Center for a Stateless Society
A Left Market Anarchist Think Tank & Media Center
Breaching the Social Contract

America leads the world. No other nation imprisons more people than we do. Over 2.2 million men, women, and children currently reside in penitentiaries; another 4 million are under criminal supervision. In the past forty years, the incarcerated population has increased by a factor of five. Billions of our tax dollars are spent maintaining prisons and jails [PDF]. The New Yorker’s Adam Gopnik writes, “The scale and the brutality of our prisons are the moral scandal of American life.” In an effort to ameliorate this sad state of affairs, many have proposed sentencing reforms, educational programs, statutory alterations, and other tweaks of the system.

Maybe it’s time to radically rethink the nature and purpose of criminal law itself. Maybe it’s time to look to another legal theory — contract law.

Despite sharing common roots, criminal law and contract law are different. In the United States, as in other jurisdictions, contrasting theory, substance, and procedure distinguish the two doctrines. Many people consider criminal behavior to be a breach of the social contract. If so, then why don’t we apply contract law principles to crime?

Crime as Breach of Contract

Consider Pierre-Joseph Proudhon’s formulation of the “social contract”:

What really is the Social Contract? An agreement of the citizen with the government? No, that would mean but the continuation of [Rousseau’s] idea. The social contract is an agreement of man with man; an agreement from which must result what we call society. (General Idea of the Revolution in the Nineteenth Century, 1851)

Proudhon equates the social contract with social expectation: how do individuals expect each other to behave under normal circumstances? Indeed, every society establishes its own norms to which its members are expected to adhere. Yet to truly be a “social contract” the state must also be party to it.

Criminal behavior amounts to a breach of the social contract and a violation of implicit social norms. For example, we do not expect our neighbors to take our stuff. We denounce theft as an illegitimate means of acquiring property.

Contract Law Principles

In general, contract law attempts to put victims of breach in as good a position as they would have been if the contract had been performed. The “expectation principle” requires the breaching party to compensate the victim just to the point of making her as whole as she had expected to be (either by economic equivalence, restitution, or both) and not beyond.

The remedy for property crimes (as social contract breach) seems intuitively obvious: give the victim back her things. After all, the point of contract remedy is to compensate the victim, treat the breaching party fairly, and promote economic efficiency. As Oliver Wendell Holmes declared, “The duty to keep a contract at common law means a prediction that you must pay damages if you do not keep it — and nothing else.”

Penalty Clauses

Because of these broad principles, penalty clauses are not enforceable. A clause that reads, “If Smith does not pay Jones $20, then Smith must pay $100 instead,” would not be upheld in court. Holdings barring the enforcement of contractual penalties and quasi-penalties litter American case law.

Penalties have been questioned and derided for centuries. In Shakespeare’s The Merchant of Venice, the villainous Shylock agrees to loan Antonio money. However, under the contract, if Antonio defaults, he must forfeit a pound of his flesh.

Shylock: Go with me to a notary, seal me there
Your single bond; and, in a merry sport,
If you repay me not on such a day,
In such a place, such sum or sums as are
Express’d in the condition, let the forfeit
Be nominated for an equal pound
Of your fair flesh, to be cut off and taken
In what part of your body pleaseth me.

Why the harsh penalty? “If it will feed nothing else, it will feed my revenge.”

Antonio defaults. At trial, someone offers to pay twice the contract price to save Antonio from Shylock’s knife. Shylock, however, insists the court enforce the deathly penalty. After ostensibly honoring his wish, the judge cleverly turns Shylock’s argument against him, preserving Antonio’s life.

Social Contract Penalties

The social contract includes at least two penalty clauses. First, if a party breaches, then he is punished (the “criminal”). Second, if a party breaches, then the aggrieved party (the “victim”) is cast aside and ignored.

Under the current bifurcated system, a criminal caption reads State v. Smith, not Jones v. Smith. The victim is not a party to the suit. Instead, the state assumes its position as a placeholder for the victim, whether or not the victim approves. Like Shylock, the state then begs for the enforcement of penalty clauses. Someone breached the social contract. Punish her!

In equating justice with punishment, we forget about the victim. Sadly, with full enforcement of the penalty clause against the breaching party, the victim also suffers a penalty — she is cast aside and ignored. Our addiction to penalties has given rise to the largest prison population in the world. In contrast, a more rigid application of contract law principles would preclude the application of penalty clauses, focusing instead on fulfilling expectations, compensating for losses, and making the victim whole again.

Many crimes violate person, not property. How would we remedy social contract breaches such as battery, rape, and murder? While the answer is not clear, to enforce penalties seems dubious at best. Civil rights attorney Clarence Darrow once noted, “All communities and states are in reality ashamed of jails and penal institutions of whatever kind. Instinctively they seem to understand that these are a reflection on the state.” Perhaps Darrow was correct in thinking that “nearly every crime could be wiped away in one generation by giving the criminal a chance.”

Moreover, common law courts rarely award emotional damages resulting from a contract breach. Such damages fall into the realm of tort law. However, Hadley v. Baxendale, a seminal case from nineteenth century Great Britain, established the “foreseeability rule.” If damages resulting as a consequence of breach could have been reasonably foreseen, then they can be recovered. All parties to the social contract certainly can “reasonably foresee” the consequential emotional damages of violent acts like rape.

The law treats contracts differently than it treats crime. But should it? Isn’t criminal behavior just a breach of contract — the social contract? When a thief steals from his neighbor, doesn’t it make sense to repay the neighbor and restore her expectations? In criminal law, penalties deprive liberty without compensating the victim. We punish both the criminal and the victim; only the state comes out ahead. The common law refuses to enforce contractual penalties for good reason. Perhaps that principle should be applied to criminal law, as well.

Markets Not Capitalism
Organization Theory
Conscience of an Anarchist