Utilitarianism, Economics and Legal Theory

Utilitarianism, Economics, and Legal Theory Author(s): Ernest J. Weinrib Source: The University of Toronto Law Journal, Vol.
30, No. 3 (Summer, 1980), pp. 307-332 Published by: University of Toronto Press Stable URL: http://www.jstor.org/stable/825489 . Accessed: 08/04/2014 18:13
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ErnestJ.Weinrib*
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in itscontent, a recentarticleby and criticizes This paper echoes in itstitle, Richard A. Posner.' Posner's article is an importantlandmark in the literature on theeconomicanalysisof law,in thatitconstitutes burgeoning of the moral statusof the mostexplicitand the most extremestatement conclusionsflowingfrom this type of analysis. Gone is the ambiguity had previouslydetected in Posner's workas to whetherthe whichcritics or normative.In Posner'spresent economicapproach to law is descriptive thecostsof view,theeconomicapproach is valuable not onlyin indicating a proposed course of actionand in guidingthosewho are alreadycommitted to economic efficiency as a value, but it 'has some claim to being as coherent and attractive basis for ethicaljudgments.'2The a regarded of this is modest and circumspect;but its scope is assertion phraseology it to turnaside objectionsto For allows Posner instance, comprehensive. of for a market the controversial baby adoptions withthe comproposal in the idea mentthata person acceptinghis views'can findno immorality of a baby market,when morality is derived fromthe economic principle To the extent that Posner is a leading prophet in the law and itself.'3 a clearlyimportantrevelaeconomicsmovement,his articleconstitutes tion. offeredhere will not be a radical one. It willnot dispute The criticism Posner's assumptionsabout fundamentalmoral notions but will rather Thus the framework of enquiryset out by Posner himself. operatewithin of the market as a moral mechanism is eschewed, for radical criticism several reasons. Such an attack would be diffuse and would have to advance on such a broad frontthat it would obscure any weaknesses in of the marPosner'spositionwhichare specificto him. General criticism
* AssociateProfessor, of Toronto Facultyof Law, University of discussingthispaper withBruce Chapman, Arnold Weinrib, t I have had the benefit of Tel in a faculty seminarat the University and WilliamBishop, and withparticipants of Toronto. I would also Avivand the Law and Economics workshopat the University like to thank Richard Posner for generouslyreading and commentingon an earlier draft.Preparationof this paper was facilitated by a leave fellowshipfromthe Social Sciencesand HumanitiesResearch Council of Canada. 1 Posner, Utilitarianism, economics, and legal theory (1979) 8 J. of Legal Studies103 (hereinafter Posner) 2 Posner,at 10lo 3 Posner,at 139 of Toronto Press University 0042-022o/80/0700/0307/$1.25/0o
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ketas an institution of the social would call into question the legitimacy in whichthe marketplays so prominenta role, and this and legal system mightin turntemptone to the conclusion thatour legal systemis either as a matter of normativeeconomic analysisor not defensibleat defensible all. For Posner our morality is 'derived from'an economic principlethat embodies marketconsiderations,and economic efficiency, or at least a But the converse versionof it,can be used as a medium ofjustification. between the marketand morality is also at least possible. If relationship in whichthe marketis encouraged or tolerated, our legal system, isjust, it maybe because marketvalues partakeofbut do notconceptually generate our notion of justice, and that the way in which our law moulds our markets and thescope whichitallowsthemis itself of a deeper a reflection Thus in order to preservecommon ground withPosner moralstructure.4 and to preventthe issue frombecomingdiffused,thispaper willaddress to considerationsand criteriainvoked by Posner himself.In other itself words,how successfulwas Posner in accomplishingthe specifictask on whichhe embarked? This of course requires some understandingof Posner's enterprise. Posner'sconcern is not only to supply an independentjustification of his ownapproach,butalso to disengage hiseconomicanalysisfrom, and show itssuperiority the of utilitarianism. This him to setout to, theory requires the criteria which he evaluates theories to ethical and to point specific by ways in which utilitarianismdisappoints, and his economic analysis these evaluative criteria.This invitesan enquiry as to whether satisfies, Posner's own views can withstandcriticism of the same sort and in the same terms as that which Posner levelled against utilitarianism. If it the more criticism radical which on centres the defects of moral cannot, themarket in generalis redundantto theevaluationof thespecific version of marketmorality which Posner is championing. The minimalgoal of Posner's article must be to demonstratethat the economic approach is innocent in some significant wayof the particularcharges whichhe levels utilitarianism. to achieve thisgoal does notentaila vindicaFailure against tionof utilitarianism, but is only an indicationthat Posner's conclusions fallshortof satisfying the criteriawhichhe himself acknowledges. An understandingof Posner's objections to utilitarianism is thus the firststep in assessing the viabilityof Posner's economic view of legal 'holds thatactions are rightin proportionas they theory.Utilitarianism tendto promotehappiness,wrongas theytend to produce the reverseof
to explore thiswithrespectto specificlegal doctrines, see Fried, Privacy: 4 For attempts Economics and ethics,a comment on Posner (1978) 12 GeorgiaL.R. 423; Weinrib, Rescue (forthcoming).
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relevantto the are particularly happiness.'5Two featuresof utilitarianism theme. focuses on the utilitarianism First, present subjectivepleasures, or preferencesof the actor; and secondly,it requires the satisfactions, of all of thesubjectivegoods of individualsand itconsidersas aggregation best the outcome in which the total of individual satisfactions is maximized. The first of these elements is want-regarding ratherthan idealregarding:it looks to the wantswhichpersons happen to have and does notattempt tojudge thesewantsagainstthe standardof some ideal." The second elementis aggregativeratherthan distributive, in thatit looks to ofall preferences thesumming across personsratherthantothedegree to whichthe wants of any given persons are satisfied.These two elements have had a powerfulappeal in liberal thoughtsince theywere systematizedby Bentham twocenturiesago. The first elementembodies notions of equalityand neutrality, since it makes no distinction betweenwantsof similar and no on value as intensity places thejudgment to theworthiness of particular wants,except as suchjudgment is itselfthe preferenceof a particularperson. This equality and neutralitygive the theorya vast since it must take into account the happiness of all comprehensiveness, and indeed of all sentient creatures.The second elementgives humanity, an indicationof the optimal solution in the many situationswhere it is to satisfy all wants.Given the minimalassumptionnotonlythat impossible are pleasures themselvesneutral but also that each person should be impartialbetween his and others' pleasures, the aggregationof satisfactionseems to be a fairly naturalprocedure.7 In recentyearsutilitarianism has become an object of criticism among scholarswho have sought to elucidate the Kantian foundationsof moral and legal thinking.8 For these scholars, the utilitariancalculus cannot accountforthe rightswhichpersons bear and whichshould insulatethe individualfrom the operation of utilitarianism in its aggregate aspect. Some of thesecritics indeed treatthe economic analysisof law as a variant of utilitarianism, or at least as being vulnerable to the same sort of criticism. Posner'spurpose, in viewof thisbackground,is to disengage his economicapproach to law fromutilitarianism the current by reiterating
ch 2, para 2 5 Mill Utilitarianism 6 BarryPolitical (1965), at 38-47 Argument ch 11, 7 SidgwickTheMethods (7th ed 1907), at 379-84, 420- 1; Mill Utilitarianism ofEthics para 18 8 Rawls A Theory in Smart and ofJustice (1971); Williams,A critique of utilitarianism, WilliamsUtilitarianism: For andAgainst and Utopia(1974); State, (1973); Nozick Anarchy, DworkinTaking Rights (1977); WalzerJustand UnjustWars(1978); Fried Right Seriously and Wrong Criminal (1978); Donagan The Theory ofMorality (1978); FletcherRethinking Law (1978). For a discussionof the 'revolt'against utilitarianism, see Barry,And who is myneighbour?(1979) 88 YaleL.J.629.
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of utilitarianism criticisms and byshowingthathis approach is immuneto thesecriticisms. In place of utilitarianism,Posner posits the principle of wealthmaximization.Wealth, says Posner, 'is the value in dollars or dollar in society.It is measured by whatpeople are equivalents... of everything to for or, iftheyalreadyown it,whattheydemand willing pay something, in moneyto giveitup. The onlykindof preferencethatcountsin a system is thusone thatis backed up bymoney- in other of wealth-maximization words, that is registered in market.'9 Markets, as Posner goes on to explain,can be classed intothreecategories.In explicitmarketsthereis a from one party to voluntaryexchange in which money is transferred marketswherethe parties. another.There are also non-explicit engage in of money; the servicesexchanged voluntary exchange withouta transfer have value in the sense that they 'could be monetized by reference to substitute servicessold in explicitmarketsor in otherways.''" Both explicitand non-explicit marketsare varietiesof actual market.Finallythere are the hypotheticalmarkets,in which transactioncosts preclude the voluntary exchanges which characterize actual markets. Here the law should bring about the same allocation of resources which would have emerged if the parties had bargained, by assigning the resource to the to whomitis the mostvaluable. party How different, from the utilitarianism then, is wealth-maximization whichPosner seeks to dissociateit?Both theoriesare aggregativein from that theyfavour the production of the highest total of whatevereach considersgood. And in boththemaximandis want-regarding respectively in thattheyeach take individual preferencesas given withoutassessing those preferencesagainst the standard of some ideal conception of human behaviour. The sole differencebetween them lies in the way they all preferences the want-regarding maximand. For utilitarianism specify of wealth-maximization count those count;in thetheory only preferences whichcan be monetizedand registered in a market, and they countonlyto the extentthat there is a willingnessto pay for their realization. This combinationof an aggregative principle and a maximand that differs from the utilitarianmaximand only in its being more limited might is not different supportthe suspicion thatPosner's wealth-maximization fromutilitarianism but only a more restrictive formof it. Indeed if the marketis looked upon as a matrixof rules by whichindividualegoism is harnessed for the production of the greatest good of all, wealthmaximization turnsout to be merelyanother versionof rule utilitarianism,which,like itspredecessor versions,has been elaborated in order to
to Posner,at 120
9 Posner,at 119
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resultswhich whileavoiding the counter-intuitive preserveutilitarianism itcan yieldin individualinstances." Posner himself remarks that 'it might seem that an ethical theory to premisedon one preference- the desire forwealth- mustbe inferior an ethicaltheory whichtakesaccountof a whole setof preferences.'"2 The to see how wealth, taken in itself,can point here is that it is difficult let alone exclusively whatis morallygood. It is one constitute, constitute, to as Bentham that did, thing postulate, pleasure was good, pain was bad, and money was 'the instrumentof measuring the quantityof pain or of value is notan instrument monetary pleasure."3 But in Posner'stheory, the it it to be an is the maximand. And maximand; measuring appears implausiblemaximand,since the ingredientbeing maximized is not one which is itselfmorally good. A rich person is not ipso facto morally superiorto a poor one. Posner's answerto thisobjectionis thathis theory, based though it is on a single preference,is successful in generating conclusionswhichare more definite, more complete,and more compatible with shared ethical intuitions. What he envisagesis apparentlya widely kind of invisiblehand whereby an ingredient which is itself morally indifferent will,on being maximized,yield conclusions coincidingwith whatwe independentlyrecognize as morallydesirable. For the moment let us set aside consideration of whether this reassuring optimism is justified. What is immediatelyrelevant is the comparison of wealthmaximization and utilitarianism, and in thisconnectiontwopointsshould be noted. First,the ingredientmaximized by utilitarianism has a claim within a want-regarding to be in even its theory good unaggregatedstate. Indeed itis itsmoralstatuswhen unaggregatedwhichjustifies itsaggregation. Posner's theory, in contrast, maximizes something which is apparentlymorallyindifferent. Secondly, one of the criticisms against is that it is simpleminded, that its conception of human utilitarianism thoughtand feelingis too impoverishedto account forthe richnessand of ethicalexperience. 4 If thisis so, a theorywhichotherwise complexity resemblesutilitarianism but whichinvolvesan even more restricted view of human behaviour seems even less likelyto satisfy the criteriaof comsee especiallyUrmson,The interpretation of the moral philoso11 On rule utilitarianism, utilitarianism 33; Smart,Extremeand restricted phyofJ.S. Mill (1953) 3 Phil. Quarterly in (1956) 6 Phil. Quarterly 344; Brandt, Toward a credible form of utilitarianism, Castaneda and Nakhnikian(eds) Morality and the (1963) 107; Lyons LanguageofConduct TheForms andLimits (1965); Brock,Recentworkin utilitarianism (1973) ofUtilitarianism Phil. Quarterly 1o American 241, at 253-61. 12 Posner,at 122 Bentham's Economic vol 1 (1952), at 117 13 Stark(ed)Jeremy Writings of an area in which this failingof 14 Williams,supra note 8, at 149. For an illustration utilitarianism is apparent,see Fletcher'sstudy, of excusingcondiThe individualization tions(1974) 47 So. Cal. L.R. 1269.
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of reductionTo deal withthe difficulty pletenessand ethicalplausibility. ism by paring away the element fromwhich utilitarianism derives whatithas does not appear to be a promisingstratagem. everdiversity A theory whichis grounded on a single kind of preference,the desire ethicalphenomena forwealth, can be comprehensiveonlyifall significant can be factoredinto thatkind of preference.But some values are notorin a market.Consider,for to monetization and registration iouslyresistant instance,Aristotle'sdiscussion of friendship.'5 Aristotledistinguishes between imperfectfriendship,which is based on the usefulness or the pleasure whichone derivesfromthe association,and perfectfriendship, in whichone wishesforanother'sgood forhis sake ratherthan forone's own. In Aristotle's view, the reason why we cannot speak of friendship withrespectto inanimateobjects,such as wine,is thatfriendship presupof wishingforanother'sgood, but 'itwould surelybe poses the possibility ridiculousto wishforthe good of wine: ifone wishesitat all, itis thatwine which maykeep, so thatwe can have it forourselves."'6The distinctions Aristotle is drawing cannot easily be captured in the theoryof wealth- the wishingof another's maximization. To translateperfectfriendship on the marketis for his sake into a which is registered preference good the marketis a since to conceive of the friendshipas an imperfect one, what is pleasurable or usefulto me ratherthan mechanismforreflecting what is intrinsically good for someone else. The very point of perfect it is that resistsmonetization; that to analyse it in terms of friendship dollarequivalentsis to change or to mistakeitsspecial character.A person wantingthissort of friendshipcould not buy it on the market,and his to do so would show thatitwas notreallythissortof friendship attempting he wanted. Indeed itmightnot be too muchof an exaggerationto say that that wealth-maximization blurs the distinction between friendshipand and between another's wine, having something for wishing good ourselves,by homogenizingour relationshipswiththe diverse elements whichconstitute our personal worlds.'7 Posner mightagree that it would be incoherentfor a person seeking perfectfriendshipto attempt to purchase it on the market. But this, Posner mightargue, does not exclude the possibility that the market
NE 1155 b 17-1158 b 11 15 Aristotle NE 1155 b 29 16 Aristotle and the IssuesofPolitics 17 Cf CropseyPolitical Philosophy (1977), at 20o: of establishedclasses, 'Mathematicalaggregation,in so far as it is also disintegrative transcends and entersdirectly intothe substanceof welfareeconomicsin methodology a problematic way. ofthetwoprimecategories,man 'Whatitimpliesis nothingless than a reconstruction and goods. The reconstruction would individualizethe species of man (i.e. reduce the species to, and replace it by, its individuals) and generalize the species of goods (i.e. dissolvethe species of goods and replace themdirectly by theirgenus).'
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appropriate to friendshipmightbe a non-explicitone. Friendship for Posneris the derivationof satisfaction fromthe satisfaction of another,'8 and it is no less a marketrelationshipforitsnot being explicitly soughtin the market.Friendship could be monetized by referenceto the price a person would demand to forgo friendshipor the resources which a person forgoesfor the sake of friendship.Thus the theoristof wealthmaximizationcan analyse friendshipwithbasically the same tools with whichhe analysescommercialtransactions. Now applicationof the same analytictools to friendship and commercial transactionsis possible only if friendshipand commerce are funidentical.That Posner viewsthemas such is apparent fromhis damentally and love on the ascriptionof moral value to honesty,trustworthiness, grounds that they promote efficiency by reducing the costs of transactions.'9Friendship would thus be regarded as a particularly smoothformof commerce, a form in which the costs of voluntaryexcharacterchange are minimal. Other relationshipscould be similarily ized: the significant differencebetween marriage and prostitution, for instance,is that in marriage the exchange between the parties can take place with lower transactioncosts. Absence of a qualitative difference betweenfriendship and commerce is a concomitantof the view thatthe difference betweenthemis quantitative solelyand can thusbe monetized in terms of dollars or dollar equivalents. The lineof reasoningwhichleads Posner to thisconclusioncan perhaps be tracedas follows.At a givenmomentin a person'slifehe maydecide to do x and notto do Y. This decision can thenbe viewedas a choice of x over Y, and since a choice is 'necessarily a choice between comparable the two alternativepossibilities musthave some comparaalternatives,'20 ble characteristic which constitutestheiressence in a person's eyes and whichis an attribute of x in greatermeasure than it is of Y. Similarly if a person can forgoresources of monetaryvalue forthe sake of friendship a commoncharacter(or viceversa),theremustbe a choice,and therefore istic,between friendshipand resources, and, since the most significant characteristic of resources is theirmonetaryvalue, thismust also be the mostsignificant characteristic of friendship.Commerce and friendship are thuscommensurablein the framework of wealth-maximization, and the differencesbetween them must also be explicable within that framework costs. bycomparingtransaction The fallacy in thistypeof reasoningwas pointed out by H.A. Pritchard
of love and altruismin Posner TheEconomic 18 Cf Posner'sdefinitions ofLaw (2nd Analysis ed 1977), at 102, 188 19 Ibid, at 185 Moral Obligation and Dutyand Interest: and Lectures (1968), at 226 20o Pritchard Essays
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morethanhalfa century betweendecidingto ago.2' There is a distinction do x and not Y and choosing x over Y. Not everydecision constitutes a choicebetweencomparable and commensurablealternatives. Friendship and commerce are not qualitativelyidentical,as can be seen from the attributes whichcan appropriatelybe ascribed to each. Friendshipcan be is noble, whereas use of this adjective to describe commercial activity somehowinfelicitous and in need of further elaboration.A noble bargain (ifthiscollocationof words is possible at all) is perhaps an arrangement whichlacks the characteristic qualitiesof a bargain - as where one of the for the sake a of non-commercial aim,abstainsfromexploitinghis parties, To ascribe to on the other hand, is not to advantage. nobility friendship, to the aberrance to is be distinguishedfromits (which point friendship's but to mark its excellence. of toolsto rarity) Application the same analytic and to commerce their fundamental friendship implies identityand thereforeobscures the peculiar qualities of friendship. A theory of willbe unable to account forwhyfriendship wealth-maximization is often celebratedin great literatureand commerce rarely.That is to say, the cannot illuminatefriendship because it has no wayof recognizing theory thevery attainsto itsdistinctive excellence. It qualitieswhereby friendship can look onlyto the resourcesforwhichone would exchange friendship, thustreating in termsof whatitis not. The ostensibleneutralfriendship ityof dealing in market preferencesmasks a Procrustean tendencyto conceiveof ourselvesin such a wayas to distortthe reality of our deepest and mostsignificant experiences.22 One mightobject that analysisof friendshipis not importantfor the issuesat hand. But Posner's definition of wealthas the value in dollars or dollar equivalents of everything in societysuggests that everything in has a value in dollar equivalents.One of Posner's criteriafor the society evaluation of ethical theories is completeness,and the lack of a viable accountof friendship and relatedconceptsof care forwhatis intrinsically good for others impairs his theory'scomprehensiveness.And although
21 Ibid; cf Nagel MortalQuestions (1979), at 128-32
22
Cf Strauss, Natural Rightand History (1953), at 128: 'There are things which are It is characteristic of all or mostof them admirable,or noble, by nature,intrinsically. thattheycontain no referenceto one's selfishinterests or that theyimplya freedom fromcalculation ... The phenomenon of admirationof human excellence cannot be explained on hedonisticor utilitarian grounds,except by means of ad hochypotheses. These hypotheseslead to the assertion that all admiration is, at best, a kind of teleforourselves.They are the outcome of a materialistic or scoped calculationof benefits view,whichforcesitsholders to understandthe higheras nothing crypto-materialistic buttheeffect of thelower,or whichpreventsthemfromconsideringthe possibility that there are phenomena which are simplyirreducibleto theirconditions,thatthereare phenomena thatforma class bythemselves.'
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it is lawyersdo not often couch theiranalyses in termsof friendship,21 worthrecallingthe role that friendshiphas played as a concept in legal One of the reasons forAristotle's interest in friendship - it is the theory. most extensivelytreated topic in the Nicomachean Ethics- is that he justice, and recognizedthattherewas a relationshipbetween friendship, Plato had invoked the notion of earlier politicalcommunity.Similarly to the that created laws are conventions bythe friendship explore position weak which should be broken by those who are naturallystrong,24 a the evaluation of which is for of crucial the whole position enterprise legal theory.If the nature of friendshipis, as Plato and Aristotlethought,a issue in legal theory,the inability of wealth-maximization to significant give a plausible account of friendshippoints to a serious defectin what purportsto be a comprehensivetheoryof law. One way, then, in which Posner's principle of wealth-maximization differs fromutilitarianism is that it insistsupon the monetizationof all ethicalphenomena. A second difference willbecome apparent ifwe shift our attention fromthe homogenizingimplications of monetization to the processwherebypreferencesare actuallyregisteredin the market.This depends broadly on three related factors: the preferences which the individualhas and theirrelativeintensities, the pricesof the goods which formtheobjectof his preferences, and the amount of wealthon whichhe can draw in his striving to satisfy these preferences.This combinationof whata person has, whathe wants,and whatit costswe can term'affordability.'Posner's economic theoryrequires not only that preferencesbe in a general sense but also thattheybe affordable monetizable byparticular individuals.In a marketsystem, an individual'sactivities 'are circumscribedby the limitations of his wealth.'25Posner illustrates this'willingsense of value when he points out that 'the hypotheticalness-to-pay' marketapproach would be applicable if someone means[emof monetary broke into an cabin and stole food to avert phasis added] unoccupied starvation. Transaction costs would be prohibitive, and there would be reason to believe that the food was worthmore, in the stricteconomic thanto theowner.'26 The qualification thatthethief be a sense,to thethief means is crucial to of In his action. an person'ofmonetary thejustification actual marketsituationthe food would be worthmore to the starving rich man than to the cabin owner, and the resultof the bargainingbetween
23 A recent exception is Fried, The lawyer as friend: The moral foundations of the lawyer-client relationship(1976) 85 YaleL.J. 1o6o. see 24 Plato Gorgias 507e, 5lob; cf Rep. 576a. On friendshipas a theme in Plato's Crito, Socratesand obedience to thelaw,forthcoming in lyunei Weinrib, (in Hebrew). Mishpat 25 Posner,at 132 26 Posner,at 121
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themwould be that the rich starvelingwould secure the food through purchase. If bargainingis impossiblethe proper allocation is one which mirrors theresultwhichwould have been produced bybargaining, and so thefood should go to thethief.But ifthestarveling had been destitute, he would not (let us assume) have had the resourcesto purchase the food in an actual market,and so it is wrong for him to take it when conditions make bargaining impossible. Only affordable preferences count, and whatis affordableto the richmaybe beyond the reach of the poor. A theory whichholds thatthe theft of food to avertstarvation is proper if the starveling is rich but improper if he is poor does not, on its face, A utilitarian would pointout that,from appear to have much plausibility. hispointof view,the source of the difficulty is the absence of neutrality as betweenwantsand the partiality towardsaffordablewants.If the starvein avertingstarvationdoes not vary according to his ling's satisfaction there is no reason for restricting the pleasures that means, monetary countto thosethatare affordable. Posner'scontentionis thathis economic analysis,geared to affordable whichare consistent withour ethicalintuitions, pleasures,can yieldresults and thatthemore restricted base fromwhichitoperates allowsitto escape criticisms whichhave been levelled againstutilitarianism. In his view,it is which supplies the constraints preciselythe limitationof affordability utilitarianism lacks. The principaldefectswhichhe sees in utilitarianism are the following: the difficulty of calculatingthe amount of totalhappito account forrights, the refusalto make moral distincness,theinability tionsamong typesof pleasure,and thereadinessto sacrifice theindividual on thealtarof social need. All thesedefects, Posner contends,do not pose seriousdifficulties forwealth-maximization, whichthussucceeds in all the fails.This is a large and significant important waysin whichutilitarianism claim.In orderto assess it,we willhave to examine each of thesedefectsin turnand see how the considerationsbehind themare treatedin Posner's economicanalysis. On Posner'scontentionabout calculability three pointsmustbe made. First,ease of measurementis not itselfa decisive criterionof a theory's If the theoryis satisfactory on other more substantive viability. grounds, ease of measurementwillbe a welcomebonus, and ifis not satisfactory on these grounds, ease of measurement cannot redeem it. Secondly the gravamen of recent criticismof the utilitariancalculus is not that the are lacking in technique but that theyare proponentsof utilitarianism which is misconceived:theyare attemptdoing something fundamentally to what is incommensurable.27 If, as we have seen, wealthing aggregate
of values,in Ryan (ed) TheIdea ofFreedom: 27 Williams, supra note 14, and Conflicts Essays inHonouroflsaiahBerlin(1979) 221 ; Nagel, supra note 21
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maximizationis vulnerable to the same criticism, a different and easier of measurement will either be the or will beside raise the technique point that the of ease measurement is a reflection of the suspicion greater distortion of what is measured. as himself Posner greater Thirdly, being the problem of measurementis obviated only in actual acknowledges,28 where the parties reveal theirpreferencesthroughthe process markets, of voluntaryexchange. In the hypotheticalmarket the problem of measurementsubsistsbecause one will have to guess how the parties would have acted in an actual market.Posner assertsthat'itis much easier to guesspeople's marketpreferences in areas wherea freemarketcan'tbe made to work than to guess what policies will maximize subjective happiness.'29Why this is so is not clear, and one can certainlythinkof instanceswhere utilitarians have been more confidentof theirestimates than Posner has been of his.s3 Guesses as to what things persons will exchange for what and guesses as to what will produce the greatest numberdepend alikeon a general knowledgeof happinessof thegreatest human nature,and the formerseem to be more exposed to the eccentric preferencesof given individuals than the latter. Posner unfortunately offersno support for his assertion that wealth-maximizing guesses are easier to make than utilitarian ones. Of theothergrounds,the one thatis crucial,since all the otherconsiderationsare closely related to it, is Posner's claim that the principle of wealth-maximization can account for rightsin a satisfactory manner, whereasutilitarianism cannot. Recent criticism utilitarianism has against indeed centred on the allegation that it does not 'take rightsseriously.' This allegationcan be considered both fromutilitarianism's aspect as a and fromitsaspectsas an aggregativetheory. As a want-regarding theory is vulnerable to the criticism that theory,utilitarianism want-regarding the sensationsto whichit ascribesvalue are not distinctive enough of the human experience to be worthy of the sortof special statuswhichis the of rights.The neutralitywhich utilitarianism subject-matter professes towards all pleasuresand satisfactions is notconducive to thedemarcating of certainaspects of human action as having the particularsignificance whichrequiresthe protectionof rights.Mill,as is well known,attempted to softenthe starkness of utilitarianism's aspect by introwant-regarding the distinction betweenhigherpleasures and lowducing ideal-regarding er pleasures - 'bettera human being dissatisfied than a pig satisfied.'3'
28 Posner,at 129-30 29 Posner,at 130 30 Compare, eg, Sidgwick The Methods ofEthics(7th ed 1907), at 437, and Posner and Landes, Salvors, finders, good Samaritans and other rescuers: An economic studyof law and altruism(1978) 7 ofLegalStudies 84, at 126. J. ch i1, para 3-8 31 Mill Utilitarianism
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Posner condemns this distinctionas being inevitably subjective,but he nonetheless considers the refusal to differentiate on moral grounds among typesof pleasures to be a defectin utilitarianism.32 The aggregativefeaturein utilitarianism also encountersdifficulties in dealing with rights.Rights attach to individuals, whereas the point of is thatthe interests of individualscan be sacrificed so thatthe aggregation totalamountof good can be produced. Aggregationpresupposes a largest conflict betweeneach person's good as an individualand the totalgood of all individualsas a group. If therewere no such conflict,33 one would not need to use an aggregative criterion,since the maximizationof each person'sindividualgood would necessarily produce the highesttotal,and it would be the formerrather than the latterwhich would be decisive. Aggregationpermits the individual to be sacrificed,and the current criticism of utilitarianism in the name of rights views these rightsas a within whichtheindividualis immunefromsubjecdemarcating sphere tionto the felicific calculus. To thatextent,rights constrainutilitarianism and are conceptually to or with it. inconsistent prior If theplausibility of thecriticism thatutilitarianism does not'takerights derives from the and seriously' want-regarding aggregativeaspects of and if Posner subscribesto thiscriticism, an obvious quesutilitarianism, tionpresentsitself.How can Posner's theoryof wealth-maximization not succumb to this very criticismin view of the fact that it too is both and aggregative?One possible answer is thatthe theory want-regarding of wealth-maximization produces outcomes and thatwealth-maximizing could be in the relevantcircumstancesto those indiattributed 'rights' vidualswhomtheseoutcomesfavour.This, however,is hardlysatisfactory since it does not distinguish the structure of rights under wealthmaximizationfrom that under utilitarianism. The point of the rightsbased criticism of utilitarianism is that rightsare prior to outcomes, not thattheyare synonomouswithoutcomes. The criticism does not centre entitlement to use theword'rights' (some utilitarians upon theutilitarian's abhorredtheword,othersgloriedin it)but upon the challenge whichthe of an aggregaconceptof rightsas sketchedabove poses to the structure tive system.The priorityof rightsto aggregative outcomes cannot be sustainedwith respect to utilitarianoutcomes but disregarded with reones. spectto wealth-maximizing Posner cannot, then, maintain that wealth-maximizing outcomes and are synonymous. Rather,he apparentlyputs the argumenton the rights basisthatwealth-maximizing outcomes coincide withthe rights whichare
32 Posner,at 113, 116 33 For an argument that Bentham himselfheld this view see Lyons, Was Bentham a utilitarian? Reasonand Reality, of Philosophyvol 5 (197o-1). Royal Institute
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and thatthese recognizedin our cultureas a matterof intuitive morality, outcomes can then provide a firmfoundation for both correctiveand distributive justice. This is a more promisingapproach, but many questionsare leftunanswered. In particular,whatis the nature of the coincidence betweeneconomicoutcome and moralintuition? since Presumably, Posner's theoryis empirical,the coincidence is a contingentone rather thanone whichexistsa priori. In other words,it is possible to imagine a conflict between the two,34and then which is to be regarded as having If moral intuition takes precedence, whyare we concerned,as a priority? normative witheconomic outcomes at all, and whatwould we lose matter, by disregardingthe economic approach to law? Posner, on occasion, refers to rights and morality as being 'derived from' his economic and thisseems to indicate the priority of wealth-maximization theory,35 over moral intuition.But this would merelyrender rightssynonymous withoutcomes, and, as we have seen, would mean that there was no relevantdifferencebetween wealth-maximization in and utilitarianism their capacity to take rightsseriously. Or is the relationshipbetween Posner's economic theoryand moral intuitionto be characterizedby a Rawlsianstateof reflective so thateach can be adjusted to equilibrium,"6 both into a coherent If bring pattern? so, preciselywhichof the theory's tenetscan be adjusted, and how can the resultmeasure up to Posner's evaluativecriteria of consistency, completeness,and definiteness? There are difficulties, in then, ascertainingthe statusof rightsunder the of Posnerian rightsto wealth-maximization, grounds for superiority utilitarian betweenrights and moral intuitions. ones, and the relationship The effect of these difficulties can be seen when one turnsto the process are created in the economic theoryof law. Posner's most bywhichrights extreme claim is that rightsdo not have to be postulated but can be derived from the theory,and that the theorycan provide a basis for corrective and distributivejustice. Considerationof thisclaiminvolvestwo further is Posner's account of rights coherent,and does itreach questions: those fundamental aspects of social life which are regarded as the appropriatedomain forthe operation of rights? Assessmentof the coherence of Posner's account requires us to look more closelyat the categoriesof marketswhichgenerate the rights, and at thedistinction betweenactual hypothetical markets. Actual particularly markets are characterizedby a process of bargainingleading to a voluntaryexchange between the participants.This exchange would not have takenplace unless it improved the positionof each party,and therefore
admitsto the existenceof severalsuch 'troublingcases.' 34 Posner (134-5) frankly 35 Eg, Posner,at lo9, 127, 139 36 Rawls,supra note 8, at 48-50
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theresourcewhichis the subject-matter of the exchange mustin the end be theproperty of theparticipant in thebargainingwho values itthe most. Thus, at the end of the day, wealth is maximized. Hypotheticalmarkets come intoplaywhen transactions costspreclude theoperationof an actual market.In thesecircumstances, the resource is allocated in the same way thatitwould have been had the partiesbeen able to bargain,and wealthis worthfivedollars to again maximized.If, forinstance,you have property in and ten dollars to that I am to pay thatmuch in the sense me, you willing in an actual marketwe willbargain,withthe orderto carryon myactivity, resultthat I will pay you between fiveand ten dollars to purchase the willbe put to itsmostvaluable use - myuse. Thus the property property. Let us assume, however,thatbargaining is impossiblebecause there are and itcannotbe knownin advance manypersonswho hold such property whetherI whichof those persons myactivity will affect.In determining in fact destroysyour property, mustcompensate you when my activity Posner'sprincipleof wealth-maximization would look to the resultwhich an actual marketwould have produced - an allocationof the property to me - and would duplicate the result.Since the property is more valuable when subject to my use than to yours,the rightto the propertyis to be allocatedto me. The hypothetical marketthusmimicstheactual market.And sinceboth actualand hypothetical markets maximizewealth,thetwotypesof market can be looked upon as being manifestations of a singleprinciple.But this is deceptive.What the hypothetical marketmimicsis not the actual unity marketsimpliciter, but only the result which the actual marketwould There are two produce regardingthe allocationof the affectedproperty. marketdoes notmimic.The first of theseis aspectswhichthehypothetical the process of bargaining,which is ex hypothesiexcluded because the transaction costs are preciselywhat causes recourse to the hypothetical marketto begin with.The second aspect is that of exchange. Not only would the actual marketallocate the propertyto me but itwould transfer between five and ten of my dollars to you, and Posner's hypothetical marketignores this latterelement. Part of the reason for ignoringthe elementof exchange is thatotherwisetheadvantage of definiteness which wealth-maximization claims over utilitarianism would be dissipated. It is easier to estimate that the propertyis worth more to me than it is to estimatehow much you would receive by way of exchange. For this amount- the precise pointbetweenthe fivedollars whichthe property is worth to you and the ten dollars itis worthto me - is intimately tied to the course of thebargainingbetweenus, and thishad alreadybeen excluded ex hypothesi.But even if it were determined that the bargained-for exchange would have been, say, seven dollars, there is no reason of
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For theaggreforwealth-maximation to insistupon itstransfer. principle of our amount will the same combined wealth be gate regardless of whether thesevendollarsare in mypocketor in yourpocket.The transfer of your propertyto me will increase our combined wealth because it is worthmore to me in termsof moneythan it is to you. But the reciprocal transfer of seven dollars fromme to you does not increase our combined wealthbecause seven dollars as such cannot be worthmore in termsof money to you than to me. Seven dollars is money, and money or its equivalent is the ultimate criterion of measurement and justification under the principleof wealth-maximization. The factthatseven dollars be worth more to in of terms else, such as satisfactions may you something or pleasures,is irrelevant, itwould be theseand notwealth sinceotherwise whichwould be the ultimate criteria. This would be to readmitutilitarianismbyallowinginterpersonalcomparison of utility. And in any case this would not sanctionthe transference of seven dollars to you as part of a process of exchange, since it is at least possible that on these further groundstheseven dollars would, afterall, be worthmore to me. These differences betweenactual and hypothetical marketsare crucial to the assessment of the coherence of wealth-maximization.Since marketsmimic the resultsof actual marketsbut not their hypothetical bargainingor exchange aspects, the most convincingvindicationof the coherenceof Posner'seconomic approach requiresthatthe resultand not the general processes of bargaining and exchange through which the resultis reached be the most significant aspect of actual markets.The of thisis perhaps suggestedin the following implausibility analogy.37 Assume thatJones loves playing golf and plays eighteen holes every Sunday morning.One particularSunday Jones realizes that he cannot spare the timeto play his usual game. Instead he goes out into his back yard,digsa hole, and drops a ball intoiteighteentimes.When questioned about his peculiarbehaviour,he explains,'Well,since itwas impossibleto playgolf,I decided to mimicwhat happens when I actuallyplay. Golf,as you know,is a game whichresultsin a ball being repeatedlydeposited into a hole in theground. Of course,thisis not thewhole game, whichincludes theprocessbywhichthisresultis to be attained.But surelytheresultis the mostsignificant part of the game, so that is the element which I reproduced. Afterall, what I was playingwas not actual golf(thatwas impossible in thecircumstances), butonlyhypothetical thatthis golf.'It is unlikely will to explanation persuade many golfers tryhypotheticalgolf when circumstances preventthe playingof actual golf.Nor could Jonesconvinthat assert actual golf and hypothetical cingly golf are merelydifferent
37 The analogy is derived fromch 3 of Bernard Suits' marvellousbook The Grasshopper: Games, Life,and Utopia(1978).
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that a manifestations ofthesameunderlying attheresult aiming principle to the ball be lodged in a hole. Hypothetical fails capture golfsimply of exercising element which givesactualgolfitsappeal, theenjoyment ofthegame. inaccordance one'sskill with theruleswhich areconstitutive led his commitment to actual that Indeed,a claim golf himtotry by Jones since thechallenge would be as incoherent, hypothetical golf regarded in the which isintegral totheformer iscompletely latter. lacking Justas actual and hypothetical golf resultin a ball's being lodged in a hole, so actual and hypothetical both resultin wealthmarkets ofmarket wealth on different Butthetwotypes maximize maximization. of wealth is directly themaximization bases.In thehypothetical market wealthBut in the actualmarket pursuedas an aggregative principle. occurs ofa distributive maximization as a consequence operaderivatively tion.In thehypothetical our total is greater eventhough wealth market, inyour wealth is individual wealth hasdecreased, sincethedecrease your is theincrease inmine.Butintheactualmarket, ourtotal wealth lessthan In the becausebothyourwealth and mywealth haveincreased. greater itwould absence ofa need toyoketogether thetwocategories ofmarket, of notnaturally occurto anyoneto call the actualmarket an instance sinceitlackstheconflict between individual and totalgood aggregation, which the termpresupposes. Of course,if each person'swealthis inthetotal inthegroupisinevitably wealth ofalltheindividuals also creased, butit is theformer notthelatter, which the increased, effect, captures distinctive ofactualmarkets. quality It is thusonly superficially thatboth categories of markets can be underthe principle subsumed of wealth-maximization. At a morefundamental levelthey and this difference isreflected intheir differ, unequal moral The actual market In seems to be far more acceptability. appealing. a want-regarding the fact that the of all individuals system, position concerned is improved is the mostpowerful reasonconceivable forrethe new situation as to the old. in markets, garding superior Hypothetical which thegainsofsomeare at thecostoflossestoothers, are muchmore Actualmarkets fortheindividual and his problematic. embody respect whereas markets entail the of the sacrifice interests of choice, hypothetical someindividuals inthenameofmaximization. One of thecriticisms is thatthe whichPosnerlevelsat utilitarianism readiness to sacrifice individuals on thealtarofsocialneed is an instance of'moral Even iftheaccusation is a fairone,ithardly monstrousness.'38 lies in the mouthof a proponent of wealth-maximization to make it. Sacrifice isentailed utilitarianism's element and wouldfind by aggregative
38 Posner,at 116
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a place in any aggregative system.Wealth-maximization differsfrom in utilitarianism of the its element,not in only conception want-regarding its being an aggregative system;and thereforesacrificeis as natural a concomitant of wealth-maximization Posner at one as of utilitarianism. concedes as much39 shifts but from the monstrousness of point ground sacrifice se to the of monstrousness utilitarian sacrifices as per compared withwealth-maximizing ones. Now monstrousnessis a term of moral evaluation,and one is entitledto wonder about the evaluative criterion which lies behind it. If the criterionof monstrousnessis a product of Posner'sown theory of wealth-maximization,40 he is merelyasserting that utilitarianism of is is a less satisfactory wealth-maximization than theory - an assertionwithwhichno utilitarian wealth-maximization willsee any need to disagree. But ifsome othercriterion is being involved,itwould be to know what if it for no other reason than to dispel the is, helpful that the criterion is a Kantian one and thus hostileto all wantsuspicion Posner's. theories, And, on anycriterion, regarding aggregative including how can Posner be so confidentthat utilitarian sacrifices are more monstrousthan wealth-maximizing ones? For, in view of Posner's othercriti- thatthereis no reliable technique formeasuring cismof utilitarianism utilitarian preferences- he should be agnostic as to the product of the utilitarian calculus. It seems unfairto argue both thatutilitarianism cannot yield definite results and that the results which it yields are But at any rate, it is clear that wealth-maximization will, monstrous.41 the of individual markets, through instrumentality hypothetical require of a routineand widespread nature. sacrifices Actual markets,which respect individuals,are significantly different from hypotheticalmarkets,which sacrificeindividuals. One might be temptedto impartstructureto wealth-maximization by postulatingthat the two marketsare to be invoked in a lexical order.42In a certainsense thisis what Posner does. In his account of hypothetical marketshe commentsthat wouldinsist that therelevant valuesare unknowable sincethey have [t]he purist notbeenrevealed inan actual market I but assume that cases transaction, (inmany a courtcan make a reasonably accurateguessas to theallocation of anyway) that resources wouldmaximize wealth. the determination of value Since, however, topay)madebya court is lessaccurate thanthat madebya is,ofwillingness (that thehypothetical market be should reserved for suchas market, cases, approach
39 Posner,at 133 is derived fromthe economic principle.' 40 Recall Posner,at 137: 'Morality statementof the utilitarianposition,see Hare, What is wrong with 41 For an optimistic slavery 103. (1979) 8 Phil. & Pub. Affairs 42 On lexicalordering,see Rawls,supra note 8, at 42-3.
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accident costs useofan actual thetypical market-transaction case,where preclude market toallocate resources efficiently.43 In any given situation,then,one first seeks to apply the actual market approach, and only if thisis impossibledoes one apply the hypothetical of thisprocedure, however,is not market approach. Posner'sjustification freefromdifficulty. He regards the two categoriesof marketsas having not different moral foundationsbut different degrees of accuracy. For himthe mostsignificant difference betweenthe actual and the hypothetical marketis that the formeryields an allocative result which is more accuratethanthatyieldedbythe latter.We have alreadyseen thatthereis reason to be dubious of thisresult-oriented approach, but the pointto be it of even if were the priority notedhere is that correctitwould notjustify is more over the actual market actual markets.Granted that hypothetical accurate in that it can determine exchange as well as allocation. But to aggregation.And withrespectto allocaexchangeas such is irrelevant one allocation is tionthe crucialquestion is not how much more efficient Once a certain than another but simply whether it is more efficient. threshold of confidencehas been reached in an allocativedetermination, further accuracyis unnecessary.Posner is willingto assume thatin many cases a reasonablyaccurate determination can be made withoutrecourse toan actualmarket:hence theuse of hypothetical But ifthisis so, markets. thereis no justification froman aggregativepoint of view for not using these reasonablyaccurate determinationseven in circumstanceswhere actualmarkets are possible. If we have confidencethatthevalue of certain will be more for me than for you (and the very existence of property markets indicates that Posner has this confidencein many hypothetical should the wealthnotbe maximizedbyallocatingthe property cases),why to me regardlessof whethertransactioncosts allow or preventan actual market?And if the answer is thatactual marketscapture the significant additionalmoral values of process,whyshould these moral values have a in a theory whose basic thrust is result-oriented and aggregative? priority Indeed, an argument can be made that if there is to be a lexical should be the reverseof thatproposed by Posner. ordering,the priority The pursuitof greateraccuracyis itselfa costlyenterprise, and a theory whichwas genuinelyconcerned to maximize wealth would require the avoidance of costs which would not be justified. Once one reaches the stageof reasonableconfidencein theaccuracyof the guess concerningthe allocation (a stage which can be reached withoutrewealth-maximizing course to an actual market),furtheraccuracy is to be avoided as being even ifthe medium forattainingthisaccuracyis an actual market. costly
43 Posner, at 120
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Thus, insteadof thepriority being attachedto theactual marketso thatan allocation takes place in a hypotheticalmarketonly if transactioncosts preclude an actual market,the priority ought to be reversed,so thatan allocation would take place in an actual marketonly if the true guess marketfell regardingthe allocation in accordance withthe hypothetical shortof reasonable accuracy.This suggestionconcerningthe priority of thehypothetical market would bydefinition the actual recourse to require but the actual marketwould be used as the basis for guesswork market, about relativevalue, not as an instrument of allocation. Posner's view is thatthe principaldifferencebetween the two typesof marketis one of but he is willingto achieve accuracyat the price of stunting the accuracy, maximization of wealth. Would it not be more consistentif the lexical that accuracy may cost orderingwere arranged to avoid the possibility morethanitis worth? the logic of Posner's theorymayrequire the restriction of Accordingly, the role of actual markets.One mightindeed say that the use of actual markets is a potentially inefficientway of accomplishing wealthmaximization. To the neo-classicaleconomistthisis a paradox, since the is, in the absence of specified forms of market concept of efficiency tiedto theoperationof actual markets. But itis possible failure, inherently to break out of the impregnable circularity of this position by defining more neutrally as the least expenditureof a limitedresource to efficiency achievea givengoal.44Justas the game of golf,withitsdistancesbetween tee and green and its deliberateand contrivedobstacles,is an inefficient way of depositing golf balls into holes, so the actual market,with its processes of negotiation and exchange, may be an inefficient way to maximizewealth.Justas one would not expect thatthe devotee of actual golf would have a view of gamesmanship compatible with that of the devotee of hypotheticalgolf - for the actual golfer hypotheticalgolf would lack the veryfeatureswhich make golfworthplaying,and forthe - so hypothetical golferactual golf would impose pointlessobstructions there is a deep tension between actual and hypotheticalmarkets.The moraljustifications of each of these two marketspoint in such different directions that it is hard to see how theycan both take theirplaces in a singlecoherenttheory. If Posner's economic theory of law is constructedon fissured and insecurefoundations,a satisfactory account of fundamentalmoral motionssuch as rightsis hardlylikelyto emerge fromit. But it is precisely Posner'sclaim thatthe attractiveness of his theory, especiallywhen contrasted withutilitarianism, is thatitcan yieldconclusionsabout important
of 44 Suits,supra note 37, at 54; cfJohansen,The bargainingsocietyand the inefficiency bargaining (1979) 32 Kyklos 497.
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ethicalissueswhichare consistent withour moral intuitions. This claim is all the more surprisingwhen it is recalled thatthe concept whichgenerates Posner's account of fundamentalmoral notions is the market.Now themarketis an instrumentality forthe exchange of holdings,and thusit presupposes that there has already been an assignmentof proprietary and thatthe mechanismsof legitimateexchange have been estabrights lishedat leastwithsufficient to allow borderlineproblemsto particularity be treated in a principled manner. Thus in a market societyone can when the highwayman recognizethat, says'Your moneyor yourlife,'he is a demand whichhe has no rightto make,takingsomething which making he has no rightto take,and thatthe resulting exchange is not a legitimate markettransaction. The marketseems to presuppose the existenceof a settledregimeof more basic rightsand not to be an appropriate instrumentforthe initialcreationof thatregime. And the initialcreation,the situationantecedent to any market exchange, is crucial, since under Posner'scriterion of affordability a preferenceis not to be included in the of wealth-maximization unless itmanifests in a willingness itself to process and one's to will with what one has. The maxpay, willingness pay vary imization of wealthrequiresthatwealthantecedently existand thusseems unable itself to create thatantecedentexistence. It is important, in view of Posner's project, to note how much more serious thisproblem is for Posner's economic principlethan for utilitarianism.Whateverthedifficulties withutilitarianism, itis at leastpossibleto conceive thatone can derive fromit fundamentalnotions of mine and thine. The objections which have been raised against utilitarianism are that it is technically calculus and impossible to conduct the felicific thatitswant-regarding and aggregativepremisesare unacceptable. The with wealth-maximization is of different order. Even if one difficulty its it seems not accepts premises, logically, merelytechnically, impossible to derivefromthema conclusionabout mine and thine.The reason is that wealth-maximization startsin at too late a stage. The want-regarding elementin utilitarianism is composed of such fundamentalsensationsas But pleasure, pain, and preference,and these exist in man naturally.45 Posner'stheory is a much narrowerone. The want-regarding component forhimis restricted to preferences whichare backed up bywealth,and the
tothe 45 As Benthamhimself putsitin his rhetorical opening to theIntroduction Principles of Morals and Legislation: 'Nature has placed mankind under the governance of two It is forthemalone to pointout whatwe ought to sovereignmasters, pain and pleasure. do, as wellas to determinewhatwe shall do. On the one hand the standardof right and are fastenedto theirthrone.They wrong,on the otherthecause of chains and effects, us in all we do, in all we say,in all we think:everyeffort we can make to throwoff govern our subjection, willbut serveto demonstrateand confirm it. In otherwordsa man may he willremainsubjectto itall the while.' pretendto adjure theirempire: but in reality
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of wealthis a social phenomenon. It not merelyexists,but it distribution withthe market,Posner seems to can be justifiedor criticized.In starting of justifying the fundamentalnotionson which preclude the possibility the marketitself depends. This criticism, in various formulations,has indeed been a standard one.46Posner'sresponse is as follows: ifmarket It istrue that werecostless, itwouldbe a matter ofindiffertransactions an exclusive The of encetotheeconomist where was vested. right initially process would reallocate the to whoever valued it most. voluntary exchange costlessly right ofzerotransaction Oncetheunrealistic costs is abandoned, however, assumption ofrights ... If transaction are positive, becomes determinate costs theassignment in those thewealth-maximization theinitial of rights requires principle vesting to valuethemthemost.This is theeconomic a whoare likely reasonforgiving theright to sellhislabouror a womantheright to determine worker hersexual If assignedrandomly to strangers theserights would generally (not partners. be repurchased and woman invariably) bytheworker respectively.47 In otherwords,the problemof theunderlying distribution can be avoided in thecontext of an actual market, and itcan be solved wherethemarketis a hypothetical one. In this way the wealth-maximization principle is 'a and criterion of and comprehensive unitary rights duties.'48 This defence is, however,insufficient withrespectto both of itsbranches. Consider first the actual marketsituation,where transactionsare costless.Posner is here applying Coase's seminal insightthat in the absence of transaction coststhe use of a resource willbe the same irrespectiveof whichof the competingpartiesis the initialholder of the property in theresource.49 the right to pound a mortar right Regardlessof whether witha pestle is given to the confectioneror whetherhis neighbour,the physician,is given the right to be free of this disturbance,the initial propertyassignmentwill have no bearing on whetherthe mortar and is, in pestlewillcontinueto be used.50 This is whythe initialdistribution Posner'swords,'a matterof indifference to the economist.'But whereas Coase was pointingto the existenceof the strangeeconomic factthatthe ultimateuse of a resource is unaffected,in the absence of transaction costs, by its ownership, Posner is imbuing this fact with a moral and treating it as a normativebasis forlegal theory.Posner's significance
46 Eg, Baker, The ideologyof the economic analysisof law (1975) 5 Phil. & Pub. Affairs 3; Dworkin, supra note 8, at 97; Kennedy,Form and substancein privatelaw adjudication (1976) 89 HarvardL.R. 1685, at 1763; Fried,supra note 8, ch 4 47 Posner,at 125 48 Posner,at 140 49 Coase, The problemof social cost (1960) 3 J.L. & Ec 1 v Bridgman 50 Sturges (1879) 11 Ch.D. 852 (C.A.),discussed byCoase, supra note 49, at 8
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is thathisapproachwillcorrespond to and can however, general point, Now, it can do so onlyif all the morally guideour ethicalintuitions. a resourceare exhaustedby the detersignificant questions regarding mination of itsultimate use. In otherwords, hisapproachwillsatisfy his owncriteria iftheeconomist's to theinitial indifference distribution only is shared thewholeissuefrom a moraland legal bypersons considering ofview, and this Ifoneweretotry issimply inconceivable. toexplain point totheconfectioner and tothephysician that theassignment oftheproper- was in their case - which was thewholeissuein thelitigation tyright in theeyesof legaltheory, irrelevant would cause to have they certainly wonder howlegal theory could be so divorced from What legalreality. seems tofollow from Coase'sdemonstration isnotthat theinitial distribution isirrelevant tolegaltheory, butthat itistheonly since it relevant issue, is theonlyissuewhich can be affected the of the by judicial operation Coase's work is important to law theory notbecausehisconcluprocess. sions aresomehow coextensive with butbecausethey to point legaltheory, a typeof consideration withwhichit is futilefor legal theory to be concerned. the veryfactor on Posner'sassertion, is which, Conversely, irrelevant to theeconomist is to thelegaltheorist an unavoidable subject ofpreoccupation. The needtoaccount for theinitial ofrights distribution doesnotevaporate inthepresence ofan actualmarket.5' It istheoperation ofhypothetical markets towhich Posner looksfor the of initial to a should be determination rights. According Posner, right to its most natural since it is him most valuable to he and owner, assigned woulddemonstrate itsvalue to himbypurchasing it ifit wereassigned elsewhere. The right tomy for to is be tomeand notto life, instance, given murderer. Its value to me is than its value to him, mypotential higher sinceiftherewerea market in the right to mylife,I wouldspend any amount to purchase it from notbe able to him,but he wouldprobably afford theprice I woulddemandifhe wished that topurchase itfrom me. Unlike utilitarianism's moregeneralcalculus, which a result might yield theforfeiture ofmy themarket will on the life, requiring placeconstraints fulfilment of the desiresof the murderer, since his activities will be 'circumscribed of his wealth.'52 Thus, wealthby the limitations
51 Posner has himselfrecognized, in another place, that an economic analysismay not reach fundamentalissues, eg, Posner, supra note 18, at 36 n 1: 'A qualificationon Coase's analysisshould be mentionedhere. The initialassignment even where of rights, transaction costsare zero so thatefficiency is notaffected, the relative wealth mayaffect of the parties,and thismay affectthe use of the resources ... [i]fthe value of the right a large fraction of the wealthof eitherparty, where the rightlands up may represents depend on how the initialassignmentis made. The extremeexample is the rightto a barrelof wateras betweentwodyingmen in a desert.' 52 Posner,at 31-2
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will yield a result which is intuitively maximization acceptable, whereas utilitarianism not. might This argument,however,is deeply flawed.One should note,as a start, thatthe limitations of the murderer'swealthare taken into account if he has to purchasetherightto mylifefromme,but thatthe limitations of my wealthare nottakenintoaccount ifI have to purchase therightfromhim. The possibility thatI maynot have enough moneyto purchase the rightthe criterionof affordability - is simply ignored. It is as if Posner's concentration here on the hypothetical qualityof the marketled him to for a moment that the marketmustmirror the results forget hypothetical oftheactualmarket, and thatin theactual markettherelativeresourcesof the partiescan be decisive. Indeed, Posner is caught here in a dilemma. Eitherthe assignment of rightshas already takenplace, in whichcase it is too late for the rightsto be created by Posner's market theory,or the of rightshas not yettaken place, in whichcase the partiesdo assignment nothave the resourceswithwhichto act in the market.It is not a satisfactoryresolutionof thisdilemma to assume (plausiblyperhaps) thatin any distribution themurdererwillnotbe able to affordmyprice but to ignore the possibility thatI willnot be able to affordhis. In assumingthat I value my lifebut ignoringwhetherI can affordit, Posner has here cut the notion of value adrift from its moorings in His justification for assigningrightsto theirnatural 'willingness-to-pay.' owners is thereforenot grounded in the maximizationof wealth. It is, worthnoticingwhatthe real ground forthis is. furthermore, justification If I am willingto spend any amount to purchase53 my natural rights, of whetherI have themoney,thenmoneyis being used notas a regardless constraint on mydesires but ratheras a measurementof the intensity of of mydesire to live is mydesires. Posner's argumentis thatthe intensity of the murderer'sdesire to kill,and thatif we greaterthan the intensity both had the money, I would pay more to indulge my desire than he would to indulge his. If we add togetherthe satisfaction and disappointmentwhichwe would each feel at my survivaland compare it withthe satisfaction and disappointment whichwe would each feelat mymurder, more aggregate happiness would be produced by the realizationof the former setof possibilities than the latter.Posner's argument,therefore, is actuallyproceeding along utilitarianlines. Perhaps it is only incipiently since a complete felicific calculus willinclude the satisfactions utilitarian, and disappointments of othersbesides the potentialvictim and the potentialmurderer.but itis nevertheless utilitarian as faras itgoes. One can see fromthisinstancehow easy it is to take Posner fora utilitarian, and how
has revealingimplications. 53 Posner'sword is actually'repurchase' - whichin itself
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- letalone difficult itis forhimto showhowhistheory is different from to utilitarianism. superior with The claimthatwealth-maximization conclusions consistent yields ourintuitions is to sustain. therefore difficult This, concerning very rights in whichPosnerasserts a congruence is not the onlycontext however, intuitions. The claimalso hiseconomic and ourethical between principle extends to ethicalbehaviour, to the qualitieswhicha virtuous person have.Posner's ofutilitarianwould ofdeparture a criticism is,again, point 'stems ism.He refers to the'moralmonstrousness,' as he terms it,which of from theutilitarian's refusal to makemoraldistinctions amongtypes A and that he the illustration: spends gives following 'Suppose pleasure,' off while hisleisure time flies, B spendshisfeeding pigeons, pulling wings and thatbecause A has greatercapacity forpleasurehe derivesmore from his time than does from his ... [T]he consistent leisure B happiness manthanB,becauseA'sactivity wouldhavetojudge Aa better utilitarian is adds moreto the sum of happinessthan B's.'54 Since utilitarianism as mark as between and does not out certain neutral pleasures pleasures wouldhave to give 'utilitarians better thanothers,55 beingqualitatively and epicuforenjoyment, and other hedonistic capacity self-indulgence, and other reanvaluesat leastequal emphasiswithdiligence, honesty,' virtues which 'a In 'the wealthof contrast, imply degree self-denial.'56 maximization and traditional virtues rewards the principle encourages or "Protestant") and capacitiesassociatedwitheconomic ("Calvinist" between histheory Posner sumsup this progress.'57 aspectofhiscontrast andutilitarianism as follows: Thegreat I difference between utilitarian andeconomic andthe source morality, ofthe'monstrousness' believe oftheformer, is that theutilitarian, his despite concern with social must ascribe welfare toallsorts of welfare, professed logically behaviour associal such as envy andsadism, of because these arecommon sources satisfaction and hence of In obtained wealth is personal utility. contrast, lawfully created for other them only bydoing things people offering advantageous trades. The individual buthe cannot, in a wellselfish, maybe completely market his self-interest without others as economy, regulated promote benefiting well as himself ... Thereis no such constraint on thepursuit ofselfishness ina utilitarian society.58 Here too,however, thereare difficulties bothwith Posner's strictures utilitarianism and with hisconclusion that hiseconomic against principle
54 55 56 57 58 Posner,at 116 betweenhigherand lowerpleasures. Posner,at 113, rejects J.S. Mill'sdistinction Posner,at 124 Ibid Posner,at 132
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allows scope to virtuousbehaviour which utilitarianism denies. One indication of the problem is Posner's statementthat as between A, the tormentor of flies, and B, the benefactorof pigeons, the utilitarian would as thebetterperson because, givenhis greatercapacity regardthe former for pleasure, his activity contributesmore to the world's totalhappiness than B's. This, I think,badly misconstruesthe utilitarianposition. Not even Bentham at his most perverse put forward the claim that one's goodness as a person varies directlywithone's capacity for pleasure.59 Indeed, the primaryconcern of the classical utilitarianswas with the of a person'sactions,notwiththeworthof theagent,and itcould morality be fora school of philosophersto whomthemotiveof an hardly otherwise act was irrelevant.6' The utilitarian interestin characterwas focused on howcharactermanifested in action; itcentredon disposition, itself 'a bent ofcharacter fromwhichuseful,or fromwhichhurtful actionsare likely to arise.'"' Thus A would be a betterperson than B onlyifA was more likely than B to act consistently with the felicific calculus. If in the situation Posner postulates there was no way for both A and B to indulge their pleasures and a choice between them had to be made, the utilitarian solutionwould indeed be to favour A,because tormenting flieswill give him more pleasure than feeding pigeons willgive B. But A would have a better thanB onlyifAwere more likely thanB to act consistentdisposition with the felicific of whose calculus,regardless ly capacityforpleasure was The 'better would be the greater. person' person more likelyto forgohis own pleasure ifthissacrifice was required on utilitarian grounds. It is in thislightthatone mustviewPosner'scriticism thatutilitarianism is hospitableto 'capacityforenjoyment, and otherhedoself-indulgence, nistic and epicurean values.' The consistent utilitarian does not discriminate between pleasures on qualitative grounds, and every pleasure, no matter how disreputable, is entitled to be considered in the felicific calculus.62But it is wrong to conclude from this that utilitarianism reto be hedonists or that utilitarianquiresor permits persons self-indulgent ism does not constrain the pursuit of selfishness.It was preciselythis fallacythat Mill was refutingwhen he pointed out that 'the happiness whichformsthe utilitarian standard of whatis rightin conduct is not the
59 The relatedpositionthata person's goodness variesaccordingto his presentenjoyment of pleasure is dismissedin Plato Philebus 55b. 6o For a clear statement see Mill Utilitarianism ch 11, para 19. Ibid in the 61 (note 3, 1864 edition) 62 BenthamAnIntroduction tothe andLegislation ch 5, ss 1o- 11; cfalso ch Principles ofMorals call it even malice,envy,cruelty;itis stilla 1o, s 1o, n 1: 'Let a man's motivebe ill-will; kind of pleasure that is his motive:the pleasure whichhe takes at the thoughtof the pain whichhe sees or expects to see his adversaryundergo. Now even thiswretched pleasure taken in itselfis good: it may be faint;it may be short;it mustat any rate be impure: yetwhile it lasts,and beforeany bad consequence arrives,it is as good as any otherwhichis not more intense.'
332
agent's own happiness, but that of all concerned. As between his own requires him to be as strictly happiness and thatof others,utilitarianism as a disinterested and benevolent impartial spectator.'63It is perhaps a measure of Posner's skillas a polemicistthat he can manage to criticize and beboth because it permitsexcessive self-indulgence utilitarianism cause itrequiresexcessivesacrifice. in favouring If in Posner'sviewutilitarianism is defective A,the insatiate of flies,over B, the moderate feeder of pigeons, one would tormentor expect thatthe situationwould be set rightunder wealth-maximization. But it is not. Posner would resolve the problem of which person's pleathe resultof bargainingbetweenA suresare to be preferred bymimicking and B. If Awere willingto pay more forpullingwingsofffliesthan B were willingto pay for feeding pigeons, A's pleasures would be preferred. does not in any wayobviatethe 'moral monstrousness' Posner'ssystem (as he calls it) which results from the refusal to make moral distinctions imposes a cost on A'S among types of pleasure. Wealth-maximization also imdoes not, but wealth-maximization sadism which utilitarianism basis for It no a cost on benefactions. B's distinguishing provides poses does is merely betweenlaudable and base pleasures. What Posner'stheory of an additional obstacle on the realization pleasure whichhas no impose of it is. connection with the Any pleasure can be necessary type pleasure to see how thisis as long as one is willing to pay forit.It is difficult satisfied, differentiate advance at all over to utilitarianism's among inability any pleasures. Posner's article is the most ambitious attempt yet to show that the currently popular economic analysiscan provide the law withan acceptable normativebasis. It is ironic that he has made this attemptin the contextof the recent criticisms since all the features of utilitarianism, - theimpoverishedviewof whichare being pointedout in thesecriticisms human relationships, of rights,the the failure to recognize the priority of the failure to make a viable distinction between sacrifice, requirement - are presentin his theoryof wealth-maximization. typesof satisfactions It could hardlybe otherwise, since wealth-maximization shares withutilitarianism the combinationof aggregativeand want-regarding elements whichrenders utilitarianism vulnerable. The great strength of Posner's articleis thathis comparison withutilitarianism supplies the reader with the criteriaby which Posner would want his own theoryto be assessed. And bythosecriteriahis theoryfails.
ch 11, para 18 63 Mill Utilitarianism

Utilitarianism, Economics and Legal Theory

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Utilitarianism, Economics, and Legal Theory Author(s): Ernest J. Weinrib Source: The University of Toronto Law Journal, Vol.

AND LEGAL THEORYt

UTILITARIANISM, ECONOMICS, AND LEGAL THEORY

UNIVERSITY OF TORONTO LAWJOURNAL

UTILITARIANISM, ECONOMICS, AND LEGAL THEORY

UNIVERSITY OF TORONTOLAW JOURNAL

UTILITARIANISM, ECONOMICS, AND LEGAL THEORY

AND LEGAL THEORY ,315

UTILITARIANISM, ECONOMICS, AND LEGAL THEORY

UTILITARIANISM, ECONOMICS, AND LEGAL THEORY

UTILITARIANISM, ECONOMICS, AND LEGAL THEORY

UNIVERSITY OF TORONTO LAWJOURNAL

UTILITARIANISM, ECONOMICS, AND LEGAL THEORY

UTILITARIANISM, ECONOMICS, AND LEGAL THEORY

UNIVERSITY OF TORONTO LAWJOURNAL

UTILITARIANISM, ECONOMICS, AND LEGAL THEORY

UTILITARIANISM, ECONOMICS, AND LEGAL THEORY

UNIVERSITY OF TORONTO LAWJOURNAL

UTILITARIANISM, ECONOMICS, AND LEGAL THEORY

UNIVERSITY OF TORONTO LAWJOURNAL

ch 11, para 18 63 Mill Utilitarianism

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