Unit 8: Private Law
Everything we have talked about so far presupposes the existence of a state with the authority to compel people to obey court judgments. But are there other paths? In other words, can institutions arise other than the state that fill the same gap and that satisfy the same function that a state-sanctioned legal system does? In this unit, we will talk about four such cases – Viking law in Iceland, private prosecution in 18th century England, property rights in Shasta County and the compulsion effect of social norms.
Iceland
From 933-1263 AD Iceland had no executive branch of government to enforce laws and no formal criminal law. There was a kind of tribal judge (a godi) with jurisdiction to hear certain kinds of cases. People could sue each other in front of the godi, but there were no police and there was no mechanism for the state to enforce the godi’s ruling. This is quite different from our system, where the state can compel the enforcement of court orders. Even tort and contract law, which are brought to court privately (not through public prosecutors), are backed up by state enforcement.
So what was the enforcement mechanism? Simple – A person who did not obey the godi’s ruling could be legally killed by anyone. You might think of a number of problems with this system, but the institution evolved over time to deal with all of them.
• Couldn’t a good fighter violate laws freely since nobody would dare to try to kill him? No. Defending an outlaw was also illegal. Anyone who helped the outlaw could himself be sued and killed if he did not pay. The Icelandic system thus creates a growing coalition of private citizens to enforce rules.
• Wouldn’t a weak person have problems enforcing rulings privately? No. Claims in the Icelandic system were transferrable. A weak person could sell his claim to a strong fighter in a better position to follow up on the ruling. This is actually an improvement over Common Law in some respects, which does not allow the transfer of legal claims.
• What about defendants with no ability to pay? Defendants with no ability to pay would often borrow from friends and family to pay their judgments and avoid being killed. Vikings could also sell themselves into temporary slavery to satisfy legal debts. And, of course, maybe this dilemma is a feature of the system, not a bug. It creates deterrence. Don’t commit crimes if you can’t afford to pay the judgment. You might be killed!
Private Prosecution in England
Police and prosecutors were not established in England until the 1830’s. Prior to that, any member of the public could take anyone to court and prosecute criminals for their crimes.
What would be the motivation for a private citizen to prosecute a criminal case? Suing for a tort or a breach of contract produces a monetary judgment, but getting someone thrown into jail produces no direct benefit for the citizen prosecuting the case. Scholars give two reasons that it made some sense for private citizens to prosecute criminals.
1. A criminal prosecution might force the criminal to give a monetary settlement to the citizen prosecuting the case in exchange for dropping the prosecution.
2. Deterrence – For example, a store that always prosecutes thieves is less likely to have recurring problems with theft. In other words, vigorously prosecuting thieves is costly in the short-term but provides a long-term benefit.
The evolution of the institution was fascinating. Eventually, citizens formed societies to prosecute felons. Each member paid annual dues to the society, and if a crime was committed against anyone in the group, the society would prosecute the criminal case. Deterrence became a strong public good within the society, with criminals afraid to commit crimes against members of the most effective societies. For anonymous crimes like mugging, the society paid a large reward for anyone who turned in a criminal that was subsequently prosecuted.
Punishments
A particularly interesting feature of English criminal prosecution was the punishment scheme. Basically all serious offenses (e.g. any theft over 40 shillings) were death penalty offenses. Now, this sounds worse than what it was. Juries would often convict criminals of lesser crimes to avoid the death penalty, and courts pardoned many offenders for various reasons. Ultimately, only about 16% of people who committed death penalty crimes were actually executed.
keeping people in prison was too expensive. Eventually, needing more options for punishing people besides the death penalty, England turned to forced labor for the state or for the army.
Why the extensive use of pardoning? That might be a good example of an institution arising organically for efficiency reasons. Society probably figured out that there was an extensive deadweight loss associated with executions (lost productivity) and so executing every person who committed a death penalty offense was undesirable. They probably realized also that executing even a small fraction of offenders creates deterrence – being sentenced to death and then pardoned at the last minute is scary enough to provide some deterrence effect, especially if you knew there was a 16% chance that you might have been killed. Another point is that many people bribed public officials to release them from execution, which essentially substituted a monetary fine for execution when the defendant could afford to do so.
How did the system work? Pretty well, evidence seems to suggest. Crime rates in England were not much higher than they are now, and at the time they were actually lower than crime rates in France, which had a modern legal infrastructure with prosecutors before England did.
Shasta County1
Shasta County, California presents a fascinating case study. It’s mostly made up of ranchers and farmers. By historical accident, some parts of the county are closed range and some parts of the county are open range.
• Closed range means that ranchers have a duty to fence in their cattle and are responsible for damage the cattle create.
• Open range means that farmers are responsible for fencing in their land if they want to keep cattle out.
According to the Coase Theorem, people should reach the efficient solution and should behave the same way no matter which law is in force in their particular part of the county. Thus, Shasta County is almost a laboratory experiment for testing the Coase Theorem.
Ellickson did find strong support for the Coase Theorem – all of the residents of Shasta County behaved the same way no matter which law applied. But the most fascinating thing that Ellickson uncovered is that compliance was enforced through social norms, not through monetary transfers and not through the legal system.
Neighbors who didn’t comply were punished socially, not through the legal system. For example “bad” neighbors might be punished with a wave of gossip or by not being invited to social
functions. In more serious cases, farmers would actually drive an offending rancher’s cattle several miles out of the way.
This system is even more private than the Icelandic system. Not only is enforcement a private matter, but even the judgment itself is a private matter. Residents decided for themselves when to pull the trigger on any of the social punishments they had available.
One important feature of systems like this is a built-in incentive not to over-punish. Punishments should be costly for the punisher as well as for the person being punished. Since people decide for themselves when to impose punishments on neighbors, the institution needs to be set up in a way that does not incentivize residents to impose punishments unless necessary. This feature is certainly present in Shasta County’s punishment scheme. Spreading rumors about people uses up some of your social credibility, encouraging people not to spread rumors frivolously. And driving away a rancher’s cows takes up your own time and energy; killing his cows was not acceptable because there’s too much incentive to over-invoke punishment in order to earn a profit.
Why didn’t the residents just use courts instead? Well, not suing neighbors was itself a social norm, and a neighbor who sued another neighbor lost his access to the community to use social enforcement. And it’s not that the residents didn’t know how to use the court system. In fact, they regularly used the court system for outsiders who were not a part of their social network and could not be punished socially.
Social Norms
The incentive problem of collective action has a centuries-long intellectual tradition in economics and across the social sciences. How do we compel people to behave in the best interests of society even when it is costly for them to do so? For example, how can we encourage people to pick up their trash or be nice to strangers? It’s better for society as a whole if everyone does these things, but each individual can deviate for selfish purposes. How do we spur compliance?
The standard answer given by social scientists is social norms. Somehow, society programs into people that they should behave a certain way for the common good, even when it is costly for them to do so. Often, per researchers, these social norms are better at securing compliance than a compulsive legal system.
how many fish their colleagues have caught, because they watch each other getting off their boats and they all sell their fish in the same markets. Like Shasta County, it’s easy to socially punish fishermen who overfish.
Social norms can arise sometimes to enhance efficiency even in clear opposition to formal law. For example, academics routinely ignore copyright laws for posting articles to webpages and using each others’ work. Obviously the free flow of information enhances efficiency, and there would be huge social problems for any academic who used the court system in a case like this.
How do these social norms arise? They might come from religious or historical tradition, but social scientists put a lot of stock in organic evolution of efficient norms. Better social norms are imitated by observers, who copy them. This process generally leads to convergence on the most efficient social norms, although it could take some time.
Are these social norms efficient? In close groups, the answer seems to be yes; the law is less important. A social norm like honesty or being kind to strangers is likely to spread because of the obvious efficiency improvement. One caveat is that norms tend not to successfully proliferate if they rely on every single person following them. There will always be deviators from any system, but something like honesty or kindness or not overfishing is still good overall even if not every single person obeys.
