Kinsella on Liberty Podcast, Episode 338.
From Human Action Podcast Ep. 308, “Rothbard’s The Ethics of Liberty with Stephan Kinsella” (May 27, 2021), with Jeff Deist, discussing Rothbard’s Ethics of Liberty, chapters 9, 13, 19, et pass. (PDF).
Lawyer and legal theorist Stephan Kinsella joins the show as we dive into Part II of Rothbard’s The Ethics of Liberty, grappling with the foundational issues of crime, proportionality, and contract. When is property justly held? When may injuries to a person or property be addressed with force, and how much force? How do we deal with one another contractually, in terms of promises and expectation? How do we resolve disputes privately? Rothbard presents a remarkable exposition of a theory of liberty, a normative justification for laissez-faire which was sorely lacking. Kinsella does a remarkable job of explaining Rothbard’s concepts with force and clarity, so you won’t want to miss this episode!
Raw video (unedited):
- Rothbard on the “Original Sin” in Land Titles: 1969 vs. 1974 (Nov. 5, 2014)
- KOL146 | Interview of Williamson Evers on the Title-Transfer Theory of Contract
- A Libertarian Theory of Contract: Title Transfer, Binding Promises, and Inalienability, Journal of Libertarian Studies 17, no. 2 (Spring 2003): 11-37
- A Libertarian Theory of Punishment and Rights, 30 Loy. L.A. L. Rev. 607-45 (1997)
- Fraud, Restitution, and Retaliation: The Libertarian Approach
- KOL197 | Tom Woods Show: The Central Rothbard Contribution I Overlooked, and Why It Matters: The Rothbard-Evers Title-Transfer Theory of Contract
- Justice and Property Rights: Rothbard on Scarcity, Property, Contracts…
- KOL004 | Interview with Walter Block on Voluntary Slavery
Rothbard on Punishment, Property, and Contract
Stephan Kinsella with Jeff Deist
The Human Action Podcast, Mises Institute
May 27, 2021
JEFF DEIST: Kinsella, you ready, Freddy?
STEPHAN KINSELLA: I’m ready. I guess I can take my mask off.
JEFF DEIST: What is it? I can’t see. What’s it got on it?
STEPHAN KINSELLA: V for Vendetta.
JEFF DEIST: Oh yeah, yeah.
STEPHAN KINSELLA: I got it backwards. That’s why.
JEFF DEIST: I love that movie. I like Stephen Fry generally, and it’s got a very young, cute Natalie Portman.
STEPHAN KINSELLA: She had her day.
JEFF DEIST: Before she was in all those – I think she was in Star Wars movies at some point.
STEPHAN KINSELLA: Yep.
JEFF DEIST: And then she became sort of a Hillary person.
STEPHAN KINSELLA: True.
JEFF DEIST: All right, we good, Clay?
Ladies and gentlemen, welcome back once again to the Human Action podcast. If you have been following along—you should be following along—you’ll know that we’ve been working our way through some various Rothbard texts in the past few weeks. And at some point we announced that we are going to tackle The Ethics of Liberty, which, after Man, Economy, and State might be the most treatise-like or full-length work of Rothbard’s for our purposes.
And we started the analysis of this book last week with Dr. Walter Block. We went through part one of the book, which deals in natural law. If you haven’t seen that show, be sure and go back and take a look because it’s got a lot of Walter Blockisms, and we wrestled with a lot of things conceptually in that show. But part two of the book where Rothbard lays out a theory of liberty is really the meat of it.
And I thought there would be nobody better for our purposes this week than our friend, Stephan Kinsella who is, of course, someone most of you probably already know or are familiar with. He’s not just an IP lawyer. Of course he’s written the definitive text, Against Intellectual Property. But he’s also written quite a bit about libertarian law more generally, the idea of when is force permissible, what is proportionality, what is contract, what is property, all of these things we wrestle with.
And Stephan, I guess by way of welcome, it’s interesting to me that Rothbard is writing this book in the’70s, comes out around ’82. I mean you think all this stuff would have been settled by 1500 or so. I mean we’re still talking about this stuff in the ‘80s. And now we’re talking about it in the 2020s.
STEPHAN KINSELLA: Yeah, and in a way, Rothbard was – he was lucky that he came in at the time where there was lots of low-hanging fruit. I think that’s one reason he made so much progress, but I always feel like the libertarian movement, the modern one, really started around Ayn Rand and that crowd in the ‘50s. So it was relatively new when Rothbard was writing in the ‘70s.
JEFF DEIST: Well, so his big chapter in here, “Property and Criminality,” I mean this is a very different approach I think to libertarianism than a lot of people take, and certainly a different one than the general public would conceive of. In other words, he roots it entirely in property. So maybe we can start with this idea. In modern statutory law and positive law, there’s a concept of tort and there’s a concept of crime. In the Rothbardian conception, for starters, those two things collapse into one another. So let’s give everybody the quick and dirty of what this means.
STEPHAN KINSELLA: Right. I think most people think of different branches of law. There’s contract. There’s property. There’s family law, international law, domestic law. But really there’s private law and civil law, tort law, and crime, so they’re all treated differently. And of course in the modern conception, crime is considered – a tort is when someone commits an offense against someone else. And in libertarian terms, it’s basically trespass, which means using their property or their resource without their permission. So that’s an offensive touching, like a battery, assault and battery, using their land or stealing their car.
Those are all types of torts. But they’re also – some of those are considered crimes, and in our current system, the statist system we have, the victim is the state, which is why, when you have a crime, it’s the state versus O.J. Simpson, which is why Ron Goldman’s family could sue O.J. Simpson separately in a civil trial. So there’s different standards of proof. There’s preponderance of the evidence for a civil trial, that is, to prove that someone harmed you and owes you damages. So you have to prove that more likely than not.
But if you convict someone of a crime, which is against the state, you have to prove by – beyond a reasonable doubt. So there are different standards, and people have sought to collapse law into one thing, sort of like mathematicians and scientists – I mean physicists search for the grand unified theory to unify quantum theory and relativity. So we seek to simply and unify these things, and Rothbard’s idea is that really it’s all tort. And of course the state shouldn’t even exist and shouldn’t be the plaintiff or the prosecutor in a criminal action. The victim should be the one that is able to seek restitution.
JEFF DEIST: So when we think of torts, I guess we think of a civil wrong other than a breach of contract for which the law provides some kind of remedy. And that’s become an entire field of law, and of course there’s personal injury, which is a huge source of income for a lot of lawyers. How radical do you think this was? I mean in 1982 when this book comes out, if we say that, for example, as Rothbard says, all property is really private.
There’s no – the distinction isn’t public versus private property. The distinction is whether there’s public or private actors controlling it. And that at the end of the day, control is the most important right in the bundle of sticks that makes up a property. So I mean do you buy this, this idea that private versus public is not the distinction?
STEPHAN KINSELLA: Well, yeah, and I think it was really radical at the time. I think that a lot of things we read now seem tame because we’re so used to it. I remember reading something by – Lew Rockwell had written something in – I think it was in the Hoppe Festschrift from just 11 or 12 years ago. And he mentioned one splash Hans Hoppe made about maybe 10, 15 years before that was when he was critiquing the US Constitution and how it was a centralization. It wasn’t really – the Constitution is not about protecting rights. And he said something like you could hear a pin drop in the audience, so everyone was stunned by that.
That was a little boldly radical to say before an American audience, even libertarians, to criticize the Constitution and the alleged minimal state nature of the original founding, which is all nonsense. But now that seemed like, oh yeah, we take that for granted, or at least it’s not – it doesn’t shock people to say that now. So I think a lot of this stuff was more pioneering than we give it credit for because it seems so – not tame but seems obvious to us now.
I do think it was radical in part because even for libertarians to hear that it was radical because the common view is that the common law is the thing. And also legislation is the primary source of law that can supersede the private common law, and even libertarians seem to have this view. Most objectivists are not against legislation as a form of law because they’re not against the state, and therefore, they’re not against legislatures and even democracy as a way of making law.
And certainly they’re not against common law, and most libertarians weren’t against the common law. But the common law always was a vehicle of the state, so you have to keep an eye on what it develops. What it develops has tended to be private law that’s more or less along the lines that’s compatible with our libertarian principles, which we sort of intuitively or rationally deduce but not always. And so we can always criticize a development even of the common law if it is incompatible with libertarian principles like blackmail law or even aspects of trademark law.
JEFF DEIST: I’m stuck when I’m reading this. I mean here, Rothbard is trying to develop basically a theory of the rights of property. And if you’re successful in that, you could, as you say, theoretically collapse civil law, positive law, common law, tort, contract, criminal law into one theory.
And I know that, for example, there were critiques of this book at the time that he had just bitten off more than he could chew, and that he was sort of breezing over some of this stuff and that this would require a much more comprehensive, philosophical system or approach to breach – he’s making some leaps here. Do you carry that away when you read this book?
STEPHAN KINSELLA: Yeah, a few, but I think that is not at all a criticism of him. He was very bold, and no one else was doing it, and no one else has done it since. He was not a lawyer, but he was amazingly good at legal theory given that he wasn’t an attorney and all kinds of other fields. He made so many advances, which are incredible. I don’t know if we’ll get to the contract stuff.
But on contract theory he, combined with Williamson Evers, neither of whom are legal specialists, they came up with this radical new contract theory, which I think is one of his most profound achievements. And it has a couple of gaps and things you can correct, which I’ve tried to do in my articles. But that’s only because they weren’t legal specialists, but given what they knew—history and economics and political theory—what they did was just amazing.
So the few rough edges, and of course it’s not comprehensive, but it’s pretty damn good. It’s just chock full of insights, and we can quibble about a few things. Like on the collapsing in the one theory of law, this is my own view, which I think is rooted in Rothbardian insights. I sometimes think everything should collapse into one, but that it’s really criminal law.
But it might just be semantics or a way of looking at it. So in a sense, all libertarian rules – it’s not – libertarianism really isn’t about liberty. Liberty is a consequence of following our principles, but our principles are property rights principles, and our principles are basically how we allocate property rights.
But all a property right means is you identify the owner of a resource so that you know who can say no to the use of that resource. And if someone uses that resource without the permission of the owner, that’s a type of trespass. Now, you can call that a tort, but in essence, it’s a crime or a tort. It’s basically a type of use of someone’s resource without their permission.
And because all rights are considered to be enforceable and the purpose of all property rights is to stop conflict, which is physical, violent clashing of people, in a sense it’s all really about criminal law or tort law in the sense of brute force. So even family law, contract enforcement, property rights, that really all boils down to either tort or criminal law because it’s about how you enforce these rights and how you stop people from invading the borders of these things with physical force.
JEFF DEIST: And I think to back up your position there, he uses the word just and justice quite a bit throughout this book, certainly throughout this section. So he’s thinking of it in the sense that we often think of justice as a criminal law consideration. And it’s interesting to me that he does take a few shots at utilitarians, the idea that we’re talking about, let’s say, disputed land titles, which has been very much in the news lately with Israel and Palestine.
And my immediate sense was that writing this in the mid ‘70s, maybe Mises’ death almost gave him a little bit of freedom to say something that he believed but to say it in a freer manner than if Mises were still alive as his great mentor. I mean because it’s – I’ve got to think he’s talking about Mises and especially Hazlitt when he brings up utilitarianism as a way to assess property rights without reflection on justice itself.
STEPHAN KINSELLA: I think so. My thoughts on this are that, of course, there’s a – utilitarianism has different meanings and subjectivism as well. The Randians use subjectivism to mean a type of relativity or moral relativism, but in Austrian economics we mean it just to mean the nature of value, that it’s a subjective thing. It’s the demonstrated preference of the actor, and the same thing with utilitarianism.
If you mean it that we should favor policies that have good consequences that’s fine because the purpose of justice in the law is also pragmatic in the sense that it solves the problem, the problem of conflict. And the goal of it is to let us lead lives of cooperation and peace and prosperity together. But we have a principled approach to achieve that, so I have never thought that a deontological or a principled approach is incompatible with a consequentialist approach.
I think Randy Barnett in the introduction to his Structure of Liberty makes this point that utilitarianism can be thought of as a subset of consequentialism. So consequentialism itself is not necessarily incompatible with our principled way of thinking, but utilitarianism in the sense of being able to add up people’s values and subtract them and come up with a net benefit, which I don’t think Mises meant. I don’t think Mises believed that because Mises had this subjective view of value. But I think his utilitarianism was more just a pragmatic consequentialist type of thing, like we should favor private property rights because that leads to greater prosperity.
JEFF DEIST: Well, let’s get into this discussion, and it’s a lengthy one from Rothbard, about these four scenarios for property titles. So first of all, he says basically using Lockian homesteading principles we can come up with an understanding of how property is justly acquired, namely, by transforming it or mixing it with your labor or by exchange, some sort of voluntary contract or payment or by gift. So once we understand that, he lays out these four scenarios for property titles. And I’d love for people interested in the Israel/Palestine/Gaza conflict right now to read these four scenarios and consider them because there might be factual disagreements about it. But I think he does lay out an approach to dealing with land disputes, nothing short of that.
STEPHAN KINSELLA: Hold on just a second, Jeff. Hold on just a second. Sorry about that. Before we go there, I wanted to mention one other thing about this property. I do have a blog post about this, which is interesting. It’s “Rothbard on the ‘Original Sin’ in Land Titles: 1969 vs. ’74.” And it sort of ties in with this, what you’re saying how he was liberated in writing something because in ’69 he had his more leftist kind of spin on this thing. And he was talking about how you could homestead the property of universities because they’re part of the state and all this kind of stuff.
JEFF DEIST: Who does that sound like?
STEPHAN KINSELLA: Exactly. But in ’74 he added a paragraph, and I’ve got this in there. He added a paragraph to the reprint of that, which is in a later book, and he basically clarified that if there’s an original sin in the origin of your property title, it doesn’t mean someone else can take it because all that really matters is if you’re not the person who stole it, so you have clean hands, really it’s whether you have a better claim than someone else who wants to take it from you.
And so I think that addresses this criticism you hear from a lot of anti-Lockians and anti-libertarians who criticize our Lockian view of homesteading because they say, well, you claim that we own property by owning – homesteading it in the state of nature. But the whole world is full of history of conquest, and no property has a clean title. So therefore – so really what they want is they want to take it for themselves, so they want to say that your title is no good, so we can take it from the state or for Georgia’s tax or something like that.
But Rothbard’s point and one that I have elaborated on, which I agree with is, look, property titles are about relative title in a sense. It’s always about contestants to the title, who has a better title to it. And in principle, if you can trace your title back to Adam or the first guy that used it, you have better title. But if you can’t, what the law has always done, and this is a clever solution, is you just trace it back to a common ancestor in title.
So if some man – if we two people contest a piece of land and they both claim that they’re the owner and they can trace their own title back to some guy from 300 years ago who they don’t dispute owned it, even if he got it illegally or his title is – they’re both claiming title based upon his title. So then you just see, well, who did the original owner transfer it to, and who has the best chain from then? So that’s a way to solve that, and you still have libertarian property rights, so that was an interesting thing how Rothbard clearly added that paragraph I think to not sound so much like he wants quasi – or property that’s being used privately for peaceful purposes to be fair game for anyone to just come take it.
JEFF DEIST: To be upended.
STEPHAN KINSELLA: Exactly. Now, I think he would still argue and I would too that government property in a sense is owned by the people. They’re the true owners of it so – like I had a Democrat friend the other day ask me will you condemn the January 6th attacks on the Capitol? And I’m like, well, I’m not a Trumper and all that stuff, but let me ask you this. Who’s rights did they violate? And he said, well, they violated the government’s rights because they own the property. I said no, they don’t. We own that property. So I’m not saying they were really liberating it, but I don’t think that they violated anyone’s property rights in a natural sense by storming the Capitol.
Now – so yes, Rothbard starts out with the Lockian idea of original appropriation or homesteading. And that is that – and Rothbard makes this great – he has so many insights that – like I’m reading this stuff myself, and I’ve been in this for 30 years. And I keep refining my own views and coming up with even simpler explanations for things that seemed simple a long time ago, and now I’m restating them.
And I see, oh, Rothbard saw that all along. Like his point that we live in the world and we need to control our bodies or our person, as he calls it, but we also need to grapple with and control material resources. And because of this need, and Hans Hoppe emphasizes this too in his development of his property theory. Because we need to use these things, any human ethic, like any political ethic, has to permit the first use of resources.
And if we’re going to have property in things, not just the right to possess – not just the ability to possess and use them, then people have to – then a property right has to be superior to someone who comes later and takes it from you later. So if you combine that together, it’s almost like the Mises regression theory of money. You can see that the owner of a resource has to be the first one who used it because the first one – so the first person has to have the right to use it. And if he’s not secure in his ownership, we don’t have property rights, and if someone coming later can just take it, then we don’t have property.
We just have a war of all against all. So these things just naturally imply that the first owner has to have a better title. And the only exception to that if he transfers it to someone by contract. So you really have three principles of all libertarianism, which come out of Rothbard. You have self-ownership, which really means you own your body, the scarce resource of your person or your body. And then that person, as an actor in the world, is the owner of things that he starts using that were unowned or that he gets by contract from someone else. In a sense, those three principles are the basis of all libertarian theory.
JEFF DEIST: Well, I guess the question is then, especially for disputed land titles, Rothbard says, well, there’s no such thing in libertarian law as the statute of limitations. We’re interested in justice, not efficiency. So talk about that.
STEPHAN KINSELLA: So statute of limitations technically of course couldn’t exist in libertarianism because it’s a statute, and that is something that a legislature enacts, and that requires a state. I do think that the principle of statute of limitations would emerge in any developed set of private law just because – maybe not going forward, but for the past because, as a practical matter, records and testimony and witnesses get lost over time.
So the older a dispute is, the harder it will be for someone to prove their claim that the current possessor of a resource is not the owner and that they should be given that resource. So basically the law would have a system, which the current private law does, which is that the possessor of a resource is presumed to be the owner, and that’s known in the common expression—possession is nine-tenths of the law—which is compatible with the very purpose of property rights, which is to stop conflict.
And so if you stop conflict, you have to presume that the possessor of something is the rightful possessor and is therefore the owner. So if you physically oust someone, you’re acting like with self-help like a vigilante. Even if you’re the owner, you should go through the right processes so that people know that what you’re doing is reliable and you’re not being biased in your case and all kind of things like that.
So the point is you would have – the possessor would be presumed to be the owner, and if someone wants to oust you, then have to prove that, by some kind of standard, the preponderance of the evidence at least, that they have a better claim to it. So the point is if someone kicks you out of your house, then you should easily be able to prove that they did that and kick them out and get damages from them for trespass, so you would win easily.
But if you claim that someone is on this farm and they’ve had it in their family for seven generations but that their great-great-great-great grandfather stole it from my great-great-great-great grandfather, I believe that if you can prove that, you should be able to win. So I do believe that, so there should be no technical limit on justice. And here I would agree with – I think Walter Block agrees with this, I think Hoppe would agree, and I think Rothbard would agree. I do know some libertarians who balk at that idea. They think there should be like a final – they think – they’re terrified of the idea of the Indians getting back Manhattan, something like that. I’m not, or I think that if you can prove that you own something, you should get it back no matter what.
Now, there are some exceptions. I shouldn’t say no matter what. If you’re partly responsible – so in the law – and you’re a lawyer. You know this. In the law, there’s a thing where if someone forges a check, it’s not your responsibility because the bank shouldn’t have let the funds be withdrawn. However, if you leave the check out signed on your drawer or when a workman is at your house, you’re kind of negligent. It’s partly your fault.
It could be a different story. So likewise, if you’re negligent and you allow your watch to be stolen easily and then it’s passed along, and ten generations later some good faith possessor has the watch, maybe it was partly your fault that this guy bought the watch in good faith and lost his money to buy it. So maybe you’re more to blame than the innocent buyer is, so you could have cases like that. But by and large, I think there should be no statute of limitations. It’s just that it’s harder to prove that after so much time has passed.
Now, I do think that going forward this may change because records are so good now. They’re electronic. They’re digital. They’re going to be locked in the blockchain all the Bitcoin nuts say. So we will be able to prove things, and a lot of these claims have been told are suspended because of state action. So, for example, when you have a communist or a socialist taking of property in a revolution, we all know whose property it was. And it might take 70 years before the empire collapses, but I think these Cubans that were expropriated, Russians, East Germans, why not let them have their house back or their family farm or their factory that was taken from them even if it’s been 100 years?
JEFF DEIST: So here’s the argument. Even if the temporal element – there’s a lot of centuries between the Indians and the current owners of high rises in Manhattan. So even if justice would ignore a temporal element, if you could in fact go back and prove ownership, talk about how Rothbard deals with the idea of a bona fide purchaser. In other words, a lot of people have come along since the Indians, and they’ve paid fair and square for their condo in Manhattan, and they may be the current owner. So they’re different. That’s a different scenario than if the heir or the descendant of the outright thief is the current occupant and owner.
STEPHAN KINSELLA: I actually – I can’t remember offhand how Rothbard deals with the bona fide purchaser doctrine. My suspicion is he rejects it, but I can’t remember. You can remind me.
JEFF DEIST: Well, I mean he lays out the four scenarios, and one of them is if you have – you know you have an unjust title. In other words, that can be proven. But you can’t – but the current owner was not involved in the injustice. So the question becomes whether they would be deserving of any compensation. And I think what Rothbard basically says is that if you can determine the rightful heir, then yes, they’re ousted and the heir gets in immediately. So there’s – nobody is saying that all of this is without friction.
STEPHAN KINSELLA: Correct.
JEFF DEIST: I mean we’re not talking about a utopian system. We’re talking about justice, and again, that comes with a price sometimes.
STEPHAN KINSELLA: And the law – speaking of unifying the law, of course in the common law, there has been two types of law. There’s the normal courts of law that we’re used to, but then there’s the courts of equity. And lots of the legal – the Latin terms like, I think, habeas corpus and things like that, those are originally based in claims that lie in equity we call it, which just means fairness. And I think there’s been efforts to unify or collapse these things, or maybe we only have the latter.
We only have regular law now, and equity supplements it now, something like that. But there’s been a lot of developments in the private law. I’m mostly familiar in this regard with the civil law because I’m from Louisiana. And I think the common law has mirror doctrines, but there’s all kinds of clever solutions that have been developed, which I think are roughly libertarian. So, for example, if you’re – so number one, you do distinguish between a bona fide or good-faith purchaser and someone who is sort of in cahoots or knowingly buys something that’s stolen.
There is – there should be a difference there. And that difference comes into play sometimes – let’s say you have a piece of land, and you don’t have good title. There’s a cloud on the title, but you’re not aware of it, or you took a risk or something like that, but you’re not directly a wrongdoer. And you build an improvement on that property, and then later, the original owner gets it back.
Well, as long as you’re a good-faith purchaser or a bona fide purchaser, I think there are some doctrines that allow the guy that was using it for some period of years to get compensated for the value of the improvement he put on there, because the original owner is getting his land back, but now it’s improved with a nice building on it that’s worth something, which seems fair.
And that actually goes to the – another equitable doctrine called unjust enrichment, like if you accidentally –which I don’t know if I completely agree with in all cases, but the classic example is you show up to paint someone’s house, but you accidentally go the neighbor’s house and you start painting it. And you paint – so you give this guy a fresh paint job. Now, let’s assume it makes the house nicer, and you don’t ruin it with orange or something like that, or what’s Auburn’s colors? Whatever they are.
JEFF DEIST: You were an Eagle man.
STEPHAN KINSELLA: So under unjust enrichment, then this homeowner comes home, and he gets a bill from the painter, and he says I have a defense to the contract claim because I didn’t sign the contract, and he’s correct. He has a defense. However, then the painter could sue inequity saying, well, you still owe me something because I made your property better. You’re enriched unjustly if you don’t pay me something to compensate me at least for my cost.
And so that doesn’t seem the most unfair horrible thing in the world. I’m not sure I agree with it in that case, but you can see the thrust of it makes some kind of sense. And I do think Rothbard would give some credence to that, but like you say, I think that ultimately he would say that, if you can prove you’re the owner, then you should get it back. Whether or not some compensation is owed for the upkeep that was done by the possessor in the interim is kind of a detail.
I also believe, and I can’t remember if Rothbard goes into this, but I think there would be a huge market for property title insurance in a totally free market, which we have already. If you get a mortgage on a house you’re buying the lender who loans you the funds insists that you get a property title policy. And the reason for that is in the case the property you’re buying turns out not to be owned by the seller and they lose their collateral, then they get paid back by an insurer. So the insurance company makes sure that a property title attorney does a search and gives an opinion saying we’re 99.9% sure that this property is owned. So that incentive system would be there, and that would tend to clean up problems and give you – if there’s a cloud like – I used to do this.
I started – before I switched to the dark side and did patent law, I was an oil and gas attorney for a couple of years. And we did property title searches, and so you would – you do this. You search for all the records filed in the county or parish records. And you do a title report, and then you examine it, and if you come up with some anomalies, you sometimes have to cure them, or you take the risk. Like, oh, this guy died without a will, or we can’t – no one found the will, and it was probated in 1932 in Arkansas, and he might have an adopted child that was lost or all kinds of things like that.
And a lot of times in those opinions, you do rely upon the statute of limitations in making your opinion. And you also – it’s convenient for lawyers in today’s world. What you do is you don’t have to go back to Adam. You only have to go back to the founding of the state because the state is the sovereign, and they’re considered to be in the law the fountain of all property rights. So you only have to go back to when Texas was incorporated or when Louisiana became a state or something like that.
In a private law setting, you wouldn’t have that convenience probably, but still, I think you would have property title insurance for things that were valuable, and that would cause the property title records to be maintained. And by the way, property title records are good, but I have another blog post, which is interesting. You’ve heard of the Domesday Book probably from England in the – oh God – around 1900 or 1000 A.D. And it was – but the whole purpose of this was – it was a big survey done by the government in England to measure all the property. Everyone says it’s a great achievement, but of course the purpose of it was for collecting taxes, and so people couldn’t not pay property taxes on their land.1
JEFF DEIST: Well, this – I think all of this leads us to our subject, which Rothbard addresses in a subsequent chapter, which is proportionality. That’s the ultimate detail. When there’s an injury to person or property, what ought to be the compensation in a Rothbardian or a libertarian legal theory? So let’s get into that. I mean, first and foremost, the shift to retribution, which is sort of restitution plus is just so refreshing because we have this crazy world of criminal law today where we’re just warehousing people in prisons at a cost of 20, 30, 40, 50 grand a year to tax payers. They come out worse, and the whole thing is just crazy and not working.
STEPHAN KINSELLA: Correct. There’s – and this is another reason why I’m not so sure that the right thing to collapse law into is tort instead of criminal law because the whole idea of proportional punishment is really a criminal law idea. It’s about how much force you can use when you’re defending yourself physically from an attack or when you’re attempting to inflict punishment after the fact in – which is called retribution.
There’s different theories of punishment in the literature, like why do we punish people? And one is the dessert theory, like a retribution, like they deserve it. Another would be rehabilitation, like we put people in jail to rehabilitate them. Of course that doesn’t work. That makes them worse. Another is incapacitation, which I think is not – is probably the best of the theories. In other words, when you’re locked away or when you’re executed, you just can’t commit crimes anymore.
And ultimately I do think that should be – my personal view is that while there is a right to retaliate with force especially in defense but even after the fact and that is the theoretical grounding of all rights. I do think that in a civilized world, institutionalized punishment would be very rare, and incarceration would be very rare because it’s just so expensive, and it’s risky. And I do think the burden of proof should be high for that, and it would be hard to solve. And if you accidentally punished an innocent person, then you’re committing a crime yourself, or at least a lot of damages.
So you’d have to get insurance. That would be expensive, and you’ve already been victimized by the crime. Why would you want to pay twice for a risky liability? So I think that restitution would tend to be the primary mode of implementing our rights combined with – in a few rare cases, combined with lethal self-defense, which everyone would accept, ostracism, or just expelling someone from the community or vigilante justice, just killing someone if they have to be killed, and everyone just sort of lets it go, or an occasional execution of someone that’s just so heinous that there’s nothing else you can do with them.
But other than that, I think people would – you would allow them to integrate back into society by making amends, admitting they were wrong, proving that they’ve rehabilitated, offering restitution to the victim or rectification. It seems to me that would be a more humane and civilized way of doing things, and if the state got out of the way of criminal law, I think that would be easier to achieve that. And I do think that’s largely compatible with Rothbard’s view.
Now, what Rothbard tries to do, and I believe here when he comes up with punishment in a civil sense for a tort, he’s modeling it based upon the criminal law idea of proportionality. And he uses this two-teeth-for-a-tooth idea, which I believe Walter Block formulated and Walter – and Rothbard drew upon that from Walter’s Defending the Undefendable. And I think the thrust of that is correct because the idea is that if someone is harming you, you only have the right to do to them what they’re doing to you.
So there’s a certain symmetry or reciprocity in the libertarian non-aggression principle. So if someone is trying to murder you, you can kill them back in self-defense. But if someone is doing very – something minor and mild to you, you don’t have the right to just blow their head off with a shotgun because that would be disproportionate, and they don’t deserve that much punishment or that much retaliation.
So there’s a proportional aspect to that, and so that translates over to the civil law side of it when you’re getting damages for something someone did to you. So the idea was that, like if someone steals your television – well, or your tooth because it’s based upon the lex talionis or the biblical idea of an eye for an eye, a tooth for a tooth. So Walter says, no, it’s not a tooth for a tooth. It’s two teeth for a tooth because if someone takes your tooth, what they did to you was take your tooth without your permission.
But you still own that tooth, and if you get that tooth back, you’re not doing anything wrong to the thief. You’re just getting your property back. But he’s still gotten away with taking your tooth without your permission, so now you can take his tooth without his permission, so that now you’re even. So you have two teeth now. You have your original tooth back, and you have his tooth. And I think the thrust of that is correct. However, I think it’s too mechanical, too mechanistic. I don’t think it’s that rigid. It’s not like two for one. I mean that would fall afoul of the criticism of subjective value that Rothbard and Walter would have to agree with as Austrians.
JEFF DEIST: Well, when – exactly, and when you say we’ve got to figure out what somebody deserves as punishment and it shouldn’t be mechanical like that, isn’t that an argument for common law juries? In other words, we have sort of local or temporal standards. Stealing a guy’s horse in 1800 might be different than stealing his horse in 2020.
STEPHAN KINSELLA: Absolutely, but that’s also because – for two reasons. Stealing someone’s horse in the 1820s is a different crime than stealing it now because the consequences are different. It might result in death in the 1820s. The beauty of the common law and the original Roman law, by the way, they were both customary, decentralized, case-based systems where law was developed by a justice finder, like a judge or a jurisconsult, sometimes augmented with a jury, trying to decide what the best or most fair or just result was in a dispute, a real dispute.
And the benefit of that was they can’t sit there like a legislature and just announce laws. They only sit there and wait for people to come to them with a dispute, and then they have before them two real parties each advancing their case, which is the benefit of the adversary system of the common law and represented by a legal counsel and formulating their best argument, drawing upon established principles of justice and established legal principles that had been developed previously, and trying to get the judge to see that they should win some result.
And that means that the court has available – they can ask questions because there’s a real context. So that means that law always develops in a context. This is one problem I have with armchair scenarios. People say, okay, if you’re starving in the desert and someone has a bottle of water, can you take it from them?
I mean no context is given. I think the question is unanswerable, but if that was a real-world case in a common law court, there would be two real human beings that were in the context for a certain reason, and you could ask questions. Well, how did you get there? What agreement did you have? What did you do to each other ahead of time? What led you to this situation? Why wasn’t there another alternative? But you can’t ask those questions of someone coming up with a stupid hypothetical. That’s why I’m very leery of answering hypotheticals or even trying to be too bold with deducing the whole body of law.
Randy Barnett, again in The Structure of Liberty makes a good point where he distinguishes between – I think he calls it legal precepts and abstract legal principles. We can only go so far with our armchair theorizing and our deducing. So I think we can go some distance. We can come up with the basic principles like I mentioned before about self-ownership and Lockian homesteading and contract. But the details will always have to be filled out by custom and interaction and some degree of negotiating and bargaining because this whole endeavor of law – the idea of law and ownership is that you have a right to your possession respected and recognized widely by your neighbors in society.
It’s almost like the idea of money is some medium of exchange that’s generally used, like the more and more generally it’s used, the more it becomes like money. For law to become law and for rights to be rights, they have to be respected by the bulk of society and your neighbors, which means you do rely upon people’s mutual agreement with each other to recognize and respect their rights.
So you’re going to have to appeal – I mean, look, you don’t want to sue someone every five days for a $5 thing because you’re going to annoy your neighbors that they have to keep being called to the jury. You might have the right to get that $5, but you don’t have the right to have your neighbors help you get it. So they’re going to help you to a certain extent if it’s serious enough.
This is why I think there is some core of truth to aspects of mutualism. I think mutualism goes off the rails. But there’s something about the mutual aspect that we have to mutually respect each other’s rights, and we have to have a give and take. So we have to be reasonable and be willing to compromise sometimes because if two neighbors have property that abuts each other, there is no infinitely precise answer to where the fence should be put.
You can’t go down to the millimeter. There’s going to be some wiggle room there because life is real. So to live in harmony with each other, we have to agree to let it go at a certain amount of slippage, an inch or a foot, something like that. And if people stand on their rights and say no, I want it measured down to the nanometer, everyone’s just going to ignore this complaint because it’s a waste of time.
JEFF DEIST: Well, the beauty of this Rothbardian conception of a private law justice system in the form of restitution to an actual victim rather than supposedly paying your debt to society or the state when you commit a crime is that I think it allows a great degree of mercy. In other words, Rothbard says, hey, look. The punishment that Walter Block or I come up with is a maximum, but the victim is always free to impose less than that. Let’s say you had a family member murdered and you find out that the murderer had a really rough childhood and this and that. You’re allowed to impose mercy…
STEPHAN KINSELLA: Correct.
JEFF DEIST: … on that person in a private society in a way that something like the three-strikes law in California, which has put a lot of people into prison for a long time for a third nonviolent offense doesn’t give you that flexibility.
STEPHAN KINSELLA: In society now, people have this flawed notion that if you’re the victim of a crime and the state is considering prosecuting the criminal, you as the victim can decide whether or not the state will prosecute because you’ll hear this expression: well, I’m not pressing charges as if…
JEFF DEIST: In the movies.
STEPHAN KINSELLA: Yeah, like but probably as a practical matter, if the victim is not going to cooperate with the prosecutor, the prosecutor might drop the case because it’s going to be more difficult to prove his case. But the victim doesn’t have the right to force the state to let the guy go or to forgive the guy. But if it was a purely private thing, he could forgive the person, and that would benefit – that would be to the benefit of a more flexible justice system because, as I’ve written in my punishment theory, which is based – rooted heavily in Rothbard’s ideas, so the victim ought to have as much flexibility as possible because victims are so different in how they respond to the crime.
We have to recognize that when a crime is done, the reason we oppose crime is because it can’t be undone. It’s an offense that’s forever immutable and undone. So pure restitution is impossible except in a very, very simple case. Someone takes my car and I recover it five minutes later. Maybe the offense – but even then being deprived for five minutes can’t be undone.
So all you can do is pay monetary damages, but because value is not measured in money, money never makes you whole. So restitution is always an imperfect remedy. It’s just the attempt of justice to let the victim do what they’re entitled to do. That’s all you can do in the aftermath of a crime or a tort or a trespass.
But if you give the victim maximum flexibility, because value is subjective, then you maximize the restitution done to them because they’re subjectively satisfied more. So if a victim wants to physically harm the aggressor to get vengeance or retribution, and if they want to take the risk that they’re punishing the wrong person and pay a heavier insurance bond and all that kind of stuff, then let them do it if they can find an agency that will take the risk on and do it.
But most people would prefer to have an apology and have the person explain why they did it and pay some kind of restitution even if it won’t be the full amount or even if it is the full amount, and get their lives back together. And one way to use this right to punish is, like you said, you don’t have to punish the person to the maximum. But if it’s legally established because of a developed body of law that, because of this type of crime, the victim would have the right to punish someone up to this amount, you can use that in a negotiation with a criminal to bargain with them.
You could say, listen, I have the right to inflict this much torture or punishment on you, but I will relinquish some or all of that if you will pay me this much money. So if you just throw it to the jury and say give an award of monetary damages for this crime, it’s kind of arbitrary. It is a judgment call, but if you conceive of it as a bargain where the victim has the right to inflict this much harm, then the jury could be asked, well, how much would this guy be willing to pay to avoid having his arm chopped off or something like that?
And then you could also take into account how much money the victim – the aggressor has. So that would solve this billionaire or millionaire problem where people say, well, if you establish that it’s only $3 million to kill someone, then Bill Gates can go kill people all the time, not that he would ever do that, right? But that wouldn’t be the case because if Bill Gates, a multi-billionaire, murdered someone, then the victim would have – the victim’s family would have the right to kill him.
And because he’s worth $200 billion, he might be willing to pay $199 billion to avoid being killed. So the incentive effective would be exactly the same no matter how much money you have. So I think this flexibility would lead to all kinds of more tailored results to the nature of the case. And it would allow the original goals of punishment, which is, again, incapacitation, rehabilitation, deterrence, justice. They would all be able to be fulfilled in a better way if the state got out of the criminal law side of things.
JEFF DEIST: Well, I think that’s a beautiful segue into our topic of contracts. So just like Rothbard roots his concept of criminality and proportionality in property, he does the same thing with the title transfer theory of contracts, which is something you mentioned earlier he developed along with Bill Evers who is still at Hoover I believe, still out at Stanford, still alive and kicking. So for people who aren’t familiar, give us the quick and dirty on the title transfer theory of contracts, and then you and I can discuss how radically that departs from the nonsense we learned in law school.
STEPHAN KINSELLA: Yeah, and I have a – on my website, I have a post about – and I have an interview with Evers because I tried to track this guy down for a long time because I was fascinated by this contract theory. I pestered the guy for about seven years with various emails, and he finally answered and agreed to an interview. The thing is I sent him my own contract article as a way to make him see that he – I was serious and I wanted him to talk to me.
But I wanted to talk to him about his article and the genesis of his ideas. All he wanted to do was go over my article because he thought that was the purpose of it. So I only – he kept saying, well, in your article. I was like, no, I wanted to talk about yours. But he confirmed what I had started to guess, which was that I had thought that Rothbard in ’82 in his Ethics of Liberty in his contract theory chapter, which draws upon Evers’ 1977 JLS article.
So I think in the very first issue of the JLS, Journal of Libertarian Studies, Evers had this path-breaking article “Toward a Reformulation of Contract Law.” So I thought that Rothbard was building on Evers’ theory, but what I discovered was, in ’74, Rothbard has written a brief passage, which kind of was the precursor to all this. So I think what happened was, and Evers didn’t disagree with me on this, Rothbard basically came up with this as he thought about property theory. And he probably was discussing with Evers, and Evers developed it, and then Rothbard built upon Evers’ development of Rothbard’s idea. So it was really a combination of Evers and Rothbard. And the idea is that it’s a natural – the contract is just a natural consequence of property theory.
So we own our bodies because we have a natural right to our body, and then we own resources in the world, scarce resources, that we homestead according to Lockian theory. But being the owner of a resource, what does it mean to be an owner? It means that you have the right to exclude people from using it. In other words, if other people want to use that resource, they need your permission.
That’s what being an owner means. So being an owner means the right to grant or to deny permission to people to use this. Now, this permission can be simple or complex. It can be future-oriented or present. It can be complete or partial. You could have a lease of something for a day, lease a car for a day. You could invite someone into your home for a day. You can let someone have sex with your body for an hour. Or you can alienate the title completely, which would be a permanent consent for someone to use it, which is what contract is.
So contract is just the way that owners express their consent for people to use their resource and what they say, what the terms of that consent are, whether it’s permanent or temporary, whether it’s conditional or unconditional, things like that. So what Rothbard did was he re-characterized contract as just the assent by the owner to transfer the title of a thing that he owned to someone else. And this is, of course, different than the legal – the modern legal conception of what contracts are.
JEFF DEIST: So if you go to law school and you take Contracts 1, you’ll learn a lot about offer and acceptance and consideration. In other words, they’ll talk endlessly about the elements to a contract, and then you’ll learn a lot about remedies. Like people think, well, you ought to – if somebody breaches a contract, then non-breaching party ought to get the benefit of the bargain. They ought to get what they thought they were going to get or at least monetary damages approximating that. And Rothbard says no, no, no.
STEPHAN KINSELLA: Correct, although most of those doctrines would have an analog in his theory that would just have a different basis. And it would lead to some different conclusions about some things like inalienability and debtors’ prison, things like that, which Rothbard slightly mangles. But so the standard legal doctrine is that, look, if you – why can we have contracts?
And in international law, by the way, it’s called pacta sunt servanda, this Latin term, which means pacts or agreements are to be respected. Why do we have agreements or contracts that are legally enforceable? And the idea is that if you make a promise to someone – this is the legal idea – if you make a promise to someone and that person relies upon your promise like they assume you’re going to do what you promise you’re going to do and they change their position, like it’s called detrimental reliance.
They change their position to their detriment so that if you don’t perform the promise you promised, they’re going to be worse off. So you made this person worse off if you don’t perform, so then you’re compelled to perform, or if you don’t perform, you have to pay some kind of monetary damages for so called breach of contract. So promises are thought to give rise to binding obligations in the law, and if you breach that obligation, you violated the rights of the person that is the obligee – the obligor and the obligee, and therefore, you’ve breached the contract and you owe some kind of damages for that breach.
So that’s the classical way we think of it. But there’s many problems with that, so Rothbard points out, well, if you make a promise to someone, you’re just saying words. And that’s not really aggression against them. And so – and also, Randy Barnett points this out. Randy Barnett has also made path-breaking work in contract theory a little bit along different lines than Rothbard but somewhat complementary.
He calls it a consent theory of contract. But Randy points out that this traditional idea of why contracts should be binding is problematic because it’s circular reasoning because if you say that someone is harmed if they reasonably relied to their detriment upon a promise, well, the reliance is reasonable only if there’s a law that says that promises are binding. If promises were not binding, then you wouldn’t be reasonable in relying on it.
Or put it this way. If someone makes a promise and you know that promises are not binding, like people can just lie and say you can view a promise as just a prediction of what you’re going to do, like I promise I will paint your house tomorrow. That’s really just a prediction of what I’m going to do tomorrow, but because I have a free will, I don’t know what I’m going to do tomorrow.
Maybe I won’t choose to do it tomorrow. So if you know that and you rely on it anyway, you’re taking that risk, so why should it be on me, right? So it’s circular reasoning to justify contracts being binding because the person reasonably relied upon it when the reliance is reasonable only if contracts are binding in the first place. So I think that’s a circular problem in the law.
So Rothbard solves this by just saying, listen. It’s not – contracts shouldn’t be viewed as binding promises. They should just be viewed as the consent given by the owner of a resource to transfer the title to someone else. It’s very simple. It’s elegant, and it clarifies so much about law. And in a sense, I think this is a bigger legal contribution than even the collapsing law into one – into tort law.
JEFF DEIST: Well, even the modern version of contract law, statutory contract law, we understand that there are limits on what we’re going to force people to do because they agreed to do it. And Rothbard brings up this idea of a wedding. Let’s say a man and woman agree to get married. And the man goes out and rents a hall and spends a bunch of money on wedding cake and food and invites all these people, and he’s out – these days, I think he’s out 20 or 30 grand for a pretty simple wedding.
And then at the 11th hour, the young lady says, nah, I’ve changed my mind. I don’t want to marry you anymore. I mean very few people would suggest that specific performance, forcing her to marry the guy, is an agreeable remedy for this breach of an oral contract when she said I do. Nobody would say that. And from that, Rothbard sort of extends it and says, well, how far down the rabbit hole does that go? And so he’s against specific performance in a way that Walter Block is not it turns out…
STEPHAN KINSELLA: Correct.
JEFF DEIST: If you watched the show last week.
STEPHAN KINSELLA: Yeah, and I actually have – I think my first podcast on my stream was Walter and I debating, here in this room I’m in right now in my house, debating inalienability and voluntary slavery contracts. Some libertarians take this – they take the – they misunderstand this idea I think of contracts, so if you take…
JEFF DEIST: So the contract becomes the thing rather than the property.
STEPHAN KINSELLA: Correct, and that’s why I’m surprised Walter makes the mistake because he seems to adopt Rothbard’s view, but he’s applying it like the – so the mainstream legal doctrine has a difficulty. Why wouldn’t a service contract be enforceable by specific performance? So why do they go to damages, monetary damages only? So they have to fix the flaws in their theory.
So theoretically, if you have a binding obligation to do something – so in the Roman law and the civil law, all obligations – contractual obligations are considered to be one of two types: obligations to give, which means – which is what Rothbard believes—really it’s just the transfer of title—or an obligation to do, which is a service or a performance contract.
But – which means that if you have an obligation to do something like marry someone or sing at their wedding or paint their house or perform at their magic show – perform a magic show for them at a party or sing, then if you don’t – if you’re going to back out, the court could physically dragoon you and force you into doing it, right? Why doesn’t the court do that? Or put it this way. If you fail to do it, then you’ve committed some kind of crime.
You failed to do something you were supposed to do, and you committed a crime. Why shouldn’t you be put in jail for that? So the law worms its way out of that by coming up with this idea. Well, it’s impractical for the court to enforce this. If you force the singer to sing, she might not do a good job. How is the court going to know whether she sung the right way? That kind of thing. So the court simply says, well, all we can do is give you monetary damages in almost every case.
So really even the law, although it claims that there are binding obligations to do things, it never really treats it like that. It treats everything like it’s an obligation to give, so you could have reclassified an obligation to sing as an obligation to pay money if you don’t sing. And by the way, under conventional contract theory, you do have this notion of breach of contract. So you think of it as a binding promise or a binding obligation, and if you don’t do it, you’ve breached the contract and you have to owe – you owe damages. You owe monetary damages.
Under Rothbard’s theory, I don’t know if he explicitly says this, but it’s a natural consequence of it. There’s no such thing as a breach of contract. It’s impossible to breach contract because contracts are not obligations. Contracts are simply transfers of title to property, to resources that are owned. And they happen according to the consent and the expressed consent of the owner when they happen.
Now, if it’s a future-based and conditional transfer, let’s say I tell you if you pay me $10,000, I give you my car in a week. I need the car for a week, but then you can have it at the end of the week. But if you pay me now, the car is yours at the end of the week. So someone pays me the money for the car. I’m driving my car, which is really now the car of the buyer, but I have the right to – I’m basically leasing it for ten days.
At the end of the week, the car really becomes owned by the buyer, and if I refuse to turn the car over, now I’m just committing a type of theft or conversion or trespass because I – so no action of mine is needed to transfer title. It already happened when I previously made the contract, but it’s not a binding obligation, so it’s got nothing to do with that. So it also clarifies, by the way – so in terms of voluntary slavery, if you focus on the fact that a contract is the transfer of ownership to a resource that you own, then the reason voluntary slavery contracts are unenforceable, and I think Rothbard is a little confusing on this.
I used to think he made a mistake, which I could fix. But now I think he was basically right, but he words it in a way that you have to read real carefully to see that he was actually right. He just – he explained it a little bit wrong. What he says is that if you owe someone money, like from a loan, like you owe them – you borrow $1000 now from a lender and you owe them $1100 in a year. And if you don’t repay the lender in a year, then you’re – he calls it implicit theft, and I don’t – I think he came up with that.
I don’t know what implicit theft is. But – so you’re technically a thief if you don’t repay the lender, so theoretically, debtors’ prison is justified. Now, if you go that far, then really Walter would be right because that means that you could sell your body because this – when you borrow money, you’re effectively pledging your body as collateral. So you’re selling your body, but Rothbard doesn’t like that result, so he says that, well, that would be disproportionate punishment, which is sort of a cheat, right?
But he also has this argument that your will is inalienable, and therefore, it’s impossible to sell your body. And I think that’s technically incorrect. It is not impossible to sell your body because if you commit a crime, then the victim is entitled to use force against this criminal even though the criminal still has a will, and it’s impossible for even the criminal to alienate his will, and yet it’s still justified to overwhelm his will and use force against him. So the impossibility is not the reason why it’s unjust to imprison a debtor. It’s rather – but what I think Rothbard was getting at it something that Hans later articulated.
It’s the reason we own our bodies. The reason you own your body is not homesteading. The reason you own your body is because you have a better link to your body because of your direct control of your body. So I think that’s what Rothbard was getting at. He glimpsed even this early on. So it’s impossible to alienate your will. It just means that you are – you, the human actor, your person, your personality, your mind – is the one controlling your body directly, and that is impossible to alienate. That’s why you have a unique ownership right over your body, which is why a contract to sell your body is not effective.
So when we imagine this Lockian origin of rights that Rothbard is based on, you own your body because you are a natural owner of your body, and that’s because it’s impossible to alienate your will, which is another way of saying you directly control your body, which is what Hoppe argues later. But as an actor moving around in the world, as Rothbard says, you not only have the need to control your body but to use material resources in the world that were unowned. So you have to grapple with those, he calls it, and use them, so you acquire them. So the ownership of things that we acquire is a different character than the ownership of your body.
When you acquire something, it was unowned, and now you acquire it and you own it. But because you acquired it, you can de-acquire it. That is, you can abandon it, which is why, with contractual consent, you can alienate title to something to someone else. If you acquire something that was unowned by your act of will, you can undo your act of will and give it to someone else.
So I own this tree branch, and now I give it to you. I own this apple. Now I give it to you. But you never acquired your body because there was never a separation of the actor in your body. You can’t be an actor that acquires things without having a body that’s unified and integrated with your personhood. So the ownership of your body is a thing that’s a natural relationship between you and the thing that constitutes the physical aspect of yourself.
So that is why a contract to sell yourself is not enforceable because to have a contract for slavery to be enforceable, it would mean that the master has the right to use force against you even though you object. But under libertarianism, that’s only permissible if someone’s committed a crime. But all he did was utter words saying I promise to be your slave, and again, Rothbard rejects the idea that promising means anything. So saying I promise to be your slave is not an act of aggression, so if I later change my mind, I’m not violating the rights of the master. So when he uses force against me to keep me from running away from his jail or his plantation, he’s committing aggression against me.
JEFF DEIST: I think Stephan Kinsella is dancing awfully close to the concept of a soul right about now, ladies and gentlemen. Oh my goodness. We’ve got to get a timestamp on this. But look, let’s – okay, alienation of the will and slavery – okay, very tough stuff, very messy stuff.
But let’s go back to your car example real quick because I want to drive this home for people. You’ve got a car. You agree to sell it to someone for X dollars, but you need it for this last week. You’re going to hand it over to them when the week is up. So at the end of the week, if you fail to transfer the property, your car to them as agreed, you’ve taken something from them. In other words, that’s theft, conversion, fraud, whatever you want to call it under libertarian laws.
STEPHAN KINSELLA: Correct.
JEFF DEIST: We don’t need breach of contract in this scenario.
STEPHAN KINSELLA: Correct. Correct. It’s pure property and tort theory. It’s pure property and tort theory.
JEFF DEIST: Well, I want to wrap up on this idea of promises and expectations, which are very amorphous things, but somehow they under gird all of our current contract law from what I can tell. Rothbard takes pains to point out. He says, look, there’s a moral element to all this that is outside the bounds or the reaches of libertarian law. You make a promise to someone and you renege on that promise. That may well be an immoral act in your own personal ethical code. But that’s not the point here is that if we get into enforcing promises and expectations, we are effectively enforcing morality. And I think both Rothbard and even Mises would agree. Whose morality? By what god to we measure? This is very difficult stuff.
STEPHAN KINSELLA: Correct. Not only is it arguable immoral to break contracts, but it would hurt your reputation, especially in the business world. So the reputational effect of not living up to your contract is far more damaging than a legal consequence of a breach of contract. I mean people are not going to trust you anymore, or they’re going to charge you a premium for your services or something like that or give a discount because you’re unreliable. So that’s the natural consequence of all this. And by the way, back on the other example, the reason that I think debtors’ prison – Rothbard doesn’t have to worm his way out of his debtors’ prison consequence by saying it’s disproportionate punishment is because we have to imagine two scenarios.
I owe $1100 – or let’s say I owe the car. I owe the car to the buyer at the end of the week. If I still am in possession of the car and now it’s owned by the buyer, if I refuse to turn it over, I’m committing some kind of offense. I’m committing a trespass. But if the car was lost or destroyed and I refused to turn it over, then I’m not committing theft because there is no car to steal. And the same thing with the debtor, if you have the money and refuse to turn it over, you’re still committing a type of theft because, on the day the money is due, let’s say I have a million dollars; $1100 of my money now becomes owned by the lender. And if I don’t turn it over, I’m committing some kind of wrong.
But if I’m bankrupt and penniless, there is no money to steal, and I told – I confronted Walter about this. I said, well, you say it’s implicit theft, Walter, but if I don’t have any money and I owe money to a lender, to a creditor, what is stolen? So he thought about it, and he goes, yeah, you’re right. It’s not the $1100 that’s stolen. It’s the original $1000. I said so now by some action that happens a year from now, it’s retroactively making the original lending of the $1000 – that money was leant to me, and it was given to me in full ownership so that I could spend it.
That’s the whole point of a loan is money is given to a borrower so they can go spend it on a project. So you’re saying that I didn’t have ownership of that $1000, so now it was the original $1000 that it turns out was retroactively stolen, but we couldn’t determine whether it was stolen for a year, which violates a principle that Hoppe and Rothbard enunciate, which is that whatever property system we come up with has to always give an answer to who owns something now.
It can’t be – it can’t wait upon a future condition because the whole purpose of a property system is to tell us who the owner of a resource is so that we can avoid conflicts. It has to always be able to, in principle, answer the question who owns this thing now. It can’t say, well, we’ll know in a year. So – and not only that, the $1000 is loaned to the borrower 100% without conditions.
It was done in exchange for a reciprocal title transfer, but the way to conceive of a loan in Rothbard’s title transfer is that a loan – look, Rothbard’s theory would handle even gifts or donations they’re called, one-way transfers. I give you $1000 now as a gift. That’s a contract because it’s a contractual title transfer. It’s not reciprocal because nothing is given in exchange. Or I can give you $1000 after you paint my fence, so that’s a one-way title transfer of money conditioned upon the performance of an action.
Now, we call that action a sale of services, but it’s not literally a sale of services. It’s just an action that the performer can do because he owns his body. But likewise, I could have – I transfer $1000 to you now that’s unconditional so that you can use the money for your purposes. And in exchange for that, you’re transferring to me $1100 in the future. But one, it’s a contemporaneous, present transfer, which is risk-free and done. The moment it’s done it’s contemporaneous. The other is in the future. And so it’s necessarily risk because the future is uncertain. This is Mises. The future is always uncertain.
So both the lender and – the creditor and the debtor both know that the $1100 in the future, which is the object of that second title transfer, is an uncertain thing. They both take that risk that’s it’s an uncertain thing. If it does not exist at the moment that the future arrives, then there is no act of theft. Now, everyone thinks, oh, well, that’s unfair because then the debtor gets off – he gets away with not paying the debt.
Well, that’s just ridiculous. Lawyers are very sophisticated, and we come up with complicated contracts, and there would be augmented conditions, conditional upon conditional upon conditional. And of course, any lender would say that, okay, you owe me $1100 on the due date, and if you don’t have it, then you owe me that amount plus accrued interest going forward, and as soon as you come into that money, then you owe me that. So they’re not going to let the guy get away scot-free.
JEFF DEIST: Right, or they place a lien on the thing he used the $1100 to buy or…
STEPHAN KINSELLA: Correct. You could have collateral. But again, not all – so this is another one little quibble I have with Rothbard. He imagines that you could have a pledge or a bond he calls it, and by the way, this is a criticism I have of a lot of Bitcoiners who have this – what I think is a ridiculous idea of smart contracts, which I think makes no sense whatsoever. They seem to envision that all contracts are secured or that could be backed up by collateral. But my guess is that 99.9% of all contracts that happen in the world today are unsecured.
I mean the typical person that borrows money, borrows money because he doesn’t have the money. So – or someone who’s going to be paid for service, like I pay – I hire someone to sing at a wedding and I’m going to pay them $3,000. This is their job. They’re not sitting on a mound of money, so they can’t pledge or put $10,000 of damage payments in escrow ahead of time. They don’t have it, so most contracts are unsecured. That is, the person extending something ahead of time is taking a risk of non-performance, which is why you might resort to insurance in some cases, or you might resort to a reputation agency to make sure this guy is a good risk.
And in some cases, you would ask for collateral, and if someone buys a car from me and I loan them money to do it or extend them credit, I might take security interest in their car or in their house. But not all contracts can have collateral. But when there is collateral, of course that can be the fallback option.
JEFF DEIST: And you might even run a credit check.
STEPHAN KINSELLA: Mm-hmm.
JEFF DEIST: Well, all that said, I think, Stephan, I want to thank you for this tour de force.
That was a great conversation. We’re going to go ahead and link to a couple of the blog posts, which Stephan mentioned.
We’re going to link to Randy Barnett’s book. We’re going to link to how you can get The Ethics of Liberty at a discount from our site.
And we’re going to keep on moving through some of the chapters in part two of this book next week with another guest.
So Stephan, I thank you for your time, and ladies and gentlemen, have a great weekend.
STEPHAN KINSELLA: Thanks Jeff.