Is Rule of Law an Equilibrium Without Private Ordering?
Gillian K. Hadfield
USC Law School and Department of Economics
Barry R. Weingast
Stanford University, Department of Political Science
July 11, 2016
USC CLASS Research Papers Series No. CLASS16-16
USC Law Legal Studies Paper No. 16-18
Stanford Law and Economics Olin Working Paper No. 493
Almost all theorizing about law begins with government. In a series of papers we challenge this orthodoxy. Our “what-is-law” approach places private enforcement at the center of a theory of law. The critical public component that distinguishes legal from social order is not public enforcement but rather a public, common knowledge, and stewarded normative classification institution that designates what is and what is not acceptable conduct in a community. Law emerges, we argue, to better coordinate and incentivize decentralized collective punishment (that is, private ordering: sanctions imposed by individuals not in an official capacity.)
Our work to date shows that the social order produced by a centralized classification institution supported exclusively by decentralized enforcement is characterized by several normatively attractive features. We call these features legal attributes. They include features routinely understood in the legal philosophical literature as characteristic of the rule of law: generality, published, clear, prospective, and stable.
Importantly, the legal attributes we identify do not arise from normative claims about law. Rather, they arise from our positive analysis sustaining an equilibrium based on centralized classification when enforcement requires the voluntary participation of ordinary citizens. These legal attributes are necessary to secure coordination and incentive compatibility in a regime of fully decentralized enforcement. Without them, the effort to sustain an equilibrium based on centralized classification fails. A regime characterized by rule of law is only an equilibrium, we argue, when enforcement of public classifications includes an important component of private enforcement. Without the discipline imposed by the need to incentivize and coordinate private enforcers, a government cannot succeed in sustaining law.
Number of Pages in PDF File: 35
Keywords: Rule of law, what-is-law, private ordering, decentralized enforcement
JEL Classification: H11, H41, K1, K4
Date posted: May 29, 2016 ; Last revised: December 8, 2016