ContractsProf Blog

Editor: Jeremy Telman
Oklahoma City University
School of Law

Friday, June 10, 2016

Scholarship Spotlight: "Is Rule of Law an Equilibrium Without Private Ordering?" (Gillian K. Hadfield, USC & Barry R. Weingast, Stanford)

Rule-of-lawEnforceability of promises by ultimate resort to governmental power is a cornerstone of contract doctrine. If you don't believe that statement, go re-read section 1 of the Restatement (Second) of Contracts. Nonetheless, Professors Gillian Hadfield (University of Southern California, Law) and Barry Weingast (Stanford, Political Science) take a different approach to theorizing about law generally, an approach suggesting--among other things--that the law of contracts does not hinge first and foremost upon the role of government at all. Hadfield and Weingast instead assert that a "legal system cannot achieve rule of law . . . unless there is an essential role for private, decentralized, enforcement of law." Here is the authors' abstract:

Gillian Hadfield (Southern Cal)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.

Barry Weingast (Stanford-PolySci)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.

"Is Rule of Law and Equilibrium Without Private Ordering?" is a fascinating piece of interdisciplinary scholarship addressing both political science and legal philosophy perspectives on a topic of immense interest to contracts scholars (among many others). Hadfield and Weingast's article is available for SSRN download here

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