Academic journal article Harvard Journal of Law & Public Policy

The State and the Networked Economy

Academic journal article Harvard Journal of Law & Public Policy

The State and the Networked Economy

Article excerpt


This Essay will examine how the networked economy may affect the cause of liberty. The traditional view, very evident in the novels 1984 (1) and Brave New World, (2) has been pessimistic about information technology's probable effect on liberty. My own view is that the new networks, spawned by the Internet and other information technology, are hopeful developments. I will defend this optimistic viewpoint by looking at the history and nature of the state, including the despotic state, and then examine how information technology will predictably alter the balance between liberty and despotism.


I will examine four provocative theories of the origin of the state and then develop a synthesis from them, hopefully adding something new in this last step. The four theories are the Hobbes-Buchanan contractarian theory, (3) Karl Wittfogel's hydraulic despotism theory, (4) Robert Carneiro's circumscription theory, (5) and Mancur Olson's stationary bandit theory. (6) These theories of the origin of the state do not all make claims about how a state whose origin is so conceived will respect human liberty but are at least suggestive of such claims. Only the Hobbes-Buchanan theory describes a constitution, but the other theories can be significantly improved if we add the potential for a constitution along lines Michael McGuire and I have previously suggested. (7)

A. The Hobbes-Buchanan Contractarian Theory

Thomas Hobbes famously began his analysis with a consideration of the state of nature. He assumed that before formal governments existed people were reasonably equal in endowments. (8) From this rough equality of mental and physical assets, each had an equal hope of acquiring the same ends, which were scarce. Hence, individuals fell into competition with each other, which resulted in the "war of every man against every man." (9) In such a state, opportunities for production, investment, learning, and exchange were limited, because each individual possessed "continual fear and danger of violent death." (10) In order to relieve themselves of eternal conflict, individuals have an incentive to organize themselves into a commonwealth, which is a hierarchy that "tie[s] them by fear of punishment to the performance of their covenants and observation of th[e] laws of nature...." (11) They institute this commonwealth by giving a monarch or an assembly the right to represent them. (12)

Two hallmarks of Hobbes's analysis are that people at least hypothetically agree to a constitution that (1) legitimizes private law and (2) does not otherwise limit the sovereign's appropriations from his (or its) subjects. In fact, Hobbes was fairly adamant that the constitution did not limit sovereign appropriations. His analysis constantly emphasized that the constitutional problem was the legitimacy of private law.

Because Hobbes thought that worthy private law rules could not arise in the state of nature, he had to posit a commonwealth, created by the hypothetical contract among subjects or citizens, as the foundation for these rules, which he analyzed in detail. Correspondingly, when it came to the natural limits that might exist for the sovereign's appropriations, Hobbes found few. For instance, he asserted that no subject had the right to defend another against any government imposition, just or unjust, though he did admit the right of any subject to defend at least his own person against violent force, whether wielded by the commonwealth or by another subject. (13) Nevertheless, despite Hobbes, the real constitutional problem is the legitimacy of the sovereign's appropriations, as most constitution framers have recognized.

Even so able an analyst as James Buchanan has followed Hobbes in stressing as a problem the constitutional legitimacy of private law rules. More explicitly than Hobbes, Buchanan has claimed that the problem of sovereign appropriation is inextricably linked to the legitimacy of private law rules. …

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