We now live in an amazing time when buying a streaming subscription requires agreeing to a legal tome that exceeds “War and Peace” in volume. We have grown accustomed to thinking that this is normal, a sign of “civilization” and a “state governed by the rule of law.” But in reality, a paper contract as thick as a brick is not a sign of progress, but rather a medical report on the sickness of society. A diagnosis that screams: “We no longer trust each other!”
For this reason, let’s consider a bold idea: in a truly healthy, free society, the vast majority of transactions should be concluded with a simple handshake. And we are not talking about Western-style romance, but about a dry, pragmatic, and extremely efficient thing—the institution of reputation.
As soon as we stop believing in a person’s word, we start proliferating paperwork. And where there is paperwork, there are lawyers, notaries, regulators, and, of course, our favorite stationary bandit, who happily takes on the role of supreme arbiter using your own taxes. But let’s look back at history. Do you think that without state control and tons of waste paper, people would have simply torn each other’s throats out? Not at all.
How did the diamond exchanges of Antwerp and New York work? For centuries, Orthodox Jews conducted deals worth millions of dollars there. Do you know what the contract for a batch of diamonds looked like? It didn’t exist. Two people looked at the stones, shook hands, and said: “Mazal u’Bracha” (“Luck and blessings”). And that was it; the deal was closed. If someone broke their word or tried to pass off junk, they weren’t dragged into court. They were simply expelled from the community forever. Their reputation was multiplied by zero, and they could no longer buy even bread from their own. The risk of losing face and business was a thousand times more terrifying than any state fine.
Another example is the medieval Lex Mercatoria (Merchant Law). Imagine: the 11th century, merchants trading from England to the Levant. There is no single state, just a bunch of different feudal lords. How do they conclude contracts? They created private law, without kings and officials. If a merchant from Genoa cheated a clothier from Flanders, the clothier didn’t write a complaint to the Pope. News of the deception spread through all the Champagne fairs, and simply no one did business with the Genoese anymore. Reputation was harder than gold.
And then there is the Wild West. From the movies, it seems people only shot each other there. In reality, until the federal government arrived with its laws, people (miners, farmers, cattlemen) created claims clubs. Land was bought and sold on a word of honor and an entry in the club’s ledger. Conflicts were resolved by neighbors over a glass of whiskey, not by judges in wigs. And it worked!
But today, we have forgotten how to reach agreements. We have outsourced the most important human function—the ability to take responsibility and resolve conflicts—to the Leviathan. The moment something goes wrong: “I’ll sue you!” or “I’ll call the police!”. Modern man has turned into a weak and infantile teenager who runs to complain to “Daddy State” because someone broke his sandcastle. And “Daddy” is deliriously happy about it. Because while we are litigating, he collects fees, swells the ranks of bureaucrats, and writes new laws on how we should properly breathe.
Total reliance on written contracts is a crutch for a society whose legs have atrophied. It is a path to nowhere! The decline of social trust and total legal infantilism are literally eating modern Western civilization from the inside. The Roman Empire collapsed not only because of barbarians; it suffocated in its own bureaucracy and taxes when citizens ceased to be citizens and became merely a “taxable base.” And we are currently stepping on the same rake. A society in which people cannot trust each other’s word, where everyone views their neighbor as a potential fraudster, and where buying a used car requires a 100-page contract—this is a fragile society. It will collapse as soon as the bureaucratic apparatus fails, and this will inevitably happen with 100% probability in the long run.
