Polycentric Law in The New Millennium

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Polycentric Law in the New Millennium

26-32 minutes
An Essay Submitted to The Mont Pelerin Society
On the Occasion of its 1998 Golden Anniversary Meeting
In Accord with the Requirements for the Friedrich A. Hayek

Fellowship
By
Tom W. Bell
Alexandria, Virginia
May, 1998
[Note: This essay won first place and was presented at The Mont
Pelerin Society's 1998 Golden Anniversary Meeting in Washington,
DC, on September 4, 1998. This HTML version faithfully reproduces
the original, print version. Notation such as "[p. 1/p. 2]" indicates
the print version's pagination.]
Polycentric Law In The New Millennium

Tom W. Bell[*]
Essay Question:
Entering the Twenty-first century, what modern choices in legal

relations are becoming available consistent with the dynamic
market process?
chrome-extension://gjhmajellcaeediogokhjjgffojhcnkb/reader/index.html?id=3083 1/18
Introduction
For millennium upon millennium, customary and private legal

systems alone ordered human affairs.[1] It could hardly have been
otherwise, given that humans cannot live together without some
sort of law. As Friedrich A. Hayek noted, society can exist "only if by
a process of selection rules have evolved which lead individuals to
behave in a manner [p. 1/p. 2] which makes social life possible."[2]
Law's practical effect thus predates not only States but even the
idea of law itself.[3]
States accumulated sufficient power to claim a monopoly in law[4]

only relatively recently--and only after a long struggle to crush
competing legal systems.[5] Polycentric law[6] [p. 2/p. 3] survived
that onslaught, however, and has now taken root in the interstices
of State power.[7] This essay will describe why, as we enter a new
millennium, conditions favor the growth and flourishing of
polycentric law.[8]
Three areas in particular stand out as promising fields for the

development of polycentric law: alternative dispute resolution,
private communities, and the Internet. Each has [p. 3/p. 4] seen the
failure of political legal systems, an exodus by dissatisfied
consumers to private alternatives, and rapid growth in the
magnitude, diversity, and sophistication of polycentric legal
services.
Alternative Dispute Resolution
Alternative Dispute Resolution (ADR) represents one of the most

tangible--and rapidly developing--ways in which modern, dynamic
market processes open up new choices in legal relations. Taken
broadly, ADR includes a variety of private means of settling
disputes, including mediation, negotiation, and arbitration. Its
illustrious history of thriving where State law cannot reach indicates

that ADR has a very bright future, indeed.
That ADR typically serves the needs of shop-keepers by no means

indicates that it requires the steady and secure environment of a
well-regulated State. To the contrary, ADR has thrived under
conditions that render soldiers and bureaucrats powerless.
Consider the Mediterranean in the eleventh century: Muslim and
Christian worlds stood on opposite shores, divided not only by sea
but by religion, kinship, kingdom, and culture. Merchants struggled
with agency relations under asymmetric information, an inability to
specify comprehensive agreements, and sharply limited means of
enforcing contracts. Yet free, private, and [p. 4/p. 5] competitive
trade thrived thanks to the Maghribi traders, a coalition of
merchants who set up and ran a private legal system.[9]
The Law Merchant (Lex Mercatoria) represents a more sophisticated

and well-known example of how the demands of commerce can
create and sustain a polycentric legal system under circumstances
that frustrate statist law.[10] Like the Maghribi traders' coalition,
the Law Merchant's effectiveness relied not on State coercion but
on the threat of ostracism. Merchants who defected from the Law
Merchant's standards found themselves cast out of its community
of reciprocal commercial relationships.[11] The Law Merchant
survived the political turmoil of the Middle Ages and influences
international law and customary business practices to this day.[12]
[p. 5/p. 6]
Just as impotent States left room for the development of the

Maghribi traders' coalition and the Law Merchant, so today the long
delays and high costs of State legal systems encourage the growth
of commercial alternatives. The largest private provider of ADR
services in the U.S., the American Arbitration Association,
administered 62,423 cases in 1995, nearly twice as many as the
35,156 it handled in 1975.[13] More than 1,000 ADR brokerages
compete with the AAA, led by Judicial Arbitration and Mediation

Services/Endispute, a private California company founded in 1979.
[14] JAMS/Endispute handled about 15,000 arbitrations and
mediations in 1997, generating $45 million in revenue. By March of
1998, its monthly average caseload had already risen 13 percent
over 1997 figures, to 1,500 a month.[15]
Private ADR has done so well that even State courts increasingly
rely on its services. In 1980, only ten state courts and one federal
district court had ADR programs.[16] By 1996, nearly half of all
federal district courts had them, while all but two of the federal
appeals courts did.[17] Nearly [p. 6/p. 7] half of the states now have
statewide ADR programs at the trial level and nearly all of them
have at least one court with a mediation program.[18]
The growth of ADR demonstrates that polycentric law naturally

pervades the gaps that open where State power fails. As discussed
below, private communities and the Internet provide similar
examples of this diffusion of freedom. ADR proves especially
interesting, however, because it demonstrates the distinction that F.
A. Hayek and Bruno Leoni drew between law and legislation. Law
arises as a spontaneous order, an aggregate effect of courts settling
various individual disputes. "[T]he law is something to be
discovered more than enacted," as Leoni put it.[19] In contrast,
"legislation is conceived as an assured means of introducing
homogeneity where there was none and rules where there were
none."[20]
The State's courts have less and less time to find the law for civil
litigants because their dockets overflow with [p. 7/p. 8] criminal
prosecutions enforcing legislation.[21] That the Drug War generates
most of these prosecutions merely illustrates the manifold hazards
of unjust legislation. By effectively abandoning civil litigants,
therefore, State courts have not only encouraged the rise of
competing, polycentric legal processes; they have also vividly

demonstrated the perils of confusing law with legislation.
Private Communities
Although private communities have existed in various forms for

many years,[22] their growth has accelerated in the last few
decades due to the rapid decline of political communities. The fear
of crime and the spread of urban decay has encouraged Americans
to seek security and convenience in gated communities,
condominiums, and homeowner associations. Although they vary in
detail, at root all such associations rely on the private control and
ownership of real property, whether held by individuals singly or in
common.[23] This [p. 8/p. 9] growth in private communities has
made polycentric law an everyday reality for millions of people.
By managing their neighborhoods through clear-cut property rights

and contractual agreements, residents of private communities win a
variety of emotional, psychological, social, and financial
advantages, including enhanced property values, security,
aesthetics, and "community spirit."[24] On a less esoteric level,
these associations provide the basic services--such as garbage,
water works, and road care--that residents of political communities
have found, to their distress, they can no longer take for granted.
Mere privatization alone cannot suffice to make any community a

success. It does, however, create incentives that reward the
development of successful communities. Those who own private
communities, whether initial investors or later residents, directly
benefit by prevailing in the competition for residents. Private
communities thus tend to seek out and implement tools for making
neighborhoods safe and pleasant. Politicians, who loosely run but
do not own conventional communities, simply do not face the same
incentives.
Does community privatization work? The numbers speak for

themselves. In 1962 the U.S. had fewer than 500 [p. 9/p. 10]
homeowners' associations.[25] Residential associations have
exploded in growth since then. There were 10,000 in 1970; 55,000
in 1980; and 130,000 in 1990.[26] By 1992 there were 150,000
residential associations housing some twenty-eight million people.
[27] Experts expect this number to double within a decade.[28] The
number of residential associations in the U.S. has long exceeded
the number of cities.[29] Gated communities, which press the
extremes of privatization, have become the most rapidly growing
type of housing in the U.S., claiming about 4 million residents at
present.[30]
Residents of private communities experience polycentric law not as

a theoretical abstraction, but as a working reality. These people
have deliberately removed themselves from the inefficient political
machinations of municipal governments, seeking instead to live
under regulations of their own choice and making. Faced with the
futility of exercising any real influence over the politicians and
bureaucrats who would run their lives, residents of private [p. 10/p.
11] communities have rediscovered the pleasures--and
undoubtedly the pains--of deliberating toward consensus with their
neighbors.
Private communities are thus reintroducing a growing number of

people to the principles of self-governance. These people have
already rejected political control of their neighborhoods. They are
rapidly acquiring a taste for home-cooked governance. Residents of
private communities thus stand ready to embrace an expansion of
polycentric law in the new millennium.
The Internet
Media pundits often describe the Internet as a virtual "Wild West."

Thanks to a double dose of dumb luck, the label fits surprisingly
well. The pundits mean to imply that the electronic frontier is, as
everyone "knows" the western frontier was, a lawless place ruled
solely by force and cunning. As Anderson and Hill have shown,
however, polycentric law made the old West considerably less wild
than, say, the modern District of Columbia.[31] Similarly, a careful
study of the Internet reveals that it, too, can boast of pervasive and
effective polycentric legal processes. [p. 11/p. 12]
For the most part, informal customary norms suffice to regulate

Internet behavior. Principles of "netiquette," enforced through
praise and criticism, set the basic rules for newsgroups, listservs,
chatrooms, MUDs, MOOs, and other virtual communities.[32] In
some cases, "netizens" of these communities establish more formal
means of regulation, such as by relying on a moderator to screen
messages or by adopting written rules. Dibbell offers a fascinating
account of how one of these virtual communities responded to anti-
social behavior by, in essence, creating a civil government.[33]
These examples demonstrate that on the Internet, as in the Old
West and elsewhere, "people frequently resolve their disputes in
cooperative fashion without paying attention to the [State] laws that
apply to those disputes."[34]
Although the Internet began as an academic and recreational

network, in recent years it has become an [p. 12/p. 13] important
new marketplace. With the advent of commerce have come new
types of disputes--and new types of polycentric law. Consider the
well-publicized problem of assigning rights to domain names, the
Internet's addresses. Companies holding trademarks, such as
"Panavision," have frequently sued parties holding rights to
allegedly infringing domain names, such as "panavision.com." While
government bureaucrats endlessly deliberated about how to fix the
quasi-public domain name registration system, entrepreneurs set
up a private, for-profit alternative, the Real Name System. In
addition to technically bypassing the traditional domain name
registration process, the Real Name System legally bypasses State
courts by relying on adjudication to solve conflicts over trademark

rights.[35]
The Internet has just begun to develop generic adjudication and

alternative dispute resolution services to which, in contrast to the
Real Name System, any mutually consenting parties can turn for
help. These online [p. 13/p. 14] experiments promise to open up
exciting new frontiers in polycentric law. A quick review of three
such services, the Virtual Magistrate, Internet Neutral, and the
Online Ombuds Office, illustrates this burgeoning trend.
The Virtual Magistrate is an on-line arbitration and fact-finding

system designed to settle disputes involving Internet users, parties
who complain that on-line conduct has harmed them, or (to the
extent that complaints implicate them) system operators.[36] Its
organizers, for the most part academics, have given careful thought
to why Internet disputes call for special legal procedures. On the
Internet, they explain,
People all over the world interact in real time and take
actions that affect the rights, interests, and feelings of
others. When conflicts arise over similar activities in the
"real" world, regular courts are available to resolve resulting
formal complaints. But the court system is too slow, too
expensive, and too inaccessible to address all problems that
arise on the Net. Also, with people from many countries
communicating on the Net, traditional nation-based legal
remedies are especially difficult to apply.[37]
The Virtual Magistrate Project has adopted procedures uniquely

suited to Internet law. Filings and other communications normally
take place solely via email; neither the parties nor their virtual
magistrate need ever meet face-to-face. Indeed, they need not
even leave their computer terminals! Proceedings move at the
accelerated pace of [p. 14/p. 15] "Internet time," with decisions
issuing within 72 hours of the receipt of a complaint.[38] Far from

merely interpreting and applying State law to disputes, virtual
magistrates examine the standards of network etiquette and
applicable contracts to determine the evolving shape of Internet
law.[39]
Another ADR project, Internet Neutral, demonstrates the diversity

of polycentric legal services that have already taken root on the
Internet.[40] In contrast to the Virtual Magistrate, Internet Neutral
offers solely mediation and uses on-line chat rather than email to
conduct proceedings.[41] It also, again in contrast to the Virtual
Magistrate, operates on a for-profit basis.[42]
Yet another project, the Online Ombuds Office, offers mediation via
email, at no charge, as part of non-profit experiment in developing
Internet ADR programs.[43] Its most interesting work has yet to
come. The Online Ombuds Office aims to develop a sophisticated
interactive multimedia virtual environment, called "LegalSpace," to
facilitate [p. 15/p. 16] online ADR.[44] If successful, LegalSpace will
make polycentric legal services easy to use and instantly accessible
for the millions (and counting) of netizens worldwide.
Internet users sorely need polycentric law. Notwithstanding its

somewhat ethereal nature, the Internet sees quite real conflicts.
The Online Ombuds Office has observed a wide range of situations
calling for mediation, including personal disputes between
members of newsgroups or listservers, contests over domain
names, disagreements between Internet service providers and their
customers, and allegations of copyright infringement.[45] Even this
partial listing shows that life on the Internet, like life off of it, gives
rise to disputes that demand legal resolution.
As the Internet community grows in population and diversity, it will

need polycentric law all the more. At the close of 1995, about nine
million people used the Internet.[46] A year later, the figure had
grown to 28 million.[47] Today, over 100 million people use the

Internet.[48] By the year 2005, [p. 16/p. 17] according one
estimate, one billion people will do so.[49] American netizens will
soon find themselves in the minority. The international Internet
community, like the community of itinerant traders that created the
Law Merchant, flows too freely and quickly for State law. Only
polycentric law can keep up with that most polycentric of networks,
the Internet.
Conclusion
To judge from the account set forth above, polycentric law has a
very bright future. The case studies on alternative dispute
resolution, private communities, and the Internet reveal that all
three provide excellent platforms for the growth and development
of polycentric legal services. But reviewing facts, figures, and
examples merely brings us up to date. Ultimately, the fate of
polycentric law relies on what we choose to make it.
Bruno Leoni once said, "Individuals make the law insofar as they
make successful claims."[50] By this he meant that legal norms
arise out of the sorts of claims that have a good probability of being
satisfied in a given society. But what Leoni said of the law's content
holds equally true of [p. 17/p. 18] the law's structure: Individuals
make the law more polycentric insofar as they struggle free of
existing, statist legal structures and successfully lay claim to newer,
freer ones.
Footnotes
[p. 1]
[*] Assistant Professor, University of Dayton School of Law (on leave

in 1997-98 academic year); Director of Telecommunications and
Technology Studies, Cato Institute (1997-98); Assistant Professor,

Chapman University School of Law (forthcoming, 1998 academic
year). Age: 34 (born 3/3/64). Email: <tomwbell@aol.com>; WWW:
<http://members.aol.com/tomwbell/Homepage.html>; office
phone: 202/789-5283.
[1] For a review of the historical role of customary and private legal
systems, see Bruce L. Benson, The Enterprise of Law (1990).
[p. 1/p. 2]
[2] Friedrich A. Hayek, I Law, Legislation and Liberty 44 (1973).
[3] "At least in primitive human society, scarcely less than in animal
societies, the structure of social life is determined by rules of
conduct which manifest themselves only by being in fact observed."
Id. at 43.
[4] Indeed, Weber's classic definition of the State relies crucially on

reference to its monopoly in law. "A compulsory political
organization with a continuous organization (politischer
Anstaltsbetrieb) will be called a 'state' if and insofar as its
administrative staff successfully upholds a claim to the monopoly of
the legitimate use of physical force in the enforcement of its order."
Max Weber, The Theory of Social and Economic Organization 154
(1964) (emphasis in the original).
[5] For a magisterial account of the origins of State law in the West,
see Harold J. Berman, Law and Revolution: The Formation of
Western Legal Tradition (1983).
[6] This essay uses "polycentric law" as a generic label for non-
statist law, including both customary and privately produced law.
This follows Lon L. Fuller's definition of the term: "[L]aw is the
enterprise of subjecting human conduct to the governance of rules."
Lon L. Fuller, The Morality of Law 106 (1964). In defending his
definition, Fuller admitted that it left ample room for non-statist

legal systems. "A possible objection . . . is that it permits the
existence of more than one legal system governing the same
population. The answer, of course, is that such multiple systems do
exist and have in the history been more common than unitary
systems." Id. at 123. See also, Roscoe Pound, II Jurisprudence
299 (1959) ("In the sense in which many sociologists now use [p.
2/p. 3] 'law' there may be a legal order and so law without any
political organization.")
It bears noting that legal positivists and analytical philosophers

sometimes dispute that anything but the State can generate law.
With regard to the former, see for example, John Austin, The
Province of Jurisprudence Determined 202 (1954) ("For every
positive law, or every law simply and strictly so called, is set directly
or circuitously by a monarch or sovereign number to a person or
persons in a state of subjection to its author.") With regard to the
latter, see for example, Margaret MacDonald, The Language of
Political Theory, 41 Proc. Aristotelian Soc'y 91, 110 (1940-41)
("To ask whether I should obey any laws is to ask whether there
might be a political society without political obligations, which is
absurd.") (emphasis in the original).
To fully refute the notion that law comes only from States would far
exceed the bounds of this essay. For an attempt at that project,
however, see, Tom W. Bell, The Jurisprudence of Polycentric Law
(1992) (unpublished manuscript, on file with the author) (defending
"polycentric law" as the best of many alternative labels, defining
customary law and privately produced law as subsets of polycentric
law, and setting forth a jurisprudential theory of polycentric law).
[7] A number of scholars have discussed polycentric law, albeit not

always under that name. For a summary of scholarship on
polycentric law see, Tom W. Bell, Polycentric Law, 7 Humane
Studies Rev. 1 (1991/92).
[8] For a vivid projection of life in a polycentric legal order, see

Randy E. Barnett, The Structure of Liberty 284-297 (1998).
[p. 3/p. 4]
[p. 4/p. 5]
[9] Avner Greif, Reputation and Coalitions in Medieval Trade:

Evidence from the Geniza Documents, 49 J. Econ. Hist. 857
(1989).
[10] See generally, Leon E. Trakman, The Law Merchant: The

Evolution of Commercial Law (1983); Berman, Law and
Revolution at 333-56 (cited in note 5).
[11] "Reciprocity and the threat of business sanctions compelled

performance. The ordinary undertakings of merchants were binding
because they were 'intended' to be binding, not because any law
compelled such performance." Trakman, The Law Merchant at 10
(cited in note 10).
[12] See Harold J. Berman & Felix J. Dasser, The 'New' Law
Merchant and the 'Old': Sources, Content, and Legitimacy, in
Thomas E. Carbonneau, ed., Lex Mercatoria and Arbitration 22
(Transnational Juris Publ, 1990): "The law merchant has been for
centuries and continues to be today an international body of law,
founded on the shared legal understandings of [p. 5/p. 6] an
international community composed principally of commercial,
shipping, insurance, and banking enterprises of all countries." See
also, Benson, The Enterprise of Law at 224-27 (cited in note 1).
[13] Richard C. Reuben, Public Justice: Toward a State Action

Theory of Alternative Dispute Resolution, 85 Calif. L. Rev. 577, 584
(1997).
[14] Id.
[15] Mike Fimea, Alternative Justice; Problem Solving Through

Mediation and Arbitration is Growing, The Arizona Republic, March
3, 1998, at EV10.
[16] Reuben, 85 Calif. L. Rev. at 584.
[17] Id.
[p. 6/p. 7]
[18] See Richard C. Reuben, The Lawyer Turns Peacemaker, A.B.A.

Journal, Aug. 1996, at 54, 56.
[19] Bruno Leoni, Freedom and the Law 10 (1961) (emphasis in

the original). See also, Hayek, I Law, Legislation and Liberty at 72-
73, 119-120 (cited in note 2).
[20] Id. at 16-17. See also, Hayek, I Law, Legislation and Liberty
at 124-ff. (discussing proper role of legislation) (cited in note 2);
Friedrich A. Hayek, The Road to Serfdom 72-87 (1944)
(discussing proper scope of Rule of Law).
[p. 7/p. 8]
[21] "Indeed, since criminal cases have priority, many courts are
unable to reach their civil dockets at all." Steven B. Duke,
America's Longest War: Rethinking Our Tragic Crusade Against
Drugs 177 (1993).
[22] Private communities have existed in the U.S. since at least

1831, when Gramercy Park was formed in New York City. Robert G.
Natelson, Law of Property Owners Associations 17 (1989).
[23] For a prescient analysis of how private communities develop

and function, see, Spencer Heath MacCallum, The Art of
Community (1970).
[p. 8/p. 9]
[24] See A. Dan Tarlock, Residential Community Associations and

Land Use Controls, in Residential Community Associations:
Private Governments in the Intergovernmental System? 75
(1989).
[p. 9/p. 10]
[25] Evan McKenzie, Privatopia: Homeowner Associations and

the Rise of Residential Private Governments 10 (1994).
[26] Id. at 10-11.
[27] Id. at 10; Timothy Egan, Many Seek Security in Private

Communities: The Serene Fortress, N.Y. Times, Sept. 3, 1995, at
A1, A22.
[28] Id. at A1.
[29] Robert C. Ellickson, Cities and Homeowners Associations, 130

U. Pa. L. Rev. 1519, 1520 (1982).
[30] Egan, Many Seek Security in Private Communities: The Serene

Fortress, at A22.
[p. 10/p. 11]
[31] Terry L. Anderson & P.J. Hill, An American Experiment in

Anarcho-Capitalism: The Not So Wild, Wild West, 3 J. Libertarian
Stud. 9 (1979) (describing private legal procedures on frontier of
American West).
[p. 11/p. 12]
[32] A listserv (or email list) forwards each message to the listserv
to all its subscriber members. A newsgroup is a Usenet discussion
group that functions much like a public bulletin board devoted to a

specific topic. A chatroom provides the equivalent of a text-based
conference call. A MUD (Multiple User Dungeon/Dimension) or MOO
(MUD, Object Oriented) is a text-based virtual environment that
uses a real-time chat interface.
[33] Julian Dibbell, A Rape in Cyberspace or How an Evil Clown, a

Haitian Trickster Spirit, Two Wizards, and a Cast of Dozens Turned a
Database into a Society, The Village Voice, Dec. 23, 1993, at 36.
[34] Robert C. Ellickson, Order Without Law: How Neighbors

Settle Disputes vii (1991). In this quote, as in the title of his book,
Ellickson regrettably reserves "law" for statist law.
[p. 12/p. 13]
[35] See, James Glave, Finding Brand Names Fast, Wired News,
5/8/98, available at
<http://www.wired.com/news/news/technology/story/12171.html>.
The story describes how the Real Name System allows companies
to ensure that links to their sites will follow searches for their brand
names on search engines and elsewhere on the web. "If Real Name
takes off, the tangled legal mess of domain name trademark battles
may be resigned to an interesting chapter in Internet history. [The
Real Name System] dispute policy is clear--[it] only accepts
payment from the registered trademark holder of a name or slogan,
and disputes are judged by Bill Washburn. . . . one of the Net's
commercial pioneers." Id.
[p. 13/p. 14]
[36] See, Virtual Magistrate Homepage at <http://vmag.cilp.org>.
[37] Frequently Asked Questions at

<http://vcilp.org/docs/vmagfaq.html>.
[p. 14/p. 15]
[38] See, How Will Decisions be Reached? at

<http://vmag.cilp.org/docs/vmpaper.html>
[39] See, Standard for Decisions at

<http://vmag.cilp.org/docs/vmpaper.html>.
[40] See, Internet Neutral Homepage at

<http://www.internetneutral.com/>.
[41] See, Mediation in a Nutshell at

<http://www.internetneutral.com/nutshell.htm>.
[42] See, The Fees at <http://www.internetneutral.com/fees.htm>.
[43] See, Online Ombuds Project Homepage at

<http://128.119.199.27/center/ombuds/>.
[p. 15/p. 16]
[44] See, LegalSpace: Moving Beyond Email at

<http://128.119.199.27/process>.
[45] Table of Disputes at

<http://128.119.199.27/center/ombuds/database.html>.
[46] Mary Meeker & Sharon Pearson, Morgan Stanley U.S.

Investment Research: Internet Retail 2-3 (1997).
[47] Id.
[48] Louise Kehoe, High Streets in Hyperspace, Financial Times

(London), April 18, 1998, at 10.
[p. 16/p. 17]
[49] Nicholas Negroponte, The Third Shall Be First: The Net

leverages latecomers in the developing world, Wired, January,
1998, at 96.
[50] Bruno Leoni, The Law as the Claim of the Individual, Archives
for Philosophy of Law and Social Philosophy 40, 58 (1964).
[p. 17/p. 18]
Access other writings.
Return to Tom W. Bell's Homepage.
(C) 1998-9 Tom W. Bell. All rights reserved. Fully attributed

noncommercial use of this document permitted if accompanied by
this paragraph.
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7/18/2021 Polycentric Law in the New Millennium :: Reader View

Polycentric Law in the New Millennium

An Essay Submitted to The Mont Pelerin Society

On the Occasion of its 1998 Golden Anniversary Meeting

In Accord with the Requirements for the Friedrich A. Hayek

Polycentric Law In The New Millennium

Entering the Twenty-first century, what modern choices in legal

For millennium upon millennium, customary and private legal

States accumulated sufficient power to claim a monopoly in law[4]

Three areas in particular stand out as promising fields for the

Alternative Dispute Resolution

Alternative Dispute Resolution (ADR) represents one of the most

illustrious history of thriving where State law cannot reach indicates

That ADR typically serves the needs of shop-keepers by no means

The Law Merchant (Lex Mercatoria) represents a more sophisticated

Just as impotent States left room for the development of the

compete with the AAA, led by Judicial Arbitration and Mediation

The growth of ADR demonstrates that polycentric law naturally

competing, polycentric legal processes; they have also vividly

Although private communities have existed in various forms for

By managing their neighborhoods through clear-cut property rights

Mere privatization alone cannot suffice to make any community a

Does community privatization work? The numbers speak for

Residents of private communities experience polycentric law not as

Private communities are thus reintroducing a growing number of

Media pundits often describe the Internet as a virtual "Wild West."

For the most part, informal customary norms suffice to regulate

Although the Internet began as an academic and recreational

courts by relying on adjudication to solve conflicts over trademark

The Internet has just begun to develop generic adjudication and

The Virtual Magistrate is an on-line arbitration and fact-finding

The Virtual Magistrate Project has adopted procedures uniquely

issuing within 72 hours of the receipt of a complaint.[38] Far from

Another ADR project, Internet Neutral, demonstrates the diversity

Internet users sorely need polycentric law. Notwithstanding its

As the Internet community grows in population and diversity, it will

grown to 28 million.[47] Today, over 100 million people use the

[*] Assistant Professor, University of Dayton School of Law (on leave

Technology Studies, Cato Institute (1997-98); Assistant Professor,

[2] Friedrich A. Hayek, I Law, Legislation and Liberty 44 (1973).

[4] Indeed, Weber's classic definition of the State relies crucially on

definition, Fuller admitted that it left ample room for non-statist

It bears noting that legal positivists and analytical philosophers

[7] A number of scholars have discussed polycentric law, albeit not

[8] For a vivid projection of life in a polycentric legal order, see

[9] Avner Greif, Reputation and Coalitions in Medieval Trade:

[10] See generally, Leon E. Trakman, The Law Merchant: The

[11] "Reciprocity and the threat of business sanctions compelled

[13] Richard C. Reuben, Public Justice: Toward a State Action

[15] Mike Fimea, Alternative Justice; Problem Solving Through

[16] Reuben, 85 Calif. L. Rev. at 584.

[18] See Richard C. Reuben, The Lawyer Turns Peacemaker, A.B.A.

[19] Bruno Leoni, Freedom and the Law 10 (1961) (emphasis in

[22] Private communities have existed in the U.S. since at least

[23] For a prescient analysis of how private communities develop

[24] See A. Dan Tarlock, Residential Community Associations and

[p. 9/p. 10]

[25] Evan McKenzie, Privatopia: Homeowner Associations and

[26] Id. at 10-11.

[27] Id. at 10; Timothy Egan, Many Seek Security in Private

[28] Id. at A1.

[29] Robert C. Ellickson, Cities and Homeowners Associations, 130

[30] Egan, Many Seek Security in Private Communities: The Serene