Polycentric Legal Order: Overcoming limitations of state-monopolized power structures by Daniel Patrick

Polycentric Legal Order: Overcoming limitations of state-monopolized power structures

Daniel Patrick

Auburn University

Polycentric Legal Order

Polycentric Legal Order: Overcoming limitations of state-monopolized power structures

Introduction

The purpose of government can perhaps most simply be defined as the maintenance of

social order through the administration of public law. It is the purpose of public administration

to carry out the required functions to bring into being the dictates of such law, and thus social

order, so that they are representative of more than merely words on paper. While it is not

controversial to hold that social cooperation is dependent upon recognition of and adherence to

some commonly agreed upon rules of conduct, rarely is the fundamental mode of the

administration and enforcement of societal rules questioned. In fact, this questioning is so rare

that certain deficiencies, inefficiencies, and outright failures in public administration are

accepted as necessary evils which can, at best, be minimized through ever-increasing reforms,

regulations and attempts at transparency. It is accepted as a forgone conclusion that these

problems are inevitable and intrinsic to the modern implementation of public policy through

bureaucracy and one of the challenges of modern public administration science is overcoming

these limitations. And while it certainly may be the case that these problems are unavoidable

given a particular policymaking and administration paradigm, we would do well to avoid the

fatal conceit of assuming that the current approach to public administration is the peak of human

development in the realm of political science. In fact, there is ample evidence to indicate that

these difficulties are not somehow peculiar to public administration per se, but are the result of a

“one-size-fits-all” monopolistic legal system.

This paper will investigate the theoretical structures intended to avoid these pitfalls by

presenting an alternative viewpoint of policy and public law administration drawing upon

Polycentric Legal Order

various disciplines of the social sciences including economics and legal theory. Namely, the

topic of polycentric legal order and its relevant criticism will be presented in the following

sections (Barnett, 1998).

Polycentrism: An alternative approach to overcoming monopolistic pitfalls

The primary trait of a monopoly legal system is that there is a single entity authorizing

the use of force or power in a given locality which must be protected by the use of force or

power. In contrast to a market monopoly in which a firm gains a dominate market share through

voluntary market transactions, this is a coercive monopoly. That is, a monopoly which exists by

violence or by threat of violence. It is a necessary quality of this structure that these powers

must be granted to some members of society and excluded from others. An example of this is

that monocentric courts have the power to order arrest, imprisonment, search & seizure, etc that

non-court members of society do not have. (Tannehill & Tannehill, 1984).

Barnett (1998) identified several problems which arise from this coercive monopoly.

The first of these problems are the selection problem, the capture problem and corruption

problem. Respectively, these problems are those of determining who gets the power, preventing

bad people from gaining the power and preventing the corrupting influence of these powers

themselves. One way of lessening these problems is through the project of liberal democracy.

Electoral politics grants a measure of reciprocity to the subjects of the system by allowing them

to decide which members of society are granted the powers and by allowing any qualifying

members of society to be elected and gain that power for themselves. While this is certainly a

way of hedging the potential harm of these problems there are certain ways in which this attempt

in itself falls short. One way is the problem of knowledge which is that those making democratic

decisions have a limited amount of information available to them about candidates prior to

election as well as about their performance after election. The other side of the knowledge

problem is that distant elected representatives lack local information about the people and places

which they rule. Another problem is that the power to choose rulers itself can be corrupting and

abused. For example, when a majority of voters choose rulers with agendas for personal gain

at the expense of the minority group. Finally, there is the problem of exit which is the limit of

subjects of monopolistic legal powers in opting-out, that is, in no longer being subject to these

powers of coercion.

The polycentric legal order offers a solution to these problems and more by allowing for

multiple centers of power within a legal order. Barnett (1998) cites two simple changes which

can be made to the existing legal order to achieve this end. These are the non-confiscation

principle and the competition principle. The non-confiscation principle is that law enforcement

and adjudicative agencies must not confiscate their income by force, but by contract with the

parties that they serve. The competition principle is that law enforcement and adjudicative

agencies cannot put their competitors out of business by force. This allows for the possibility

of the existence of firms which provide services through voluntary contract that were previously

monopolized (Benson, 2011). This provision addresses the problem of knowledge in which

subscribers to a particular legal center transmit the information about their preferences in the

same way in which other market transactions do (i.e. through profit and loss). This also corrects

the problem of corruption and exit. Because service providers cannot force others to contract

with them they must uphold higher standards of conduct in order to retain competitive market

position. Additionally, service consumers cannot take advantage of other subscribers to the

provider in the way of pursuing their interests at the expense of the minority. This is not merely

theoretical speculation, however. Currently, any number of services outside of the realm of

monopolistic law exist based on these principles (Stringham, 1999). Insurance providers are

one example with private arbitration services being another. In fact, many businesses which

would be forced into never ending litigation in monopoly court systems are only able to continue

operating by their reliance on private arbitration services (Stringham, 2007).

Polycentrism: An experiment in chaos

One obvious criticism of this approach is that a competitive system of law enforcement

and adjudication would result in gang warfare. Such conflicts could be supposed to arise in the

following manner: Customer A (CA) has his property stolen by Customer B (CB). CA contacts

his private protection agency to report the offense. Agency A dispatches to the residence of CB

to reclaim the stolen property or collect for damages. Upon arrival, CB refuses too cooperate

and contacts her private protection agency to report that they are being accosted. CB’s protection

agency arrives to defend their client and conflict ensues between the two respective protection

agencies resulting in a type of turf war. Clearly, this is not a situation conducive to social order.

Another criticism is that in a pay-for-law scenario only those that can afford legal protection can

attain it, resulting in the impoverished being defenseless and victimized by those that can afford

protection (Stringham, 2007).

The polycentric solution also falls short in its lack of explanation of how the competitive

principle alone can prevent a single firm from gaining a monopoly by forcing competitors out of

the market, essentially resulting in the original problem which it attempts to resolve. Related

to this idea is the issue that results from taking rule-setting powers away from the general public

through the democratic process and putting it into the hands of private protection agencies.

Additionally, the case for polycentric legal order fails to address the threat of foreign invasion

from outside monocentric forces. If we are to assume that private protection agencies would

have to rely on weapons of mass destruction for large-scale defense, wouldn’t the result be a

that a dominant private firm could use force to acquire other areas to gain additional customers?

Although the potential problems of monocentrism are acknowledged, the polycentric model does

not adequately explain how those problems can be avoided and could perhaps lead to a worse

scenario in which the existing hedges of monocentrism are abolished (Palchak & Leung, 2011).

Analysis and Rebuttal

The case for polycentric legal order correctly identifies serious limitations of a

monopolistic system and offers some compelling arguments for its adoption. While the

objections to its enactment are valid criticisms there are reasons to believe that the concerns are

unfounded given certain facts about the economics of a market-based system. The first objection

of devolution into gang warfare ignores the costs of violence between competitors. There is

initially the cost of losing property and employee capital to acts of aggression. Secondly, there is

the cost of resolving damages through the litigation process. It is not in the interest of any profit-

making firm to incur preventable costs. Quite simply, negotiation and mediation are far cheaper

than violence. In contrast, the monocentric system which relies upon confiscation by coercion

for its revenue does not incur any of these costs as they are passed on to the consumers, even if

the increased costs are against their will. Essentially, the monocentrists have free reign to pursue

all the benefits of violence without the drawback of paying the price. This means that

monopolistic systems have an inherent incentive to engage in violence while polycentric systems

have an inherent incentive to avoid the high costs of violence (Stringham, 2007).

The second criticism which does not seem to withstand scrutiny is that under a

polycentric legal system a dominant private protection agency could gain monopoly position and

either become a monopolistic system in itself or take advantage of its customers. The first

scenario is impossible because the a firm may only gain market dominance through the

satisfaction of its customers. Stripped of the ability to use coercion to maintain that monopoly a

firm must compete fairly in order to retain market dominance. In fact, natural monopolies do not

exist outside of theory for this very reason. The only monopolies which can exist currently are

those which are based on the monocentric-granted privilege of exclusivity. This fact also makes

the second scenario impossible. For if a market-dominant firm began abusing customers, say

through exorbitant prices, breaches of contract or poor service, a competing provider would have

an opportunity to satisfy those unmet desires (Benson 2011).

Conclusion

While it is acknowledged that the case for polycentrism is not free of potential

drawbacks, it is an important contribution to the area of law and public administration. It

correctly identifies and attempts to addresses many of the current limitations of monocentric

legal systems, particularly problems of corruption, legitimacy, and knowledge. Detractors to the

theory are correct in pointing out that it is not a perfect system. However, it is not intended to be

any more than the status quo is intended to be utopian. What it does do successfully is question

the current paradigm and show that attempts at reform are hamstrung by inherent problems of

the system itself. Just as we have seen the vast benefits that can be derived from allowing

voluntary interaction to satisfy innumerable other human needs so can we benefit from allowing

the same processes to improve law and order. Although the idea of polycentric legal order may

seem shocking or impossible by today’s standards so it must have been for those under feudal

rule to imagine a world in which individuals could function without the rule of that power

structure.

References

Barnett, R. E. (1998). The structure of liberty: justice and the rule of law. New York: Oxford

University Press.

Benson, B. (2011). The enterprise of law : justice without the state. Oakland, CA: The Independent

Institute.

Palchak, J. K., & Leung, S. T. (2002). No state required – a critical review of the polycentric legal

order. Gonzaga Law Review, 38, 289.

Stringham, E. (1999). Market chosen law. Journal of Libertarian Studies, 14(1; SEAS WIN), 53-78.

Stringham, E. (2007). Anarchy and the law, the political economy of choice. Oakland, CA:

Transaction Publications

Tannehill, M., & Tannehill, L. (1984). The market for liberty: Is government really necessary? ; is

government our protector … or our destroyer? New York: Laissez Faire Books.

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