Abstract
A right is a claim by a specific individual, which is honored by other individuals, that some specific treatment is due him.1 How is an individual able to make such a claim, and why are others willing to honor it? The answers to both of these questions are the same. An individual will claim a right because he believes that having the right will make him better off. Likewise, others will honor the claim because they believe they are better off honoring the claim than not honoring it. The first step in developing a theory of rights is the recognition of the fact that people honor the rights of others because those honoring the rights believe it is in their self-interest to do so.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
Notes
This definition roughly corresponds to that of Wesley Hohfeld, Fundamental Legal Conceptions (1923; Westport, Conn.: Greenwood Press, 1978).
See David D. Gordon, “Morality and Rights,” Humane Studies Review 5, No. 3 (Spring 1988), pp. 1–2, 17–22, for a discussion and a bibliographic essay on morality and rights.
See John Umbeck, “Might Makes Rights: A Theory of the Foundation and Initial Distribution of Property Rights,” Economic Inquiry 19, No. 1 (January 1981), pp. 38–59, for a discussion of rights in this context.
This idea is discussed in the opening pages of Ludwig von Mises, Human Action, 3rd rev. ed. (Chicago: Henry Regnery Company, 1966).
Additional discussion of the idea appears in Randall G. Holcombe, Economic Models and Methodology (Westport, Conn.: Greenwood Press, 1989), chapter 7.
Thomas Hobbes, Leviathan (New York: E.P. Dulton, 1950 (orig. 1651)), p. 104.
Along these lines, see David Gauthier, Morals By Agreement (Oxford: Clarendon Press, 1986).
Some, such as Murray Rothbard, For a New Liberty (New York: Macmillan, 1973), argue that anarchy would develop market institutions that would make it more productive than a society with government; however, rights are observed in Rothbard’s anarchy.
Buchanan, The Limits of Liberty: Between Anarchy and Leviathan (Chicago: University of Chicago Press, 1975).
Robert Nozick, Anarchy, State, and Utopia (New York: Basic Books, 1974).
Robert C. Ellickson, “A Critique of Economic and Sociological Theories of Social Control,” Journal of Legal Studies 16, No. 1 (January 1987), pp. 67–99. has suggested that the law and economics literature has overstated the importance of laws as methods of social control, and that social norms tend to evolve that are wealth maximizing rules even though they are not laws. Ellickson goes on to note that such norms do not always distribute the gains from Pareto superior improvements equally.
For a discussion, see Henry Sumner Maine, Ancient Law (New York: Henry Holt and Company, 1888),
and Maine, Early Law and Custom (New York: Henry Holt and Company, 1886).
See Maine, Ancient Law, Chapter 4, “The Modern History of the Law of Nature,” and Richard A. Posner, “A Theory of Primitive Society, with Special Reference to Law,” Journal of Law & Economics 23, No. 1 (April 1980), pp. 1–53.
This point is emphasized by Leland B. Yeager, “Rights, Contract, and Utility in Policy Analysis,” Cato Journal 5, No. 1 (Summer 1985), pp. 259–294, who notes that regardless of how much one agrees with the policies of one’s government, the fundamental relationship between the state and its citizens is coercive.
Bruce Benson, “An Institutional Explanation for Corruption of Criminal Justice Officials,” Cato Journal 8, No. 1 (Spring/Summer 1988), pp. 139–163, discusses the emergence of black markets and the incentives for corruption when government tries to prevent economic exchange.
Hernando de Soto, The Other Path (New York: Harper & Row, 1989).
See Tibor Machan, Individuals and Their Rights (La Salle, Illinois: Open Court, 1989), who considers rights as a purely normative concept.
See, however, Amartya Sen, “Rational Fools: A Critique of the Behavioral Foundations of Economic Theory,” Philosophy and Public Affairs 6 (Summer 1977), pp. 317–344, on the idea of dual utility functions.
See James M. Buchanan, “Public Finance and Public Choice,” National Tax Journal 28 (December 1975), pp. 383–394, who describes this as the fundamental premise of public choice.
George J. Stigler, “The theory of Economic Regulation,” Bell Journal of Economics and Management Science 2 (Spring 1971), pp. 2–21, spawned a new literature on regulation by explaining it as the outcome of individual self-interested behavior rather than legislation in the public interest.
However, Steven Kelman, “Public Choice and Public Spirit,” The Public Interest 87 (Spring 1987), pp. 80–94, argues that this type of analysis is damaging to society because it undermines the norm of public spiritedness, so becomes a self-fulfilling prophecy that causes government to act less in the public interest.
One might argue that such behavior has a biological origin. Following the publication of Edward O. Wilson’s Sociobiology (Cambridge: Harvard University Press, 1975), economists developed an interest in biological origins of economic behavior.
For a discussion, see Gary S. Becker, “Altruism, Egoism, and Genetic Fitness: Economics and Sociobiology,” Journal of Economic Literature 14, No. 3 (September 1976), pp. 817–826,
Jack Hirshleifer, “Shakespere vs. Becker on Altruism: The Importance of Having the Last Word,” Journal of Economic Literature 15, No. 2 (June 1977), pp. 500–502,
Gordon Tullock, “Economics and Sociobiology: A Comment,” Journal of Economic Literature 15, No. 2 (June 1977), pp. 502–506,
and Gary S. Becker, “Reply to Hisrshleifer and Tullock,” Journal of Economic Literature 15, No. 2 (June 1977), pp. 506–507. Regardless of the possibility of a biological origin, the challenge for the present argument is to explain why people will identify with certain groups to further group interests. Of course, biological models might apply without any genetic foundation, due to the competitive process.
See Armen A. Alchian, “Uncertainty, Evolution, and Economic Theory,” Journal of Political Economy 58 (1950), pp. 211–221 for an insightful discussion.
Adam Smith, The Wealth of Nations (New York: Random House, Modern Library, 1937), begins his treatise with a discussion of the benefits of the division of labor.
Robert Axelrod, The Evolution of Cooperation (New York: Basic Books, 1984).
Douglass C. North, Structure and Change in Economic History (New York: W.W. Norton & Company, 1981), especially chapter 5.
The economics literature has some discussion of ideology as an alternative to narrow self-interested behavior. See, for examples, James B. Kau and Paul H. Rubin, “Self-Interest, Ideology, and Logrolling in Congressional Voting,” Journal of Law & Economics 22 (October 1979), pp. 365–384,
Joseph P. Kalt and Mark A. Zupan, “Capture and Ideology in the Theory of Politics,” American Economic Review 74 (June 1984), pp. 279–300,
and Sam Peltzman, “Constituent Interest and Congressional Voting,” Journal of Law & Economics 27, No. 1 (April 1984), pp. 181–210.
Margaret Levi, Of Rule and Revenue (Berkeley: University of California Press, 1988).
Murray Edelman, The Symbolic Uses of Politics (Urbana: University of Illinois Press, 1964).
David Gauthier, Morals By Agreement (Oxford: Clarendon Press, 1986), discusses moral behavior — which might be considered to be at least part of the observance of the rights of others — as behavior which is not self-interested. While the possibility of moral behavior that is not self-interested must be recognized, Gauthier does note that moral behavior is desirable because it enables cooperation among others in society. This cooperation is socially desirable even though it may impose costs directly on the individual.
A different view is put forward by Robert Axelrod, The Evolution of Cooperation (New York: Basic Books, 1984), who depicts cooperative behavior as self-interested. The views of Gauthier and Axelrod are not necessarily inconsistent, but this theory of rights follows Axelrod’s lead.
Additional justification is provided by Geoffrey Brennan and James M. Buchanan, “Predictive Power and the Choice Among Regimes,” in Explorations into Constitutional Economics (College Station: Texas A&M University Press, 1989). Brennan and Buchanan argue for models of self-interest when analyzing public sector institutions so that institutions can be designed to guard against such behavior, rather than because such behavior is necessarily descriptive.
An application of the distinction is found in Randall G. Holcombe, “Applied Fairness Theory: Comment,” American Economic Review 73 (December 1983), pp. 1153–1156,
commenting on William J. Baumol, “Applied Fairness Theory and Rationing Policy,” American Economic Review 72 (September 1982), pp. 639–651.
This is not the type of utilitarianism Yeager espouses. It is, however, the common view of applied utilitarianism. See, for example, Paul G. Hare, ed., Surveys in Public Sector Economics (Oxford: Basil Blackwell, 1988), for a collection of readings using the utilitarian framework.
David Gauthier, Morals By Agreement (Oxford: Clarendon Press, 1986), p. 221, points out that there is no fixed set of rights in a utilitarian framework, since one’s rights depend upon what arrangements maximize social welfare. One could easily imagine a change in circumstances which would require some people to give up some rights they previously enjoyed in order to benefit others and improve social welfare. The same is true in the economic theory of rights: a change in bargaining power can change the rights a person is able to claim and defend.
Natural rights theorists tend to focus on rights as opportunities rather than entitlements. For some examples, see Ayn Rand, “Man’s Rights,” in The Virtue of Selfishness (New York: New American Library, 1961),
and Murray Rothbard, The Ethics of Liberty (Atlantic Highlands, N.J.: Humanities Press, 1982). Another application is liberalism as defined by Sen.
See, for example, Amartya Sen, “Liberty, Unanimity, and Rights,” Economica 43 (August 1976), pp. 217–245.
James M. Buchanan and Gordon Tullock, The Calculus of Consent (Ann Arbor: University of Michigan Press, 1962).
The phraseology was deliberately chosen to be provocative in the same way as Paul A. Samuelson’s “The Pure Theory of Public Expenditure,” Review of Economics and Statistics 36 (November 1954), pp. 387–389.
Samuelson later modified the tile to call it “a theory” rather than “the theory” in “A Diagrammatic Exposition of a Theory of Public Expenditure,” Review of Economics and Statistics 37 (November 1955), pp. 350–356, in response to comments that there were other theories of public expenditure. The reader is invited to consider how other purely economic theories of rights might be developed.
Ronald H. Coase, “The Problem of Social Cost,” Journal of Law & Economics 3 (October 1960), pp. 1–44.
See James M. Buchanan, “The Relevance of Pareto Optimality,” Journal of Conflict Resolution (November 1962), pp. 341–354, on the relevance of Pareto optimality to institutional changes.
See Steven N. S. Cheung, “China in Transition: Where is She Heading Now?” Contemporary Policy Issues 4, No. 4 (October 1986), pp. 1–11, who argues that China has gone past the point of no return in extending rights to its citizens. Cheung’s idea that it would not be possible to take back certain rights once extended paints an optimistic picture about the future of individual rights in general.
Both Milton Friedman, Capitalism and Freedom (Chicago: University of Chicago Press, 1962),
and Freidrich A. Hayek, The Road to Serfdom London: George Routledge & Sons, 1944), argue the interdependence of rights structures and economic performance.
Gerald W. Scully, “The Institutional Framework and Economic Development,” Journal of Political Economy 96, No. 3 (June 1988), pp. 652–662, finds an empirical relationship supporting the views of Friedman and Hayek.
Author information
Authors and Affiliations
Copyright information
© 1994 Randall G. Holcombe
About this chapter
Cite this chapter
Holcombe, R.G. (1994). The Economic Theory of Rights. In: The Economic Foundations of Government. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-13230-0_2
Download citation
DOI: https://doi.org/10.1007/978-1-349-13230-0_2
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-13232-4
Online ISBN: 978-1-349-13230-0
eBook Packages: Palgrave Economics & Finance CollectionEconomics and Finance (R0)