The Benefits and Costs of Law

Law-abiding on the part of an individual is the cost that he pays as a part of the overall legal-social contract between himself and others in the community, treated as a unit. In a private, personal utility sense, any limits on individual behavior are “bads.”But rational persons accept such limits in exchange or trade for the “goods”which law-abiding on the part of others represents. This behavior on the part of others creates “goods”because of the predictable order, security, or stability that it generates in the individual’s choice set. To the extent that other persons respect the limits laid down in law or rules, and to the extent that these are known by everyone, the individual can make his own private decisions in a reasonably predictable and stable social environment. This feature is applicable for many rules that might be called “laws,”whether these be simple rules of the road, such as right-hand driving, or complex arrangements, such as those required among different owners of condominium units. For purposes of illustrating the analysis, we may think of law as embodying general agreement to respect a set of rights or disposition over physical property. Individuals in the community, having agreed on or having accepted this assignment of rights, are said to abide by law if they do not attempt to secure others’ assigned rights without consent.

Buchanan, James M. The Limits of Liberty: Between Anarchy and Leviathan. Indianapolis, IN: Liberty Fund, Inc. 1999. Library of Economics and Liberty [Online] available from https://www.econlib.org/library/Buchanan/buchCv7c7.html; accessed 21 September 2012; Internet

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