1. ECO 481: Public Choice Theory Week 14 – Pt. I Chaos Theory: Private Legal System Dr. Dennis Foster

2. Legal System - Basic Issues Government-provided is a monopoly Isn’t efficient nor equitable. Relies on threat of the use of force. RPM: Mechanics of “market anarchy.” Libertarian premise: – The Non-Aggression Principle No one has the right, under any circumstances, to initiate force against another human being, nor to delegate its initiation.

3. What does the legal system do? Define & protect property rights. Do we need a state to do this? No! Key mechanisms – contracts & insurance. Contracts spell out the nature of our interactions. Insurance provides the validation of the contract. It took no king to produce language, money, or science, and it takes no government to produce a just legal system.

4. How do you enforce contracts? Professional arbiters (judges) will rule. Parties must agree. Judges have incentive to be fair & impartial. Insurance company pays off on the judgment. Judges will likely follow precedent. Contracts will evolve into standard formats. What if.... Parties can’t agree to a judge? Loser won’t pay? Loser has no insurance?

5. Advantages of a private system Based on restitution, not on punishment. Peer pressure is an important element. Even jails will be private, competitive & voluntary. We eliminate the litigation abuses we now have. Disadvantages??? It is a totally free society, but...

6. Critiques of a private system “Warring” insurance agencies. Will criminals take over? Will insurance companies become the state? What about the children? How do you get original title? How can the market really make these decisions? But “the market” is just shorthand for the totality of economic interactions of freely acting individuals…Murder isn’t wrong because it fails the market test…its intrinsic immorality will find expression through market forces.

7. Some Applications Product safety. Professional licensing. Gun control & Dangerous criminals

8. ECO 481: Public Choice Theory Week 14 – Pt. I Chaos Theory: Private Legal System Dr. Dennis Foster