WEBVTT NOTE Rothbard on the Economics of Crime 1 00:00:00.000 --> 00:00:06.720 It's a great pleasure for me to deliver this talk for the 14th anniversary symposium 2 00:00:06.720 --> 00:00:14.760 in honor of Murray Rothbard's Man-Economy and State, Masterpiece in Austrian Economics, 3 00:00:14.760 --> 00:00:22.440 and I want to thank Guido for his invitation and Jesus University for his fabulous opportunity. 4 00:00:22.440 --> 00:00:29.200 The subject of this talk is not about Rothbard and Beerus, but about crime, a subject maybe 5 00:00:29.200 --> 00:00:36.240 Today we could find a point of connection with a presentation made by Professor Bodky 6 00:00:36.240 --> 00:00:41.920 because the socialist state represents one of the highest forms of collective criminal 7 00:00:41.920 --> 00:00:49.920 organization. Transition is already a transition from criminal organization to a society about 8 00:00:49.920 --> 00:00:55.920 freedom. The question of crime is important because it permits, among other things, to 9 00:00:55.920 --> 00:01:06.920 To distinguish the characteristics of market on which a free society is built to separate clearly the society of cooperation and violent behaviors. 10 00:01:06.920 --> 00:01:16.920 Economies of crime as a specific application of instruments of economists can be analyzed for different topics. 11 00:01:25.920 --> 00:01:33.920 But we choose deliberately to reduce the focus of this paper. 12 00:01:33.920 --> 00:01:38.920 This talk does not deal with the mechanism of anarcho-capitalist society, 13 00:01:38.920 --> 00:01:43.920 subject on which some contributions were made by Murray Rothbard in his book 14 00:01:43.920 --> 00:01:48.920 Libertarian Manifesto or by Professor Hoppe in the Journal of Libertarian Studies. 15 00:01:48.920 --> 00:01:53.920 Nor will it constitute a study on the private protection of security. 16 00:01:53.920 --> 00:02:00.920 It will also not be about the problem of restitution of a debate on the proportionality of punishments. 17 00:02:00.920 --> 00:02:08.920 Our sole objective is to highlight the different and divergent contributions made by Murray Rothbard 18 00:02:08.920 --> 00:02:11.920 as the mainstream economist on the question of crime. 19 00:02:11.920 --> 00:02:16.920 To understand this difference, we follow three important perspectives, 20 00:02:16.920 --> 00:02:21.920 the conception of law, the enforcement of law and the role of the state. 21 00:02:23.920 --> 00:02:36.120 For the neoclassical school, law is what is defined by the state. In Barnett's words, 22 00:02:36.120 --> 00:02:43.640 whatever the state says is law, is law. Whatever the state makes a crime, is a crime. Consequently, 23 00:02:43.640 --> 00:02:50.240 law is the outcome of a special state process which defines the titers of property and rights. 24 00:02:50.240 --> 00:02:56.240 There are rights because there is a law, and not there is a law because there are rights. 25 00:02:56.240 --> 00:03:02.240 Bastiat in his essay The Law has already stressed this different logic. 26 00:03:02.240 --> 00:03:05.240 We can note three consequences. 27 00:03:05.240 --> 00:03:11.240 First, some actions are forbidden although they do not constitute violation of property rights. 28 00:03:11.240 --> 00:03:16.240 News from France, for example, the recent project of the French government on security 29 00:03:16.240 --> 00:03:26.240 This takes several of the activities of prostitution, although it constitutes for the most part of prostitutes and customers a valuable commercial activity. 30 00:03:26.240 --> 00:03:33.240 Moreover, other actions are legalized, although they represent clearly violation of property rights. 31 00:03:33.240 --> 00:03:43.240 Indeed, a farmer who refuses to sell his property to a government agency can see this one sized by force to build an highway. 32 00:03:43.240 --> 00:03:48.240 The third consequence of this approach is the place given to the economist. 33 00:03:48.240 --> 00:03:55.240 The economist is a social engineer who helps the political decision to assign different rights. 34 00:03:55.240 --> 00:04:00.240 So the crucial position is attributed to him. 35 00:04:02.240 --> 00:04:11.240 For the neoclassical economist, law is the result of rational calculus between cost and gains. 36 00:04:11.240 --> 00:04:21.240 The cost of defining and assigning the different rights on one hand and the gains obtained by the added edges of an adapted definition of rights on the other hand. 37 00:04:21.240 --> 00:04:28.240 Law is a means to internalize the burden of externalities and to minimize the social cost. 38 00:04:28.240 --> 00:04:41.740 In this framework, the rights depend on the result of a specific calculus, that is to say, they depend on the importance of gains and costs. 39 00:04:41.740 --> 00:04:50.240 The rights are not absolute, but they are relative to specific and historical conditions. 40 00:04:50.240 --> 00:05:00.240 The purpose calculus is based on an objective value, that is, it implies the possibility of interpersonal comparison. 41 00:05:00.240 --> 00:05:03.240 The rights are conditional words. 42 00:05:06.240 --> 00:05:17.240 In fact, the mainstream economist does not think in terms of crime and peaceful exchange, but in terms of voluntary or involuntary transfer. 43 00:05:17.240 --> 00:05:24.240 An inventory transfer is not bad in itself if it permits to increase the total available wealth for a society. 44 00:05:27.240 --> 00:05:30.240 The allocation of rights is the first step. 45 00:05:33.240 --> 00:05:38.240 The second one is the enforcement of rights previously defined. 46 00:05:38.240 --> 00:05:43.240 This process of enforcement is also the outcome of calculus. 47 00:05:43.240 --> 00:05:54.240 The objective is also the same to minimize the social losses or to maximize the highest possible wealth for a society. 48 00:05:54.240 --> 00:06:02.240 To this level of minimized social losses is associated an optimal number of crimes or rapes or murders, 49 00:06:02.240 --> 00:06:08.240 and the optimal element for the probability of detection and severity of punishment. 50 00:06:08.240 --> 00:06:24.240 The notion of optimal crime is considered as a curious and meaningless thing for a libertarian or for an Austrian economist, but it is the price that must be paid for acceptance of the mainstream framework if we accept it. 51 00:06:25.240 --> 00:06:35.240 To sum up this first point, the neoclassical approach of law considers that the rights are conditional and depends on historical dispositions. 52 00:06:35.240 --> 00:06:42.240 Murray Rothbard shows clearly that this framework is characterized by an absence of theory of justice. 53 00:06:42.240 --> 00:06:51.240 It's only the outcome of a social and political competition and compromise subject to variation and to policy choices. 54 00:06:51.240 --> 00:07:04.040 In the Rothbardian framework, it's possible to understand what is a crime when a just 55 00:07:04.040 --> 00:07:11.360 title of property is correctly defined. Indeed, a crime is a valuation of just right which 56 00:07:11.360 --> 00:07:18.040 rests upon a theory of property. More accurately, if we follow Rothbard, a crime can be defined 57 00:07:18.040 --> 00:07:25.360 and properly analyzed as a violent aggression against the just property of an individual. 58 00:07:25.360 --> 00:07:30.640 Crime constitutes an invasion against the property of somebody, against tangible goods 59 00:07:30.640 --> 00:07:35.160 on which he has just property, or against his body. 60 00:07:35.160 --> 00:07:38.520 So what is a just title of property? 61 00:07:38.520 --> 00:07:42.280 A just title of property can be deduced from three criteria. 62 00:07:42.280 --> 00:07:50.280 The first one is the criterion of self-ownership, the ownership of an individual as on his own body. 63 00:07:50.280 --> 00:08:01.280 The criterion of stealing is the second one, the individual has just property rights by mixing his labor with clay of land or raw material, for example. 64 00:08:01.280 --> 00:08:10.280 The third one is R, the principles of exchange of just held property and production with just held goods. 65 00:08:10.280 --> 00:08:17.280 It results from this analysis the clear separation between crimes and legitimate acts. 66 00:08:17.280 --> 00:08:25.280 The analysis of Rothbard represents also a tremendous calling to question of the actual practice and of some laws too. 67 00:08:25.280 --> 00:08:34.280 It constitutes a proposition of new arrangement of rights by stressing the existence of prison force rights, 68 00:08:34.280 --> 00:08:40.200 which are in fact variation of crimes and by offering a consistent defense or some 69 00:08:40.200 --> 00:08:46.560 activities which are unjustly and erroneously judged and legalled. 70 00:08:46.560 --> 00:08:54.760 Walter Block's book, Defense of Indefendable, is clearly an application of this analysis. 71 00:08:54.760 --> 00:09:03.760 But to have a just right does not mean to have an absolute right or use of this right. 72 00:09:03.760 --> 00:09:09.760 Rothbard suggests what could be called a just exercise of his right. 73 00:09:09.760 --> 00:09:20.760 Indeed, a just exercise of the right implies that the use of the just-held property does not violate the just-held property of another person. 74 00:09:20.760 --> 00:09:28.760 That is to say that the property of another person is not invited by the exercise of his just right. 75 00:09:28.760 --> 00:09:37.760 For Rothbard, it exists an absolute basis driven property right based on theory of property, but not an absolute use of this property. 76 00:09:41.760 --> 00:09:46.760 Another point raised by Rothbard is the question of morality. 77 00:09:46.760 --> 00:09:58.760 I'm not a specialist of this question, but Rothbard distinguished clearly law from morality. 78 00:09:58.760 --> 00:10:08.760 Law is relative to a legitimate use of resources, whereas morality is relative to a judgment on the means or the ends of an action. 79 00:10:08.760 --> 00:10:18.760 For Rothbard, an owner can use this property in the way he wants, provided not just rights is deprived. 80 00:10:18.760 --> 00:10:27.760 You can drink alcohol, inject grass in your blood, drive at very high speed, though it can harm your own body. 81 00:10:27.760 --> 00:10:37.760 You can watch specific movies, hear rock'n'roll songs or Eminem songs, or share extreme and special religious opinions, 82 00:10:37.760 --> 00:10:41.520 Although you can love the conviction of the people. 83 00:10:41.520 --> 00:10:47.000 But because not just right is deprived by exercising such activities, 84 00:10:47.000 --> 00:10:51.280 which could be judged or perceived as immoral by others, 85 00:10:51.280 --> 00:10:57.600 the legitimate owner cannot be prevented from acting. 86 00:10:57.600 --> 00:11:06.000 In the Rothbardian framework, morality concerns only the means to attain ends and not ends themselves. 87 00:11:06.000 --> 00:11:11.480 To give the full sense to morality, the individual must have the opportunity to be moral and 88 00:11:11.480 --> 00:11:16.120 immoral, to make moral actions and immoral ones. 89 00:11:16.120 --> 00:11:22.040 In fact, by preventing or prohibiting the realization of some activities, the uterus 90 00:11:22.040 --> 00:11:29.680 as actions uses force to impose his own ideas and reverse his immoral position by violating 91 00:11:29.680 --> 00:11:35.560 the just right of another person. 92 00:11:35.560 --> 00:11:42.240 Or rather, Rothbard distinguished three origins for the law, the custom of a community or 93 00:11:42.240 --> 00:11:49.440 a tribe, the positive law as the outcome of a state endurance, and the natural law. 94 00:11:49.440 --> 00:11:53.760 Rothbard travels clearly the natural law, discovered by reason. 95 00:11:53.760 --> 00:11:58.320 Natural law permits to define a rule which is universally applied, independently of the 96 00:11:58.320 --> 00:12:16.320 When the criterion of universality is not respected, the law constitutes a means to establish a superiority of some men and other men. 97 00:12:16.320 --> 00:12:22.320 Then the Robertian framework allows to consist two radically different orders. 98 00:12:22.320 --> 00:12:25.320 The first one can be called economic order. 99 00:12:25.320 --> 00:12:30.320 It is based on peaceful cooperation, mutual benefits, harmony, 100 00:12:30.320 --> 00:12:34.320 voluntary agreements and the respect of property rights. 101 00:12:34.320 --> 00:12:40.320 The other one is the hegemonic or political order based on invasion, aggression, 102 00:12:40.320 --> 00:12:48.320 expectation, size, predatory behavior, violation of property rights and power of men on other men. 103 00:12:48.320 --> 00:12:56.320 Consequently, the approaches presented by the mainstream economist or mainstream school and Rothbard are irreconcilable 104 00:12:56.320 --> 00:13:02.320 because funded on two different conceptions of liberty. 105 00:13:02.320 --> 00:13:09.320 The second rupture between the two frameworks concerns enforcement of law. 106 00:13:09.320 --> 00:13:16.320 For the mainstream economics, law can be summarized as a process of engineering, a search for efficiency. 107 00:13:16.320 --> 00:13:20.320 For Rothbard, law deals with justice. 108 00:13:20.320 --> 00:13:25.320 We show that the process of enforcement depends on the calculus. 109 00:13:25.320 --> 00:13:31.320 More accurately, the enforcement justifies first if it exists a net damage, 110 00:13:31.320 --> 00:13:38.320 that is to say if the value of damage borne by the victim is higher than the gains obtained by the criminal. 111 00:13:38.320 --> 00:13:50.320 Secondly, it depends also on the cost of enforcement. If the costs of enforcement are higher than the damage done, then the right is not enforced. 112 00:13:50.320 --> 00:14:00.320 Again, the property rights are conditional ones. When the authorities decide to enforce a law, they must define the format of their intervention. 113 00:14:00.320 --> 00:14:07.320 What must be the level of detection? What must be the severity of punishment? 114 00:14:07.320 --> 00:14:15.320 Again, its choice depends on the results of deterrence for each tool, each instrument and the associated cost. 115 00:14:15.320 --> 00:14:26.320 The authority is to search the highest level of deterrence or budget or to minimize the cost of enforcement for a specific level of deterrence. 116 00:14:30.320 --> 00:14:37.120 But with such a presentation, there are many shortcomings. 117 00:14:37.120 --> 00:14:40.720 Indeed, it supports the possibility of fine-tuning policy. 118 00:14:40.720 --> 00:14:44.720 It's possible to make some trade-offs on marginal elements. 119 00:14:44.720 --> 00:14:54.720 For example, for highway surveillance, it's possible to use 10.5 police cars or, during the next period, another period, 10.51 police cars. 120 00:14:54.720 --> 00:14:59.520 The policy of deterrence is supposedly totally flexible. 121 00:14:59.520 --> 00:15:05.520 It is also presented as being reversible, perfectly reversible. 122 00:15:05.520 --> 00:15:16.520 It's possible, for example, to use a gel of 500% optionishment and to modify five days after the first policy to use only five, 123 00:15:16.520 --> 00:15:22.520 independently of the existence and the cost of the previous investment. 124 00:15:22.520 --> 00:15:27.520 These two hypotheses are clearly not conformed to the economic reality. 125 00:15:27.520 --> 00:15:31.520 More crucial is the hypothesis made concerning the information. 126 00:15:31.520 --> 00:15:35.520 Not only does the process of deterrence is reversible and flexible, 127 00:15:35.520 --> 00:15:43.520 but all the need information concerning the different combination is available for the authorities 128 00:15:43.520 --> 00:15:47.520 and the information relative to the cost of a different combination too. 129 00:15:47.520 --> 00:15:56.520 Another point forgotten by the neoclassical economists concerns the possibility of a situation of irresolution 130 00:15:56.520 --> 00:16:03.480 in which the authorities can be placed. Indeed, the available contributions made by the mainstream 131 00:16:03.480 --> 00:16:09.640 economists are numerous, integrating different hypotheses concerning behaviour towards risk, 132 00:16:09.640 --> 00:16:13.720 different levels of wealth among populations or the limited information. 133 00:16:15.160 --> 00:16:19.080 The problem is that the proper solution for public policy can be opposite, 134 00:16:19.960 --> 00:16:24.280 because the hypotheses are different. So, what is the solution? 135 00:16:24.280 --> 00:16:32.720 The last critic we made concerned the conception of law as being a search for social efficiency. 136 00:16:32.720 --> 00:16:43.240 The mainstream economy supports a relationship of proportionality between the arm turn and 137 00:16:43.240 --> 00:16:50.720 the potential punishment defined as the probability of detection times the severity of punishment. 138 00:16:50.720 --> 00:16:59.720 The determination of the respective level for punishment and detection depends on the relative cost and the relative effects in terms of deterrence. 139 00:16:59.720 --> 00:17:12.720 Consequently, as Rothbard stressed previously, some strange situations can occur where more serious crimes can be punished less severely than minor ones. 140 00:17:12.720 --> 00:17:20.720 In the mainstream framework, it is the potential punishment which is taken into account and not the actual punishment. 141 00:17:28.720 --> 00:17:35.720 We show that Rothbard proposes a definition of crime which represents the notion of just property. 142 00:17:35.720 --> 00:17:38.720 It must be used in a just manner. 143 00:17:38.720 --> 00:17:44.640 Another consequence of the Rothballion analysis is that the owner of just-held property owns 144 00:17:44.640 --> 00:17:51.080 although just right to define it by violence against violent invasion. 145 00:17:51.080 --> 00:17:57.840 The owner can ensure himself this activity, or renting the service of specialized agencies 146 00:17:57.840 --> 00:17:59.880 for the production of security. 147 00:17:59.880 --> 00:18:05.960 It may deduce from this proposition that the only legitimate use of violence is not the 148 00:18:05.960 --> 00:18:12.960 is a monopoly of state, but the individual monopoly of the owner on his own property. 149 00:18:12.960 --> 00:18:17.480 Consequently, from the theory of property rights, Rothbard is able to deduce a principle 150 00:18:17.480 --> 00:18:25.560 for a free society or an anarcho-capitalist society, but also a right to self-defense. 151 00:18:25.560 --> 00:18:29.960 But the just right to defend his property against invasion is limited by the rule of 152 00:18:29.960 --> 00:18:30.960 proportionality. 153 00:18:30.960 --> 00:18:40.960 By this criminal act, the perpetrator loses his own right to the same extent he violated previously the right of another person. 154 00:18:40.960 --> 00:18:47.960 No more, no less. The damage done constitutes the European limit for the punishment. 155 00:18:47.960 --> 00:18:52.960 Contrary to the mainstream, for Rothbard the punishment cannot be modulated. 156 00:18:52.960 --> 00:18:58.960 The distinction between a potential punishment and an actual one is meaningless and useless. 157 00:18:58.960 --> 00:19:05.960 The punishment must be a just punishment and rightfully imposed. If the punishment is higher 158 00:19:06.080 --> 00:19:12.600 than the damage done, the rule of proportionality is violated, and the situation indicates clearly 159 00:19:12.600 --> 00:19:19.120 a violation of criminal right. The perpetrator of this harmful act must be prosecuted the 160 00:19:19.120 --> 00:19:23.480 same way. 161 00:19:23.480 --> 00:19:29.680 Rothbard defined also the idea that the damage done is not composed by the loss, only composed 162 00:19:29.680 --> 00:19:36.800 by the loss of some rights, but also the trouble in which the victim is placed against his 163 00:19:36.800 --> 00:19:37.800 will. 164 00:19:37.800 --> 00:19:42.400 The victim must be restored in his right for his tangible competence, a broken window, 165 00:19:42.400 --> 00:19:48.480 a broken arm, a broken car, but also for an unchangeable path, fear or nervous disorder. 166 00:19:48.480 --> 00:19:57.480 Consequently, Rothbard proposed to double or more the punishment to take into account all the components of the damage. 167 00:19:57.480 --> 00:20:03.480 The criminal loses right to the same extent and must be restored a victim. 168 00:20:03.480 --> 00:20:11.480 Then Rothbard gives a logical answer to an old rule, you took one tooth, you give back two teeth. 169 00:20:11.480 --> 00:20:17.480 Consequently, for Rothbard, the God of Justice is not an objective of deterrence, 170 00:20:17.480 --> 00:20:35.480 Restitution is a gift to attain justice, an imperfect gift because of the problem of valuation, but only one available for man. 171 00:20:35.480 --> 00:20:46.480 However, nobody can deny that a fine could produce an effect of deterrence, so I would reconcile the effect of deterrence and the Rothbardian position. 172 00:20:46.480 --> 00:20:58.480 We think that Rothbard does not deny the existence of this effect but denies to consider it must be the sole objective of justice. 173 00:20:58.480 --> 00:21:09.480 Deterrence must be understood as being a secondary effect or an indirect positive effect. 174 00:21:09.480 --> 00:21:21.480 The third crucial difference between the approach of Rothbard and the mainstream economist is relative to the conception of state presented as being an aggressor or a protector. 175 00:21:21.480 --> 00:21:31.480 For the mainstream economist, the state has an important role to play because it is a central actor to regulate and to eliminate crime. 176 00:21:31.480 --> 00:21:44.480 Only a central authority is able to determine the optimal amount of deterrents and provide these services. 177 00:21:44.480 --> 00:21:52.480 It is also denoted to ignore the potentialities of a private sector, but they consider the most important component is the public forum. 178 00:21:52.480 --> 00:22:01.480 For mainstream economists, the market mechanisms are inefficient in some situations and are unable to protect against crime. 179 00:22:01.480 --> 00:22:07.480 The solution is the integration of state, which is presented as a protector. 180 00:22:07.480 --> 00:22:15.480 Rothbard's position on the state is radically different. 181 00:22:15.480 --> 00:22:20.480 Rothbard sees the apparatus of state as a tremendous concentration of power. 182 00:22:20.480 --> 00:22:25.480 It has a legacy to its left-wingers, compulsory monopolies. 183 00:22:25.480 --> 00:22:30.480 Its size of property, it can do it on a large scale as in Russia. 184 00:22:30.480 --> 00:22:34.480 For Rothbard, the state constitutes a real threat and liberties. 185 00:22:34.480 --> 00:22:38.480 Who can protect the people against the intrusion of state? 186 00:22:38.480 --> 00:22:43.480 In the Rothbardian framework, the state appears clearly as a collective criminal organization. 187 00:22:43.480 --> 00:22:49.480 Use its power and political or violent means to extract illegally resources to survive. 188 00:22:49.480 --> 00:22:53.040 Then we are in a contradiction with the existence of state. 189 00:22:53.040 --> 00:22:56.960 To protect people, it has to violate some property rights of people. 190 00:22:56.960 --> 00:23:00.080 To ensure the creation of wealth, it has to destroy wealth. 191 00:23:00.080 --> 00:23:07.800 To provide public protection, it has to extract money by taxation. 192 00:23:07.800 --> 00:23:14.020 To finish with this conception, I want to stress another point, is the intervention of 193 00:23:14.020 --> 00:23:19.040 state is made easier by the efforts of an intelligentsia, by the strong apparatus of 194 00:23:19.040 --> 00:23:26.760 individuals who are prepared to produce ideology, doctrines and theories to justify his intervention. 195 00:23:26.760 --> 00:23:32.400 The mainstream economist can be put in this category. 196 00:23:32.400 --> 00:23:42.560 To conclude, we saw a radical diversion between the mainstream approach and Rothbard's ones 197 00:23:42.560 --> 00:23:48.400 concerning the conception of law, the role of punishment, the place of estate. 198 00:23:48.400 --> 00:23:53.120 For the classical economist, the definition and the enforcement of law are reduced to 199 00:23:53.120 --> 00:23:58.800 calculus of costs and benefits, a problem of allocation of resources, a technical problem 200 00:23:58.800 --> 00:24:02.160 of social engineering, the search for efficiency. 201 00:24:02.160 --> 00:24:14.160 For Rothbard, property rights are absolute and cannot be the object of trade-off. They are absolute, but their use is limited by the respect of just property rights of other persons. 202 00:24:14.160 --> 00:24:24.160 The goal of justice is to restore the victim in his right by a proportional and rightfully imposed punishment. 203 00:24:24.160 --> 00:24:30.160 Rothbard's approach is very stimulating because it offers new paths for further research. 204 00:24:30.160 --> 00:24:33.160 What are the foundations for a private system of protection? 205 00:24:33.160 --> 00:24:40.160 What are the implications if a victim is placed at the centre of a judicial process? 206 00:24:40.160 --> 00:24:49.160 His theory of liberty appears clearly very useful to understand the international relationship and, in this time, particularly the question of war. 207 00:24:49.160 --> 00:24:55.660 and more. Numerous changes on which the Austrian economist's point of view is necessary and 208 00:24:55.660 --> 00:24:59.820 for which the insight of Robert Rothbard are simply essential.