Review of Austrian Economics - The Ludwig von Mises Institute

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An Evolutionary Contractarian View of Primitive Law: The Institutions and Incentives Arising Under Customary Indian Law Bruce L. Benson* The European conquest and absorption of native American Indian groups obviously produced tremendous changes in the way Indians live and interact with one another. One very important source of change in Indian life was the changes in the rules and institutions of Indian law. Few Indian groups had any sort of strong central legal authority before Europeans began to exert various types of influence on the evolution of Indian law. This does not mean that there was no law, however. Evolving unwritten social contracts among Indian groups had produced well-developed legal systems based on customary rules of conduct which emphasized individual rights and private property. Adjudication procedures were in place to solve disputes without violence. No state-like centralized authority applied sanctions, but sanctions were applied, primarily in the form of economic restitution. These sanctions were enforceable because of reciprocal arrangements between individuals for recognition of law, support of judgments, and community wide ostracism. 1 Such characteristics of primitive American Indian legal systems have been discovered through extensive study by anthropologists. *Bruce L. Benson is professor of economics at Florida State University. This research was supported by the Political Economy Research Center (PERC) in Bozeman, Montana, and this paper draws freely from and extends material reported in "Customary Indian Law: Two Case Studies," which was written for PERC's project on Property Rights, Constitutions, and Indian Economics. I wish to thank Terry Anderson for helpful comments. As E. Adamson Hoebel (1954, p. 294), who is responsible for some of the most important anthropological studies of American Indian law, explained, in virtually all primitive groups: The Review of Austrian Economics, Vol. 5, No. 1 (1991): 41-65 ISSN 0889-3047 41
42 The Review of Austrian Economics, Vol. 5, No. 1 What can an economist add to the understanding of Indian law that has not already been said by anthropologists? Economic theory predicts human behavior by considering how individuals react to incentives and constraints in the context of rational choice models. In contrast, most anthropologists adopt an "empirical" approach to law: behavior is not predicted from a theoretical model, but rather observation presumably allows the anthropologist to discern behavior (Hoebel 1954, p. 5). Thus, the following examination will emphasize the institutions and incentives which influence the provision of law and its enforcement, in order to see if anthropologists' observations support economic theory's predictions. In particular, predictions, based on economic theory, will be made as to (1) how a legal system could induce recognition of rules of conduct without strong centralized authority, (2) how institutions and procedures for adjudication and legal change could be voluntarily established, (3) and why a non-centralized legal system dominated by voluntarily established institutions and procedures should emphasize individual rights and private property. In other words, predictions about the characteristics of the implicit evolving social contract which underlies a customary law system will be made based on economic theory, so that a generalizable characterization of such legal systems can be developed. Examples of Indian legal systems as they have been reported by anthropologists will then be examined in light of the theoretical predictions. 2 The community group, although it may be ethnologically a segment of a tribe is autonomous and politically independent. There is no tribal state. Leadership resides in family or local group headmen who have little coercive authority and are hence lacking in both the means to exploit and the means to judge. They are not explicitly elected to office; rather, they lead by the tacit consent of their followers, and they lose their leadership when their people begin no longer to accept their suggestions ... As it is, their leadership is confined to action in routine matters. The patriarchal tyrant of the primitive horde is nothing but a figment of nineteenth-century speculation . . . But primitive anarchy does not mean disorder. Anarchy as synonymous with disorder occurs only temporarily in complex societies when in a social cataclysm the regulating restraints of government and law are suddenly and disastrously removed. 2 This is not the first time that primitive Indian legal systems have been analyzed from an economic perspective. Baden, Stroup and Thurman (1981) examined the resource management incentives of various American Indian tribes, for example, while Demsetz (1967) explained the incentives to establish property rights and applied his analysis with examples from American Indian history, and Johnsen (1986) explored the formation and protection of property rights among the Kwakiutl Indians. The presentation below follows the lead of these studies, but goes beyond the emphasis on incentives for and the process of property right formation to discuss the legal institutions formed for the enforcement of rights, adjudication of disputes, and legal change.
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