Risks and Wrongs.

• Author: Postema, Gerald J.

1. INTRODUCTION

   In Risks and Wrongs, Jules Coleman investigates what Aquinas called "commutative justice"--the dimension of justice that arises from and governs transactions between individuals.(1) Aquinas' term conveniently captures the object of Coleman's inquiry because it brings concerns of justice in contracts and in torts together under a single rubric, permitting an exploration of their general similarities and specific differences.(2)

   Coleman outlines and defends a distinctively liberal theory of commutative justice. While he works squarely within the rational choice tradition,(3) his work follows no party line. Indeed, readers of Risks and Wrongs will be surprised to find that, while Coleman embraces the basic principles of individual and social rationality at the foundations of rational choice theory and the economic analysis of law, he rejects the idea that the perfectly competitive market is the paradigm of rational social interaction. Coleman's "rational choice liberalism" focuses on forms of cooperation instead of institutional attempts to mimic perfect competition. In his view, the market is central to liberal political and legal theory not because it is paradigmatically rational or because it allocates goods and evils most efficiently, but because it serves social stability and local coordination of social interaction. This service enhances the ability of individual citizens to live out their chosen plans and projects.

   Having articulated and defended this revisionist rational choice political theory, Coleman turns to the task of providing normative-interpretive theories of commutative justice that embrace contract and tort law. He argues, first, that contract law is best understood as safeguarding and enhancing market transactions by helping parties to solve problems of uncertainty that are endemic to the bargaining process. His interpretation of tort law, in contrast, takes a decidedly "anti-market" approach. Tort law, he argues, seeks to secure justice between parties by imposing the duty to compensate victims' wrongful losses on the injurers; it is not designed to enhance market transactions. For Coleman, the fundamental goal of tort law is not efficient accident-cost avoidance, fair cost-spreading, or the annulment of wrongful losses;(4) rather, it is corrective justice between the injurer and the victim. Although it is "backward-looking," tort law can be justified within rational choice liberalism, he maintains, because it sustains local coordination and promotes stability just as the market does, albeit through strikingly different means. While this decidedly "anti-market" account of tort law applies to the core of current practice, Coleman argues that market-oriented principles already govern many other parts of tort practice, and may even come to dominate it in the future. Contemporary tort practice, he argues, is thus a mix of markets and morals.

   This is only the barest sketch of Coleman's bold, richly colored, and subtly nuanced theoretical picture. Coleman makes important contributions to each of the theoretical areas he addresses, and his analysis has such a clarity of focus that it should redefine contemporary debate in those areas. The signal virtue of his work, however, is its inviting intellectual honesty and modesty. The work has no fixed agenda. Coleman identifies and challenges opposing views, but still makes room for many of them, newly revised, in his theoretical mansion. His analysis is guided by firm theoretical and substantive intuitions, but he follows the argument where it leads him, sometimes even into untidy complexity. No reader will find all of his arguments persuasive, but each will come away from this work with a clear map of the theoretical terrain and a firm sense of the interest and importance of Coleman's thesis.

   In this Review, I discuss two important parts of Coleman's project. First, I explore the foundation of Coleman's jurisprudential theory and his use of rational choice theory as the basis for a liberal approach to moral and political justification. Next, I focus on Coleman's interpretations of corrective justice and modern tort practice, setting them out in some detail and trying to uncover their deeper theoretical motivations.

2. RATIONAL CHOICE LIBERALISM

   1. Rational Choice Theory and the Market Paradigm

      In Risks and Wrongs, Coleman works self-consciously within that branch of the liberal tradition that seeks to ground liberal institutions and fundamental liberal values in a nonmoral notion of rational choice.(5) Coleman's view is that rational choice theory supplies the best available set of conceptual and normative tools for articulating and defending liberal commitments. Moreover, he maintains that it does so in a way that best captures and expresses liberal commitments concerning the mode of justification appropriate to rational moral agents and citizens.

      Received rational choice theory proposes to justify moral, political, and legal norms or institutions by showing that they meet the demands of rationality defined in terms of individual interest. This interest-based notion of rationality takes shape in two familiar principles: (a) a norm is collectively rational if and only if it is Pareto optimal, enabling persons constrained by it to exploit the full welfare-enhancing potential of their interaction; and (b) a norm is individually rational for any agent governed by it if and only if it is welfare-enhancing, or not welfare-decreasing, for that agent.(6) A set of norms, then, is rational in a group if and only if compliance with it is both Pareto optimal and advantageous to each member. Satisfaction of each principle is necessary to the justification of norms or institutions. Coleman adds to this standard account of conditions of rationality a third principle, which explains what he terms the "distributive" dimension of morality.(7) Because rational choice theory stands outside the framework of moral notions and standards and seeks to defend those standards in terms of rationality alone, it cannot appeal to a notion of fair division. Instead, it must define a principle of divisional rationality, according to which a scheme of constraint and cooperation is rational only if the division of gains of productive cooperative activity is determined by each party's relative resistance to making concessions to the others.(8)

      In Coleman's view, these three principles of rational choice represent the demands of rationality on social norms and institutions, and offer a precise and compelling interpretation of a fundamental principle of liberal political theory. This liberal principle holds that norms or institutions that regulate individual conduct or affect individual well-being are valid only if they can be justified to each individual affected. Rational choice principles meet this liberal demand in two respects: (a) they only recognize arguments that are articulated in terms of promoting the interests of individuals, and (b) they require that the norm or institution work to the advantage of each individual affected. The principle of individual rationality thus represents a welfarist interpretation of the liberal demand for ad hominem justification.(9)

      Coleman parts company with standard rational choice theorists when they embrace what he calls "the market paradigm." The market paradigm holds that the perfectly competitive market is the ideal institutional embodiment of the above principles of rationality.(10) Under conditions of perfect competition, individual and collective rationality converge. The market paradigm assumes that rational agents are not fundamentally interested in cooperation. According to this view, cooperation is defensible or intelligible only if viewed as a solution to failed competition.(11) Coleman challenges this assumption by arguing that it is just as reasonable to regard competition as the result of failed cooperation.(12) Successful competition presupposes cooperative collective action, he argues; indeed, competitive market activity--setting prices, bidding, bargaining, and forming a stable set of preferences for a range of goods--is intelligible only against a background of stable and enforceable property rights and an ethos of mutual forbearance of force and fraud. These public goods are products of prior cooperative activity.(13) Thus, he concludes, rational choice theory must treat cooperation rather than competition as the model of rational social interaction.

      In contrast to the agents posited by standard rational choice theory and its market paradigm, Coleman's ideal agents are not merely rational utility maximizers, but also rational cooperators.(14) Coleman's rational choice liberalism combines the three principles of rationality with his claim that, when deciding upon the structure of social institutions, ideal rational choosers consider cooperation, not competition, to be fundamental. They ask themselves: Which norms, institutions, or modes of interaction best enable us to cooperate rationally? This is not to say that they no longer face problems of defection or that rational choosers are willing to sacrifice their own benefits for the collective good. It means, rather, that they are searching for forms of cooperative interaction that meet the conditions of productive (Pareto), individual, and distributive rationality.

      According to this view of the rational choosers' task, the market no longer sets the standard of rationality for other forms of social interaction. Coleman's rational choice liberalism regards markets, law, politics, and morality as institutional forms of cooperation, and assesses their rationality in light of a community's empirical circumstances and the institutions' assigned tasks.(15) While markets still assume a large role in Coleman's liberal theory, he also recognizes the importance and value of other forms of social cooperation. In particular, he recognizes the importance of...