The Market as a Res Publica~ Philip Pettit Republicans seek to protect and promote individual freedom. So dolibertarians of the right. The difference? Republicans recognise that themarket is constructed through political, public action.Freedom in the republican tradition requires enjoyment of the fundamentalliberties with the security that only a rule of law can provide. You must bepublicly protected and resourced in such a way that it is manifest to you andto all that under local (not unnecessarily restrictive) conventions, you canspeak your mind, associate with your fellows, enjoy communal resources,locate where you will, move occupation and make use of what is yours,without reason for fearing anyone or deferring to anyone. You have thestanding of aliber  or free person; you enjoy equal status under the publicorder and you share equally in control over that order.This approach to the public world ascribes importance to a sphere ofrelatively private relationships and actions, insisting that within that sphereyou should not be beholden to anyone for your ability to act as you will. But onany of the established republican views, that sphere is a space that is carvedout by public custom and law, maintained by public enforcement, and securedby a form of public control in which each has an equal share. The rules ofpublic order constitute the possibility of private life in the way in which therules of a game like chess constitute the possibility of playing that game. Theyrepresent enabling (or enabling-cum-constraining) rules, not rules that merelyregulate a pre-existing domain.This republican image runs into sharp conflict with a more receivedpicture, celebrated by right-wing libertarians, according to which the rules ofpublic order regulate the private sphere rather than serving – now in thefashion of one culture, now in the fashion of another – to make it possible. Onthis libertarian view, the private sphere is only contingently dependent onpublic regulation, not dependent in the constitutive manner envisaged in therepublican. The conflict between the images is important because it shows upin alternative visions of the economy and the relationship between theeconomy and the state.Property: the contrast in libertarian and republican viewsTo bring out the conflict of images, consider the property conventions thatestablish the titles and rights of ownership. On the libertarian picture owning isa natural relationship — you might think of it as a relationship of possessionand use — and the rules of property serve to affirm and protect the naturalrights of owners.On the republican picture, owning is a relationship that presupposes law,if only the inchoate law of informal custom. You do not own something — youdo not have the freedom of an owner — just insofar as you can hang onto it,frightening off or driving off potential rivals. You own something only insofar asit is a matter of accepted convention that given the way you came to hold it —given public recognition of the title you have to the property — you enjoypublic protection against those who would take it from you. It is yours to holdand enjoy in private; but it is yours in that sense only by grace of publicconvention.

This view of property, prominent in Rousseau  and presupposed in thebroader republican tradition, is scarcely questionable in view of the salientdiversity in systems of property. These differ in how far they allow forcommunal and public property as well as private; in the titles they recognizeon the private front; and in the rights of usage that they grant to privateowners. Think of the variation in how far landowners are taken to ownminerals under the surface of their land, or of the diversity in copyright lawand intellectual property, or of the differences in how far people are allowed totreat their animals or extend their houses. Or think, of course, of the range ofvariation in taxation regimes, remembering that public taxation is part andparcel of any property system.These observations, scarcely richer than platitudes, are important forgiving us a perspective on the market and the economy, undermining thelibertarian image. That picture represents the market as ares privata , aprivate thing, suggesting that the role of the state is merely to lay low the hillsin the way of the market and smooth the paths for its operation. And so itdepicts any other interventions of government in the market as dubious onphilosophical, not just empirical, grounds. I suspect that this image accountsfor the continuing attachment to austerity among those on the right. They arephilosophically opposed to Keynesianism, not just opposed on empiricalgrounds, and their ideological stance makes empirically based arguments forKeynesianism invisible to them.The public rules of economic associationWhat constitutes the economy on the republican approach? The answer is:the sorts of public rules that create private space in general, such as thepublic rules that create the possibility of private ownership. These rules arepublic in the sense of being accepted across the society as a matter ofcommon awareness, and being normally spelled out in statutory or customarylaw. And they vary across societies and periods, reflecting the varyingassumptions of parliaments and courts and other public forums. They includethe property conventions that we have been discussing but also extend muchfurther. Without aspiring to be exhaustive, we should add to theRules ofproperty  at least the following four categories of market-enabling rules.Rules of incorporation . These determine the forms in which individualscan combine to form new economic players. They have evolved greatly overthe past two hundred years, giving companies and banks and other suchentities life without a sunset clause; liability that is limited to a shared treasury;the possibility of owning other such entities; the possibility of changinglocation and sphere of operation; and so on. While the rules for the formationand operation of commercial entities have generally become more and morepermissive, most countries impose some anti-trust restrictions, guardingagainst monopoly. And countries vary a great deal, of course, in how far theyallow corporations political influence, with the United States growing evermore tolerant of the pretence thatcorporations have the rights of natural

persons .Rules of production . These rules impose restrictions on how far thelarger players in an economy, especially in manufacturing industry, areallowed to locate near centers of population, to pollute the ground or water oratmosphere, to contribute to global warming, and to impose negativeexternalities on other players, individual or corporate. Many of these rulescome about via statute while others emerge from the courts in the resolutionof common law issues, in particular issues oftort . TheLearned Hand rule  onsuch questions of tort would suggest, for example, that producers and otherparties ought to take precautions against harming others in any cases wherethe cost of the precaution is less than the expected cost of the damage: thatis, the cost of the damage, discounted by the probability of its occurring.Rules of contract . These determine a variety of matters that have to besorted out for the smooth and successful operation of a market. Who arecompetent parties to make contracts? What conditions, say in the matter ofrecords of the transaction, are required for a binding contract? How far is thecontract to be understood on the basis of the exact words used and how faron the basis of presumptions reasonably ascribed to the parties? When is acontract null and void? What damages may a party seek for breach ofcontract: the loss suffered as a result of reliance on the other or the loss of thebenefits that the contract promised? And so on.Rules of finance . By what agencies is the money supply in the economyto be controlled? And what are the guidelines that those agencies shouldfollow? Most countries rely on central banks for controlling the money supplyand impose guidelines related to keeping inflation down and employment up.In pursuing its aims, and subject to statutory constraints, the central bank willvary factors such as the base interest rate at which commercial banks canborrow, the ratio they have to preserve between their reserves and theirloans, the extent to which their loans can be bundled together in derivatives,the insurance available to depositors in the event of a bank defaulting, and soon.As the rules of property establish a system of ownership, so these andother rules combine with them to establish, more broadly, a full-scale marketeconomy. This claim, like the earlier claim about the role of propertyconventions, borders on the platitudinous. But by giving it prominence we canavoid being seduced into the libertarian view — now, alas, almost anorthodoxy — that the market is a relatively autonomous sphere whichdepends only contingently on the framework of custom and law, and on therole of the state in supporting that framework. The role of the state in relationto the market — the role of the community, operating through the state — isconstitutive and not just regulative, enabling and not just constraining. And itis extensive in even a greater measure than my five sets of rules suggest,

since it also includes providing for the infrastructure of education,communication, transport and insurance that any contemporary economyrequires.