natural advantages and contractual justice

LARRY ALEXANDER AND WILLIAM WANG

N A T U R A L A D V A N T A G E S A N D

C O N T R A C T U A L J U S T I C E

ABSTRACT. Anthony Kronman has argued that libertarians cannot distinguish non-arbitrarily between legitimate and illegitimate advantage-taking in contractual relations except by reference to a liberal, wealth-redistributive standard Kronman calls "paretianism." We argue to the contrary that libertarians need not concede that any advantage-taking in contracts is legitimate and thus need not be liberal "paretians" with respect to advantage-taking.

Can a libertarian maintain a coherent distinction between those forms of advantage-taking in contractual relations that he would forbid and those he would allow, or does the at tempt to proscribe any form of advantage-taking place him on the slippery slope to welfare-state liberalism? In a recent and highly influential article, 'Contract Law and Distributive Justice, '1 Anthony Kronman argues, contrary to the prevailing wisdom of both libertarians and welfare-state liberals, that the proper rules regulating contractual exchanges should be framed with an eye to distributive outcomes, and that those distributive outcomes should be more egalitarian than the libertarians seem to think. Kronman attempts to demon- strate (1) "that considerations of distributive justice ... m u s t be taken into account if the law of contracts is to have even mini- mum moral acceptabili ty. . . "; (2) " that the idea of voluntary agreement - an idea central to the libertarian theory of justice in exchange - cannot be understood except as a distributional con- cept"; a n d (3) that the "voluntariness" test libertarians should accept "for deciding which kinds o f advantage-taking should be permit ted" is "similar in form to Rawls' difference principle . . . . ,, 2

1 Anthony Kronman, 'Contract Law and Distributive Justice,' Yale Law Journal 89 (1980): 472. (Hereinafter cited as Kronman). Quotations reprinted by permission of The Yale Law Journal Company and Fred B. Rothman & Company.

Ibid., pp. 474-76 (emphasis in the original).

Law and Philosophy 3 (1984) 281-297. 0167-5249/84/0032-0281 $01.70. © 1984 by D. ReidelPublishing Company.

282 Larry Alexander and William Wang

Kronman's general argument and the neo-Rawlsian standard of "paretianism" that he prescribes as a test for contract rules - allowing advantage-taking in contracts only if the "victims" are better off in the long run 3 - should not convince the libertarian. Although paretianism Night well govern some of a libertarian's as well as liberal's contract rules, Kronman has overstated the result- ing degree of egalitarianism within a libertarian framework and has improperly blurred the distinction between libertarians and liberals.

The task here is to place Kronman's analysis in the perspective of a proper rendition of libertarianism. No argument for libertarianism's superiority over liberalism will be advanced. The aim is the modest and essentially negative one of showing that Kronman fails in his attempt to put libertarians on the slippery slope that leads logically to liberalism. The justification for such a negative aim is that Kronman's argument, were it correct, would constitute a definitive victory for liberalism over libertarianism. With such high stakes riding on the validity of his argument, establishing the argument's failure is, like many demonstrations of philosophical error, a worthwhile undertaking.

I. KRONMAN'S ARGUMENT

A. Three Types of Paretianism

In brief, Kronman's argument is as follows. The libertarian theory of contract law is premised upon the belief that individuals have the right to make voluntary agreements for the exchange of their own property. If the agreement is coerced or involuntary, it is not enforceable. 4 Involuntariness is the same as illegitimate advantage- taking by the other party. Illegitimate advantage-taking can take such forms as physical coercion, deliberate misrepresentation, and deliberate nondisclosure. A principle must be developed to deter-

3 Ibid., p. 486. 4 Ibid., pp. 475-78.

Natural Advantages and Contractual Justice 283

mine when (1) advantage-taking is legitimate (and a contract is voluntary) and (2) advantage-taking is illegitimate (and a contract is involuntary), s

One possible principle is the "liberty principle," which states that advantage-taking by one party to an agreement should be allowed unless it infringes on the rights or liberty of the other party. This principle begs the question and is useless. An advantage- taking can just as easily be a right of the advantage-taker as an invasion of the rights of the "victim. ''6 Only three meaningful principles can be used to determine which forms of advantage- taking are permissible: (1) natural superiority, (2) utilitarianism, and (3) "paretianism." The first two are incompatible with libertarian principles. 7

Kronman argues that a libertarian, to be consistent with his most fundamental moral premises, must endorse the principle of paretianism to determine what kinds of advantage-taking should be permitted. The principle of paretianism, however, appears in three different forms. Kronman first formulates paretianism as a test that could be applied to the individual parties in a transaction. Thus, advantage-taking in an individual transaction might be allowed only if the specific individual who is disadvantaged will benefit in the long run from allowing the advantage-taking. 8 This version of paretianism will be called Individual Transaction Paretianism (ITP).

Kronman expressly rejects ITP in favor of a second formulation of the principle of paretianism. Because the highly individualized assessments called for by ITP would be impossible for courts and legislatures, and because ITP would lack the predictability of application of more formal, less individualistic rules, Kronman

,argues for a formulation that allows advantage-taking when doing

s Ibid., pp. 478-80. 6 Ibid., pp. 483-84. 7 Ibid., pp. 485-86. 8 Ibid., pp. 484-86.


so will increase the welfare of most people who are thus disadvantaged. 9 This formulation of paretianism will be called Class of Transactions Paretianism (CTP) because the principle applies to classes of transactions rather than to individual ones.

Although Kronman is explicit about adopting CTP, there is a third version of paretianism that it is fair to claim Kronman actually holds. That version requires that all rules governing pre-contractual assignments of wealth, as well as all rules governing contractual relations - indeed, all rules affecting the distribution of wealth generally - be tailored to maximize the wealth of those with the least wealth. For obvious reasons this version will be called Rawlsian Paretianism (RP). 1°

B. The Rejection o f Class o f Transaction Paretianism in Favor o f RawIsian Paretianism

Two considerations justify ascribing RP rather than CTP to Kron- man. First, deficiencies in CTP relative to both ITP and RP, coupled with Kronman's explicit rejection of ITP, suggest adop- tion of RP. Second, many of Kronman's examples of paretianism's application make sense only if the version of paretianism in question is RP. (In addition, Kronman frequently emphasizes the similarity of his test to Rawls's.) 11

1. Deficiencies in CTP

CTP is quite implausible as a principle governing advantage-taking in contractual exchanges. First, as tests for "voluntariness," both ITP and RP rest on a notion that disadvantages are "voluntarily" accepted so long as they are to the long-term advantage of the one disadvantaged. Under ITP, as specific party "voluntarily" accepts a

9 Ibid., pp. 486-87. 10 John Rawls, A Theory of Justice (Cambridge: Harvard Univ. Press, 1971), p. 75. ("... [T]he higher expectations of those better situated are just if and only if they work as part of a scheme which improves the expectations of the least advantaged members of society.") ,1 Kronman, pp. 474-75,488 n. 41,490 n. 44,493 n. 49.


short-term disadvantage because it is to his long-term advantage to do so. Under RP, the "party" voluntarily accepting a short-term disadvantage for "his" long-term advantage is the fictitious person behind the Rawlsian veil of ignorance. 12 Under CTP, on the other hand, the long-term advantage that justifies the short-term disadvantage is a long-term advantage to most people in a class, not necessarily to all people who are disadvantaged. Using a long-term- advantage notion of "voluntariness," how can we say a disadvantage is voluntarily accepted by someone merely because others in his class will be advantaged in the long-term by allowing the disadvantage to be imposed? 13

In addition to the complete irrelevance of CTP to voluntariness, even Kronman's long-term-advantage notion of voluntariness, CTP is also morally arbitrary. First of all there are the problems of defining the relevant classes of transactions. Is withholding information about defects in property a relevant category, or is the relevant category withholding of information generally, or, at the opposite extreme, withholding of information about termite infestation of homes? Are wealthy sellers and poor buyers or poor sellers and wealthy buyers characteristics that define classes of transactions, or are the transaction classes to be defined without regard to the wealth of the parties ?

Kronman gives several examples of practical applications of

12 Rawls, A Theory of Justice, pp. 136-42. is Rawls, of course, applies his principles of justice to classes and "represen- tative persons" rather than to specific individuals (A Theory of Justice, pp. 64, 95-100). As his critics have pointed out, however, the RawMan rational contractors, concerned about their worst possible fate, would reject Rawls's class-based approach in favor of an individualistic one. See e.g., Bruce Acker- man, Social Justice in the Liberal State (New Haven: Yale University Press, 1980), pp. 267-72; Robert Nozick, Anarchy, State, and Utopia (New York: Basic Books, 1974), p. 190; J. E.J. Altham, 'Rawls's Difference Principle,' Philosophy 48 (1973): 73; Jan Narveson, 'A Puzzle About Economic Justice in Rawls's Theory,' Social Theory and Practice 4 (1976): 1-27; Hans Oberdick, 'Book Review,' New York Univ. Law Review 47 (1973): 1012--1026.


paretianism. One involves a trained geologist, B, purchasing a piece of property without disclosing to the seller, A, that there is a rich mineral deposit on the land. Kronman suggests that allowing buyers to take advantage of deliberately acquired geological information may encourage mineral exploration and lower mineral and overall prices enough to make sellers like A better off in the long run. If so, buyers like B should not be required to disclose. Kron- man does not explain why the class of "victims" should not be broader or narrower than "land-sellers whose buyers do not disclose mineral deposits."

Suppose that the sellers of land with oil, natural gas, and bauxite are better off in the long run, but sellers of land with iron ore, uranium, gold, silver, and any rare earth are worse off in the long run. Separate contract rules could be developed for each type of mineral. Sellers could also be classified by region or state. Suppose that Oregon residents who unknowingly sell natural-gas rich land are worse off in the long run because natural gas is not an impor- tant source of power in that state. If the buyer knows there is natural gas on an Oregon resident's property, should the buyer be obligated to disclose to the seller? Even if one rule is to be adopt- ed for all "minerals," "mineral" must be defined. Is hot under- ground water (usable for thermal power) a mineral? It is not vege- table or animal.

Rather than be narrowed, the relevant class could also be broadened to classes like the following:

1. land-sellers whose buyers do not disclose material information.

2. sellers and buyers of land when the other party does not disclose material information.

3. sellers (of anything) when the buyers do not disclose material information.

4. sellers and buyers (of anything) when the other party does not disclose material information.

In short, Kronman does not explain why the relevant class should not be narrower or broader.

The problems of defining the relevant classes of transactions are


not only serious; they are irresolvable. Because CTP, unlike RP, does not look at the effects of allowing various forms of disadvantage-taking on the least advantaged member of society, but instead looks only at the effects on a class of transactors, it has no standard independent of the definition of the class for assessing when it has properly defined the class.

Finally, no matter how the classes are defined for application of CTP, CTP remains morally arbitrary. Under CTP, if allowing a particular form of advantage-taking benefits (long-term) 51% of the disadvantaged class, the remaining 49% may be sacrificed, no matter how little the 51% gain, no matter how much the 49% lose, and no matter how much members o f society outside the class o f transactors are harmed by allowing the advantage-taking. Con- versely, under CTP, if allowing a particular form of advantage- taking benefits (long-term) only 49% of the disadvantaged class, the remaining 51% must be relieved of the disadvantage, no matter how much the 49% ultimately lose, no matter how little the 5I% ultimately gain, and no matter how much members o f society outside the class o f transactors are harmed by disallowing the advantage-taking.

Moreover, even if CTP is revised so that a small long-term gain to 51% cannot outweigh a large long-term loss to 49%, and a long-term gain to "most people" in the relevant class is redefined as a net long-term gain to the class as a whole, Kronman still must justify focusing solely upon the class of transactors. He cannot do so by claiming that a net overall gain to the class as a whole means that all those disadvantaged by the transaction rule in question "voluntarily" accept the rule. Such a claim would necessarily rest on assumptions about the probabilities of each transactor's gaining and losing under the rule, about the maximum possible gain and loss under the rule, and about each transactor's aversion to risk, assumptions Kronman nowhere makes explicit or attempts to justify. And such a claim would arbitrarily exclude effects on persons from those transactions to which they were not parties. (Once effects of transactions are opened up to include effects on nonparties who are merely potential transactors on other occasions,


the effects must be extended to include effects on all non-parties, thus leading to utilitarianism, RP, or some similar society-wide principle.)

2. Kronman's application of paretianism to pre-contractual entitlements

Kronman does not restrict the application of paretianism to what would be considered contractual transactions. He applies the principle additionally to determine what persons' precontractual en- t i t lements are, that is, to define property rights. Thus, if the ques- t ion is whether I have a right to bo th of my kidneys despite your need for one, or instead whether you have a right to use your superior strength, weaponry, or stealth and cunning to take one of my kidneys from me, Kronman would reply that the answer is whatever paretianism dictates. If giving me and others the "advantage" of the right to withhold our kidneys works to the greatest long-term advantage of those disadvantaged, then paretianism would dictate that we be given a pre-contractual property right to our kidneys. If, on the other hand, treating kidneys as part o f a c o m m o n pool works to the greatest long-term advantage of the disadvantaged, paretianism would dictate such t reatment . The following passages f rom Kronman's article reflect his willingness to apply paretianism to all potential advantages, to all pre-contractual rights, not just to advantages in ordinary contracts; the passages also reflect his belief that his principle is similar to Rawls's:

The principle of paretianism requires us to evaluate different kinds of advantage-taking by asking whether they make the disadvantaged themselves better off in the long run. But what is the baseline against which we are to measure changes in the welfare of the disadvantaged? Clearly, the baseline is represented by the situation in which the advantage-taking in question is legally for- bidden; advantage-taking is to be allowed only if the disadvantaged are made better off than they would be were it prohibited. But the baseline situation, conceived in this way, is a situation of equality. Consequently, if a libertarian adopts paretianism as the basis for discriminating between acceptable and un- acceptable forms of advantage-taking in the exchange process - and I have argued that he has good reasons for doing so - he will be endorsing a view


that rests upon what, from a libertarian perspective, may seem to be a sur- prisingly strong egalitarian premise. 14

* * *

The egalitarian nature of this baseline situation is illustrated ... by the rule forbidding the use of physical force in exchange relationships. Suppose that A has greater physical strength than his neighbors. If we refuse to give A the right to exploit his superior strength by threatening his neighbors with harm unless they agree to do what he wishes, we once again place everyone in- volved (the person who possesses the advantage as well as those who do not) in a situation of equality. Here, of course, equality is achieved not by forcing A to share his advantage with others, but by denying everyone, including A, a right to make use of the advantage in question, at least in this particular way) s

* * *

... In every case, however, the principle forbids us to grant the possessor of an advantage the exclusive right to exploit it for his own benefit unless those excluded from its ownership are thereby made better offthan they would be if no one were given a greater right to the advantage than anyone else. Stating the principle in this way emphasizes its strongly egalitarian character and underscores its similarity to Rawls' test for assessing the fairness of inequalities in the distribution of material wealth) 6

At this point in his argument , Kronman has i l lustrated the s t rongly egalitarian nature o f paretianism, no t only as a principle for assessing rules o f cont rac tua l exchange, bu t more impor tan t ly as a principle for al locating pre-contractual en t i t lements - as RP, not CTP! But w h y should l ibertarians accept paret ianism as the proper principle for al locating precont rac tua l ent i t lements? Why should they give up the principle that one is ent i t led to those natural advantages that one possesses pre-contractual ly - one 's b o d y , one 's energy, and one 's talents?

Kronman turns his argument to the moral significance o f natural advantages. He points out that l ibertarians have to explain w h y they al low a person to exploi t certain natural advantages - for example , beau ty , intelligence, and vigor - bu t not to exploi t

14 Kronman, pp. 491--92. is Ibid., p. 492. 16 Ibid., p. 493 (footnote omitted).


other advantages - for example, skill at extort ing, deceiving, or thieving. The crucial point in Kronman ' s argument then follows:

Presumably, the reason a libertarian will give for disallowing certain forms of advantage-taking on X's part is that they violate Y's right not to be coerced in these ways. But which types of coercion violate Y's right to non- interference? However one answers this question, the fact that X possesses the advantage he wants to exploit can never be an argument for defining the scope of Y's right in a certain way; that proposition will always be true and therefore cannot make the position of either party stronger (or weaker) than it would otherwise be. Likewise, it can never be an argument either for limiting or expanding the scope of Y's right to non-interference that Y himself possesses an interest that will be affected if others are allowed to take advantage of him, since this, too, is true in every case. The mere fact of possession - whether X's or Y's - provides no help whatsoever in deciding how Y's right to non-interference should be defined, or whether X should be assigned an exclusive right to the advantages he possesses.

Thus, it is a mistake to think that the fact of possession has any moral significance in itself, even of the limited sort claimed by libertarians, so far as the assignments of entitlements is concerned. By viewing individual advantages as if they were part of a common fund or pool, one eliminates the fact of possession as a relevant consideration and thereby avoids this mistake. The great attraction of viewing advantages in this way is that it forces us to clarify the underlying argument that must always provide the true foundation for protecting one set of possessory interests rather than another. 17

These passages f rom Kronman ' s article only make sense if Kron- man is arguing for RP, not CTP. Only RP would lead to viewing individual advantages as part o f a c o m m o n pool. It is true tha t th roughou t the article Kronman refers to paret ianism as a principle to be applied to advantage-taking in exchanges. Kronman ' s broad no t ion of the "exchanges" to which paretianism applies, however, includes, for example, you r use o f superior strength to prevent me f rom taking advantage o f my superior kidneys. This requires tha t paretianism be RP. Al though I can de facto enjoy the full use o f m y kidneys outside the context o f such exchanges, my moral right to do so - m y moral en t i t lement to m y kidneys -

17 Ibid., p. 494 (emphasis added).


only becomes an issue when against such a right you assert a con- flicting right to use your superior strength and part me f rom those kidneys.

There is a final piece of textual evidence that Kronman holds RP, not CTP:

...[T]he only sensible interpretation of the libertarian's position is ... [that] when a libertarian asserts that contract law should not be used to redistribute wealth from the rich to the poor, he must be claiming either that existing inequalities of wealth are justified (for example, on utilitarian or paretianist grounds) or that contract law is an unsuitable instrument for correcting those inequalities which are unjustifiable. 1 s

F rom this passage one must conclude that Kronman believes paretianism can be used to assess the general distr ibution of wealth. Paretianism can be so used if it is RP; it cannot if it is CTP.

II. ANALYSIS OF KRONMAN'S ARGUMENT

A. Paretianism as the Correct Libertarian Formula for Allocation o f Pre-Con tractual Entitlements

Kronman's most interesting and revolutionary claim is that possession of natural advantages cannot be given moral significance, even by libertarians, and that libertarians, like liberals, should adopt paretianism (RP) as the proper approach to pre- contractual enti t lements. I f his claim were correct, Kronman would have provided an ironclad defense of the welfare state and its redistributive policies f rom attacks f rom some of its most powerful enemies on the Right.

Unfor tunate ly , Kronman's claim is unwarranted. He fails to demonstra te the moral insignificance of possession of natural advantages. There is a distinctly libertarian baseline that defines one's pre-contractual ent i t lements and explains, apart f rom RP, for example, why exploiting superior strength by taking from

is Ibid., p. 497 (second emphasis added).


another by force is wrong. The difference between liberalism and libertarianism that results from adopting the libertarian baseline and protecting certain natural advantages but not others may or may not be very great. As will be explained in a forthcoming article, advantages that the libertarian would protect may be offset to a great extent b y compensatory awards of advantages that are not specially protected by libertarianism. Regardless o f the extent o f these compensatory awards, libertarianism and liberalism remain distinct.

1. The libertarian baseline

The libertarian baseline is defined by what one of us has elsewhere called the libertarian "core injunction." The core in junc t ion actually has two renditions. Each rendition in some way protects for a person what he brings to the world that is o f potential value to others. One rendition forbids the appropriation o f a person's body, labor, or talents without his consent. The other rendition forbids making ourselves bet ter o f f than had another person not existed by making him worse o f f than had we not existed, unless he consents to being made worse off. 19

The core injunction under either rendition has this basic conse- quence. No one need use his body, labor, or talents as a Good Samaritan. So long as A's dire straits have in no way beeen caused

19 The difference between the two renditions of the libertarian core injunction shows up in such cases as blackmail, invasion of privacy, malicious competition, and other instances of taking pleasure in another's unhappiness or benefiting from another's existence in a way that makes him unhappy. Thus, to take malicious competition as an example, where A enters a business just to derive sadistic pleasure from hurting a competitor, B, A has not violated the rendition of the core injunction that forbids nonconsensual appropriation of B's body, labor, or talents, but A has violated the rendition that forbids him to make himself better off at B's expense than he would have been ifB had not existed. For our purposes here, the differences between the two renditions are irrelevant. See Larry Alexander, 'Liberalism as Neutral Dialogue: Man and Manna in the Liberal State,' U.C.L.A. Law Review 28 (1981): 816, 819--20.

Natural Advantages and Con tractuaI Justice 2 9 3

by B's existence, B has no duty to ameliorate A's condition. It is here that the fissure between liberals, who do not accept the core injunction, at least for less-than-major sacrifices, and libertarians, who accept it in almost all cases, is most pronounced. It is here - on the issues o f compulsory Good Samaritanism and (for libertarians, the same thing) the permissibility o f taking the products o f others' bodies, labors.and talents 2° - that the theoret- ical battle lines are drawn.

We suspect that the battle between liberals and libertarians cannot be resolved in favor o f either side solely on grounds of co- herence. Indeed, the battle appears resolvable, if at all, only on metaethical grounds. Libertarianism or liberalism might fail some methodological test for the adequacy o f moral theories, such as RaMs' "reflective equilibrium" condition. 21 In any event, our limited claim here, which we will come to Shortly, is that Kron- man has not resolved the liberal-libertarian battle.

2. Allocations o f resources outside the scope o f the libertarian core injunction

When it comes to resources that are not anyone's body, labor, or talents - the earth, and the ability to engage in activities thereon - libertarianism fails to generate plausible principles that are dis- tinguishable from those a liberal would adopt. Distinctly libertarian candidates - such as first possession - to govern use o f nonhuman resources (for example, land) and to govern activities that

2o Taxation is clearly forced labor, as Robert Nozick maintains (Anarchy, State, and Utopia, pp. 169-71). The "force" of the forced labor is represented by the importance of whatever is taxed. Thus, if a 50% tax is applied to the product of one who needs to labor four hours a day in order to survive, he is forced by the tax to labor eight hours a day on pain of non- survival. The tax is no different in such a case from labor forced at the point of a gun. Of course, to say a tax is tantamount to forced labor is not to say it is unjustified. Liberals think forced labor is justified to help the needy (forced Good Samaritanism). Libertarians do not. 21 Rawls, A Theory ofdustice, pp. 48-51.


affect others' uses and activities (for example, playing a stereo while another attempts to listen to the crickets) are normatively 'counter-intuitive. 22 This article will assume - and thus concede to Kronman the maximum a libertarian would concede - that a libertarian, like a liberal, would distribute rights to nonhuman resources and competing activities in accordance with an end-state principle like RP. Such a distribution might all but eliminate the advantages of natural endowments protected by the core injunction. However, the core injunction would still rule out compulsory Good Samaritanism.

3. Kronman's argument for the moral insignificance o f possession o f natural advantages

Kronman believes he has demonstrated the untenability o f the libertarian baseline because he believes he has demonstrated the inability of the libertarian to distinguish nonarbitrarily between those natural advantages that may be permissibly exploited and those, like the ability to extort, that may not be. But the libertarian core injunction does rest upon a nonarbitrary distinction among natural advantages or "talents." It protects use of what

22 This is what is argued in Alexander, 'Man and Manna in the Liberal State,' pp. 822, 836-38, against libertarians like Pilon, Epstein, and Nozick who adopt either a principle of first possession or a Lockean principle of mixing one's labor with a resource. See Pilon, 'Corporations and Rights: On Treating Corporate People Justly,' Georgia Law Review 13 (1979): 1245, 1274-84; Epstein, 'Possession as the Root of Title,' Georgia Law Review 13 (1979): 1221; Nozick, Anarchy, State, and Utopia, pp. 174-82. Others who approach the Libertarian core injunction adopt a variety of approaches to the distribution of nonhuman resources. See, e.g., Ackerman, Social Justice, pp. 53-63; C. Fried, Right and Wrong (Cambridge: Harvard Univ. Press, 1978), pp. 132-63; Brody, 'Health Care for the Haves and Have Nots: Toward a Just Basis of Distribution,' in Justice and Health Care, ed. Earl E. Shelp (Dordrecht: D. Reidel, 1981), pp. 151, 156-67; Davis, 'Necessity and Nozick's Theory of Entitlement,' Political Theory 5 (1977): 217, 231 n. 7; Gibbard, 'Natural Property Rights,' No~s 10 (1976): 77; Steiner, 'The Natural Right to the Means of Production,' Philosophical Quarterly 27 (1979): 41.


might be called first-order talents, those that are valuable to the possessor when he is alone or that are valuable to others. It does not protect second-order talents, talents whose value is totally parasitic on the value of first-order talents. The ability to produce things of great value to oneself or others is protected by the core injunction as a first-order talent. The ability to steal what another has produced - a second-order talent - is not. 23 Put differently, the respect for people's separate existences that is fundamental to libertarianism requires that individuals not be treated as involuntary resources for others.

Kronman's argument actually is a complete non sequitur because it rests on an assumption that a libertarian would allow some, but not all, types of taking advantage of another. Thus, Kronman says that "it can never be an argument for limiting or expanding the scope of Y's right to noninterference that Y himself posesses an interest that will be affected if others are allowed to take advantage of him, since this ... is true in every case."24 Kron- man's assumption is invalid. Libertarians would not permit any "taking advantage" of another if "taking advantage" entails a loss from the libertarian baseline without the loser's voluntary consent. (Voluntary consent would, of course, have to be defined indepen- dently of end-state distributions of wealth, so that it would be theoretically possible for someone to consent to a loss. The libertarian's definition of consent would focus on mental capacity, information, and psychological duress, not gains or losses. Indeed, it is one of our principal criticisms of Kronman that his end-state distribution view of voluntariness leaves no room for voluntarily consenting to a loss.) Some instances of what might loosely be called "taking advantage" may be allowed - those that involve losses that were voluntarily consented to, and those that involve allocation of contractual surplus and thus an improvement from

23 See also Nozick, Anarchy, State, and Utopia, pp. 84-86 (productive versus non-productive exchanges). 24 Kronman, p. 494 (emphasis added).


the libertarian baseline; these will be discussed in the sequel to this article. But libertarians allow no one to "take advantage" of another in a way that would make Kronman's argument go through. Possession, at least of first-order talents, does have moral significance in itself to a libertarian.

There is another way of looking at Kronman's error. One of the purposes of any moral theory will be to define people's moral entitlements. A moral entitlement is, among other things, some- thing that it is wrong to take by force or fraud from the one whose entitlement it is. Thus, no matter how "talented" one is in forceful or fraudulent takings of others' moral entitlements, it is by definition wrong to employ those talents, regardless of the moral theory that defines the entitlements. Rawlsian liberals regard first-order talents as part of a common pool, to be milked for the benefit of the least advantaged members of society. Liber- tarians give absolute discretion to the one who possesses the first- order talents to withhold their employment for his or others' benefit. But neither libertarians nor liberals would count the "talents" to violate moral entitlements as talents to be allocated under their theories.

In his recent discussion of talent pooling, Kronman acknowl- edges that the libertarian's protection of first-order talents from appropriation by others, and the rejection by libertarians of the idea of a talent pool, may not be arbitrary at all. Indeed, some such protection may be essential to preserve the personal integrity that underlies the theories of both Rawlsian and libertarian liberals. 25 Although the relation of bodily integrity to personal integrity may be contingent on the facts of human physiology and reproduction, so that we could image moral beings with much weaker senses of identity with their bodies, the strong relation

2s Ibid., 'Talent Pooling,' in Human Rights, ed. J. Pennock and J. Chapman (New York: New York Univ. Press, 198!), pp. 58, 71-77. On the topic of the common pool view of bodily parts, compare Harris, 'The Survival Lottery,' Philosophy 50 (1975): 81, with Roth, 'Personhood, Property Rights, and the Permissibility of Abortion,' Law and Philosophy 2 (1983): 163-91.

Natural A dvan tages and Con trac tual Justice 2 9 7

between one's personal identi ty and one's talents and labor would appear to hold for all beings we could recognize as moral agents. 26 Treating all o f a person's first-order talents - his body, labor, and abilities - as part of a c o m m o n pool would appear to reduce him to the status of pure experiencer and undermine the basis of liberal respect for him as an individual.

It is impor tan t to reiterate that we are not endorsing libertarianism and its protect ion, by means of the core injunction, of first-order talents. Nor are we claiming that libertarianism is superior in any way to liberalism as a moral theory. Our sole con- ten t ion is that libertarianism does not succumb to Kronman's a t t empt to demonstra te the moral arbitrariness o f its, as opposed to liberalism's, first premises.

Kronman fails in his a t tempt to demonstra te the impossibility of any coherent libertarian view of voluntary agreements. The libertarian, by denying persons' rights to use such "natural" advantages as superiority o f force or decept ion in exchanges, is not led inexor- ably to Rawlsian redistribution. Libertarians only protect first- order natural advantages, in exchanges and elsewhere. In a forthcoming article, we shall examine such contractual problems as format ion, interpretat ion, and mistake, as well as the issues o f contractual enforcement and the fair division of contractual surplus. Our concern will be the extent to which the libertarian's approach to those problems either must or should incorporate collectivist-redistributive goals. We conclude that al though collectivist-redistributive goals will properly inform the libertarian's reso- lut ion of many contractual issues, the libertarian's approach to contracts does not collapse into the Rawlsian liberal's approach.

School of Law University of San Diego Alcal~ Park San Diego, CA 92110 U.S.A.

University of California Hastings College of the Law 200 McAllister Street San Francisco, CA 94102 U.S.A.

26 Alexander, 'Man and Manna in the Liberal State,' pp. 816,826-27 n. 46.

natural advantages and contractual justice

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