From Natural Law to Social Welfare: Theoretical Principles and Practical Applications

Author:Richard A. Epstein
Position:Laurence A. Tisch Professor of Law at New York University School of Law
Pages:1743-1772
SUMMARY

Many common accounts of natural law understand it in opposition to modern social welfare theory. Contrary to that wisdom this Essay shows how many of the fixed landmarks of the common law, including its rules on individual autonomy and the definition and acquisition of private property, comport with the natural law tradition. The modern welfarist positions only emerge through key decisions in... (see full summary)

 
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1743
From Natural Law to Social Welfare:
Theoretical Principles and Practical
Applications
Richard A. Epstein
ABSTRACT: Many common accounts of natural law understand it in
opposition to modern social welfare theory. Contrary to that wisdom this Essay
shows how many of the fixed landmarks of the common law, including its
rules on individual autonomy and the definition and acquisition of private
property, comport with the natural law tradition. The modern welfarist
positions only emerge through key decisions in 19th century law, which then
help explain the choice among three welfarist positions: Kaldor–Hicks, Pareto,
and a more rigorous standard that requires pro rata gains among all parties.
This Essay uses a transaction costs framework to explain the proper
deployment of these three rules.
I. INTRODUCTION ........................................................................... 1744
II. THE NATURAL LAW TRADITION .................................................. 1744
III. THE CLASSICAL SYNTHESIS.......................................................... 1752
IV. THE TRANSITION FROM NATURAL LAW TO SOCIAL WELFARE .... 1757
V. THE LEGAL TRANSFORMATION ................................................... 1761
VI. CONCLUSION .............................................................................. 1772
Laurence A. Tisch Professor of Law, New York University School of Law; Peter and
Kirsten Bedford Senior Fellow, The Hoover Institution; James Parker Hall Distinguished Service
Professor of Law Emeritus and Senior Lecturer, the University of C hicago. This Essay is a revised
and expanded version of the Levitt Lecture that I gave at the University of Iowa on March, 6,
2014. Much of the expansion was driven by the detailed and incisive comments on the paper by
my host for the Levitt Lecture, Robert T. Miller, who supplied me with a host of useful references
which I have tried to work into this lecture. I also thank the participants of workshop at William
& Mary Law School and Hebrew University Law School for their probing questions and
comments, and Chelsea Plyler and Isaac H. Ritter, NYU Law School Class of 2016, for their
helpful research assistance on an earlier draft of this lecture.
1744 IOWA LAW REVIEW [Vol. 100:1743
I. INTRODUCTION
The 2014 Levitt Lecture covered the relationship between natural law
and social welfare theory over a period that extends to close to 2000 years. In
some sense, this subject presents the intellectual challenge of explaining how
ideas that have gained currency only in the last 150 or so years relate to legal
approaches that were developed well over a thousand years earlier, when, in
total ignorance of modern economic tools, it was impossible conceptually just
to ask the question of how the determination of legal rules systematically
related to any understanding of overall social welfare.
In this Essay, I hope to trace out the complex interconnections in three
stages. The first part examines the approach to the natural law within the
Roman and early common law traditions. The second portion examines the
classical synthesis of these issues from mid-17th century to the late 19th
century. The last section then makes explicit the transition from natural law
to social welfare theory from the late 19th century to the present. In so doing,
I shall address three measures of social welfare, the Pareto principle, the
Kaldor–Hicks principle, and a third standard, often left unappreciated, that
prorates the gains from any positive sum venture among the relevant parties.
A brief conclusion follows.
II. THE NATURAL LAW TRADITION
There was, even within the natural law tradition, the sense that legal rules
were designed to deal with self-preservation (if you are a pessimist about the
world) or human flourishing (if you take a more optimistic view of your
subject matter). But as a determined student and teacher of Roman law from
my first day at law school in Oxford in the fall of 1964, it became clear that
the expression “ratio naturalis” or natural reason concealed more than it
revealed. The term was invoked at key points in the articulation of the
fundamental rules of the legal system. It was thought that slavery was contrary
to the law of nature,1 (even in the face of the brute reality of slavery), and that
children born of freed slaves must also be free.
2 Natural reason allowed
people to capture and use things that were unowned in the state of nature,3
and to transfer their property to others by some form of delivery either formal
or informal,4 and to form partnerships.5 Natural law allows us to keep
buildings erected on our land by others,6 to impose guardianships on children
1. J. INST. 1.2.2 (J.B. Moyle trans., 1911).
2. G. INST. 1.89 (Edward Poste trans., 1904).
3. Id. at 2.66.
4. Id. at 2.67.
5. Id. at 3.154.
6. Id. at 2.73.

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