A Defense of Polycentrism

I was pleased to see a critique which bothered to address real substance of the idea of polycentric law. This article refutes those 2 critiques.

I am defining polycentric law as:

  • The system of law which emerges on a free market. In particular, the concept described by David Friedman in which PDAs create arbitration contracts with each other to reduce costs, effectively creating private law.

The two critiques:

  1. The Circular Problem: A market may generate law, but markets presuppose a legal framework.
  2. The Regression Problem: In the same way money is created on the market through the Regression Theorem, so government is also created.

Here Bob Murphy lays out the Regression Theorem rather well:

My replies:

  1. Markets do not presuppose a legal framework.
    1. Two men may meet on an island and exchange. If there is any legal framework it occurs simultaneously and implicitly, it is not presupposed or formal.
    2. As markets scale, at some point more formal law may create gains to efficiency, but this is a product of the market, not a requisite.
    3. In any case a polycentric society would not spawn ex nihilo. It would result from a transition from prior society, so there would be a legal framework at the outset.
  2. The regression occurs, but it is not a problem.
    1. Most markets have beneficial inequality, and we can expect strong inequality in a private legal system.
    2. It may be the case that the most efficient PDA becomes so dominant that it is colloquially considered a government.
    3. However, this government is importantly different from the traditional state where a state is a geographic monopoly on the use of force.
    4. A dominant PDA is not expected to be a monopoly on the use of force and neither is it expected to be geographically oriented.
    5. PDA dominance is also expected to see high turnover. That is, the market-leading PDA one year is unlikely to sustain the position in the long run.
    6. Competition and individual sovereignty are importantly in effect. If a dominant PDA attempts abuse, it is expected to quickly be replaced.
    7. So inefficiency, abuse, corruption, and all the other undesirable qualities of the state are still minimized as expected on the market, even if the market has some leading firm at some point in time.

Side note: I have been a long time resident of /r/anarcho_capitalism, despite the fact that I got shadowbanned and I’m better described as a polycentrist anyway. I was pleased to see that /r/Polycentric_Law has been growing, but after being shadowbanned I cannot contribute much anymore. Now I have taken up Voat and Steemit as substitutes, and I encourage the reader to check those sites out.


Leave a Comment