C
hristopher Hill uses the term “physical force Levellers” to describe the contingent of the English Civil War who believed that, even if they were given political enfranchisement, unless there was a leveling of property, they would be forced into slavery by those who could use their economic means as a power over them (1972, p. 114). In much the same way, early-twentieth-century “realist” legal scholars contended that the formal restraints of contract law were inadequate in the face of increasingly consolidated cor-porate ownership of productive property. In that context, “a ‘legalist’ con-sciousness that excludes ‘result-oriented’ jurisprudence as contrary to the rule of law also inevitably discourages the pursuit of substantive justice” (Horwitz 1977, p. 566). This contention was all the more the case in the early twenti-eth century, when the common reaction of the state to labor militancy was to defend the “negative liberty” of the owners of productive property, often with state troops.The liberal break on the more radical Leveller impulse, established in part by John Locke’s anonymous pamphlets collected in Two Treatises of Govern-ment, is a germinal iteration of what Chantal Mouffe (2000) discusses as “the democratic paradox.” Mouffe finds this paradox in relation to the way that liberalism relies on and resists democracy: “What cannot be contestable in a liberal democracy is the idea that it is legitimate to establish limits to popular sovereignty in the name of liberty. Hence its paradoxical nature” (2000, p.
4). By claiming that government was subject to a democratic revolution only
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when it failed to uphold “the Natural Liberty” of the people, Locke strictly confines what democracy means: democracy is valid only if it continues to support the absolute protection of productive private property (1988, p. 412).
The capitalist state is necessary to defend the property rights of owners—
Locke says this is virtually its only reason for existing. The paradox is that a democratic government requires the consent of the governed, yet to govern, it must remain legitimate to the majority of the population. Its hegemony becomes especially precarious if the majority begins to see that property’s protection mostly serves a smaller and smaller slice of the electorate.
In introducing Jürgen Habermas’s tome Between Facts and Norms, Wil-liam Rehg argues that a functional state requires that “at least some portion of a population, indeed the majority, must look at legal rules as standards that everyone ought to follow, whether because they reflect the ways of ancestors, the structure of the cosmos, or the will of God, or because they have been democratically approved or simply enacted according to established proce-dures” (Habermas 1998, loc. 170). The concept of legitimacy—central to Habermas’s work—comes to the fore when we consider the cultural efficacy of the law and the state in any given order. The paradox of the liberal notion of the state is that it projects a politically democratic facade in front of an edifice built on economic inequality. Or, in the words of the legal historian Morton Horwitz:
It creates formal equality—a not inconsiderable virtue—but it pro-motes substantive inequality by creating a consciousness that radi-cally separates law from politics, means from ends, processes from outcomes. By promoting procedural justice it enables the shrewd, the calculating, and the wealthy to manipulate its forms to their own ad-vantage. And it ratifies and legitimates an adversarial, competitive, and atomistic conception of human relations. (1977, p. 566)
The “First Law and Economics Movement” chronicled by Barbara Fried (1998) sought to address this problem in the United States of the early 1900s by tempering the property absolutism with pragmatism: labor rights, social safety nets, safety and health regulations—policies that U.S. president Frank-lin Roosevelt would call “sane radicalism” (Olmsted 2015, p. 39). A key strat-egy of these scholars was “the choice to co-opt traditional ‘natural rights’ talk to its own political ends” (B. Fried 1998, p. 22). Robert Hale, the key scholar in this earlier movement, pointedly critiqued the Lockean assumptions of the laissez-faire state, attempting to take it on its own terms. As Fried sum-marizes, “Hale’s wholesale revision of property rights [. . .] is largely internal
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to the natural rights tradition that it critiques, grounded on the Lockean imperative that people have an exclusive right to that which they have created with their own labor” (ibid., p. 73).
During a time of increasing labor militancy, Hale’s rearticulation of Locke’s argument had significant political implications. While he was only one of many scholars working on this issue at the time, the struggle to define natural rights in an alternative fashion was as important as the Levellers’ re-fashioning of the concept in the seventeenth century, extending all the way to President Roosevelt, who tried to articulate a Second Bill of Rights in terms of economic and social equality (Sunstein 2004). Economics rather than religion formed the most potent cultural narrative. Therefore, the reaction against these policies was staged largely on the grounds of simply applying economics to the law. In the past four decades, this neoliberal doctrine of law and eco-nomics has become the hegemonic ideology, aiding in the reconsolidation of the apolitical, liberal definition of the state as defender of the reified culture of property.
The late-twentieth-century descendants of Locke’s ideology—which I discuss as the Law and Economics movement—do not shrink from its para-doxical implications, but they have a ready answer. They assert that their interpretation of the morality and utility of neoliberal economic theory and the natural law limits on “positive rights” are an accurate representation of the natural world; therefore, there should be little democratic discussion of the economic policies—all of which are seen as policies ultimately bearing on property. Bryan Caplan asserts that, since voters do not all adhere to his nar-row interpretation of the virtue of markets, “weakening democracy in favor of markets could be a good thing” (2011, p. 11). Jason Brennan’s Against De-mocracy (2017) argues much the same, and Hans-Hermann Hoppe (2001) goes so far as to recommend we return to a monarchy as the “lesser evil”
compared to democracy. Nancy MacLean’s history of James Buchanan’s role at George Mason University’s (GMU’s) economics department (where Caplan now teaches) and elsewhere is titled Democracy in Chains (2017).
While some critics disagree with MacLean’s account of Buchanan’s sup-port for Virginia’s resistance to desegregation, few take issue with her main thesis about the movement that Buchanan helped advance:
Their cause, they say, is liberty. But by that they mean the insulation of private property rights from the reach of government—and the takeover of what was long public (schools, prisons, western lands, and much more) by corporations, a system that would radically reduce the freedom of the many. In a nutshell, they aim to hollow out democratic
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resistance. And by its own lights, the cause is nearing success. (2017, pp. 28–29)
Buchanan is less central to this movement than MacLean proposes, but he was an economist present at the Mont Pelerin society meetings of the 1940s, he trained at the University of Chicago, and he served as a leader at the college that has since received the most money from the Koch brothers (from 2011 to 2014 alone, GMU received more than $48 million in Koch family monies [Barakat 2016]). In this sense, Buchanan is a good stand-in for the transformation of neoliberal hegemony over the past seventy years.
This chapter examines the moral and utilitarian arguments of the con-temporary Law and Economics movement, which has taken it upon itself to revive the Lockean understanding of the liberal state (or, as Milton Fried-man called it, the neoliberal, because it returned to the values of classical liberalism. It fits into the historical lineage started in the previous chapter, with Henry Ireton at Putney, his eye to property. In addition to this linear historical connection, however, the Law and Economics movement is also performing a similar political role to Locke’s ideology of property in the late seventeenth century. In the face of a variety of movements bent on articulat-ing their own understandarticulat-ing of this liberty, property, and natural law, Locke helped solidify natural law as articulated in the liberal capitalist conception of law and the state: the state would defend property, and any attempt to adjust property distribution should be met with a revolution. The contem-porary Law and Economics movement, as the present chapter illustrates, has been similarly motivated to rearticulate the proper relationship between law, economics, and the state, trying to resist a similar set of leveling impulses and reclaim the mantle of liberty from midcentury liberals and the emergent civil rights movement.
The Law and Economics movement is especially crucial to understanding Lawrence Lessig’s position as a preeminent voice in the battle for some form of “balanced copyright.” But before choosing this stance, he was focused on creating what he termed a “New Chicago School” within the Law and Eco-nomics movement. The “Old Chicago School” he problematizes is known as one of the earliest fonts of the contemporary Law and Economics tradi-tion. As an insurgent within the Chicago School of Law, Lessig (1995, 1996, 1998) called for a more explicit understanding of how the legal basis of the dominant economic system was inherently underpinned by an unexamined (or at least underexamined) set of cultural and social norms. Lessig’s evalu-ation did not question the validity of the cultural and social norms posited by the Old Chicago School but instead hypothesized that using social and
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cultural norms to regulate social behavior could be an extra-legal tool for policy makers.
In other words, the cultural efficacy of the system does not function as the Law and Economics movement postulates. To take the framework we have developed for talking about law and cultural efficacy, insofar as its pos-tulates are correct, it is either because other forms of efficacy—present in the practices of C1, beliefs of C2, and institutions of C3—help (and have historically helped) generate the predicted behaviors. As explored in the pre-vious chapter, where one “discovers” the ideal subject of “possessive market society,” it is often because state institutions have, at some previous moment, reformed C1 practices, censored C2 media, and instituted repressive C3 laws to force people to operate in ways that are more like the economic postulates of the Law and Economics movement. These postulates are, at best, a helpful index of human behavior in cultures where this efficacy adheres—similar to C. B. Macpherson’s assessment of Thomas Hobbes discussed in the previous chapter. However, at worst, they are ways of modeling the state according to what Richard Epstein calls an “economic imperialism” (1997, p. 1168) forcibly coercing individuals into acting according to the postulates when necessary.
In calling for this “New Chicago School,” Lessig opts for a middle ground, invoking Michel Foucault’s analysis of similar, nineteenth-century projects to “make culture serve power” (1998, p. 691). While he does so in the context of the potential downside, it is clear that he also intends the reference to the disciplinary practices of the nineteenth century—so often the subject of cultural studies ire—as a model of what might be called stateless social reg-ulation. But far from seeing this model as a problem, he sees it as admirably making explicit what many liberal theorists simply assume—namely, that the supposedly essential characteristics of the so-called state of nature had to be thoroughly inculcated through a variety of regulatory and repressive means.
Thus, while he critiques the Law and Economics movement, he basically accepts its understanding of what our culture should look like. His main con-cern is how to more effectively get there. Here, he represents the “democratic paradox” from the opposite direction: if it is evident that there is not a general cultural understanding of “liberty” and “property” along liberal lines, how can these be imposed on a society without the antidemocratic authoritarian-ism that liberalauthoritarian-ism was supposed to contest? A recent answer, given by Cass Sunstein, his former Chicago School of Law colleague, and Richard Thaler is that “libertarian paternalism is not an oxymoron” (2003). The article (ex-panded into their popular book Nudge [2008]) takes libertarianism (i.e., the absence of a paternalistic state) as an unquestioned paradigm, and hence the title well represents the paradox at hand—that is, how do we make people act
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more like they are supposed to act, or how do we make people act more like libertarians presume them to think and act without using the coercive state that libertarians claim to oppose?
Viewing Lessig’s later arguments about copyright in terms of a “free cul-ture” against this backdrop brings the real foundations of his critique into relief. The distinction he makes between “the physics of piracy of the intan-gible [and] the physics of piracy of the tanintan-gible” (2004, p. 64) serve as the jumping off point of the next chapter, which focuses on the use of the state to secure the rights of intellectual property (IP) against intrusion or dispos-session, insisting that every state commit itself to preserving the value of that property. Hence, the attempt by owners of IP to secure maximalist rights is not a deviation from the historical practice of liberalism but represents some of its most cherished goals.
In his work on copyright, Lessig tries to produce a rigorous critique of existing conditions of property relations, but the conditions he finds un-impeachable are the true source of the injustice he perceives. The supposed democratic content of the “free culture” interactions within that state are significant, but they cannot be read at face value. The necessary continuation of a class-divided democracy is especially evident in the very distinction Les-sig tries to make between tangible and intangible property, a partition that mirrors the global division of labor and its distributional consequences. This observation leads into the next chapter, which considers Lessig and other intellectual property rights (IPR) critics’ discussions of the social production of value: under the reified culture of capitalism, this value is appropriated through the social division of labor.
While it is beyond the scope of this work to trace fully the articulation of the democratic paradox throughout the history of Anglo-American mo-dernity, this brief overview of some of its most germinal thinkers should help situate the archaic resources that the latest Law and Economics tradition relies on—as well as the “so-called primitive accumulation” that the field overlooks in its historical accounts, a process that extends from the end of the previous chapter to the present day. The primary goal of this chapter is to outline the cultural assumptions and political goals that remain implicit in the arguments of adherents to the neoliberal ideology of the Law and Economics movement, despite their claims to scientific and ethical objectivity. The Law and Econom-ics movement was founded on a certain set of cultural assumptions, which must be taken for granted from the outset. Lessig does not contest the logic or rationality of these assumptions: he just pragmatically recommends that social norms must be implanted rather than expected to be natural.
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I begin by covering the more recent history leading up to the current Law and Economics movement and the battle over what these norms and assumptions could and should be. I then address these cultural assumptions and the economic theory behind them. I argue that this theory—embodied by Friedrich von Hayek and Ludwig von Mises—includes a tacit agreement that they should be coercively implanted, and then I turn to a close analysis of Ronald Coase and D. McCloskey. I then return to Lessig and the reason his challenge of maximalist IPR fails—precisely because it fails to challenge the reified culture of property on which the Law and Economics movement was founded.
From Locke and Lochner to the West Coast Hotel and Back:
A Short Prehistory of Law and Economics
As with Locke, proponents of the contemporary Law and Economics tradi-tion maintain the democratic paradox inherent in liberalism. They justify their ideology as simultaneously ethical or deontological and utilitarian. On the one hand, their property-protecting liberalism is said to be deontologi-cally, morally superior—stealing property is theft!—and should be followed as strictly as possible no matter the social or ecological consequences. This pure theoretical view, which haunts most Law and Economics movement analyses, is also the clearest reproduction of the reified culture of property, as seen in Locke. Here, as discussed in the previous chapter, the liberal state is removed from politics: no matter what democratic demands may emerge, no legitimate state action can be used to alter the status quo of social property relations. On the other hand, even in the Lockean understanding, the conse-quences of this deontological stance are inevitably posed as more efficient and hence superior from a version of the utilitarian perspective. Thus, the ethical stance is doubly legitimate, as it is also economically superior.
This utilitarian Locke, a student of Sir Francis Bacon, sees enclosing and improving property as not just a political right to be defended against government intervention but a general social good—using, in this case, the application of science to the improvement of yields. Tucked into section 37 of the chapter “On Property” in the third edition of his Second Treatise of Government, Locke introduces a unique defense of private property that eco-nomic liberals have stressed ever since:
He who appropriates land to himself by his labour, does not lessen but increases the common stock of mankind. For the provisions serving
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to the support of human life, produced by one acre of inclosed and cultivated land, are (to speak much within compasse) ten times more, than those which are yielded by an acre of Land, of an equal richness, lyeing waste in common. And therefore, he that incloses Land and has a greater plenty of conveniences of life from ten acres, than he could have from an hundred left to Nature, may truly be said, to give ninety acres to Mankind. (1988, p. 294)
Or, as Macpherson paraphrases, “Private appropriation in this way, actu-ally increases the amount that is left over for others” (1962, p. 212). In other words, in addition to the political defense, Locke proposes that his economic model is more productive. Within the Law and Economics movement, and the general U.S. discourse on property rights, this orthodoxy reigns: private ownership provides incentives for the “improvement” of real property and IP, producing more output than would exist otherwise—for instance, in a social commons.
But even this utilitarianism is haunted by a version of the democratic para-dox. As Macpherson points out, it “assumes, of course, that the increase in
But even this utilitarianism is haunted by a version of the democratic para-dox. As Macpherson points out, it “assumes, of course, that the increase in