From Natural Law to Social Welfare: Theoretical Principles and Practical Applications

Many common accounts of natural law understand it in opposition to modern social welfare theory. Contrary to that wisdom this Essay shows how many of the fixed landmarks of the common law, including its rules on individual autonomy and the definition and acquisition of private property, comport with the natural law tradition. The modern welfarist positions only emerge through key decisions in 19th century law, which then help explain the choice among three welfarist positions: Kaldor-Hicks, Pareto, and a more rigorous standard that requires pro rata gains among all parties. This Essay uses a transaction costs framework to explain the proper deployment of these three rules.