Book Reviews

UTOPI A, THE MI NI MAL

STATE, AND ENTI TLEMENT
James M. Buchanan-k
Robert Nozick' s important book, Anarchy, State, and Utopia, treats three
major topics that are superficially distinct but closely related at a more
fundamental level of analysis. In their order of presentation, these are (1) the moral
legitimacy of the minimal state and the moral illegitimacy of any other state, (2)
the entitlement theory of distributive justice, and (3) a framework for Utopia. I
shall discuss these topics in the order of the appeal of Nozick' s argument to me,
that is, in the order (3), !1), and (2). His discussion of a utopian framework is
familiar, attractive, and hopefully convincing. Despite the possibility of identifying
important gaps in the analysis, I can accept much of the argument for the minimal
state. But I find Nozick' s entitlement theory of justice t o be unconvincing.
A Libertarian Framework f or Utopia
Economists will recognize Nozick' s framework for Utopia as the world of
competitive clubs (associations), with voluntary entry and exit. The Ti ebout theory
of local government and the related t heory of clubs were initially analyzed in terms
of their efficiency-generating attributes, and most of the subsequent discussion has
been within this setting (see Tiebout, and Buchanan 1965). Dennis Mueller has also
called at t ent i on to the equit T aspects of these models, aspects that economists have
largely neglected. Nozick' s contribution here lies in shifting the analysis of
competitive clubs to the most fundamental realm of discourse, the comparative
evaluation of idealized social orders.
*This is a review article of Robert Nozick, Anarchy, State, and Utopia (New York: Basic
Books, 1974). I am indebted to my colleagues, Nicolaus Tideman, Gordon Tullock, and
Richard Wagner for helpful comments.
122 PUBLIC CHOICE
Nozick asks the reader t o dream for himself an ideal world, constrained only
by the recognition that other men, real and imagined, can dream their own worlds.
This rules out the self-interested temptation to invent a Utopia where others bend
to the dreamer' s will. In this conceptual setting, Nozick describes a world in which
each person holds membership in that club which most satisfies his desires, securing
a net value from his membership that is at least equal t o the value of his
contribution to ot her members. Nozick does not, and should not, lay down
constraints on the limits of club action, and his model allows for widely divergent
ranges of activities. So long as persons may voluntarily emigrate and form new clubs
or, i f permitted, j oi n other existing clubs, there are no moral arguments against the
particular activities of any group. In this analysis, and particularly as he moves from
the idealized to the real world, Nozick does not fully consider problems raised by
the definition of rights of members, by the possible absence of effective
entrepreneurship, by the presence of scale economies or diseconomies including
threshold limits and transactions costs, by the potential for interpersonal
discrimination. He acknowledges the incompleteness of his model, however, and his
discussion lends itself admirably to elaboration and extension by more specialized
scholars.
The Minimal State
These clubs are not "states," in Nozick' s usage, and they are, along with their
individual members, presumably subject to the constraints of the minimal state
which is exhaustively discussed earlier in the book. Nozick' s initial objective is the
refutation of the anarchists' claim that any state is immoral. He tries to show that
an entity with the required properties of a state will emerge spontaneously from a
sequence of morally acceptable actions by persons. Nozick places emphasis on this
invisible-hand explanation of the state, and he specifically introduces the analogue
t o the spontaneous coordination of the market.
The starting point is Locke' s state of nature, in which each person has certain
natural rights (more on this below). Anarchy cannot prevail because each person
will recognize that some will t ry to violate the rights of others. Enforcement and
punishment will be necessary, and specialists in these tasks will emerge. Individuals
will purchase the services of protective associations, and, in the ordinary course of
things, one association will come t o a dominant, but not exclusive, position in the
community. To this point, there is no problem. Nozick' s conjectural history is
essentially a positive model of rational individual behavior. The next critical step,
however, is the derivation of exclusivity for one protective association, even in the
absence of voluntary purchase of its services by all persons in the community. To
take this step, Nozick switches to an explicitly normative model and invokes
criteria of morality to evaluate behavior. Through a very complex argument which
involves the risks associated with allowing independents to punish clients of the
protective agency, risks to all clients and not only t o those who are guilty, Nozick
justifies the prohibition oF independents' rights to punish on allegedly moral
grounds. But, this prohibition, in itself, would violate the natural rights of the
REVIEW 12 3
independents; hence they must be compensated which may, in turn, require that
the agency tax its own clients. The compensation will normally take the form of
offers to provide the protective services o the agency to nonclients at below-cost
p r i c e s .
The last part of the argument is not congenial to the public-choice economist,
who is not likely to be primarily interested in morality, which must be recognized
as Nozick' s principal domain. The discussion does expose the contractarian
presuppositions of the whole public-choice framework. In the latter, the legitimacy
of collective action is derived from voluntary agreement, from contract among
individuals with defined rights. The institution of free and voluntary exchange is
generalized to suggest contractual origins of collective action. And even i f this
aspect is not emphasized, "moral legitimacy" is thereby accorded to those activities
of collectivities that embody observed agreement on the part of all persons in the
membership.
Mt hough he does not discuss the point explicitly, Nozick presumably rejects
contractarian explanations of the state on the grounds that these become apologies
for coercion. And, to Nozick, coercion is the primary attribute of the state. The
contractarian is on admittedly weak ground when he uses his criteria to evaluate
existing institutions, which demonstrably embody coercion, on the "as i f"
presumption of contractual origins. This is notably the case when the argument is
not informed by a categorical distinction between ,the constitutional and the
postconstitutional stages o agreement, a distinction that I have repeatedly urged on
fellow social philosophers. Nozick does not seem cognizant of this distinction,
especially when he discusses RaMs' possible response to criticisms of the directly
redistributive measures dictated by Rawlsian precepts of justice. RaMs' possible
argument to the effect that these precepts are designed to be applicable at the
macro level of structure and, therefore, that micro level objections are unfounded,
is held to be invalid by Nozick. While the Rawlsian macro-micro terminology is
highly misleading, there is no inconsistency when the distinction is understood in
the constitutional-postconstitutional context. Contractual agreement may be
reached on rules that operate in subsequent periods so as to embody apparent
coercion.
The Entitlement Theory of Justice
In Part II of the book, Nozick is concerned with defense of the minimal state
against all arguments for extension, holding that all extensions violate the natural
rights of persons. His analysis is, however, devoted almost exclusively to the state' s
possible role in redistribution, which is, of course, the most difficult of all
extensions t o defend. Nozick simply leaves out of account the provision of public
goods (Musgrave's allocation branch), the "economic theory of the state," which
may be contractually derived. He does so, presumably, on the anticontractarian
grounds not ed above, although the possible benefits to be realized from j oi nt or
cooperative ventures t end to be neglected throughout the analysis.
Nozick presents an entitlement t heory of distributive justice, which states
that any distribution of holdings is just i f it has been acquired justly. The process of
124 PUBLIC CHOICE
acquisition and transfer of holdings becomes the central focus of at t ent i on and not
the particular characteristics of any distribution. I share Nozick' s criticism of what
he calls "time-slice" principles of justice, principles whose criteria are drawn from
end results independently of process. On the other hand, Nozick' s own principle of
entitlement seems to me to be open to comparable criticism because it, t oo, looks
at an existent distribution and then applies historical criteria to determine its moral
acceptability. But why is a young Kennedy or Rockefeller "ent i t l ed" to an
inheritance merely because it was voluntarily bequeat hed t o him? 1 What "nat ural
t i ght " is t aken from him when such transfers are limited? And why does it mat t er
at all whether the propert y so bequeat hed was acquired j ust l y or unjustly? As
Bernard Williams not ed in his earlier review (Times Literary Supplement, 17
January t 975), Nozick' s moral evaluation of process would suggest t hat most of
America properly belongs to the Indians (perhaps Marlon Brando has something
after all).
This sort of question exposes the weak link in Nozick' s whole logical
structure, his defense of the starting point in Locke' s state of nature, where persons
are defined with claims to certain ' "natural rights," bot h with respect to physical
objects and to ot her persons. Nozick' s efforts in this respect are no more successful
t han those of Murray Rot hbard and Dax4d Friedman.
Why must a starting poi nt be defined at all? One ultimate purpose may be
of locating some basis for evaluating the social order t hat we observe. In a very real
sense, the starting poi nt is always the status quo, and proposals for i mprovement
must be i nformed by this existential reality. Conceptual origins are helpful,
however, to the ext ent t hat they aid in the evaluation. It will be useful to outline
three recent usages of conceptual origins of social order. These are (1) Nozick' s
state of nature defined in Lockean terms where each person has certain natural
rights, (2) the "original posi t i on" posited by J ohn RaMs, in which persons put on
the "veil of ignorance." and (3) the natural equilibrium in Hobbesian anarchy,
which I have used as a basis for analysis (Buchanan, 1975).
t f distributive justice is to be applied to possible imputations of holdings only
in terms of the process through which these imputations have been created or have
evolved, and i f the moral acceptability of this process is the ultimate test, it
becomes essential t hat some morally justifiable starting point be described. This is
Nozick' s schemata, with Locke' s state of nature in which persons possess natural
@t s assuming the central role.
If, by contrast, criteria for the justice or injustice of social arrangements are
derived from the contractual process through .which these arrangements have been
chosen, or might have been chosen, the origin must be defined in such a way as to
make general agreement possible. I f agreement is to emerge from self-interest,
individuals' roles cannot be identifiable. (We agree on "fai r" rules for a game only
in *he setting in which our own positions are uncertain.) This is the purpose of
1This is admittedly an extreme example with perhaps unfair emotional overstones.
Nozick's argument becomes much more pesuasive if it could, somehow, be limited to apply to
the distribution of earnings based on relative e/tort. But it is precisely the extreme examples
that make the moral acceptance of the entitlement theory so difficult.
REVIEW 125
RaMs' original position. Although ambiguities in RaMs' presentation must be
acknowledged, Nozick' s criticism of the Rawlsian principles on the grounds that
these are derived from end-result norms seems to me to be misplaced.
(Unfortunately, many of the interpretations of RaMs' principles do treat these
strictly as end-result norms.)
Finally, i f the purpose is not that of making moral judgments about the
existing social order, but instead is that of seeking the basis for
mutually-advantageous changes in the socio-tegat-political structure of society, it is
helpful to think of conceptual origins in which men are observed to be unequal in
the distribution of endowments. In this context. I have found the natural
equilibrium in a Hobbesian rather than a Lockean state of nature to offer
productive insights. In the former, rights are not defined, and individuals may differ
in strengths and abilities. The protective state that emerges from the basic
constitutional contract in this setting need not itself by Hobbesian. In my
derivation, this state is similar to the minimal state described by Nozick. In my
analysis, however, all persons are brought into the protective umbrella, are brought
under law and are subjected to punishment on violation of law, because they retain
n o rights by remaining outside the contract. My contractarian model does not,
however, allow the state to be closed of f at these limits. I f contractual agreements
emerge for the provision of jointly-consumed public goods, there may be a role for
a productive as well as for a protective state. These need not, however, have
common boundaries, and the desired provision of public goods may be organized
through clubs or associations (local governmental units) among which migration is
possible. Aside from utility interdependence, however, direct redistributive action is
not conceptually possible within the strict contractarian framework i f at t ent i on is
confined to the post-constitutional level. However, at the constitutional stage,
where individual income and wealth positions are not known, structural
arrangements may be agreed upon that will allow for apparent redistribution at the
postconstitutional stage (Buchanan and Tullock). In this respect, my own
derivation can be made consistent with the RaMsian process, although not wi t h
particular principles.
Nozick' s wholly different approach forces me to acknowledge the basic
weakness in the constractarian approach, not ed above. There is a fundamental
difference between those institutions embodying apparent coercion that may be
conceptually legitimatized as having emerged from contractual agreement and those
institutions, again embodying apparent coercion, that have been observed to emerge
from actual agreement. And, of course, the latter are rare indeed. Nonetheless, I
should still argue that the contractarian approach does generate criteria that
disqualify certain intrusions on individual liberty. "Could we have reached
agreement?" seems to me t o be a more appealing intellectual question and a more
discriminating instrument for evaluation than "did this violate someone' s natural
rights?" And surely "can we reach agreement?" offers a more satisfactory propect
for achieving meaningful change than "what do we have the right t o do?"
Agreement is operationally testable; men fight over disputes about rights.
126 PUBLIC CHOICE
To establish morally legitimate claims to rights, Nozick would have us l ook at
the process of acquisition. In a world where the minimal state exists, and where its
own limits are widely accepted, this might be a meaningful approach. But why
should agreement emerge when the claims that seem justified by Nozick' s process
conflict with individual rights that seem to be embodied in the democratic franchise
of the supraminimal state? How can Nozick expect his argument for the minimal
state t o be convincing until and unless he first unravels, also through agreement, the
maze of conflicting "public entitlements" that membership in the modern state
seems to carry with it?
The multiplicity of conflicting claims should not be overemphasized. Within
limits, the social process remains orderly, and thereby reasonably productive. Had
Nozick grounded his entitlement theory of.rights, not on norms of justice but on
those of productive social order, his whole analysis would have been more readily
acceptable. I f men can agree on rights, the problem of social order is largely
resolved. I am not convinced that Nozick's argument does much toward securing
such agreement. And i f I, who share so many of Nozick' s libertarian
presuppositions, am not persuaded, how can he expect to fare with his peers in the
Cambridge (Massachusetts) intellectual establishment?
REFERENCES
Buchanan, James M. "An Economic Theory of Clubs." Economica, 32 (February
1965), 1-14.
, and Tullock, Gordon. The Calculus of Consent. Ann Arbor: University of
Michigan Press, 1962.
, The Limits of Liberty: Between Anarchy and Leviathan. Chicago:
University of Chicago Press, 1975.
Friedman, David. The Machinery of Freedom. New York: Harper, 1973.
Nozick, Robert. Anarchy, State and Utopia. New York: Basic Books, 1974.
MueUer, Dennis. "Achieving the Just Pol i t y. " American Economic Review, 64 (May
1974), 147-152.
Rawls, John. A Theory of Justice. Cambridge: Harvard University Press, 1971.
Rothbard, Murray. For a New Liberty. New York: Macmi/lan, 1974.
Tiebout, C. M. "A Pure Theory of Local Government Expenditure. " Journal of
Political Economy, 64 (October 1956), 416-424.