webbed for comment on my site My blog: daviddfriedman.blogspot.com Whatever I feel like talking about