The Aim of Order Without Law

Abstract

Informal interactions can spontaneously generate complex institutions. No one consciously desgins a society's language, etiquette, or cultural traditions. Because a market economy is a classic illustration of a complex spontaneous institution, economists should be especially appreciative of what nonhierarchical forces can accomplish. Regrettably, however, many scholars working in law-and-economics have assumed that only governments can produce the rules through which a society governs itself. According to this centralist perspective, private ordering cannot begin until the sovereign has specified property rights. My recent book, Order Without Law (Ellickson [1991]), challenges this view. I am gratified that its publication has prompted the editors of this journal to solicit reviews from a distinguished panel of commentators. This summary of the book's main themes is designed to provide a backdrop for their remarks. In his watershed article, The Problem of Social Cost, Ronald Coase [1960] inadvertently abetted legal centralism in law-and-economics. In developing his renowned Parable of the Farmer and the Rancher, Coase [1960] envisioned that the legal system would determine whether or not a farmer would be entitled to recover damages for cattle trespass. Order without Law demonstrates that this seemingly innocent assumption is almost certainly incorrect in any rural area in which neighbors repeatedly interact. The first half of the book recounts the results of a field investigation into the exact type of dispute that Coase [1960] invoked in his Parable. The setting was rural Shasta County, California, a jurisdiction selected because in some portions of its territory stockmen are strictly liable for cattle trespass, while in other portions they are typically not liable at all. If the Coasean Parable were realistic, these legal variations would affect the starting points of interneighbor bargaining to resolve a trespass incident. The field study revealed that, contrary to the Parable, variations in law virtually never affected how neighbors determined responsibility for cattle trespass. Residents of rural Shasta County regard the legal system as an inappropriate institution for the resolution of animaltrespass incidents. With rare exceptions, most aspire to be neighbors. In their eyes, a good neighbor would not use the legal system, which is relatively costly and politicized, to resolve a minor