Structure of Production of Free Market Adjudication

0:00It is an honor and pleasure, as always, to come and present at the Mises Institute. I changed the title, of course. I want to talk a little bit more broadly about the structure of production of free market dispute resolution. What I'll talk about today is, I want to give you a little bit of understanding of my research program, who I am and what I'm doing, and then an overview of this project. Project. And the things that we'll talk about is I'm going to talk about the categories of dispute resolution and the dispute cycle. And then if you study this in legal anthropology and so forth, you find there are natural roles in dispute resolution that just kind of fall out when you consider the different categories of dispute resolution. I'm going to talk Talk just a little bit about the four causes of law from Aquinas and kind of a refinement of what he has to say about it.

0:59Talk about supply and demand for data and some insights on norms and how they diffuse into the body of law in a natural dispute resolution order. And then we give you a little potpourri because this presentation is really a commercial for For my 30 page paper, which you're welcome to kick up, and I really look forward to critical feedback. That's why I do these things. And so I'll list some future work that's related to this. So first, let me talk a little bit about what I do. My long-term goal is to establish a Company that produces free market defense services and if I follow Stephen Covey's advice and begin with the end in mind, sometimes I have to think quite a bit about what does a free market insecurity really look like so that when I make a step in an interventionist Market with a defense service, it can evolve and grow into a truly free market order.

2:10So this in particular is kind of an attempt to figure out, well, what does a free market in mediation and arbitration look like? Is there a difference between arbitration and litigation? What is the role of lawyers in a free society? What are their different roles as lawyers? And so that's what this paper attempts to come to terms with. So let's go on to the categories of dispute resolution. As it turns out, there are seven ways that you can handle a dispute. And these are completely exhaustive of all the ways.

2:59And I didn't make this up. This is from the insights from legal anthropology. You can do nothing. You know, you should come home from the grocery store and they left a can of beans out of your bag. Oh, okay, well, forget it, okay? It's a violation of my rights, but I don't care. That's fine. I'll just take that as a loss. We do nothing when there are small amounts involved, small violations. We also do them when there are substantial power imbalances involved, you know, you can't fight city hall, that sort of thing, right? Seeking a concession is quite simple. It's the supposed victim goes to the supposed offender and says, hey, you know, you're sitting in front of where I was trying to watch the Mardi Gras parade, I just went down to Mardi Gras on Galveston, and you know, I really would like an unobstructed view here.

3:55And they say, oh, okay, well, we'll remove our stuff, no problem. So if the supposed offender directly gives a concession, that also can end the dispute. Oftentimes seeking a concession will lead to a negotiated settlement. And this is where the two parties work it out among themselves. What shall we do about this situation? And if they end up agreeing, this is kind of the high road and the gold standard of it would be great if everybody could kind of agree on their disputes and we can all hold hands and sing kumbaya. But the reality is that oftentimes with acrimonious disputes, they escalate in contentiousness and they require therefore increasing amounts of formality and I don't know if technology is the right word, but a mediator has a certain skill set, everyone has these natural abilities to be a mediator but it is actually a profession nowadays and there are things to learn about about how to be a mediator, and the same thing is true about being an arbiter, and as you

5:20move along this scale here from left to right, you have an increase in the formality and contentiousness of the disputes. At each stage you also have roles that fall out of this. I'm not going to spend a lot more time about this particular graph, but the coloring means something. The green indicates complete voluntariness and agreement by the parties. The blue indicates areas where the parties have agreed that a third party can decide. And the red indicates a non-adjudicative area, self-help, which is sometimes, there are two definitions of vigilantism that you'll see.

6:18One of them is synonymous with self-help. Another one is that there's an adjudicative element that lacks the requirements of litigation and therefore is illegitimate in the minds of the society at large. But self-help as defined here and in the legal anthropology literature is direct action on on the part of a claimant against an offender or his property to either punish or get his due or get retribution or secure restitution directly.

7:04It's a non-rational activity that does not seek to justify what it's doing, it simply does it. And as a result, it can be quite destructive of the social order, which is why many people Authors throughout history have said that self-help needs to be limited to a very few cases. There are always cases where people believe that self-help is okay. Antigone can bury her brother, you know, these sorts of things. But it needs to be limited because if you exercise self-help without having justified what you're doing, Banking, then this is indistinguishable from aggression to a third party. This is one of the problems.

7:56So the dispute cycle is real simple. You have a dispute. You try to solve it in the six categories that are reasonable, that have to do with rational deliberation. And then You end up with either a settlement or a judgment, or an arbitral award, and if the offender agrees and complies with the remedies, then the dispute ends with finality, as long as no significant negative effects come from the carrying out of the terms and this sort of thing. If they don't agree with the remedy for whatever reason, maybe they don't agree with it in principle, maybe they don't agree with the way things are working out, it creates either a new dispute or it renovates the dispute, and of course when you're in this box, you can always devolve into self-help, and so having these disputes kick back and renovate is what we don't want because then you If you don't have peace and when you don't have peace, then you don't have the advantages of social cooperation.

9:18So the natural roles that fall out of dispute resolution are of course the disputants themselves. And I take my best shot in the paper at carefully picking words and in many cases defining them in the text. because what I've done is to comprehend all disputes here and to not, that is what we've just discussed includes a case where someone somewhere is enjoying themselves and I have a problem with that, okay, that could be a dispute or it could be that A harmed B and and C has a problem with that and he comes to A and he says, hey, I have a dispute with you, you harmed B. So if you are a claimant or a disputant, it does not necessarily mean you fall into the category of a supposed victim or a supposed offender. Mediators, of course, arbiters and judges, which together are the category of adjudicators, jurists, jurists Disputes are people that review decisions on appeals and advocates, people who argue for your behalf in some cases.

10:39These are all natural categories that fall out of thinking about what does dispute resolution look like. You will recognize these terms as being part of modern parlance, but they are in many cases just natural categories and there are of course non-participating roles. There are third parties of at least two types. One is the communities of care. These are kind of the second order victims and offenders. These are the people closely connected to the supposed victims or offenders and those who are closely impacted by it. Often they're people that are very well known by the victims and offenders.

11:26I want to talk just a bit about what Aquinas had to say about, in his Summa Theologica he has a number of questions devoted to law and people call that the treaties on law. It's actually quite short. What he has to say is he takes Aristotle's Four Causes and he says that the legislator or the judge in applying their prudence to enact promulgated law and of course decisions which is kind of implicit in this, attempts to achieve the common good through human acts. And it's an interesting way to kind of cut things up but what it does not do is it does is not really look at individual actors and an advantage of the Austrian method of analyzing individual actions is that different people have different ends and so each category of each role in dispute resolution they obviously have different ends so if you're a disputant you're seeking your end now if the disputant is paying an advocate well the advocate once A mediator, and I argue these positions to some extent in the paper. If you are a mediator, what you try to do is you try to establish peace. This is true if you are a first among equals in a customary law society, but it's also true if you are a mediator for hire, because part of what you want to achieve as a mediator is you want a good settlement rate.

13:15a good settlement rate and you want settlements that do not renovate into new disputes and are settled with finality. What a mediator is not after is he's not really after justice, he's after peace. And really the same thing is true for an arbiter. An arbiter is after peace. He's only after justice to the extent that he really wants his judgments to be under Under review by jurists to be upheld as just and upheld as socially legitimate. So the two words you don't find on this page here are justice or common good.

14:02The closest you get is under disputant. He's looking for his due as he sees it, and the other disputant is as well, but they may have competing theories of justice that they provide arguments for in front of an arbiter and the arbiter has to either pick between competing theories of justice and competing arguments or supply his own. Okay, so I'll leave it at that and let me just move to the next topic. Another thing that I cover in this paper is a discussion about the data of dispute resolution. There are all of these things, these objects, these items, settlements, and collections of settlements, judgments and collections of judgments, or arbitral awards, adjudicators issue summons and notices of refusal to arbitrate, advisory opinions, orders like garnishment orders, attachment orders, things like this, jurists issue opinions, jurists also are the people who provide restatements of the law, they codify things, after you have a bunch of cases, it's quite easy to, well I know it's not quite easy, but it's possible to

15:21take all of the awards and judgments and even within the judgments sometimes rules are suggested by Arbiters and of course they suggest these general rules as a means to persuade the disputants and the third parties to accept the legitimacy of their judgment. You take these as a jurist, you take all of these various claims of general rules that arbiters and judges make and you can create a body of law or a restatement of the law to Guide Arbiters in the Future, and it's a corrective as well. What they often seek to do in restating the law is to eliminate inconsistencies.

16:11The German civil lawyers, the German civilians in the 1800s and early 1900s were very concerned and with trying to reconcile the German Civilian Legal Code with Kantian philosophy and to ground it ethically. So jurists have a very important role to play. Each one of these things, titles, identification of persons, even some of these things that people like to register in some sort of way, it's simple to go through these things and And say, well, it's quite clear that you have to have a publisher, but, you know, how is this publisher going to make money? How is he going to, if you are a publisher of a restatement of the law, an individual jurist is going to have a problem with that. And I regard things like the American Law Institute, which is a non-profit organization that produces Restatements of Common Law in the U.S. as essentially free market type organizations.

17:24That's the type of organization we would expect in a stateless order. And so they would be able to, through their membership organization, create subcommittees that enjoyed large social legitimacy and therefore their restatements would be socially legitimate. But these registry firms also, it's quite clear that there would have to be a registry firm or firms that would emerge to handle a number of these data and connect the suppliers with the users. Another little topic that I wanted to mention that's in the paper is to talk about how norms and so forth.

18:18So we'll start from the bottom of this diagram and general education, let's just say, people who go to the university and so forth and become second-hand dealers and knowledge university University professors and journalists and these sorts of things. They become second-hand dealers in whatever general education they receive. They influence the general public. From the general public, the disputants identify themselves. And when settlements are created, the disputants themselves present their norms and they are not mediated by any other third They could be mediated in the sense that the discussions are mediated, but they're not imposed by an outside party.

19:06This is important because in real practice, even today, most disputes are solved either informally or even in a formal mediated settlement. Most disputes are settled. That's just the facts. And many fewer disputes are arbitrated or adjudicated in any way. And so as a result, settlements, if we have a bunch of settlements, they are a great window onto community norms of punishment and restitution and these sorts of Things, and I've written a separate paper on that before that's referenced within this paper. I'll give an example. Imagine, if you will, that a mediator mediates victim-offender mediations and he sees a series of cases. In each of these cases, one of the person's A thumb is cut off through whatever reason that is part of the dispute.

20:29Part of the negotiated settlement that comes out is that the offender owes the victim $10,000 and then in another case $11,000 and then in another case $8,000. As these settlements rack up, you get to see a freely negotiated price, shall we say, for providing a restitution payment for a lost thumb. And in fact, there's an analogous institution that already exists, which are the so-called quantum books that many lawyers use where they take liability cases and they put together There are, in fact, multiple cases of similar types where people lose a hand or a thumb or use of a leg or various things like this and they tabulate the cases in jury awards and then mediating lawyers use them as reference when they're trying to negotiate settlements.

21:42But these, unlike jury awards, would be freely assented to and are, and this is actually In a free market order, there would be a significant demand for it, because you would not have, as a judge, sentencing guidelines to guide you. Okay, so that's the most diffuse, it's the most diffuse way that norms enter the body of law, but it is actually one of the largest portions of the body of law because there are many more settlements than there are arbitral awards and judgments.

22:31The disciplines of criminology and psychology influence mediators, which then create facilitation models that reflect these disciplines, the state of the art of these disciplines, so that they can affect settlement outcomes. If you're a mediator, you want to have a mediation that sticks, that is, you want terms of the Mediation. You want to guide your mediated parties to terms that will be upheld and that will actually conduce to the good of your parties that you're mediating. And there's a natural feedback loop here.

23:19Defense providers also will look at the outcomes that take place and mold their defense institutions on Insights from These Disciplines, the area of ethics, economics and rhetoric is where the body of law is affected and I'm just going to leave it at that for now, there's quite a bit in the paper on this. Some things that are in the paper that I haven't discussed in this little commercial are forms that the law takes, types of lawyers, there are different categories, how litigation is different from arbitration, and this is a natural category, there are five categories of difference between an arbitration and a litigation, even in a free market order, how appeals are held, holdouts and scoff laws and enforcement and goats and outlaws and deadbeats and insurance and registry firms Future Work is on these items. I'll tell you openly that my hope is to write a little book on this, and I'm modeling it in some ways on Rothbard's What Has Government Done to Our Money.

24:36What I want to do is show what the institution of a free market looks like without aggressive interventions. And then in the second half, we'll look at the interventions of forced jurisdiction, compelled testimony and legislation, etc. And there's actually a very clear sequence of how one intervention leads to other related interventions. and this is actually kind of the order in which they kind of go. Once you legislate things then people start suing over things and then the state manipulates standing to keep citizens away from being able to challenge laws and so forth. It's a very interesting story. So I look forward to writing it.

25:22And that's all I have. Thank you.