My point is that these institutions I have been saddled with exert just as much — sometimes even more — power over my person than any State. Their power, their authority, is no less real than State power; certainly not in the primitive societies webgrrrl introduced to the debate with her example. Arguably though, in the current situation the actions of the 'social institutions' of Wall Street (they were not part of the state by any stretch of the imagination) have impinged on the liberty of many. Any serious advocate for liberty must acknowledge that.

For some reason, libertarians claim to look to the State merely as a minimalist means of arbitrating disputes between individuals. My instinct is that there are also disputes about the power of non-state collectives that must also be addressed, and part of the task of a minimalist state is to protect my individual liberties against the failure or malfeasance of these collective institutions.

Gotta be careful you don't oversell it though. I would make the claim that the single most important thing regulators can do is to make parties to transactions be as transparent as possible about the nature of what is being bought and sold. And not merely to one another. The overall agora benefits from the information in the price signals sent from the stalls all around them.

Public markets. Public visibility.

Since I lack webgrrl's restraint, I'll throw in my $.02.

There are many social institutions and there is a great deal of legislation (I think that's what you mean by laws) around these institution. Some of this legislation adds value, much of it adds nothing (or has costs and benefits that net out to something trivial), and (I think) the majority does harm.

I think it's a huge mistake to misinterpret this situation to be that it's the legislation that makes the institutions possible.

It's just not true.

As a practical matter, you're right that we're going to get more legislation around financial markets and it's important to consider what form it should take to make things better. But, I expect a kitchen-sink of regulations to come out of this process that will not improve trust or “The efficient functioning of the market.”

To expect something better requires faith that I lack.

As for trust, I'm not sure you're aware of the social science studies that show how best to rebuild it. Wharton has some nice ones.

Why on earth would you want to believe that–say–church law, or tribal tradition, or a family's personal vendettas, have any more a priori legitimacy than the laws a State sets down? In principle I do not see any difference between 'tribal traditions of fairness and regulation of the state'. Tribal elders possess the same monopoly on 'legitimate' force. They are vulnerable to the same human temptations and failings that lead to capricious authority.

In fact, in a Democratic state there is at least a process for changing the laws and regulations by which we all agree to operate. Further, law is written; formalized in a way that tradition is not. I would argue that there is more liberty under Law than Social Tradition. (At this point I mumble about the obligation to disobey 'bad laws' and so forth, but would derail that discussion with an discussion about the design of the processes under which a state might best operate.)

I very well understand the force of what I am saying, and I embrace its radical implications. If we acknowledge that our network of social interactions–of which the market and its advantages are just one–depends upon social laws, regulations, and upon their impartial enforcement, then all that remains is the question of how these are agreed upon and how they operate.

To embrace the times for a moment, we are learning from recent events is how the absence of any written laws concerning complex financial transactions has destroyed the requisite trust, and undermined the efficient functioning of the market. To build trust again, our 'tribe' needs new 'traditions' to guide us when answering questions about property and market transactions.

Rights arise from the relations and customs of family and civil society, or they inhere in persons. Either way, they are not outlined by or derived from the external state. Taboo is not regulation; custom is not law. Can you not see the difference between tribal traditions of fairness and regulation of the state?

I think with all due respect you don't really understand the force of what you are saying, or its implications.

Consider the consequences had the yummy fish head proven toxic, and killed it's buyer. Or it turned out that the 5 cowrie shells were taken from an area of the reef that was a traditional hunting ground of another clan. In the social context of this time, the woman or her trading partner would have been ostracized, branded witches, and probably (under the social contract of the time) traded by her husband/owner at cut-price to the neighboring tribe.

Want to exchange something? There is — there must be — consequences should one party to the exchange renege or act dishonestly. Without consequences there can be no trust, and trust (as we're discovering) is no less important to the tribal mind than the modern banker.

“There is no 'free market'. There never was. There never will be. Laws defining property rights and procedures for adjudicating contract disputes are regulation.”

Wait – are you saying that before the first woman traded the first yummy fish head on the beach for 5 cowrie shell beads and a handful of face paint, there had to be an SEC? Surely you jest.