How does libertarian punishment theory deal with the doctrine of unjust enrichment?

What is the proper punishment from the perspective of the libertarian philosophy? More specifically, in what way, if at all, may a thief benefit from his robbery? The present essay attempts to wrestle with these challenging questions.

I. Introduction

 Libertarian punishment theory[1] emphasizes restitution. While it is usually impossible to make the victim “whole” again, after his ill-treatment, that is the direction in which notions of justice indicate we should tread.

 But we are not now addressing these issues in general.  Rather, the present essay is dedicated to analyzing several specific issues. In section II we look at ancillary criminal benefits and in section III internal criminal benefits. The burden of section IV is to discuss unjust enrichment. We conclude in section V.

II. Ancillary criminal benefits

 Question 1: Suppose A steals a typewriter from B. Then clearly part of the proper restitution is to take the typewriter from A and give it back to B. But what if A has typed a manuscript using that stolen typewriter (and on paper that belongs to A) -- does A have a legitimate property title, also, to the manuscript? If not, what should be done with the manuscript?

 In the view of Rothbard[2]: “It should be evident that our theory of proportional punishment—that people may be punished by losing their rights to the extent that they have invaded the rights of others—is frankly a retributive theory of punishment, a ‘tooth (or two teeth) for a tooth’ theory. Retribution is in bad repute among philosophers, who generally dismiss the concept quickly as ‘primitive’ or ‘barbaric’ and then race on to a discussion of the two other major theories of punishment: deterrence and rehabilitation. But simply to dismiss a concept as ‘barbaric’ can hardly suffice; after all, it is possible that in this case, the ‘barbarians’ hit on a concept that was superior to the more modern creeds.”

 There are three possible answers to this typewriter query, and I will respond in increasing order of Draconianism.

 The first is the least punitive to the criminal. Here, we consider two scenarios. The first is that the criminal merely plays with the keys of the typewriter, with no paper involved. We posit that the harm to the typewriter in terms of wear and tear is the same whether or not there is any actual writing going on. Then, apart from any other aspects of the retribution against A the criminal, the same response is visited upon him whether he types a manuscript, or, presses the keys to the same extent without writing anything. Here, the focus is entirely on what damage, if any, A did to B’s typewriter, during the time it was in his possession. Since it is the same by stipulation, the penalty would be the same in either case. The bottom line is that the criminal may keep his manuscript.

 The second scenario is that A’s typing without paper does more (or less) damage to the writing machine than the alternative. If so, A must pay B more (or less) than before, because his damage to B’s property is of greater (or lesser) extent. In both these scenarios, A keeps the manuscript he wrote on the stolen typewriter.

 Of course, it is only the tip of the iceberg that A be forced to return the item he took from B. If this were all there were, on utilitarian grounds, crime would “pay” from the limited economic perspective. For, if the criminal is caught, he suffers no more than the loss of time and the possible danger to which he was exposed when he perpetrated his evil deed. That would be but the first “tooth” to which Rothbard refers. The second would be the requirement that A be “served” in the manner he applied to B. Since A absconded with a typewriter of B’s, A must be compelled to give B an implement of the same kind; that is, A owes B his own typewriter.  

 Third, at least in the libertarian society, if A immediately after his robbery approached the (private) police, confessed, and returned to them his ill-gotten gain, then there would be no additional punishment for him. But if he compounded his theft by hiding from the forces of law and order then the costs of search and capture would be added to his bill. But there is one more penalty yet in store for A, a far more controversial one. When he committed his dastardly deed, he scared B. B’s sense of security was lessened. A proportional punishment would have to also take that into account. How so? By standing behind A and yelling “Boo?” Not a bit of it. Rather, A would be forced to play Russian Roulette, with the number of bullets and chambers, and importance of the criminal’s body part the gun must be aimed at, proportional to just how badly he frightened B.  This, then, is the second most Draconian scenario. It is a four part penalty, consisting of two “teeth,” costs of capture, and the imposition of terrifying the criminal.  But that is it! There is no more. Any other penalty would be adventitious, arbitrary, capricious, over and above the call of justice. 

 However, suppose that this manuscript typed up by A is worth one billion dollars. Or, more realistically, suppose A stole $5 from B and with those funds purchased a winning lottery ticket with a prize of a billion dollars. Would A have to pay B one dime of that amount of money? No, because, by stipulation, he has already fully paid the four elements of his punishment.  Then, he may keep his (very valuable) manuscript, and/or the gigantic lottery prize he won with B’s money.

 Let us now consider the most severe punishment of them all: it includes the previous level of severity, but with one more side condition: the criminal cannot be allowed to benefit from his crime, in any manner, shape or form.  This is sometimes called the “Son of Sam” law, named after David Berkowitz, a notorious murderer who was offered great riches to publish his story. A similar issue arose with regard to David Chapman, the murderer of Beatles musician John Lennon. Under this rubric, A, who stole B’s typewriter and wrote a best-selling novel worth millions, and the person who stole $5 and purchased the winning lottery ticket, would have to give this ill-gotten wealth to their respective victims. And this, in addition to the four-part punishment series mentioned above as the second stage of Draconianism.

 So, which of these three models fits in best with libertarianism? I argue for the second.  Son of Sam rules are incompatible with the freedom philosophy. Why? This is due to an extrapolation of Rothbard’s insight about proportionality. He focused on vertical equity. Crimes of different severity should be treated proportionately. If a crime is twice as severe as another, it should be punished doubly.  

 But libertarian law, I contend, requires both horizontal and vertical equity. Let us now consider the latter. Two people, A and A’, steal a typewriter from B and B’. Or, two criminals steal $5 and buy a lottery ticket, call them C and C’. All four, A and A’ and C and C’ pay their full penalties, discussed under the second type of Draconianism. However, A and C are lucky. The manuscript typed by A sells for a million dollars, the one by A’ is worthless. C wins zillions in the lottery, the ticket purchased by C’ is worthless. Horizontal equity requires that A and A’, C and C’, be treated exactly equally. After all, they committed precisely the same crime. To deal with them differently, for something that occurs after the crime, would be unjust. It would be to treat equals unequally. It is unlibertarian. It violates horizontal equity.

 But is it not positively galling that A and C benefit spectacularly (albeit indirectly) from their horrid crimes?  We can just hear them each cackling to themselves and their friends that yes, crime does pay, as they roll in their money bins like Scrooge McDuck. Yes, of course, this objection is a powerful one. This seems entirely unjust. However, we can achieve solace from our appreciation of the Russian Roulette proviso. These newly wealthy criminals still have to face this hurdle. Now that they have this vast wealth at their disposal, the price they will likely pay to escape from this their just dessert, will presumably skyrocket. There will not be all that much money for them to roll around in after they finish paying for the privilege of not having to play this deadly game. Thus, from a theoretical position, we can have our cake and eat it to: stick to principle, and obviate the perceived unfairness of a criminal benefitting from his crime.

 III. Internal criminal benefits

 Question 2: In other cases, the use of stolen property may not be as tangible. For example, suppose A stole an electronic massage chair from B and has used it to massage himself several times. Does the proper course of restitution and punishment in this case depend on the extent to which A has used the massage chair (apart from compensation for the wear and tear resulting from A's use of the chair)? In fact, A's illegitimate use of the massage chair may have comforted and reinvigorated him and thus enabled him to generate more income from other (legitimate) activities. How should issues like this be handled?

 Here we have a somewhat different challenge.  In the previous section, the benefit to the criminal was tangible, physical. Here, it is internal. It is entirely possible to seize the typewriter from the criminal A who stole it, and return it to its rightful owner. But how can one alienate from the thief the comfort he derived from use of the massage chair? It is not possible.

 The closest analogy we have to this scenario is the crime of rape. It is impossible in a similar way to “take” the rape from the rapist and return it to his victim. What, then, are the appropriate penalties for this shameful crime?  The “two teeth” will obviously not apply to this case; this leaves only the third and fourth element of libertarian punishment theory. Is there anything that can take the place of the “two teeth?” Yes. What was done to the victim will now have to be done to the rapist, only twice over.  In addition, there is "lucrum cessans" (profits lost), compensation at fair market value for the time lost by the victim of this invasive crime.

 With this help due to extrapolating from the crime of rape  we return to the question posed. How to deal with the criminal who benefits from the enjoyment of the massage chair? Our response, then, must be that there is no real difference in terms of punishment between stealing a television and acquiring a massage chair through theft and incorporating its benefits into, so to speak, oneself. The rapist, presumably, also derives internal psychic income from his foul deed which cannot be taken away from him either. Both malefactors must pay the penalty for their uncivilized behavior, despite the fact that they have each internalized the benefits of their rights violation, and there is thus nothing physical to return to the victim. However, if the massage chair robber writes better and more valuable material as a result of the relaxation his ill-gotten gain accords him, he need pay no greater penalty than a criminal who steals and uses a massage chair, feels equally better, but either writes nothing or derives no additional financial benefits from what he does write. Horizontal equity, not only vertical equity, is a touchstone of libertarianism.

 IV. Unjust enrichment

 Let us now consider the doctrine of "unjust enrichment" which is a general area of law, of which the two questions posed above are but examples.[3]

 Here are some cases: Suppose A hires B to paint his house. B shows up but accidentally paints C's house (A's neighbor), instead. Under at least some interpretations of the law prohibiting unjust enrichment, B may sue C and make the latter pay for the paint job--maybe not the full price A had agreed upon, but some lesser amount, if the paint job actually increased the value of C's house (and if B made the error in good faith).  

 This conclusion is incompatible with libertarianism. C is an entirely innocent person. He did not authorize any painting of his house. The fact that B’s paint job in some objective manner increased the value of his home is entirely beside the point. To force him to pay B would involve positive obligations, anathema to the freedom philosophy.  In that view, people’s only obligation is to keep their contracts and refrain from uninvited border crossings onto the persons or property of others.

 Although “unjust enrichment” is a legal term, it also falls under the rubric of economics with the heading of external economies, or positive externalities. Here, one person, call him X, engages in an act that benefits Y, but X may not charge Y for improving his life in this way. For example, education: I go to school, I become, presumably, a better voter, a more informed citizen, a more supportive neighbor, etc. But, I may not bill you for these benefits that supposedly spill over on to you. Another example is compulsory union dues. The allegation here is that labor organizations benefit all workers in the firm, even though they are not members. Therefore, they must be forced to pay dues to the union.

 Rothbard’s reductio absurdum of this argument is as follows: “A and B often benefit, it is held, if they can force C into doing something. . . . [A]ny argument proclaiming the right and goodness of, say, three neighbors, who yearn to form a string quartet, forcing a fourth neighbor at bayonet point to learn and play the viola, is hardly deserving of sober comment.”[4] 

 The problem is, there is no way that it can be demonstrated without any doubt that these people, the person whose house was mistakenly painted, the non-union employee, the general citizen, was indeed benefitted from these actions supposedly made in their behalf. It implies no logical contradiction to suppose either that they were indifferent to these “benefits,” or were actually harmed by them. The only way we can deduce benefits for sure is from voluntary interaction. When someone purchases a typewriter for $100, there can be no doubt that at the moment of purchase, he valued that item to a greater degree than its cost to him. If not, why, ever, would he have bought it? We are also entitled to infer that the criminal, too, prefers a world where he is in possession of the stolen good, rather than its rightful owner. But these are human actions[5]; the presumed beneficiary of “unjust enrichment” engages in no action. He is passive in this regard.

 Suppose, arguendo, that C does indeed benefit from the mistaken house painting. It still does not follow that he must pay for it. I now smile at you, gentle reader. Stipulate that you do gain from this gift of mine to you. Should you be legally obligated to pay me for this benefit I just bestowed upon you? Hardly.

 Another example. Suppose A steals a hunk of granite from B's quarry.  Whereupon A carves a magnificent statue with that stolen material. The implication of “unjust enrichment” is that B may not have that particular piece of granite back from A because he, B, would be unjustly enriched. The value of the carved granite is so much greater than the raw granite of which B was robbed. Instead, A would only have to repay B for the value of the raw granite, plus the other libertarian aspects of punishment. This is clearly unjust, based on the libertarian philosophy. That particular rock belongs to B, and what A did to “improve” it is of no nevermind. But, suppose that A may indeed keep this carved rock in his possession, and only needs to forfeit an equally valued non-carved piece of granite. One way to handle such  patent injustice is that when A is forced to undergo the Russian roulette part of his punishment, he will now be able to pay much more to B than otherwise would have been the case; so A’s increased wealth will tend to revert back to B in any case, even if the law does not require him to return the specific rock he stole. But, we can go further than that, and reject the entire doctrine of “unjust enrichment” as incompatible with libertarianism. Then, A must be compelled to return that specific carved rock. Maybe that will teach him not to be a crook.

 There is something of an anomaly in the present analysis. We have insisted upon horizontal equity in terms of the positives: all criminals who commit the identical crime pay the exact same penalty. They both steal $5 and purchase a lottery ticket. One wins big, the other obtains nothing. The lucky one need not pay any more than the unlucky one . But, matters are quite different on the negative side.

 A pushes B, a young, strong, man, who shrugs it off. A’ pushes B’ with identical force, but the latter is a young looking, strong-looking but actually weak man, who falls, hits his head on the pavement, and dies. Did A and A’ really commit the same crime? I argue that the two criminals really committed a different kind of crime; the former is guilty, merely, of assault and battery, the latter of outright murder.  The aphorism that applies best in these types of cases is “the criminal takes his victim as he finds him.” The As of the world are responsible not only for what they do (they both pushed with the same force, a person, B, who looked the same), but also for the results of their actions. In the case of A, it was only a slight discomfort on the part of his victim. For A’, it was much worse.

 Winning the lottery gives A great confidence. As a result, for the rest of his life, A earns an extra $1million per year. He has to give all of this to B, because he stole that $5? That would be the implication of the view I argue against. This punishment outrages our sense of justice. Does a penalty for a crime never end, merely because the reverberations benefit the perpetrator? I answer in the negative. Penalties do come to a conclusion, at least eventually; even Draconian ones, such as offered by the libertarian philosophy.

 V. Conclusion

 It is time to conclude this paper. To summarize, we have attempted to apply libertarian punishment theory to criminal behavior, asking whether, and if so, to what extent, offenders may properly benefit from their ill-gotten gains. Contrary to the Draconianism to which libertarianism is sometimes conflated, we arrive at a moderate position. The malefactor may indeed, sometimes, with restrictions, benefit from his crime, since all just punishments must eventually come to an end. We have also rejected the unjust enrichment doctrine, according to which the (supposed) beneficiary owes a debt to this (supposed benefactor).