When Private Law Makes You Poor, Can Public Law Save You?

This is a post by Diego M. Papayannis (University of Girona).

Most lawyers would agree that private law is not supposed to be distributively fair. It is, after all, the area of law in which we are allowed to act in our own best interests, provided we do not wrong others in the process. So, when someone points out that private law is insensitive to pre-existing social inequalities, and that it actively generates new ones, the most frequent response is to gesture toward welfare programmes: that is what they are there for. But is this good enough? Does it meet the requirements of justice?

The debate I have in mind concerns what might be called the orthodox, Kantian-inspired vision of private law, associated with the Toronto school of private law theory and with scholars such as Ernest Weinrib and Arthur Ripstein. The Kantian starting point is that in the state of nature we all have an innate right to freedom, and that private law—most prominently the law of property, contracts, and tort—exists to extend that freedom and make it compatible with everyone else’s. Within a system of private rights, individuals can pursue their own ends without being subjected to another’s will. This is a genuinely attractive idea in a liberal society.

Predictably, the trouble begins with the institution of property. Once a civil society acknowledges property rights, legitimate accumulation becomes possible. And with it comes exclusion. Some people might end up with so little that their very survival depends on the goodwill of others. The orthodox solution to this peril is elegant: subject the legitimacy of robust individual rights to the existence of redistributive mechanisms. In this way, private law remains ‘pure’, handling interactions between individuals, while public law institutions—taxation, public spending, welfare programmes—offset whatever inequalities might arise. Individuals are free to interact without giving a thought to the distributive effects of their deeds.

This solution, however, is far from optimal, not only in practice but also in theory.

The first difficulty is that public redistribution transforms individual dependence into a social one. The orthodox response to this objection is that the poor hold a legal right to public aid, and the state bears a correlative duty to provide it; since they are not begging for charity, it cannot be said that they depend on anyone’s will.

Even so, the content and extent of that support remains, inevitably, a political matter. Welfare programmes are the product of shifting legislative majorities, ideological cycles, and budget constraints. What counts as a decent standard of living, how generous the safety net is, who qualifies as a beneficiary, all of this, is subject to the political mood. Those excluded by private law do not hold a determinate entitlement to a fixed level of support. They are dependent, in a very real sense, on the whims of politics. And that is still a very tangible form of dependence.

By contrast, think of private law rules specifically designed to prevent exploitation. Wouldn’t they settle a more respectful scheme of interaction? Wouldn’t they provide a more stable protection against systematic subordination? Civil codes change slowly, require broad political consensus, and evolve in consistent directions over generations. The history of continental European legal systems illustrates this clearly. That stability is not incidental. Lawmakers understand that private law cannot be frequently altered without undermining its core function of providing a reliable framework for interaction. Welfare policy enjoys no such protection. It can reverse overnight.

But there is a deeper problem in relying exclusively on welfare, and it has to do with something harder to quantify than institutional stability. I am thinking of self-respect. According to Rawls, self-respect has two dimensions: a person’s sense of their own worth, and their confidence in their capacity to carry out their projects. Without it, everything else becomes hollow. Therefore, it is a condition of human agency. When social welfare is proposed as the sole solution to poverty, the social bases of self-respect are systematically undermined.

Empirical research on welfare recipients confirms this. If you were an applicant, chances are you would experience anxiety and shame when seeking public assistance. If you had food stamps to spend, you would probably travel to a distant supermarket to avoid being recognized by your neighbours. After some time on welfare, like many of your fellow beneficiaries, you would be at risk of suffering from depression and a pervasive sense of being trapped in the system. Perhaps most striking: like them, you would hold negative views of other welfare recipients, internalizing the very stigma being applied to you, while attributing your own situation to factors beyond your control—illness, family breakdown, bad luck, you name it. The stigma is so powerful it would even turn you against those who share your condition.

The obvious objection is that these effects are contingent. Design a better welfare system—more discreet, less bureaucratic, less conditional—and the stigma disappears. I am not convinced. The shame is not an accidental feature of poorly designed programmes. It is the structural consequence of a system in which some people earn their living and contribute as taxpayers while others, like you, receive transfers from a common pool. That division makes it very difficult for you to regard yourself as a fully cooperating member of society, and no administrative redesign can fully neutralize it. The fact that the benefit is legally framed as a right rather than charity offers little consolation to someone who is perceived—and who perceives themselves—as unable to pull their own weight.

There is also a practical dimension that the orthodox view tends to overlook. Even if we grant that public redistribution is the appropriate mechanism for addressing poverty, its effectiveness depends heavily on the private law framework within which it operates. If you receive a subsidy because of your poverty but contract law still allows the stronger party to impose abusive conditions, a significant portion of your money will simply be captured by those with greater bargaining power. The minimum income goes in through the front door and flows straight out through high rents, debt repayments, or abusive contract terms. Redistribution without complementary private law protections is, at best, inefficient and, at worst, regressive.

This points to something the orthodox view resists acknowledging: private law is never distributively neutral. Every design choice—whether to apply fault or strict liability, what standard of care to require, whether to impose mandatory disclosure duties, whether to allow certain contractual clauses—distributes rights and resources in ways that have measurable social effects over time. A rule requiring financial service providers to disclose information to consumers implicitly transfers money from the former to the latter. These effects do not disappear because we choose not to discuss them. Ignoring them does not make private law neutral; it makes it silently biased in favour of whoever holds the stronger position.

None of this means that courts should become instruments of redistribution, deciding cases with one eye on social policy. I agree with the Toronto school that litigation is about justice between the parties. But the general rules that govern those interactions are part of the basic structure of society. They give form to the scheme of social cooperation over time and are therefore subject to the demands of distributive justice.

What I am defending is not the abolition of private law’s bilateral structure or the politicization of every dispute. It is something more modest. Private law rules should be designed with awareness of their distributive effects, and that redistribution embedded in private law is more stable, less stigmatizing, and ultimately more respectful of persons than external welfare transfers. It works silently, without sorting people into contributors and recipients, without attaching shame to need derived from unfair systems of interaction.

Returning to the question I started with: when private law makes you poor, can public law save you? It can help, of course, and social welfare programmes remain essential. But if the private law framework that produces poverty is left untouched, public redistribution will always be fighting an uphill battle—diluted by the very rules it is trying to compensate for, and leaving you in a condition that falls short of genuine independence. An institutional arrangement that expects the most disadvantaged to absorb social subordination so that the most privileged can enjoy unlimited accumulation has some serious explaining to do.

To read more, see Papayannis, D.M. (2025). “Orthodox Private Law and Social Subordination.” Canadian Journal of Law & Jurisprudence, 38(2), 502–516.6 (1): 31–51.

Diego M. Papayannis is a Professor in Legal Philosophy at the University of Girona, and Senior member of BIAP. His teaching and research focusses on private law theory, economic analysis of law, and philosophy of law more generally. His work has appeared, among others, in The Journal of European Tort Law, Legal Theory, Revus, Jurisprudence, Ratio Juris, and The Canadian Journal of Law and Jurisprudence.