Private Governance: Creating Order in Economic and Social Life.

• Author: Casey, Gerard
• Position: Book review

* Private Governance: Creating Order in Economic and Social Life

By Edward Peter Stringham

New York: Oxford University Press, 2015.

Pp. x, 283. $45 hardcover.

Edward Stringham's new book Private Governance is a kind of intellectual sandwich, its bread being a discussion of the theoretical issues surrounding private governance and its filling being an illustration of the reality of private governance by means of a set of concrete and practical examples--stock markets, online commerce, private policing, alternative dispute resolution, and (by far the most challenging case) financial derivatives.

The argument between the adherents of private governance and the adherents of central governance hinges not on the question of whether order is necessary (both sides agree that it is) but on what kind of order is needed and how it is to be provided. Centralists believe that our sociolegal order must come from the top down, from central government. Real life, they argue, is far too complex and too sophisticated for private solutions to be effective. Some forms of private governance may work in limited circumstances, the centralists concede, but only under the protective penumbra of state law, justice, and security. But advocates of private governance reject the centralists' core thesis. Private Governance shows us why they do so and, in a series of telling examples, how private governance actually works.

It should be obvious at this point in history that centralism (either central planning or legal centralism) is not the solution to all our social and economic ills. If centralism's relative inefficiency were all that could be debited to its account, we could perhaps live with it, for, after all, even private governance doesn't necessarily solve all our problems. Indeed, Stringham is careful to point out that not all problems are soluble. "In many cases there is no solution, and people just have to live with the problem" (p. 12). The trouble with centralism is not just that it fails to solve all our problems but that, apart from creating the illusion that all problems are soluble (and often imposing astonishingly high costs on its alleged beneficiaries), it either hampers or crowds out private-governance strategies that actually do work. Stringham acutely notes the isomorphism between legal centralism and central planning, remarking, "Just as the central planner assumes that without property rights, prices, profits, and markets the government can engage...