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Getting the Rabbit out of the Hat: A Critique of Anthony Kronman's Theory of Contracts

Published online by Cambridge University Press:  16 January 2009

Matthew H. Kramer  and
Nigel E. Simmonds
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More than a decade-and-a-half ago, Anthony Kronman published an article on contract law and distributive justice that has “become something of a classic in the philosophy of private law.” Kronman's article has received a great deal of attention on both sides of the Atlantic, and it has helped to sharpen the debate between libertarianism and other forms of liberalism. In the present essay, we shall seek to expose two major weaknesses in Kronman's arguments (after we briefly summarise them).

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Articles
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The Cambridge Law Journal , Volume 55 , Issue 2 , July 1996 , pp. 358 - 371
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Copyright © Cambridge Law Journal and Contributors 1996

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References

1 Dare, Tim“Kronman on Contract: A Study in the Relation Between Substance and Procedure in Normative and Legal Theory” (1994) 7 “Canadian Journal of Law & Jurisprudence 331.CrossRefGoogle Scholar Kronman's article is “Contract Law and Distributive Justice” (1980) 89 Yale Law Journal 472 [hereinafter cited as Kronman, “Contract Law”]. As Dare appositely observes: “It is the first part of [Kronman's] article, from pages 475–97[,] which has become something of a classic and which is the subject of this paper.” Dare, op. cit., at p. 331. For some roughly contemporary essays by Kronman that deal with several of the issues raised in his most renowned article, see (1978) 7 Journal of Legal Studies 1; (1980) 9 Journal of Legal Studies 227; (1983) 92 Yale Law Journal 763; “Talent Pooling”, in Pennock, J. Roland & Chapman, John (eds.), Human Rights: Nomos XXIII (New York, 1981), p. 58.Google Scholar Given the purposes of our critique, however, we do not need to bring forward any lines of reasoning other than those found in the classic article from the 1980 Yale Law Journal.

Some of the secondary works which deal sustainedly with that article are Dare, op. cit.; Alexander, Larry & Wang, William, (1984) 3 Law and Philosophy 281;CrossRefGoogle ScholarBenson, Peter, (1989) 10 Cardozo Law Review 1077 at pp. 1119–45;Google ScholarLucy, William, (1989) 9 O.J.L.S. 132;Google ScholarMurphy, Jeffrie & Coleman, JulesPhilosophy of Law, rev. ed. (Boulder, , 1990), pp. 164–75;Google ScholarRichardson, Megan (1990) 10 L.S. 258;Google ScholarTrebilcock, MichaelThe Limits of Freedom of Contract (Cambridge, Mass., 1993), pp. 82–4, 86, 88, 91.Google Scholar

2 Kronman, “Contract Law”, p. 475.

3 Ibid., at p. 480.

4 Kronman's notion of “advantage-taking” is strikingly similar to the concept of “bargaining“ in Hale, Robert “Bargaining, Duress, and Economic Liberty” (1943) 43 Columbia Law Review 603.Google Scholar

5 Kronman, “Contract Law,” op. cit., at p. 483.

6 Kronman's analysis is in some respects quite similar to that in Reiman, Jeffrey “The Fallacy of Libertarian Capitalism” (1981) 92 Ethics 85 at pp. 85–8.CrossRefGoogle Scholar See also Kelley, David“Life, Liberty, and Property” (1984) (#2) Social Philosophy & Policy 108.CrossRefGoogle Scholar

7 Kronman's dismissal of the principle of natural superiority is perhaps misguided; arguably, libertarians rely on a certain version of that principle. See Murphy & Coleman, op. cit., at p. 172. Libertarianism's emphasis on equality extends only to the vesting of everyone with a “basic right to freedom from the interference of others” (Kronman, “Contract Law”, at p. 485); it does not exclude “the claim that worthiness is a legitimate ground for the assignment of rights and duties” (Ibid., at p. 484). In a libertarian world, countless specific rights of property will be acquired only by people who exhibit their worthiness through appropriate toil. (We here leave aside the recipients of charity or of other gratuitous transfers, to whom donations are strictly noncompulsory.) To be sure, rights of property in external assets do not attach to anyone merely because the person is strong or talented. The rights have to be earned through the actual exertion of the strength or talents. Nonetheless, neither the libertarians' insistence on actual exertion nor their formal egalitarianism will prevent their creed from deeming some people (those who are industrious and talented) to be worthier of enjoying numerous specific rights than are other people (those who are indolent or inept). At any rate, even if the libertarian position can plausibly be described as a doctrine of natural superiority, such a response to Kronman does not overcome his powerful critique of first-possession justifications of ownership (Ibid., at pp. 493–4).

8 Kronman, “Contract Law”, at pp. 486, 487 (emphasis in original).

9 Ibid., at pp. 491–2.

10 Ibid., at p. 488. We realise, of course, that Kronman and most of his critics view this precept as individualistic rather than communitarian. We deliberately invert the prevailing view because that view is based on the very points of reference which we assail. That is, it stems from Kronman's solicitude for disadvantaged promisors rather than for advantageously positioned promisees, and it likewise stems from his belief that every mode of advantage-taking has to overcome a presumption against its permissibility; in a Kronmanian world, the mandatory forgoing of any gains from an advantage does not count as a loss, and hence it does not run afoul of the welfare-reduction precept. When our focus shifts to the promisee who has to forgo benefits for the sake of disadvantaged people, and when we furthermore presume that collective constraint rather than individual advantage-taking is presumptively illegitimate, we must regard Kronman's version of the welfare-reduction precept as a communitarian imposition on promisees' freedom.

11 Ibid., at p. 494. Here and elsewhere we have used the term ‘communitarian’ in a strictly political sense, to denote moral or legal norms that oblige individuals to make sacrifices in behalf of the collective weal. Unlike some theorists who describe themselves as ‘communitarians’, we do not employ that label to make sociological or philosophical claims about the standing of human subjectivity. For arguments that militate in favour of our narrow usage, see Kramer, Matthew “Our Longest Lie: Irreligious Thoughts on the Relation Between Metaphysics and Politics” (1993) 37 Philosophy Today 89 at pp. 93–4;Google Scholar Kramer Matthew Critical Legal Theory and the Challenge of Feminism (Lanham, 1995), pp. 10–12, 197–8.

12 See, e.g., Alexander & Wang, op. cit., at p. 295; Lucy, op. cit., at p. 141; Murphy & Coleman, op. cit., at p. 170.

13 The analysis in this middle part of our essay has to some extent been anticipated by Lucy, op. cit., at pp. 142–6. (As Lucy readily acknowledges, his own analysis derives from observations made to him by one of us—Simmonds—in correspondence.) However, Lucy develops his own critique in a way that is not at all to our liking; he unquestioningly accepts a crucial aspect of Kronman's article—its focus on the freedom of promisors rather than of promisees—which we shall put into question.

14 See, e.g., Alexander & Wang, op. cit., at pp. 291–6; Benson, op. cit., Murphy & Coleman, op. cit., at pp. 170, 173–4; Trebilcock, op. cit., at pp. 83–4; Dare, op. cit.

15 Still, let us notice the following observation by Kronman: “[E]ven where utilitarianism and paretianism converge to the same practical result, they do so for different reasons, arriving at a common conclusion from fundamentally different starting-points. In comparing moral principles, it is important to consider the reasons they provide for acting in certain ways, as well as the actions they require and forbid.” Kronman, “Contract Law”, at p. 488.

16 For a classic recognition of this point, see Cohen, Morris“The Basis of Contract” (1933) 46 Harvard Law Review 553.CrossRefGoogle Scholar

17 Again we should stress that the ‘workings of public power’ involve violence that is merely latent (consisting in a regime of laws that will be enforced if necessary), as well as actual violence that is administered when laws do have to be enforced. Behind the general point made in this paragraph lies the work of Morris Cohen and Robert Hale on the public/private distinction. See, e.g., Cohen, Morris “Property and Sovereignty” (1927) 13 Cornell Law Quarterly 8;Google ScholarHale, Robert “Coercion and Distribution in a Supposedly Non-Coercive State” (1923) 38 Political Science Quarterly 470.Google Scholar For discussions of the ideas propounded by Cohen and Hale, see Kramer, MatthewLegal Theory, Political Theory, and Deconstruction: Against Rhadamanthus (Bloomington, 1991), pp. 70–80;Google Scholar Kramer, Critical Legal Theory, at pp. 243–7. For analyses of libertarianism that are relevant to this paragraph, see, e.g., Reiman, op. cit.; Cohen, G.A. “Freedom, Justice, and Capitalism” (1981) 126 New Left Review 3 at pp. 7–11;Google ScholarRyan, Cheyney “Yours, Mine, and Ours: Property Rights and Individual Liberty”, in Paul, Jeffrey (ed.), Reading Nozick (Totowa, 1981), p. 323.Google Scholar

18 For a famous libertarian justification of the state, see Nozick, RobertAnarchy, State, and Utopia (New York, 1974), pt. I.Google Scholar

19 We should stress that our defence of Hbertarianism against many of Kronman's arguments does not amount to a general defence thereof. Not only do we endorse some of Kronman's anti-libertarian onslaughts (as was noted above, with reference to his attack on the emptiness of libertarianism's deontological appeals), but we could well engage in some further such onslaughts. Throughout the last main part of this essay, we shall explore a major problem of indeterminacy in Kronman's paretian doctrine; were we so minded, we could unearth a related problem in Hbertarianism (when Hbertarianism is understood as a largely consequentialist doctrine). Such a task, however, is a project for a different essay. For some arguments that would clearly be germane, mutatis mutandis, see Rizzo, Mario“The Mirage of Efficiency” (1980) 8 Hofstra Law Review 641.Google Scholar

20 The remarks about specific types of contracts are in Kronman, “Contract Law”, at pp. 489–91. Though we do not wish to engage in detailed ripostes to Kronman's discussions, we should note one outright blunder that occurs in his discussion of fraud. Kronman declares: “[There is no reason to think that most people will benefit from a rule permitting fraud; indeed, this is impossible, since total gains from such a rule will exactly equal total losses.” Ibid., at p. 490. Kronman has clearly erred in the second half of this statement, for the necessary match between total gains and total losses does not have any bearing on the distribution of the gains and the losses. A brief example will make this point clear. Suppose that a rather oafish person holds most of the wealth in a society where the legislature votes to permit fraud. Many of the compatriots of the wealthy dolt now sometimes defraud him in his dealings with them. Their gains exactly equal his losses, yet the permissibility of fraud does indeed work to the benefit of most people in the society. The latter fact (about widespread benefits) is in no way ruled out by the former fact (about the equivalence of gains and losses).

21 The following critique is largely an extension or application of the trenchant arguments in Kennedy, Duncan“Cost-Benefit Analysis of Entitlement Problems: A Critique” (1981) 33 Stanford Law Review 387 at pp. 422–44.CrossRefGoogle Scholar Our analysis is also partly akin to the analysis in Benson, op. cit., at pp. 1130–3, though we formulated our critique long before we came across Benson's article.

22 Kronman. “Contract Law”, at p. 497.