Quote of the Week

6 Replies

The Firm, the Market, & the Law (Coase)A system in which the rights of individuals were unlimited would be one in which there were no rights to acquire.

— R.H. Coase, “The Problem of Social Cost,” in The Firm, the Market, and the Law (Chicago: University of Chicago Press, 1988), p. 155.

Maybe because ethical approaches to rights have never been persuasive to me, I find Coase’s conception of rights as tradeable goods extremely appealing. The establishment of a framework for rights is part of the process of spontaneous order, or institutional change in the direction of growing complexity. Within this changing institutional framework, humans allocate rights either through the market process or through the legal/political process.

We can take property rights — from which, some say, all other rights stem — as an example. There is an inherent interest in establishing property rights as a result of the basic fact of scarcity. It’s a means of reducing conflict. But, property rights didn’t come in a bundle. They had to be developed over time, with all of their complexities. This explains the gradation we see when we look at different rights frameworks in different societies. To me, it only makes sense to speak of some rights as “natural” if by “natural” we mean that they are logical consequences of certain conditions of human existence. But, this doesn’t say much to me. By that definition, all aspects of human civilization are natural. This term, however, hides the process of change, growing sophistication and complexity, that drives the process of the creation of rights: not just property rights, but all kinds of rights. It also disallows for alternative directions of development.

It also follows that since rights change, new rights can replace old rights. Terming a set of rights as “natural rights” packages them as sacred and immutable. I understand the appeal of wanting to protect rights from predation by assuming them “inalienable,” but from a sociological point of I view I don’t find much sense in this perspective. Of course, by our definition of “natural” above, any new rights would be just as natural as existing rights! Hopefully one can see why I think the word “natural” lacks meaning. Instead of thinking of rights as conditions which transcend time, we should think of them as goods (which also have a relation with institutions) that are developed and allocated over time.

  • Robert Mróz

    Well, appeals to “natural law” or “natural rights” always strike me as similar to appeals to God in the theory of evolution – i.e., they basically constitute an attempt to “explain” something by a concept no less mysterious. Just as we can ask “All right, so if God made evolution happen, who (or what) made God happen?”, we can also ask “If natural rights enable us to have any other rights, then where did they themselves come from?”. This is just an assumption, an axiom which is useless in the process of explaining social change, and it constitutes an arbitrary limit of inquiry. But our inquiry, whether in economics, in sociology, biology or physics, should be considered as endless as there is always something left unexplained.

    Also, Ronald Dworkin provides some good arguments against, e.g., notion of general “natural right to be free” in “Taking Rights Seriously”.

    • http://economicthought.net/blog JCatalan

      Your point about arbitrariness is just what I have in mind. This, if I remember correctly, is also one of the points John Rawls made against Nozick.

  • George Machen

    Haven’t read Coase’s book yet, but my first impression of his quotation taken in isolation is, does his hypothetical set-up of a case of individual rights as unlimited include the standard libertarian proviso of “your rights end where my nose begins”? If not, then his conclusion follows indubitably, but trivially as a straw man. If so, then by gum, we’d have a real problem there, yessiree!

    • http://economicthought.net/blog JCatalan

      He only talks about property rights in the general sense.

  • http://twitter.com/JohnXopher John Christopher

    I tweeted on this earlier and indicated that I did not buy it. I will expand on that a little. I have not read this book. It looks interesting and I am putting it on my reading list. That being said one of the phrases that concerns me in this post is “This term (referring to natural law), however, hides the process of change, growing sophistication and complexity, that drives the process of the creation of rights” in addition “It also follows that since rights change, new rights can replace old rights.” I still believe there are set of rights that don’t change and take precedence on any developments resulting from the growth of society and the utilization of technology. Perhaps when I read this book I will gain a different perspective but at this point I still believe there are some fundamental rights that never go away regardless of societal changes.

    • http://economicthought.net/blog JCatalan

      This book isn’t primarily on the question of rights, other than property rights. But, one way to interpret his work on property rights is to see how individuals divide and package their property rights to sell them. So, it’s possible that something we can generally call rights in property has existed for as long as we can remember, but the exact divvying up of property and whatnot is developed over time.