I Chose Liberty - Ludwig von Mises Institute

112 I Chose Liberty: Autobiographies of Contemporary Libertarians
of going into teaching, but no intention of being anyone’s disciple. What I needed to learn
was to think about the complexities of the American system that went beyond my English
background. I had to learn about systems of direct government regulation, which were wholly
absent from the English curriculum, which was entirely oriented to the private law. I became
much to my surprise something of an expert in taxation, which I taught extensively in my
first ten or so years in academia. And I learned, chiefly from Ward Bowman (who to this day
describes himself, wrongly in my case, as “not gone, but forgotten”) who introduced me to
law and economics, Chicago style, where he had trained with Aaron Director.
In one sense Bowman was the strongest influence on my intellectual development
because he was the one teacher who added tools to the kit that I had not used. As a pioneer
in law and economics, he forced me to think about the consequences of social arrangements
in ways that, frankly, started to undermine my strong, libertarian, deductive sense. He
could explain why the antitrust cases miss the functional or efficiency justifications for
various contractual terms, and started me asking why people entered into contracts in the
first place. He was also a believer that monopoly was a wrong, which was not central (beyond
contracts said to be in restraint of trade, narrowly construed) to my English background.
One day in class I pushed him hard and asked him if he thought that monopoly was
equivalent to coercion, to which he replied yes. I told him, in so many words, that I thought
he was nuts. But it started me thinking. Maybe monopoly was not coercion, but it was a
problem worth thinking about. It is a problem that comes up all the time with everything
from common carriers, to licenses to constitutional law. And it took me years to figure out
that monopoly may be bad but that coercion is still worse, which seems both obvious and
profound even as I write it.
So armed it was off to teaching at the University of Southern California. The day I
arrived I met Michael Levine and Lou Brown in Dorothy Nelson’s office. Lou had been
an expert in what he called preventive law, which asked one question: how do you get the
deal right in the office in order to avoid litigation thereafter. He knew all this material
because his wife, Hermione Brown, was a leading trust lawyer in Los Angeles, counting
among her clients the stars of Los Angeles, for whom if you drafted an irrevocable inter
vivos trust, you could do it only once. She taught me the fundamental principle of contract
through a bit of street wisdom. “You know that a contract is fair, if it leaves both sides happy
at formation.” To which she added, “and you know that a settlement is fair if both sides are
unhappy.” Deals are positive games that are Pareto improvements. Settlements are negative
sum games relative to initial expectations, but positive relative to the abyss that would
otherwise lurk ahead.
But Michael Levine, for his part, was relentless in his belief of the price system as a
mode of allocation and was a determined defender of the antitrust laws who found my
libertarian skepticism (one contract is as good as another, after all) infuriating. Over billiards,
which neither of us could play well, he would lash out at my elegant defenses of
cartels by asking why have an arrangement that leaves everyone worse off and no one better
off. The germs of a seed were planted. Robert Ellickson who joined that faculty in 1970
pushed a similar line, starting with land use instead of economic regulation. All of a sudden
force and fraud were not the only absolutes. There was a forward looking way to envision