Introduction : Governing Exchange

This is the introduction to The Exchange Order: Property and Liability as an Economic System, New York: Oxford University Press, 2017. It briefly describes the exchange order, the comprehensive social system comprising explicit markets, tort liability and criminal liability. These institutions are portrayed as different ways to govern exchanges, compensated transfers from lower to higher valuing owners, across a range of environments. Every transfer involves both the taking of goods and the imposition of costs, and exchange means that cost bearers are fully compensated by takers for their losses. Markets govern exchanges in environments where property rights are secure, so all trades are consensual and compensation occurs at the moment of taking. Tort and criminal liability operate in environments where property is insecure, completing involuntary transfers of entitlements, rights to be free of unlawful cost imposition, by imposing compensatory liability prices on takers equal to the cost of the taking. All three systems thus operate to move rights and objects to higher valuing owners through the payment of compensatory prices