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Private Enforcement Of Law Essay, Research Paper

4. Private Enforcement of Law4.1 Octracism and boycottUnlike governments, private bodies do not normally have jails, police, and soldiers to enforce their rulings. This is why many people assume that only governments can enforce private agreements, and, indeed, private arbitration. However, the whole thrust of the economic analysis of crime is that a criminal sanction is much like a price; what precludes private bodies from exacting the same price that the government does? While the usual criminal sanction is imprisonment, it is likely that time in prison has some implicit price. It should therefore be possible to secure compliance by threatening to reduce a person’s income. And private bodies do have this power.The classic non-violent sanctions are ostracism and boycott. A boycott is essentially a refusal to trade with an offender. Ostracism is a more extreme form of boycott; the community completely cuts off an ostracized individual. We frequently hear about sanctions like this in primitive and ancient societies. Cut off from their tribe or nation, ostracized individuals had to either survive autarchically or find another community. The latter was naturally difficult because an individual ostracized by one group might be a bad member of any group.A common assumption is that boycott and ostracism can only work in face-to-face societies. There are two reasons why people make this assumption. First, the usefulness of boycott and ostracism depends crucially on information. In a small tribe, everyone knows who has been ostracized; it is not feasible for an offender to assume some new identity or move to a new part of town. The complaint is that modern societies are too anonymous for this to work; it is easy to cast off a stigma by finding a new group of friends, trading partners, and community when there are five billion humans on earth.The second complaint is that boycott and ostracism suffer from a serious free rider problem; hence, if they work at all, they would have to be enforced by the government. The sanction isn’t really private at all. Imagine, for example, individuals who find the working conditions of grape workers offensive. They could try a consumer boycott of grapes to punish the employers. Yet there is a serious free rider problem here: all people offended by the grape- workers’ conditions benefit if the employers get punished via reduced sales (assuming that this is a good strategy in the first place). But the costs of enforcement are borne solely by the individuals who have to forego their favorite fruit. We might expect cheating and chiselling unless the boycotters are ferociously principled. Like most free rider problems, a boycott could only work if the state enforced it. That seems self-defeating if we want a private means of punishment.While these two doubts about the feasibility of boycott and ostracism are plausible, they simply aren’t true in many cases. First of all, while imodern societies lack the face-to-face character of simpler times, information storage and transmission have advanced in step with modern technology. Credit ratings, for example, or rental histories, have become ever more feasible and inescapable with the development of the computer. We could easily imagine comparable data banks for information about employment history. More to the point, in the modern world it would be easy to register people who violated arbitration agreements or defied legitimate rulings. There is actually a strong case that the requisite information for boycott and ostracism is more available in modern societies than in earlier ones. Before the advent of modern information storage and retrieval technology, one could simply move to another city and leave one’s past behind. As the world’s economy globalizes, it grows ever more difficult to get rid of a bad commercial reputation.The second doubt about boycott and ostracism misses the whole point. Of course, if the benefit produced by the boycott/ostracism really is collective (as in the grape worker example), then it is a public good. But boycotting and ostracizing dishonest trading partners, far from being selfless service to the public good, is in one’s immediate interest. Just as landlords would voluntarily refrain from renting to people with bad rental or credit histories because they are bad risks, so too is it in the interest of merchants and employers to refuse to trade with people who break arbitration agreements. This is why the damage to one’s reputation is so harmful to merchants — they won’t get customers if they can’t win their trust. (Or at the least they would have to pay a price premium to compensate trading partners for the extra risk.)Ostracism and boycott work well in the merchant community precisely because the common good — sanctioning dishonest businesspeople — is perfectly consistent with the private interest in avoiding bad risks. If people want to boycott grapes to pressure employers to give grape workers better pay, then the cost is private while the benefit is public. But if merchants want to boycott a cheater in order to avoid bad risks, the benefit of sanctioning is just as private as the cost. There is no public goods problem here. Each individual need merely attend to his private interest, and the public good of punishment springs up automatically.Here, then, lies a simple tool with which private arbitration might be enforced. It is non-violent and wholely private; but it works in many cases. Private enforcement of law is not only possible but real.One mustn’t forget, however, that boycott and ostracism depend on the free flow of information. Information is hardly costless even in competitive markets; and it is likely that individuals would only check out the history of their trading partners if the value of their deal were fairly high. Landlords, for example, usually run a credit check on potential tenants,

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