Rothbard on the Economics of Crime

0:00It's a great pleasure for me to deliver this talk for the 14th anniversary symposium in honor of Murray Rothbard's Man-Economy and State, Masterpiece in Austrian Economics, and I want to thank Guido for his invitation and Jesus University for his fabulous opportunity. The subject of this talk is not about Rothbard and Beerus, but about crime, a subject maybe Today we could find a point of connection with a presentation made by Professor Bodky because the socialist state represents one of the highest forms of collective criminal organization. Transition is already a transition from criminal organization to a society about freedom. The question of crime is important because it permits, among other things, to To distinguish the characteristics of market on which a free society is built to separate clearly the society of cooperation and violent behaviors.

1:06Economies of crime as a specific application of instruments of economists can be analyzed for different topics.

1:25But we choose deliberately to reduce the focus of this paper. This talk does not deal with the mechanism of anarcho-capitalist society, subject on which some contributions were made by Murray Rothbard in his book Libertarian Manifesto or by Professor Hoppe in the Journal of Libertarian Studies. Nor will it constitute a study on the private protection of security. It will also not be about the problem of restitution of a debate on the proportionality of punishments. Our sole objective is to highlight the different and divergent contributions made by Murray Rothbard as the mainstream economist on the question of crime.

2:11To understand this difference, we follow three important perspectives, the conception of law, the enforcement of law and the role of the state. For the neoclassical school, law is what is defined by the state. In Barnett's words, whatever the state says is law, is law. Whatever the state makes a crime, is a crime. Consequently, law is the outcome of a special state process which defines the titers of property and rights. There are rights because there is a law, and not there is a law because there are rights. Bastiat in his essay The Law has already stressed this different logic.

3:02We can note three consequences. First, some actions are forbidden although they do not constitute violation of property rights. News from France, for example, the recent project of the French government on security This takes several of the activities of prostitution, although it constitutes for the most part of prostitutes and customers a valuable commercial activity. Moreover, other actions are legalized, although they represent clearly violation of property rights. Indeed, a farmer who refuses to sell his property to a government agency can see this one sized by force to build an highway. The third consequence of this approach is the place given to the economist.

3:48The economist is a social engineer who helps the political decision to assign different rights. So the crucial position is attributed to him. For the neoclassical economist, law is the result of rational calculus between cost and gains. 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. Law is a means to internalize the burden of externalities and to minimize the social cost. 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.

4:41The rights are not absolute, but they are relative to specific and historical conditions. The purpose calculus is based on an objective value, that is, it implies the possibility of interpersonal comparison. The rights are conditional words. In fact, the mainstream economist does not think in terms of crime and peaceful exchange, but in terms of voluntary or involuntary transfer. An inventory transfer is not bad in itself if it permits to increase the total available wealth for a society. The allocation of rights is the first step.

5:33The second one is the enforcement of rights previously defined. This process of enforcement is also the outcome of calculus. The objective is also the same to minimize the social losses or to maximize the highest possible wealth for a society. To this level of minimized social losses is associated an optimal number of crimes or rapes or murders, and the optimal element for the probability of detection and severity of punishment. 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.

6:25To sum up this first point, the neoclassical approach of law considers that the rights are conditional and depends on historical dispositions. Murray Rothbard shows clearly that this framework is characterized by an absence of theory of justice. It's only the outcome of a social and political competition and compromise subject to variation and to policy choices. In the Rothbardian framework, it's possible to understand what is a crime when a just title of property is correctly defined. Indeed, a crime is a valuation of just right which rests upon a theory of property. More accurately, if we follow Rothbard, a crime can be defined and properly analyzed as a violent aggression against the just property of an individual.

7:25Crime constitutes an invasion against the property of somebody, against tangible goods on which he has just property, or against his body. So what is a just title of property? A just title of property can be deduced from three criteria. The first one is the criterion of self-ownership, the ownership of an individual as on his own body. 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. The third one is R, the principles of exchange of just held property and production with just held goods. It results from this analysis the clear separation between crimes and legitimate acts.

8:17The analysis of Rothbard represents also a tremendous calling to question of the actual practice and of some laws too. It constitutes a proposition of new arrangement of rights by stressing the existence of prison force rights, which are in fact variation of crimes and by offering a consistent defense or some activities which are unjustly and erroneously judged and legalled. Walter Block's book, Defense of Indefendable, is clearly an application of this analysis. But to have a just right does not mean to have an absolute right or use of this right.

9:03Rothbard suggests what could be called a just exercise of his right. 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. That is to say that the property of another person is not invited by the exercise of his just right. For Rothbard, it exists an absolute basis driven property right based on theory of property, but not an absolute use of this property.

9:41Another point raised by Rothbard is the question of morality. I'm not a specialist of this question, but Rothbard distinguished clearly law from morality. 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. For Rothbard, an owner can use this property in the way he wants, provided not just rights is deprived. You can drink alcohol, inject grass in your blood, drive at very high speed, though it can harm your own body.

10:27You can watch specific movies, hear rock'n'roll songs or Eminem songs, or share extreme and special religious opinions, Although you can love the conviction of the people. But because not just right is deprived by exercising such activities, which could be judged or perceived as immoral by others, the legitimate owner cannot be prevented from acting. In the Rothbardian framework, morality concerns only the means to attain ends and not ends themselves. To give the full sense to morality, the individual must have the opportunity to be moral and immoral, to make moral actions and immoral ones.

11:16In fact, by preventing or prohibiting the realization of some activities, the uterus as actions uses force to impose his own ideas and reverse his immoral position by violating the just right of another person. Or rather, Rothbard distinguished three origins for the law, the custom of a community or a tribe, the positive law as the outcome of a state endurance, and the natural law. Rothbard travels clearly the natural law, discovered by reason. Natural law permits to define a rule which is universally applied, independently of the When the criterion of universality is not respected, the law constitutes a means to establish a superiority of some men and other men.

12:16Then the Robertian framework allows to consist two radically different orders. The first one can be called economic order. It is based on peaceful cooperation, mutual benefits, harmony, voluntary agreements and the respect of property rights. The other one is the hegemonic or political order based on invasion, aggression, expectation, size, predatory behavior, violation of property rights and power of men on other men. Consequently, the approaches presented by the mainstream economist or mainstream school and Rothbard are irreconcilable because funded on two different conceptions of liberty.

13:02The second rupture between the two frameworks concerns enforcement of law. For the mainstream economics, law can be summarized as a process of engineering, a search for efficiency. For Rothbard, law deals with justice. We show that the process of enforcement depends on the calculus. More accurately, the enforcement justifies first if it exists a net damage, that is to say if the value of damage borne by the victim is higher than the gains obtained by the criminal. 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.

13:50Again, the property rights are conditional ones. When the authorities decide to enforce a law, they must define the format of their intervention. What must be the level of detection? What must be the severity of punishment? Again, its choice depends on the results of deterrence for each tool, each instrument and the associated cost. 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.

14:30But with such a presentation, there are many shortcomings. Indeed, it supports the possibility of fine-tuning policy. It's possible to make some trade-offs on marginal elements. 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. The policy of deterrence is supposedly totally flexible. It is also presented as being reversible, perfectly reversible. 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, independently of the existence and the cost of the previous investment.

15:22These two hypotheses are clearly not conformed to the economic reality. More crucial is the hypothesis made concerning the information. Not only does the process of deterrence is reversible and flexible, but all the need information concerning the different combination is available for the authorities and the information relative to the cost of a different combination too. Another point forgotten by the neoclassical economists concerns the possibility of a situation of irresolution in which the authorities can be placed. Indeed, the available contributions made by the mainstream economists are numerous, integrating different hypotheses concerning behaviour towards risk, different levels of wealth among populations or the limited information.

16:15The problem is that the proper solution for public policy can be opposite, because the hypotheses are different. So, what is the solution? The last critic we made concerned the conception of law as being a search for social efficiency. The mainstream economy supports a relationship of proportionality between the arm turn and the potential punishment defined as the probability of detection times the severity of punishment. The determination of the respective level for punishment and detection depends on the relative cost and the relative effects in terms of deterrence. Consequently, as Rothbard stressed previously, some strange situations can occur where more serious crimes can be punished less severely than minor ones.

17:12In the mainstream framework, it is the potential punishment which is taken into account and not the actual punishment.

17:28We show that Rothbard proposes a definition of crime which represents the notion of just property. It must be used in a just manner. Another consequence of the Rothballion analysis is that the owner of just-held property owns although just right to define it by violence against violent invasion. The owner can ensure himself this activity, or renting the service of specialized agencies for the production of security. It may deduce from this proposition that the only legitimate use of violence is not the is a monopoly of state, but the individual monopoly of the owner on his own property. Consequently, from the theory of property rights, Rothbard is able to deduce a principle for a free society or an anarcho-capitalist society, but also a right to self-defense.

18:25But the just right to defend his property against invasion is limited by the rule of proportionality. By this criminal act, the perpetrator loses his own right to the same extent he violated previously the right of another person. No more, no less. The damage done constitutes the European limit for the punishment. Contrary to the mainstream, for Rothbard the punishment cannot be modulated. The distinction between a potential punishment and an actual one is meaningless and useless. The punishment must be a just punishment and rightfully imposed. If the punishment is higher than the damage done, the rule of proportionality is violated, and the situation indicates clearly a violation of criminal right. The perpetrator of this harmful act must be prosecuted the same way.

19:23Rothbard defined also the idea that the damage done is not composed by the loss, only composed by the loss of some rights, but also the trouble in which the victim is placed against his will. The victim must be restored in his right for his tangible competence, a broken window, a broken arm, a broken car, but also for an unchangeable path, fear or nervous disorder. Consequently, Rothbard proposed to double or more the punishment to take into account all the components of the damage. The criminal loses right to the same extent and must be restored a victim. Then Rothbard gives a logical answer to an old rule, you took one tooth, you give back two teeth.

20:11Consequently, for Rothbard, the God of Justice is not an objective of deterrence, Restitution is a gift to attain justice, an imperfect gift because of the problem of valuation, but only one available for man. 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. We think that Rothbard does not deny the existence of this effect but denies to consider it must be the sole objective of justice.

20:58Deterrence must be understood as being a secondary effect or an indirect positive effect. 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. For the mainstream economist, the state has an important role to play because it is a central actor to regulate and to eliminate crime. Only a central authority is able to determine the optimal amount of deterrents and provide these services.

21:44It is also denoted to ignore the potentialities of a private sector, but they consider the most important component is the public forum. For mainstream economists, the market mechanisms are inefficient in some situations and are unable to protect against crime. The solution is the integration of state, which is presented as a protector. Rothbard's position on the state is radically different. Rothbard sees the apparatus of state as a tremendous concentration of power. It has a legacy to its left-wingers, compulsory monopolies. Its size of property, it can do it on a large scale as in Russia.

22:30For Rothbard, the state constitutes a real threat and liberties. Who can protect the people against the intrusion of state? In the Rothbardian framework, the state appears clearly as a collective criminal organization. Use its power and political or violent means to extract illegally resources to survive. Then we are in a contradiction with the existence of state. To protect people, it has to violate some property rights of people. To ensure the creation of wealth, it has to destroy wealth. To provide public protection, it has to extract money by taxation. To finish with this conception, I want to stress another point, is the intervention of state is made easier by the efforts of an intelligentsia, by the strong apparatus of individuals who are prepared to produce ideology, doctrines and theories to justify his intervention.

23:26The mainstream economist can be put in this category. To conclude, we saw a radical diversion between the mainstream approach and Rothbard's ones concerning the conception of law, the role of punishment, the place of estate. For the classical economist, the definition and the enforcement of law are reduced to calculus of costs and benefits, a problem of allocation of resources, a technical problem of social engineering, the search for efficiency. 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.

24:14The goal of justice is to restore the victim in his right by a proportional and rightfully imposed punishment. Rothbard's approach is very stimulating because it offers new paths for further research. What are the foundations for a private system of protection? What are the implications if a victim is placed at the centre of a judicial process? His theory of liberty appears clearly very useful to understand the international relationship and, in this time, particularly the question of war. and more. Numerous changes on which the Austrian economist's point of view is necessary and for which the insight of Robert Rothbard are simply essential.