@ Conza
I will read the Kinsella article.
I believe in absolute rights to property, if i must carry this belief to a pencil or bubble gum killer then i will accept it as such. It is only consistant. Yet, i believe the market would eliminate these extreme scenarios.
This is an excerpt from an unpolished essay i wrote The Implict Contract: An Amoral Animal , in it i defend the right to charge 1 million dollars for a cup of coffee if not explictly contracted not to do so, but the bubble gum, pencil killer could be substituded in the analogy.
The remedy is thus intrinsically built into the market for contracting. For example, imagine the creation of an all-encompassing agreement on prices paid for services received, derived from previous contract law. This type of all-encompassing agreement may be designed by two merging insurance companies, one for the consumer and one for the producer. Let this fictional firm operate under the name “TRUST”. The purpose of such a company is to generate a trust between two parties based on explicit agreements of terms prior to the exchange of goods or services. In addition to generating trust, we can imagine this same company insuring from future loopholes by insurance. If a loophole were thus to be found between two contracting parties, which ended in large settlements or losses due to contract deviation, the insurance company, TRUST, would thus be liable for damages to either party. Therefore, we can see how an objection from the standpoint of time consumption may be remedied.
If your argument were something to the nature of, after drinking a cup of coffee the owner claims that it will now cost you one million dollars. Thus what is the market policy for such exploitation? Well, if we were dealing with an implicit contract we would thus outsource a decision to a third party who would decide a “true market value” for coffee. These individuals may factor in many variables such as normal market prices, substitutes, any additional complements, etc. We would thus retreat into a realm of arbitrariness in which there is no true ownership. Yet, who possesses the authority to decide the valuation one places on their property except the owner of that property? Who is to say how much one can value a cup of coffee (maybe someone famous owned that coffeemaker, or that cup, etc), and who has the authority to determine price except the owner of that property? Consequently, I can see no other characterization of an implicit contract than that of property violation.
Now, returning to our image of a firm (TRUST) that provides insurance against such exploitation, and assuring loyalty between the contracting parties, the new question that surfaces is whether these two individuals are participants of this firm. If they are, then these terms should be determined. The clause may simply state that in a willing two-party transaction, one may not sue for above three times the market price of the product transferred–thus, more than three times a market price of a cup of coffee. The language used here is of course completely arbitrary. It serves only as an example, not as anything remotely concrete. Yet its purpose is to signal how the problem may be approached, especially how it may be approached when a firm like TRUST is liable to any mistakes within the contracting. Therefore, let’s paint a possible picture of how a transaction may occur without implicit contracting.
- Individual A desires a cup of coffee
- Individual B owns a coffee shop
- Individual A notices a sign, “Operating Member of ‘TRUST’ and thus feels safe with entering the shop
- Individual B must show identification that he is a member of ‘TRUST’ to secure the sale of coffee
- Individual A believes he is safe from exploitation and buys the coffee
- Individual B worries that he could be sued by individual A for something (like making him sick), thus individual B takes out added insurance from ‘TRUST’ that protects him from lawsuits of such.
Again, the picture is to serve as an example only. It shows only that a market for such a system of insurance exists when terms must be fully defined, and when there is demand, there is supply. In fact, we have some examples in existence under our current rule of law. For example, and I wish I had a more popular example, the FDIC operates as a trust mechanism (though its validity is near comical).
Yet isn’t there also a market for frivolous lawsuits? Won’t demand for million dollar coffees create its own supply? It is, of course, accurate that a fraction of the population will always engage in this form of exploitation. Yet given the nature of our social species, the majority of the population will desire engaging in mutually beneficial forms of supply and demand. Thus, if an individual were to happen to gain a large settlement by way of frivolous lawsuit, there would hence be a demand to protect oneself from such individuals. Thus, one can imagine a blacklist of sorts surfacing for such individuals, in which companies of certain circles oust these individuals from future transactions. Therefore, there is a price to pay for such endeavors the same way there is a “possible” gain to reap. So, one must decide before he enters into such a lawsuit, what the chances of winning are. He must decide because if he doesn’t win, he may be blacklisted from many suppliers, and if he does win, he may reap large profits but not have the ability to purchase from suppliers who see him as a risk. Thus, only specialized individuals would know the answer to such questions as the probability of winning a lawsuit, therefore eliminating the possibility of a large portion of the population specializing in such frivolousness[1]. Yet, of course, ultimate demand will be for suitable exchanges, or those of mutual benefit, not fraud. Therefore more credence will be given to the study of properly defining variables within contracts versus finding loopholes within the variables. This may seem odd given the Buchananite philosophy of interest groups and the asymmetry of demands. However, just because there is case-by-case asymmetry in favor of small groups (meaning small groups have a stronger incentive to find loopholes), it does not mean that the market will be moving in this direction and not that of mutual benefit. In fact, if each case serves as a precedent upon how we must modify our future contracts, then this type of behavior is self-terminating, and previous contract mistakes will be corrected. Therefore, the market acts as a vehicle in the direction of mutual beneficial transactions once the market is freed from the animal of implicit contracts.
[1]Indeed, we can imagine a market for firms that hunt down frivolous million-dollar-coffee-cup individuals, setting traps for them and then paying back their victims with proceeds.
