Viktor Vanberg’s reply to Geoffrey Brennan’s response

 

I appreciate very much and entirely agree with Geoffrey’s response to my comment. He is right in pointing out that my remark on free-market liberalism’s emphasis on the voluntariness and legitimacy of market transactions appears to be not perfectly consonant with my claim that “voluntariness” is “defined in terms of the rules that constitute the market.” His critique reminds me that I should have been more careful in emphasizing a distinction that I have discussed explicitly in my “Markets and Regulation” paper referenced in my comment. There I argue:

In regard to the game of catallaxy (Hayek) we must distinguish between two issues: the legitimacy of actions and transactions within the game and the legitimacy of the game. The former derives from the players staying within the rules of the game, the latter from the players’ agreement on the rules. Geoffrey rightly points out that when, in reference to market transactions, I speak of agreement among the “parties involved,” this is ambiguous because “there are other parties who are affected by exchanges between A and B,” parties that may not at all agree to being harmed by what A and B agree upon. He also rightly points out that “it is the role of the rights structure.” i.e., of the rules of the game of catallaxy, to distinguish between “harms” that players must tolerate because they result from legitimate, rule-abiding actions and “harms” they are entitled to be protected against because they result from rule-violating actions.

The issue of the legitimacy-conferring capacity of agreement is obviously relevant only for harms to others that result from rule-abiding agreements between A and B. To be sure, players can hardly be expected to joyfully agree to losses inflicted on them by other players’ actions, even if these actions remain perfectly within the rules of the game. But fairness requires them to accept such losses when playing a game under mutually agreed-upon rules. It is by their agreement to the rules of the game that individuals agree to accept losses that may result from rule-abiding playing of the game. As Hayek has persistently emphasized, there are indeed good reasons for them to agree to playing the game of catallaxy – compared to other feasible games – because they can trust that the “general compensation” it promises will outweigh the losses it will inflict on them. As a side-remark: Free-market liberals would do their cause a good service if they would put more energy in convincing their fellow-citizens why, and under what rules, such “trust” in the market game is justified rather than proclaiming “natural rights” justifications for the market order.

I reckon, Geoffrey and I are in perfect agreement in these matters.