Miners, Vigilantes & Cattlemen: Overcoming Free Rider Problems in the Private Provision of Law

Law is a good like food, insurance, or housing. Like other goods, it can and often should be provided by private entities. Yet law is usually regarded as the quintessential public good, so obviously public in nature that we need not even discuss its provision by anyone but the State. As Bruce Benson observed [a]nyone who would even question the \u27fact\u27 that law and order are necessary functions of government is likely to be considered a ridiculous, uninformed radical by most observers. Even William Landes and Richard Posner, hardly apologists for the State, have concluded that law often must be publicly provided. Ultimately, the arguments for public provision of law turn on one aspect or another of the free rider problem. In essence this problem arises because it is difficult to exclude those who refuse to pay from the consumption of law. Thus, if you and I agreed to purchase rule of law services from a private firm, even those of our neighbors who refused to contribute a dime would reap some of the benefits of our services if only because they would no longer need to worry about spillover violence from our less peaceful, nonlegal methods of settling disputes. Similarly, rules produced by our litigation could be used by others without payment. The net result could be too little law since many would opt to ride for free on the efforts of others. Despite this seeming consensus on law\u27s public nature, Americans frequently turn to private sources for law. During the development of the American West, private citizens often undertook to privately provide both rules and enforcement mechanisms where governmental systems were absent or ineffective. Some of these examples, like the placer mining districts, Montana cattlemen, and Montana vigilantes, provide positive lessons. Others, like the 1856 San Francisco vigilance committee and Wyoming cattlemen\u27s invasion of Johnson County, provide negative lessons. These experiences with privately produced law answer questions about how some people overcame free rider problems in privately providing law and illustrate how to avoid substituting private for public monopolies. These lessons provide us with guidelines for shifting provision of at least some law provision functions of government to private entities. Briefly, the Western experiences with privately produced, customary law suggest the following are important to successfully overcoming the free rider problems in private provision of law: First, customary legal systems work best when they enforce reasonably well defined rights generally recognized in the community as just. Second, private legal systems flourish spontaneously when they are given space to grow, making the ability to opt out of any State system crucial to their development. Third, removing distortions blocking private law, including pricing State legal institutions at their true costs, can significantly assist the growth of customary legal institutions. Fourth, customary law requires a set of skills and knowledge to succeed. Fostering these skills and disseminating this knowledge can enhance these skills. Finally, customary systems that reward treating others with respect are more likely to succeed. I examine several case studies of non-state legal systems: Miners\u27 law in California, Montana, and the Dakota Black Hills; two prominent vigilante movements in San Francisco in 1856 and Montana in 1863-64; and conflicts between cattlemen and settlers in the 1880s-1890s in Wyoming and Montana. I examine the lessons from Part II on how private law production can be enhanced in Part III and suggest how those principles can be applied today to enable privately produced law to develop regarding the Internet, in Part IV. I also briefly examine the recent phenomenon of common law courts and conclude they do not meet the requirements for successful development of private law