Property Rules, Liability Rules, and Inalienability: One View of the Cathedral
Guido Calabresi & A. Douglas Melamed
NLY rarely are Property and Torts approached from a uni-
fied perspective. Recent writings by lawyers concerned with
economics and by economists concerned with law suggest, how-
ever, that an attempt at integrating the various legal relationships
treated by these subjects would be useful both for the beginning
student and the sophisticated scholar.’ By articulating a concept
of “entitlements”which are protected by property, liability, or
inalienability rules, we present one framework for such an ap-
proach.2 We then analyze aspects of the pollution problem and of
criminal sanctions in order to demonstrate how the model enables
us to perceive relationships which have been ignored by writers
in those fields.
The first issue which must be faced by any legal system is one
we call the problem of “entitlement.”Whenever a state is pre-
sented with the conflicting interests of two or more people, or two
or more groups of people, it must decide which side to favor.
Absent such a decision, access to goods, services, and life itself will
be decided on the basis of “might makes right”- whoever is
stronger or shrewder will win.3 Hence the fundamental thing that
law does is to decide which of the conflicting parties will be en-
titled to prevail. The entitlement to make noise versus the en-
titlement to have silence, the entitlement to pollute versus the
entitlement to breathe clean air, the entitlement to have children
versus the entitlement to forbid them – these are the first order
of legal decisions.
Having made its initial choice, society must enforce that
choice. Simply setting the entitlement does not avoid the problem
of “might makes right”; a minimum of state intervention is always
necessary.4 Our conventional notions make this easy to compre-
hend with respect to private property. If Taney owns a cabbage
patch and Marshall, who is bigger, wants a cabbage, he will get it
unless the state intervenes.5 But it is not so obvious that the state
must also intervene if it chooses the opposite entitlement, com-
munal property. If large Marshall has grown some communal
cabbages and chooses to deny them to small Taney, it will take
state action to enforce Taney’s entitlement to the communal cab-
bages. The same symmetry applies with respect to bodily in-
tegrity. Consider the plight of the unwilling ninety-eight-pound
weakling in a state which nominally entitles him to bodily in-
tegrity but will not intervene to enforce the entitlement against a
lustful Juno. Consider then the plight – absent state intervention
– of the ninety-eight-pounder who desires an unwilling Juno in
a state which nominally entitles everyone to use everyone else’s
body. The need for intervention applies in a slightly more com-
plicated way to injuries. When a loss is left where it falls in an
auto accident, it is not because God so ordained it. Rather it is
because the state has granted the injurer an entitlement to be free
of liability and will intervene to prevent the victim’s friends, if
they are stronger, from taking compensation from the injurer.6
The loss is shifted in other cases because the state has granted
an entitlement to compensation and will intervene to prevent the
stronger injurer from rebuffing the victim’s requests for com-
pensation.
The state not only has to decide whom to entitle, but it must
also simultaneously make a series of equally difficult second order
decisions. These decisions go to the manner in which entitlements
are protected and to whether an individual is allowed to sell or
trade the entitlement. In any given dispute, for example, the state
must decide not only which side wins but also the kind of protec-
tion to grant. It is with the latter decisions, decisions which shape
the subsequent relationship between the winner and the loser, that
this article is primarily concerned. We shall consider three types
of entitlements – entitlements protected by property rules, en-
titlements protected by liability rules, and inalienable entitle-
ments. The categories are not, of course, absolutely distinct; but
the categorization is useful since it reveals some of the reasons
which lead us to protect certain entitlements in certain ways.
An entitlement is protected by a property rule to the extent
that someone who wishes to remove the entitlement from its
holder must buy it from him in a voluntary transaction in which
the value of the entitlement is agreed upon by the seller. It is the
form of entitlement which gives rise to the least amount of state
intervention: once the original entitlement is decided upon, the
state does not try to decide its value.7 It lets each of the parties
say how much the entitlement is worth to him, and gives the seller
a veto if the buyer does not offer enough. Property rules involve
a collective decision as to who is to be given an initial entitle-
ment but not as to the value of the entitlement.
Conclusion
Notes
See Also
References and Further Reading
About the Author/s and Reviewer/s
Author: international
Mentioned in these Entries
List of top 10 legal articles in Shapiro’s citation data, Property Rules, Liability Rules, and Inalienability: One View of the Cathedral 2.
Leave a Reply