Wednesday, October 08, 2008

Who says the natural state is equalitarian?

Why left intellectuals despise Richard Epstein of the Chicago School: Because he's one smart legal scholar and a very good political philosopher.
Now that yesterday's market nosedive shows the disappointing Congressional bailout has not calmed markets, let the post-mortem begin. Disasters like this latest financial meltdown don't just happen. Mistakes this huge require an impoverished political philosophy to grease the skids. Fannie and Freddie didn't design their horrific lending policies by chance. No, behind this lending fiasco lay the strong collective preference for the "patterned principles" of justice that Robert Nozick attacked so powerfully in his 1974 masterpiece, Anarchy, State, and Utopia.

Believers in patterned principles hold that there is some preordained social order that is more just than others. Accordingly, the function of the state is to use the levers of powers to manipulate behavior to achieve the desired outcomes. These patterned principles stand in opposition to historical principles of justice, which are content to establish the rules of the game and then let the legal moves by individual players determine the social outcomes. For Nozick, the key rules were rules of justice in acquisition (to set up the initial property rights) and justice in transfer, whereby those rights (and others derived from them) could be exchanged or combined through voluntary transactions.

Because Nozick was no utilitarian, he did not dwell on the powerful efficiency features of this system, which shine through for ordinary real estate transactions. The key function of the legal system is to minimize the transactional barriers and increase the velocity of voluntary exchanges, all of which generate mutual gains for the parties. So long as one is sure that the given distribution of resources is obtained by legal moves from the original position, don't worry about the relative positions of one person vis-à-vis the others. Don't, in other words, use state coercion to create a distinctive pattern of rights deemed ever so desirable in the eye of some political beholder.

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